Independent Auditors' Report
The President of India
Report on the Standalone Financial Statements
1. We have audited the accompanying standalone financial statements of State Bank ofIndia ("the Bank") as at March 31 2018 which comprise the Balance Sheet as onthat date and the Profit and Loss Account and the Cash Flow Statement for the year thenended and a summary of significant accounting policies and other explanatory information.Incorporated in these standalone financial statements are the returns of -i) The CentralOffices 16 Local Head Offices Global Market Group International Business GroupCorporate Accounts Group (Central) Mid-Corporate Group (Central) Stressed AssetsResolution Group (Central) Central Accounts Offices and 42 branches audited by us; ii)14566 Indian Branches audited by other auditors; iii) 51 Foreign Branches audited by thelocal auditors.
The branches audited by us and those audited by other auditors have been selected bythe Bank in accordance with the guidelines issued to the Bank by the Reserve Bank ofIndia. Also incorporated in the Balance Sheet and the Profit and Loss Account are thereturns from 9033 Indian Branches (including other accounting units) which have not beensubjected to audit. These unaudited branches account for 3.49 % of advances 12.56 % ofdeposits and 4.62 % of interest income and 12.85 % of interest expenses.
Management's Responsibility for the Standalone Financial Statements
2. The Bank's management is responsible for the preparation of these standalonefinancial statements that give a true and fair view of the financial position financialperformance and cash flows of the Bank in accordance with the requirements of the ReserveBank of India the provisions of the Banking Regulation Act 1949 the State Bank of IndiaAct 1955 and recognised accounting policies and practices including the AccountingStandards issued by the Institute of Chartered Accountants of India (ICAI). Thisresponsibility of the management includes the design implementation and maintenance ofinternal controls and risk management systems relevant to the preparation of thestandalone financial statements that are free from material misstatement whether due tofraud or error. In making those risk assessments the management has implemented suchinternal controls that are relevant to the preparation of the standalone financialstatements and designed procedures that are appropriate in the circumstances so that theinternal control with regard to all the activities of the Bank is effective.
3. Our responsibility is to express an opinion on these standalone financial statementsbased on our audit. We conducted our audit in accordance with the Standards on Auditingissued by the Institute of Chartered Accountants of India. Those Standards require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the standalone financial statements are free from materialmisstatement.
4. An audit involves performing procedures to obtain audit evidence about the amountsand disclosures in the standalone financial statements. The procedures selected depend onthe auditor's judgment including the assessment of the risks of material misstatement ofthe standalone financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal control relevant to the Bank's preparation andfair presentation of the standalone financial statements in order to design auditprocedures that are appropriate in the circumstances but not for the purpose ofexpressing an opinion on the effectiveness of the entity's internal control. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by management as well as evaluating the overallpresentation of the standalone financial statements.
5. We believe that the audit evidence we have obtained is suficient and appropriate toprovide a basis for our audit opinion.
6. In our opinion as shown by books of the Bank and to the best of our informationand according to the explanations given to us:
(i) the Balance Sheet read with the significant accounting policies and the notesthereon is a full and fair Balance Sheet containing all the necessary particulars isproperly drawn up so as to exhibit a true and fair view of state of affairs of the Bank asat March 31 2018 in conformity with accounting principles generally accepted in India;
(ii) the Profit and Loss Account read with the significant accounting policies and thenotes thereon shows a true balance of loss in conformity with accounting principlesgenerally accepted in India for the year covered by the account; and
(iii) the Cash Flow Statement gives a true and fair view of the cash flows for the yearended on that date.
Emphasis of Matter
7. We draw attention to:
a) Note no 18(9)(b) regarding unamortized balance of INR 2707.50 crore on account ofadditional liabilities towards Gratuity; and
b) Note no 18(9)(g) regarding recognition of Deferred Tax Assets of INR2461.40 Crore on provision for standard assets.
Our Opinion is not modified in respect of the above stated matters.
Report on Other Legal and Regulatory Requirements
8. The Balance Sheet and the Profit and Loss Account have been drawn up in Forms"A" and "B" respectively of the Third Schedule to the BankingRegulation Act 1949 and these give information as required to be given by virtue of theprovisions of the State Bank of India Act 1955 and regulations there under.
9. Subject to the limitations of the audit indicated in paragraphs 1 to 5 above and asrequired by the State Bank of India Act 1955 and subject also to the limitations ofdisclosure required there in we report that:
a) We have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit and have found them tobe satisfactory.
b) The transactions of the Bank which have come to our notice have been within thepowers of the Bank.
c) The returns received from the ofices and branches of the Bank have been foundadequate for the purposes of our audit.
10. We further report that:
a) The Balance Sheet the Profit and Loss Account and the Cash Flow Statement dealtwith by this report are in agreement with the books of account and returns.
b) The reports on the accounts of the branch ofices audited by branch auditors of theBank as per the provisions of the Banking Regulation Act 1949 and the State Bank ofIndia Act 1955 have been sent to us and have been properly dealt with by us in preparingthis report.
c) In our opinion the Balance Sheet the Profit and Loss Account and the Cash FlowStatement comply with the applicable accounting standards.
Emphasis of Matter
9. We draw attention to: a) Note no 220.127.116.11 regarding unamortized balance of INR2707.50 crore on account of additional liabilities towards Gratuity; and b) Note no 3.7regarding recognition of Deferred Tax Assets of INR 2461.40 crore on provision forstandard assets; Our opinion is not modified in respect of the above stated matters.
| ||For Varma & Varma |
| ||Chartered Accountants |
| ||FRN 004532S |
| ||P R Prasanna Varma |
|Place: Mumbai ||Partner |
|Date: 22nd May 2018 ||M. No.025854 |