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Housing Development Finance Corporation Ltd.

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OPEN 2164.25
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VOLUME 99672
52-Week high 3021.10
52-Week low 2026.55
P/E 28.90
Mkt Cap.(Rs cr) 397,188
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Housing Development Finance Corporation Ltd. (HDFC) - Auditors Report

Company auditors report

To The Members of

Housing Development Finance Corporation Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements ofHousing Development Finance Corporation Limited ("the Corporation") whichcomprise the Balance sheet as at March 31 2022 the Statement of Profit and Lossincluding the statement of Other Comprehensive Income the Cash Flow Statement and theStatement of Changes in Equity for the year then ended and notes to the standalonefinancial statements including a summary of significant accounting policies and otherexplanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 as amended ("the Act") in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Corporation as atMarch 31 2022 its profit including other comprehensive income its cash flows and thechanges in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing ("SAs") as specified under section143(10) of the Act. Our responsibilities under those Standards are further described inthe 'Auditors' Responsibilities for the Audit of the Standalone Financial Statements'section of our report. We are independent of the Corporation in accordance with the 'Codeof Ethics' issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the standalone financial statements.

Key Audit Matters

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

We have determined the matters described below to be the key auditmatters to be communicated in our report. We have fulfilled the responsibilities describedin the Auditors' responsibilities for the audit of the standalone financial statementssection of our report including in relation to these matters. Accordingly our auditincluded the performance of procedures designed to respond to our assessment of the risksof material misstatement of the standalone financial statements. The results of our auditprocedures including the procedures performed to address the matters below provide thebasis for our audit opinion on the accompanying standalone financial statements.

Key audit matter How our audit addressed the key audit matter
1. 1 mpairment of loans (expected credit losses) (refer note 3.2.5 note 3.2.6 and note 9 to the standalone financial statements)
Indian Accounting Standard (Ind AS) 109 Financial Instruments requires the Corporation to provide for impairment of its loans using the expected credit loss (ECL) approach. ECL involves an estimation of probability weighted loss on financial instruments over their life considering reasonable and supportable information about past events current conditions and forecasts of future economic conditions and other factors which could impact the credit quality of the Corporation's loans. Read and assessed the Corporation's accounting policies for impairment of financial assets considering the requirements of Ind AS 109 and the governance framework approved by the Board of Directors pursuant to Reserve Bank of India guidelines issued on March 13 2020.
In the process a significant degree of judgement and estimates have been applied by the management for: • Evaluated the management estimates by understanding the process of ECL estimation and related assumptions and tested the controls around data extraction validation and computation.
• Staging of loans (i.e. classification in 'significant increase in credit risk' ('SICR') and 'default' categories) based on past due status or qualitative assessment;
• Assessed the criteria for staging of loans based on their past due status as per the requirements of Ind AS 109. Tested a sample of performing loans to assess whether any SICR or loss indicators were present requiring them to be classified under higher stages.
• Grouping of borrowers (retail loan portfolio) based on homogeneity for estimating probability of default ('PD') loss given default ('LGD') and exposure at default ('EAD') on a collective basis;
• Estimation of PD LGD and EAD for non-retail loan portfolio based on historical default experience and individual assessment wherever necessary of the borrower specific cash-flows security and other relevant factors; • Involved internal experts for testing of the ECL model and computation including factors that affect the PD LGD and EAD considering various forward looking micro and macro-economic factors. Involved internal valuation experts for testing the valuation of the underlying security for the non-retail loan portfolio.
• Estimation of losses for loan products with no/ minimal historical defaults;
• Tested assumptions used by the management in determining the overlay for macro-economic and other factors.
• Determining macro-economic and other factors impacting credit quality of loans.
• Assessed disclosures included in the standalone financial statements in respect of expected credit losses.
The Corporation has also recorded a management overlay as part of its ECL to reflect among other things an increased risk of deterioration in macro-economic factors caused by the COVID-19 pandemic. Given the unique nature and scale of the economic impact of this pandemic the management overlay is based on various uncertain variables which could result in actual credit loss being different than that being estimated.
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.
2. Valuation of Derivatives Instruments and Hedge Accounting (Refer to the accounting policies in Note 3.2.11 to the standalone financial statements: Derivative financial instruments; Note 7 to the standalone financial statements: Derivative financial instruments and Note 43.6 to the standalone financial statements - Foreign currency risk)
The Corporation enters into derivative financial instruments for risk management purposes. The identified risks in relation to the borrowings are foreign exchange rate risk and interest risk. The Corporation enters into cash flow hedges or fair value hedges depending on the risk being hedged. • Understood the risk management policies and procedures adopted by the Corporation and also obtained understanding about the accounting treatment of such transactions.
• Evaluated the design and operating effectiveness of controls over accounting of derivative transactions and controls over designating hedging relationship including authorization and related documentation.
Derivative and Hedge accounting is considered as a key audit matter because of its significance to the operations and complexity involved in applying formal and technical requirements to the hedge accounting and also in valuing hedge instruments.
• Obtained understanding of ongoing monitoring and tested hedge effectiveness.
• Tested qualifying criteria for hedge accounting and also checked that the valuation of derivative instruments is in accordance with Ind AS 109.
• Verified hedge documentation on sample basis.
• Reviewed valuation reports obtained from experts to assess whether the assumptions used are in line with market practice.
• Tested reconciliation of derivative instruments with independent confirmations obtained at the year-end.
• Considered the appropriateness of disclosures made in the standalone financial statements relating to financial risk management derivative financial instruments and hedge accounting.
3. IT systems and controls
The financial accounting and reporting systems of the Corporation are fundamentally reliant on IT systems and IT controls to process significant transaction volumes. Automated accounting procedures and IT environment controls which include IT governance general IT controls over program development and changes access to programs and data and IT operations are required to be designed and to operate effectively to ensure accurate financial reporting. • The aspects covered in the assessment of IT General Controls comprised: (i) User Access Management; (ii) Program Change Management; (iii) Other related ITGCs - to understand the design and test the operating effectiveness of such controls in respect of information systems that are important to financial reporting ("inscope applications").
• Tested the changes that were made to the in-scope applications during the audit period to assess changes that have impact on financial reporting.
Any gaps in the IT control environment could result in a material misstatement of the financial accounting and reporting records.
• Tested the periodic review of access rights inspected requests of changes to systems for appropriate approval and authorization.
Therefore due to the pervasive nature and 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.
• Performed tests of controls (including other compensatory controls wherever applicable) on the IT application controls and IT dependent manual controls in the system.
• Tested the design and operating effectiveness of compensating controls where deficiencies were identified and where necessary extended the scope of our substantive audit procedures.

Other Information

The Corporation's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Director'sreport and Management Discussion & Analysis (MD&A) report but does not includethe standalone financial statements and our auditors' report thereon.

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

In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whethersuch other information is materially inconsistent with the standalone financial statementsor our knowledge obtained in the audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatementof this other information we are required to report that fact. We have nothing to reportin this regard.

Responsibilities of Management and Those Charged withGovernance for the Standalone Financial Statements

The Corporation's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the financial position financialperformance including other comprehensive income cash flows and changes in equity of theCorporation in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Corporation and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and the design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the standalone financial statements management isresponsible for assessing the Corporation's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Corporation or tocease operations or has no realistic alternative but to do so.

Those charged with governance are also responsible for overseeing theCorporation's financial reporting process.

Auditors' Responsibilities for the Audit of the StandaloneFinancial Statements

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

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

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

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Corporation has adequate internal financial controls with reference tofinancial statements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCorporation's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditors' report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditors' report. However future events or conditions may cause theCorporation to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements for the financial year ended March 31 2022 and are therefore the keyaudit matters. We describe these matters in our auditors' report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.

Other Matter

The standalone financial statements of the Corporation for the yearended March 31 2021 included in these standalone financial statements have been auditedby the predecessor auditor who expressed an unmodified opinion on those standalonefinancial statements on May 7 2021.

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 1" a statement on thematters 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 explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;

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

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

(d) In our opinion the aforesaid standalone financial statementscomply with the Accounting Standards specified under Section 133 of the Act read withCompanies (Indian Accounting Standards) Rules 2015 as amended;

(e) On the basis of the written representations received from thedirectors as on March 31 2022 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2022 from being appointed as a director in termsof Section 164 (2) of the Act;

(f) With respect to the adequacy of the internal financial controlswith reference to these standalone financial statements and the operating effectiveness ofsuch controls refer to our separate Report in "Annexure 2" to this report;

(g) In our opinion the managerial remuneration for the year endedMarch 31 2022 has been paid/ provided by the Corporation to its directors in accordancewith the provisions of section 197 read with Schedule V to the Act;

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

i. The Corporation has disclosed the impact of pending litigations onits financial position in its standalone financial statements - Refer Note 40 to thestandalone financial statements;

ii. The Corporation has made provision as required under theapplicable law or accounting standards for material foreseeable losses if any onlong-term contracts including derivative contracts - Refer Note 7 to the standalonefinancial statements;

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Corporation during theyear ended March 31 2022. Whilst the Corporation transferred the unclaimed dividend2371 underlying equity shares relating to such unclaimed dividend could not betransferred as the depository participant confirmed to the Corporation that the aforesaidequity shares were not available in the demat accounts of the respective shareholders;

iv. a) The management has represented that to the best of itsknowledge and belief no funds have been advanced or loaned or invested (either fromborrowed funds or share premium or any other sources or kind of funds) by the Corporationto or in any other person(s) or entity(ies) including foreign entities("Intermediaries") with the understanding whether recorded in writing orotherwise that the Intermediary shall whether directly or indirectly lend or invest inother persons or entities identified in any manner whatsoever by or on behalf of theCorporation ("Ultimate Beneficiaries") or provide any guarantee security or thelike on behalf of the Ultimate Beneficiaries;

b) The management has represented that to the best of its knowledgeand belief no funds have been received by the Corporation from any person(s) orentity(ies) including foreign entities ("Funding Parties") with theunderstanding whether recorded in writing or otherwise that the Corporation shallwhether directly or indirectly lend or invest in other persons or entities identified inany manner whatsoever by or on behalf of the Funding Party ("UltimateBeneficiaries") or provide any guarantee security or the like on behalf of theUltimate Beneficiaries; and

c) Based on such audit procedures that were considered reasonable andappropriate in the circumstances nothing has come to our notice that has caused us tobelieve that the representations under sub-clause

(a) and (b) contain any material misstatement; and

v. T he final dividend paid by the Corporation during the year inrespect of the same declared for the previous year is in accordance with section 123 ofthe Act to the extent it applies to payment of dividend.

As stated in Note 26.9 to the standalone financial statements theBoard of Directors of the Corporation has proposed final dividend for the year which issubject to the approval of the members at the ensuing Annual General Meeting. The dividenddeclared is in accordance with section 123 of the Act to the extent it applies todeclaration of dividend.

H=100% CELLPADDING=2>
For S. R. Batliboi & Co. LLP For G. M. Kapadia & Co.
Chartered Accountants Chartered Accountants
ICAI Firm registration number: 301003E/E300005 ICAI Firm registration number: 104767W
per Viren H. Mehta Atul Shah
Partner Partner
Membership No.: 04 8749 Membership No.: 039569
UDIN: 22 0 4 8749AIGPRD7872 UDIN: 22039569AIGPZN4047
Mumbai Mumbai
May 2 2022 May 2 2022

Annexure 1 to the Independent Auditors' Report of even dateon the Standalone Financial Statements of Housing Development Finance Corporation Limited

In terms of the information and explanations sought by us and given bythe Corporation and the books of account and records examined by us in the normal courseof audit and to the best of our knowledge and belief we state that:

(i) (a) (A) The Corporation has maintained proper records showing fullparticulars including quantitative details and situation of Property Plant and Equipmentand Investment Property.

(B) The Corporation has maintained proper records showing fullparticulars of the intangible assets recognized in the standalone financial statements.

(b) The management of the Corporation has physically verified PropertyPlant and Equipment (including right of use assets) during the year and no materialdiscrepancies were identified on such verification.

(c) Based on test check examination of the records and sale deeds/transfer deeds/ lease deeds/ conveyance deeds/ property tax receipts and such otherdocuments provided to us the title deeds of all the immovable properties (other thanproperties where the Corporation is the lessee and the lease agreements are duly executedin favour of the lessee) are held in the name of the Corporation. In respect of certainImmovable Properties located at Village Mehrauli Tehsil Hauz Khas New Delhi and Plot No. 4Echelon Institutional Sector 32 Gurgaon having aggregate gross carrying cost of ' 114.10crores the Corporation is in the process of execution and registration of sale deed. Theexecution of these documents has got delayed due to legal process as detailed in note 13.5to the standalone financial statements. The acquisition of these properties was in thenormal course of business and none of the promoters directors or their relatives areassociated with these transactions in any manner.

(d) The Corporation has not revalued its Property Plant and Equipment(including Right of use assets) or intangible assets during the year ended March 31 2022.

(e) There are no proceedings initiated during the year or are pendingagainst the Corporation as at March 31 2022 for holding any benami property under theProhibition of Benami Property Transactions Act 1988 (as amended) and rules madethereunder.

(ii) (a) The Corporation's business does not require maintenance ofinventories and accordingly the requirement to report on clause 3(ii)(a) of the Order isnot applicable to the Corporation.

(b) The Corporation has been sanctioned working capital limits inexcess of ' 5 crores in aggregate by banks or financial institutions. However such loansare either unsecured or secured by way of negative lien over assets of the Corporation.Accordingly the requirement to report on clause 3(ii)(b) of the Order is not applicableto the Corporation.

(iii) (a) Since the principal business of the Corporation is to giveloans the requirement to report on clause 3(iii)(a) of the Order is not applicable to theCorporation.

(b) During the year the investments made guarantees provided securitygiven and the terms and conditions of the grant of all loans and advances in the nature ofloans and guarantees to companies or any other parties are not prejudicial to theCorporation's interest.

(c) In respect of loans and advances in the nature of loans granted bythe Corporation as part of its business of providing housing finance and loans againstproperty to individual customers as well as providing corporate finance constructionfinance etc. to non-individual customers the schedule of repayment of principal andpayment of interest has been stipulated by the Corporation. Having regard to thevoluminous nature of loan transactions it is not practicable to furnish entity-wisedetails of amount due date for repayment or receipt and the extent of delay in thisreport (as suggested in the Guidance Note on CARO 2020 issued by the Institute ofChartered Accountants of India for reporting under this clause) in respect of loans andadvances which were not repaid / paid when they were due or were repaid / paid with adelay in the normal course of lending business. Further except for loans where there aredelays or defaults in repayment of principal and / or payment of interest as at thebalance sheet date in respect of which the Corporation has disclosed asset classification/ staging in note 9.4 to the standalone financial statements in accordance with IndianAccounting Standards (Ind AS) and the guidelines issued by the Reserve Bank of India theparties are repaying the principal amounts as stipulated and are also regular in paymentof interest as applicable.

(d) In respect of loans and advances in the nature of loans the totalamount overdue for more than ninety days as at March 31 2022 and the details of thenumber of such cases are disclosed in note 9.4 to the standalone financial statements. Insuch instances in our opinion reasonable steps have been taken by the Corporation forrecovery of the overdue amount of principal and interest.

(e) Since the principal business of the Corporation is to give loansthe requirement to report on clause 3(iii)(e) of the Order is not applicable to theCorporation.

(f) The Corporation has not granted any loans or advances in the natureof loans either repayable on demand or without specifying any terms or period ofrepayment to companies firms Limited Liability Partnerships or any other parties.Accordingly the requirement to report on clause 3(iii)(f) of the Order is not applicableto the Corporation.

(iv) Loans in respect of which provisions of section 185 of the Act areapplicable have been complied with by the Corporation. There are no loans investmentsguarantees and security in respect of which provisions of section 186 of the Act areapplicable and hence not commented upon.

(v) T he Corporation being a housing finance company registered withthe National Housing Bank the directives issued by the Reserve Bank of India and theprovisions of sections 73 to 76 or any other relevant provisions of the Act and theCompanies (Acceptance of Deposits) Rules 2014 as amended with regard to the depositsaccepted are not applicable to the Corporation. We are informed by the management that noorder has been passed by the Company Law Board National Company Law Tribunal or ReserveBank of India or any Court or any other Tribunal on the Corporation in respect of theaforesaid deposits.

(vi) The Central Government has not specified the maintenance of costrecords under Section 148(1) of the Act for the products/services of the Corporation.

(vii) (a) Undisputed statutory dues including goods and services taxprovident fund employees' state insurance income-tax sales-tax service tax duty ofcustom duty of excise value added tax cess and other statutory dues as applicable tothe Corporation have generally been regularly deposited with the appropriate authoritiesthough there has been a slight delay in a few cases.

According to the information and explanations given to us and based onaudit procedures performed by us no undisputed amounts payable in respect of thesestatutory dues were outstanding at the year end for a period of more than six monthsfrom the date they became payable.

(b) The dues of goods and services tax provident fund employees'state insurance income-tax sales-tax service tax duty of custom duty of excise valueadded tax cess and other statutory dues as applicable to the Corporation have not beendeposited on account of any dispute are as follows:

Name of the statute Nature of disputed dues Amount under dispute (Rs. in crore) Amount paid* (Rs. in crore) Period to which the amount relates Forum where the dispute is pending
Income Tax Act 1961 Income Tax 1535.63 75.00 FY 2017-2018 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income Tax 781.57 156.31 FY 2018-2019 Commissioner of Income Tax (Appeals)
Finance Act 1994 Service Tax 13.62 7.20 FY 2007-2018 Customs Excise and Service Tax Appellate Tribunal (CESTAT) Mumbai
Finance Act 1994 Service Tax 1.25 0.13 FY 2008-2012 CESTAT Mumbai
Goods and Services Tax Act 2017 Goods and Services Tax 2.40 0.24 FY 2017-2018 Joint Commissioner
Maharashtra Sales Tax on the Transfer of the Right to use any Goods for any Purpose Act 1985 Interest on lease tax 0.02 FY 1999-2000 Commissioner of Sales Tax (Appeals)

* paid under protest

In addition to above there are other income tax related disputeddemands which have been fully paid/ adjusted.

(viii) The Corporation has not surrendered or disclosed anytransaction previously unrecorded in the books of account in the tax assessments underthe Income- tax Act 1961 as income during the year. Accordingly the requirement toreport on clause 3(viii) of the Order is not applicable to the Corporation.

(ix) (a) The Corporation has not defaulted in repayment of loans orother borrowings or in the payment of interest thereon to any lender during the year.

(b) The Corporation has not been declared as a wilful defaulter by anybank or financial institution or other lender during the year.

(c) Monies raised during the year by the Corporation by way of termloans has been applied for the purpose for which they were raised other than temporarydeployment pending application of proceeds.

(d) On an overall examination of the standalone financial statements ofthe Corporation no funds raised on short-term basis have been used for long-term purposesduring the year by the Corporation.

(e) On an overall examination of the standalone financial statements ofthe Corporation the Corporation has not taken any funds from any entity or person onaccount of or to meet the obligations of its subsidiaries associates or joint venturesduring the year.

(f) The Corporation has not raised loans during the year on the pledgeof securities held in its subsidiaries joint ventures or associate companies. Hence therequirement to report on clause (ix)(f) of the Order is not applicable to the Corporation.

(x) (a) The Corporation has not raised any money during the year by wayof Initial Public Offer/ Further Public Offer (including debt instruments) hence therequirement to report on clause 3(x)(a) of the Order is not applicable to the Corporation.(b) The Corporation has not made any preferential allotment or private placement ofshares/ fully or partially or optionally convertible debentures during the year underaudit and hence the requirement to report on clause 3(x)(b) of the Order is notapplicable to the Corporation.

(xi) (a) No fraud by the Corporation or no material fraud on theCorporation has been noticed or reported during the year.

(b) During the year and up to the date of this report no report undersection 143 (12) of the Act has been filed by secretarial auditor or by the predecessorauditors or by us in Form ADT - 4 as prescribed under Rule 13 of Companies (Audit andAuditors) Rules 2014 with the Central Government.

(c) We have taken into consideration the whistle blower complaintsreceived by the Corporation during the year while determining the nature timing andextent of audit procedures.

(xii) The Corporation is not a nidhi company as per the provisions ofthe Act. Therefore the requirement to report on clause 3(xii) of the Order is notapplicable to the Corporation.

(xiii) Transactions with the related parties are in compliance withsections 177 and 188 of the Act where applicable and the details of such transactions havebeen disclosed in the notes to the standalone financial statements as required by theapplicable accounting standards.

(xiv) (a) The Corporation has an internal audit system commensuratewith the size and nature of its business.

(b) The internal audit is performed as per a planned program approvedby the Audit and Governance Committee of the Board of Directors of the Corporation. Theinternal audit reports of the Corporation issued till the date of the audit report inaccordance with the aforesaid plan have been considered by us.

(xv) The Corporation has not entered into any non-cash transactionswith its directors or persons connected with its directors and hence requirement to reporton clause 3(xv) of the Order is not applicable to the Corporation.

(xvi) (a) The provisions of section 45-IA of the Reserve

Bank of India Act 1934 (2 of 1934) are not applicable to theCorporation. Accordingly the requirement to report on clause (xvi)(a) of the Order is notapplicable to the Corporation.

(b) The Corporation is a Housing Finance Company registered with theNational Housing Bank and is not required to obtain a Certificate of Registration (CoR)from the Reserve Bank of India as per the Reserve Bank of India Act 1934.

(c) The Corporation is not a Core Investment Company as defined in theregulations made by Reserve Bank of India. Accordingly the requirement to report onclause 3(xvi) of the Order is not applicable to the Corporation.

(d) There is no Core Investment Company as a part of the Group hencethe requirement to report on clause 3(xvi) of the Order is not applicable to theCorporation.

(xvii) The Corporation has not incurred cash losses in the current yearor the immediately preceding financial year.

(xviii) The previous statutory auditors of the Corporation haveresigned during the year pursuant to the requirements of the Guidelines for Appointment ofStatutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excludingRRBs) UCBs and NBFCs (including HFCs) dated April 27 2021 issued by the Reserve Bank ofIndia and there are no issues objections or concerns raised by the outgoing auditors.

(xix) On the basis of the financial ratios ageing and expected datesof realization of financial assets and payment of financial liabilities other informationaccompanying the standalone financial statements our knowledge of the Board of Directorsand management plans and based on our examination of the evidence supporting theassumptions nothing has come to our attention which causes us to believe that anymaterial uncertainty exists as on the date of the audit report that Corporation is notcapable of meeting its liabilities existing at the date of balance sheet as and when theyfall due within a period of one year from the balance sheet date.

We however state that this is not an assurance as to the futureviability of the Corporation. We further state that our reporting is based on the facts upto the date of the audit report and we neither give any guarantee nor any assurance thatall liabilities falling due within a period of one year from the balance sheet date willget discharged by the Corporation as and when they fall due.

(xx) (a) In respect of other than ongoing projects there are nounspent amounts that are required to be transferred to a fund specified in Schedule VII ofthe Act in compliance with second proviso to sub section 5 of section 135 of the Act.This matter has been disclosed in note 33.8 to the standalone financial statements.

(b) There are no unspent amounts that are required to be transferred toa special account in compliance of provision of sub section (6) of section 135 of the Act.This matter has been disclosed in note 33.8 to the standalone financial statements.

For S. R. Batliboi & Co. LLP For G. M. Kapadia & Co.
Chartered Accountants Chartered Accountants
ICAI Firm registration number: 301003E/E300005 ICAI Firm registration number: 104767W
per Viren H. Mehta Atul Shah
Partner Partner
Membership No.: 048749 Membership No.: 039569
UDIN: 2 2 0 4 8 749AIGPRD7872 UDIN: 22039569AIGPZN4047
Mumbai Mumbai
May 2 2022 May 2 2022

Annexure 2 to the Independent Auditors' Report of even date on theStandalone

Financial Statements of Housing Development Finance Corporation Limited

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

We have audited the internal financial controls with reference tostandalone financial statements of Housing Development Finance Corporation Limited as ofMarch 31 2022 in conjunction with our audit of the standalone financial statements of theCorporation for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Corporation's Management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Corporation considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence to theCorporation's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Corporation'sinternal financial controls with reference to these standalone financial statements basedon our audit. We conducted our audit in accordance with the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting (the "Guidance Note") andthe Standards on Auditing as specified under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls both issued by ICAI. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to these standalone financial statements was establishedand maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to these standalonefinancial statements and their operating effectiveness. Our audit of internal financialcontrols with reference to standalone financial statements included obtaining anunderstanding of internal financial controls with reference to these standalone financialstatements assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditors' judgement including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Corporation's internalfinancial controls with reference to these standalone financial statements.

Meaning of Internal Financial Controls with reference to theseStandalone Financial Statements

A company's internal financial controls with reference to standalonefinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. A company'sinternal financial controls with reference to standalone financial statements includesthose policies and procedures that (1) pertain to the maintenance of records that inreasonable detail accurately and fairly reflect the transactions and dispositions of theassets of the company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference toStandalone Financial Statements

Because of the inherent limitations of internal financial controls withreference to standalone financial statements including the possibility of collusion orimproper management override of controls material misstatements due to error or fraud mayoccur and not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial control with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Corporation has in all material respects adequateinternal financial controls with reference to standalone financial statements and suchinternal financial controls with reference to standalone financial statements wereoperating effectively as at March 31 2022 based on the internal control over financialreporting criteria established by the Corporation considering the essential components ofinternal control stated in the Guidance Note issued by the ICAI.

For S. R. Batliboi & Co. LLP For G. M. Kapadia & Co.
Chartered Accountants Chartered Accountants
ICAI Firm registration number: 301003E/E300005 ICAI Firm registration number: 104767W
per Viren H. Mehta Atul Shah
Partner Partner
Membership No.: 048749 Membership No.: 039569
UDIN: 2 2 0 4 8 749AIGPRD7872 UDIN: 22039569AIGPZN4047
Mumbai Mumbai
May 2 2022 May 2 2022

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