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Auditor Report of Dhanlaxmi Bank Ltd.

Mar 31, 2023

Dhanlaxmi Bank Limited Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of Dhanlaxmi Bank Limited (âthe Bankâ), which comprise the Balance Sheet as at 31st March, 2023, 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 across India.

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 Principal Accounting Policies and Notes appended thereto give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 2013 (the âActâ) in the manner so required for banking companies and are in conformity with accounting principles generally accepted in India and give a true and fair view of the state of affairs of the Bank as at 31st March, 2023, 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 âAuditor''s Responsibilities for the Audit of the Financial Statementsâ 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 Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion of the financial statements.

Emphasis of Matter

We draw attention to Note No. 14(i) of Schedule 18 to the financial statements regarding amortization of additional liability on account of revision in family pension amounting to ''14.29 Crores. As stated therein, the bank has charged an amount of ''2.86 Crores to the profit and loss account for the financial year ended March 31 , 2023 and the balance unamortized expenditure of ''8.58 Crores has been carried forward. Had the bank recognised the entire additional liability in the previous year, the debit balance in profit and loss account shown under reserves and surplus as at March 31, 2023 would have been higher by ''8.58 Crores.

We draw attention to Note No. 4(g) of Schedule 1 8 to the financial statements regarding allocation of provision for frauds over a period of four quarters in respect of an advance with outstanding balance of ''59.40 Crores declared as fraud during Q2 of this financial year, against which provision of ''14.85 Crores was held as on the date of declaring the account as fraud. As stated therein, Bank has charged an amount of ''33.41 Crores to the profit and loss account during the year being 75% of the provision required to be made over and above provision already held as on the date of fraud. Bank recovered ''0.35 Crores in the account subsequently, The balance amount of ''10.79 Crores has now been charged against revenue reserves under reserves and surplus. Had the bank charged the entire provision to the profit and loss account, the Net profit for the year ended March 31,2023 would have been lower by a sum of ''10.79 Crores.

Our opinion is not modified in respect of these matters.

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 of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key Audit Matters	How our audit addressed the Key Audit Matters
1. Classification of Advances, Identification of Non-Performing Advances, Income Recognition and Provision on Advances
Refer Note No. 4 of Schedule 18 to the financial statements relating to Asset Quality in respect of movement of NonPerforming Assets (NPAs) and related provisions. Advances constitute significant portion of the Bank''s total assets. They are, inter alia, governed by income recognition, asset classification and provisioning (IRAC) norms and other circulars and directives issued by the RBI from time to time which provides guidelines related to classification of Advances into performing and non-performing Advances (NPA) and recognition of provisions. The identification of performing and non performing advances involves establishment of proper mechanism and 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'') applying both quantitative as well as qualitative factors prescribed by the regulations. The management of the bank relies on the CBS (Core Banking Solutions) along with other allied IT systems accompanied by various estimates, prudent judgement relating to performance of borrowers, determination of security value, manual interventions including services of experts & professionals for asset classification, Income recognition and provisioning thereon. Compliance of relevant prudential norms issued by the Reserve Bank of India (RBI) in respect of income recognition, asset classification and provisioning pertaining to advances is a key audit matter due to its high degree of complexity and materiality involved. Bank has significant exposure to a large number of borrowers across various sectors, products and industries and there is a high degree of complexity, uncertainty and judgment involved in recoverability of advances, nature of transactions, estimation of provisions thereon.	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. We have evaluated and understood the Bank''s internal control system in adhering to the relevant RBI guidelines regarding income recognition, asset classification and provisioning pertaining to advances. We evaluated the design, implementation and operating effectiveness of key internal controls over the valuation of securities for NPAs and Special Mention Accounts (''SMA''). We checked the minutes of credit and business committee meetings and enquired 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. We have test checked advances to examine the validity of the recorded amounts, loan documentation, examined the statement of accounts, indicators of impairment, impairment provision for non-performing assets and compliance with income recognition, asset classification and provisioning pertaining to advances in terms of applicable RBI guidelines. We have reviewed the CBS and other related & allied systems for compliance with the prudential norms issued by Reserve Bank of India. We considered the Internal Audit, Systems Audit, Credit Audit and Concurrent Audit reports. We considered the RBI Annual Financial Inspection report on the Bank, the bank''s response to the observations and other communication with RBI during the year.
2. Information Technology (âIT'') Systems and Controls for financial reporting
The IT environment of the Bank is complex and involves a large number of independent and interdependent IT systems used in the operations of the Bank for processing and recording a large volume of transactions. As a result, there is a high degree of reliance and dependency on such IT systems for the financial reporting process of the Bank. Appropriate IT general controls and IT application controls are required to ensure that such IT systems are able to process the data as required, completely, accurately, and consistently for reliable financial reporting. We have identified ''IT systems and controls'' as key audit matter because of the high level of automation, significant number of systems being used by the Bank for processing financial transactions, the complexity of the IT architecture and its impact on the financial records and financial reporting process of the Bank.	As a part of our audit procedures for review of the Bank''s IT systems and related controls for financial reporting: â¢ We have planned, designed and carried out the audit procedures and sample checks, taking into consideration the IT systems of the Bank. We obtained an understanding of Bank''s IT environment including integration of various systems to evaluate their adequacy, â¢ 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 inspected requests of changes to systems for approval and authorisation. 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 sought explanations regarding compensating controls or performed alternate audit procedures.

Key Audit Matters

How our audit addressed the Key Audit Matters

3. Recognition and Measurement of Deferred Tax Asset

Refer Note No. 15(f) of Schedule 18 to the financial statements relating to Accounting for Taxes on Income.

The Bank has recognised a net deferred tax asset of ''69.12 Crores as on March 31,2023.

The recognition of deferred tax involves judgement regarding the likelihood of realisation of these assets in particular whether there will be sufficient taxable profits in future periods that will support the recognition of these assets. Given the degree of judgement involved in considering these deferred tax assets as recoverable or otherwise, we consider this to be a key audit matter.

Our audit procedures involved gaining an understanding of the applicable tax laws and relevant regulations applicable to the Bank. Our audit procedures included:

â¢ Evaluation of policies used for recognition and measurement of deferred tax assets in accordance with AS 22 Accounting for Taxes on Income.

â¢ Assessed the probability of the availability of profits based on assumptions and other parameters used by the Management against which the Bank will be able to use this deferred tax asset in the future with reference to forecast as noted by the Audit Committee of the Board of Directors.

â¢ Assessed the method for determining the Deferred Tax Asset with reference to applicable tax rates and tested the arithmetical accuracy,

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 included in the Annual Report, but does not include the financial statements and our auditor''s report thereon. The Bank''s annual report is expected to be made available to us after the date of this auditor''s report.

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 when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. When we read the Bank''s annual report, if we conclude that there is a material misstatement of this other information, we are required to communicate the matter to those charged with governance.

Responsibilities of Management and those charged with governance for the Financial Statements

The Bank''s Management and Board of Directors are responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these financial statements that give a true and fair view of the 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 1 33 of the Act read with relevant rules issued thereunder, in so far as they apply to the Bank and provisions of Section 29 of the Banking Regulation Act, 1 949 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 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.

In preparing the 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.

Those Management and Board of Directors 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 scepticism throughout the audit. We also:

â¢ 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.

â¢ Obtain an understanding of internal controls 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 with reference to financial statements 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 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 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of the misstatements in the financial statements that, individually or 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 of the scope of our audit work and 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 Matters

We did not audit the financial statements of 237 branches and processing centres included in the financial statements of the Bank whose financial statements reflect total assets of ''5,944.73 Crores as at 31st March 2023 and total revenue of ''579.65 Crores for the year ended on that date, as considered in the financial statements. These branches and processing centers cover 59.81% of gross advances, 85.36% of deposits and 41.78% of Non-performing assets as at 31st March 2023 and 50.59% of revenue for the year ended 31st March 2023. The financial statements of these branches 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 branches, is based solely on the report of such branch auditors.

Our opinion is not modified in respect of the above matter.

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 relevant rules issued thereunder.

1. 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) the returns received from the Offices and branches of the Bank have been found adequate for the purpose of our audit;

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

2. 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 and proper returns adequate for the purposes of our audit have been received from branches not visited by us;

c) The reports on the accounts of the branch offices of the Bank audited by branch auditors under Section 143(8) of the Act have been forwarded 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 relevant rules issued thereunder, 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 31 March, 2023 and taken on record by the Board of Directors, none of the directors are disqualified as on 31 March, 2023 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 with reference to the financial statements of the Bank and the operating effectiveness of such controls, refer to our separate Report in âAnnexure Aâ to this report;

h) 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;

The Bank is a Banking Company as defined under Banking Regulation Act, 1949. Accordingly, the requirements prescribed under Section 197 of Act do not apply;

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 1 2 and Note No. 16(c) 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 16(e) 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.

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 (âIntermediariesâ), 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 (âUltimate Beneficiariesâ) 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 (âFunding Partiesâ), 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 (âUltimate Beneficiariesâ) 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 1 1 (e), as provided under (a) and (b) above, contain any material misstatement.

v) The bank has not declared or paid any dividend during the year and hence the compliance of Section 123 of the Act is not applicable.

For Krishnamoorthy & Krishnamoorthy

Chartered Accountants (FRN: 001488S)

R. Venugopal

Partner

Place : Kochi Membership No. 202632

Date : May 22, 2023 UDIN: 23202632BGTCSY1789

Mar 31, 2022

Opinion

We have audited the accompanying financial statements of Dhanlaxmi Bank Limited (âthe Bankâ), which comprise the Balance Sheet as at 31st March, 2022, the Profit and Loss Account and 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 across India.

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 Principal Accounting Policies and Notes appended thereto give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 2013 (the âActâ) in the manner so required for banking companies and are in conformity with accounting principles generally accepted in India and give a true and fair view of the state of affairs of the Bank as at 31st March, 2022, 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 âAuditor''s Responsibilities for the Audit of the Financial Statementsâ 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 (âICAIâ) 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 Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion of the financial statements .

Emphasis of Matter

We draw attention to Note No. 40) under Schedule 18 to the financial statements regarding the impact of COVID-19 pandemic on the Bank''s operations and financial position, which will depend on various uncertain aspects including actions taken to mitigate the same and other regulatory measures.

We draw attention to Note No. 14(i) under Schedule 18 to the financial statements regarding amortization of additional liability on account of revision in family pension amounting to Rs. 14.29 Crores. As stated therein, the bank has recognized the entire additional liability estimated at Rs. 14.29 Crores and opted to amortize the same over a period of five years beginning with the financial year ended March 31, 2022. Accordingly, an amount of Rs. 2.86 crores have been written off during the current financial year and the balance amounting to Rs.11.43 crores have been carried forward as unamortized expenditure. Had the bank charged the entire additional liability to the profit and loss account, the profits for the year ended March 31, 2022 would have been lower by a sum of Rs.11.43 Crores.

Our opinion is not modified in respect of these matters.

Key Audit Matters

Sl.

No.

Key Audit Matters

How our audit addressed the Key Audit Matters

Classification of Advances, Identification of Non-Performing Advances, Income Recognition and provision on Advances

Refer Note No. 4 under Schedule 18 to the financial statements relating to Asset Quality in respect of movement of Non-Performing Assets (NPAs) and related provisions.

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.

Sl. No.	Key Audit Matters	How our audit addressed the Key Audit Matters
	As required under Income Recognition, Asset Classification and Provisioning Norms (IRAC norms), Circulars on Resolution Framework for COVID-19 related and other circulars, notifications and directives issued by the RBI, the Bank classifies advances to performing and non performing which consists of Standard, Sub-standard, Doubtful and Loss and recognizes appropriate provisions. The identification of performing and non performing advances involves establishment of proper mechanism and the Bank is required to apply significant degree of judgement to identify and determine the amount of provision required against each non-performing asset (âNPA'') applying both quantitative as well as qualitative factors prescribed by the regulations. Compliance of relevant prudential norms issued by Reserve Bank of India (RBI) in respect of income recognition, asset classification and provisioning pertaining to advances is a key audit matter due to its high degree of complexity and materiality involved. Bank has significant exposure to a large number of borrowers across various sectors, products and industries and there is a high degree of complexity, uncertainty and judgment involved in recoverability of advances, nature of transactions, estimation of provisions thereon.	We have evaluated and understood the Bank''s internal control system in adhering to the relevant RBI guidelines regarding income recognition, asset classification and provisioning pertaining to advances We evaluated the design, implementation and operating effectiveness of key internal controls over the valuation of securities for NPAs and Special Mention Accounts (âSMA''). We checked the minutes of credit and business committee meetings and enquired 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. We have test checked advances to examine the validity of the recorded amounts, loan documentation, examined the statement of accounts, indicators of impairment, impairment provision for non-performing assets and compliance with income recognition, asset classification and provisioning pertaining to advances in terms of applicable RBI guidelines. We considered the Internal Audit, Systems Audit, Credit Audit and Concurrent Audit reports. We considered the RBI Annual Financial Inspection report on the Bank, the bank''s response to the observations and other communication with RBI during the year.
2	Valuation of Investments, Identification of and provisioning for Non-Performing Investments
	Refer Note No. 3 under Schedule 18 to the financial statements with respect to Investments and related Provisions. 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 nonperforming investments, non-recognition of income and provisioning against non-performing investments. 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. Accordingly, our audit was focused on valuation of investments, classification, identification of nonperforming investments and provisioning related to investments.	Our audit approach included testing the design, operating effectiveness of internal controls and substantive audit proceduresin respect of valuation, classification, identification of non-performing investments (NPls) andprovisioning/depreciation related to Investments. On sample basis, we tested the accuracy and compliance with the RBI Master Circulars and directions by reperforming 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. We assessed and evaluated the process adopted for collection of information from various sources for determining market value of the investments. We carried out substantive audit procedures to recompute independently the provision to be maintained in accordance with the circulars and directives of the RBI.

Sl. No.	Key Audit Matters	How our audit addressed the Key Audit Matters
		Accordingly, we selected samples from the investments of each category and tested for NPls as per the RBI guidelines and recomputed the provision to be maintained in accordance with the RBI Circular for those selected sample of NPls; We tested the mapping of investments between the Investment application software and the financial statement preparation software to ensure compliance with the presentation and disclosure requirements as per the aforesaid RBI Circular/directions. We assessed and evaluated the process of identification of NPls and corresponding reversal of income and creation of provision.
3	Information Technology (âIT'') Systems and Controls for financial reporting
	The Bank''s key financial accounting and reporting processes are highly dependent on information systems including automated controls in systems, such that there exists a risk that gaps in the IT control environment could result in the financial accounting and reporting records being misstated. In addition, large transaction volumes and the increasing challenges to protect the integrity of the Bank''s systems and data, cyber security has become a more significant risk in recent periods. We have identified âIT systems and controls'' as key audit matter because of the high-level automation, significant number of systems being used by the management and the complexity of the IT architecture.	We focused on user access management, change management, segregation of duties, system reconciliation controls and system application controls over key financial accounting and reporting systems. We tested a sample of key controls operating over the information technology in relation to financial accounting and reporting systems, including system access and system change management, program development and computer operations. We tested the design and operating effectiveness of key controls over user access management which includes granting access right, new user creation, removal of user rights and preventive controls designed to enforce segregation of duties. For a selected group of key controls over financial and reporting systems, we independently performed procedures to determine that these controls remained unchanged during the year or were changed following the standard change management process. Other areas that were assessed included password policies, security configurations, system interface controls, controls over changes to applications and databases and that business users and controls to ensure that developers and production support did not have access to change applications, the operating system or databases in the production environment. Security configuration review and related tests on certain critical aspects of cyber security on network security management mechanism, operational security of key information infrastructure, data and client information management, monitoring and emergency management.

Information other than the Financial Statements and Auditorâs Report thereon

Responsibilities of Management and those charged with governance for the Financial Statements

The Bank''s Management and Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these financial statements that give a true and fair view of the 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, 1 949 and circulars and guidelines issued by the Reserve Bank of India (âRBI'') 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 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 .

Board of Directors 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.

Auditorâs Responsibilities for the Audit of the Financial Statements

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism 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 financial controls 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 with reference to financial statements 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 and Board of Directors. Conclude on the appropriateness of management 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 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 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.

Other Matters

We did not audit the financial statements of 233 branches and processing centres included in the financial statements of the Bank whose financial statements reflect total assets of Rs. 5482.77 Crore as at 31st March 2022 and total revenue of Rs. 448.48 Crore for the year ended on that date, as considered in the financial statements . These branches and processing centers cover 55.77% of gross advances, 85.44% of deposits and 45.74% of Non-performing assets as at 31st March 2022 and 41.31% of revenue for the year ended 31st March 2022. The financial statements of these branches 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 branches, is based solely on the report of such branch auditors.

The financial statements of the Bank for the year ended March 31, 2021 were audited by predecessor auditors whose report dated May 29, 2021 expressed an unmodified opinion on those financial statements.

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

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) The returns received from the Offices and branches of the Bank have been found adequate for the purpose of our audit;

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

1. 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;

e) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, 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 31 March, 2022 taken on record by the Board of Directors, none of the directors are disqualified

as on 31 March, 2022 from being appointed as a director in terms of Section 164(2) of the Act;

h) 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;

The Bank is a Banking Company as defined under Banking

Regulation Act, 1949. Accordingly, the requirements

prescribed under Section 197 of Act do not apply;

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. 16(d) under 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 16(n under 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.

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 (âIntermediariesâ}, 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 (âUltimate Beneficiariesâ) of 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) The bank has not declared or paid any dividend during the year and hence the compliance of Section 123 of the Act is not applicable.

For Krishnamoorthy & Krishnamoorthy

Chartered Accountants

(FRN:0014888)

R.Venugopal

Partner

Kochi Membership No. 202632

Date: May 19th, 2022 UDIN: 22202632AJGLZV8059

Mar 31, 2018

Report on the Financial Statements

We have audited the accompanying financial statements of Dhanlaxmi Bank Limited (âthe Bankâ), which comprise the Balance Sheet as at 31 March, 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. Incorporated in these financial statements are the returns of seventeen branches/offices and Treasury division audited by us, 252 branches/offices audited by branch auditors.

Managementâs Responsibility for the Financial Statements

The Bankâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (the âActâ) 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, 1 949 and 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 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 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.

Auditorâs Responsibility

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 there under.

We have 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.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditorâs 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 Bankâs 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 Bankâs 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

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 Principal Accounting Policies and Notes appended thereto give the information required by the Banking Regulation Act,1949 as well as 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 31 March 2018, its profit and its cash flows for the year ended on that date.

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 by Section 143(3) of the Act and 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) In our opinion, 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 purpose of our audit. The reports on the accounts of the branch offices audited by branch auditors of the Bank under Section 143(8) of the Act have been sent to us and have been properly dealt with by us in preparing this report;

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, 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 specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, as applicable to banks;

g) On the basis of written representations received from the directors as on 31 March, 2018 taken on record by the Board of Directors, none of the directors are disqualified as on 31 March, 2018 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 separate Report in âAnnexure 1â to this report. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Bankâs internal financial controls over financial reporting.

i) With respect to the other matters to be included in the Auditorâs 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 Note 29 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 Note 31 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; and

Annexure 1 to The Independent Auditorâs Report of even date on the Financial Statements of Dhanlaxmi Bank Limited

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)

The Members of Dhanlaxmi Bank Limited

We have audited the internal financial controls over financial reporting of Dhanlaxmi Bank Limited (âthe Bankâ) as of 31 March 2018 in conjunction with our audit of the financial statements of the Bank for the year ended on that date.

Managementâs Responsibility for Internal Financial Controls

The Bankâs 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 (the âGuidance Noteâ). 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 Bankâs 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.

Auditorâs Responsibility

Our responsibility is to express an opinion on the Bankâs internal financial controls over financial reporting based on our audit. We have conducted our audit in accordance with 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, both 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 auditorâs 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 is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting.

Concept of Internal Financial Controls Over Financial Reporting

A companyâs 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 companyâs 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 company; (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 company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companyâs 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 31 March 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 Sridhar & Co.

Chartered Accountants

Firm Registration Number: 003978S

I. Jayasindhu

Place : Thrissur Partner

Date : 23 May, 2018 Membership Number: 205660

Mar 31, 2016

The Members of Dhanlaxmi Bank Limited

Report on the Financial Statements

We have audited the accompanying financial statements of Dhanlaxmi Bank Limited (âthe Bankâ), which comprise the Balance Sheet as at 31 March, 2016, 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. Incorporated in these financial statements are the returns of ten branches/offices and Treasury division audited by us, 269 branches/ offices audited by branch auditors.

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 (the âActâ) 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 and 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 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 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

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 there under. We have 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.

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

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 Principal Accounting Policies and Notes appended thereto 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 31 March 2016, its loss and its cash flows for the year ended on that date.

Emphasis of Matter:

We draw attention to the following matters in the Notes to the financial statements:

(i) Note No. 6 (iv) of the financial statements regarding deferment of shortfall arising from the sale of certain Non Performing Assets during the year ended March 31, 2016 in terms of RBI Master Circular DBR.No. BPBC 2/21.04.048/2015-16 on prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to advances dated 1st July 2015 and the unamortized balance as at 31st March 2016 amounting to Rs. 10.97 Crores.

(ii) Note no. 23 of the financial statements regarding retention of Deferred Tax Asset amounting to Rs.37.06 Crores.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

2. As required sub section (3) of section 30 of the Banking Regulation Act, 1949 and the appointment letter dated October 6, 2015, 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. We have conducted audit of ten branches/offices and Treasury division in connection with our Central Statutory audit.

3. Further, as required by section 143(3) of the Companies Act, 2013, 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 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;

(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;

(f) On the basis of written representations received from the directors as on 31 March, 2016 taken on record by the Board of Directors, none of the directors are disqualified as on 31 March, 2016 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 âAnnexure1â to this report; 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, 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 Note 36 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.

Annexure 1 to The Independent Auditor''s Report of even date on the Financial Statements of Dhanlaxmi Bank Limited

Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)

To the Members of Dhanlaxmi Bank Limited

We have audited the internal financial controls over financial reporting of Dhanlaxmi Bank Limited (âthe Bankâ) as of 31 March 2016 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 (the âGuidance Noteâ). 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 have conducted our audit in accordance with 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, both 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 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 is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting.

Concept of Internal Financial Controls Over Financial Reporting

A company''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 company''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 company; (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 company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''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, 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 31 March 2016, 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 K. Venkatachalam Aiyer & Co.

Chartered Accountants

Firm Registration Number: 004610S

K. Narayanan

Partner

Membership Number: 7024

Place : Thrissur

Date : May 30, 2016

Mar 31, 2013

Report on the Financial Statements

1. We have audited the accompanying financial statements of Dhanlaxmi Bank Ltd. as at 31st March, 2013, which comprise the Balance Sheet as at March 31, 2013, and Profit and Loss Account and 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 10 Branches, Dhanam Retail Centralised Solutions and Treasury Division, auditied by us, 148 Branches audited by other branch auditors. Also incorporated in the Balance Sheet and Profit and Loss Account are the returns of 116 branches which have not been subjected to audit. The unaudited branches account for 12% of advances, 13% of deposits, 5% of interest income and 10% of interest expense. The branches audited by us and those audited by other auditors have been selected by Bank.

Management''s Responsibility for the Financial Statements

2. Management of the Bank is responsible for the preparation of these financial statements that give true and fair view of the financial position and financial performance of the Bank in accordance with Banking Regulation Act, 1949 and complying with Reserve Bank of India Guidelines issued from time to time. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation 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 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 Bank''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

5. The financial information as at and for the year ended 31st March 2013 of 148 branches has been audited by other auditors whose reports have been furnished to us and our opinion is based solely on the reports of such other auditors.

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

Opinion

7. Without qualifying our opinion, we draw attention to Note No. 19 of the Schedule 18 to the financial statements, regarding deferment of pension liability and gratuity liability of the Bank, pursuant to the exemption granted by the Reserve Bank of India to the public sector banks from application of the provisions of Accounting Standard (AS) 15, Employees Benefits vide circular no. DBOD.BRBC/80/21.04.018/2010-11, dated 09-02-2011 on "Re-opening of Pension Option to the employees of Public Sector Banks and Enhancement in Gratuity Limits - Prudential Regulatory Treatment". Accordingly, out of the unamortized amount of Rs. 15.32 crore as on 01.04.2012, the Bank has amortized Rs. 3.15 crore for Pension and Rs. 1.96 crore for Gratuity being proportionate amount for the year ended March 31, 2013 and balance amount to be amortized in future periods for Pension is Rs. 6.29 crore and for Gratuity is Rs. 3.92 crore.

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

(i) the Balance Sheet read with the significant accounting policies and notes thereon, is a full and fair balance sheet containing all the necessary particulars, is properly drawn up so as to exhibit a true and fair view of state of affairs of the bank as at 31st March, 2013, in conformity with accounting principles generally accepted in India;

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

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

Report on Other Legal and Regulatory Requirements

9. The Balance Sheet and the Profit and Loss Account have been drawn up in Forms ''A'' & ''B'', respectively, of the third Schedule to the Banking Regulation Act, 1949.

10. Subject to the limitations of the auditi indicated in paragraphs 1 to 6 above and as required by the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970 and subject also to the limitations of disclosure required therein, we report that;

(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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, as supplemented with the information furnished by the Management, 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 applicable Accounting Standards.

For Sagar & Associates

Chartered Accountants

Firm Registration No.: 003510S

Sd/-

V. Vidyasagar Babu

Partner

Membership No.: 27357

Place : Kochi

Date : May 17, 2013

Mar 31, 2012

1. We have audited the attached Balance Sheet of Dhanlaxmi Bank Limited (the 'Bank') as at 31st March, 2012 the annexed Profit and Loss Account and the Cash Flow Statement for the year ended on that date, in which are incorporated the audited returns of 19 branches and treasury division audited by us, 107 branches audited by the Branch Auditors and 161 branches on which we carried out limited review procedures. 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.

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 misstatements. 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 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 (1), (2) and (3C) of the Companies Act, 1956.

4. The financial information as at and for the year ended 31st March, 2012 of 107 branches has been audited by other auditors whose reports have been furnished to us and our opinion is based solely on the reports of such other auditors.

5. On the basis of our audit and having regard to the reports received by us from the auditors of the branches audited by other auditors and based on limited review procedures carried out by us on certain branches as mentioned above, 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. in our opinion, 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.

6. In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting principles generally accepted in India including Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956, in so far as they apply to the Bank and are not inconsistent with the accounting policies prescribed by the Reserve Bank of India.

7. We further report that:

a. 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 returns;

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

8. In our opinion and to the best of our information and according to the explanations given to us, and on consideration of reports submitted by the auditors of the branches not audited by us, and based on limited review procedures carried out by us on the financial reporting of certain branches as mentioned under paragraph 1 above, since the total assets of such branches as at 31st March, 2012 and total revenue/net cash flows for the year then ended are not very significant to the total assets of the Bank as at 31st March, 2012 and total revenue/net cash flows of the Bank for the year then ended, respectively, the said financial statements read together with the Significant Accounting Policies and the Notes in Schedule 17 and 18 respectively, give the information required by the Companies Act, 1956, in the manner so required for banking companies and the guidelines issued by the Reserve Bank of India from time to time, give a true and fair view in conformity with the accounting principles generally accepted in India;

a. in the case of Balance sheet, of the state of affairs of the Bank as at 31st March, 2012;

b. in the case of Profit and Loss Account, of the loss for the year ended on that date; and

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

For Walker, Chandiok & Co. For Sharp & Tannan

Chartered Accountants Chartered Accountants

Firm Registration No.: 001076N Firm Registration No.: 109982W

Sd/- Sd/-

per Khushroo B. Panthaky Edwin P Augustine

Partner Partner

Membership No.: F-42423 Membership No.: 043385

Place : Mumbai Place : Mumbai

Date : 30th May, 2012 Date : 30th May, 2012

Mar 31, 2011

1. We have audited the attached Balance Sheet of Dhanlaxmi Bank Limited (the Bank) (formerly The Dhanalakshmi Bank Limited) as at 31 March 2011 the annexed Profit and Loss Account and the Cash Flow Statement for the year ended on that date, in which are incorporated the audited returns of 19 branches and treasury division audited by us, 104 branches audited by the Branch Auditors and 149 branches on which we carried out limited review procedures. 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 misstatements. 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 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. The financial information as at and for the year ended 31 March 2011 of 104 branches has been audited by other auditors whose reports have been furnished to us and our opinion is based solely on the reports of such other auditors.

5. On the basis of our audit and having regard to the reports received by us from the auditors of the branches audited by other auditors and based on limited review procedures carried out by us on certain branches as mentioned above, 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. in our opinion, the transactions of the Bank, which have come to our notice, have been within the powers of the Bank;

6. In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting principles generally accepted in India including Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956, in so far as they apply to the Bank and are not inconsistent with the accounting policies prescribed by the Reserve Bank of India.

7. We further report that:

a. 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;

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. based on information and explanations given to us, the Central Government has, till date, not prescribed any cess payable under Section 441A of the Companies Act, 1956;

d. on the basis of the written representations received from the Directors as at 31 March 2011, and taken on record by the Board of Directors, none of the directors is disqualified as at 31 March 2011 from being appointed as a director in terms of Section 274(1 )(g) of the Companies Act, 1956;

8. In our opinion and to the best of our information and according to the explanations given to us, and on consideration of reports submitted by the auditors of the branches not audited by us, and based on limited review procedures carried out by us on the financial reporting of certain branches as mentioned under paragraph 1 above, since the total assets of such branches as at 31 March 2011 and total revenue/net cash flows for the year then ended are not very significant to the total assets of the Bank as at 31 March 2011 and total revenue/net cash flows of the Bank for the year then ended, respectively, the said financial statements, together with the notes thereon and attached thereto give the information required by the Banking Regulation Act, 1949, as well as the 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;

a. in the case of Balance sheet, of the state of affairs of the Bank as at 31 March 2011;

b. in the case of Profit and Loss Account, of the profit for the year ended on that date; and

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

For Walker, Chandiok & Co Sharp and Tannan Chartered Accountants Chartered Accountants Firm Registration No.: 001076N Firm Registration No.: 109982W

per Khushroo B. Panthaky Edwin P. Augustine Partner Partner Membership No.: F-42423 Membership No.: 043385

Place: Mumbai Place: Mumbai Date: April 23, 2011 Date : April 23, 2011

Mar 31, 2010

1. We have audited the attached Balance Sheet of The Dhanalakshmi Bank Limited, Thrissur as at 31 March 2010 the annexed Profit and Loss Account and the Cash Flow Statement for the year ended on that date, in which are incorporated the audited returns of 11 branches and treasury division audited by us and 227 Branches audited by the 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 misstatements. 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 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. On the basis of our audit and having regard to the reports received by us from the auditors of the branches audited by other auditors, which have been considered by us for issuing our opinion, 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. in our opinion, the transactions of the Bank, which have come to our notice, have been within the powers of the Bank;

5. In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting principles generally accepted in India including Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956, in so far as they apply to the Bank and are not inconsistent with the accounting policies prescribed by the Reserve Bank of India.

6. We further report that:

a. 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;

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. based on information and explanations given to us the Central Government has till date, not prescribed any cess payable under Section 441A of the Companies Act, 1956;

d. on the basis of the written representations received from the Directors as at 31 March 2010, and taken on record by the Board of Directors none of the directors is disqualified as at 31 March 2010 from being appointed as a director in terms of Section 274(1) (g) of the Companies Act, 1956;

7. In our opinion and to the best of our information and according to the explanations given to us, and on consideration of reports submitted by the auditors of the branches not audited by us the said financial statement together with the notes thereon and attached thereto give the information required by the Banking Regulation Act, 1949, as well as the Companies Act, 1956, in the manner so required for banking companies give a true and fair view in conformity with the accounting principles generally accepted in India;

a. in the case of Balance sheet, of the state of affairs of the Bank as at 31 March 2010;

b. in the case of Profit and Loss Account, of the profit for the year ended on that date; and

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

For Walker, Chandiok & Co For Shah Gupta & Co

Chartered Accountants Chartered Accountants

Firm Registration No: 001076N Firm Registration No: 109574W

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