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Auditor Report of South Indian Bank Ltd.

Mar 31, 2023

The South Indian Bank Limited

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

Opinion

We have audited the standalone financial statements of The South Indian Bank Limited (''the Bank''), which comprise the Balance Sheet as at March 31, 2023, the Profit and Loss Account, the Cash Flow Statement for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 2013 (''the Act'') and the circulars and guidelines issued by the Reserve Bank of India ("RBI"), in the manner so required for banking companies and give a true and fair view in conformity with accounting principles generally accepted in India, including the Accounting Standards prescribed under Section 133 of the Act, read with rules thereunder, of the state of affairs of the Bank as at March 31, 2023, and its profit and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements 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 ''Auditor''s Responsibilities for the Audit of the Standalone Financial Statements'' section of our report. We are independent of the Bank in accordance with the "Code of Ethics" issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the Standalone 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 sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Key Audit Matters

Key Audit Matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the financial year ended March 31, 2023. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone financial statements. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and results of our audit procedures, including the procedures performed to address the matters below, provide the basis in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters prescribed below to be the key audit matters:

Key Audit Matters	How our audit addressed the Key Audit Matters
(i) Classification of Advances, identification of non-performing advances, Income Recognition, and provisioning
on Advances (Refer Schedule 9, Note 3 of Schedule 17 and Note 4 of Schedule 18A to the standalone financial
statements)
Advances include Bills purchased and discounted, Cash	Our audit approach / procedures included the following:
credits, Overdrafts, Loans repayable on demand and Term loans. These are further categorized as secured by Tangible assets (including advances against Book Debts), covered by Bank/Government Guarantees and Unsecured advances;	- Understanding and considering the Bank''s accounting policies for NPA identification and provisioning and assessing compliance with the prudential norms prescribed by the RBI (IRACP Norms) including the additional provisions made
RBI prescribes the prudential norms for Income	on advances and additional provisions and asset
Recognition, Asset Classification and Provisioning of	classification benefit extended on restructured
non-performing assets (including circulars in relation	advances under RBI''s COVID-19 Regulatory Package.
to COVID-19 Regulatory Package - Asset Classification and Provisioning) (IRACP Norms) and prescribes the minimum provision required for such assets.	- Understanding, evaluation and testing the design and operating effectiveness of key controls (including application controls for system driven
The identification of performing and non-performing	identification of NPAs) over approval, recording,
advances (including advances restructured accounts	monitoring and recovery of loans, monitoring
under applicable IRACP Norms) involves establishment	overdue / stressed accounts, identification of
of proper systems, controls mechanism, and the bank	NPA, provision for NPA, valuation of security and
is required to apply significant degree of judgement	collateral and identification and provisioning of
to identify and determine the amount of provision	impaired accounts based on the extant guidelines
required against each Non-Performing Asset (''NPA'')	on IRACP laid down by the RBI. Further obtained
applying both quantitative as well as qualitative factors	an understanding of the contingency provision
prescribed by the regulations. The risk of identification	carried by the Bank and verified the underlying
of NPAs is affected by factors like stress and liquidity	assumptions used by the Bank for such estimate.
concerns in certain sectors.	- Testing of application controls on sample basis
The provision on NPA is estimated based on ageing	including testing of automated and manual
and classification of NPAs, recovery estimates, nature	controls, reports and system reconciliations, in
of loan product, value of security and other qualitative	relation to income recognition, asset classification,
factors and is subject to the minimum provisioning	provisioning pertaining to advances and
norms specified by RBI and approved policy of the Bank	investments and compliances of other regulatory
in this regard.	guidelines issued by the RBI.
The Management of the Bank also makes an assessment	- Testing on sample basis the accuracy of the data
of the impact on borrowers'' accounts which were	input in the system for income recognition,
restructured as per RBI Circulars issued to provide relief	classification into performing and nonperforming
to the borrowers.	Advances and provisioning in accordance with the IRACP norms.
	- Selected the sample borrowers based on
	quantitative and qualitative risk factors for their assessment of appropriate classification as NPA including computation of overdue ageing to assess its correct classification and provision amount as per extant IRACP norms and the Bank policy.
	- Performed other procedures including substantive
	audit procedures covering the identification of NPAs by the Bank. These procedures included:

Key Audit Matters	How our audit addressed the Key Audit Matters
Significant judgements and estimates for NPA	(a)	Considering testing of the exception reports
identification and provisioning could give rise to		generated from the application software and the
material misstatements on:		systems where the advances have been recorded;
- Completeness and timing of recognition of non-	(b)	Considering the accounts reported by the Bank
performing assets in accordance with criteria as		and other banks as Special Mention Accounts
per IRACP norms.		("SMA") in RBI''s central repository of information
- Measurement of the provision for non-		on large credits (CRILC) to identify stress;
performing assets based on loan exposure,	(c)	Reviewing account statements, appraisal note,
ageing and classification of the loan, realizable		audited financial statements, drawing power
value of security;		calculation, security and other related documents
- Appropriate reversal of unrealized income on the NPAs		and information of the sample borrowers selected based on quantitative and qualitative risk factors;
Since the identification of NPAs and provisioning of advances (including additional provisions arising out of COVID-19 pandemic) requires proper mechanism and significant level of estimation and given its significance to the overall audit, including possible observation by RBI which could result into disclosure in the financial	(d)	Reading of minutes of management committee and credit committee meetings and performing inquiries with the credit and risk departments to ascertain if there were indicators of stress or an occurrence of an event of default in a loan account or any product;
statements, we have ascertained identification of	(e)	Considering Internal Audit, Systems Audit, Credit
NPAs and provisioning against such NPAs as a key		Audit, Concurrent Audit, stock and receivable
audit matter.		audit and credit appraisal as per the policies and procedures of the Bank;
	(f)	Considering the RBI Annual Financial Inspection report on the Bank, the bank''s response to the observations and other communication with RBI during the year;
	(g)	Examination of advances including stressed advances on a sample basis with respect to compliance with the RBI Master Circulars / Guidelines.
		For NPAs identified, we, based on our sample factors including stressed sectors and account materiality, tested the asset classification dates, value of available security and provisioning as per IRACP norms. We recomputed the provision for NPA after considering the key input factors and compared our measurement outcome to that of system-generated reports and statements prepared by management.

Key Audit Matters	How our audit addressed the Key Audit Matters
(ii) Classification and Valuation of Investments, Identification of and provisioning for Non-Performing Investments
(Refer Schedule 8, Note 2 of Schedule 17 and Note 3 of Schedule 18A to the standalone financial statements)
Investments include investments made by the Bank in various Government Securities, Bonds, Debentures, Shares, Security receipts and other approved securities. These are governed by the circulars and directives of the RBI. These directions of RBI, inter-alia, cover valuation of investments, classification of investments, identification of non-performing investments (NPI),	Our audit approach/procedures included the following: - We evaluated and understood the Bank''s internal control system to comply with relevant RBI guidelines regarding valuation, classification, identification of NPIs and provisioning/depreciation related to investments;
nonrecognition of income and provisioning against NPI.	- We assessed and evaluated the process adopted for
Investments are classified into ''Held for Trading'' (''HFT''), ''Available for Sale'' (''AFS'') and ''Held to Maturity'' (''HTM'')	collection of information from various sources for determining market value of these investments;
categories at the time of purchase. Investments, which	- For the selected sample of investments in hand,
the Bank intends to hold till maturity are classified as	we tested accuracy and compliance with the RBI
HTM investments.	Master Circulars and directions by re-performing
Investments classified as HTM are carried at amortised cost. Where in the opinion of management, a diminution, other than temporary, in the value of investments has taken place, appropriate provisions	valuation for each category of the security. Samples were selected after ensuring that all the categories of investments (based on nature of security) were covered in the sample;
are made.	- We assessed and evaluated the process of
Investments classified as AFS and HFT are marked-to-market on a periodic basis as per the relevant	identification of NPIs and corresponding reversal of income and creation of provision;
RBI guidelines.	- We carried out substantive audit procedures to
The valuation of each category (type) of the aforesaid securities is to be done as per the method prescribed in circulars and directives issued by the RBI which involves collection of data/information from various sources such as FBIL /FIMMDA rates, rates quoted on BSE/NSE, financial statements of unlisted companies etc.	recompute independently the provision to be maintained 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
Considering the complexities and extent of judgement involved in the valuation, volume of transactions, investments on hand and degree of regulatory focus, this has been determined as a Key Audit Matter.	sample of NPIs; - We tested the mapping of investments between the Investment application software and the financial statement preparation software to
Accordingly, our audit was focused on valuation of	ensure compliance with the presentation and
investments, classification, identification of NPI and	disclosure requirements as per the aforesaid RBI
provisioning related to investments.	Circular/directions.

Key Audit Matters	How our audit addressed the Key Audit Matters
(iii) Assessment of Provision for Taxation (including Deferred Tax Assets) (Refer Note 14 of Schedule 17 and Note
3 of Schedule 18B to the standalone financial statements)
This matter has been identified as a Key Audit Matter	Our	key audit procedures includes:
due to the significant level of management judgement required in the estimation of provision for income taxes including any write back of provisions, due to the following factors	a.	Obtaining an understanding of the Bank''s process and respective internal controls for determining tax liabilities, tax provisions, deferred tax assets and contingent liabilities in respect of the major
a. The Bank''s assessment of provision is based on		litigations in order to design our audit procedures
facts of matter, existence of multiple uncertain tax		that are appropriate in the circumstances;
positions leading to multiple disputes / litigations	b.	Analyzing the facts of subject matter of each
b. Provision for tax involves interpretation of various		dispute, issue and matter under consideration and
rules and law. It also involves consideration of		judgements/ interpretation of law involved.
the complex issues in on-going disputes and disclosures of related contingencies.	c.	Understanding the current status of the litigations/ tax assessments in respect of each matter for
Further, significant judgements are also involved in		different years;
Assessment of Liability, Adequacy of provisions and Adequacy of disclosures for measuring such obligations.	d.	Discussion with appropriate senior management personnel, independently assessed management''s
Recognition of deferred tax assets involves the		estimate of the possible outcome of the disputed
assessment of its recoverability within the allowed time		cases; and evaluated the Management''s underlying
frame requiring significant estimate of the financial		key assumptions in estimating the tax provisions.
projections which are approved by the Bank''s Board of Directors, availability of sufficient taxable income in the future and also involving significant judgements in the interpretation of tax regulations and tax positions adopted by the Bank. Considering the judgement	e.	Considering legal precedence and other rulings in evaluating management''s position on these uncertain tax positions, the provisions made, and/ or write back of the provisions
involved in determining the recovery of deferred tax	f.	Review of the reconciliation of the underlying tax
assets, the matter is considered a Key Audit Matter		balances to supporting documentation, including correspondence with tax authorities.
	g.	Obtaining the components of deferred tax assets and estimates of taxable incomes for future periods as approved by the Board of Directors.
	h.	Evaluating management assessment for estimating availability of future taxable profits for recognition of deferred tax assets.
	i.	Assessing the period over which the deferred tax assets would be recovered against future taxable income.
	j.	Verifying the disclosures related to significant litigations and taxation matters in the standalone financial statements

Key Audit Matters

How our audit addressed the Key Audit Matters

(iv)

Litigation, Claims and Contingent Liabilities (Refer Schedule 12, Note 15 of Schedule 17 and note 14 of Schedule 18B to the standalone financial statements)

Assessment of provisions and Contingent liabilities in Our audit approach/procedures included the following: respect of certain litigations including Indirect Taxes,

- Testing the design and operating effectiveness

various claims filed by other parties not acknowledged

of the Banks key controls over the estimation,

as debt and other matters under dispute which involve

monitoring and disclosure of provisions and

significant judgement to determine the possible

contingent liabilities

outcome of these disputes.

- Obtaining an understanding of internal controls in

There is a high level of judgement required in

relation to creation of provisions and Contingent

estimating the level of provisioning for the above. The

liabilities in respect of the major litigations

Bank s assessment is supported by the facts of matter,

before various judicial forums including Indirect

their own judgement, interpretation and analysis of

Taxes, various claims filed by other parties not

the complex issues under dispute, past experience and

acknowledged as debts relevant to audit in order

orders of the judicial authorities on identical issues,

to design our audit procedures that are appropriate

and advice from legal and independent tax consultants

in the circumstances;

wherever necessary. Accordingly, unexpected adverse

outcomes may significantly impact the Bank''s - Understanding the current status of the litigations/ reported profit and state of affairs presented in the tax assessments in respect of each matter for Balance Sheet. different years;

We determined the above area as a Key Audit Matter - Examining recent orders/ communications in view of associated uncertainty relating to the received from various tax authorities/ judicial outcome of these matters which requires application forums, judicial pronouncements and follow up of judgement in interpretation of law. Accordingly, action thereon; our audit was focused on analyzing the facts of

- Evaluating the merit of the issues and subject

subject matter of each dispute, issue and matter

matter under consideration with reference to

under consideration and judgements/ interpretation

_of l_aw i_nvolved the grounds presented therein and available

independent legal/ tax advice including opinion of our internal legal/tax experts;

- Review and analysis of evaluation of the contentions of the Bank through discussions, collections of details of the subject matter under consideration, the likely outcome and consequent potential outflows on those issues; and

- Verification of disclosures related to significant litigations and indirect taxation matters.

Key Audit Matters How our audit addressed the Key Audit Matters

(v) Information Technology (''IT'') Systems and Internal Controls for financial reporting

IT systems and controls followed by the bank are - Obtaining a comprehensive understanding of IT

material from a financial reporting perspective, applications landscape implemented at the Bank,

due to the pervasive nature and complexity of the followed by process understanding, mapping of

IT environment, the large volume of transactions applications to the processes related to financial

processed in numerous locations daily and the reliance reporting and understanding financial risks posed on automated and IT dependent manual controls. by people-process and technology.

Therefore on account of these factors, there exists a

- We tested the design and operating effectiveness

risk that gaps in the IT control environment could result

of the Bank s IT access controls over the

in the financial accounting and reporting records being

information systems that are critical to financial

materially misstated.

reporting. We tested IT general controls (logical Our areas of audit focus included user access access, changes management and aspects of IT management, developer access to the production operational controls). environment and changes to the IT environment.

- This included testing that requests for access to

Appropriate IT general controls and application controls

systems were appropriately logged, reviewed and

are required to ensure that such IT systems are able to

authorized. We tested the Bank s periodic review

process the data, as required, completely, accurately,

of access rights. We inspected requests of changes

and consistently for reliable financial reporting.

to systems for approval and authorization. We In addition, there are increasing challenges to protect considered the control environment relating the integrity of the Bank''s systems and data since cyber to various interfaces, configuration and

security has become a more significant risk in recent other application layer controls identified as

periods. These are key to ensure that IT dependent and key to our audit. application-based controls are operating effectively.

- In addition to the above, we tested the design

Due to the pervasive nature and complexity of the and operating effectiveness of certain automated

IT environment as well as its importance in relation controls that were considered as key internal

to accurate and timely financial reporting, we system controls over financial reporting using

have ascertained IT systems and controls as a Key various techniques such as inquiry, review of

Audit Matter. documentation / record / reports, observation, and

re-performance.

- Where deficiencies and mismatches were identified, we tested compensating controls or performed alternate procedures.

- In addition, we understood where relevant, changes were made to the IT landscape during the audit period and tested those changes that had a significant impact on financial reporting.

- In addition, we relied on management representation which included IS audit, and also the testing of the automated system driven controls conducted by the Management.

Information other than the standalone Financial Statements and Auditor''s Report Thereon

The Bank''s Management and Board of Directors are responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Board''s report including Annexures to that Board''s Report, Business Responsibility and Sustainability Report, Corporate Governance and Shareholder''s Information, but does not include the standalone financial statements, consolidated financial statements and our auditor''s report thereon, the Pillar III disclosures under Basel III Capital Regulation, Leverage Ratio, Liquidity Coverage Ratio and Net Stable Funding Ratio. The other information is expected to be made available to us after the date of this auditor''s report.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

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

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.

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

The Bank''s Board of Directors and management are responsible for the matters stated in section 134(5) of the Act, with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 in so far as they apply to the Bank and provisions of Section 29 of the Banking Regulation Act, 1949 and circulars and guidelines issued by RBI from time to time(the "RBI Guidelines"). This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding of the assets of the Bank and for preventing and detecting frauds and other

irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, Management and Board of Directors are responsible for assessing the Bank''s 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 and board of directors either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Bank''s financial reporting process.

Auditor''s Responsibilities for the audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s 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 standalone financial statements.

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

â¢ Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

â¢ 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) of the Act, we are also responsible for expressing our opinion on whether the Bank has adequate internal financial controls system in place and the operating effectiveness of such controls;

â¢ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management and board of directors;

â¢ Conclude on the appropriateness of management''s and board of directors'' 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 Bank''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Bank to cease to continue as a going concern;

â¢ Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with Those Charged with Governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

matters in our auditor''s 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.

Report on Other Legal and Regulatory Requirements

1. 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 Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.

2. As required by sub-section (3) of section 30 of the Banking Regulation Act, 1949, we report that:

(a) 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;

(b) the transactions of the Bank, which have come to our notice, have been within the powers of the Bank; and

(c) The key operations and functions of the Bank are administered, managed and controlled by regional offices and Head Office through centralised systems and processes with automation of critical applications integrated to the software of Core Banking System, and therefore the audit was also carried out centrally based on such centralised systems and processes with automation of critical applications by review of the relevant records, documents and data required for the purposes of our audit available centrally through such applications/ platform. Further, we visited 41 major branches to examine the operations and functioning of the branch and review the records/registers/ documents maintained at such branches as part of our audit processes and procedures.

(d) the profit and loss account shows a true balance profit for the year then ended.

3. Further, as required by section 143(3) of the Act, we report that:

(a) 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;

(b) 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;

(c) The Standalone Balance Sheet, the Standalone Profit and Loss Account, the Standalone Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, to the extent they are not inconsistent with the accounting policies prescribed by RBI;

(e) On the basis of written representations received from the directors as on March 31, 2023, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2023, from being appointed as a director in terms of Section 164(2) of the Act;

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Bank with reference to these standalone financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure A" to this report;

(g) With respect to the matters to be included in the Auditor''s Report under Section 197(16) of the Act:

The Bank is a banking company as defined under Banking Regulation Act, 1949. Accordingly, the requirements prescribed under Section 197 of the Companies Act, 2013 do not apply by virtue of Section 35B(2A) of the Banking Regulation Act, 1949, and;

(h) With respect to the other matters to be included in the Auditor''s 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

i. The Bank has disclosed the impact of pending litigations on its financial position in its standalone financial statements - as

per details furnished in Schedule 12 and Sl.no 1 of Note 14 under Schedule 18B to the standalone financial statements;

ii. The Bank has made provision, as required under the applicable laws or accounting standards, for material foreseeable losses, if any, on long term contracts including derivative contracts - as per details furnished in Note 15 under Schedule 18B to the standalone financial statements; and

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Bank.

iv. (a) The management has represented that, to the best of its knowledge and belief, other than as disclosed in Note 20 of Schedule 18B of the notes to the standalone financial statements, 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 persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Bank ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(b) Further, the management has represented, that, to the best of its knowledge and belief, other than as disclosed in in Note 20 of Schedule 18B of the notes to the standalone financial statements, no funds have been received by the Bank from any persons or entities, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Bank shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries and

(c) Based on such audit procedures performed, that were considered reasonable and appropriate by us in the circumstances and according to

and accordingly, the requirement of reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023.

Other Matter

The audit of standalone financial statements of the Bank for the year ended March 31, 2022 was conducted by CNK & Associates LLP, Chartered Accountants and Varma and Varma, Chartered Accountants, the joint statutory auditors of the Bank, who have expressed an unmodified opinion on those financial statements. Accordingly, we, K Venkatachalam Aiyer & Co. Chartered Accountants, do not express any opinion on the figures reported in the standalone financial statements for the year ended / as at March 31, 2022.

Our opinion on the standalone financial statement is not modified in respect of the above matter.

the information and explanations provided to us by the Management in this regard, nothing has come to our notice that has caused us to believe that the management representations made under subclause (a) and (b) contain any material misstatement.

v. The Board of Directors, in their meeting held on May 11, 2023 have proposed final dividend of ? 0.30 per equity share (30%) for the year ended March 31, 2023 amounting to '' 62.78 Crores. The proposal is subject to the approval of shareholders at the Annual General Meeting as stated in note 21 of Schedule 18B to the Standalone Financial Statements.

vi. Provisions of the Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of accounts using accounting software which has features of recording audit trail (Edit log) facility are applicable to the Bank with effect from April 1, 2023,

Mar 31, 2022

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of The South Indian Bank Limited (''the Bank''), which comprise the Balance Sheet as at March 31, 2022, the Profit and Loss Account, the Cash Flow statement for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 2013 (''the Act'') in the manner so required for banking Companies and give a true and fair view in conformity with accounting principles generally accepted in India, of the state of affairs of the Bank as at March 31,2022, and its profit and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the ''Auditor''s Responsibilities for the Audit of the Standalone Financial Statements'' section of our report. We are independent of the Bank in accordance with the "Code of Ethics" issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the standalone 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 sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Emphasis of Matter

We draw attention to Note No.B.11.(ii) of schedule 18 of

the accompanying statement of Audited standalone financial statements regarding amortization of the additional liability on account of revision in family pension to the extent of '' 43 crores over a period of seven quarters beginning with the quarter ended September 30, 2021, in accordance with the permission granted by Reserve Bank of India (RBI). As also stated in the said Note, an amount of '' 18.42 crores has been written off during the year ended March 31, 2022, and the balance amounting to '' 24.58 crores has been carried forward as unamortized expenditure. If the balance liability as above had been written off during the current year, the net profit for the year ended March 31, 2022, would have been lower by '' 24.58 crores.

Our opinion is not modified in respect of this matter.

Key Audit Matters

Key Audit Matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the financial year ended March 31, 2022. These matters were addressed in the context of our audit of the standalone financial statements, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

Description of Key Audit Matters

Key Audit Matters

How our audit addressed the Key Audit Matters

(i)

Adoption of Centralized Statutory Branch Audit

During the FY 2021 - 22, with an objective to reduce the time and effort involved in the financial statements closure process, the Bank discontinued the process of appointing Branch Statutory Auditors and has implemented verticalization of its processes and centralization of audits of its branch network.

Accordingly, in FY 2021-22 the Joint Statutory Auditors have conducted a Centralized Statutory Branch Audit based on the bank regions allocated and agreed upon mutually.

Centralization of audit generally leads to concentration of audit work at the Head Office for all departments like Corporate Financial Management (CFM), Credit Monitoring, Management Information System (MIS) cell in Data Science Department (which includes uploading of data on a cloud-based platform).

Since the centralization of audit was adopted for the first time by the Bank, we considered this as a Key Audit Matter.

Our audit approach/procedures included the following:

- Understanding the implementation of the internal controls adopted by the bank w.r.t centralization of branch audits including the information / data to be uploaded on the VDR platform.

- Selection of Branches for performing a detailed audit for selective branches The basis of sample branches selected by us include criteria''s like:

a. Top 20 branches in accordance with the RBI circular ''Norms on eligibility, empanelment and appointment of Statutory Branch Auditors in Public Sector Banks from the year 2020-21 and onwards;

b. Branches with top Advances;

c. Branches with Stressed Portfolios.

- Review of selective branches'' data through virtual environments

- Verification of the Banking operations undertaken by the Branches and whether the same are in line with the Bank''s policies and procedures;

- Verification of advances based on its classification and NPA provisioning as per IRAC norms;

- Review of Inspection/ Concurrent Audit / Credit Audit Reports related to the selected branches;

- Analysis of Bank Level Data for Advances, Stressed Advances, Restructured Advances and Non Performing Advances. Reperformance of interest calculation of selective data. Also reviewed documentation for advances for samples selected at Bank Level ;

- Analysis of Bank Level data for Deposits, Current Accounts and Saving Bank Accounts details and reperformance of interest calculation of selective data;

- Analysis of Bank Level data for expenditure and other accounts;

- Interaction with respective departments at head office and head of verticals related to Branch Operation;

- Compliance with the RBI regulations

Key Audit Matters	How our audit addressed the Key Audit Matters
(ii) Classification of Advances, identification of	non-performing advances, Income Recognition, and
provisioning on Advances (Refer Schedule 8 read with Note 2 of Schedule 17 to the standalone financial
statements)
Advances include Bills purchased and discounted,	Our audit approach / procedures included the following:
Cash credits, Overdrafts, Loans repayable on demand and Term loans. These are further categorized as secured by Tangible assets (including advances against Book Debts), covered by Bank/Government Guarantees and Unsecured advances;	- Understanding and considering the Bank''s accounting policies for NPA identification and provisioning and assessing compliance with the prudential norms prescribed by the RBI (IRACP Norms) including the additional provisions
	made on advances.
RBI prescribes the prudential norms for income recognition, asset classification and provisioning of non-performing assets (including circulars in relation to COVID-19 Regulatory Package - Asset Classification and Provisioning) (IRACP Norms) and prescribes the minimum provision required for such	- Understanding, evaluation and testing the design and operating effectiveness of key controls (including application controls) for identification and provisioning of impaired accounts based on the extant guidelines on IRACP laid down by the RBI.
assets.	- Performing other procedures including substantive audit
The identification of performing and nonperforming advances involves establishment of	procedures covering the identification of NPAs by the Bank. These procedures included:
proper mechanism, and the bank is required to	(a) Considering testing of the exception reports generated
apply significant degree of judgement to identify	from the application systems where the advances have
and determine the amount of provision required	been recorded;
against each non-performing asset (''NPA'') applying both quantitative as well as qualitative factors prescribed by the regulations.	(b) Considering the accounts reported by the Bank and other banks as Special Mention Accounts ("SMA") in RBI''s central repository of information on large credits
Significant judgements and estimates for NPA	(CRILC) to identify stress;
identification and provisioning could give rise to material misstatements on:	(c) Reviewing account statements and other related
	information of the borrowers selected based on
- Completeness and timing of recognition of non-	quantitative and qualitative risk factors;
performing assets in accordance with criteria as per IRACP norms.	(d) Reading of minutes of management committee and credit committee meetings and performing inquiries
- Measurement of the provision for non-	with the credit and risk departments to ascertain if
performing assets based on loan exposure,	there were indicators of stress or an occurrence of an
ageing and classification of the loan, realizable	event of default in a loan account or any product;
value of security;	(e) Considering Internal Audit, Systems Audit, Credit Audit
- Appropriate reversal of unrealized income on	and Concurrent Audit as per the policies and procedures
the NPAs	of the Bank;
Since the identification of NPAs and provisioning of advances requires proper mechanism and significant level of estimation and given its significance to the overall audit, we have ascertained identification of NPAs and provisioning of advances as a key audit matter.	(f) Considering the RBI Annual Financial Inspection report on the Bank, the bank''s response to the observations and other communication with RBI during the year; (g) Examination of advances including stressed advances on a sample basis with respect to compliance with the
	RBI Master Circulars / Guidelines.
	For NPAs identified, we, based on our sample on factors including stressed sectors and account materiality, tested the asset classification dates, value of available security and provisioning as per IRACP norms. We recomputed the provision for NPA after considering the key input factors and compared our measurement outcome to that prepared by management.

Key Audit Matters	How our audit addressed the Key Audit Matters
(iii) Classification and Valuation of Investments,	Identification of and provisioning for Non-Performing
Investments (Schedule 8 read with Note 2 of Schedule 17 to the standalone financial statements)
Investments include investments made by the	Our audit approach/procedures included the following:
Bank in various Government Securities, Bonds,	- We evaluated and understood the Bank''s internal control
Debentures, Shares, Security receipts and other approved securities. These are governed by the circulars and directives of the RBI These directions	system to comply with relevant RBI guidelines regarding valuation, classification, identification of N PIs and
of RBI, inter-alia, cover valuation of investments,	provisioning/depreciation related to investments;
classification of investments, identification of non-	- We assessed and evaluated the process adopted for
performing investments (NPI), nonrecognition of	collection of information from various sources for
income and provisioning against NPI.	determining market value of these investments;
Investments are classified into ''Held for Trading''	- For the selected sample of investments in hand, we tested
(''HFT''), ''Available for Sale'' (''AFS'') and ''Held to	accuracy and compliance with the RBI Master Circulars and
Maturity'' (''HTM'') categories at the time of purchase.	directions by re-performing valuation for each category of
Investments, which the Bank intends to hold till	the security. Samples were selected after ensuring that all
maturity are classified as HTM investments.	the categories of investments (based on nature of security)
Investments classified as HTM are carried at amortised	were covered in the sample;
cost. Where in the opinion of management, a	- We assessed and evaluated the process of identification of
diminution, other than temporary, in the value of	NPIs and corresponding reversal of income and creation of
investments has taken place, appropriate provisions	provision;
are made.	- We carried out substantive audit procedures to recompute
Investments classified as AFS and HFT are marked-	independently the provision to be maintained in accordance
to-market on a periodic basis as per the relevant RBI	with the circulars and directives of the RBI. Accordingly, we
guidelines.	selected samples from the investments of each category and
The valuation of each category (type) of the aforesaid securities is to be done as per the method prescribed in circulars and directives issued by the	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; and
RBI which involves collection of data/information	- We tested the mapping of investments between the
from various sources such as FBIL /FIMMDA rates,	Investment application software and the financial
rates quoted on BSE/NSE, financial statements of	statement preparation software to ensure compliance with
unlisted companies etc.	the presentation and disclosure requirements as per the
Considering the complexities and extent of judgement involved in the valuation, volume of transactions, investments on hand and degree of regulatory focus, this has been determined as a Key Audit Matter.	aforesaid RBI Circular/directions.
Accordingly, our audit was focused on valuation of investments, classification, identification of NPI and provisioning related to investments.

	Key Audit Matters	How our audit addressed the Key Audit Matters
(iv)	Assessment of Provisions and Contingent Liabilities (Refer Note 15 of Schedule 17 to the standalone financial statements)
	Assessment of provisions and Contingent liabilities in respect of certain litigations including Direct and Indirect Taxes, various claims filed by other parties not acknowledged as debt. There is a high level of judgement required in estimating the level of provisioning for the above. The Bank''s assessment is supported by the facts of matter, their own judgement, past experience, and advice from legal and independent tax consultants wherever necessary. Accordingly, unexpected adverse outcomes may significantly impact the Bank''s reported profit and state of affairs presented in the Balance Sheet. We determined the above area as a Key Audit Matter in view of associated uncertainty relating to the outcome of these matters which requires application of judgement in interpretation of law. Accordingly, our audit was focused on analyzing the facts of subject matter under consideration and judgements/ interpretation of law involved.	Our audit approach/procedures included the following: - Obtaining an understanding of internal controls relevant to audit in order to design our audit procedures that are appropriate in the circumstances; - Understanding the current status of the litigations/ tax assessments; - Examining recent orders/ communications received from various tax authorities/ judicial forums and follow up action thereon; - Evaluating the merit of the subject matter under consideration with reference to the grounds presented therein and available independent legal/ tax advice including opinion of our internal tax experts; - Review and analysis of evaluation of the contentions of the Bank through discussions, collections of details of the subject matter under consideration, the likely outcome and consequent potential outflows on those issues; and - Verification of disclosures related to significant litigations and taxation matters.
(v)	Information Technology (''IT'') Systems and Controls for financial reporting
	IT systems and controls followed by the bank are material from a financial reporting perspective, due to the pervasive nature and complexity of the IT environment, the large volume of transactions processed in numerous locations daily and the reliance on automated and IT dependent manual controls. Our areas of audit focus included user access management, developer access to the production environment and changes to the IT environment. These are key to ensure that IT dependent and application-based controls are operating effectively. Due to the pervasive nature and complexity of the IT environment we have ascertained IT systems and controls as a Key Audit Matter.	- We tested the design and operating effectiveness of the Bank''s IT access controls over the information systems that are critical to financial reporting. We tested IT general controls (logical access, changes management and aspects of IT operational controls). - This included testing that requests for access to systems were reviewed and authorized. We tested the Bank''s periodic review of access rights. We inspected requests of changes to systems for approval and authorization. We considered the control environment relating to various interfaces, configuration and other application layer controls identified as key to our audit. - In addition to the above, we tested the design and operating effectiveness of certain automated controls that were considered as key internal controls over financial reporting.
		- Where deficiencies were identified, we tested compensating controls or performed alternate procedures. In addition, we understood where relevant, changes were made to the IT landscape during the audit period and tested those changes that had a significant impact on financial reporting.

Information other than the standalone Financial Statements and Auditor''s Report Thereon

The Bank''s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual Report but does not include the standalone financial statements, consolidated financial statements and our auditor''s report thereon and the Pillar III disclosures under Basel III Capital Regulation, Leverage Ratio, Liquidity Coverage Ratio and Net Stable Funding Ratio. The other information as above is expected to be made available to us after the date of this auditor''s report.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements, or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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

The Bank''s Board of Directors is responsible for the matters stated in section 134(5) of the Act, with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, in so far as they apply to the Bank 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, Management and Board of Directors are responsible for assessing the Bank''s 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.

Those Board of Directors are also responsible for overseeing the Bank''s financial reporting process.

Auditor''s Responsibilities for the audit of the Standalone Financial Statements

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 standalone financial statements

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

â¢ 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) of the Act, we are also responsible for expressing our opinion on whether the Bank has adequate internal financial controls system in place and the operating effectiveness of such controls;

â¢ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management and board of directors;

â¢ Conclude on the appropriateness of management''s 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 Bank''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Bank to cease to continue as a going concern;

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.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements for the financial year ended March 31,2022 and are therefore the key audit matters. We describe these matters in our auditor''s 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.

Report on Other Legal and Regulatory Requirements

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 Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.

As required by sub-section (3) of section 30 of the Banking Regulation Act, 1949, 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 purpose 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) 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. However, during the course of our audit we have visited 35 branches to examine the records maintained at such branches for the purpose of our audit.

(d) the profit and loss account shows a true balance of profit for the year then ended

Further, as required by section 143(3) of the Act, we report that:

a) 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;

b) 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;

c) 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;

d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, to the extent they are not inconsistent with the accounting policies prescribed by RBI;

e) On the basis of written representations received from the directors as on March 31, 2022, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2022, from being appointed as a director in terms of Section 164(2) of the Act;

f) With respect to the adequacy of the internal financial controls over financial reporting of the Bank with reference to these standalone financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure A" to this report;

g) With respect to the matters to be included in the Auditor''s Report under Section 197(16) of the Act:

The Bank is a banking company as defined under Banking Regulation, 1949. Accordingly, the requirements prescribed under Section 197 of the Companies Act, 2013 do not apply by virtue of Section 35B(2A) of the Banking Regulation Act, 1949, and;

i) With respect to the other matters to be included in the Auditor''s 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

i. The Bank has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Schedule 12.I and Sl.no 1 of Note B.14 under Schedule 18 to the standalone financial statements;

ii. The Bank has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long term contracts including derivative contracts - Refer Note B.15 under Schedule 18 to the standalone financial statements; and

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Bank.

iv(a)The management has represented that, to the best of its knowledge and belief, other than as disclosed in the Note B. 20 of Schedule 18

to the accompanying statement of Audited standalone financial statements, 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 persons or entities, including foreign entities ("Intermediaries"), with the understanding, recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(b) Further, the management has represented, that, to the best of its knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been received by the Bank from any persons or entities, including foreign entities ("Funding Parties"), with the understanding, recorded in writing or otherwise, that the Bank shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries and

(c) Based on such audit procedures that were considered reasonable and appropriate by us in the circumstances, nothing has come to our notice that has caused us to believe that the representations under subclause (i) and (ii) of Rule 11 (e), as provided under (a) and (b) above, contain any material misstatement.

v. During the financial year, the Bank has not declared/ paid any dividend and hence, the related reporting requirements under subclause (f) of Rule 11 of the Companies (Audit and Auditors) Rules 2014 is not applicable.

For Varma and Varma For CNK & Associates LLP

Chartered Accountants Chartered Accountants

Firm Registration No. 004532S Firm Registration No.

101961W/W-100036

Vivek Krishna Govind Hiren Shah

Partner Partner

Membership No. 208259 Membership No. 100052

UDIN:22208259AIWMTQ1575 UDIN:

22100052AIWOCM5631

Place: Kochi

Date: May 12, 2022 Place: Thrissur

Date: May 12, 2022

Mar 31, 2019

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of The South Indian Bank Limited ("the Bank"), which comprise the Balance Sheet as at March 31, 2019, the Profit and Loss Account, the Cash Flow Statement for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information in which are included the returns for the year ended on that date audited by the branch auditors of the Bank''s branches located at across India.

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 and the Companies Act, 2013 ("the Act") in the manner so required for the banking companies and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Bank as at March 31, 2019, its profit and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the Standards on Auditing (SAs), as specified under Section 143(10) of the Act. Our responsibilities under those Standards are further described in the ''Auditor''s Responsibilities for the Audit of the Financial Statements'' section of our report. We are independent of the Bank in accordance with the ''Code of Ethics'' issued by the Institute of Chartered Accountants of India together with 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 sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

Emphasis of Matter

We draw attention to Schedule 18.A.31(a)(i) to the financial statements regarding deferment of additional provision requirement on account of Debt Asset Swap transactions ("DAS") entered into by the Bank in earlier years pursuant to the Reserve Bank of India''s letter dated May 2, 2019 ref. DBS(T) No./424/02.02.006/2018-19 to the bank prescribing asset classification and provisioning norms for DAS transactions and the unamortized balance of Rs.33 crores as at March 31, 2019.

Our opinion is not qualified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the financial year ended March 31, 2019. 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. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor''s responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements.

Key audit matters

How our audit addressed the key audit matter

Classification and Provisioning of Advances (Refer note Schedule 17.3 and Schedule 18.A.9 and to the financial statements)

The Reserve Bank of India (''RBI'') prescribes the prudential norms for identification and classification of Non-performing assets (IRAC Norms) and prescribes the minimum provision required for such assets. However, the bank is required to apply significant degree of judgement to identify and determine the amount of provision required against each non-performing asset (''NPA'') criteria applying both quantitative as well as qualitative factors prescribed by the regulations.

At year end the Bank reported total gross non-performing advances of Rs.313,167 Lakhs (2018: Rs.198,030 Lakhs) and nonperforming asset provision of Rs.93,782 Lakhs (2018: Rs.54,106 Lakhs).

The audit procedures performed, among others, included:

- Understanding and considering the Bank''s accounting policies for NPA identification and provisioning and assessing compliance with the prudential norms prescribed by the RBI (IRAC Norms).

- We understood, evaluated and tested the design and operating effectiveness of key controls (including application controls) around identification and provisioning of impaired accounts based on the extant guidelines on IRAC laid down by the RBI.

key audit matters

How our audit addressed the key audit matter

Significant judgements and estimates around NPA identification and provisioning could give rise to material misstatements on:

- Completeness and timing of recognition of non-performing assets in accordance with criteria as per IRAC norms;

- Measurement of the provision for non-performing assets based on loan exposure, ageing and classification of the loan, realizable value of security;

Since the identification of NPAs and provisioning of advances requires significant level of estimation and given its significance to the overall audit, we have ascertained identification and provisioning of NPAs as a key audit matter.

- We performed other procedures including substantive audit procedures covering the identification of NPAs by the Bank. These procedures included:

- Considering testing of the exception reports generated from the application systems where the advances have been recorded.

- Considering the accounts reported by the Bank and other banks as Special Mention Accounts ("SMA") in RBI''s central repository of information on large credits (CRILC) to identify stress

- Reviewing account statements and other related information of the borrowers selected based on quantitative and qualitative risk factors

- Reading of minutes of management committee and credit committee meetings and performing inquiries with the credit and risk departments to ascertain if there were indicators of stress or an occurrence of an event of default in a loan account or any product

- Considering audit reports and memorandum of changes issued by branch auditors

- Considering the RBI Annual Financial Inspection report on the Bank, the bank''s response to the observations and other communication with RBI during the year

- For Non- performing advances identified we based on our sample on factors including stressed sectors and account materiality tested the asset classification dates, value of available security and provisioning as per IRAC norms. We recomputed the provision of NPA based after considering the key input factors and compared our measurement outcome to that prepared by management and investigated any differences arising.

Pension valuation, retirement benefit obligations and provision for wage revisions

The Bank operates defined benefit schemes like gratuity, pension and leave benefits for its employees which in total are significant in the context of the overall balance sheet. At year end the Bank reported a pension liablity of Rs.70,021 Lakhs (2018: Rs.65,013 Lakhs), and gratuity provision of Rs.21,644 Lakhs (2018: Rs.21,150 Lakhs). Further, it has also provided for provision towards wage revision in anticipation towards negotiation between Banks and its employees in the current financial year.

The valuations of the employee benefit liabilities are calculated with reference to multiple actuarial assumptions and inputs including discount rate, rate of inflation and mortality rates. The net defined benefit asset is sensitive to changes in the assumptions.

- We tested the design and operating effectiveness of key controls over the completeness and accuracy of data extracted and supplied to the Bank''s actuaries, which is used to calculate the defined benefit schemes'' surplus or deficit.

- We also tested the controls associated with the actuarial assumptions setting process and the measurement of the fair value of the schemes'' assets.

- We understood the judgements made in determining the assumptions used by management to value the retirement benefit liabilities and we examined whether these assumptions met the requirements of the applicable accounting standards, the specific circumstances of the schemes and their participants, and were in line with market practice.

key audit matters

How our audit addressed the key audit matter

Further, regarding wage revision the management has made provisions based on previous experience, progress of ongoing negotiations with trade unions and other market factors, involving significant level of judgements and estimates.

Considering the significant level of judgements and estimates and the materiality involved, we have included this as a Key audit matter.

- Our audit procedures included an assessment of the assumptions used by the actuary by comparing life expectancy assumptions with relevant mortality tables, benchmarking inflation and discount rates against external market data. We have also evaluated the independence, qualifications and results of work performed by management''s actuaries involved in the valuation process.

- We agreed the value of plan assets to the statements provided by asset management companies managing the plan assets.

- Verified the disclosures provided by the Bank in accordance with AS 15(R) Employee Benefits.

- Regarding the estimate on wage revision, we discussed and understood the wage negotiation process and understood the key assumptions used for estimating the provision and compared the same for consistency and reasonability based on past experience.

Information Technology (''IT'') systems and Controls for financial reporting

Our audit procedures have a focus on those IT systems and controls which are material from a financial reporting perspective, due to the pervasive nature and complexity of the IT environment, the large volume of transactions processed in numerous locations daily and the reliance on automated and IT dependent manual controls. Our areas of audit focus included user access management, developer access to the production environment and changes to the IT environment. These are key to ensuring IT dependent and application based controls are operating effectively.

Due to the pervasive nature and complexity of the IT environment we have ascertained IT systems and controls as a Key audit matter.

- We tested the design and operating effectiveness of the Bank''s IT access controls over the information systems that are critical to financial reporting. We tested IT general controls (logical access, changes management and aspects of IT operational controls). This included testing that requests for access to systems were reviewed and authorised. We tested the Bank''s periodic review of access rights. We inspected requests of changes to systems for approval and authorisation. We considered the control environment relating to various interfaces, configuration and other application layer controls identified as key to our audit.

- In addition to the above, we tested the design and operating effectiveness of certain automated controls that were considered as key internal controls over financial reporting.

- Where deficiencies were identified, we tested compensating controls or performed alternate procedures. In addition, we understood where relevant, changes were made to the IT landscape during the audit period and tested those changes that had a significant impact on financial reporting.

Information other than the financial statements and auditor''s report Thereon

The Bank''s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the financial statements and our auditor''s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information 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. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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

The Bank''s Board of Directors is 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 financial position, financial performance, cash flows of the Bank in accordance with the provisions of Section 29 of the Banking Regulation Act, 1949, accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014 in so far as they apply to the Bank provision of Section 29 of the Banking Regulation Act, 1949 and the circulars, guidelines and directions issued by 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 the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Bank''s 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. Those Charged with Governance are also responsible for overseeing the Bank''s financial reporting process.

Auditor''s Responsibilities for the Audit of the Financial statements

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 auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

- 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) of the Act, we are also responsible for expressing our opinion on whether the Bank has adequate internal financial controls system in place and the operating effectiveness of such controls.

- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

- Conclude on the appropriateness of management''s 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 Bank''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s 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 auditor''s 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.

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.

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 financial year ended March 31, 2019 and are therefore the key audit matters. We describe these matters in our auditor''s 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.

Report on Other Legal and Regulatory Requirements

1. 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 read with Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.

2. As required sub Section (3) of Section 30 of the Banking Regulation Act, 1949 and the appointment letter dated June 12, 2018, 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 purpose 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 purpose of our audit.

3. As required by Section 143(3) of the Act, we report that:

(a) 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;

(b) 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 the branches not visited by us;

(c) The reports on the accounts of the branch offices of the Bank audited under Section 143(8) of the Act by branch auditors have been sent to us and have been properly dealt with by us in preparing this report;

(d) The Balance Sheet, the Profit and Loss Account, the Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the returns received from the branches not visited by us;

(e) In our opinion, the aforesaid financial statements comply with the Companies (Accounting Standards) Rules, 2006 (as amended) specified under Section 133 of the Act, read with the Companies (Accounts) Rules, 2014 to the extent they are not inconsistent with the accounting policies prescribed by RBI;

(f) On the basis of the written representations received from the directors as on March 31, 2019 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2019 from being appointed as a director in terms of Section 164 (2) of the Act;

(g) With respect to the adequacy of the internal financial controls over financial reporting of the Bank with reference to these financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 1" to this report;

(h) In our opinion, the entity being a banking company, the remuneration to its directors during the year ended March 31, 2019 has been paid/provided by the Bank in accordance with the provisions of Section 35B (1) of the Banking Regulation Act, 1949, and;

(i) With respect to the other matters to be included in the Auditor''s 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:

i. The Bank has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Schedule 12.I and Schedule 18.B Note 9(1) to the financial statements;

ii. The Bank has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long term contracts including derivative contracts - Refer Schedule 18.B Note 9(2) to the financial statements;

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

ANNEXURE 1 TO THE INDEPENDENT AUDITOR''S REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS OF THE SOUTH INDIAN BANK LIMITED Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of The South Indian Bank Limited ("the Bank") as of March 31, 2019 in conjunction with our audit of the financial statements of the Bank for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

The Bank''s 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 Bank''s 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 Companies Act, 2013.

Auditor''s Responsibility

Our responsibility is to express an opinion on the Bank''s 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") and the Standards on Auditing as specified under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls and, both issued by the Institute of Chartered Accountants of India. 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 was 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 system 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 control based on the assessed risk. The procedures selected depend on the auditor''s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A bank''s internal financial control 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 bank''s internal financial control 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 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 bank''s 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 control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Bank has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2019, 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.

For S. R. Batliboi & Co. LLP

Chartered Accountants

Firm''s Registration No.: 301003E/E300005

per Shrawan Jalan

Partner

Membership No.: 102102

Place : Mumbai

Date : May 09, 2019

Mar 31, 2018

TO THE MEMBERS OF THE SOUTH INDIAN BANK LIMITED

Report on the Financial Statements

1. We have audited the accompanying financial statements of The South Indian Bank Limited ("the Bank"), which comprise the Balance Sheet as at March 31, 2018, the Profit and Loss Account and the Cash Flow statement for the year then ended, and a summary of significant accounting policies and notes to the financial statements and other explanatory information in which are incorporated the returns of 16 branches / offices audited by us, 843 branches and 20 offices audited by the branch auditors of the Bank for the year ended on that date.

Management''s Responsibility for the Financial Statements

2. The Bank''s Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with the provisions of Section 29 of the Banking Regulation Act, 1949, accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014 in so far as they apply to the Bank provision of section 29 of the Banking Regulation Act, 1949 and the circulars, guidelines and directions issued by Reserve Bank of India ("RBI") from time to time.

3. 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 the design, implementation and maintenance of adequate internal financial control, 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.

Auditor''s Responsibility

4. Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India, as specified under section 143(10) of the Act. 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.

5. 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 financial control relevant to the Bank''s preparation of the financial statements that give a true and fair view 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 Bank''s Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

Opinion

6. In our opinion and to the best of our information and according to the explanations given to us, the financial statements together with the notes thereon give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 2013, in the manner so required for the banking companies and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Bank as at March 31, 2018, its profit and its cash flows for the year ended on that date.

Emphasis of Matter

7. Without modifying our opinion, we draw attention to note no. 18.B.6 (d) regarding deferment of additional provision requirement on account of the enhancement in gratuity limits as per the amendment dated March 29, 2018 in Payment of Gratuity Act, 1972 in terms of the Reserve Bank of India approval vide letter no. DBR. BP9730/21.04.018/2017-18 dated April 27, 2018, and the unamortised balance as at March 31, 2018 of ''20.45 Crores.

Report on Other Legal and Regulatory Requirements

8. 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 read with Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.

9. As required sub Section (3) of Section 30 of the Banking Regulation Act, 1949 and the appointment letter dated July 11, 2017, 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 purpose 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

10. Further, as required by Section 143(3) of the Companies Act, 2013, we further report that:

(a) 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;

(c) The reports on the accounts of the branch offices audited by branch auditors of the Bank under Section 143(8) of the Companies Act, 2013 have been sent to us and have been properly dealt with by us in preparing this report;

(d) 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 and with the returns received from the branches not visited by us;

(e) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 to the extent they are not inconsistent with the accounting policies prescribed by RBI;

(f) On the basis of written representations received from the directors as on March 31, 2018 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2018 from being appointed as a director in terms of Section 164 (2) of the Act;

(g) With respect to the adequacy of the internal financial controls over financial reporting of the Bank and the operating effectiveness of such controls, refer to our separate Report in "Annexure 1" to this report; and

i. The Bank has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Schedule 12.I, and Schedule 18.B-Note 9(1) to the financial statements;

ii. The Bank has made provision, as required under the applicable law or accounting standards, for material foreseeable losses on long-term contracts including derivative contracts - Refer Schedule 18B-Note 9 (2) to the financial statements.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Bank.

We have audited the internal financial controls over financial reporting of The South Indian Bank Limited ("the Bank") as of March 31, 2018 in conjunction with our audit of the financial statements of the Bank for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

Auditor''s Responsibility

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Opinion

In our opinion, the Bank has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018, 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.

For S. R. Batliboi & Co. LLP

Chartered Accountants ICAI

Firm''s Registration No.: 301003E/E300005

per Shrawan Jalan

Partner

Membership Number: 102102

Place : Kochi

Date : May 14, 2018

Mar 31, 2017

TO THE MEMBERS OF THE SOUTH INDIAN BANK LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of THE SOUTH INDIAN BANK LIMITED (âthe Bank"), which comprise the Balance Sheet as at 31st March, 2017, 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 in which are incorporated the returns for the year ended on that date of 848 branches / offices audited by the branch auditors of the Bank.

Management''s Responsibility for the Financial Statements

The Bank''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with the provisions of Section 29 of the Banking Regulation Act, 1949, accounting principles generally accepted in India, including the Accounting Standards prescribed under section 133 of the Act, in so far as applicable to banks, and the Guidelines issued by the Reserve Bank of India.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Bank and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit.

In conducting our audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit of the financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. 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.

An audit involves performing procedures to obtain audit evidence about the amounts and the 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 financial controls relevant to the Bank''s preparation of the financial statements that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Bank''s Directors, and evaluating the overall presentation of the financial statements.

We believe that the audit evidence obtained by us and 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 financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of reports of the branch auditors on separate financial statements / financial information of the branches/ offices referred to in the Other Matters paragraph below, the aforesaid financial statements give the information required by the Banking Regulation Act, 1949 and the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Bank as at 31st March, 2017, and its profit and its cash flows for the year ended on that date.

Emphasis of Matter

Attention is drawn to:

i ) Note No.B. 11. A of Schedule 18 regarding deferment of shortfall arising from the sale of certain non-performing assets in terms of RBI Master Circular DBOD.No. BP BC.9/21.04.048/2014-15 on Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to advances, dated July 1, 2014, as amended and the unamortized balance as at 31st March, 2017 of Rs.76.05 Crore.

ii) Note No.C.13 of Schedule 18 regarding deferment of provisioning pertaining to a fraud account identified during the quarter ended 31st December, 2016, in terms of RBI

Circular DBR.No.BP.BC.92/21.04.048/2015-16 dated April 18, 2016 and the unamortized balance as at 31st March, 2017 of Rs.57.82 Crore.

Our opinion is not modified in respect of these matters. Other Matters

We did not audit the financial statements / financial information of 848 branches / offices included in the financial statements of the Bank whose financial statements / financial information reflect total advances of Rs. 29,731.47 Crore as at 31st March, 2017 and total interest income of Rs.3,296.30 Crore for the year ended on that date, as considered in the financial statements. The financial statements / financial information of these branches / offices have been audited by the branch auditors whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these branches / offices and our report in terms of subsection (3) of Section 143 of the Act, in so far as it relates to the aforesaid branches / offices, is based solely on the report of such branch auditors.

Our opinion on the financial statements and our report on Other Legal and Regulatory Requirements below is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143 (3) of the Act and Section 30 of the Banking Regulation Act, 1949, based on our audit and on the consideration of the reports of the branch auditors on the separate financial statements / financial information of the branches / offices, referred to in the Other Matters Paragraph above, we report to the extent applicable that:

a) 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.

b) In our opinion, the transactions of the Bank which have come to our notice have been within the powers of the Bank.

c) 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 the report of the branch auditors and proper returns adequate for the purposes of our audit have been received from the branches not visited by us.

d) The reports on the accounts of the 848 branches / offices audited by branch auditors of the Bank appointed under section 143(8) of the Act have been forwarded to us and have been properly dealt with by us in preparing this report

e) 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 and with the returns received from the branches not visited by us.

f) In our opinion, the aforesaid financial statements comply with the Accounting Standards prescribed under section 133 of the Act, as applicable to banks.

g) On the basis of the written representations received from the directors as on 31st March, 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2017 from being appointed as a director in terms of Section 164 (2) of the Act.

h) With respect to the adequacy of the internal financial controls over financial reporting of the Bank, its branches / offices and the operating effectiveness of such controls, refer to our separate report in "Annexure A". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Bank''s internal financial controls over financial reporting.

i. The Bank has disclosed the impact of pending litigations on its financial position in its financial statements;

ii. The Bank has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Bank.

iv. The disclosure with respect to the holdings or dealings in Specified Bank Notes as defined in the Notification S.O. 3407(E) dated 8th November, 2016 of the Ministry of Finance, during the period from 8th November, 2016 to 30th December, 2016 as required under amendment to Schedule III to the Companies Act, 2013, is not applicable as the financial statements of the Bank are prepared under section 29 and Third Schedule of the Banking Regulation Act, 1949.

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act").

ANNEXURE "A" TO THE INDEPENDENT AUDITOR''S REPORT (Referred to in paragraph 1(h) under ''Report on Other Legal and Regulatory Requirements'' section of the auditor''s report of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act").

We have audited the internal financial controls over financial reporting of THE SOUTH INDIAN BANK LIMITED ("the Bank") as at 31st March, 2017 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 of the Bank''s branches / offices.

Management''s Responsibility for Internal Financial Controls

The Bank''s 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 (''the Guidance Note'') issued by the Institute of Chartered Accountants of India (ICAI). 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 Bank''s 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, the Banking Regulation Act, 1949 and the Guidelines issued by the Reserve Bank of India.

Auditor''s Responsibility

Our responsibility is to express an opinion on the Bank''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note issued by the ICAI and the Standards on auditing prescribed under Section 143(10) of the Act, 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.

An audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system 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 control based on the assessed risk. 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.

We believe that the audit evidence we have obtained and the audit evidence obtained by the branch auditors of branches/offices, 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 Bank''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A Bank''s internal financial control 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 and other applicable regulations. A bank''s internal financial control 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 of the bank are being made only in accordance with authorizations of management and directors of the bank; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the bank''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Opinion

In our opinion, to the best of our information and according to the explanations given to us and based on the consideration of the reports of the branch auditors on internal financial controls system over financial reporting of the branches / offices referred to in Other Matters paragraph below, the Bank has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March, 2017, 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 issued by the ICAI.

Other Matters

Our aforesaid report under Section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls over financial reporting insofar as it relates to 848 branches / offices, is based on the corresponding reports of the branch auditors.

Our opinion is not modified in respect of this matter.

For DELOITTE HASKINS & SELLS

Chartered Accountants

(Firm''s Registration No. 008072S)

S. Sundaresan

Partner

(Membership No. 25776)

KOCHI, 15 May, 2017

Mar 31, 2016

1. We have audited the accompanying financial statements of THE SOUTH INDIAN BANK LIMITED ("the Bank"), which comprise the Balance Sheet as at 31st March, 2016, the Profit and Loss Account, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information in which are incorporated the Returns of 19 branches of the Bank audited by us and 839 branches/ offices audited by the Branch Auditors of the Bank''s branches.

Management''s Responsibility for the Financial Statements

2. The Bank''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with the provisions of Section 29 of the Banking Regulation Act, 1949, accounting principles generally accepted in India, including the Accounting Standards prescribed under Section 133 of the Act, in so far as they apply to banks and Guidelines issued by the Reserve Bank of India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Bank and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

3. Our responsibility is to express an opinion on these financial statements based on our audit.

4. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

5. We conducted our audit of the financial statements of the Bank in accordance with the Standards on Auditing (''the Standards'') specified under Section 143(10) of the Act. 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.

6. An audit involves performing procedures to obtain audit evidence about the amounts and the 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 financial control relevant to the Bank''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Bank''s Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

8. 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 Act, in the manner so required for Banking Companies and give a true and fair view in conformity with the accounting principles generally accepted in India, in so far as they apply to banks and Guidelines issued by the Reserve Bank of India, of the state of affairs of the Bank as at 31st March, 2016, and its profit and its cash flows for the year ended on that date.

Emphasis of Matter

9. Attention is drawn to Note No. A. 10.A of Schedule 18 regarding spreading over the shortfall arising from the sale of certain non-performing assets during the year ended 31st March, 2015 and 2016 over a period of 2 years, in terms of RBI Master Circular DBOD.No.BP.BC.9/21.04.048/2014-15 on Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to advances, dated July 1, 2014, as amended and the balance outstanding of such cumulative shortfall as at 31st March, 2016 of Rs.23.74 crore.

Our Opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

10. As required by Section 143 (3) of the Act and Section 30 of the Banking Regulation Act, 1949, we report that:

a) 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.

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

c) 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.

d) The reports on the accounts of the 839 branches/ offices audited by branch auditors of the Bank appointed under Section 143(8) of the Companies Act, 2013 have been forwarded to us and have been properly dealt with by us in preparing this report.

e) 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,

f) In our opinion, the aforesaid financial statements comply with the Accounting Standards prescribed under Section 133 of the Act, as applicable;

g) On the basis of the written representations received from the directors as on 31st March, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2016 from being appointed as a director in terms of Section 164 (2) of the Act.

h) With respect to the adequacy of the internal financial controls over financial reporting of the Bank and the operating effectiveness of such controls, refer to our Report in "Annexure A". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Bank''s internal financial controls over financial reporting.

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

i. The Bank has disclosed the impact of pending litigations on its financial position in its financial statements- Refer Schedule 12 and Note No. B.10 of Schedule 18 to the financial statements;

ii. The Bank has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note No. B.11 of Schedule 18 to the financial statements;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Bank.

For DELOITTE HASKINS & SELLS

Chartered Accountants

(Firm''s Registration No.008072S)

S.Sundaresan

Partner

(Membership No.25776)

Bengaluru, 11th May, 2016

Mar 31, 2015

1. We have audited the accompanying financial statements of The South Indian Bank Limited (hereinafter referred to as "the Bank"), which comprise the Balance Sheet as at March 31, 2015 and the 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, in which are incorporated the returns 19 branches/offices audited by us, 823 branches/offices audited by the branch auditors of the BankRs.s branches for the year ended on that date.

ManagementRs.s Responsibility for the Financial Statements

2. The BankRs.s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014 and with guidelines issued by the Reserve Bank of India (Rs.RBIRs.) insofar as they are applicable to the Bank and in conformity with Form A and B (revised) of the Third Schedule to the Banking Regulation Act, 1949, as applicable. 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 internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

3. Our responsibility is to express an opinion on these financial statements based on our audit.

4. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

5. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. 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.

6. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditorRs.s 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 control relevant to the BankRs.s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Bank has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the BankRs.s Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

8. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements together with the notes thereon give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 2013, in the manner so required for the banking companies and give a true and fair view of the state of affairs of the Bank as at March 31,2015 and its profit and its cash flows for the year then ended.

Report on Other Legal and Regulatory Matters

9. 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 read with Section 133 of the Companies Act, 2013 read with Rule 7 of the

10. As required sub Section (3) of Section 30 of the Banking Regulation Act, 1949 and the appointment letter dated June 24, 2014, 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 purpose of our audit and have found them to be satisfactory;

(b) The transactions of the Bank, which have come to our notice, have been within the powers of the Bank; and

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

11. Further, as required by Section 143(3) of the Companies Act, 2013, we report that:

(i) We have sought and obtained all the information and explanation which to the best of our knowledge and belief were necessary for the purpose of our audit.

(ii) In our opinion, proper books of account as required by law have been kept by the Bank so far as appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from the branches not visited by us.

(iii) The reports on the accounts of the branch offices audited by branch auditors of the Bank under Section 143(8) of the Companies Act, 2013 have been sent to us and have been properly dealt with by us in preparing this report.

(iv) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by us in the Report are in agreement with the books of account and with the returns received from the branches not visited by us.

(v) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(vi) On the basis of the written representations received from the directors as on March 31, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

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

(a) The Bank has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note no. 11 of Schedule 17 to the financial statements.

(b) The Bank has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts.

(c) There has been no delay in transferring amounts, required to be transferred to the Investor Education and Protection Fund by the Bank.

For S. R. Batliboi & Associates LLP

Chartered Accountants ICAI Firm Registration No: 101049W

per Subramanian Suresh

Partner

Membership Number: 083673

Place : Kochi Date : May 5, 2015

Mar 31, 2014

1. We have audited the attached financial statements of The South Indian Bank Limited (the "Bank"), which comprise the Balance Sheet as at March 31, 2014 and the 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 17 branches/offices audited by us, 806 branches/offices audited by branch auditors.

Management''s Responsibility for the Financial Statements

2. Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with accounting principles generally accepted in India, including Accounting Standards notified under the Companies Act, 1956 ("the Act") read with General Circular 8/2014 dated April 4, 2014 issued by the Ministry of Corporate Affairs, read with guidelines issued by the Reserve Bank of India insofar as they are applicable to the Bank and in conformity with Forms A and B (revised) of the Third Schedule to the Banking Regulation Act, 1949 as applicable. This responsibility includes the design, implementation and maintenance of internal control 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.

Auditor''s 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 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 control relevant to the Company''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 and to the best of our information and according to the explanations given to us, the said accounts together with the notes thereon give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 1956, in the manner so required for the banking companies and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Bank as at March 31, 2014; (ii) in the case of the Profit and Loss Account of the profit for the year ended on that date; and (iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Emphasis of Matter

7. We draw attention to Note 18.B.7 to the financial statements which describes the deferment of pension and gratuity liability relating to existing employees of the Bank to the extent of Rs. 156.53 crores and the unamortized liability of Rs. 22.49 crores as at March 31, 2014 pursuant to the exemption granted by the Reserve Bank of India and made applicable to the Bank vide Letter No. DBOD No.BR BC.15896/21.04.018/2010-11 dated April 8, 2011, from the application of the provision of the Accounting Standard (AS) 15, Employee Benefits. Our opinion is not qualified in respect of this matter.

8. We draw attention to Note 18. B. 5 to the financial statements, which describes creation of Deferred Tax Liability ("DTL") on Special Reserve under section 36(1)(viii) of the Income Tax Act, 1961 pursuant to RBI''s Circular No. DBOD. No.BR BC.77/21.04.018/2013-14 dated December 20, 2013, whereby the DTL of Rs.14.71 crores pertaining to period upto March 31, 2013 has been adjusted to the general reserve of the Bank and DTL of Rs. 5.78 crores on the special reserve created during the financial year ended March 31, 2014 has been charged to the profit and loss account. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Matters

9. 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 read with Accounting Standards notified under the Companies Act, 1956, read with General Circular 8/2014 dated April 4, 2014 issued by the Ministry of Corporate Affairs.

10. 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 purpose 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.

11. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the Accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956, read with General Circular 8/2014 dated April 4, 2014 issued by the Ministry of Corporate Affairs.

12. 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 with the audited returns from the branches.

b. In our opinion, proper books of account as required by law have been kept by the Bank so far as appears from our examination of those books.

c. The reports on the accounts of the branches audited by branch auditors have been dealt with in preparing our report in the manner considered necessary by us.

d. On the basis of the written representation received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014 from being appointed as a director in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

For S. R. Batliboi & Associates LLP

Chartered Accountants

ICAI Firm Registration No: 101049W

per Subramanian Suresh

Partner

Membership Number: 083673

Place of Signature : Chennai

Date of Report : April 24, 2014

Mar 31, 2013

1. We have audited the attached financial statements of The South Indian Bank Limited (the ''bank''), which comprise the Balance Sheet as at 31st March, 2013 and the 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 17 branches/ offices audited by us and, 747 branches/offices audited by branch auditors.

Management''s Responsibility for the Financial Statements

2. Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with accounting principles generally accepted in India, including the Accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies act, 1956 ("the act") read with guidelines issued by the Reserve Bank of India insofar as they are applicable to the Bank and in conformity with Forms A and B (revised) of the Third Schedule to the Banking Regulation Act, 1949 as applicable. 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.

Auditor''s 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 auditor''s 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 control relevant to the Company''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.

Basis for qualified opinion

6. Attention is invited to Note 18.A.26 to the financial statements regarding a non-performing advance of Rs. 150 crores and in respect of which a provision of Rs. 90 crores has been made by the management of the Bank based on special dispensation obtained from the Reserve Bank of India (RBI) vide RBI letter dated DBS (T) No. 674/02.05.06/2012- 13 dated December 31, 2012 from complying with the "Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances" issued by the RBI. As the ultimate recoverability of the net carrying amount is uncertain, pending final determination thereof we are unable to comment on the recoverability of the carrying amount and consequential effects of these matters on the financial statements.

Qualified Opinion

7. In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter discussed in the basis for qualified opinion paragraph discussed above, the said accounts together with the notes thereon give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 1956, in the manner so required for the banking companies and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Bank as at 31st March, 2013;

(ii) in the case of the Profit and Loss Account of the Profit for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of cash flows for the year ended on that date.

Emphasis of Matter

8. We draw attention to Note 18.B.7 to the financial statements which describes the deferment of pension and gratuity liability relating to existing employees of the Bank to the extent of Rs. 156.53 crores and the unamortized liability of Rs. 50.72 crores as at March 31, 2013 pursuant to the exemption granted by the Reserve Bank of India and made applicable to the Bank vide Letter No. DBOD No.BP BC.15896/21.04.018 /2010-11 dated April 8, 2011, from the application of the provision of the accounting Standard (As) 15, Employee Benefits. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Matters

9. 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 read with Section 211 of the Companies act, 1956.

10. 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 purpose 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 accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies act, 1956.

10. 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 with the audited returns from the branches.

b. In our opinion, proper books of account as required by law have been kept by the Bank so far as appears from our examination of those books.

c. The reports on the accounts of the branches audited by branch auditors have been dealt with in preparing our report in the manner considered necessary by us.

d. On the basis of the written representation received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2013 from being appointed as a director In terms of Clause (g) of Subsection (1) of Section 274 of the Companies act, 1956.

For S. R. Batliboi & Associates LLP

Chartered Accountants

ICAI Firm Registration No.: 101049W

per Subramanian Suresh

Partner

Membership Number: 083673

Place of Signature : Bangalore

Date of Report : May 6, 2013

Mar 31, 2012

1. We have audited the attached balance sheet of The South indian Bank Limited (the 'Bank') as at March 31, 2012 and also the profit and loss account and cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Bank's management. Our responsibility is to express an opinion on these financial statements based on our audit. Incorporated in these financial statements are the returns of 17 branches/offices audited by us and 685 branches audited by branch auditors.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. The balance sheet and profit and loss account are drawn up in conformity with Forms A and B (revised) of the Third Schedule to the Banking Regulation Act, 1949, read with Section 211 of the Companies Act, 1956.

4. 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) In our opinion, the transactions of the Bank which have come to our notice have been within its powers;

c) In our opinion, proper books of account as required by law have been kept by the Bank so far as appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from branches not audited by us. The Branch Auditors' Reports have been forwarded to us and have been appropriately dealt with;

d) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account and with the audited returns from the branches;

e) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in Sub-section (3C) of Section 211 of the Companies Act, in so far as they apply to the Bank;

f) On the basis of written representations received from the directors, as on March 31, 2012, and taken on record by the Board of Directors, we report that none of the Directors are disqualified from being appointed as a director in terms of Clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956;

g) Without qualifying our opinion, we draw attention to Note 18.B.6 to the financial statements which describes the deferment of pension and gratuity liability relating to existing employees of the Bank to the extent of Rs 156.53 crores and the unamortized liability of Rs 84.31 crores as at March 31, 2012 pursuant to the exemption granted by the Reserve Bank of India and made applicable to the Bank vide Letter No. DBOD No. BP.BC.15896/21.04.018/2010-11 dated April 8, 2011, from the application of the provision of the Accounting Standard (AS) 15, Employee Benefits.

h) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Banking Regulation Act, 1949 and Companies Act, 1956 in the manner so required for banking companies, and give a true and fair view in conformity with the accounting principles generally accepted in India;

i. in case of the balance sheet, of the state of the affairs of the Bank as at March 31, 2012;

ii. in case of the profit and loss account, of the profit for the year ended on that date; and

iii. in case of of cash flow statement, of the cash flows for the year ended on that date.

For S. R. BATLIBOI & ASSOCiATES

Chartered Accountants

Firm Registration Number: 101049W

per Subramanian Suresh

Place : Chennai Partner

Date : May 7, 2012 Membership No.: 83673

Mar 31, 2011

1. We have audited the accompanying Financial Statements of The South Indian Bank Limited, which comprise the Balance Sheet as at 31st March, 2011, the Statement of Profit and Loss 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 4 branches / offices audited by us and 634 branches audited by branch auditors.

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, circulars and guidelines issued by the Reserve Bank of India (RBI) from time to time, the Companies Act, 1956, Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI) and notified by the Companies Accounting Standard Rules, 2006 to the extent applicable and other applicable laws in India. 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 judgement, 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 companys 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. Without qualifying our opinion we draw attention to:

a) Note No. A. 23 (b), Schedule 18, of the Financial Statements regarding disputed Income Tax liability of Rs. 116.05 Crores relating to earlier assessment years consequent to a decision of the Kerala High Court, now pending before the Supreme Court of India, and its treatment as Contingent Liability by the Bank.

b) Note No. B. 7, Schedule 18, to the financial statements which describes deferment of pension and gratuity liability of the bank to the extent of Rs. 125.22 Crores

pursuant to the exemption granted by the Reserve Bank of India and made applicable to the Bank vide Letter No. DBOD No.BP.BC.15896 /21.04.018 /2010-11 dated April 8, 2011, from the application of the provision of the Accounting Standard (AS) 15, Employee Benefits.

7. In our opinion and to the best of our information and according to the explanations given to us, the said accounts together with the notes thereon give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 1956, in the manner so required for the banking companies and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Bank as at 31st March, 2011;

(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of cash flows for the year ended on that date. Report on other Legal and Regulatory Matters

8. 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 read with Section 211 of the Companies Act, 1956.

9. 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 purpose 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 Accounting Standards referred to in subsection (3C) of Section 211 of the Companies Act, 1956.

11. We further report that:

(i) the Balance Sheet and Profit and Loss Account dealt with by this report, are in agreement with the books of account and the returns.

(ii) in our opinion, proper books of account as required by law have been kept by the Bank so far as appears from our examination of those books.

(iii) the reports on the accounts of the branches audited by Branch Auditors have been dealt with in preparing our report in the manner considered necessary by us.

(iv) as per information and explanation given to us the Central Government has, till date, not prescribed any cess payable under Section 441A of the Companies Act, 1956.

(v) on the basis of the written representation received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

For Deloitte Haskins & Sells Chartered Accountants (Registration No. 008072S)

M. Ramachandran Partner Membership No.16399

Place: Kochi Date : May 2, 2011

Mar 31, 2010

1. We have audited the attached Balance Sheet of The South Indian Bank Limited as at 31st March 2010 and also the Profit and Loss Account of the Bank and the Cash Flow Statement annexed thereto for the year ended on that date in which are incorporated the returns of 4 branches/offices audited by us and 573 branches audited by branch auditors. These financial statements are the responsibility of the Banks management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement(s). An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. 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 read with Section 211 of the Companies Act, 1956.

4. 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 purpose 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.

5. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956.

6. We further report that:

(i) the Balance Sheet and Profit and Loss Account dealt with by this report, are in agreement with the books of account and the returns.

(ii) in our opinion, proper books of account as required by law have been kept by the Bank so far as appears from our examination of those books.

(iii) the reports on the accounts of the Branches audited by Branch Auditors have been dealt with in preparing our report in the manner considered necessary by us.

(iv) as per information and explanation given to us the Central Government has, till date, not prescribed any cess payable under section 441A of the Companies Act, 1956.

(v) on the basis of the written representation received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

7. In our opinion and to the best of our information and according to the explanations given to us, the said accounts together with the notes thereon give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 1956, in the manner so required for the banking companies and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the bank as at 31st March, 2010;

(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of cash flows for the year ended on that date.

Thrissur For Deloitte Haskins & Sells

30th April, 2010 Chartered Accountants

(Registration No. 008072S)

M. Ramachandran

Partner

M.No. 16399

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