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State Bank of India.

BSE: 500112 Sector: Financials
NSE: SBIN ISIN Code: INE062A01020
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OPEN 423.40
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VOLUME 753824
52-Week high 442.00
52-Week low 175.55
P/E 18.75
Mkt Cap.(Rs cr) 382,999
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

State Bank of India. (SBIN) - Auditors Report

Company auditors report

To

The President of India

REPORT ON AUDIT OF THE STANDALONE FINANCIAL STATEMENTS OF STATE BANK OFINDIA

Opinion

1. We have audited the accompanying Standalone Financial Statements ofState Bank of India ("the Bank") which comprise the Balance Sheet as at March31 2021 the Profit and Loss Account and the Cash Flow Statement for the year then endedand Notes to Standalone Financial Statements including Significant Accounting Policies andother explanatory information in which are included returns for the year ended on thatdate of:

i. The Central offices 17 Local Head offices Global Market UnitInternational Business Group Corporate Accounts Group (Central) Commercial Client Group(Central) Stressed Asset Resolution Group (Central) Central Accounts Offices and 42branches audited by us;

ii. 10766 Indian branches audited by respective Statutory BranchAuditors;

iii. 34 Foreign branches audited by respective Local Auditors;

The branches audited by us and those audited by other auditors havebeen selected by the Bank in accordance with the guidelines issued to the Bank by theReserve Bank of India (RBI). Also incorporated in the Balance Sheet the Profit and LossAccount and the Cash Flow Statement are the returns from 13965 Indian branches (includingother accounting units) which have not been subjected to audit. These unaudited branchesaccount for 9.63% of advances 23.89% of deposits 11.55% of interest income and 22.72% ofinterest expenses.

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 Banking Regulation Act 1949 and State Bank of India Act 1955in the manner so required for the Bank and are in conformity with accounting principlesgenerally accepted in

India and give a -

a) true and fair view in case of the Balance Sheet of the State ofAffairs of the Bank as at March 312021;

b) true balance of profit in case of the Profit and Loss Account forthe year ended on that date; and

c) true and fair view of the cash flows in case of the Cash FlowStatement for the year ended on that date.

Basis for Opinion

2. We conducted our audit in accordance with the Standards on Auditing("SAs") issued by the Institute of Chartered Accountants of India ("theICAI"). Our responsibilities under those Standards are further described in theAuditors' Responsibilities for the Audit of the Standalone Financial Statementssection of our report. We are independent of the Bank in accordance with the Code ofEthics issued by the ICAI together with ethical requirements that are relevant to ouraudit of the Standalone Financial Statements 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.

Emphasis of Matter

3. We draw attention to Note No. 18.10 (28) of Schedule 18 of theStandalone Financial Statements regarding impact of COVID-19 pandemic. The situationcontinues to be uncertain and the Bank is evaluating the situation on an ongoing basiswith respect to the challenges faced.

Our opinion is not modified in respect of this matter.

Key Audit Matters

4. Key Audit Matters are those matters that in our professionaljudgment were of most significance in our audit of the Standalone Financial Statements forthe year ended March 31 2021. These matters were addressed in the context of our audit ofthe Standalone Financial Statements as a whole and in forming our opinion thereon and wedo not provide a separate opinion on these matters. We have determined the mattersdescribed below to be the Key Audit Matters to be communicated in our report:

Sr. No. Key Audit Matters How the matter was addressed in our audit
Classification of Advances Income Recognition Identification of and provisioning for non-performing Advances (Refer Schedule 9 read with Note 3 of Schedule 17 to the financial statements) Our audit approach towards advances with reference to the IRAC norms and other related circulars/directives issued by the RBI and also internal policies and procedures of the Bank includes the testing of the following
i Advances include Bills purchased and discounted Cash credits Overdrafts Loans repayable on demand and Term loans. These are further categorised as secured by Tangible assets (including advances against Book Debts) covered by Bank/Government Guarantees and Unsecured advances. a. The accuracy of the data input in the system for income recognition classification into performing and non performing Advances and provisioning in accordance with the IRAC norms in respect of the branches allotted to us;
Advances constitute 54.02 per cent of the Bank's total assets. They are inter-alia governed by income recognition asset classification and provisioning (IRAC) norms and other circulars and directives issued by the RBI from time to time which provides guidelines related to classification of Advances into performing and non- performing Advances (NPA) except in case of foreign offices classification of advances and provisioning thereof is made as per local regulations or RBI guidelines whichever is more stringent. The Bank classifies these Advances based on IRAC norms as per its accounting policy No. 3. b. Existence and effectiveness of monitoring mechanisms such as Internal Audit Systems Audit Credit Audit and Concurrent Audit as per the policies and procedures of the Bank;
c. Examination of advances including stressed advances on a sample basis with respect to compliance with the RBI Master Circulars / Guidelines/ Judicial pronouncements;
d. We have also relied on the reports of External IT System Audit experts with respect to the business logics / parameters inbuilt in CBS for tracking identification and stamping of NPAs and provisioning in respect thereof.
Identification of performing and non-performing Advances involves establishment of proper mechanism. The Bank accounts for all the transactions related to Advances in its Information Technology System (IT System) viz. Core Banking Solution (CBS) which also identifies whether the advances are performing or non- performing.
e. We tested the mapping of advances in the CCDP application software and the financial statement preparation software to ensure compliance with the presentation and disclosure requirements as per the aforesaid RBI Circular/directions.
Further NPA classification and calculation of provision is done through another IT System viz. Centralised Credit Data Processing (CCDP) Application Software . f. We have examined the efficacy of various internal controls over advances to determine the nature timing and extent of the substantive procedures and compliance with the observations of the various audits conducted as per the monitoring mechanism of the Bank and RBI Inspection.
The carrying value of these advances (net of provisions) may be materially misstated if either individually or in aggregate the IRAC norms are not properly followed.
g. In carrying out substantive procedures at the branches allotted to us we have examined all large advances/ stressed advances while other advances have been examined on a sample basis including review of valuation reports of independent valuers provided by the Bank's management.
Considering the nature of the transactions regulatory requirements existing business environment estimation/ judgement involved in valuation of securities it is a matter of high importance for the intended users of the Standalone Financial Statements. Considering these aspects we have determined this as a Key Audit Matter.
h. We assessed and evaluated the process of identification of NPAs and corresponding reversal of income and creation of provision;
Accordingly our audit was focused on income recognition asset classification and provisioning pertaining to advances due to the materiality of the balances
i. Reliance is also placed on Audit Reports of other Statutory Branch Auditors with whom we have also made specific communication.
ii Classification and Valuation of Investments Identification of and provisioning for Non-Performing Investments (Schedule 8 read with Note 2 of Schedule 17 to the financial statements) Our audit approach towards Investments with reference to the RBI Circulars/directives included the understanding of internal controls and substantive audit procedures in relation to valuation classification identification of non performing investments (NPIs) provisioning/depreciation related to Investments. In particular ;
Investments include investments made by the Bank in various Government Securities Bonds Debentures Shares Security receipts and other approved securities.
Investments constitute 29.81 per cent of the Bank's total assets. These are governed by the circulars and directives of the RBI. These directions of RBI inter-alia cover valuation of investments classification of investments identification of nonperforming investments the corresponding non-recognition of income and provision there against. a. We evaluated and understood the Bank's internal control system to comply with relevant RBI guidelines regarding valuation classification identification of NPIs provisioning/depreciation related to investments;
b. We assessed and evaluated the process adopted for collection of information from various sources for determining fair value of these investments;
c. For the selected sample of investments in hand we tested accuracy and compliance with the RBI Master Circulars and directions by re-performing valuation for each category of security. Samples were selected after ensuring that all the categories of investments (based on nature of security) were covered in the sample;
The valuation of each category (type) of the aforesaid securities is to be done as per the method prescribed in circulars and directives issued by the RBI which involves collection of data/ information from various sources such as FIMMDA rates rates quoted on BSE/NSE financial statements of unlisted companies etc. Considering the complexities and extent of judgement involved in the valuation volume of transactions investments on hand and degree of regulatory focus this has been determined as a Key Audit Matter. d. We assessed and evaluated the process of identification of NPIs and corresponding reversal of income and creation of provision;
e. We carried out substantive audit procedures to recompute independently the provision to be maintained and depreciation to be provided in accordance with the circulars and directives of the RBI. Accordingly we selected samples from the investments of each category and tested for NPIs as per the RBI guidelines and recomputed the provision to be maintained in accordance with the RBI Circular for those selected sample of NPIs;
Accordingly our audit was focused on valuation of investments classification identification of non performing investments and provisioning related to investments
f. We tested the mapping of investments between the Investment application software and the financial statement preparation software to ensure compliance with the presentation and disclosure requirements as per the aforesaid RBI Circular/directions.
iii Assessment of Provisions and Contingent liabilities in respect of certain litigations including Direct and Indirect Taxes various claims filed by other parties not acknowledged as debt (Schedule 12 read with Note 18.9 (j) of Schedule 18 to the financial statements) : Our audit approach involved:
a. Obtaining an understanding of internal controls relevant to the audit in order to design our audit procedures that are appropriate in the circumstances;
There is high level of judgement required in estimating the level of provisioning. The Bank's assessment is supported by the facts of matter their own judgment past experience and advice from legal and independent tax consultants wherever considered necessary. Accordingly unexpected adverse outcomes may significantly impact the Bank's reported profit and state of affairs presented in the Balance Sheet. b. Understanding the current status of the litigations/tax assessments;
c. Examining recent orders and/or communication received from various tax authorities/ judicial forums and follow up action thereon;
d. Evaluating the merit of the subject matter under consideration with reference to the grounds presented therein and available independent legal / tax advice including opinion of our internal tax experts;
We determined the above area as a Key Audit Matter in view of associated uncertainty relating to the outcome of these matters which requires application of judgment in interpretation of law. Accordingly our audit was focused on analysing the facts of subject matter under consideration and judgments/ interpretation of law involved.
e. Review and analysis of evaluation of the contentions of the Bank through discussions collection of details of the subject matter under consideration the likely outcome and consequent potential outflows on those issues; and
f. Verification of disclosures related to significant litigations and taxation matters.
iv Modified Audit Procedures carried out in the light of continuing COVID-19 pandemic: Due to the outbreak of COVID-19 pandemic that caused nationwide lockdown and other travel restrictions imposed by the Central and State Governments/local administration during the period of our audit we could not travel to the Branches/ Circle /Administrative /Corporate Offices and carry out the audit processes physically at the respective offices.
Due to the continuing COVID-19 pandemic lockdown declared by some of the State Governments and travel restrictions imposed by State Governments / Local Authorities during the period of our audit and the RBI directions to Bank to facilitate carrying out audit remotely wherever physical access was not possible audit could not be conducted by visiting the premises of certain Branches / LHOs/ Business Units in the Corporate Office of the bank.
Wherever physical access was not possible necessary records/ reports/ documents/ certificates were made available to us by the Bank through digital medium emails and remote access to CBS CCDP and other relevant application software. To this extent the audit process was carried out on the basis of such documents reports and records made available to us which were relied upon as audit evidence for conducting the audit and reporting for the current period.
As we could not gather audit evidence in person/ physically/ through discussions and personal interactions with the officials at the Branches/Circle / Administrative /Corporate Offices either fully or partially we have identified such modified audit procedures as a Key Audit Matter. Accordingly we modified our audit procedures for control testing and substantive testing which included the following:
a. Conducted verification of necessary records/ documents/ CBS/ CCDP and other Application software electronically through remote access/emails in respect of some of the Branches / LHOs / Administrative Offices and other offices of the Bank wherever physical access was not possible.
Accordingly our audit procedures were modified to carry out the audit remotely.
b. Carried out verification of scanned copies of the documents deeds certificates and the related records made available to us through emails and remote access over secure network of the Bank.
c. Making enquiries and gathering necessary audit evidence through Video Conferencing dialogues and discussions over phone calls/conference calls emails and similar communication channels.
d. Resolution of our audit observations telephonically/ through email instead of a face-to-face interaction with the designated officials.

Information Other than the Standalone Financial Statements andAuditors' Report thereon

5. The Bank's Board of Directors is responsible for the OtherInformation. The Other Information comprises the Corporate Governance Report which weobtained at the time of issue of this report. The Other Information also includesDirectors' Report including annexures in Annual Report but does not include theStandalone Financial Statements and our Auditors' Report thereon which is expectedto be made available to us after the date of this Auditors' Report.

Our opinion on the Standalone Financial Statements does not cover theOther Information and Pillar 3 disclosures under the Basel III Disclosure and we do notand will 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 identified above and in doing soconsider whether the Other Information is materially inconsistent with the StandaloneFinancial Statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.

If based on the work we have performed on the Other Information thatwe obtained prior to the date of this Auditors' 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 in AnnualReport if any thereon if we conclude that there is a material misstatement therein weare required to communicate the matter to Those Charged with Governance.

Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements

6. The Bank's Board of Directors is responsible with respect tothe preparation of these Standalone Financial Statements that give a true and fair view ofthe financial position financial performance and cash flows of the Bank in accordancewith the accounting principles generally accepted in India including the AccountingStandards issued by ICAI to the extent applicable and provisions of Section 29 of theBanking Regulation Act 1949 the State Bank of India Act 1955 and circulars andguidelines issued by RBI from time to time. This responsibility also includes maintenanceof adequate accounting records in accordance with the provisions of the above mentionedActs for safeguarding of the assets of the Bank and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring 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.

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.

Those Board of Directors are also responsible for overseeing theBank's financial reporting process.

Auditors' Responsibilities for the Audit of the StandaloneFinancial Statements

7. Our objectives are to obtain reasonable assurance about whether theStandalone Financial Statements as a whole are free from material misstatement whether dueto 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 aggregate they could reasonably be expected to influence the economicdecisions 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 controls relevant to theaudit in order to design audit procedures that are appropriate in the circumstances.

• 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 thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Bank's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditors'report to the related disclosures in the Standalone Financial Statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditors' report. However future events orconditions may 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.

Materiality is the magnitude of misstatements in the StandaloneFinancial Statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the Standalone FinancialStatements may be influenced. We consider

quantitative materiality and qualitative factors in (i) planning thescope of our audit work and in evaluating the results of our work; and (ii) to evaluatethe effect of any identified misstatements in the Standalone Financial Statements.

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 controls 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 to communicatewith them all relationships and other matters that may reasonably be thought to bear onour 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 of the current period and are therefore the Key Audit Matters. Wedescribe these matters in our auditors' 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

8. We did not audit the financial statements / information of 10842branches included in the Standalone Financial Statements of the Bank whose financialstatements/ financial information reflects total assets of Rs.3444485 crore at March312021 and total revenue of Rs.283673 crore for the year ended on that date asconsidered in the Standalone Financial Statements. The financial statements/ informationof these branches have been audited by the branch auditors whose reports have beenfurnished to us and our opinion in so far as it relates to the amounts and disclosuresincluded in respect of these branches is based solely on the report of such branchauditors.

Our opinion is not modified in respect of the above 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; and these giveinformation as required to be given by virtue of the provisions of the State Bank of IndiaAct 1955 and regulations there under.

Subject to the limitations of the audit indicated in paragraphs 6 and 7above and as required by the State Bank of India Act 1955 and subject also to thelimitations of disclosure required therein and as required by sub-section (3) of section30 of the Banking Regulation Act 1949 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 have found them to besatisfactory;

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.

10. 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 FlowStatement 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 as per the provisions of the section 29 of the Banking RegulationAct 1949 and the State Bank of India Act 1955 have been sent to us and have beenproperly dealt with by us in preparing this report; and

d) in our opinion the Balance Sheet the Profit and Loss Account andthe Cash Flow Statement comply with the applicable accounting standards to the extentthey are not inconsistent with the accounting policies prescribed by the RBI.

11. As required by letter No. DOS.ARG.No.6270/08.91.001/2019- 20 datedMarch 17 2020 on "Appointment of Statutory Central Auditors (SCAs) in Public SectorBanks - Reporting obligations for SCAs from FY 2019-20" read with subsequentcommunication dated May 19 2020 issued by the RBI we further report on the mattersspecified in paragraph 2 of the aforesaid letter as under:

a) In our opinion the aforesaid Standalone Financial Statements complywith the applicable Accounting Standards issued by ICAI to the extent they are notinconsistent with the accounting policies prescribed by the RBI.

b) There are no observations or comments on financial transactions ormatters which have any adverse effect on the functioning of the Bank.

c) On the basis of the written representations received from thedirectors as on March 31 2021 and taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2021 from being appointed as a director in termsof sub-section (2) of Section 164 of the Companies Act 2013.

d) There are no qualifications reservations or adverse remarksrelating to the maintenance of accounts and other matters connected therewith.

Our report on the adequacy and operating effectiveness of theBank's Internal Financial Controls over Financial Reporting is given in Annexure - Ato this report expressing an unmodified opinion on the Bank's Internal FinancialControl over Financial Reporting with reference to the Standalone Financial Statements asat 31st March 2021.

ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 11(e) under ‘Report on Other Legal andRegulatory Requirements' section of our report of even date) Report on the InternalFinancial Controls Over Financial Reporting as required by the Reserve Bank of India (the"RBI") Letter DOS.ARG.No.6270/08.91.001/2019-20 dated March 17 2020 (asamended) (the "RBI communication")

We have audited the internal financial controls over financialreporting of State Bank of India ("the Bank") as of March 31 2021 inconjunction with our audit of the standalone financial statements of the Bank for the yearended on that date which includes internal financial controls over financial reporting ofthe Bank's branches.

Management's Responsibility for Internal Financial Controls

The Bank's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Bank 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. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to the Bank's policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Banking Regulation Act 1949 and the circulars andguidelines issued by the Reserve Bank of India.

Auditors' Responsibility

Our responsibility is to express an opinion on the Bank's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India (the "ICAI") and the Standards on Auditing (SAs) issued by the ICAI tothe extent applicable to an audit of internal financial controls. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate Internal Financial ControlsOver Financial Reporting were established and maintained and if such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the Internal Financial Controls over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal financial controls based on theassessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue to fraud or error.

We believe that the audit evidence we have obtained and the auditevidence obtained by the branch auditors in terms of their reports referred to in theOther Matters paragraph below is sufficient and appropriate to provide a basis for ouraudit opinion on the Bank's internal financial controls over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A Bank's internal financial controls over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A Bank's internal financial controlsover financial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the Bank; (2) provide reasonable assurancethat transactions are recorded as necessary to permit preparation of financial statementsin accordance with generally accepted accounting principles and that receipts andexpenditures of the Bank are being made only in accordance with authorizations ofmanagement and directors of the Bank; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of theBank's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrols over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion and to the best of our information and according to theexplanations given to us and based on the consideration of the reports of the branchauditors referred to in the Other Matters paragraph below the Bank has in all materialrespects adequate internal financial controls over financial reporting and such internalfinancial controls over financial reporting were operating effectively as at March312021 based on "the criteria for internal control over financial reportingestablished by the Bank considering the essential components of internal control stated inthe Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issuedby the ICAI".

Other Matters

Our aforesaid report in so far as it relates to the operatingeffectiveness of internal financial controls over financial reporting of 576 branches isbased on the corresponding reports of the respective branch auditors of those branches.

Our opinion is not modified in respect of this matter.

.