Auditor Report of Suryoday Small Finance Bank Ltd.

Mar 31, 2025

We have audited the financial statements of
Suryoday Small Finance Bank Limited ("the Bank”), which
comprise the Balance Sheet as at March 31, 2025, Profit and
Loss account, and the Statement of Cash Flow for the year
then ended, and notes to the financial statements, including
a summary of significant accounting policies and other
explanatory information ("financial statements”).

In our opinion and to the best of our information and according to
the explanations given to us, the aforesaid financial statements
give the information required by the Banking Regulations
Act, 1949 as well as the Companies Act, 2013 ("the Act”) and
circulars and guidelines issued by the Reserve Bank of India (''the
RBI’) in the manner so required for Banking Companies and give
a true and fair view in conformity with the Accounting Standards
prescribed under section 133 of the Act read with Companies
(Accounting Standard) Rules, 2021 as amended and other
accounting principles generally accepted in India, of the state of
affairs of the Bank as at March 31, 2025, its profits and its cash
flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on
Auditing (SAs) specified under section 143(10) of the Act. Our
responsibilities under those Standards are further described
in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the
Bank in accordance with the Code of Ethics issued by the
Institute of Chartered Accountants of India ("ICAI”) together

with the ethical requirements that are relevant to our audit of the
financial statements under the provisions of the Act and the Rules
thereunder, and we have fulfilled our other ethical responsibilities
in accordance with these requirements and the Code of Ethics.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.

Emphasis of Matter:

We draw attention to Note No 20 (z) of the Financial Statements
on provision on advance covered by Credit Guarantee Fund
for Micro Units (CGFMU) where upto last year , The Bank was
making provisions on full value of Loan as per its Internal policy
and from current year has made provision as permitted by RBI
Guidelines, which has resulted in lesser provision for the year
ended by an amount H 17,602, in respect of loans that became
NPA during the Year. CRAR of the Bank as at March 31,2025
is 25.83% instead of 22.03%, on account of application of
Risk Weights as per NCAF issued by RBI guidelines, only on
unguaranteed portion of advances under CGFMU scheme. Our
opinion is not modified in this aspect

Key Audit Matters

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

We have determined the matters described below to be the key
audit matters to be communicated in our report

Identification of Non-Performing Assets (''NPA'') and Provisioning and write off for Loans and Advances

Total Loans and Advances (Net of NPA Provision, floating provision, securitization and IBPC) as on March 31, 2025: H 9,97,43,499 (''000)
Gross NPA as on March 31, 2025: H 73,38,370 (''000)

Provision for NPA as on March 31, 2025 (Excluding floating provision): H 23,97,549 (''000)

(Refer Schedule 9 and Schedule 18 (4.1) to the financial statement)

Key Audit Matter	How our audit addressed the key audit matter
The Reserve Bank of India’s ("RBI”) guidelines on Income	Tested the design and operating effectiveness of key controls
recognition and asset classification ("IRAC”) prescribe the	(including application controls) over identification of NPAs,
prudential norms for identification and classification of non-	provisions thereof and the valuation of securities.
performing assets ("NPA”) and the minimum provision required for such assets.	Testing of Application controls included testing of reports and system reconciliations as at the year end.
The Bank is required to have Board approved policy as per IRAC guidelines for NPA identification and provision.	Review of controls over calculations of provision of non-performing advances, basis of provisioning in accordance with the Board approved policy.

Key Audit Matter	How our audit addressed the key audit matter
The Bank is also required to apply its judgement to determine the identification and provision required against NPAs by	Performed substantive procedures as listed below:
applying quantitative as well as qualitative factors. The risk	• For sample borrowers, assessed the appropriateness of
of identification of NPAs is affected by factors like stress and	asset classification and adequacy of related provisioning
liquidity concerns in certain sectors.	by performing procedures such as computation of overdue ageing, assessment of borrower level NPA identification and
The provision against advances is based on criteria such as past	verification of applicable provision rates as per IRAC norms
due status, out of order status etc. The provisions in respect	and Bank''s Policy;
of such NPAs are made based on ageing and classification of	• Selected samples of performing loan accounts to assess,
NPAs, recovery estimates, value of security and other qualitative	independently, whether such loan accounts should be
factors and is subject to minimum provisioning levels prescribed by the RBI and approved policy of the bank in this regard. In addition to this, for restructured accounts, provision is made for erosion/ diminution in fair value of restructured loans, in	classified as NPA; • For selected samples, reviewed the securities valuation performed by the Bank;
accordance with the RBI guidelines. Further, NPA classification	• Considered the data shared by Bank regarding accounts
is made borrower wise whereby if one facility of the borrower	reported as Special Mention Accounts ("SMA”) in RBI''s
becomes an NPA then all facilities of such a borrower will be	central repository of information on large credits (CRILC) to
treated as an NPA.	identify stress. • Selected samples for standard and overdue accounts to
Additionally, the Bank makes provisions on exposures that are	assess compliance with the RBI Circulars on ''COVID-19 -
not classified as NPAs including identified advances or group	Regulatory Package'' and ''COVID-19 Regulatory Package -
advances that can potentially slip into NPA. These are part of	Asset Classification and Provisioning'';
standard asset provision.	• Selected sample of accounts restructured under RBI Circulars
The Management of the Bank also made an assessment of the	on ''Micro, Small and Medium Enterprises (MSME) sector
impact on borrowers account due to Covid -19 pandemic and in	- Restructuring of Advances'' and ''Resolution Framework
line with the COVID 19 Regulatory Package announced by the	for Covid-19-related Stress'' to assess compliance with the
RBI in respect of moratorium and restructuring of advances as	RBI directions;
relief measures to the borrowers. Since the identification of NPAs and provisioning for advances require significant level of estimation and given its significance to the overall audit, we have ascertained identification and provisioning for NPAs as a key audit matter.	• Assessed the adequacy of disclosures against the relevant accounting standards and RBI requirements relating to NPAs.
Information Technology (''IT'') systems and controls impacting	Our Audit procedures with respect to this matter included: We
financial reporting	used our internal IT team to perform audit procedures to assess IT systems and controls over financial reporting which included
The Bank''s IT architecture to process key financial accounting and reporting is complex involving number of independent and	the following:
interdependent IT systems used in the operations of the Bank, and IT controls to process significant transactions volumes at	1) General IT controls design, observation and operation:
numerous locations.	• Obtain an understanding of the IT infrastructure and IT systems
As such there is high reliability on IT systems, appropriate IT	• Testing the sample of key controls operating over the
general controls and application controls are required to ensure	information technology in relation to financial accounting
that such IT systems are able to process the data, as required,	and reporting systems, including system access, system
completely, accurately and consistently for reliable financial	change management and computer operations.
reporting. The IT systems and controls, as they impact the financial recording and reporting of transactions, is a key audit matter.	2) User access controls operation: • Reviewed processes followed by the management in respect of access rights granted to applicants relevant to financial accounting and reporting systems. • Assessing the operating effectiveness of controls over granting, removal and appropriateness of access rights. Other areas that were assessed under the IT control environment, included password and security related policies were also part of our audit procedures

Information Other than the Financial Statements and
Auditor''s Report Thereon

The Bank’s Board of Directors is responsible for the other
information. The other information comprises the information
in the Director’s Report including annexures to the Director’s
report and the Annual Report but does not include the financial
statements and our Auditor’s report thereon. The Director’s
Report and Annual Report is expected to be made available to
us after the date of this auditor’s report.

Our opinion on the financial statements does not cover the other
information and we will 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 identified above
when it becomes available and, in doing so, consider whether
the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit, or otherwise
appears to be materially misstated.

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

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

The Bank’s Board of Directors is responsible for the matters stated
in section 134(5) of the Act with respect to the preparation of these
financial statements that give a true and fair view of the financial
position, financial performance, and cash flows of the Bank in
accordance with the accounting principles generally accepted in
India, including the Accounting Standards specified under section
133 of the Act, read with the Companies (Accounting Standards)
Rules, 2021 and other accounting principles generally accepted in
India and provisions of the Banking Regulation Act, 1949 and the
circulars, guidelines and directions issued by the Reserve Bank
of India from time to time (RBI Guidelines) as applicable to the
Bank. This responsibility also includes maintenance of adequate
accounting records in accordance with the provisions of the Act
and RBI Guidelines for safeguarding of the assets of the Bank
and for preventing and detecting frauds and other irregularities;
selection and application of appropriate accounting policies;
making judgments and estimates that are reasonable and prudent;
and design, implementation and maintenance of adequate internal
financial controls, that were operating effectively for ensuring the
accuracy and completeness of the accounting records, relevant to
the preparation and presentation of the financial statement that
give a true and fair view and are free from material misstatement,
whether due to fraud or error.

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

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

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

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

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

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

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

• Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and
related disclosures made by Management of the Bank.

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

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

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

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

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

From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the financial statements for the
financial year ended March 31, 2025 and are therefore, the
key audit matters. We describe these matters in our Auditor’s
report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our
report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits
of such communication.

Other Matter

The Financial Statements of the Bank for the year ended March
31, 2024, were audited by previous statutory auditor whose
report dated May 09, 2024 expressed an unmodified opinion on
those statements.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. The Balance Sheet and the Profit and Loss Account have
been drawn up in accordance with the provisions of Section
29 of the Banking Regulation Act, 1949 and Section 133 of
the Act and relevant rules issued thereunder.

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

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

b. The transactions of the Bank, which have come to
our notice during the course of our audit, have been
within the powers of the Bank.

c. Since the key operations of the Bank are automated
with the key applications integrated to the core
banking system, the audit is carried out centrally as
all the necessary records and data required for the
purpose of our audit are available therein. During
the course of our audit we have visited 34 branches
to examine the books of account and other records
maintained at the branches and performed relevant
audit procedures.

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

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

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

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

d. In our opinion, the aforesaid financial statements
comply with the Accounting Standards specified
under Section 133 of the Act read with the
Companies (Accounting Standards) Rules, 2021 and
relevant rules made thereunder to the extent they
are not inconsistent with the accounting policies
prescribed by RBI.

e. On the basis of the written representations received
from the directors as on March 31, 2025 taken on
record by the Board of Directors, none of the directors
are disqualified as on March 31, 2025 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 financial statements of
the Bank and the operating effectiveness of such
controls, refer to our separate Report in "Annexure
A”. Our report expresses an unmodified opinion on
the adequacy and operating effectiveness of the
Bank’s internal financial controls with reference to
financial statements.

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

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

i. The Bank has disclosed the impact of pending
litigations on its financial position in its financial
statements - Refer Schedule 12 and Schedule
18 (20.b) to the financial statements;

ii. The Bank has not entered into any long-term
contracts nor entered into any derivative
contracts as at March 31, 2025 and accordingly
no provision is required to be made;

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

iv. a) Based on the information and explanation

provided and as represented to us by the
management to the best of its knowledge
and belief, other than as disclosed in note
20(w)(i) to the financial statements, no
funds have been advanced or loaned or
invested (either from borrowed funds or
share premium or any other sources or
kind of funds) by the Bank to or in any
other person(s) or entity(ies), including
foreign entities ("Intermediaries”), with the
understanding, whether recorded in writing
or otherwise, that the Intermediary shall,
whether, directly or indirectly lend or invest
in other persons or entities identified in any
manner whatsoever by or on behalf of the
Bank ("Ultimate Beneficiaries”) or provide
any guarantee, security or the like on behalf
of the Ultimate Beneficiaries.

b) Based on the information and explanation
provided and as represented to us by the
management to the best of its knowledge
and belief, other than as disclosed in note
20(w)(ii) to the financial statements, no
funds have been received by the Bank
from any person(s) or entity(ies), including
foreign entities ("Funding Parties”), with
the understanding, whether recorded in
writing or otherwise, that the Bank shall,

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

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

v) The Bank has not declared or paid any dividend
during the year ended 31 March 2025.

vi) Based on our examination which included test
checks, the Bank has used various accounting
software systems for maintaining its books
of account which have a feature of recording
audit trail (edit log) facility and the same has
operated throughout the year for all relevant
transactions recorded in the software. Further,
during the course of our audit we did not come
across any instance of the audit trail feature
being tampered with. Additionally, the audit trail
feature of prior year(s) has been preserved by
the Bank as per the statutory requirements for
record retention to the extent it was enabled and
recorded in respective years.

For Mukund M. Chitale & Co.

Chartered Accountants
FRN:106655W

Nilesh RS Joshi

Partner

Place: Mumbai Membership No.

Date: May 08,2025 UDIN: 25114749BMILSU6215

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Mar 31, 2024

Suryoday Small Finance Bank Limited

Report on the Audit of the Financial Statements

Opinion

1. We have audited the accompanying financial statements of Suryoday Small Finance Bank Limited (''the Bank''), which comprise the Balance Sheet as at 31 March 2024, the Statement of Profit and Loss and the Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of the significant accounting policies and other explanatory information.

2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 2013 (''the Act'') and circulars and guidelines issued by the Reserve Bank of India (''the RBI''), in the manner so required for banking companies and give a true and fair view, in conformity with the Accounting Standards specified under section 133 of the Act, read with the Companies (Accounting Standards) Rules, 2021 and other accounting principles generally accepted in India, of the state of affairs of the Bank as at 31 March 2024, and its profit and its cash flows for the year ended on that date.

Basis for Opinion

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

Key Audit Matters

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

5. We have determined the matters described below to be the key audit matters to be communicated in our report

Identification of Non-Performing Advances (NPA) and provisioning and write off for loans and advances

As at 31 March 2024, the Bank reported total loans and advances (net of provisions) of H 8,078 crores (2023: 6,015 crores), gross NPAs of H 242 crores (2023: H 191 crores), and provision for non-performing assets (including floating provision) of H 173 crores (2023: H 98 crores). The Bank has written off loans of H 103 crores during the year ended 31 March 2024 (2023: H 275 crores).

The provision coverage ratio as at 31 March 2024 is 71% (2023: 51%).

[Refer schedules 9, schedule 17, and 18(4)]

Key Audit Matter	How our audit addressed the key audit matter
Identification of NPA and measurement of provision for loans and	Our audit procedures included but were not limited to the
advances is made based on the assessment of various criteria	following:
stipulated in the Reserve Bank of India (''RBI'') guidelines on ''Prudential Norms on Income Recognition, Asset Classification	Design/Controls
and Provisioning pertaining to advances'' (''IRACP'').	Understood the process and controls and tested the
The Bank is required to have a Board approved policy as per the	design and operating effectiveness of key internal controls
IRACP guidelines for NPA identification and provision and write	(including application controls) over
off for loans and advances.	* Approval, recording and recovery of loans;
The IRACP guidelines stipulate the requirement to identify NPA through defined criteria such as past due status, out of	* Monitoring process for overdue loans
order status etc. Provisions in respect of such NPAs are made	* 1 dentification and classification of NPA in line with
based on minimum provisioning levels prescribed under the	IRACP guidelines; and
IRACP and Bank''s internal credit policy. The provision on NPAs are also based on the valuation of the security available. NPA	* Measurement of provision on loans and advances
classification is made borrower wise whereby if one facility to the	in line with IRACP guidelines including valuation of
borrower becomes an NPA then all facilities to such a borrower will be treated as an NPA	security and collateral against loans.

Key Audit Matter	How our audit addressed the key audit matter
The Bank is also required to apply its judgement to determine the identification of NPA and provision required for loans and advances by applying quantitative as well as qualitative factors. The risk of identification of NPA is affected by factors like stress and liquidity concerns in certain sectors, profile of borrowers etc. Similarly, the Bank is also required to make judgements to identify the loans and advances which are non-recoverable and thereby determined to be written off. Considering the significance of the above matter to the financial statements, the heightened regulatory compliances, and significant auditor attention required, we have identified this as a key audit matter for the current year audit.	Substantive procedures * Evaluated the Bank''s accounting and internal policies for identification of NPAs and provisioning and write off on loans and advances; * For borrowers, assessed the appropriateness of asset classification and adequacy of related provisioning by performing procedures such as computation of ageing, assessment of borrower level NPA identification and verification of applicable provision rates as per IRACP norms and Bank''s Policy on test check basis; * Verified performing loans on test check basis to assess whether they should be classified as NPA; * Performed inquiries with the Management of the Bank to ascertain if there were indicators of stress, perceived credit risk or occurrence of an event of default in any particular class of borrowers, product category or loan account that warrants NPA assessment; * Verified on a sample basis that the loan writeoffs during the year is in accordance with Board approved policy; * Obtained and read communications with regulators during the year * Assessed disclosures included in the financial statements in respect of asset classifications and provisioning, including specific disclosures made in accordance with the requirements of the RBI Master Directions
Information Technology ("IT”) Systems and Controls for the financial reporting process
Key Audit Matter	How our audit addressed the key audit matter
The IT environment of the Bank is complex as it involves a number of independent and inter-dependent IT systems which are used in the operations of the Bank for processing and recording a large volume of transactions at numerous locations on a daily basis. As a result, there is a high degree of reliance and dependency on such IT systems for the financial reporting process of the Bank which impacts key financial accounting and reporting items such as loans, interest income, provision on loans amongst others. Appropriate IT general controls and application controls are required to ensure that such IT systems are able to process the data, as required, completely, accurately and consistently for reliable financial reporting. Our area of audit focus for the IT systems and the related control environment included: * IT general controls over user access management and change management across applications, networks, database, and operating systems; * IT application controls (automated controls) relevant for financial reporting.	We included specialized IT auditors as part of our audit team to perform audit procedures which included, but were not limited to the following: * Obtained an understanding of the Bank''s IT related control environment and conducted risk assessment and identified IT applications, networks, databases and operating systems that are relevant to our audit. Also, obtained an understanding of the changes that were made to the identifi-ed IT applications during the audit period and tested those changes that had a significant impact on financial reporting. * Tested IT general controls particularly access rights over applications, change management across identified applications, password policies, security configuration etc. We also assessed the design and operating effectiveness of controls over granting, removal and periodical review of access rights. We further tested segregation of duties, including preventive controls to ensure that access to change applications, the operating system or databases in the production environment were granted only to authorized personnel.

Key Audit Matter How our audit addressed the key audit matter

Accordingly, due to the importance of the impact of the IT * Tested related interfaces, configuration and other

systems and automated controls, new system implementation application layer controls identified during our audit

and related control environment on the Bank''s financial reporting mainly for loans, interest income, provision for loan

process, we have identified testing of such IT systems and assets, deposits amongst others, for evaluating

related control environment as a key audit matter for the current completeness and accuracy;

year audit.

* Where deficiencies were identified, tested compensating controls or performed alternative procedures.

I nformation other than the Financial Statements and Auditor''s Report thereon

The Bank''s Board of Directors are responsible for the other information. The other information comprises the information included in the Annual Report but does not include the 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 financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

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

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.

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

6. The accompanying financial statements have been approved by the Bank''s Board of Directors. The Bank''s Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation and presentation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with the Accounting Standards specified under section 133 of the Act, read with the Companies (Accounting Standards) Rules, 2021 and other accounting principles generally accepted in India, and provisions of section 29 of the Banking Regulation Act, 1949 and circulars and guidelines issued by the RBI from time to time. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Bank and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for

ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

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

8. The Board of Directors is also responsible for overseeing the Banks''s financial reporting process.

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

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

10. As part of an audit in accordance with Standards on Auditing specified under section 143(10) of the Act, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

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

* Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;

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

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

11. 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.

12. We also provide those charged with governance with a statement that we have complied with relevant ethical requirementsregarding 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.

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

Report on Other Legal and Regulatory Requirements

14. The Balance Sheet and the Profit and Loss Account have been drawn up in accordance with the provisions of

section 29 of the Banking Regulation Act, 1949 and section 133 of the Act.

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

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

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

c) We have visited 30 branches to examine the books of accounts and other records maintained at the branch for the purpose of our audit. Since the key operations of the Bank are automated with the key applications integrated to the core banking system, the audit is carried out at centrally as all the necessary records and data required for the purposes of our audit are available therein.

16. With respect to the matter to be included in the auditor''s report under section 197(16) of the Act, we report that since the Bank is a banking company, as defined under the Banking Regulation Act, 1949; the reporting under section 197(16) in relation to whether the remuneration paid by the Bank is in accordance with the provisions of section 197 of the Act and whether any excess remuneration has been paid in accordance with the aforesaid section is not applicable.

17. Further, as required by section 143 (3) of the Act, based on our audit, we report, to the extent applicable, that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit of the accompanying financial statements;

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

c) The financial statements 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 the Companies (Accounting Standards) Rules, 2021, to the extent they are not inconsistent with the accounting policies prescribed by RBI;

e) On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2024 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 financial statements

of the Bank as on 31 March 2024 and operating effectiveness of such controls, refer to our separate report in Annexure A wherein we have expressed an unmodified opinion; and

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 Bank, as detailed in schedule 12 and schedule 18 - note (20)(b) to the financial statements, has disclosed the impact of pending litigations on its financial position as at 31 March 2024;

ii. The Bank has made provision as at 31 March 2024, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts. The Bank does not have any derivative contracts as at 31 March 2024;

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Bank during the year ended 31 March 2024;

iv. a. The management has represented that, to the best of its knowledge and belief, as disclosed in note 20(w)(i) to the financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Bank to or in any person(s) or entity(ies), including foreign entities (''the intermediaries''), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner

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

b. The management has represented that, to the best of its knowledge and belief, as disclosed in note 20(w) (ii) to the financial statements, no funds have been received by the Bank from any person(s) or entity(ies), including foreign entities (''the Funding Parties''), with the understanding, whether recorded in writing or otherwise, that the Bank shall, whether directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (''Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

c. Based on such audit procedures performed, as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the management representations under sub-clauses (a) and (b) above contain any material misstatement.

v. The Bank has not declared or paid any dividend during the year ended 31 March 2024.

vi. Based on our examination which included test checks, the Bank, in respect of financial year commencing on or after 01 April 2023, has used an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all relevant transactions recorded in the software. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with.

For Walker Chandiok & Co LLP

Chartered Accountants

Firm''s Registration No.: 001076N/N500013

Sudhir N. Pillai

Partner

Membership No.: 105782 UDIN: 24105782BKFIZZ3010

Place: Mumbai Date: 09 May 2024

---

Mar 31, 2023

Suryoday Small Finance Bank Limited

Report on the Audit of the Financial Statements

Opinion

1. We have audited the accompanying financial statements of Suryoday Small Finance Bank Limited

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

2. I n our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 2013 (''the Act'') and circulars and guidelines issued by the Reserve Bank of India (''the RBI''), in the manner so required for banking companies and give a true and fair view, in conformity with the Accounting Standards specified under section 133 of the Act, read with the Companies (Accounting Standards) Rules, 2021 and other accounting principles generally accepted in India, of the state of affairs of the Bank as at 31 March 2023, and its profit and its cash flows for the year ended on that date.

Basis for Opinion

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

Key Audit Matters

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

5. We have determined the matters described below to be the key audit matters to be communicated in our report.

Identification of Non-Performing Advances (NPA) and provisioning and write off for loans and advances

• As at 31 March 2023, the Bank reported total loans and advances (net of provisions) of ? 6,015 crores (2022: 4,751 crores), gross NPAs of ? 191 crores (2022: ? 598 crores), and provision for non-performing assets of ? 98 crores (2022: ? 314 crores). The Bank has written off loans of ? 275 crores during the year ended 31 March 2023.

The provision coverage ratio (excluding write-offs) as at 31 March 2023 is 51.42% (2022: 52.57%)

[Refer schedules 9, schedule 17 and schedule 18(4) to the financial statements]

Key Audit Matter	How our audit addressed the key audit matter
Identification of NPA and measurement of provision for	Our audit procedures included but were not limited
loans and advances is made based on the assessment of	to the following:
various criteria stipulated in the Reserve Bank of India (''RBI'') guidelines on ''Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to advances'' (''IRACP'').	- Understood the process and controls and tested the design and operating effectiveness of key internal controls (including application controls) over:
The Bank is required to have a Board approved policy as per	•	Approval, recording and collection of loans;
the IRACP guidelines for NPA identification and provision	•	Identification and classification of NPA in line
and write off for loans and advances.		with IRACP guidelines; and
The IRACP guidelines stipulate the requirement to identify	•	Measurement of provision on loans and advances
NPA through defined criteria such as past due status, out		in line with IRACP guidelines including valuation
of order status etc. Provisions in respect of such NPAs		of security and collateral against loans.
and restructured advances are made based on minimum provisioning levels prescribed under the IRACP and Bank''s	- Substantive procedures included:
internal credit policy. The provision on NPAs are also	•	Evaluated the Bank''s accounting and internal
based on the valuation of the security available. In case		policies for identification of NPAs and provisioning
of restructured accounts, provision is made for erosion/		and write off on loans and advances;
diminution in fair value of restructured loans, in accordance with the IRACP guidelines. Further, NPA classification is made borrower wise whereby if one facility to the borrower becomes an NPA then all facilities to such a borrower will be treated as an NPA.	•	For borrowers, assessed the appropriateness of asset classification and adequacy of related provisioning by performing procedures such as computation of ageing, assessment of borrower level NPA identification and verification of
The Bank is also required to apply its judgement to determine		applicable provision rates as per IRACP norms
the identification of NPA and provision required for loans		and Bank''s Policy on test check basis;
and advances by applying quantitative as well as qualitative factors. The risk of identification of NPA is affected by factors like stress and liquidity concerns in certain sectors,	•	Verified performing loans on test check basis to assess whether they should be classified as NPA;
profile of borrowers etc. Similarly, the Bank is also required	•	Performed inquiries with the management of
to make judgements to identify the loans and advances		the Bank to ascertain if there were indicators
which are non-recoverable and thereby determined to		of stress, perceived credit risk or occurrence
be written off.		of an event of default in any particular class of
The Bank had extended benefits to its borrowers in line with the various guidelines and circulars related to COVID-19		borrowers, product category or loan account that warrants NPA assessment;
- Regulatory Packages and Resolution Framework for	•	Verified on a sample basis that the loan write-offs
COVID-19-related Stress announced by RBI in 2020 and 2021.		during the year is in accordance with Board approved policy;

Key Audit Matter	How our audit addressed the key audit matter
During the current year, the Bank has entered into	• Verified restructured accounts on test check
non-recurring transaction for transfer of stressed loans to	basis to assess compliance with the Resolution
Edelweiss Asset Reconstruction Company in accordance	Framework and adequacy of provisioning
with the RBI''s guidelines governing the transfer of	requirements as per RBI norms.
stressed loans - Reserve Bank of India (Sale of Loan Exposures) Direction, 2021 (RBI/DOR/2021-22/86 DOR. STR.REC.51/21.04.048/2021-22 dated 24 September 2021 (Updated 05 December 2022). ("RBI Master Directions") as further detailed in note 18(3)(f) to the accompanying financial statements.	• Verified whether the transfer of stressed loans is in accordance with RBI Master Directions and the de-recognition of loans transferred and subsequent loss on transfer has been accounted as per the RBI Master Directions
Considering the significance of the above matter to the financial statements, the heightened regulatory compliances, and significant auditor attention required, we have identified	• Obtained and read the latest RBI Annual Financial Inspection report and other communications with regulators during the year
this as a key audit matter for the current year audit.	• Assessed disclosures included in the financial
	statements in respect of asset classifications and provisioning, including specific disclosures made in accordance with the requirements of the COVID-19 Resolution Framework and RBI Master Directions on transfer of stressed loans.
Information Technology ("IT") Systems and Controls for the financial reporting process
Key Audit Matter	How our audit addressed the key audit matter
The IT environment of the Bank is complex as it involves	We included specialized IT auditors as part of our audit
a number of independent and inter-dependent IT systems	team to perform audit procedures which included, but were
which are used in the operations of the Bank for processing	not limited to the following:
and recording a large volume of transactions at numerous locations on a daily basis.	• Obtained an understanding of the Bank''s IT related control environment and identified IT applications
As a result, there is a high degree of reliance and dependency	that are relevant to our audit. Also, obtained an
on such IT systems for the financial reporting process	understanding of the changes that were made to the
of the Bank which impacts key financial accounting and	identified IT applications during the audit period and
reporting items such as loans, interest income, provision	tested those changes that had a significant impact on
on loans amongst others. Appropriate IT general controls	financial reporting.
and application controls are required to ensure that such IT systems are able to process the data, as required, completely, accurately and consistently for reliable financial reporting.	• Tested IT general controls particularly access rights over applications, change management across identified applications, password policies, security
Our area of audit focus for the IT systems and the related	configuration etc. We also assessed the design and
control environment included:	operating effectiveness of controls over granting,
> IT general controls over user access management and change management across applications, networks, database, and operating systems;	removal and periodical review of access rights. We further tested segregation of duties, including preventive controls to ensure that access to change applications, the operating system or databases in
> IT application controls (automated controls) relevant	the production environment were granted only to
for financial reporting.	authorized personnel.

Key Audit Matter	How our audit addressed the key audit matter
Migration of IT systems during the year During the year, the Bank has migrated to a new core banking system for its retail assets and liabilities. Such significant system change increases the risk to the internal financial control environment. These changes represent a financial reporting risk while migration takes place as controls and process that have been established earlier are updated and migrated to a new environment. Hence, our audit strategy focused on this migration of IT systems due to the risk of error and the impact such an error could have on the Bank''s financial accounting and reporting process. Accordingly, due to the importance of the impact of the IT systems and automated controls, new system implementation and related control environment on the Bank''s financial reporting process, we have identified testing of such IT systems and related control environment as a key audit matter for the current year audit.	• Tested related application level controls relevant to the audit mainly for loans, interest income, provision for loan assets, deposits amongst others, for evaluating completeness and accuracy; • Where deficiencies were identified, tested compensating controls or performed alternative procedures. Apart from above, below procedures were performed in relation to migration of IT systems which included: • Obtained an understanding of the migration process and evaluated the controls established by the Bank for such migration activity; • Verified system migration reports approved by appropriate personnel, mock runs observations and remediations, general ledger wise balance transfer, system access controls reconciliations, etc to ensure accuracy and completeness of transfer of data between the systems;
	•	Verified on sample basis for transfer of amount outstanding as on the cutoff date for advances;
	•	Verified on sample basis for transfer of deposit balances as on the cutoff date for deposit account holders; and
	•	Obtained the observations of the management arising from their testing of the data migration activity and ensured that exceptions if any have been rectified and concluded.

Information other than the Financial Statements and Auditor''s Report thereon

6. The Bank''s Board of Directors are responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Report on Corporate Governance, and Directors'' Report but does not include the 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 financial statements does not cover the other information and we will 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

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

When we read the Annual Report, 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 Financial Statements

7. The accompanying financial statements have been approved by the Bank''s Board of Directors. The Bank''s Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to

the preparation and presentation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with the Accounting Standards specified under section 133 of the Act, read with the Companies (Accounting Standards) Rules, 2021 and other accounting principles generally accepted in India, and provisions of section 29 of the Banking Regulation Act, 1949 and circulars and guidelines issued by the RBI from time to time. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Bank and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

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

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

Auditor''s Responsibilities for the Audit of the Financial

Statements

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

influence the economic decisions of users taken on the basis of these financial statements.

11. As part of an audit in accordance with Standards on Auditing specified under section 143(10) of the Act, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

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

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;

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

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

12. 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.

13. 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.

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

Report on Other Legal and Regulatory Requirements

15. The Balance Sheet and the Profit and Loss Account have been drawn up in accordance with the provisions of section 29 of the Banking Regulation Act, 1949 and section 133 of the Act.

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

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

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

c) We have visited 25 branches to examine the books of accounts and other records maintained at the branch for the purpose of our audit. Since the key operations of the Bank are automated with the key applications integrated to the core banking system, the audit is carried out at centrally as all the necessary records and data required for the purposes of our audit are available therein.

17. With respect to the matter to be included in the auditor''s report under section 197(16) of the Act, we report that since the Bank is a banking company, as defined under the Banking Regulation Act, 1949; the reporting under section 197(16) in relation to whether the remuneration paid by the Bank is in accordance with the provisions of section 197 of the Act and whether any excess remuneration has been paid in accordance with the aforesaid section is not applicable.

Further, as required by section 143 (3) of the Act, based on our audit, we report, to the extent applicable, that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit of the accompanying financial statements;

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

c) The financial statements 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 the Companies (Accounting Standards) Rules, 2021, to the extent they are not inconsistent with the accounting policies prescribed by RBI;

e) With respect to the adequacy of the internal financial controls with reference to financial statements of the Bank as on 31 March 2023 and operating effectiveness of such controls, refer to our separate Report in Annexure A wherein we have expressed an unmodified opinion; and

f) With respect to the other matters to be included in the Auditor''s Report in accordance with rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the

best of our information and according to the

explanations given to us:

i. The Bank, as detailed in schedule 12 and schedule 18 - note (20)(b) to the financial statements, has disclosed the impact of pending litigations on its financial position as at 31 March 2023;

ii. The Bank has made provision as at 31 March 2023, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts. The Bank does not have any derivative contracts as at 31 March 2023;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Bank during the year ended 31 March 2023. Refer schedule 18 - note 20(n);

iv. a. The management has represented that,

to the best of its knowledge and belief, as disclosed in schedule 18 - note 20(w)(i) to the financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Bank to or in any person(s) or entity(ies), including foreign entities (''the intermediaries''), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Bank (''the Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries;

b. The management has represented that, to the best of its knowledge and belief, as disclosed in schedule 18 - note 20(w) (ii) to the financial statements, no funds have been received by the Bank from any

person(s) or entity(ies), including foreign entities (''the Funding Parties''), with the understanding, whether recorded in writing or otherwise, that the Bank shall, whether directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (''Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

c. Based on such audit procedures performed, as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the management representations under sub-clauses (a) and (b) above contain any material misstatement.

v. The Bank has not declared or paid any dividend during the year ended 31 March 2023.

vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 requires all companies which use accounting software for maintaining their books of account, to use such an accounting software which has a feature of audit trail, with effect from the financial year beginning on 1 April 2023 and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 (as amended) is not applicable for the current financial year.

For Walker Chandiok & Co LLP

Chartered Accountants

Firm''s Registration No.: 001076N/N500013

Sudhir N. Pillai

Partner

Membership No.: 105782

UDIN: 23105782BGXTBZ7571

Place: Mumbai

Date: 15 May 2023