Auditor Report of Capital Small Finance Bank Ltd.

Mar 31, 2025

We have audited the accompanying financial statements
of CAPITAL SMALL FINANCE BANK LIMITED ("the Bank"),
which comprise the Balance Sheet as at 31^st March, 2025,
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 (together referred to as
"financial statements").

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 and give a true
and fair view in conformity with the Accounting Standards
prescribed under section 133 of the Act ("Accounting
Standards") as applicable to Bank, the relevant circulars,
guidelines and directions issued by the Reserve Bank
of India ("RBI") from time to time and other accounting
principles generally accepted in India, of the state of affairs
of the Bank as at 31^st March, 2025, 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") specified
under section 143(10) of the Act. Our responsibilities under
those Standards are further described in the Auditor''s
Responsibility for the Audit of the Financial Statements
section of our report. We are independent of the Bank in
accordance with the Code of Ethics issued by the Institute
of Chartered Accountants of India ("ICAI") together with
the ethical requirements that are relevant to our audit of
the financial statements under the provisions of the Act
and the Rules made thereunder, and we have fulfilled our
other ethical responsibilities in accordance with these
requirements and the ICAI''s Code of Ethics. We believe
that the audit evidence obtained by us is sufficient and
appropriate to provide a basis for our audit opinion on the
financial statements.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
financial statements of the current year. These matters
were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
We have determined the matters described below to be the
key audit matters to be communicated in our report.

SI. No.	Key Audit Matter	Auditor''s Response
1	Identification of Non-Performing Advances and Provisioning for Advances (Refer Schedule 9 to the financial statements) Advances constitute a significant portion of the Bank''s assets, and the quality of these advances is measured in terms of ratio of Non-Performing Advances ("NPA") to the gross advances of the Bank. The Bank has gross advances amounting to 7,18,38,897 thousand (Previous Year 6,15,97,961 thousand) and the gross NPA ratio of Bank is 2.58 % (Previous Year 2.76%) as at 31st March, 2025. The Reserve Bank of India''s (RBI) guidelines on income recognition, asset classification and provisioning (''IRAC norms'') and other RBI Guidelines (herein after referred as "Relevant RBI guidelines") prescribes the norms for identification and classification of NPAs and the minimum provision required for such assets. The Bank is also required to apply its judgement to determine the identification and provisioning for NPAs by applying quantitative as well as qualitative factors.	Our audit approach included testing the design, operating effectiveness of internal controls and substantive audit procedures in respect of income recognition, asset classification and provisioning pertaining to advances. In particular, our procedures include: • We have evaluated and understood the Bank''s internal control system in adhering to the relevant RBI guidelines. • We have analysed and understood key IT systems/applications used and tested the design and implementation as well as operational effectiveness of relevant controls in relation to income recognition, asset classification, viz. standard, sub¬ standard, doubtful and loss with reference to relevant RBI guidelines and provisioning pertaining to advances. • We test checked advances to examine the validity of the recorded amounts, underlying loan documentation and statement of accounts, impairment provision for NPAs, and compliance with IRAC norms and other RBI guidelines. • We performed test of details on the provisioning made against respective asset classes as at balance sheet date, and consistency of such provisioning with the Bank''s accounting policies and applicable regulatory provisioning requirements.

SI. No.	Key Audit Matter	Auditor''s Response
	In view of the significance of this area to the overall audit of financial statements, it has been considered as a key audit matter.	• We have considered the system generated "SMA" reports and made inquiries of personnel in the Bank''s credit and risk departments regarding indicators of stress or the occurrence of specific event(s) of default or other factors affecting the loan portfolio / particular loan product category, that may affect NPA identification and/ or provisioning. • Evaluated the governance process and controls over calculation of provision for Non-performing Advances and tested that the basis of provisioning is in accordance with the Board of Directors approved policy and IRAC norms. • We performed analytical procedures which considered both financial and non-financial parameters, in relation to identification of NPAs and provisioning there against. • We had performed the walkthrough of the NPA automation process in the current financial year and tested the core functionality for selected sample and tested the identification of NPA and computation of provisions.
2	Key Information technology (IT) systems used in financial reporting process: As a Scheduled Commercial Bank that operates on core banking solution (CBS) and other loan applications across its branches, the reliability and security of IT systems plays a key role in the business operations. Since large volume of transactions are processed daily, the IT controls are required to ensure that applications process data as expected and that changes are made in an appropriate manner. The IT infrastructure is critical for smooth functioning of the Bank''s business operations as well as for timely and accurate financial accounting and reporting. Due to the pervasive nature and complexity of the IT environment we have identified access controls, segregation of duties and change management of relevant Information technology applications, databases, and operating systems (IT) used in financial reporting process as a key audit matter.	We obtained an understanding of the Bank''s IT related control environment. Furthermore, we conducted an assessment and identified key IT applications, databases and operating systems that are relevant for our audit. For the key IT systems used to prepare accounting and financial information, our areas of audit focus included access security (including controls over privileged access), program change controls, database management and network operations. Our procedures include: We tested the design, implementation, and operating effectiveness of the Bank''s IT General controls over the key IT systems that are critical to financial reporting. This included evaluation of Bank''s controls to evaluate segregation of duties and access rights being provisioned / modified based on duly approved requests, access for exit cases being revoked in a timely manner and access of all users being recertified during the period of audit. We also tested key automated and manual business cycle controls and logic for system generated reports relevant to the audit; including testing of compensating controls or performed alternate procedures to assess whether there were any unaddressed IT risks that would materially impact the financial statements

INFORMATION OTHER THAN THE FINANCIAL STATEMENTS
AND AUDITOR''S REPORT THEREON

The Bank''s Board of Directors are responsible for the
other information. The other information comprises the
information in the Annual Report but does not include
the financial statements and our auditors report thereon
and the Basel II Disclosures under New Capital Adequacy
Framework (Basel II Disclosures).

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 during the course of our 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 THE 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 and cash flows of the Bank in accordance with
the provisions of Section 29 of the Banking Regulation Act,
1949, Accounting Standards specified under section 133 of
the Act and other accounting principles generally accepted
in India and the circulars, guidelines and the directions
issued by the Reserve Bank of India, from time to time.
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 statement 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 the Board of Directors either intends to
liquidate the Bank or to cease operations or has no realistic
alternative but to do so.

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

AUDITOR''S RESPONSIBILITY 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 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 an
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.

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

Investor Education and Protection Fund by

the Bank during the year ended 31^st March

2025.

iv. a) The Management has represented

that, to the best of its knowledge and
belief, no funds (which are material
either individually or in the aggregate)
have been advanced or loaned or
invested (either from borrowed funds
or share premium or any other sources
or kind of funds) by the Bank to or in
any other person or entity, including
foreign entity ("Intermediaries"), with
the understanding, whether recorded
in writing or otherwise, that the
Intermediary shall, whether, directly or
indirectly lend or invest in other persons
or entities identified in any manner
whatsoever by or on behalf of the Bank
("Ultimate Beneficiaries") or provide
any guarantee, security or the like on
behalf of the Ultimate Beneficiaries.

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

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

v. a) The final dividend paid by the Bank

during the year in respect of the same

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

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

From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the financial statements of the
current year 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 and
Section 133 of the Act and the relevant rules issued
thereunder.

2) 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.

c. Since the key operations of the Bank are
automated with the key applications integrated
to the core banking system, it does not require
its branches to submit any financial returns.
Accordingly, the audit is carried out centrally as all
the necessary records and data required for the
purposes of our audit are available therein. We
have visited 25 branches to examine the records
maintained at the branches 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 and have found them to be
satisfactory.

(b) 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.

(c) In our opinion, the aforesaid financial statements
comply with the Accounting Standards specified
under Section 133 of the Act read with relevant
rules issued thereunder, to the extent they are
not inconsistent with the accounting policies
prescribed by the RBI;

(d) On the basis of the written representations
received from the directors as on 31^st March 2025
taken on record by the Board of Directors, none
of the directors are disqualified as on 31^st March,
2025 from being appointed as a director in terms
of Section 164 (2) of the Act;

(e) With respect to the adequacy of the internal
financial controls with reference to financial
statements of the Bank 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 with reference to financial
statements, and;

(f) 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 and Note No. 32 of the Schedule 18 to the
financial statements.

ii. The Bank did not have any long-term
contracts including derivative contracts as
at the year-end for which there were material
foreseeable losses.

iii. There has been no delay in transferring
amounts, required to be transferred, to the

declared for the previous year is in
accordance with Section 123 of the
Companies Act 2013 to the extent it
applies to payment of dividend.

As stated in note 1.1.5 of Schedule 18
to the financial statements, the board
of Directors of the bank have proposed
final dividend for the year which is
subject to the approval of the members
at the ensuing annual general meeting.
The dividend proposed is in accordance
with section 123 of the Act.

vi. Based on our examination, which included
test checks, the Bank has used accounting
software systems for maintaining its books
of account for the financial year ended
31^st March 2025, which have a feature of
recording audit trail (edit log) facility and
the same has been operated throughout the
year for all relevant transactions recorded
in the software systems. Further, during the
course of our audit we did not come across
any instance of the audit trail feature being
tampered with and the audit trail has been
preserved by the Bank as per the statutory
requirements for record retention.

4) With respect to the other matters to be included in the
Auditor''s Report in accordance with the requirements of
section 197(16) of the Act, as amended, in our opinion
and to the best of our information and according
to the explanations given to us, the entity being a
banking company, section 197 of the Act related to the
managerial remuneration is not applicable by virtue of
Section 35B(2A) of the Banking Regulation Act, 1949.

FOR SCV & CO. LLP

Chartered Accountants
Firm Registration No. 000235N/N500089

SUNNY SINGH

Partner

Membership No. 516834
ICAI UDIN: 25516834BMMNCP9443

Place: Noida

Date: 29^th April 2025

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Mar 31, 2024

We have audited the accompanying financial statements of CAPITAL SMALL FINANCE BANK LIMITED ("the Bank"), which comprise the Balance Sheet as at 31^st March, 2024, 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 (together referred to as "financial statements").

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 and give a true and fair view in conformity with the Accounting Standards prescribed under section 133 of the Act ("Accounting Standards") as applicable to Bank and other accounting principles generally accepted in India, of the state of affairs of the Bank as at 31 March, 2024, 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") specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor''s Responsibility for the Audit of the Financial Statements section of our report. We are independent of the Bank in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India ("ICAI") together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI''s Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current year. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

SI. No.	Key Audit Matter	Auditor''s Response
1	Identification of Non-Performing Advances and Provisioning for Advances (Refer Schedule 9 to the financial statements) Advances constitute a significant portion of the Bank''s assets, and the quality of these advances is measured in terms of ratio of Non-Performing Advances ("NPA") to the gross advances of the Bank. The Bank has gross advances amounting to 6,15,97,961 thousand (Previous Year 5,50,72,667 thousand) and the gross NPA ratio of Bank is 2.76 % (Previous Year 2.77%) as at 31 March, 2024. The Reserve Bank of India''s (RBI) guidelines on income recognition, asset classification and provisioning (''IRAC norms'') and other RBI Guidelines (herein after referred as "Relevant RBI guidelines") prescribes the norms for identification and classification of NPAs and the minimum provision required for such assets. The Bank is also required to apply its judgement to determine the identification and provisioning for NPAs by applying quantitative as well as qualitative factors. In view of the significance of this area to the overall audit of financial statements, it has been considered as a key audit matter.	Our audit approach included testing the design, operating effectiveness of internal controls and substantive audit procedures in respect of income recognition, asset classification and provisioning pertaining to advances. In particular, our procedures include: • We have evaluated and understood the Bank''s internal control system in adhering to the Relevant RBI guidelines. • We have analysed and understood key IT systems/applications used and tested the design and implementation as well as operational effectiveness of relevant controls in relation to income recognition, asset classification, viz. standard, substandard, doubtful and loss with reference to relevant RBI guidelines and provisioning pertaining to advances. • We test checked advances to examine the validity of the recorded amounts, underlying loan documentation and statement of accounts, indicators of impairment, impairment provision for NPAs, and compliance with IRAC norms and other RBI Guidelines. • We performed test of details on the provisioning made against respective asset classes as at balance sheet date, and consistency of such provisioning with the Bank''s accounting policies and applicable regulatory provisioning requirements. • We have considered the system generated "SMA" reports and made inquiries of personnel in the Bank''s credit and risk departments regarding indicators of stress or the occurrence of specific event(s) of default or other factors affecting the loan portfolio / particular loan product category, that may affect NPA identification and/ or provisioning.

SI. No.	Key Audit Matter	Auditor''s Response
		• We performed analytical procedures which considered both financial and non-financial parameters, in relation to identification of NPAs and provisioning there against. • We had performed the walkthrough of the NPA automation process in the current financial year and tested the core functionality for selected sample and tested the identification of NPA and computation of provisions.
2	Key Information technology (IT) systems used in financial reporting process: As a Scheduled Commercial Bank that operates on core banking solution (CBS) and other loan applications across its branches, the reliability and security of IT systems plays a key role in the business operations. Since large volume of transactions are processed daily, the IT controls are required to ensure that applications process data as expected and that changes are made in an appropriate manner. The IT infrastructure is critical for smooth functioning of the Bank''s business operations as well as for timely and accurate financial accounting and reporting. Due to the pervasive nature and complexity of the IT environment we have identified and tested access controls, segregating of duties and change management of relevant Information technology applications, databases, and operating systems (IT) used in financial reporting process as a key audit matter.	We obtained an understanding of the Bank''s IT related control environment. Furthermore, we conducted an assessment and identified key IT applications, databases and operating systems that are relevant for our audit. For the key IT systems used to prepare accounting and financial information, our areas of audit focus included access security (including controls over privileged access), program change controls, database management and network operations. Our procedures include: We tested the design, implementation, and operating effectiveness of the Bank''s IT General controls over the key IT systems that are critical to financial reporting. This included evaluation of Bank''s controls to evaluate segregation of duties and access rights being provisioned / modified based on duly approved requests, access for exit cases being revoked in a timely manner and access of all users being recertified during the period of audit. We also tested key automated and manual business cycle controls and logic for system generated reports relevant to the audit; including testing of compensating controls or performed alternate procedures to assess whether there were any unaddressed IT risks that would materially impact the financial statements

INFORMATION OTHER THAN THE 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 in the Annual Report but does not include the financial statements and our auditors report thereon and the Basel II Disclosures under New Capital Adequacy Framework (Basel II Disclosures).

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 during the course of our 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 THE 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 and cash flows of the Bank in accordance with the provisions of Section 29 of the Banking Regulation Act, 1949, Accounting Standards and other accounting principles generally accepted in India and the circulars, guidelines and the directions issued by the Reserve Bank of India, from time to time. 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 statement 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 the Board of Directors either intends to liquidate the Bank or to cease operations or has no realistic alternative but to do so.

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

AUDITOR''S RESPONSIBILITY 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 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 an 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.

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit 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.

OTHER MATTER

The comparative financial information of the Bank for the previous reporting periods included in the financial statements has been audited by the predecessor auditor. The report of the predecessor auditor dated 19 May 2023, on this comparative financial information expressed an unmodified opinion.

Our Opinion on the financial statements 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(3) of the Banking Regulation Act, 1949, based on

our Audit, 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 and have found them to be satisfactory.

(b) In our opinion, the transactions of the Bank, which have come to our notice during the course of our audit have been within the power of the Bank.

(c) As explained in the paragraph 2 below, the financial accounting system of the Bank are centralised and, therefore, accounting returns are not required to be submitted by branches.

(d) 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.

(e) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this Report are in agreement with the books of accounts.

(f) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act read with relevant rules issued thereunder.

(g) On the basis of the written representations received from the directors as on 31 March 2024 taken on record by the Board of Directors, none of the directors are disqualified as on 31 March, 2024 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 with reference to financial statements of the Bank 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 with reference to financial statements.

(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 and Note No. 32 of the Schedule 18 to the financial statements.

ii. The Bank did not have any long-term contracts including derivative contracts as at the year-end for which there were material foreseeable losses.

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, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Bank to or in any other person or entity, including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Bank ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

b) The Management has represented, that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Bank from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in

writing or otherwise, that the Bank shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

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

v. a) The final dividend paid by the Bank

during the year in respect of the same declared for the previous year is in accordance with Section 123 of the Companies Act 2013 to the extent it applies to payment of dividend.

As stated in note 1.1.5 of Schedule 18 to the financial statements, the board of Directors of the bank have proposed final dividend for the year which is subject to the approval of the members at the ensuing annual general meeting. The dividend proposed is in accordance with section 123 of the Act.

vi. Based on our examination, which included test checks, the Bank has used accounting software for maintaining its books of account for the financial year ended 31 March, 2024, which has a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all relevant

transactions recorded in the software. Further, during the course of our audit we did not come across any instance of the audit trail feature being tampered with.

As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from 1 April, 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per the statutory requirements for record retention is not applicable for the financial year ended 31 March, 2024.

(j) With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of section 197(16) of the Act, as amended, in our opinion and to the best of our information and according to the explanations given to us, the entity being a banking company, section 197 of the Act related to the managerial remuneration is not applicable by virtue of Section 35B(2A) of the Banking Regulation Act, 1949.

2) We report that during the course of our audit we have visited and performed select relevant procedures at 24 branches. Since the Bank considers its key operations to be automated, with the key applications largely integrated to the Core Banking System, it does not require its branches to submit any financial returns. Accordingly, our audit is carried out centrally at Head Office based on the records and data required for the purpose of Audit being made available to us.

For SCV & CO. LLP

Chartered Accountants Firm Registration No. 000235N/N500089

Sunny Singh

Partner

Place: Noida Membership No. 516834

Dated: 9^th May 2024 ICAI UDIN: 24516834BKBMNR8947