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Auditor Report of Federal Bank Ltd.

Mar 31, 2023

TO THE MEMBERS OF THE FEDERAL BANK LIMITEDREPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTSOPINION

We have audited the accompanying standalone financial

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

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

BASIS FOR OPINION

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (''SAs'') specified

under section 143(10) of the Act. Our responsibilities under those Standards are further described in the ''Auditors'' Responsibilities for the Audit of the Financial Statements'' section of our report. We are independent of the Bank in accordance with the âCode of Ethics" issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

KEY AUDIT MATTERS

Key Audit Matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the financial year ended March 31, 2023. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

DESCRIPTION OF KEY AUDIT MATTERS
	key Audit Matters	How our audit addressed the key Audit Matters
(i)	classification of Advances, Identification of Non-Performing Advances, Income Recognition and Provision on Advances (Schedule 9 read with Note 4.2 of Schedule 17 and Note 1.4 and Note 1.14.5 of Schedule 18 to the standalone financial statements)
	Advances include Bills purchased and discounted, Cash credits, Overdrafts, Loans repayable on demand and Term loans. These are further categorised as secured by Tangible assets (including advances against Book Debts), covered by Bank/Government Guarantees and Unsecured advances. The Reserve Bank of India (''RBI'') has prescribed the ''Prudential Norms on Income Recognition, Asset Classification and Provisioning'' in respect of advances for banks (''IRACP Norms'') for the identification and classification of non-performing assets (''NPA'') and the minimum provision required for such assets.	Our audit approach / procedures towards Classification of Advances, Identification of Non-performing Advances, Income Recognition and Provision on Advances included the following: - Understanding and considering the Bank''s accounting policies for NPA identification and provisioning and assessing compliance with the prudential norms prescribed by the RBI (IRACP Norms). - Understanding, evaluation and testing the design and operating effectiveness of key controls (including system based automated controls) for identification and provisioning of impaired accounts based on the extant guidelines on IRACP laid down by the RBI.

	key Audit Matters	How our audit addressed the key Audit Matters
	The identification of performing and non-performing advances (including advances restructured under applicable IRACP Norms) 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 advance applying both quantitative as well as qualitative factors prescribed by the regulations. Significant judgements and estimates for NPA identification and provisioning could give rise to material misstatements on: - Completeness and timing of recognition of nonperforming assets in accordance with criteria as per IRACP norms; - Measurement of the provision for non-performing assets based on loan exposure, ageing and classification of the loan, realizable value of security; - Appropriate reversal of unrealized income on the NPAs. Since the classification of advances, identification of NPAs and creation of provision on advances (including additional provisions on restructured advances under applicable IRACP Norms) and income recognition on advances: - Requires proper control mechanism and significant level of estimation by the Bank; - Has significant impact on the overall financial statements of the Bank; we have ascertained this area as a Key Audit Matter.	- Performing other procedures including substantive audit procedures covering the identification of NPAs by the Bank. These procedures included: (a) Considering testing of the exception reports generated from the application systems where the advances have been recorded. (b) Considering the accounts reported by the Bank and other banks as Special Mention Accounts ("SMA") in RBI''s central repository of information on large credits (CRILC) to identify stress. (c) Reviewing account statements, drawing power calculation, security and other related information of the borrowers selected based on quantitative and qualitative risk factors. (d) Reading of minutes of management committee and credit committee meetings and performing inquiries with the credit and risk departments to ascertain if there were indicators of stress or an occurrence of an event of default in a loan account or any product. (e) Considering key observations arising out of Internal Audits, Systems Audits, Credit Audits and Concurrent Audits conducted as per the policies and procedures of the Bank. (f) Considering the RBI Annual Financial Inspection report on the Bank, the Bank''s response to the observations and other communication with RBI during the year. (g) Examination of advances including stressed/ restructured advances on a sample basis with respect to compliance with the RBI Master Circulars / Guidelines. (h) Seeking independent confirmation of account balances for sample borrowers. (i) Visits to branches/offices and examination of documentation and other records relating to advances. For Non- performing advances identified, we, based on factors including stressed sectors and account materiality, tested on a sample basis the asset classification dates, reversal of unrealized interest, value of available security and provisioning as per IRACP norms. We recomputed the provision for NPA on such samples after considering the key input factors and compared our measurement outcome to that prepared by management.
(ii)	Valuation of Investments, Identification of and provisioning for Non-Performing Investments (Schedule 8 read with Note 4.1 of Schedule 17 and Note 1.2 and Note 1.14.5 of Schedule 18 to the standalone financial statements)
k	Investments include investments made by the Bank in various Government Securities, Bonds, Debentures, Shares, Security receipts and other approved securities. RBI Circulars and directives, inter-alia, cover valuation of investments, classification of investments, identification of non-performing investments(''NPI''), non-recognition of income and provisioning against non-performing investments.	Our audit approach/procedures towards Investments with reference to the RBI Circulars/directives included the understanding of internal controls and substantive audit procedures in relation to valuation, classification, identification of non-performing investments (NPIs) and provisioning/depreciation related to Investments. In particular -

	key Audit Matters	How our audit addressed the key Audit Matters
	The valuation of each category (type) of the aforesaid securities is to be done as per the method prescribed in circulars and directives issued by the RBI which involves collection of data/information from various sources such as FIMMDA rates, rates quoted on BSE/NSE, financial statements of unlisted companies etc. We identified valuation of investments and identification of NPI as a Key Audit Matter because of the management judgement involved in determining the value of certain investments (Bonds and Debentures, Pass-through certificates) based on applicable Regulatory guidelines and the Bank''s policies, impairment assessment for HTM book based on management judgement, the degree of regulatory focus and the overall significance to the financial results of the Bank.	- We evaluated and understood the Bank''s internal control system to comply with relevant RBI guidelines regarding valuation, classification, identification of NPIs, reversal of income on NPIs and provisioning/ depreciation related to investments; - We assessed and evaluated the process adopted for collection of information from various sources for determining market value of these investments; - For the selected sample of investments in hand, we tested accuracy and compliance with the RBI Master Circulars and directions by re-performing valuation for each category of the security; - We carried out substantive audit procedures to recompute independently the provision to be maintained in accordance with the circulars and directives of the RBI. Accordingly, we selected samples from the investments of each category and tested for NPIs as per the RBI guidelines and recomputed the provision to be maintained and if accrual of income is in accordance with the RBI Circular for those selected sample of NPIs; - 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.
(iii)	Information Technology (''IT'') Systems and Controls for financial reporting
	The Bank uses several systems for its overall financial reporting and there is a large volume of transactions being recorded at multiple locations daily. In addition, there are increasing challenges to protect the integrity of the Bank''s systems and data since cyber security has become a more significant risk in recent periods. Due to the pervasive nature and complexity of the IT environment as well as its importance in relation to accurate and timely financial reporting, we have identified this area as a Key Audit Matter.	As a part of our audit procedures for review of the Bank''s IT systems and related controls for financial reporting: - We tested the design and operating effectiveness of the Bank''s IT access controls over the information systems that are critical to financial reporting. - We tested sample 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. We considered the control environment relating to various interfaces, configuration and other application layer controls identified as key to our audit. - We reviewed the Bank''s controls over opening and unauthorized operations in internal/ office accounts. - We reviewed key observations arising out of audits conducted on the Bank''s IT systems during the year.

	key Audit Matters	How our audit addressed the key Audit Matters
		- In addition to the above, we tested the design and operating effectiveness of certain automated controls that were considered as key internal financial controls over financial reporting. Where deficiencies were identified, we sought explanations regarding compensating controls or performed alternate audit procedures. In addition, we understood where relevant, changes made to the IT landscape during the audit period and tested those changes that had a significant impact on financial reporting.
(iv)	Assessment of Provisions and Contingent Liabilities (Schedule 5 and 12 read with Notes 4.13 & 4.21 of Schedule 17 to the standalone financial statements)
	Assessment of Provisions and Contingent liabilities in respect of certain litigations including Direct and Indirect Taxes, various claims filed by other parties not acknowledged as debt (Schedule 12 to the standalone financial statements) and various employee benefits schemes (Schedule 5 to the standalone financial statements) was identified as a significant audit area. There is high level of judgement involved in estimating the level of provisioning required as well as in the disclosure of both Provisions and Contingent Liabilities in respect of tax matters and other legal claims. The Bank''s assessment is supported by the facts of matter, their own judgment, past experience, and advice from independent legal / tax consultants wherever considered necessary. Accordingly, unexpected adverse outcomes may significantly impact the Bank''s reported profit and state of affairs presented in the Balance Sheet. The valuations of the employee benefit liabilities are calculated with reference to multiple actuarial assumptions and inputs including discount rate, rate of inflation and mortality rates. The valuation of funded assets in respect of the same is also sensitive to changes in the assumptions. We determined the above area as a Key Audit Matter in view of associated uncertainty relating to the outcome of the matters which requires application of judgment in interpretation of law, circumstances of each case and estimates involved.	Our audit approach / procedures involved: - Obtaining an understanding of internal controls relevant to the identification of litigations and legal cases to be reported; - Understanding the current status of the litigations/tax assessments; - Examining recent orders and/or communication received from various tax authorities/ judicial forums and follow up action thereon; - Evaluating the merit of the subject matters identified as significant, with reference to the grounds presented therein and available independent legal / tax advice including opinion of the Bank''s tax consultants; - Review and evaluation of the contentions of the Bank through discussions, collection of details of the subject matter under consideration, the likely outcome and consequent potential outflows on those issues; - Testing the design and operating effectiveness of key controls over the completeness and accuracy of the data, the measurement of the fair value of the schemes'' assets, understanding the judgements made in determining the assumptions used by management to value the employee liabilities with specific schemes and market practice; - Our audit procedures included an assessment of the assumptions used by the actuary by comparing life expectancy assumptions with relevant mortality tables, benchmarking inflation and discount rates against external market data. We verified the value of plan assets to the statements provided by asset management companies managing the plan assets and - Verification of disclosures related to significant litigations, taxation matters and Employee benefits liabilities in the standalone financial statements.

INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND AUDITORS'' REPORT THEREON

The Bank''s Board of Directors is responsible for the other information. The Other Information comprises the information in Basel III - Pillar 3 disclosures which we obtained prior to the date of this auditors'' report, and Annual Report, which is expected to be made available to us after that date (but does not include the standalone financial statements, consolidated financial statements and our auditors'' reports thereon).

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

In connection with our audit of the standalone financial

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

When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance under SA 720 ''The Auditor''s responsibilities Relating to Other Information.

RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE STANDALONE FINANCIAL STATEMENTS

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

In preparing the standalone financial statements, Management and Board of Directors are responsible for assessing the Bank''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.

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

AUDITORS'' RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE FINANcIAL STATEMENTS

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

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

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

â¢ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Bank has adequate internal financial controls system with reference to standalone 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 in the standalone financial statements made by management.

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

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

Materiality is the magnitude of the misstatements in the standalone 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 standalone financial statements for the financial year ended March 31, 2023 and are therefore the key audit matters. We describe these matters in our auditors'' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

The standalone Balance Sheet and the standalone 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.

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

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

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

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

a) We have sought and obtained all the information and

explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

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

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

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

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

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

g) With regard to matters to be included in the Auditor''s Report in accordance with the requirements of Section 197(16) of the Act, in our opinion, the entity being a banking company, the remuneration to its directors during the year ended March 31,2023 has been paid/provided by the Bank in accordance with the provisions of section 35B (1) of the Banking Regulation Act, 1949, and;

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

i. The Bank has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Schedule 12 and Note No 3.6 under Schedule 18 to the standalone financial statements;

ii. The Bank has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long term contracts including derivative contracts - Refer Note 3.8 under Schedule 18 to the standalone financial statements; and

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Bank - Refer Note 3.10 under Schedule 18 to the standalone financial

statements.

iv. a) The Management has represented that, to the

best of its knowledge and belief, as disclosed in Note No.3.12 under Schedule 18 to the standalone financial statements, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Bank to or in any other person or entity, including foreign entity (''Intermediaries''), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the

Bank (''Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

b) The Management has represented, that, to the best of its knowledge and belief, as disclosed in Note No.3.12 under Schedule 18 to the standalone financial statements, no funds (which are material either individually or in the aggregate) have been received by the Bank from any person or entity, including foreign entity (''Funding Parties''), with the understanding, whether recorded in writing or otherwise, that the Bank shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (''Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

c) Based on the audit procedures performed 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; and

v. The dividend declared and paid by the Bank is in accordance with sec.123 of the Act.

vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable to the Bank with effect from April 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31,2023.

For Varma & Varma For Borkar & Muzumdar

Chartered Accountants Chartered Accountants

FRN:004532S FRN:101569W

Vijay Narayan Govind kaushal Muzumdar

Partner Partner

M. No.203094 M. No. 100938

UDIN: 23203094BGXYMB9748 UDIN: 23100938BGQQRH2390

Kochi Kochi

05th May, 2023 05th May, 2023

Mar 31, 2022

To the Members of The Federal Bank Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial

statements of The Federal Bank Limited (''the Bank''), which comprise the standalone Balance Sheet as at March 31, 2022, the standalone Profit and Loss Account, the standalone Cash Flow statement for the year then ended and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information in 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 standalone financial statements give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 2013 (''the Act'') in the manner so required for banking companies and give a true and fair view in conformity with accounting principles generally accepted in India, of the state of affairs of the Bank as at March 31, 2022, and its profit and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (''SAs'') specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the ''Auditors'' Responsibilities

for the Audit of the Financial Statements'' section of our report. We are independent of the Bank in accordance with the âCode of Ethics" issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Emphasis of Matter

We draw attention to Note No. 3.14 of Schedule 18 to the Standalone financial statements regarding the impact of COVID-19 pandemic. As stated therein, in view of continuing uncertainties, the extent of impact of the pandemic on the

Bank''s operations and financial position would depend on several factors including actions taken to mitigate its impact and other regulatory measures.

Our opinion is not modified in respect of this matter.

Key Audit Matters

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

Description of Key Audit Matters
Key Audit Matters	How our audit addressed the Key Audit Matters
(i) Classification of Advances, Identification of Non-Performing Advances, Income Recognition and Provision on Advances (Schedule 9 read with Note 5.2 of Schedule 17 and Note 1.4 and Note 1.14.5 of Schedule 18 to the standalone financial statements)
Advances include Bills purchased and discounted, Cash credits, Overdrafts, Loans repayable on demand and Term loans. These are further categorised as secured by Tangible assets (including advances against Book Debts), covered by Bank/Government Guarantees and Unsecured advances.	Our audit approach / procedures towards Classification of Advances, Identification of Non-performing Advances, Income Recognition and Provision on Advances included the following: - Understanding and considering the Bank''s accounting policies for NPA identification and provisioning and assessing compliance with the prudential norms prescribed by the RBI (IRACP Norms), including the additional provisions and asset classification benefit extended on restructured advances under RBI''s COVID-19 Regulatory Package.

Key Audit Matters	How our audit addressed the Key Audit Matters
The Reserve Bank of India (''RBI'') has prescribed	- Understanding, evaluation and testing the design and operating
the ''Prudential Norms on Income Recognition,	effectiveness of key controls (including system based automated
Asset Classification and Provisioning'' in respect	controls) for identification and provisioning of impaired accounts
of advances for banks (''IRACP Norms''), including circulars in relation to COVID-19 Regulatory	based on the extant guidelines on IRACP laid down by the RBI.
Package - Asset Classification and Provisioning.	- Performing other procedures including substantive audit procedures covering the identification of NPAs by the Bank. These
The identification of performing and	procedures included:
non-performing advances (including advances restructured under applicable IRACP Norms) involves establishment of proper mechanism	(a) Considering testing of the exception reports generated from the application systems where the advances have been recorded.
and the Bank is required to apply significant	(b) Considering the accounts reported by the Bank and other banks
degree of judgement to identify and determine	as Special Mention Accounts ("SMA") in RBI''s central repository
the amount of provision required against each	of information on large credits (CRILC) to identify stress.
advance applying both quantitative as well as	(c) Reviewing account statements, drawing power calculation,
qualitative factors prescribed by the regulations.	security and other related information of the borrowers
Significant judgements and estimates for NPA	selected based on quantitative and qualitative risk factors
identification and provisioning could give rise to	(d) Reading of minutes of management committee and credit
material misstatements on:	committee meetings and performing inquiries with the credit
- Completeness and timing of recognition of	and risk departments to ascertain if there were indicators
non-performing assets in accordance with	of stress or an occurrence of an event of default in a loan
criteria as per IRACP norms;	account or any product
- Measurement of the provision for	(e) Considering audit reports and memorandum of changes issued
non-performing assets based on loan	by statutory branch auditors.
exposure, ageing and classification of the	(f) Considering Internal Audit, Systems Audit, Credit Audit and
loan, realizable value of security;	Concurrent Audit as per the policies and procedures of the Bank.
- Appropriate reversal of unrealized	(g) Considering the RBI Annual Financial Inspection report on
income on the NPAs. Since the classification of advances, identification	the Bank, the Bank''s response to the observations and other communication with RBI during the year.
of NPAs and creation of provision on advances	(h) Reviewing the report submitted by external expert appointed
(including additional provisions on restructured	by the Bank to verify compliance with the RBI circular on
advances under applicable IRACP Norms) and	Automation of IRACP processes through the Bank''s core
income recognition on advances:	banking system.
- Requires proper control mechanism and	(i) Examination of advances including stressed/ restructured
significant level of estimation by the Bank; - Required to be aligned with changes in	advances on a sample basis with respect to compliance with the RBI Master Circulars / Guidelines.
IRACP Norms during the year arising out of	(j) Visits to branches/offices and examination of documentation
the COVID 19 pandemic	and other records relating to advances.
- Has significant impact on the overall	For Non- performing advances identified, we, based on factors including
financial statements of the Bank; we have ascertained this area as a Key Audit Matter.	stressed sectors and account materiality, tested on a sample basis the asset classification dates, reversal of unrealized interest, value of available security and provisioning as per IRACP norms. We recomputed the provision for NPA on such samples after considering the key input factors and compared our measurement outcome to that prepared by management.

	Key Audit Matters	How our audit addressed the Key Audit Matters
(ii)	Valuation of Investments, Identification of and provisioning for Non-Performing Investments (Schedule 8 read with Note 5.1 of Schedule 17 and Note 1.2 and Note 1.14.5 of Schedule 18 to the standalone financial statements)
	Investments include investments made by the Bank in various Government Securities, Bonds, Debentures, Shares, Security receipts and other approved securities. RBI Circulars and directives, inter-alia, cover valuation of investments, classification of investments, identification of non-performing investments, non-recognition of income and provisioning against non-performing investments.	Our audit approach/procedures towards Investments with reference to the RBI Circulars/directives included the understanding of internal controls and substantive audit procedures in relation to valuation, classification, identification of non-performing investments (NPIs) and provisioning/ depreciation related to Investments. In particular - - We evaluated and understood the Bank''s internal control system to comply with relevant RBI guidelines regarding valuation, classification, identification of NPIs, reversal of income on NPIs and provisioning/ depreciation related to investments;
	The valuation of each category (type) of the aforesaid securities is to be done as per the method prescribed in circulars and directives issued by the RBI which involves collection of data/information from various sources such as FIMMDA rates, rates quoted on BSE/NSE, financial statements of unlisted companies etc. We identified valuation of investments and identification of NPI as a Key Audit Matter because of the management judgement involved in determining the value of certain investments (Bonds and Debentures, Pass-through certificates) based on applicable Regulatory guidelines and the Bank''s policies, impairment assessment for HTM book based on management judgement, the degree of regulatory focus and the overall significance to the financial results of the Bank.	- We assessed and evaluated the process adopted for collection of information from various sources for determining market value of these investments; - For the selected sample of investments in hand, we tested accuracy and compliance with the RBI Master Circulars and directions by re-performing valuation for each category of the security; - We carried out substantive audit procedures to recompute independently the provision to be maintained in accordance with the circulars and directives of the RBI. Accordingly, we selected samples from the investments of each category and tested for NPIs as per the RBI guidelines and recomputed the provision to be maintained and if accrual of income is in accordance with the RBI Circular for those selected sample of NPIs; - 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.
(iii)	Information Technology (''IT'') 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 materially misstated. The Bank uses several systems for its overall financial reporting and there is a large volume of transactions being recorded at multiple locations daily. In addition, there are increasing challenges to protect the integrity of the Bank''s systems and data since cyber security has become a more significant risk in recent periods.	As a part of our audit procedures for review of the Bank''s IT systems and related controls for financial reporting: - We tested the design and operating effectiveness of the Bank''s IT access controls over the information systems that are critical to financial reporting. - We tested sample 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. We considered the control environment relating to various interfaces, configuration and other application layer controls identified as key to our audit.

Key Audit Matters	How our audit addressed the Key Audit Matters
Due to the pervasive nature and complexity of the IT environment as well as its importance in relation to accurate and timely financial reporting, we have identified this area as a Key Audit Matter.	- We reviewed the Bank''s controls over opening and unauthorized operations in internal/ office accounts. - In addition to the above, we tested the design and operating effectiveness of certain automated controls that were considered as key internal financial controls over financial reporting. Where deficiencies were identified, we sought explanations regarding compensating controls or performed alternate audit procedures. In addition, we understood where relevant, changes made to the IT landscape during the audit period and tested those changes that had a significant impact on financial reporting.
(iv) Assessment of Provisions and Contingent Liabilities (Schedule 5 and 12 read with Notes 5.13 & 5.21 of Schedule 17 to the standalone financial statements)
Assessment of Provisions and Contingent liabilities in respect of certain litigations including Direct and Indirect Taxes, various claims filed by other parties not acknowledged as debt (Schedule 12 to the standalone financial statements) and various employee benefits schemes (Schedule 5 to the standalone financial statements) was identified as a significant audit area. There is high level of judgement involved in estimating the level of provisioning required as well as in the disclosure of both Provisions and Contingent Liabilities in respect of tax matters and other legal claims. The Bank''s assessment is supported by the facts of matter, their own judgment, past experience, and advice from independent legal / tax consultants wherever considered necessary. Accordingly, unexpected adverse outcomes may significantly impact the Bank''s reported profit and state of affairs presented in the Balance Sheet.	Our audit approach / procedures involved: - Obtaining an understanding of internal controls relevant to the identification of litigations and legal cases to be reported; - Understanding the current status of the litigations/tax assessments; - Examining recent orders and/or communication received from various tax authorities/ judicial forums and follow up action thereon; - Evaluating the merit of the subject matter under consideration with reference to the grounds presented therein and available independent legal / tax advice including opinion of the Bank''s tax consultants; - Review and analysis of evaluation of the contentions of the Bank through discussions, collection of details of the subject matter under consideration, the likely outcome and consequent potential outflows on those issues; - Testing the design and operating effectiveness of key controls over the completeness and accuracy of the data, the measurement of the fair value of the schemes'' assets, understanding the judgements made in determining the assumptions used by management to value the employee liabilities with specific schemes and market practice;
The valuations of the employee benefit liabilities are calculated with reference to multiple actuarial assumptions and inputs including discount rate, rate of inflation and mortality rates. The valuation of funded assets in respect of the same is also sensitive to changes in the assumptions.	- Our audit procedures included an assessment of the assumptions used by the actuary by comparing life expectancy assumptions with relevant mortality tables, benchmarking inflation and discount rates against external market data. We verified the value of plan assets to the statements provided by asset management companies managing the plan assets;
We determined the above area as a Key Audit Matter in view of associated uncertainty relating to the outcome of the matters which requires application of judgment in interpretation of law, circumstances of each case and estimates involved.	- Verification of disclosures related to significant litigations, taxation matters and Employee benefits liabilities in the standalone financial statements.

Opinion

We have audited the accompanying standalone financial

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

Basis for Opinion

Emphasis of Matter

Bank''s operations and financial position would depend on several factors including actions taken to mitigate its impact and other regulatory measures.

Our opinion is not modified in respect of this matter.

Key Audit Matters

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

Description of Key Audit Matters
Key Audit Matters	How our audit addressed the Key Audit Matters
(i) Classification of Advances, Identification of Non-Performing Advances, Income Recognition and Provision on Advances (Schedule 9 read with Note 5.2 of Schedule 17 and Note 1.4 and Note 1.14.5 of Schedule 18 to the standalone financial statements)
Advances include Bills purchased and discounted, Cash credits, Overdrafts, Loans repayable on demand and Term loans. These are further categorised as secured by Tangible assets (including advances against Book Debts), covered by Bank/Government Guarantees and Unsecured advances.	Our audit approach / procedures towards Classification of Advances, Identification of Non-performing Advances, Income Recognition and Provision on Advances included the following: - Understanding and considering the Bank''s accounting policies for NPA identification and provisioning and assessing compliance with the prudential norms prescribed by the RBI (IRACP Norms), including the additional provisions and asset classification benefit extended on restructured advances under RBI''s COVID-19 Regulatory Package.

Key Audit Matters	How our audit addressed the Key Audit Matters
The Reserve Bank of India (''RBI'') has prescribed	- Understanding, evaluation and testing the design and operating
the ''Prudential Norms on Income Recognition,	effectiveness of key controls (including system based automated
Asset Classification and Provisioning'' in respect	controls) for identification and provisioning of impaired accounts
of advances for banks (''IRACP Norms''), including circulars in relation to COVID-19 Regulatory	based on the extant guidelines on IRACP laid down by the RBI.
Package - Asset Classification and Provisioning.	- Performing other procedures including substantive audit procedures covering the identification of NPAs by the Bank. These
The identification of performing and	procedures included:
non-performing advances (including advances restructured under applicable IRACP Norms) involves establishment of proper mechanism	(a) Considering testing of the exception reports generated from the application systems where the advances have been recorded.
and the Bank is required to apply significant	(b) Considering the accounts reported by the Bank and other banks
degree of judgement to identify and determine	as Special Mention Accounts ("SMA") in RBI''s central repository
the amount of provision required against each	of information on large credits (CRILC) to identify stress.
advance applying both quantitative as well as	(c) Reviewing account statements, drawing power calculation,
qualitative factors prescribed by the regulations.	security and other related information of the borrowers
Significant judgements and estimates for NPA	selected based on quantitative and qualitative risk factors
identification and provisioning could give rise to	(d) Reading of minutes of management committee and credit
material misstatements on:	committee meetings and performing inquiries with the credit
- Completeness and timing of recognition of	and risk departments to ascertain if there were indicators
non-performing assets in accordance with	of stress or an occurrence of an event of default in a loan
criteria as per IRACP norms;	account or any product
- Measurement of the provision for	(e) Considering audit reports and memorandum of changes issued
non-performing assets based on loan	by statutory branch auditors.
exposure, ageing and classification of the	(f) Considering Internal Audit, Systems Audit, Credit Audit and
loan, realizable value of security;	Concurrent Audit as per the policies and procedures of the Bank.
- Appropriate reversal of unrealized	(g) Considering the RBI Annual Financial Inspection report on
income on the NPAs. Since the classification of advances, identification	the Bank, the Bank''s response to the observations and other communication with RBI during the year.
of NPAs and creation of provision on advances	(h) Reviewing the report submitted by external expert appointed
(including additional provisions on restructured	by the Bank to verify compliance with the RBI circular on
advances under applicable IRACP Norms) and	Automation of IRACP processes through the Bank''s core
income recognition on advances:	banking system.
- Requires proper control mechanism and	(i) Examination of advances including stressed/ restructured
significant level of estimation by the Bank; - Required to be aligned with changes in	advances on a sample basis with respect to compliance with the RBI Master Circulars / Guidelines.
IRACP Norms during the year arising out of	(j) Visits to branches/offices and examination of documentation
the COVID 19 pandemic	and other records relating to advances.
- Has significant impact on the overall	For Non- performing advances identified, we, based on factors including
financial statements of the Bank; we have ascertained this area as a Key Audit Matter.	stressed sectors and account materiality, tested on a sample basis the asset classification dates, reversal of unrealized interest, value of available security and provisioning as per IRACP norms. We recomputed the provision for NPA on such samples after considering the key input factors and compared our measurement outcome to that prepared by management.

	Key Audit Matters	How our audit addressed the Key Audit Matters
(ii)	Valuation of Investments, Identification of and provisioning for Non-Performing Investments (Schedule 8 read with Note 5.1 of Schedule 17 and Note 1.2 and Note 1.14.5 of Schedule 18 to the standalone financial statements)
	Investments include investments made by the Bank in various Government Securities, Bonds, Debentures, Shares, Security receipts and other approved securities. RBI Circulars and directives, inter-alia, cover valuation of investments, classification of investments, identification of non-performing investments, non-recognition of income and provisioning against non-performing investments.	Our audit approach/procedures towards Investments with reference to the RBI Circulars/directives included the understanding of internal controls and substantive audit procedures in relation to valuation, classification, identification of non-performing investments (NPIs) and provisioning/ depreciation related to Investments. In particular - - We evaluated and understood the Bank''s internal control system to comply with relevant RBI guidelines regarding valuation, classification, identification of NPIs, reversal of income on NPIs and provisioning/ depreciation related to investments;
	The valuation of each category (type) of the aforesaid securities is to be done as per the method prescribed in circulars and directives issued by the RBI which involves collection of data/information from various sources such as FIMMDA rates, rates quoted on BSE/NSE, financial statements of unlisted companies etc. We identified valuation of investments and identification of NPI as a Key Audit Matter because of the management judgement involved in determining the value of certain investments (Bonds and Debentures, Pass-through certificates) based on applicable Regulatory guidelines and the Bank''s policies, impairment assessment for HTM book based on management judgement, the degree of regulatory focus and the overall significance to the financial results of the Bank.	- We assessed and evaluated the process adopted for collection of information from various sources for determining market value of these investments; - For the selected sample of investments in hand, we tested accuracy and compliance with the RBI Master Circulars and directions by re-performing valuation for each category of the security; - We carried out substantive audit procedures to recompute independently the provision to be maintained in accordance with the circulars and directives of the RBI. Accordingly, we selected samples from the investments of each category and tested for NPIs as per the RBI guidelines and recomputed the provision to be maintained and if accrual of income is in accordance with the RBI Circular for those selected sample of NPIs; - 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.
(iii)	Information Technology (''IT'') 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 materially misstated. The Bank uses several systems for its overall financial reporting and there is a large volume of transactions being recorded at multiple locations daily. In addition, there are increasing challenges to protect the integrity of the Bank''s systems and data since cyber security has become a more significant risk in recent periods.	As a part of our audit procedures for review of the Bank''s IT systems and related controls for financial reporting: - We tested the design and operating effectiveness of the Bank''s IT access controls over the information systems that are critical to financial reporting. - We tested sample 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. We considered the control environment relating to various interfaces, configuration and other application layer controls identified as key to our audit.

Key Audit Matters	How our audit addressed the Key Audit Matters
Due to the pervasive nature and complexity of the IT environment as well as its importance in relation to accurate and timely financial reporting, we have identified this area as a Key Audit Matter.	- We reviewed the Bank''s controls over opening and unauthorized operations in internal/ office accounts. - In addition to the above, we tested the design and operating effectiveness of certain automated controls that were considered as key internal financial controls over financial reporting. Where deficiencies were identified, we sought explanations regarding compensating controls or performed alternate audit procedures. In addition, we understood where relevant, changes made to the IT landscape during the audit period and tested those changes that had a significant impact on financial reporting.
(iv) Assessment of Provisions and Contingent Liabilities (Schedule 5 and 12 read with Notes 5.13 & 5.21 of Schedule 17 to the standalone financial statements)
Assessment of Provisions and Contingent liabilities in respect of certain litigations including Direct and Indirect Taxes, various claims filed by other parties not acknowledged as debt (Schedule 12 to the standalone financial statements) and various employee benefits schemes (Schedule 5 to the standalone financial statements) was identified as a significant audit area. There is high level of judgement involved in estimating the level of provisioning required as well as in the disclosure of both Provisions and Contingent Liabilities in respect of tax matters and other legal claims. The Bank''s assessment is supported by the facts of matter, their own judgment, past experience, and advice from independent legal / tax consultants wherever considered necessary. Accordingly, unexpected adverse outcomes may significantly impact the Bank''s reported profit and state of affairs presented in the Balance Sheet.	Our audit approach / procedures involved: - Obtaining an understanding of internal controls relevant to the identification of litigations and legal cases to be reported; - Understanding the current status of the litigations/tax assessments; - Examining recent orders and/or communication received from various tax authorities/ judicial forums and follow up action thereon; - Evaluating the merit of the subject matter under consideration with reference to the grounds presented therein and available independent legal / tax advice including opinion of the Bank''s tax consultants; - Review and analysis of evaluation of the contentions of the Bank through discussions, collection of details of the subject matter under consideration, the likely outcome and consequent potential outflows on those issues; - Testing the design and operating effectiveness of key controls over the completeness and accuracy of the data, the measurement of the fair value of the schemes'' assets, understanding the judgements made in determining the assumptions used by management to value the employee liabilities with specific schemes and market practice;
The valuations of the employee benefit liabilities are calculated with reference to multiple actuarial assumptions and inputs including discount rate, rate of inflation and mortality rates. The valuation of funded assets in respect of the same is also sensitive to changes in the assumptions.	- Our audit procedures included an assessment of the assumptions used by the actuary by comparing life expectancy assumptions with relevant mortality tables, benchmarking inflation and discount rates against external market data. We verified the value of plan assets to the statements provided by asset management companies managing the plan assets;
We determined the above area as a Key Audit Matter in view of associated uncertainty relating to the outcome of the matters which requires application of judgment in interpretation of law, circumstances of each case and estimates involved.	- Verification of disclosures related to significant litigations, taxation matters and Employee benefits liabilities in the standalone financial statements.

Information other than the standalone Financial Statements and Auditors'' Report Thereon

The Bank''s Board of Directors is responsible for the other information. The other information comprises the information included in the Bank''s Annual Report, but does not include the

standalone financial statements and our Auditors'' Report thereon. The Bank''s Annual Report is expected to be made available to us after the date of this Auditors'' Report.

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

In connection with our audit of the standalone financial

statements, our responsibility is to read the other information when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. When we read the 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 standalone Financial Statements

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

Auditors'' Responsibilities for the audit of the standalone Financial Statements

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

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

Information other than the standalone Financial Statements and Auditors'' Report Thereon

The Bank''s Board of Directors is responsible for the other information. The other information comprises the information included in the Bank''s Annual Report, but does not include the

standalone financial statements and our Auditors'' Report thereon. The Bank''s Annual Report is expected to be made available to us after the date of this Auditors'' Report.

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

In connection with our audit of the standalone financial

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

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

Auditors'' Responsibilities for the audit of the standalone Financial Statements

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

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

â¢ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures in the standalone financial statements made by management.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements

for the financial year ended March 31, 2022 and are therefore the key audit matters. We describe these matters in our auditors'' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matters

We did not audit the financial statements of 331 branches included in the standalone financial statements of the Bank whose financial statements reflect total assets of ''52539 crores as at March 31, 2022 and total revenue of ''2091crores for the year ended on that date, as considered in the standalone financial statements. These branches cover 15.80 % of advances, 26.11% of deposits and 23.33% of Non-performing assets as at 31st March 2022 and 13.27 % of revenue for the year ended 31st March 2022. The financial statements of these branches have been audited by branch auditors whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these branches, is based solely on the reports of such branch auditors.

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

Report on Other Legal and Regulatory Requirements

The standalone Balance Sheet and the standalone 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.

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 purposes of our audit;

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

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

a) We have sought and obtained all the information and

explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) In our opinion, proper books of account as required by law have been kept by the Bank so far as it appears from our examination of those books 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 under section 143(8) of the Act by branch auditors of the Bank have been sent to us and have been properly dealt with by us in preparing this report;

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

e) In our opinion, the aforesaid standalone 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 March 31, 2022 and taken on record by the Board of Directors, none of the directors is disqualified as on Marc

Mar 31, 2019

INDEPENDENT AUDITORS'' REPORT

TO THE MEMBERS OF

THE FEDERAL BANK LIMITED

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying Standalone Financial Statements of THE FEDERAL BANK LIMITED ("the Bank"), which comprise the standalone balance sheet as at 31 March 2019, and the standalone profit and loss account, the standalone cash flow statement for the year then ended and notes to the Standalone Financial Statements, including a summary of the 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.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Financial Statements give the information required by the Banking Regulation Act, 1949 (''BR Act'') as well as the Companies Act, 2013 ("Act") in the manner so required for banking companies and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Bank as at 31 March 2019, and profit and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities

under those SAs are further described in the Auditor''s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Bank in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the Standalone Financial Statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Financial Statements of the current period. These matters were addressed in the context of our audit of the Standalone Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Description of Key Audit Matters

Identification of Non-Performing Assets (''NPAs'') and Provision on Advances Gross NPA: INR 3,260.68 crore for year ended 31 March 2019 Charge (including write-off): INR 630.55 crore for year ended 31 March 2019 NPA Provision: INR 1,606.32 crore as at 31 March 2019

Refer to the accounting policies in "Schedule 17 to the Standalone Financial Statements: Significant Accounting Policies- Use of estimates and Advances and Note 1.4 and Note 3.1 of Schedule 18 to the Standalone Financial Statements: Advances"

The key audit matter	How the matter was addressed in our audit
Significant estimate and judgment involved	Our key audit procedures included:
Identification of NPAs is made based on the assessment of various criteria stipulated in the Reserve Bank of India (''RBI'') guidelines with regard to the ''Prudential Norms on Income Recognition, Asset Classification and Provisioning''. NPA classification is made borrower wise whereby if one facility to the borrower becomes an NPA then all facilities to such a borrower will be treated as an NPA. Provisions in respect of such NPAs and restructured advances are made based on management''s assessment of the degree of impairment of the advances subject to and guided by the minimum provisioning levels prescribed under RBI guidelines, prescribed from time to time. The provision on NPAs are also based on the valuation of the security available. In case of restructured accounts, provision is made for erosion/diminution in fair value of restructured loans, in accordance with the RBI guidelines.	Design /controls â¢ Assessing the design, implementation and operating effectiveness of key internal controls over approval, recording and monitoring of loans, monitoring process of overdue loans (including those which became overdue subsequent to the reporting date), measurement of NPA provision, identification of NPA accounts, and assessing the reliability of management information, which included overdue reports. In addition, for corporate loans we tested controls over the internal ratings process, monitoring of stressed accounts including credit file review processes and review controls over the approval of significant individual impairment provisions.
	â¢ Evaluated the design, implementation and operating

The key audit matter	How the matter was addressed in our audit
We identified NPA identification and provision on loans and advances as a key audit matter because of the significant efforts involved by the management in identifying NPAs based on the RBI guidelines, the level of management judgement involved in determining the provision, the valuation of security of the NPAs and on account of the significance of these estimates to the financial statements of the Bank.	effectiveness of key internal controls over the valuation of the securities for NPAs and the Special Mention Accounts (''SMA).
	â¢ Testing of management review controls over identification of NPAs, measurement of provisions and disclosures in financial statements, including auditing management controls on Early Warning System of identifying credit impairment indicators.
	â¢ Involved our information systems specialist in the audit of this area to obtain evidence and get assurance over data integrity and calculations, including system reconciliations.
	Substantive tests
	â¢ Test of details for a selection of exposures over calculation of NPA provisions including valuation of collaterals for NPAs as at 31 March 2019; the borrower-wise NPA identification and provisioning determined by the Bank and also testing related disclosures by assessing the completeness, accuracy and relevance of data and to ensure that the same is in compliance with the RBI guidelines with regard to the Prudential Norms on Income Recognition, Asset Classification and Provisioning.
	â¢ We also selected a number of loans to test potential cases of loans repaid by a customer during the period by fresh disbursement(s) to these higher risk loans.
	â¢ We selected samples (based on quantitative and qualitative thresholds) of corporate clients where impairment indicators had been identified by management. We obtained management''s assessment of the recoverability of these exposures (including individual provisions calculations) and challenged whether individual provisions, or lack of, were appropriate.
	â¢ This included the following procedures:
	Reviewing the statement of accounts, approval process, board and credit committees minutes, credit review of customer, review of Special Mention Accounts (''SMA'') reports and other related documents to assess recoverability and the classification of the facility;
	- Assessed external collateral valuer''s credentials and comparing external valuations to values used in management''s assessments; and
	For a risk based sample of corporate loans not identified as displaying indicators of deterioration by management, challenged this assessment by reviewing the historical performance of the customer and assessed whether any impairment indicators were present.

The key audit matter	How the matter was addressed in our audit
Valuation of Financial Instruments (Investments) Gross value of investments: INR 32,224.29 crore as at 31 March 201 Â£ Mark to market: INR 399.82 crore as at 31 March 2019 Net value of investments: INR 31,824.47 crore as at 31 March 2019	)
Refer to the accounting policies in "Schedule 17 to the Standalone Financial Financial Statements: Investments"	Statements: Significant Accounting Policies- Investments" and "Schedule 8 to the
Significant estimate and judgment involved	Our key audit procedures included:
Investments	Design / controls
Investments are classified into ''Held for Trading'' (''HFT''), Available for Sale'' (''AFS'') and ''Held to Maturity'' (''HTM'') categories at the time of purchase. Investments, which the Bank intends to hold till maturity are classified as HTM investments. Investments classified as HTM are carried at amortised cost. Where in the opinion of management, a diminution, other than temporary, in the value of investments has taken place, appropriate provisions are made. Investments classified as AFS and HFT are marked- to-market on a periodic basis as per the relevant RBI guidelines. We identified valuation of investments as a key audit matter because of the management judgement involved in determining the value of certain investments (Bonds and Debentures, Pass through certificates) based on the policy and model developed by the Bank, impairment assessment for HTM book and the overall significance to the financial results of the Bank.	We tested the design, implementation and operating effectiveness of management''s key internal controls over the valuation process and independent price verification, including the Bank''s review and approval of the estimates and assumptions used for the valuation including key authorization and data input controls; We assessed appropriateness of the valuation methodologies with reference to RBI guidelines and Bank''s own valuation policy; Read investment agreements / term sheets entered into during the current year, on a sample basis, to understand the relevant investment terms and identify any conditions that were relevant to the valuation of financial instruments. We tested the controls operated at the Bank for ensuring completeness of the investments.
	Substantive tests
	We verified the list of investments from eKuber for SLR securities and DP statements for Non-SLR securities. We independently verified the fair valuation of investments on a sample basis with direct observable inputs and external input data such as market value from FBIL, spreads from FIMMDA etc. after considering the requirements of RBI guidelines. We assessed that the financial statement disclosures appropriately reflected the Bank''s exposure to investments valuation risks with reference to the requirements of the prevailing accounting standards and the RBI guidelines.
Information technology (''IT'') systems
IT systems and automated controls	Our key IT audit procedures included:
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 materially misstated. Amongst, its multiple IT systems, seven systems are key for its overall financial reporting. 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 ''IT systems and automated 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.	â¢ 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.
	â¢ 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.
	â¢ 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 preventative controls designed to enforce segregation of duties.

The key audit matter	How the matter was addressed in our audit
	â¢ For a selected group of key controls over financial and reporting system, we have performed procedures to determine that these controls remained unchanged during the year or were changed following the standard change management process.
	â¢ We have also assessed other areas which includes password policies, security configurations, system interface controls, controls over changes to applications and databases and that business users, developers and production support did not have access to change applications, the operating system or databases in the production environment.
	â¢ 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 Standalone

Financial Statements and Auditors'' 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 Bank''s Annual Report, but does not include the Standalone Financial Statements and our auditors'' 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 Standalone Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.

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

When we read the Bank''s Annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Management''s Responsibility for the Standalone 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 Standalone Financial Statements that give a true and fair view of the state of affairs, profit 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, provisions of Section 29 of the Banking Regulation Act, 1949 ("BR Act") and the circulars, guidelines and directions issued by the Reserve Bank of India ("RBI") from time to time. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Bank and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management and Board of Directors are responsible for assessing the Bank''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.

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

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

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

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

â¢ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Bank has adequate internal financial controls 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.

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors'' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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 BR Act, Section 133 of the Act.

(A) As required by sub section (3) of Section 30 of the BR 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) the transactions of the Bank, which have come to our notice, have been within the powers of the Bank; and

(c) since the key operations of the Bank are automated with the key applications integrated to the core banking systems, the audit is carried out centrally as all the necessary records and data required for the purposes of our audit are available therein. However, during the course of our audit we have visited 40 branches. Returns from 1,234 branches were received duly audited by other auditors and were found adequate for the purpose of our audit.

(B) 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 purposes of our audit and have found them to be satisfactory;

(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 1,234 branches 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 standalone balance sheet, the standalone profit and loss account and the standalone cash flow statement dealt with by this Report are in agreement with the books of accounts.

(e) in our opinion, the aforesaid standalone 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 the RBI;

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

(g) with respect to the adequacy of the internal financial controls with reference to financial statements of the Bank and the operating effectiveness of such controls, refer to our separate Report in "Annexure A"; and

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

i. The Bank has disclosed the impact of pending litigations on its financial position in its Standalone Financial Statements - Refer Schedule 12 and No.47 of Schedule 18 to the Standalone Financial Statements;

ii. The Bank has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts- Refer Note 4.12 of Schedule 18 to the Standalone 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. The disclosures required on holdings as well as dealing in specified bank notes during the period from 8 November 2016 to 30 December 2016 as envisaged in notification

G.S.R. 308(E) dated 30 March 2017 issued by the Ministry of Corporate Affairs is not applicable to the Bank

(D) With respect to the matter to be included in the Auditors'' Report under section 197(16):

i. The Bank is a banking company as defined under Banking Regulation Act, 1949. Accordingly, the requirements prescribed under Section 197 of the Companies Act, 2013 do not apply.

For B S R & Co. LLP	For M.M. Nissim & Co.
Chartered Accountants	Chartered Accountants
Firm''s Registration No:	Firm''s Registration No:
101248W/W-100022	107122W
Akeel Master	Sanjay Khemani
Partner	Partner
Membership No: 046768	Membership No: 044577
Mumbai
May 4, 2019

ANNEXURE A TO THE INDEPENDENT AUDITORS'' REPORT ON THE STANDALONE FINANCIAL STATEMENTS OF THE FEDERAL BANK FOR THE YEAR ENDED 31 MARCH 2019.

Report on the internal financial controls with reference to the aforesaid standalone financial statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013

(Referred to in paragraph (B)(g) under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date)

Opinion

We have audited the internal financial controls with reference to financial statements of The Federal Bank Limited ("the Bank") as of 31 March 2019 in conjunction with our audit of the standalone financial statements of the Bank for the year ended on that date.

In our opinion, the Bank has, in all material respects, adequate internal financial controls with reference to financial statements and such internal financial controls were operating effectively as at 31 March 2019, based on the internal financial controls with reference to financial statements criteria established by the Bank considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (the "Guidance Note").

Management''s Responsibility for Internal Financial Controls

The Bank''s management and the Board of Directors are responsible for establishing and maintaining internal financial controls based on the internal financial controls with reference to financial statements criteria established by the Bank considering the essential components of internal control stated in the Guidance Note. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to 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 (hereinafter referred to as "the Act"). Auditors'' Responsibility

Our responsibility is to express an opinion on the Bank''s internal financial controls with reference to financial statements based on our

audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to financial statements. 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 with reference to financial statements were established and maintained and whether 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 with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of such internal financial controls, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgement, including the assessment of the risks of material misstatement of the standalone 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 Bank''s internal financial controls with reference to financial statements.

Meaning of Internal Financial controls with Reference to Financial Statements

A Bank''s internal financial controls with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Bank''s internal financial controls with reference to financial statements include those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Bank; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Bank are being made only in accordance with authorisations of management and directors of the Bank; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Bank''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial controls with Reference to Financial Statements

Because of the inherent limitations of internal financial controls with reference to financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls with reference to financial statements to future periods are subject to the risk that the internal financial controls with reference to financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

For B S R & Co. LLP	For M.M. Nissim & Co.
Chartered Accountants	Chartered Accountants
Firm''s Registration No:	Firm''s Registration No:
101248W/W-100022	107122W
Akeel Master	Sanjay Khemani
Partner	Partner
Membership No: 046768	Membership No: 044577
Mumbai
May 4, 2019

Mar 31, 2018

INDEPENDENT AUDITORS'' REPORT TO THE MEMBERS OF THE FEDERAL BANK LIMITED

Report on the audit of Standalone Financial Statements

We have audited the accompanying standalone financial statements of THE FEDERAL BANK LIMITED (''the Bank''), which comprise the Balance Sheet as at 31 March 2018, the Profit and Loss Account, the Cash Flow Statement for the year then ended, and notes to the standalone financial statements, including a summary of the significant accounting policies and other explanatory information in which are incorporated the Returns for the year ended on that date audited by the branch auditors of the Bank''s branches.

Management''s responsibility for the standalone financial statements

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

Auditors'' responsibility

Our responsibility is to express an opinion on these standalone 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 conducted our audit on the standalone financial statements of the Bank in accordance with the Standards on Auditing (''the

Standards'') specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone financial statements are free from material misstatements.

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

Opinion

in our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the BR Act, as well as the relevant requirements of the Act, in the manner so required for banking companies and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Bank as at 31 March 2018, its profit and its cash flows for the year then ended on that date.

Emphasis of Matter

Without qualifying our opinion, we draw attention to Note No.

2.1 of Schedule 18 regarding deferment of additional provision requirement on account of the enhancement in gratuity limits as per the amendment dated 29 March 2018 in Payment of Gratuity Act, 1972 in terms of RBi approval vide letter no. DBR. BP.9730/21.04.018/2017-18 dated 27 April 2018, and the unamortized balance as at 31 March 2018 of Rs 5,358 lakhs. Our opinion is not modified in respect of this 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 BR Act, Section 133 of the Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.

As required by sub section (3) of Section 30 of the BR Act, 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

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

(a) we have sought and obtained all the information and explanations which to the best of our knowledge and belief, were necessary for the purpose of our audit;

(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 1,234 branches audited by branch auditors of the Bank audited under section 143(8) 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 standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, to the extent they are not inconsistent with the accounting policies prescribed by the RBi;

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

(g) with respect to the adequacy of the internal financial controls with reference to the standalone financial statements of the Bank and the operating effectiveness of such controls, refer to our separate report in "Annexure A";

(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 Schedule 12 and Note No. 4.7 of Schedule 18 to the standalone financial statements;

(ii) The Bank has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note No. 4.12 of Schedule 18 to the standalone 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) The disclosures required on holdings as well as dealing in Specified bank notes during the period from 8 November 2016 to 30 December 2016 as envisaged in notification G.S.R. 308(E) dated 30 March 2017 issued by the Ministry of Corporate Affairs is not applicable to the Bank.

ANNEXURE A TO THE INDEPENDENT AUDITORS'' REPORT OF EVEN DATE ON THE STANDALONE FINANCIAL STATEMENTS OF THE FEDERAL BANK LIMITED

Report on the internal financial controls under clause (i) of sub-section 3 of Section 143 of the Companies Act, 2013

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

Management''s responsibility for internal financial controls

The Bank''s Board of Directors is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Bank considering the essential components of internal control stated in the Guidance Note on Audit of internal Financial Controls Over Financial Reporting (''the Guidance Note'') issued by the institute of Chartered Accountants of India (''the iCAi''). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Bank''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013 (''the Act'').

Auditors'' responsibility

Our responsibility is to express an opinion on the Bank''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing (''the Standards''), issued by the iCAi and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting 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 Bank''s internal financial controls system over financial reporting.

Meaning of internal financial controls over financial reporting

A bank''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A bank''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the bank; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the bank are being made only in accordance with authorizations of management and directors of the bank; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the bank''s assets that could have a material effect on the financial statements.

Inherent limitations of internal financial controls over financial reporting

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 issued by the iCAi.

For B S R & Co. LLP For M.M. Nissim & Co.

Chartered Accountants Chartered Accountants

Firm''s Registration No: 101248W /

W-100022 Firm''s Registration No: 107122W

Akeel Master Sanjay Khemani

Partner Partner

Membership No: 046768 Membership No: 044577

Mumbai 9 May 2018

Mar 31, 2017

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of THE FEDERAL BANK LIMITED (''the Bank''), which comprise the Balance Sheet as at 31 March 2017, the Profit and Loss Account, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Financial Statements

The Bank''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (''the Act'') with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, provisions of Section 29 of the Banking Regulation Act, 1949 (''BR Act'') and the circulars, guidelines and directions 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 internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

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

We conducted our audit in accordance with the Standards on Auditing (''the Standards'') specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risk 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 of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Bank''s Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the BR Act, 1949 as well as the relevant requirements of the Act, in the manner so required for banking companies and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Bank as at 31 March 2017, its profit and its cash flows for the year then ended on that date.

Other Matters

The standalone financial statements of the Bank for the year ended 31 March 2016 were audited by other auditors who expressed an unmodified opinion on those statements on 30 April 2016.

Report on Other Legal and Regulatory Requirements

The Balance Sheet and Profit and Loss Account have been drawn up in accordance with the provisions of Section 29 of the BR Act, 1949 read with Section 133 of the Act, 2013 read with the Rule 7 of the Companies (Accounts) Rules, 2014.

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

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

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

(c) During the course of our audit we have visited 40 branches. Since the key operations of the Bank are automated with the key applications integrated to the core banking systems, the audit is carried out centrally as all the necessary records and data required for the purposes of our audit are available therein.

(d) The reports on the accounts of the 1,231 branches audited by branch auditors of the Bank appointed under section 143(8) the Companies Act, 2013 and unaudited return with respect to 1 branch have been forwarded to us and have been properly dealt with by us in preparing this report.

The disclosure required on holdings as well as dealings in Specified Bank Notes during the period from 8 November 2017 to 30 December 2017 as envisaged in notification GSR 308(E) dated 30 March 2017 issued by the Ministry of Corporate Affairs, is not applicable to the Bank. Refer Note No. 4.15 of Schedule 18 to the standalone financial statements.

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

(a) we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

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

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

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

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

(f) with respect to the adequacy of the internal financial controls over financial reporting of the Bank and the operating effectiveness of such controls, refer to our separate Report in âAnnexure Aâ;

(g) 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:

(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.4.12 of Schedule 18 to the standalone financial statements; and

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

For B S R & Co. LLP For M.M. Nissim & Co.

Chartered Accountants Chartered Accountants

Firm''s Registration No: 101248W / W-100022 Firm''s Registration No: 107122W

Venkataramanan Vishwanath Sanjay Khemani

Partner Partner

Membership No: 113156 Membership No: 044577

Mumbai

28 April 2017

Mar 31, 2015

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial state- ments of THE FEDERAL BANK LIMITED (herein after referred to as "the Bank"), which comprise the Balance Sheet as at 31st March 201 5, the Profit and Loss Account and the Cash Flow State- ment for the year then ended, and a summary of the significant accounting policies and other explanatory information. Incorpo- rated in these financial statements are the returns of 57 branches / offices of the Bank audited by one of us and 1220 branches / offices audited by the branch auditors of the Bank''s branches.

Managements'' Responsibility for the Standalone Financial Statements

The Bank''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial state- ments 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, the accounting principles generally accepted in India, in- cluding 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 banks and guidelines issued by Reserve Bank of India. This responsibility also includes main- tenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Bank and for preventing and detecting frauds and other irregularities; selec- tion and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal fi- nancial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

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

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

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(1 0) of the Act. Those Stand- ards 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 misstate- ment.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, in- cluding 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 state- ments that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Bank has in place an adequate internal financial controls system over finan- cial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the ac- counting 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 standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements together with the notes thereon give the informa- tion required by the Banking Regulation Act, 1949 as well as the Companies Act, 201 3, 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 st March 201 5, and its profit and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to Note No.2.11 of Schedule 18 to the Fi- nancial Statements which describes proportionate charge of pension liability of the Bank amounting to Rs. 33.68 Crore to the Profit and Loss Account and the balance unamortised pension liability of Rs. Nil (Rs. 33.68 Crore as at 31 st March 2014), included in Schedule 11 to the Financial Statements, pursuant to the exemption from the application of the provisions of the Accounting Standard (AS) 15, Employee Benefits, granted by the Reserve Bank of India and made applicable to the Bank vide letter no. DBOD No.BP.BC.1 5896 / 21.04.018 / 2010-11 dated April 8, 2011.

Our Opinion is not modified in respect of this matter.

Report on other Legal and Regulatory Requirements

As required by Section 143 (3) of the Companies Act, 201 3 and Section 30 of the Banking Regulation Act, 1 949 we report that:

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

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

(iii) 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 purpose of our audit have been received from the branches not visited by us.

(iv) The reports on the accounts of the branch offices audited by the 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.

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

(vi) In our opinion, the aforesaid standalone financial state- ments comply with the Accounting Standards specified under Section 1 33 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(vii) On the basis of the written representations received from the directors as on 31st March 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31 st March 201 5 from being appointed as a director in terms of Section 1 64 (2) of the Act.

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

a. The Bank has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 2.13 of Schedule 1 8 to the financial statements;

b. The Bank has made provision, as required under the applica- ble law or Accounting Standard for material forseeable losses, if any, on long-term contracts including derivative contracts - Refer Note 2.14 of Schedule 18 to the financial statements.

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

For Deloitte Haskins & Sells For M P Chitale & Co. Chartered Accountants Chartered Accountants (Firm''s Registration (Firm''s Registration No.008072S) No.101 851W)

M. Ramachandran Ashutosh Pednekar Partner Partner (Membership No.16399) (Membership No.41037)

KOCHI, 29th April, 2015

Mar 31, 2013

Report on the Financial Statements

1. We have audited the accompanying financial statements of The Federal Bank Limited ("the Bank"), which comprise the Balance Sheet as at 31st March, 2013 and the Profit and Loss Account and the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information. Incorporated in these financial statements are the returns of 35 branches / offices of the Bank audited by one of us and 1096 branches / offices audited by branch auditors.

Management''s Responsibility for the Financial Statements

2. The Bank''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with the provisions of Section 29 of the Banking Regulation Act, 1949, Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956 in so far as they apply to the banks and the Guidelines issued by Reserve Bank of India. This responsibility includes the design, implementation and maintenance of internal controls relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

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

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

Opinion

6. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Banking Regulation Act, 1949 as well as Companies Act, 1956 in the manner so required for banking companies and the Guidelines issued by Reserve Bank of India from time to time and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

Emphasis of Matter

7. We draw attention to Note No.2.9 of Schedule 18 to the Financial Statements which describes proportionate charge of pension liability of the Bank amounting to Rs. 33.68 Crore to the profit and Loss Account and the balance unamortised pension liability of Rs. 67.36 Crore as at 31st March 2013, included in Schedule 11 to the Financial Statements to be amortised over the next two years, pursuant to the exemption from the application of the provisions of the Accounting Standard (AS) 15, Employee Benefits, granted by the Reserve Bank of India and made applicable to the Bank vide letter no. DBoD No.Bp.BC.15896 / 21.04.018 / 2010-11 dated April 8, 2011.

our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Matters

8. As required by Section 227(3) of the Companies Act, 1956 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) 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 branches / offices of the Bank not visited by one of us have been found adequate for the purposes of our audit.

9. In our opinion, the Balance Sheet, profit and Loss Account and Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 in so far as they apply to banks.

10. We further report that:

(i) the Balance Sheet and profit and Loss Account dealt with by this report, are in agreement with the books of account and with the returns received from the branches / offices not visited by any one of us.

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

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

(iv) on the basis of the written representation received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2013 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

For Deloitte Haskins & Sells For M P Chitale & Co.

Chartered Accountants Chartered Accountants

(Registration No.008072S) (Registration No. 101851W)

M. Ramachandran Ulhas Chitale

Partner Partner

(Membership No.16399) (Membership No. 32292)

kochi,

27 April, 2013.

Mar 31, 2012

1. We have audited the attached Balance Sheet of THE FEDERAL BANK LIMITED, Aluva as at 31st March 2012 and also the Profit and Loss Account of the Bank and the Cash Flow Statement annexed thereto for the year ended on that date in which are incorporated the returns of 16 branches /offices audited by us and 962 branches / offices audited by other auditors. 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 auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. The Balance Sheet and the Profit and Loss Account have been drawn up in accordance with the provisions of Section 29 of the Banking Regulation Act, 1949, read with Section 211 of the Companies Act, 1956.

4. We report that:

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

b) 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 purposes of our audit;

d) In our opinion,the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

e) The Bank's Balance Sheet andProfit and Loss Account dealt with by this report, are in agreement with the books of account and the returns;

f) 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;

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

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

i) On the basis of written representation received from the directors as on 31st March 2012and taken on record by the Board of Directors,none of the directors is disqualified as on 31st March 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

5. Without qualifying our opinion, we draw attention to Note No.2 of Schedule 19 to the financial statements, which describes deferment of pension liability of the bank to the extent of Rs.101.04 crore pursuant to the approval granted by the Reserve Bank of India to the Bank vide letter no.DBOD No.BP.BC.15896/21.04.018/2010-11 dated0 8.04.2011, for availing the exemption from application of the provisions of Accounting Standard (AS) 15- Employee Benefits, as provided therein.

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

i) in the case of the Balance Sheet, of the state of affairs of the Bank as at 31st March 2012;

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

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

For Varma and Varma For Price Patt & Co.,

Chartered Accountants Chartered Accountants

FRN:004532S FRN:02783S

R. Rajasekharan S. Ramaswamy

Partner, Membership No. 22703 Partner, Membership No. 025918

Place: Kochi

Date: 11-05-2012

Mar 31, 2011

1. We have audited the attached Balance Sheet of THE FEDERAL BANK LIMITED, Aluva as at 31st March 2011 and also the Profit and Loss Account of the Bank and the Cash Flow Statement annexed thereto for the year ended on that date in which are incorporated the returns of 20 branches /ofces audited by us and 737 branches / ofces audited by other auditors. 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 auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. The Balance Sheet and the Profit and Loss Account have been drawn up in accordance with the provisions of Section 29 of the Banking Regulation Act, 1949, read with Section 211 of the Companies Act, 1956.

4. We report that:

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

b) 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 ofces and branches of the Bank have been found adequate for the purposes of our audit;

d) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956, in so far as they apply to banks;

e) The Bank's Balance Sheet and Profit and Loss Account dealt with by this report, are in agreement with the books of account and the returns;

f) 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;

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

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

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

5. Without qualifying our opinion, we draw attention to Note No.3 of Schedule 19 to the financial statements, which describes deferment of pension liability of the Bank to the extent of Rs. 134.72 crore pursuant to the approval granted by the Reserve Bank of India to the Bank vide letter no. DBOD. No.BP.BC.15896/21.04.018/2010-11 dated 08.04.2011, for availing the exemption from application of the provisions of Accounting Standard (AS) 15 - Employee benefits, as provided therein.

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

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

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

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

For Varma and Varma For Price Patt & Co.,

Chartered Accountants Chartered Accountants

FRN: 004532S FRN: 02783S

R. Rajasekharan S. Ramaswamy

Partner, Membership No. 22703 Partner, Membership No. 025918

Place: Kochi Date: 6th May, 2011

Mar 31, 2010

1. We have audited the attached Balance Sheet of FEDBANK FINANCIAL SERVICES LIMITED as at 31st March, 2010, Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on 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. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956 (hereinafter referred to as the "Act"), we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent applicable.

4. Further to our comments in the Annexure referred to in paragraph 3 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 purposes of our audit;

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

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

d. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report have been prepared in compliance with the accounting standards referred to in Section 211 (3C) of the Act, to the extent applicable;

e. On the basis of the written representation received from the Directors and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2010 from being appointed as a director of the Company under Section 274(1 )(g) of the Act;

f. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with "Principal Accounting Policies and Notes of Accounts" in Schedule 9 and other notes appearing elsewhere in the accounts, give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 st March, 2010 and

ii) in the case of the Profit & Loss Account, of the profit for the year ended as on that date.

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

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR AUDIT REPORT OF EVEN DATE

On the basis of such checks as were considered appropriate and according to the information and explanations given to us during the course of audit, we state that:

1. (a) The company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets;

(b) The fixed assets have been physically verified by the management at reasonable intervals and no material discrepancies were noticed in such verification, and the same has been properly dealt with in the books of accounts;

(c) No fixed assets have been disposed off during the year.

2. The company has no inventories.

3. The Company has not taken / granted any loans from/to companies, firms and other parties covered under Section 301 of the Act.

4. The Company has adequate internal control system commensurate with the size of the company, and the nature of its business, for the purchase of fixed assets, and for sale of services. We have not observed any major weaknesses in the internal control system.

5. The Company has not entered into any contracts or arrangements referred to in section 301 of the Act.

6. The Company has not accepted any deposits during the year.

7. The Company has an internal audit system commensurate with the size and nature of its business.

8. Maintenance of cost records is not prescribed by the Central Government in respect of the activities of the company.

9. (a) According to the information and explanations given to us, the company is generally regular in depositing undisputed amounts payable in respect of income-tax, wealth tax, sales tax, customs duty, service tax, excise duty, cess and other statutory dues. No undisputed amounts payable in respect of above were outstanding as at 31.3.2010 for a period of more than six months from the date they become payable. (b) According to the records of the company, there are no dues of sales tax, income-tax, customs duty, wealth tax, excise duty, service tax and cess which have not been deposited on account of any dispute.

10. The Company has no accumulated losses as at 31st March 2010 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

11. The company has not borrowed any money from financial institutions or banks or debenture holders.

12. The company has not granted any loans and advances on the basis of security, by way of pledge of shares, debentures and other securities.

13. The company is not a chit fund, Nidhi, or a mutual benefit society.

14. The company is not dealing in shares, securities, debentures and other investments.

15. The company has not given any guarantee for loans taken by others.

16. The company has not taken any term loans.

17. No funds have been raised on short term basis.

18. The company has not made any preferential allotment of shares.

19. No debentures have been issued.

20. Company has not raised any money by way of public issue.

21. During the course of our examination of the books and records for the Company, carried out in accordance with the generally accepted audit practices in India, and according to the information and explanation given to us, we have not come across any instances of fraud on or by the Company, noticed or reported during the year.

For R KRISHNA IYER & CO. CHARTERED ACCOUNTANTS R KRISHNA IYER Kochi PARTNER

13.05.2009 (Membership No. 10525)

Firm Registratio n No. 14745

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