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Auditor Report of PNB Housing Finance Ltd.

Mar 31, 2023

To the Members of PNB Housing Finance Limited Basis for Opinion

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTSOpinion

We have audited the accompanying Standalone Financial Statements of PNB Housing Finance Limited ("the Company"), which comprise the Balance sheet as at March 31, 2023, the Standalone Statement of Profit and Loss, including standalone Other Comprehensive Income, the standalone Statement of Cash Flow and and the standalone Statement of Changes in Equity for the year then ended, and notes to the Standalone Financial Statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the Standalone Financial Statements").

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 Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2023, its profit including standalone other comprehensive income, its standalone cash flows and the standalone changes in equity for the year ended on that date.

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

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Financial Statements for the financial year ended March 31, 2023. 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. We have determined the matters described below to be the key audit matters to be communicated in our report.

Key audit matters

How our audit addressed the key audit matter

Allowance for Expected Credit Loss (ECL) on loan assets

The Company has reported total gross loans of H59,341.37 crore and H1,432.84 crore of allowance for expected credit loss as on March 31, 2023 (Refer Note 6).

The allowance for ECL on loan assets involves significant key judgements and estimates in respect of timing and measurement of expected credit loss (Refer Note 2.21). As part of our risk assessment, we determined that the allowance for ECL on loan assets has a high degree of estimation, with a potential impact on the financial statements.

The major elements of estimating ECL are the following:

a) Application of ECL model requires several data inputs.

b) Judgmental models used to estimate ECL which involves determining Probability of Default ("PD"), Loss Given Default ("LGD"), and Exposures at Default ("EAD"). The PD and the LGD are the key drivers of estimation complexity in the ECL and as a result are considered the most significant judgmental aspect of the Company''s modelling approach.

c) Qualitative and quantitative factors used in staging of loan assets.

d) Ind AS 109 requires the Company to measure ECL on an unbiased forward-looking basis reflecting a range of future economic conditions. Significant management judgement is applied in determining the economic scenarios used and the probability weights applied to them.

Our audit approach was a combination of test of internal controls and substantive procedures which included the following:

a) Testing the design and effectiveness of internal controls over the following:

- key controls over the completeness and accuracy of the key inputs, data and assumptions into the Ind AS 109 impairment models.

- key controls over the application of the staging criteria consistent with the definitions applied in accordance with the policy approved by the Board of Directors including the appropriateness of the qualitative factors.

- management''s controls over authorisation and calculation of post model adjustments and management overlays to the output of the ECL model.

b) In addition to above the following audit procedures have been applied;

- testing of key inputs, data and assumptions impacting ECL calculations to assess the completeness, accuracy and relevance of data, reasonableness of economic forecasts, weights, and model assumptions applied;

Key audit matters

How our audit addressed the key audit matter

e) Completeness and valuation of post model adjustments.

In view of the high degree of management''s judgement involved in estimation of ECL and the overall significance of the impairment loss allowance to the standalone financial statements, it is considered as a key audit matter.

- with the support of the team of modelling specialists employed by the Company to make the models, we tested/relied upon the assumptions, inputs and formulas used in a sample of ECL models. This included assessing the appropriateness of model design and formulas used, the ''Probability of Default'', ''Loss Given Default'', ''Exposure at Default'', historical loss rates used, and the valuation of collateral.

- tested mathematical accuracy and computation of the allowances by using the input data used by the Company;

c) Evaluating the appropriateness of the Company''s impairment methodologies as required under Ind AS 109 and reasonableness of assumptions used including management overlays ensuring that the adjustment to ECL Model was in conformity with the policy approved by the Audit Committee.

Information Technology (IT) Systems and Controls

The Company uses ERP system for financial reporting which interface with other business operation softwares that process transactions related to loans, deposits and borrowings.

The Company''s key financial accounting and reporting processes are highly dependent on the automated controls implemented in IT systems. If there exist gaps in the IT control environment, then it could result in the financial accounting and reporting records being materially misstated.

Therefore, due to the complexity of the IT environment, the assessment of the general IT controls and the application controls specific to the accounting and preparation of the financial information is considered to be a key audit matter.

Our key audit procedures on this matter included, but were not limited,

to the following:

(a) obtained an understanding of the Company''s information processing systems, IT General Controls and automated IT controls for applications, databases and operating systems relevant to our audit;

(b) Also, obtained an understanding of the changes that were made to the IT applications during the audit period;

(i) tested the IT General Controls around user access management, changes to IT environment and segregation of duties around program maintenance and security administration relating to key financial accounting and reporting processes;

(ii) tested the Company''s periodic review of access rights. We also tested requests of changes to systems for approval and authorization; and

(iii) tested the automated controls like interfaces, configurations and information generated by the entity''s information processing systems for loans, borrowings, deposits, interest income, interest expense and other significant financial statement items.

Other Information

The Company''s management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company''s Annual Report, but does not include the Standalone Financial Statements and our auditor''s report thereon. The 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.

If, based on the work we have performed, we conclude that

there is a material misstatement of this other information, we are required to report that fact. 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 and take necessary actions, as applicable under the applicable laws and regulations.

Responsibilities of Management for the Standalone Financial Statements

The Company''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 standalone financial position, financial performance including standalone other comprehensive income standalone cash flow and standalone changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under

section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company 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.

In preparing the Standalone Financial Statements, management is responsible for assessing the Company''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 Company or to cease operations, or has no realistic alternative but to do so.

Board of Directors are also responsible for overseeing the Company''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:

- 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.

- 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 Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

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

- Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''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 Company to cease to continue as a going concern.

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

1. As required by the Companies (Auditor''s Report) Order, 2020 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

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

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

(c) The standalone Balance Sheet, the standalone Statement of Profit and Loss including standalone Other Comprehensive Income, the standalone Statement of Cash Flow and standalone Statement in Equity 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 Companies (Indian Accounting Standards) Rules, 2015, as amended;

(e) On the basis of the written representations received from the directors as on March 31, 2023 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 with reference to these Standalone Financial Statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B" to this report;

(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, as amended in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its Standalone Financial Statements - Refer Note 40 to the Standalone Financial Statements;

ii. The Company has recognised 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 15 to the standalone financial statements;

iii. The Company was regular in depositing the amounts required to be transferred to the Investor Education and Protection Fund;

iv. a. The management has represented that, to the

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

b. The management has represented, that, to the best of it''s knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any persons or entities,

including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company 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; and

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

v. The Company has not declared or paid any dividend during the year and has not proposed any dividend for the year. Therefore, reporting in this regard is not applicable to the Company.

vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1, 2023. Therefore, reporting in this regard is not applicable.

3. In our opinion, the remuneration paid/ provided by the Company for its directors and managers for the year ended March 31, 2023 is in accordance with the provisions of section 197 read with Schedule V to the Act.

For Singhi & Co. For T R Chadha & Co LLP

Chartered Accountants Chartered Accountants

Firm Reg. No. 302049E Firm Reg. No. 006711N/N500028

BIMAL KUMAR SIPANI NEENA GOEL

Partner Partner

Membership No. 088926 Membership No. 057986

UDIN: 23088926BGXBAG3781 UDIN: 23057986BGVLHI8293

Date: May 18, 2023 Date: May 18, 2023

Place: New Delhi Place: New Delhi

Mar 31, 2022

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTSOPINION

We have audited the accompanying Standalone Financial Statements of PNB Housing Finance Limited ("the Company"), which comprise the Balance Sheet as at March 31 2022, the Statement of Profit and Loss, including Other Comprehensive Income, the Statement of Cash Flow and the Statement of Changes in Equity for the year then ended, and notes to the Standalone Financial Statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the Standalone Financial Statements").

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 Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2022, its profit including other comprehensive income, its cash flows and the changes in equity 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), as specified under section 143(10) of the Act.

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

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Financial Statements for the financial year ended March 31, 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. We have determined the matters described below to be the key audit matters to be communicated in our report.

Key audit matters

How our audit addressed the key audit matter

Allowance for Expected Credit Loss (ECL) on loan assets

The Company has reported total gross loans of '' 57,939.68 crore and '' 2,558.94 crore of allowance for expected credit loss as on March 31, 2022 (Refer Note 6).

The allowance for ECL on loan assets involves significant key judgements and estimates in respect of timing and measurement of expected credit loss (Refer Note 2.20). As part of our risk assessment, we determined that the allowance for ECL on loan assets has a high degree of estimation, with a potential impact on the financial statements.

The major elements of estimating ECL are the following:

a) Application of ECL model requires several data inputs.

Our audit approach was a combination of test of internal controls and substantive procedures which includes the following:

a) Testing the design and effectiveness of internal controls over the

following:

â¢ key controls over the completeness and accuracy of the key inputs, data and assumptions into the Ind AS 109 impairment models.

â¢ key controls over the application of the staging criteria consistent with the definitions applied in accordance with the policy approved by the Board of Directors including the appropriateness of the qualitative factors.

â¢ management''s controls over authorisation and calculation of post model adjustments and management overlays to the output of the ECL model.

b) In addition to above the following audit procedures have been applied;

â¢ testing of key inputs, data and assumptions impacting ECL calculations to assess the completeness, accuracy and relevance of data, reasonableness of economic forecasts, weights, and model assumptions applied;

Key audit matters	How our audit addressed the key audit matter
c) Qualitative and quantitative factors used in staging of loan assets. d) Ind AS 109 requires the Company to measure ECL on an unbiased forward-looking basis reflecting a range of future economic conditions. Significant management judgement is applied in determining the economic scenarios used and the probability weights applied to them. e) Completeness and valuation of post model adjustments.	c)	â¢ with the support of the team of modelling specialists employed by the Company to make the models, we tested the assumptions, inputs and formulas used in a sample of ECL models. This included assessing the appropriateness of model design and formulas used, the ''Probability of Default'', ''Loss Given Default'', ''Exposure at Default'', historical loss rates used, and the valuation of collateral. â¢ tested mathematical accuracy and computation of the allowances by using the input data used by the Company; Evaluating the appropriateness of the Company''s impairment methodologies as required under Ind AS 109 and reasonableness of assumptions used including management overlays ensuring that the adjustment to ECL Model was in conformity with the policy approved by the Audit Committee.
Information Technology (IT) Systems and Controls
The Company uses ERP system for financial reporting which interface with other business operation softwares'' that process transactions related to loans, deposits and borrowings. The Company''s key financial accounting and reporting processes are highly dependent on the automated controls implemented in IT systems. If there exist gaps in the IT control environment, then it could result in the financial accounting and reporting records being materially misstated.	Our key audit procedures on this matter includes, but were not limited, to the following: (a) obtained an understanding of the Company''s information processing systems, IT General Controls and automated IT controls for applications, databases and operating systems relevant to our audit; (b) Also, obtained an understanding of the changes that were made to the IT applications during the audit period; (c) Also, performed following procedures: (i) tested the IT General Controls around user access management, changes to IT environment and segregation of duties around program maintenance and security administration relating to key financial accounting and reporting processes; (ii) tested the Company''s periodic review of access rights. We also tested requests of changes to systems for approval and authorization; and (iii) tested the automated controls like interfaces, configurations and information generated by the entity''s information processing systems for loans, borrowings, deposits, interest income, interest expense and other significant financial statement items.

OTHER MATTER

The financial statements for the year ended March 31, 2021, included in the accompanying financial statements have been audited by predecessor auditor whose audit report dated April 27, 2021 expressed unmodified opinion. Our opinion is not modified in respect of this matter.

OTHER INFORMATION

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

In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

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 and take necessary actions, as applicable under the applicable laws and regulations.

RESPONSIBILITIES OF MANAGEMENT FOR THE STANDALONE FINANCIAL STATEMENTS

The Company''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 including other comprehensive income, cash flow and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company 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.

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

AUDITOR''S 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¢ 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 Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

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

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 Company''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 Company 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.

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, 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.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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

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

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

(c) The Balance Sheet, the Statement of Profit and Loss including the Other Comprehensive Income, the Statement of Cash Flow and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

(e) On the basis of the written representations received from the directors as on March 31, 2022 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2022

from being appointed as a director in terms of Section 164 (2) of the Act;

(g) In our opinion, the remuneration paid/ provided by the Company for its directors and managers for the year ended March 31, 2022 is in accordance with the provisions of section 197 read with Schedule V to the Act;

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

i. The Company has disclosed the impact of pending litigations on its financial position in its Standalone Financial Statements

- Refer Note 40 to the Standalone Financial Statements;

ii. The Company has recognised 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 15 to the Standalone Financial Statements;

iii. The Company was regular in depositing the amounts required to be transferred to the Investor Education and Protection Fund;

iv. a. The management has represented that,

to the best of it''s knowledge and belief, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediaries shall, whether,

directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

b. The management has represented, that, to the best of it''s knowledge and belief, no funds have been received by the Company from any persons or entities, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company 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; and

(i) and (ii) of Rule 11(e), as provided under (a) and (b) above contain any material misstatement;

v. The Company has not declared or paid any dividend during the year and has not proposed final dividend for the year. Therefore, reporting in this regard is not applicable to the Company.

Mar 31, 2019

Independent Auditors'' Report

To the Members of PNB Housing Finance Limited

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

We have audited the standalone financial statements of PNB Housing Finance Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2019, the Statement of Profit and Loss (including Other Comprehensive Income), Statement of changes in equity and the statement of Cash Flows for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the standalone financial statements").

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 Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2019, and its profit, changes in equity and its cash flows for the year ended on that date.

SL KEY AUDIT MATTER No.

1. Transition to Ind AS from Indian GAAP

The standalone financial statements of the Company for the year ended March 31, 2019 have been prepared in accordance with Ind AS. For the purposes of transition to Ind AS, the Company has followed the guidance prescribed in Ind AS 101, ''First-Time Adoption of Indian Accounting Standards'', with April 01, 2017 as the transition date and IGAAP as the previous GAAP. The transition to Ind AS has resulted in material changes in:

â¢ Classification and measurement of financial assets and financial liabilities

â¢ Measurement of loan losses (expected credit losses)

â¢ Accounting for loan related fees and costs

â¢ Accounting for employee stock option plan

â¢ Accounting for Derivative financial instruments

2. Impairment of loans

The Company reported total gross loans of Rs.74,190.47 crore and Rs. 437.59 crore of expected credit loss provisions as on March 31, 2019 (Refer Note 6).

Key judgements and estimates (Refer Note 2.20) in respect of the timing and measurement of expected credit losses (ECL) include:

â¢ Allocation of assets to stage 1, 2 or 3 using criteria in accordance with the Indian Accounting Standard 109;

â¢ Accounting interpretations and modelling assumptions used to build the models that calculate the ECL;

â¢ Completeness and accuracy of data used to calculate the ECL;

â¢ Inputs and assumptions used to estimate the impact of multiple economic scenarios;

â¢ Completeness and valuation of post model adjustments;

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 Standards are further described in the Auditor''s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the 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 ICAI''s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our 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 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. We have determined the matters described below to be the key audit matters to be communicated in our report.

OUR RESPONSE

The transition to Ind AS has resulted in changes in the presentation of the financial statements, disclosures in the notes thereto and accounting policies and principles. Our audit procedures included:

â¢ Evaluating the accounting interpretations for compliance with Ind AS and testing the adjustments and disclosures made on transition.

â¢ The accounting policies (Refer Note 1.2) reflected in the comparative information are consistent with those applied in the current period or, if there have been changes in accounting policies, whether those changes have been properly accounted for and adequately presented and disclosed. (Refer Note 46 for detailed note on First-Time Adoption of Ind AS)

â¢ Assessed that the areas of significant estimates and management judgment are in line with principles under Ind AS.

Our audit procedures included testing the design and operating effectiveness of key controls across the processes relevant to the ECL. These controls/ processes included the allocation of assets into stages, model governance, data accuracy and completeness, credit monitoring, multiple economic scenarios, post model adjustments, individual provisions and disclosures and accounting thereof. The criteria used to allocate an asset to stage 1, 2 or 3 in accordance with Ind AS 109 was evaluated. Assets in stage 1, 2 or 3 were reviewed to verify that they were allocated to the appropriate stage. With the support of the team of modelling specialists employed by the Company to make the models, we tested the assumptions, inputs and formulas used in a sample of ECL models. This included assessing the appropriateness of model design and formulas used, the ''Probability of Default'', ''Loss Given Default'', ''Exposure at Default'', historical loss rates used and the valuation of collateral.

Measurements of individually assessed provisions including the assessment of multiple scenarios; and Accuracy and adequacy of the financial statement disclosures.

To verify data quality, calculation of the data used in the ECL was tested by reconciling to source systems. To test credit monitoring, risk ratings were checked for a sample of performing loans.

Appropriateness of forecasted macroeconomic variables, such as GDP, Money supply and House Price Index were evaluated.

The completeness and appropriateness of post model adjustments was assessed.

The adequacy and appropriateness of disclosures for compliance with the Ind AS including disclosure of Ind AS 107 was evaluated.

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

The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Annual Report, for example, Management Discussion and Analysis, Board''s Report including Annexures to Board''s Report, Business Responsibility Report, Corporate Governance and Shareholder''s Information, Key Highlights etc., but does not include the consolidated financial statements, standalone financial statements and our auditors'' report thereon.

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

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

The other information is expected to be made available to us after the date of this auditors'' report. When we read this other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

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

The Company''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, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company 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, the Board of Directors is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

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

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

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

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

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

significant doubt on the Company''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 Company 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 misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial statements may be influenced. We consider quantitative materiality and qualitative factors in

(i) planning the scope of our audit work and in evaluating the results of our work; and

(ii) to evaluate the effect of any identified misstatements in the standalone financial statements.

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 auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure ''I'' a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. As required by section 143(3) of the Act, based on our audit we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose 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 those books.

(c) The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), Statement of Changes in Equity and the Statement of Cash Flow 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 Ind AS specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

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

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure ''II''.

(g) With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of section 19706) of the Act, as amended:

In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements -Refer Note 37(i) to the standalone financial statements;

ii. The Company did not have any long-term contracts including any derivative contracts for which there were any material foreseeable losses;

iii. The Company has generally been regular in depositing the amounts required to be transferred to the Investor Education and Protection Fund.

	For B.R. Maheswari and Co. LLP
	Chartered Accountants
	FR No : 001035N/N500050
	Sudhir Maheshwari
Place: New Delhi	Partner
Date: May 09, 2019	Membership No. 081075

Annexure ''I to the Independent Auditors'' Report

(Referred to in Paragraph 1 under the heading "Report on other legal and regulatory requirements" of our report of even date)

1) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) As informed, fixed assets have been physically verified by the management in a phased periodical manner which in our opinion is reasonable having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such verification.

(c) Based upon the audit procedure performed and according to the records of the Company, the title deeds of all the immovable properties are held in the name of the Company.

2) The provisions of paragraph (ii) of the order are not applicable to the Company, as the Company is engaged in the financial services sector.

3) As informed, the Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Act for the financial year 2018-19, and accordingly clauses (a), (b) and (c) of para (iii) of the order are not applicable.

4) As informed, the Company has complied with the provisions of section 185 and 186 of the Act, in respect of loans, investments, guarantees and security.

5) In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India, provisions of section 73 to 76 and other relevant provisions of the Act, the Companies (Acceptance of Deposit) Rules, 2014 to the extent applicable, and The Housing Finance Companies (NHB) Directions, 2010, with regard to acceptance of deposits from the public. No order has been passed by the Company Law Board or the National Company Law Tribunal or Reserve Bank of India or by any other court or tribunal with regard to such deposits.

6) As informed to us, the maintenance of cost records has not been prescribed by the Central Government under section 1480) of the Act, in respect of the activities carried on by the Company.

7) (a) According to the information and explanations given to us, the Company has generally been regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income Tax, Goods and Service Tax, Custom Duty, Cess and other material statutory dues applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31, 2019 for a period of more than six months from the date they become payable.

(b) According to the information and explanations given to us, the details of disputed amount of Income Tax not deposited by the Company are as follows:

Name of the statute	Nature of the dues	Amount under dispute (Rs. in crores)	Period to which the amount relates (Assessment Year)	Forum where dispute is pending
Income tax Act	Income tax	1.84	2016-17	Commissioner of Income Tax (Appeals)
Income tax Act	Income tax	1.06	2015-16	ITAT. Delhi
Income tax Act	Income tax	1.96	2014-15	ITAT. Delhi
Income tax Act	Income tax	0.43	2013-14	ITAT. Delhi
Income tax Act	Income tax	0.43	2012-13	ITAT. Delhi
Income tax Act	Income tax	0.35	2011-12	ITAT. Delhi
Income tax Act	Income tax	14.88	2010-11	ITAT. Delhi
Income tax Act	Income tax	0.55	2009-10	ITAT. Delhi
Total		21.50

8) Based on the information and explanations given to us, we are of the opinion that the Company has not defaulted in repayment of loans and borrowings to the financial institutions, banks or debenture holders. The Company did not have any outstanding loans and borrowings from government during the year.

9) Based upon the audit procedures performed and the information and explanations given by the management, the company has not raised moneys by way of initial public offer or further public offer including debt instruments and term Loans. Accordingly, the provisions of clause 3 (ix) of the Order are not applicable to the Company and hence not commented upon.

10) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

11) In our opinion, the managerial renumeration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

12) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company.

13) In our opinion, all transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and the details have been disclosed in the standalone financial statements, as required by the applicable accounting standards.

14) The company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year, therefore reporting under clause 3Cxiv) of the Order are not applicable.

15) According to the information and explanations given to us and on an overall examination of the financial statements of the Company, we report that the Company has not entered into any non-cash transaction with directors or persons connected with him.

16) In our opinion, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

Independent Auditors'' Report

To the Members of PNB Housing Finance Limited

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

SL KEY AUDIT MATTER No.

1. Transition to Ind AS from Indian GAAP

â¢ Classification and measurement of financial assets and financial liabilities

â¢ Measurement of loan losses (expected credit losses)

â¢ Accounting for loan related fees and costs

â¢ Accounting for employee stock option plan

â¢ Accounting for Derivative financial instruments

2. Impairment of loans

The Company reported total gross loans of Rs.74,190.47 crore and Rs. 437.59 crore of expected credit loss provisions as on March 31, 2019 (Refer Note 6).

Key judgements and estimates (Refer Note 2.20) in respect of the timing and measurement of expected credit losses (ECL) include:

â¢ Allocation of assets to stage 1, 2 or 3 using criteria in accordance with the Indian Accounting Standard 109;

â¢ Accounting interpretations and modelling assumptions used to build the models that calculate the ECL;

â¢ Completeness and accuracy of data used to calculate the ECL;

â¢ Inputs and assumptions used to estimate the impact of multiple economic scenarios;

â¢ Completeness and valuation of post model adjustments;

BASIS FOR OPINION

KEY AUDIT MATTERS

OUR RESPONSE

â¢ Evaluating the accounting interpretations for compliance with Ind AS and testing the adjustments and disclosures made on transition.

â¢ Assessed that the areas of significant estimates and management judgment are in line with principles under Ind AS.

Measurements of individually assessed provisions including the assessment of multiple scenarios; and Accuracy and adequacy of the financial statement disclosures.

To verify data quality, calculation of the data used in the ECL was

tested by reconciling to source systems. To test credit monitoring, risk

ratings were checked for a sample of performing loans.

Appropriateness of forecasted macroeconomic variables, such as

GDP, Money supply and House Price Index were evaluated.

The completeness and appropriateness of post model adjustments

was assessed.

The adequacy and appropriateness of disclosures for compliance with

the Ind AS including disclosure of Ind AS 107 was evaluated.

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

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

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

In preparing the standalone financial statements, the Board of Directors is responsible for assessing the Company''s ability to

continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company''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¢ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

(i) planning the scope of our audit work and in evaluating the results of our work; and

(ii) to evaluate the effect of any identified misstatements in the standalone financial statements.

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 auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order") issued by the Central Government

of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure ''I'' a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. As required by section 143(3) of the Act, based on our audit we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and

belief were necessary for the purpose 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 those books.

(d) In our opinion, the aforesaid standalone financial statements comply with the Ind AS specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(g) With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of section 19706) of the Act, as amended:

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements -Refer Note 37(i) to the standalone financial statements;

ii. The Company did not have any long-term contracts including any derivative contracts for which there were any material foreseeable losses;

iii. The Company has generally been regular in depositing the amounts required to be transferred to the Investor Education and Protection Fund.

	For B.R. Maheswari and Co. LLP
	Chartered Accountants
	FR No : 001035N/N500050
	Sudhir Maheshwari
Place: New Delhi	Partner
Date: May 09, 2019	Membership No. 081075

Annexure ''I to the Independent Auditors'' Report

(Referred to in Paragraph 1 under the heading "Report on other legal and regulatory requirements" of our report of even date)

1) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(c) Based upon the audit procedure performed and according to the records of the Company, the title deeds of all the immovable properties are held in the name of the Company.

2) The provisions of paragraph (ii) of the order are not applicable to the Company, as the Company is engaged in the financial services sector.

4) As informed, the Company has complied with the provisions of section 185 and 186 of the Act, in respect of loans, investments, guarantees and security.

5) In our opinion and according to the information and explanations given to us, the Company has complied

with the directives issued by the Reserve Bank of India, provisions of section 73 to 76 and other relevant provisions of the Act, the Companies (Acceptance of Deposit) Rules, 2014 to the extent applicable, and The Housing Finance Companies (NHB) Directions, 2010, with regard to acceptance of deposits from the public. No order has been passed by the Company Law Board or the National Company Law Tribunal or Reserve Bank of India or by any other court or tribunal with regard to such deposits.

6) As informed to us, the maintenance of cost records has not been prescribed by the Central Government under section 1480) of the Act, in respect of the activities carried on by the Company.

7) (a) According to the information and explanations

given to us, the Company has generally been regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income Tax, Goods and Service Tax, Custom Duty, Cess and other material statutory dues applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31, 2019 for a period of more than six months from the date they become payable.

(b) According to the information and explanations given to us, the details of disputed amount of Income Tax not deposited by the Company are as follows:

Name of the statute	Nature of the dues	Amount under dispute (Rs. in crores)	Period to which the amount relates (Assessment Year)	Forum where dispute is pending
Income tax Act	Income tax	1.84	2016-17	Commissioner of Income Tax (Appeals)
Income tax Act	Income tax	1.06	2015-16	ITAT. Delhi
Income tax Act	Income tax	1.96	2014-15	ITAT. Delhi
Income tax Act	Income tax	0.43	2013-14	ITAT. Delhi
Income tax Act	Income tax	0.43	2012-13	ITAT. Delhi
Income tax Act	Income tax	0.35	2011-12	ITAT. Delhi
Income tax Act	Income tax	14.88	2010-11	ITAT. Delhi
Income tax Act	Income tax	0.55	2009-10	ITAT. Delhi
Total		21.50

of clause 3 (ix) of the Order are not applicable to the Company and hence not commented upon.

10) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

11) In our opinion, the managerial renumeration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

12) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company.

15) According to the information and explanations given to us and on an overall examination of the financial statements

of the Company, we report that the Company has not entered into any non-cash transaction with directors or persons connected with him.

16) In our opinion, the Company is not required to be

registered under section 45-IA of the Reserve Bank of India Act, 1934.

Annexure ''II to the Independent Auditors'' Report

(Referred to in Paragraph 2(f) under the heading "Report on other legal and regulatory requirements" of our report of even date)

Report on the Internal Financial Controls under clause (i) of sub section 3 of section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of PNB Housing Finance Limited ("the Company") as of March 31, 2019 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

MANAGEMENT''S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company 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 ("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 company''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.

AUDITORS'' RESPONSIBILITY

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and prescribed under section 14300) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s 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 Company''s internal financial controls system over financial reporting.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of standalone financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of standalone financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company''s assets that could have a material effect on the standalone 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 Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2019 based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

	For B.R. Maheswari and Co. LLP
	Chartered Accountants
	FR No : 001035N/N500050
	Sudhir Maheshwari
Place: New Delhi	Partner
Date: May 09, 2019	Membership No. 081075

Annexure ''II to the Independent Auditors'' Report

(Referred to in Paragraph 2(f) under the heading "Report on other legal and regulatory requirements" of our report of even date)

Report on the Internal Financial Controls under clause (i) of sub section 3 of section 143 of the Companies Act, 2013 ("the Act")

MANAGEMENT''S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

AUDITORS'' RESPONSIBILITY

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

OPINION

	For B.R. Maheswari and Co. LLP
	Chartered Accountants
	FR No : 001035N/N500050
	Sudhir Maheshwari
Place: New Delhi	Partner
Date: May 09, 2019	Membership No. 081075

Mar 31, 2018

Report on the Financial Statements

We have audited the accompanying financial statements of PNB Housing Finance Limited (âthe Companyâ), which comprise the Balance Sheet as at March 31st, 2018, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Managementâs Responsibility for the Standalone Financial Statements

The Companyâs Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company 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. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditorsâ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

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

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 auditorâs judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs 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 Companyâs Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements 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, of the state of affairs of the Company as at March 31st, 2018 and its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure âIâ a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. 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 of the aforesaid financial statements.

(b) In our opinion, proper books of account as required by law relating to preparation of the aforesaid financial statements have been kept by the Company so far as it appears from our examination of those books.

(c) The Balance Sheet, the Statement of Profit and Loss 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.

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

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

I. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 28(i) to the financial statements;

ii. The Company did not have any long term contracts including any derivative contracts for which there were any material foreseeable losses;

iii. The Company has generally been regular in depositing the amounts required to be transferred to the Investor Education and Protection Fund.

Annexure âIâ to the Independent Auditorsâ Report

(Referred to in Paragraph 1 under the heading âReport on other legal and regulatory requirementsâ of our report of even date)

1) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets

(c) Based upon the audit procedure performed and according to the records of the Company, the title deeds of all the immovable properties are held in the name of the Company

2) The provisions of paragraph (ii) of the order are not applicable to the Company, as the Company is engaged in the financial services sector

3) As informed, the Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Act for the financial year 2017-18, and accordingly clauses (a), (b) and (c) of para (iii) of the order are not applicable

4) As informed, the Company has complied with the provisions of section 185 and 186 of the Act, in respect of loans, investments, guarantees and security

6) Since the Company is engaged in the financial services sector, provisions of sub-section (1) of section 148 of the Companies Act, 2013 are not applicable to the Company

7) a) According to the information and explanations given to us, the Company has generally been regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employeesâ State Insurance, Income Tax, Sales Tax, Value Added Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31st, 2018 for a period of more than six months from the date they become payable.

(b) According to the information and explanations given to us, the details of disputed amount of Income Tax, Value Added Tax, Sales Tax, Excise Duty, Custom Duty, Service Tax and Cess not deposited by the Company are as follows :

Name of the statute	Nature of the dues	Amount under dispute (Rs. in crores)	Period to which the amount relates (Financial Year)	Forum where dispute is pending
Income tax Act, 1961	Income tax	1.06	2014-15	CIT(A)
Income tax Act, 1961	Income tax	1.96	2013-14	ITAT, Delhi
Income tax Act, 1961	Income tax	0.43	2012-13	ITAT, Delhi
Income tax Act, 1961	Income tax	0.43	2011-12	ITAT, Delhi
Income tax Act, 1961	Income tax	0.35	2010-11	ITAT, Delhi
Income tax Act, 1961	Income tax	14.88	2009-10	ITAT, Delhi
Income tax Act, 1961	Income tax	0.53	2008-09	ITAT, Delhi
Income tax Act, 1961	Income tax	0.40	2007-08	ITAT, Delhi
Income tax Act, 1961	Income tax	0.75	2006-07	ITAT, Delhi
Income tax Act, 1961	Income tax	0.51	2005-06	ITAT, Delhi
Total		21.30

9) In our opinion and according to the information and explanations given to us, the Company has not raised any money by way of public offer during the year. In our opinion, amount raised by way of term loans have been applied for the purpose for which they were obtained.

10) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year, although there have been few instances of loans becoming doubtful of recovery consequent upon fraudulent misrepresentation by borrowers, the amounts whereof are not material in the context and size of the Company and the nature of its business and which have been provided for.

11) In our opinion, the managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

12) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company.

13) In our opinion, all transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and the details have been disclosed in the Financial Statements, as required by the applicable accounting standards.

15) According to the information and explanations given to us and on an overall examination of the financial statements of the Company, we report that the Company has not entered into any noncash transaction with directors or persons connected with him.

16) In our opinion, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

For B R Maheswari & Co LLP

Chartered Accountants

Firmâs Registration No: 001035N/N500050

Sudhir Maheshwari Partner

Membership No.081075

Place: New Delhi

Date: May 03, 2018

Mar 31, 2017

Report on the Financial Statements

We have audited the accompanying financial statements of PNB Housing Finance Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2017, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Managementâs Responsibility for the Standalone Financial Statements

The Companyâs Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company 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. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditorsâ Responsibility

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements 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, of the state of affairs of the Company as at 31st March, 2017 and its profit and its cash flows for the year ended on that date.

Emphasis of Matter

We refer to Note 3.2 to the financial statements, which describes the accounting treatment used by the Company in creating the Deferred Tax Liability on Special Reserve under section 36(1)(viii) of the Income Tax Act, 1961 as at April 1, 2014, which is in accordance with the National Housing Bankâs Circular No. NHB (ND)/DRS/Pol. Circular No. 65/2014 dated August 22, 2014.

Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditorâs Report) Order, 2016 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure âIâ a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. 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 Company so far as it appears from our examination of those books.

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

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

I The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 28(i) to the financial statements;

ii. The Company did not have any long term contracts including any derivative contracts for which there were any material foreseeable losses;

iii. The Company has generally been regular in depositing the amounts required to be transferred to the Investor Education and Protection Fund, though there have been a slight delays in a few cases.

iv. Company has provided requisite disclosures in its financial statements in Note 34 as to holdings as well as dealings in Specified Bank Notes during the period 8 November 2016 to 30 December 2016 and the same are in accordance with the books of accounts maintained by the company.

3. During the current financial year, the Company has issued fresh shares through an Initial Public Offer (IPO) due to which shareholding of Punjab National Bank has reduced from 51% to 39.08%. As a result, the Company no longer falls within the definition of a Government Company as defined in The Companies Act, 2013. Further, we have not received any directions from the Comptroller and Auditor General of India stipulated under section 143(5) of The Companies Act, 2013. Hence, no additional statement is being attached to this report.

Annexure âIâ to the Independent Auditorsâ Report

(Referred to in Paragraph 1 under the heading "Report on other legal and regulatory requirements" of our report of even date)

1) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(c) Based upon the audit procedure performed and according to the records of the Company, the title deeds of all the immovable properties are held in the name of the Company

2) The provisions of paragraph (ii) of the order are not applicable to the Company, as the Company is engaged in the financial services sector.

3) As informed, the Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Act for the financial year 2016-17, and accordingly clauses (a), (b) and (c) of para (iii) of the order are not applicable.

4) As informed, the Company has complied with the provisions of section 185 and 186 of the Act, in respect of loans, investments, guarantees and security.

6) Since the Company is engaged in the financial services sector, provisions of sub-section (1) of section 148 of the Companies Act, 2013 are not applicable to the Company.

7) (a) According to the information and explanations given to us, the Company has generally been regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employeesâ State Insurance, Income Tax, Sales Tax, value Added Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2017 for a period of more than six months from the date they become payable.

Name of the statute	Nature of the dues	Amount under dispute (Rs.in crores)	Period to which the amount relates (Assessment Year)	Forum where dispute is pending
Income tax Act, 1961	Income tax	1.96	2013-14	CIT(A)
Income tax Act, 1961	Income tax	0.43	2012-13	CIT(A)
Income tax Act, 1961	Income tax	0.43	2011-12	ITAT
Income tax Act, 1961	Income tax	0.32	2010-11	ITAT
Income tax Act, 1961	Income tax	14.98	2009-10	ITAT
Income tax Act, 1961	Income tax	0.53	2008-09	ITAT
Income tax Act, 1961	Income tax	0.40	2007-08	ITAT
Income tax Act, 1961	Income tax	0.76	2006-07	ITAT
Income tax Act, 1961	Income tax	0.52	2005-06	ITAT
Total		20.33

9) In our opinion and according to the information and explanations given to us, the Company has utilized the money raised by way of initial public offer and term loans during the year for the purpose for which they were obtained.

11) In our opinion, the managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

12) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company.

15) According to the information and explanations given to us and on an overall examination of the financial statements of the Company, we report that the Company has not entered into any non- cash transaction with directors or persons connected with him.

16) In our opinion, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

For B R Maheswari & Co LLP

Chartered Accountants

Firmâs Registration No. 001035N/500050

Sudhir Maheshwari

Partner

Membership No.081075

Place: New Delhi

Date: 12th May, 2017

Mar 31, 2016

Independent Auditorsâ Report

TO THE MEMBERS OF PNB HOUSING FINANCE LIMITED REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of PNB Housing Finance Limited (âthe Companyâ), which comprise the Balance Sheet as at 31st March, 2016, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

MANAGEMENTâS RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Companyâs Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company 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. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AUDITORSâ RESPONSIBILITY

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

OPINION

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements 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, of the state of affairs of the Company as at 31st March, 2016 and its profit and its cash flows for the year ended on that date.

EMPHASIS OF MATTER

Our opinion is not qualified in respect of this matter.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government of India in terms of sub section (11) of section 143 of the Act, we give in the Annexure âIâ a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. 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 Company so far as it appears from our examination of those books.

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

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

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

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 29 (i) to the financial statements;

ii. The Company did not have any long term contracts including any derivative contracts for which there were any material foreseeable losses;

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

3. As required by the Directions and Sub-Directions under section 143(5) of the Companies Act, 2013, refer Annexure âIIIâ on the matters specified.

ANNEXURE âIâ TO THE INDEPENDENT AUDITORSâ REPORT

(Referred to in Paragraph 1 under the heading âReport on other legal and regulatory requirementsâ of our report of even date)

1) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(c) Based upon the audit procedure performed and according to the records of the Company, the title deeds of all the immovable properties are held in the name of the Company.

2) The provisions of paragraph (ii) of the Order are not applicable to the Company, as the Company is engaged in the financial services sector.

3) As informed, the Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Act for the financial year 2015-16, and accordingly clauses (a), (b) and (c) of para (iii) of the Order are not applicable.

4) As informed, the Company has complied with the provisions of section 185 and 186 of the Act, in respect of loans, investments, guarantees and security.

6) Since the Company is engaged in the financial services sector, provisions of sub-section (1) of section 148 of the Companies Act, 2013 are not applicable to the Company.

7) (a) According to the information and explanations given to us, the Company has generally been regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employeesâ State Insurance, Income Tax, Sales Tax, Value Added Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2016 for a period of more than six months from the date they become payable.

Name of the statute	Nature of the dues	Amount under dispute not yet deposited (Rs. in Lacs)	Period to which the amount relates (Assessment Year)	Forum where dispute is pending
Income tax Act, 1961	Income tax	42.63	2013-14	CIT (Appeals)
Income tax Act, 1961	Income tax	415.16	2012-13	CIT (Appeals)
Income tax Act, 1961	Income tax	32.02	2011-12	CIT (Appeals)
Income tax Act, 1961	Income tax	11.10	2009-10	ITAT
Income tax Act, 1961	Income tax	2.29	2008-09	ITAT
Total		503.22

9) The Company has not raised any money by way of public offer during the year. In our opinion, the term loans have been applied for the purpose for which they were obtained.

11) In our opinion, the managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

12) The Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company.

13) In our opinion, all transactions with the related parties are in compliance with sections 177 and 188 of the Act wherever applicable and the details have been disclosed in the Financial Statements, as required by the applicable accounting standards.

14) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year, therefore reporting under clause 3(xiv) of the Order are not applicable.

15) According to the information and explanations given to us and on an overall examination of the financial statements of the Company, we report that the Company has not entered into any non- cash transaction with directors or persons connected with him.

16) In our opinion, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

For B. R. Maheswari & Co

Chartered Accountants

Firmâs Registration No: 001035N

Akshay Maheshwari

Partner

Membership No: 504704

Place: New Delhi

Date: 12th May, 2016

Mar 31, 2015

Independent Auditors'' Report

TO THE MEMBERS OF PNB HOUSING FINANCE LIMITED Report on the Financial Statements

We have audited the accompanying financial statements of PNB Housing Finance Limited (âthe Companyâ), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, 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 Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company 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. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''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 Company''s Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements 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, of the state of affairs of the Company as at 31st March, 2015, and its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2015 (âthe Orderâ), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2015, we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

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

c) The Company does not have any branch which is separately audited ad hence this clause is not applicable.

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

e) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule7 of the Companies (Accounts) Rules, 2014.

f) 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 31st March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

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:

i) The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 29 to the financial statements.

ii) The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

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

3. As required by the Directions and sub-directions under section 143 (5) of the Companies Act, 2013, we give in the Annexure II and III statement on the matters specified.

ANNEXURE I TO INDEPENDENT AUDITOR''S REPORT

Re: PNB Housing Finance Limited

Referred to in paragraph 1 under âReport on Other Legal and Regulatory Requirementsâ of our report of even date.

We report that:

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) As informed, fixed assets were physically verified by the management during the year and no material discrepancies were noticed on such verification.

(ii) The provisions of paragraph (ii) (a) to (c) of the order are not applicable to the Company, as the Company is engaged in the financial services sector.

(iii) As informed, the Company has not granted any loans, secured or unsecured, to Companies, firms or other parties covered in the register maintained under section 189 of the Act for the financial year 2014-15, and accordingly clauses (a) and (b) of para (iii) of the order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there exists an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to acquisition of properties, fixed assets, and with regard to sale of properties and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system.

(v) In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India, provisions of section 73 to 76 and other relevant provisions of the Act, the Companies (Acceptance of Deposit) Rules, 2014 to the extent applicable, and The Housing Finance Companies (NHB) Directions, 2010, with regard to acceptance of deposits from the public. No order has been passed by the Company Law Board or the National Company Law Tribunal or Reserve Bank of India or by any other court or tribunal with regard to such deposits.

(vi) Since the Company is engaged in the financial services sector, provisions of sub-section (1) of section 148 of the Companies Act, 2013 are not applicable to the Company.

(vii) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income Tax, Wealth Tax, Service Tax, Cess and other material statutory dues applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of outstanding statutory dues were in arrears as at 31st March, 2015 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, following amounts have not been deposited as on 31st March, 2015 on account of any dispute:

Statute		Financial Year	Amount (in Rs.)	Forum where dispute is pending
Income Tax		2010-11	32,02,112	Commissioner of Income Tax (Appeals)
Income Tax		2011-12	4,15,16,470	Commissioner of Income Tax (Appeals)
	Total		4,47,18,582

(c) According to the information given to us the amount required to be transferred to Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under has been transferred to such fund within time.

(viii) The Company neither has accumulated losses nor has incurred any cash losses during the financial year covered by our audit and the immediately preceding financial year.

(ix) According to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institutions, banks or debenture holders.

(x) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xi) To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, the term loans obtained during the year were, prima facie, applied by the Company for the purpose for which they were obtained, other than temporary deployment pending application.

(xii) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year, although there have been few instances of loans becoming doubtful of recovery consequent upon fraudulent misrepresentation by borrowers, the amounts whereof are not material in the context and size of the Company and the nature of its business and which have been provided for.

ANNEXURE II TO INDEPENDENT AUDITOR''S REPORT

Re: Directions for PNB HOUSING FINANCE LIMITED

Referred to in paragraph 3 under âReport on Other Legal and Regulatory Requirementsâ of our report of even date.

1. If the Company has been selected for disinvestment, a complete status report in terms of valuation of Assets (including intangible assets and land) and Liabilities (including Committed & General Reserves) may be examined including the mode and present stage of disinvestment process.â

To the best of our knowledge, during the period under review, the Company has not been selected for disinvestment.

2. Please report whether there are any cases of waiver/write off of debts/loans/interest etc., if yes, the reasons thereof and the amount involved.

The Company has written off an amount of Rs.102.29 lacs as bad debts during the year due to non recoverability.

3. Whether proper records are maintained for inventories lying with third parties & assets received as gift from Govt. or other authorities.

The Company being a Housing Finance Company does not hold any inventory.

4. A report on age-wise analysis of pending legal / arbitration cases including the reasons of pendency and existence/effectiveness of a monitoring mechanism for expenditure on all legal cases (foreign and local) may be given.

Age-wise breakup of pending cases are given as under:

Particulars (Ageing of live cases)	Rs.in lacs
Up to one year	144.06
One to Three years	66.88
Three to Five years	119.01
More Than Five years	103.24
Total Amount Involved	433.19

These cases have been filed against borrowers for recovery of loans given, where there has been default in repayment of the same.

A structure for legal fees has been framed by the Company for all legal cases, based on the amounts involved in the particular case. Fees are paid as per this structure.

Referred to in paragraph 3 under âReport on Other Legal and Regulatory Requirementsâ of our report of even date.

1. Investments

Whether the titles of ownership in respect of CGS/SGS/Bonds/Debentures etc. are available in physical/demat form and these, in aggregate, agree with the respective amounts shown in the Company''s books of accounts? If not, details may be stated.

The title of CGS/SGS/Bonds/Debentures etc held is in the name of the Company. The amounts in aggregate agree with the books of accounts of the Company.

2. Land

Whether the Company has clear title/lease deeds for freehold and leasehold land respectively? If not, please state the area of freehold and leasehold for which the title/lease deeds are not available.

The Company does not own any land.

3. Confirmation of balances

Whether amount of (a) bank balances (b) trade receivables (c) trade payables (d) loans and advances for which third party confirmation was not made available has been reported?

Where such balance has been confirmed by respective parties, whether it varies widely from the amounts reflected under respective heads in the financial statements, and if so, difference to be disclosed

(a) Confirmations of all Bank Balances have been received and reconciled with the books of account.

(b) There are no trade receivables with the Company.

(d) Loans and Advances have been given to more than 55,000 borrowers and are backed by a written agreement in each case. Since payments are being regularly received as per EMI fixed in the agreements, hence it was not considered practical and prudent to call for a written confirmation once again. In disputed cases where EMI are not being received, Company has activated recovery proceedings.

4. Reconciliation of deposits

Whether the deposits/advances made by the Company to the Income tax, Service tax and other authorities have been verified and reconciled with the respective authorities?

The advances/deposits with service tax and income tax authorities'' have been verified through service tax returns and Form 26AS respectively. There is no deposit/advance to any other authority.

5. Employee Benefits

Independent verification may be made of information/inputs furnished to Actuary, viz number of employees, average salary, retirement age and assumptions made by the actuary regarding the discount rate, future cost increase, mortality rate, etc for arriving at the provision for liability of retirement benefits, viz gratuity, leave encashment, post retirement medical benefits etc. (if accounting treatment of retirement benefits is done on the basis of actuarial valuation)

The accounting treatment of retirement benefits like Gratuity and Leave encashment is done on the basis of Actuarial valuation. The Gratuity fund of the Company is being managed by LIC of India. The provision for gratuity is made on the basis of actuarial valuation provided by LIC. Leave encashment liability is estimated by a valuation conducted by an independent actuary.

We have independently verified the information provided to the Actuary.

For B. R. Maheswari & Co.

Chartered Accountants

FRN: 001035N

Akshay Maheshwari

Partner

Membership No. 504704

Place: New Delhi

Date: 5th May 2015

Mar 31, 2014

Independent Auditorsâ Report

The Members

PNB Housing Finance Limited Revised Auditor Report

This audit report is being issued to revise our Audit Report dated March 29th, 2014 for the year ended March 31st, 2014. This report incorporates the amendment announced on February 7th, 2014 to the paragraph on "Auditors'' Responsibility". It also corrects the heading from Auditors'' Report to "Independent Auditors'' Report"

Report on the Financial Statements

We have audited the accompanying financial statements of PNB HFL ("Company"), which comprise the Balance Sheet as at March 31st, 2014 and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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 Company in accordance with Accounting Standards notified under Section 211(3C) of the Companies Act, 1956 ("the 1956 Act") read with General Circular 15/2013 dated September 13th, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in 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.

Auditors'' Responsibility

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.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity''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 entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, 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.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements 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:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31st, 2014;

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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the 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.

b) In our opinion, proper books of account as required by law have been kept.

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

d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with Accounting Standards notified under Section 211 (3C) of the Companies Act, 1956 ("the 1956 Act") read with General Circular 15/2013 dated September 13th, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013.

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

ANNEXURE REFERRED TO IN OUR REPORT OF EVEN DATE

As required by the Companies (Auditor''s Report) Order, 2003 issued by the Company Law Board in terms of section 227(4A) of Companies Act, 1956 on the basis of such checks as we considered appropriate and report that:

1) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

(b) As explained to us, the fixed assets were physically verified by the management in a phased manner during the year which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. The discrepancies noticed were not significant and have been properly dealt with in the accounts.

(c) In our opinion, the Company has not disposed of a substantial part of its fixed assets during the year and the going concern status of the Company is not affected.

2) The provisions of paragraph (ii) (a) to (c) of the order are not applicable to the Company, as the Company is engaged in the financial services sector.

3) In respect of the loans, secured or unsecured, granted or taken by the Company to/from Companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

(a) As informed, the Company has not granted any loans, secured or unsecured from Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 and accordingly paragraph (iii) (b) to (d) of the order are not applicable for the FY 2013-14.

(b) As informed, the Company has not taken any loans, secured or unsecured from Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Therefore the clauses (e), (f) & (g) of paragraph (iii) of the order are not applicable.

4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size and nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls system.

5) (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) The service contract for procurement of loan business to DEPL who is holding 27.46% shareholding in the Company was g iven in previous year. The terms of the agreement with the party are prima facie reasonable having regard to the prevailing market price in the view of the fact that the party is not using any facility of the Company for the business development.

6) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of section 58A, section 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposit) Rules, 1975 to the extent applicable and The Housing Finance Companies (NHB) Directions, 2010 with regard to acceptance of deposits from the public.

7) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

8) To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub- section (1) of section 209 of the Companies Act, 1956 for the products of the Company.

9) (a) According to the records of the Company, undisputed statutory dues including Provident Fund, income tax, service tax, etc. have generally been regularly deposited with the appropriate authorities during the year. Considering the business of the Company ESI, Excise Laws, etc are not applicable to the Company at present.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Customs Duty, Excise Duty and Cess were in arrears, as at 31.3.2014 for the period of more than six months from the date they become payable except as mentioned below:

Particulars	Nature of dues	Financial Year	Amount (in Rs.)	Forum where dispute is pending
Income Tax	Allocation of common expenses for computation of	2008-09	43,41,393	Commissioner of
	deduction u/s 36(i)(viii) of the Act	2009-10	51,95,570	Income Tax (Appeals)
		2010-11	1,20,72,496
		2011-12	96,39,830
TOTAL			3,12,49,289

10) The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

11) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution or banks.

12) (a) The Company grants loans and advances for housing inter alia on the main security of the equitable mortgage of properties, its own deposits, other securities besides other collateral securities/ guarantees as stated in Note No.22. Adequate documents and records have been maintained.

(b) The Company does not give any loans/advance against pledge of shares, debentures or the other securities as primary security.

(c) The demand loan granted by the Company under Public Deposit Scheme complies with requirements of the NHB Guidelines & that of section 58A & section 58AA of the Companies Act, 1956.

13) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor''s Report) Order 2003 are not applicable to this Company.

14) In our opinion, the Company''s transactions for sale/purchase of securities and other investments, held as investment proper records of the transactions have been maintained and timely entries have been made therein. We confirm that Company''s investments are held in its own name.

15) According to information given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

16) In our opinion, the term loans have been applied for the purpose for which they were raised.

17) According to the information and explanations given to us , with a view to bring down the overall cost of funds, we observe that funds raised from Overdraft / Term Loans from the Banks etc. have been used to finance Housing/Non- Housing loans, the average repayment of which ranges from 3 to 10 years. Further, we have been explained that generally the short-term funds are not used for long-term investments.

18) According to the information and explanations given to us, the Company has not made any preferential allotment of shares to the parties covered in the register maintained under section 301 of the Act. However, the Company has made a rights issue during the year. (refer note 22.18 for details).

19) According to the information and explanations given to us, during the period covered by our audit report, the Company has issued secured bonds amounting Rs. 1,500 crores. The charge in respect of the bonds has been properly created.

20) During the year under audit, the Company has not raised money by public issue.

21) According to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the course of our audit.

For B. R. Maheswari & Co.

Chartered Accountants

FRN: 001035N

Akshay Maheshwari

Partner

Membership No. 504704

Place: New Delhi

Date: 18/06/2014

Mar 31, 2013

Report mi the Financial Statements

We have audited the accompanying financial statements of PNB HOUSING FINANCE LIMITED which turn prise the Balance Sheet as at Minch 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement tor the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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 Company in accordance with the Accounting Standards referred to in sub-section (3Q of Section 211 of the Companies Act, 1556 (âthe Act''¹).. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error,

Auditorâs Responsibility

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 requirement;! and plan and perform the audit to obtain reasonable assurance about Whether the financial statements are free from material misstatement.

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

Opinion

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

In our opinion and to the best or our in formal ion and according to the explanations given to us, the financial statements 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:

a) in the ease of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditorâs Report) Order, 2003 (âthe Order¹'') issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure "A", a statement on the matters specified in paragraphs 4 and 5 of the Order,

2. As required by section 227(3) of the 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:

b) in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books

e) the Balance Sheet, Statement of Profit and Loss, and Cash flow Statement dealt with by this Report are in agreement with the books of account,

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

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

f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 44! A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

Referred To in paragraph I of our report of even date

As required by the Companies (Auditor''s Report) Order 2003 issued by the Company Law Rnard in. terms of Section 227(4A) of Companies Act, 1956 on the basis of such checks as we considered appropriate and report

I. (a) The Company has maintained proper records to show full particulars including

(b) The fixed assets of the Company have been physically verified by the Management during the year and as per the information and explanations given lo us, no material

II.The provisions of para (fi) (a) to (c) of the Order are not applicable to the Company, being engaged in financial services sector.

III. (a) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956, and accordingly para (iii) (b) to (d) of the Order are not

(d) As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Therefore the clauses (t) & (g) of para (iii) of the Order

The 7.25% Compulsory Convertible Debentures (CCD''s) amounting to Rs 137.32 crore issued to Destimoney Enterprises Private Limited (DEPL), which is holding 26% shares in the Company, issued in earlier years, have been converted in to equity on 08th June 2012. The year end balance in respect of the same us at March

(e) The rate of interest paid by the Company on these CCD % till 08th June 2012, is not prejudicial to the interest of the Company. Other terms and conditions are as per the agreement between PNBHFL Punjab National Hank and DEPL for conversion of CCD''s into equity shares at a future dale. The conversion price of the CCD''s into equity shares is at a predetermined price as per the terms of the said shareholders agreement decided by a competitive bidding process, therefore we do not offer any

IV, On the basis of selective checks carried out during the course of our audit, in our opinion and according to the information and explanations given to us, the internal control system that arc presently installed are generally adequate and commensurate with the size of (he Company and the nature of its business with regard to purchases of fixed assets and for the sanction, disbursement and recovery of loans given by the Company, We have not observed any continuing failure to correct major weaknesses in such internal controls.

V, a) According to the information and explanation given to us and on the basis of representation by the management, we are of the opinion that particulars of contract or arrangements that need to be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b) The service contract for procurement of loan business to UKPL who is holding 49% shareholding in the Company was given in previous year. The terms of the agreement with the party are prima facie reasonable having regard to the prevailing market price in view of the fact that the party is not using any facility of the Company for business development,

VI In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 5SA, Section 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposit) Rules, 1975 to the extent applicable and The Housing Finance Companies (NHB) Directions, 2010 with regard to acceptance of deposits from the public,

VII The Company has an internal audit cell comprising of experienced and qualified staff that carries out the internal audit of branches on rotation basis and system of transaction (Internal) audit of its branches and head office by the firm of Chartered Accountants. In view of the above, the system of internal audit appears to be in commensurate with the size of the Company and the nature of its business.

VIII. To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (I) of section 209 of the Companies Act, 1956 for the products of the Company.

IX. (a) According to the records of the Company, undisputed statutory dues including Provident Fund, income lax, service tax, etc, have generally been regularly deposited with the appropriate authorities during the year. We have been informed that Government Notification about Cess payable is still awaited and considering the business of the Company, in the managementâs view ESI, Excise Laws, etc, are not applicable to the Company at present.

However, an amount of Rs. Rs. 19,72,800/-, in respect of Works Contract Tax, is payable as of March 31, 2013, which shall be deposited in the due course as explained by the management.

(b) According to the information and explanations given to us, there are no undisputed amounts payable in respect of Income Tax and Service Tux which is outstanding for a period of more than six months as at 31*¹ March, 2013 from the date they became payable,

(c) We have been informed that there are no dues in respect of Service Tax, Wealth Tax and Cess which has not been deposited on account of any dispute, except for Income Tax demand as given hereunder, which has not been deposited as the same is disputed

Name of (he statute	Nature of dues	Amount (Rs.)	Assessment Year to which the amount relate*	Forum where dispute is pending
The income Tax Act, 1961	Allocation of Common Expenses for compulation of dL-duclion u/s 36 (I)(viti> of the Act.	52,15.202	2007-08	Commissioner of income Tax {Appeals)
		74,53,195	2008-09
		43,41,393	2009-10
		51,95,570	2010-11
		2,22,05,360

X, The Company has no accumulated losses ai the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

XI. According lo the information & explanations given & records examined by us, in our opinion, the Company has not defaulted in repayment of dues to Financial Institutions, Banks or Debenture Holders.

XIL fa) The Company grants loans and advances for housing interalia on the main security of equitable mortgage of properties. Us own deposits, other securities besides other collateral securities/guarantees as stated in Nore No, 22. Adequate documents and records have been maintained.

(b) The Company does not give any Loans/advance against pledge of shares, debentures or other securities as primary security.

(c) The Demand Loan granted by the Company under Public Deposit Scheme complies with requirements of the NHB Guidelines & that of Section 58A & Section 58AA of the Companies Act, 1956,

XIII In our opinion, the Company is not a chit fund or a nidhi mutual benefit fund / society. Therefore, the provisions of clause 4{xiii) of the Companies (Auditorâs Report) Order, 2003 {as amended) are not applicable to the Company.

XIV, In respect of Companyâs transactions for safe / purchase of securities and other investments, held as Investments, proper records of the transactions have been maintained and timely entries have been made therein, We confirm the Companyâs investments are held in its own name,

XV. According to the information and explanations given to us. the Company has not given any guarantee for loans taken by others / third parties from Banks or Financial Institutions.

XVI. Based on information and explanations given to us by the management, term loans were applied for the purpose Tor which the loans were obtained.

XVII. According to the information and explanations given to us, with a view to bring down the overall cost of funds, we observe that funds raised from Overdraw/Term Loan from Banks etc. have been used to finance Housing/Non-Housing Loans, the average repayment of which ranges from 3 to 10 years. Further we have been explained that generally the Short -term funds are not used for Long-Term investments,

XVIII. According to the information and explanations given to us, the Company has not made any preferential allotment of shares to any party covered in the Register maintained under section 301 of Companies Act

XIX. The Company did not have any outstanding debentures as at March 31, 2013*

XX, The Company has not raised any money through public issue during the year.

XXI. According to the information and explanations given to us, during the year ended on 31.03.203 3, no fraud has been came to the noticed of management / reported to the Board of Directors/ Audit Committee.

For RAJ K. AGCARWAL & ASSOCIATES

Chartered Accountants

Partner

M. No: 511415

Firm Registration No; O02585N

Plate: New Delhi

Dated: 04.05.2013

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