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ICICI Bank Ltd.

BSE: 532174 Sector: Financials
NSE: ICICIBANK ISIN Code: INE090A01021
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OPEN 716.10
CLOSE 710.05
VOLUME 5371409
52-Week high 859.70
52-Week low 488.30
P/E 26.19
Mkt Cap.(Rs cr) 509,950
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

ICICI Bank Ltd. (ICICIBANK) - Auditors Report

Company auditors report

To the Members of ICICI Bank limited

Report on the audit of the Standalone Financial Statements Opinion

1. We have audited the accompanying standalone financial statements ofICICI Bank Limited (‘the Bank') which comprise the Balance Sheet as at 31 March2021 the Profit and Loss Account and the Cash Flow Statement for the year then endedand a summary of the significant accounting policies and other explanatory information.Incorporated in these standalone financial statements are the returns of the internationalbranches for the year ended 31 March 2021. The branches in Dubai South Africa and NewYork have been audited by the respective branch auditors.

2. In our opinion and to the best of our information and according tothe explanations given to us and based on the consideration of the reports of the branchauditors as referred to in paragraph 16 below the aforesaid standalone financialstatements give the information required by the Banking Regulation Act 1949 as well asthe Companies Act 2013 (‘Act') and circulars and guidelines issued by theReserve Bank of India (‘RBI') in the manner so required for banking companiesand give a true and fair view in conformity with the accounting principles generallyaccepted in India including the Accounting Standards prescribed under section 133 of theAct read with rule 7 of the Companies (Accounts) Rules 2014 (as amended) of the stateof affairs of the Bank as at 31 March 2021 and its profit and its cash flows for the yearended on that date.

Basis for Opinion

3. We conducted our audit in accordance with the Standards on Auditingspecified under section 143(10) of the Act. Our responsibilities under those standards arefurther described in the Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements section of our report. We are independent of the Bank in accordancewith the Code of Ethics issued by the Institute of Chartered Accountants of India(‘ICAI') together with the ethical requirements that are relevant to our auditof the standalone financial statements under the provisions of the Act and the rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained and that obtained by the branch auditors in terms of their reports referred toin paragraph 16 of the Other Matter section below is sufficient and appropriate toprovide a basis for our opinion.

Emphasis of matter

4. We draw attention to note 18.59 of the accompanying standalonefinancial statements which describes the uncertainties due to the outbreak of SARS-CoV-2virus (COVID-19). The impact of these uncertainties on the Bank's results issignificantly dependent on future developments.

Our opinion is not modified in respect of this matter.

Key audit matters

5. Key audit matters are those matters that in our professionaljudgment and based on the consideration of the reports of the branch auditors asreferred to in paragraph 16 below were of most significance in our audit of thestandalone financial statements of the current period. These matters were addressed in thecontext of our audit of the financial statements as a whole and in forming our opinionthereon and we do not provide a separate opinion on these matters.

6. We have determined the matters described below to be the key auditmatters to be communicated in our report

a. Information technology (‘IT') systems and controls impacting financialreporting

Key audit matter How our audit addressed the key audit matter
The IT environment of the Bank is complex and involves a large number of independent and inter- dependent IT systems used in the operations of the Bank for processing and recording a large volume of transactions at numerous locations. As a result there is a high degree of reliance and dependency on such IT systems for the financial reporting process of the Bank. In assessing the integrity of the IT systems relevant for financial reporting we involved our IT experts to obtain an understanding of the IT infrastructure and IT systems relevant to the Bank's financial reporting process for evaluation and testing of relevant IT general controls and IT application controls.
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. Access rights were tested over applications operating systems networks and databases which are relied upon for financial reporting. We also assessed the operating effectiveness of controls over granting removal and periodical review of access rights.
The accuracy and reliability of the financial reporting process depends on the IT systems and the related control environment including: 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.
IT general controls over user access management and change management across applications networks database and operating systems; Other areas that were assessed under the IT control environment included password policies security configurations business continuity and controls around change management.
IT application controls. We also evaluated the design and tested the operating effectiveness of key automated controls within various business processes. This included testing the integrity of system interfaces the completeness and accuracy of data feeds system reconciliation controls and automated calculations.
Due to the importance of the impact of the IT systems 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. Where deficiencies were identified we tested compensating controls or performed alternate procedures.

b. Identification and provisioning for Non-Performing Assets(‘NPAS') including implementation of COVID-19 related measures

As at 31 March 2021 the Bank reported total loans and advances (net ofprovisions) of Rs. 7337291 million (2020: 6452900 million) gross NPAs of Rs.408414 million (2020: Rs. 408291 million) and provision for non-performingassets of Rs. 317238 million (2020: 309058 million). The provision coverage ratio as at31 March 2021 is 77.7% (2020: 75.7%).

 

(Refer schedules 9 17.3 18.16 18.19 and 18.27)

Key audit matter How our audit addressed the key audit matter
The identification of NPAs and provisioning for advances is made in accordance with the extant RBI regulations or host country regulations in the case of international branches. Based on our risk assessment the following are significant in assessment of the NPA provisions: We understood the process and controls and tested the design and operating effectiveness of key controls including IT based controls focusing on the following:
?• Recognition of defaults in accordance with the criteria set out in the RBI Prudential norms on Income Recognition Asset Classification and Provisioning pertaining to Advances (IRAC norms) or in accordance with the host country regulations as applicable. Further the Bank is also required to identify NPAs by applying certain qualitative aspects; ?• Identification and classification of NPAs in line with RBI IRAC norms and certain qualitative aspects;
?• Implementation of the "COVID 19 Regulatory Package- Asset Classification and Provisioning" announced by the RBI on 17 April 2020 and RBI circular on "Asset Classification and Income Recognition following the expiry of COVID-19 regulatory package" dated 07 April 2021 (collectively referred to as ‘the RBI circulars') and "Resolution Framework for COVID-19 related Stress" (the ‘Resolution Framework') issued by the RBI on 6 August 2020 which were collectively considered by the management in identification and provisioning of non- performing assets. On the basis of an estimate made by the management a provision of Rs. 74750 million was held by the Bank as at 31 March 2021 on account of likely increase in defaults due to the impact of COVID-19 on recoverability of loans and assets of the Bank. The Bank has also revised its internal provisioning policy of retail loans to address aforesaid risk. The basis of estimation of the additional provisions and the assumptions used for aforesaid additional provision are subject to periodic review by the Bank as these depend on future developments including the rate of spread of COVID-19 the effectiveness of current and future steps taken by the government and central banks to mitigate the economic impact and the time it takes for the economic activities to return to pre-pandemic levels. Periodic internal reviews of asset quality;
?• The measurement of provision under RBI guidelines is also dependent on the ageing of overdue balances secured / unsecured status of advances stress and liquidity concerns in certain sectors and valuation of collateral. The provision on NPAs at certain overseas branches requires estimation of amounts and timing of expected future cash flows and exit values. Assessment of adequacy of NPA provisions; and
Implementation of the RBI circulars also required the Bank to implement changes in its base Information Technology applications to extend the relief packages and moratorium period to the customers as announced by the Government. Periodic valuation of collateral for NPAs.
Considering the significance of the above matters to the financial statements the heightened regulatory inspections additional complexities in the current year on account of impact of COVID-19 and significant auditor attention required we have identified this as a key audit matter for the current year audit. Implementation of the RBI circulars
To test the identification of loans with default events and other triggers we selected a sample of performing loans and independently assessed as to whether there was a need to classify such loans as NPAs.
With respect to provisions recognised towards NPAs we selected samples based on high risk industry sectors identified by the Bank such as shipping rigs power mining and oil and gas exploration. For the samples selected we re-performed the provision calculations including valuation of collaterals and compared our outcome to that prepared by the management and challenged various assumptions and judgements which were used by the management. We also held discussions with the management of the Bank on high risk industry sectors and measures taken by the management monitor to such assets.
We read the RBI Annual Financial Inspection report for the financial year ended 2020 and other communication with regulators.
With respect to those borrowers to whom a moratorium was granted in accordance with the RBI circulars on a sample basis we tested that such moratorium was granted and implemented in the systems in accordance with the board approved policy. On a test check basis we tested the loans to ensure that identification of NPAs provisions created and asset classification were in accordance with the requirements of the RBI circulars. Further with respect to the additional provisions made by the Bank on account of the impact of the COVID-19 pandemic we understood and challenged the underpinning assumptions used by the Bank for such estimate by considering our understanding of the risk profiles of the customers of the Bank and other relevant publicly available macro-economic factors pertaining to impact of COVID-19.
With respect to the Resolution Framework ensured that the Bank's board approved policy was in accordance with the RBI requirements. On a test check basis we ensured that the restructuring was approved and implemented and provisions made on such restructured loans in accordance with the Bank's board approved policy and the Resolution Framework.
We assessed the appropriateness and adequacy of disclosures against the relevant accounting standards and RBI requirements relating to NPAs including the additional disclosures required to be made in accordance with the relevant RBI requirements.

c. Provisions for litigation matters and taxation and contingentliabilities

As at 31 March 2021 the Bank has reported the following:

(Rs. in millions)

Included under contingent liabilities
Particulars At 31.03.2021 At 31.03.2020
Legal cases 3303 3300
Taxes 70465 59940
total claims against the Bank not acknowledged as debts 73768 63240

 

(Refer schedules 12 18.41)

Key audit matter How our audit addressed the key audit matter
As at 31 March 2021 the Bank has ongoing legal and tax cases with varied degrees of complexities. This indicates that a significant degree of management judgement is involved in determining the appropriateness of provisions and related disclosures. Our audit procedures included but were not limited to the following:
Significant management judgement is needed in determining whether an obligation exists and whether a provision should be recognised as at the reporting date in accordance with the accounting criteria set under Accounting Standard 29 - Provisions Contingent Liabilities and Contingent Assets (‘AS 29') or whether it needs to be disclosed as a contingent liability. Further significant judgements are also involved in measuring such obligations the most significant of which are: We tested the design and operating effectiveness of the Bank's key controls over the estimation monitoring and disclosure of provisions and contingent liabilities.
?• Assessment of liability: Judgement is involved in the determination of whether an outflow in respect of identified material matters are probable and can be estimated reliably; For significant legal matters we sought external confirmations and also reviewed the confirmations obtained by the management from external legal counsels and corroborated with management's documented conclusions on the assessment of outstanding litigations against the Bank.
Adequacy of provisions: The appropriateness of assumptions and judgements used in the estimation of significant provisions; and In respect of taxation matters we involved our tax specialists to gain an understanding of the current status of the outstanding tax litigations including understanding of various orders / notices received by the Bank and the management's grounds of appeals before the relevant appellate authorities and critically evaluated the management's assessment of the likelihood of the liability devolving upon the Bank in accordance with the principles of AS 29.
Adequacy of disclosures of provision for liabilities and charges and contingent liabilities. For the significant provisions made we understood assessed and challenged the adequacy of provisions recognised by the management. We also reviewed the historical accuracy of the provisions recognised to determine the efficacy of the process of estimation by the management.
Considering the significance of the above matter to the financial statements and significant auditor attention required to test such estimates we have identified this as a key audit matter for current year audit. Further we assessed whether the disclosures related to significant litigation and taxation matters were appropriate and adequate in terms of whether the potential liabilities and the significant uncertainties were fairly presented.

d. Valuation of derivatives

(Rs. in millions)

Particulars Included under At 31.03.2021 At 31.03.2020
Notional value of derivatives Contingent liabilities 25062638 23649552

 

(Refer schedule 12 and 18.13)

Key audit matter How our audit addressed the key audit matter
Derivatives are valued through models with external inputs. The derivatives portfolio of the Bank primarily includes transactions which are carried out on behalf of its clients (and are covered on a back-to-back basis) and transactions to hedge the Bank's interest and foreign currency risk. Our audit procedures included but were not limited to the following:
A significant degree of management judgement is involved in the application of valuation techniques through which the value of the Bank's derivatives is determined. The financial statement risk arises particularly with respect to complex valuation models valuation parameters and inputs that are used in determining fair values. We included our valuation experts as a part of our audit team to obtain an understanding evaluate the design and test the operating effectiveness of the key controls over the valuation processes including:
Considering the significance of the above matter to the financial statements significant management estimates and judgements and auditor attention required to test such estimates and judgements we have identified this as a key audit matter for current year audit. independent price verification performed by a management expert; and
• model governance and validation.
On a sample basis our valuation experts performed an independent reassessment of the valuation of derivatives to ensure compliance with the relevant
RBI regulations reasonableness of the valuation methodology and the inputs used.
Further our valuation experts assisted us in challenging the appropriateness of significant models and methodologies used in valuation.

Information other than the Standalone Financial Statements andauditor's Report thereon

7. The Bank's Board of Directors are responsible for the otherinformation. The other information comprises the information included in theManagement's Discussion and Analysis and Directors' Report including annexuresto the Directors' Report but does not include the standalone financial statementsand our auditor's report thereon. Our opinion on the standalone financial statementsdoes not cover the other information and we do not express any form of assuranceconclusion thereon.

In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.

Responsibilities of management and those charged with Governance forthe Standalone Financial Statements

8. The accompanying financial statements have been approved by theBank's Board of Directors. The Bank's Board of Directors is responsible for thematters stated in section 134(5) of the Act with respect to the preparation of thesestandalone financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Bank in accordance with the accountingprinciples generally accepted in India including the Accounting Standards prescribedunder section 133 of the Act read with rule 7 of the Companies (Accounts) Rules 2014 (asamended) and provisions of section 29 of the Banking Regulation Act 1949 and circularsand guidelines issued by RBI from time to time. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Bank and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.

9. In preparing the standalone financial statements management isresponsible for assessing the Bank'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 Bank or to ceaseoperations or has no realistic alternative but to do so.

10. The Board of Directors is also responsible for overseeing theBanks's financial reporting process.

Auditor's Responsibilities for the audit of the StandaloneFinancial Statements

11. 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 auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with Standards on Auditing will always detect a materialmisstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if individually or in the aggregate they could reasonably beexpected to influence the economic decisions of users taken on the basis of thesestandalone financial statements.

12. As part of an audit in accordance with Standards on Auditing weexercise professional judgment 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 the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for explaining our opinion on whether theBank has adequate internal financial controls system in place and the operatingeffectiveness 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 theBank's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the Bank 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.

13. 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.

14. We also provide those charged with governance with a statement thatwe have 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.

15. From the matters communicated with those charged with governancewe determine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Other matters

16. We did not audit the financial statements of 3 internationalbranches included in the standalone financial statements of the Bank whose financialstatements reflects Total assets of Rs. 596868.52 million as at 31 March 2021 and Totalrevenue Total net loss after tax and net cash inflows of Rs. 9716.89 million Rs.6068.91 million and Rs. 108879.26 million respectively for the year ended on thatdate as considered in the standalone financial statements. The financial statements ofthese branches have been audited by the branch auditors whose reports have been furnishedto us by the management and our opinion on the standalone financial statements in so faras it relates to the amounts and disclosures included in respect of branches is basedsolely on the reports of such branch auditors.

Our opinion on the standalone financial statements is not modified inrespect of the above matter.

Report on Other legal and Regulatory Requirements

17. The Balance Sheet and the Profit and Loss Account have been drawnup in accordance with the provisions of section 29 of the Banking Regulation Act 1949 andsection 133 of the Act read with rule 7 of the Companies (Rules) 2014 (as amended).

18. As required by sub-section (3) of section 30 of the BankingRegulation Act 1949 based on our audit and on the consideration of the reports of thebranch auditors as referred to in paragraph 16 above we report that:

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

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

c) since the key operations of the Bank are automated with the keyapplications integrated to the core banking system the audit is carried out centrally asall the necessary records and data required for the purposes of our audit are availabletherein. However during the course of our audit we have visited 130 branches to examinethe records maintained at such branches for the purpose of our audit.

19. With respect to the matter to be included in the Auditor'sReport under section 197(16) of the Act we report that since the Bank is a bankingcompany as defined under Banking Regulation Act 1949 the reporting under section197(16) in relation to whether the remuneration paid by the Bank is in accordance with theprovisions of section 197 of the Act and whether any excess remuneration has been paid inaccordance with the aforesaid section is not applicable.

20. Further as required by section 143 (3) of the Act based on ouraudit and on the consideration of the reports of the branch auditors as referred to inparagraph 16 above we report to the extent applicable that:

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

b) in our opinion proper books of account as required by law have beenkept by the Bank so far as it appears from our examination of those books and properreturns adequate for the purposes of our audit have been received from the internationalbranches not audited by us;

c) the reports on the accounts of the international branches of theBank audited under section 143(8) of the Act by the branch auditors of the Bankhave been sent to us and have been properly dealt with by us in preparing this report;

d) the standalone financial statements dealt with by this report are inagreement with the books of account and with the returns received from the internationalbranches not audited by us;

e) in our opinion the aforesaid standalone financial statements complywith Accounting Standards prescribed under section 133 of the Act read with rule 7 of theCompanies (Accounts) Rules 2014 (as amended) to the extent they are not inconsistentwith the accounting policies prescribed by RBI;

f) on the basis of the written representations received from thedirectors as on 31 March 2021 and taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2021 from being appointed as a director in termsof section 164(2) of the Act;

g) we have also audited the internal financial controls over financialreporting (IFCoFR) of the Bank as on 31 March 2021 in conjunction with our auditof the standalone financial statements of the Bank for the year ended on that date and ourreport dated 24 April 2021 as per Annexure A expressed an unmodified opinion;

h) with respect to the other matters to be included in theAuditor'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 accordingto the explanations given to us:

i. the Bank as detailed in schedules 12 and 18.45 to the standalonefinancial statements has disclosed the impact of pending litigations on its financialposition as at 31 March 2021;

ii. the Bank as detailed in schedule 18.45 to the standalone financialstatements has made provisions as at 31 March 2021 as required under the applicable lawor Accounting Standards for material foreseeable losses if any on long-term contractsincluding derivative contracts;

iii. there has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Bank during the yearended 31 March 2021;

iv. the disclosure requirements relating to holdings as well asdealings in specified bank notes were applicable for the period from 8 November 2016 to 30December 2016 which are not relevant to these standalone financial statements. Hencereporting under this clause is not applicable.

ANNEXURE A to the Independent Auditor's Report of even date tothe members of ICICI Bank Limited on the standalone financial statements for the yearended 31 March 2021

Independent auditor's Report on the internal financial controlswith reference to the standalone financial statements under clause (i) of Sub-section 3 ofSection 143 of the companies act 2013 (‘the act')

1. In conjunction with our audit of the standalone financial statementsof ICICI Bank Limited (‘the Bank') as at and for the year ended 31 March 2021we have audited the internal financial controls with reference to financial statements ofthe Bank as at that date.

Management's Responsibility for internal Financial controls

2. The Bank's Management is responsible for establishing andmaintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Bank considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India. These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of the Bank's business includingadherence to the Bank's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under the Act.

Auditor's Responsibility for the audit of the internal Financialcontrols with Reference to Financial Statements

3. Our responsibility is to express an opinion on the Bank'sinternal financial controls with reference to financial statements based on our audit. Weconducted our audit in accordance with the Standards on Auditing issued by the Instituteof Chartered Accountants of India (‘ICAI') and deemed to be prescribed underSection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements and the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting (‘the Guidance Note')issued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls with reference to financial statementswere established and maintained and if such controls operated effectively in all materialrespects.

4. Our audit involves performing procedures to obtain audit evidenceabout the adequacy of the internal financial controls with reference to financialstatements and their operating effectiveness. Our audit of internal financial controlswith reference to financial statements includes obtaining an understanding of internalfinancial controls with reference to financial statements assessing the risk that amaterial weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error.

5. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the Bank's internalfinancial controls with reference to financial statements.

Meaning of internal Financial controls with Reference to FinancialStatements

6. An enitity's internal financial controls with reference tofinancial 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. Anentity's internal financial controls with reference to financial statements includethose policies and procedures that

(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of theentity;

(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 entity are beingmade only in accordance with authorisations of management and directors of the entity; and

(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the entity's assetsthat could have a material effect on the financial statements.

Inherent limitations of internal Financial controls with Reference toFinancial Statements

7. Owing to the inherent limitations of internal financial controlswith reference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Opinion

8. In our opinion the Bank has in all material respects adequateinternal financial controls with reference to financial statements and such controls wereoperating effectively as at 31 March 2021 based on the internal financial controls withreference to financial statements criteria established by the Bank considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the ICAI.

For Walker Chandiok & Co Llp
Chartered Accountants
Firm's Registration No:001076N/N500013
Sudhir N. Pillai
Partner
Membership No:105782
Udin:21105782aaaacO8365
Place: Mumbai
Date: 24 April 2021

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