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. () - Auditors Report

Company auditors report

To The Members of Oriental Bank of Commerce Opinion

1. We have audited the financial statements of Oriental Bank ofCommerce (the ‘Bank') which comprise the Balance Sheet as at 31st March 2019the Profit and Loss Account and the Cash Flow Statement for the year then ended and notesto financial statements including a summary significant accounting of policies and otherexplanatory information in which are included returns for year ended on that date of 20branches audited by us and 1388 branches audited by statutory branch auditors. Thebranches audited by us and those audited by other auditors have been selected by the Bankin accordance with the guidelines issued to the Bank by the Reserve Bank of India. Alsoincluded in the Balance Sheet the Profit and Loss Account and the Cash Flow Statement arethe returns from 982 branches which have not been subjected to audit. These unauditedbranches account for 6.04 percent of advances 17.74 per cent of deposits 4.34 per centof interest income and 16.83 per cent of interest expenses.

2. In our opinion and to the best of our information and according tothe explanations given to us the aforesaid financial statements give the informationrequired by the Banking Regulation Act 1949 (the ‘Act') in the manner sorequired for bank and are in conformity with accounting principles generally accepted inIndia and give: a) true and fair view in case of the Balance sheet of the state ofaffairs of the Bank as at 31st March 2019; b) true balance of profit in case of Profitand Loss Account for the year ended on that date; and c) true and fair view in case ofCash Flow Statement for the year ended on that date.

Basis for Opinion

3. We conducted our audit in accordance with the Standards on Auditing(SAs) issued by the Institute of Chartered Accountants of India (ICAI). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements' section of our report. Weare independent of the Bank in accordance with the code of ethics issued by the Instituteof Chartered Accountants of India together with ethical requirements that are relevant toour audit of the financial statements in India 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 opinion.

Key Audit Matters

4. Key audit matters are those matters that in our professionaljudgment were of most significance in our audit of the financial statements of thecurrent year. These matters were addressed in the context of our audit of the financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

Key Audit Matters How our matter was addressed in the audit
Advances classification and provisioning Our Audit Procedure:
(Refer Schedule 9 to the financial statements read with the Accounting Policy No. 17.5) We obtained an understanding of the Bank's software circulars guidelines and directives of the RBI and the Bank's internal instructions and procedures in respect of the assets classification and its provisioning and adopted the following audit procedures:
The advances are classified as performing and non- performing advances (NPA) and provisioning thereon is made in accordance with the prudential norms as prescribed by the Reserve Bank of India (RBI). The classification and provisioning is done by the Bank's IT software integrated with its Core Banking Solution (CBS). / review of the documentations operations / The extent of provisioning of NPA under the prudential norms are mainly based on its ageing and recoverability of the underlined security. -

Evaluation and testing of the effectiveness of the IT Software controls and other key internal control mechanisms with respect to the advances monitoring identification / classification assessment of the loan impairment including testing of relevant data quality and review of the real data entered / existing in the software.

In the event of any improper application of the prudential norms or consideration of the incorrect value of the security as the valuation of the security involves high degree of estimation and judgement the carrying value of the advances could be materially misstated either individually or collectively and in view of the significance of the amount of advances in the financial statements i.e. 58.58% of total assets the classification of the advances and provisioning thereon has been considered as Key Audit Matter in our audit. - Verification/review of the documentation operations/performance and monitoring of the advance accounts on test check basis of the large and stressed advances to ascertain any overdue unsatisfactory conduct or weakness in any advance account to ensure that its classification is in accordance with the prudential norms of RBI in respect of the branches / verticals audited by us. In respect of the branches audited by the branch statutory auditors we have placed reliance on their reports.

Review of the reports of the credit audit inspection audit internal audit concurrent audit regulatory audit and any other audit / inspection mechanisms to ascertain the advances having any adverse indication / comments and review of the control mechanisms of the bank to ensure the proper classification of such advances and provisioning thereof.

Our Results:
The results of our audit process were observed to be adequate and satisfactory considering the materiality of the transactions.
Investments valuation and identification and provisioning for Non-Performing Investments (Refer Schedule 8 to the financial statements read with the Accounting Policy No. 4) Our Audit Procedure:
Our audit approach towards Investments with reference to the RBI circulars / directives included the review and testing of the design operating effectiveness of internal controls and substantive audit procedures in relation to valuation classification identification of Non Performing Investments provisioning / depreciation related to Investments. In particular
Investment portfolio of the bank comprises of Investments in Government Securities Bonds Debentures Shares Security Receipts and other Approved Securities which are classified under three categories Held to Maturity Available for Sale and Held for Trade. - We evaluated and understood the system and internal control as laid down by the Bank to comply with relevant RBI guidelines regarding valuation classification identification of Non Performing Investments Provisioning/ depreciation related to Investments.
Valuation of Investments identification of Non-performing Investments (NPI) and the corresponding non- recognition of income and provision thereon is carried out in accordance with the relevant circulars / guidelines / directions of RBI. The valuation of each category (type) of aforesaid security is to be carried out as per the methodology prescribed in circulars and directives issued by the RBI which involves collection of data/ information from various sources such as FBIL rates rates quoted on BSE/ NSE financial statements of unlisted companies NAV in case of security receipts etc. As per the RBI directions there are certain investments that are valued at market price however certain investments are based on the valuation methodologies that include statistical models with inherent assumptions assessment of price for valuation based on financial statements etc. Hence the price discovered for the valuation of these Investments may not be the true representative but only a fair assessment of the Investments as on date. Hence the valuation of Investments requires special attention and further in view of the significance of the amount of Investments in the financial statements i.e. 29.15% of total assets) the same has been considered as Key Audit Matter in our audit. - We assessed and evaluated the process adopted for collection of information from various sources for determining fair value of these investments.
Our Results:
The results of our audit process were observed to be adequate and satisfactory considering the materiality of the transactions.

Information Other than the Financial Statements and Auditor'sReport thereon

5. The Bank's Board of Directors is responsible for the otherinformation. The other information comprises the Corporate Governance Report (but does notinclude the financial statements and our auditor's report thereon) which we obtainedprior to the date of this auditor's report and Directors' Report includingannexures if any thereon which is expected to be made available to us after that date.

Our opinion on the financial statements does not cover the otherinformation and Pillar 3 disclosure under Basel III and we do not and will not express anyform of assurance conclusion thereon.

In connection with our audit of the financial statements ourresponsibility is to read the other information identified above and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.

If based on the work we have performed on the other information thatwe obtained prior to the date of this auditor's report we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.

When we read the Directors' Report including annexures if anythereon if we conclude that there is a material misstatement therein we are required tocommunicate the matter to those charged with governance.

Responsibilities of the Management and Those Charged with Governancefor the Financial Statements

6. The Bank's Board of Directors is responsible with respect tothe preparation of these financial statements that give a true and fair view of thefinancial position financial performance and cash flows of the Bank in accordance withthe accounting principles generally accepted in India including the Accounting Standardsissued by ICAI and provisions of Section 29 of the Banking Regulation Act 1949 andcirculars and guidelines issued by the Reserve Bank of India (‘RBI') from timeto time. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Bank andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and 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 financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the financial statements management is responsible forassessing the Bank's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Bank or to cease operationsor has no realistic alternative but to do so.

Auditor's Responsibilities for the Audit of the FinancialStatements

7. Our objectives are to obtain reasonable assurance about whether thefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these 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 thefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

? 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 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 auditor's report. However future events or conditions may cause the bankto cease to continue as a going concern.

? Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the significant audit findings includingany and in internal control that we identify during significant our audit.

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 financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Other Matter

8. We did not audit the financial statements/ information of 1388branches included in the financial statements of the Bank whose financial statements/information reflect total assets of Rs. 75543 crores as at 31st March 2019 and totalrevenue of Rs. 6241 crores for the year ended on that date as considered in thesefinancial statements. The financial statements/ information of these branches have beenaudited by the branch auditors whose reports have been furnished to us and our opinion inso far as it relates to the amounts and disclosures included in respect of these branchesis based solely on the report of such branch auditors.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

9. The Balance Sheet and the Profit and Loss Account have been drawn upin accordance with Section 29 of the Banking Regulation Act 1949; 10. Subject to thelimitations of the audit indicated in paragraphs 5 to 7 above and as required by theBanking Companies (Acquisition and Transfer of Undertakings) Act 1970/1980 and subjectalso to the limitations of disclosure required therein we report that:

a) We have obtained all the information and explanations which to thebest of our knowledge and belief were necessary for the purposes 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) The returns received from the offices and branches of the Bank havebeen found adequate for the purposes of our audit. 11. We further report that:

a) 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 branches notvisited by us;

b) the Balance Sheet the Profit and Loss Account and the Cash FlowsStatement dealt with by this report are in agreement with the books of account and withthe returns received from the branches not visited by us;

c) the reports on the accounts of the branch offices audited by branchauditors of the Bank under section 29 of the Banking Regulation Act 1949 have been sentto us and have been properly dealt with by us in preparing this report; and

d) In our opinion the Balance Sheet the Profit and Loss

Account and the Cash Flows Statement comply with the applicableaccounting standards to the extent they are not inconsistent with the accounting policiesprescribed by RBI.

For B. C. Jain & Co. For S. N. Dhawan & Co. LLP
Chartered Accountants Chartered Accountants
FRN:001099C FRN: 000050N/N500045
(Pooja Jain) (S. K. Khattar)
Partner Partner
M. No. 406783 M. No. 084993
For S. P. Chopra & Co. For Batra Deepak & Associates
Chartered Accountants Chartered Accountants
FRN: 000346N FRN: 005408C
(Pawan K. Gupta) (Kapil Kumar Bhagirath)
Partner Partner
M. No. 092529 M. No. 095639
Place: Gurugram
Dated: May 13 2019