To
The Members of Central Bank of India Mumbai
Report on Audit of the Standalone Financial Statements Opinion
1. We have audited the accompanying standalone financial statements of Central Bank Of India (‘the Bank'), which comprise the Standalone Balance Sheet as at 31st March 2024, the Standalone Profit and Loss Account and the Standalone Cash Flow Statement for the year then ended, and notes to Standalone Financial Statements including a summary of significant accounting policies and other explanatory information in which are included the returns for the year ended on that date of the Head Office, 12 Zones and
i. 1 Specialized Integrated Treasury Branch audited by us
ii. 20 branches audited by us
iii. 1356 branches audited by respective statutory branch auditors.
The branches audited by us and those audited by other auditors have been selected by the Bank in accordance with the guidelines issued to the Bank by the Reserve Bank of India. Also incorporated in the Standalone Balance Sheet, the Standalone Profit and Loss Account and the Standalone Cash Flow Statement are the returns from 3124 branches which have not been subjected to audit. These unaudited branches account for 27.74 per cent of advances, 47.37 per cent of deposits, 31.70 per cent of interest income and 44.95 per cent of interest expenses.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Banking Regulation Act, 1949 (hereinafter referred to as “the Act”) in the manner so required for the Bank and are in conformity with
accounting principles generally accepted in India and:
a) the Standalone Balance Sheet, read with the notes thereon is a full and fair Balance Sheet containing all the necessary particulars, is properly drawn up so as to exhibit a true and fair view of the state of affairs of the Bank as at 31st March, 2024;
b) the Standalone Profit and Loss Account, read with the notes thereon shows a true balance of profit for the year ended on that date; and
c) the Standalone Cash Flow Statement gives a true and fair view of the cash flows 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 (“ICAI”). Our responsibilities under those Standards are further described in the “Auditors' Responsibilities for the Audit of the Standalone Financial Statements” section of our report. We are independent of the Bank in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with ethical requirements that are relevant to our audit of the Standalone Financial Statements prepared in accordance with the accounting principles generally accepted in India, including the Accounting Standards issued by the ICAI, and provisions of section 29 of the Banking Regulation Act, 1949 and circulars and guidelines issued by the Reserve Bank of India (“RBI”) from time to time and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the standalone financial statements.
Emphasis of Matter
3. We draw attention to:
a) Note no. 15 (f)(iv) of the Statement regarding deferred tax, wherein on the basis of tax review made by the Bank's management with respect to the possible tax benefits arising out of the timing
difference, the net deferred tax asset of ' 4,294.57 crore is recognised as on 31st March 2024 (' 5,798.90 crore as on 31st March 2023).
Our opinion is not modified in respect of these matters.
Key Audit Matters
4. Key audit matters are those matters that, in our be communicated in our report.
professional judgment, were of most significance in our audit of the standalone financial statements for the year ended 31st March 2024. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to
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Key Audit Matters
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Auditors' response
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1. Identification and provisioning of non-
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Our audit approach included assessment of the design,
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performing advances made in accordance with the prudential norms prescribed by Reserve Bank of India on Income recognition, Asset Classification and provisioning pertaining to Advances (refer Schedule 9 read with Note 3 of Schedule 17 to the standalone financial statements)
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operating effectiveness of key internal controls over approval, recording and monitoring of loans and substantive audit procedures in respect of income recognition, asset classification and provisioning pertaining to advances.
In particular:
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Advances comprise substantial portion of the
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• We have evaluated and understood the Bank's
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Bank's total assets. Identification of non-performing
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internal control system in adhering to the relevant
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advances (NPAs) is carried out, based on system
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RBI guidelines regarding income recognition, asset
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identification, by the Core Banking Solution (CBS)
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classification and provisioning pertaining to advances.
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software in operation based on the various controls
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• We assessed and evaluated the process of
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and logic embedded therein.
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identification of NPAs, and corresponding reversal of
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Provisions in respect of such NPAs and restructured advances are made based on management's assessment of the degree of impairment of the advances subject to and guided by the minimum provisioning levels prescribed under RBI guidelines, prescribed from time to time. The provisions on NPAs are also based on the valuation of the security available. In case of restructured accounts, provision is made in accordance with the RBI guidelines. We identified NPA identification and provision on loans and advances as a key audit matter because of
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income and creation of provision.
• We have analyzed and understood key IT systems/ applications used operational effectiveness of relevant controls including involvement of manual process and manual controls in relation to income recognition, asset classification and provisioning pertaining to advances.
In order to ensure the effectiveness of the operation of the key controls and compliance to the directions of the RBI, we have verified whether both CBS system and the
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the significant efforts involved by the management
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management have:
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in identifying NPAs based on the RBI Guidelines, the level of management judgement involved in determining the provision (including the provisions
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• timely recognized the depletion in the value of available security.
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on assets which are not classified as NPAs), the
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• made adequate provisioning based on such time-
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valuation of security of the NPAs and on account of
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to-time monitoring and identification of asset
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the significance of these estimates to the standalone
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classification including accounts which meet the
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financial statements of the Bank.
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criteria for asset classification benefit in accordance with the Reserve Bank of India COVID-19 Regulatory Package.
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• We placed reliance upon the Independent Auditor's
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Report of the respective Branch Auditors with respect to income recognition, asset classification and provisioning as well as Memorandum of changes suggested both at the branches and at Head Office.
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Key Audit Matters
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Auditors' response
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2. Investments
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Investment portfolio of the Bank comprises of
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Our audit approach towards Investments with reference
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investments in government securities, bonds,
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to the RBI circulars/ directives included the review and
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debentures, shares, security receipts and other
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testing of the design, operating effectiveness of internal
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approved securities which are classified under three
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controls and substantive audit procedures in relation to
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categories, Held to Maturity, Available for Sale and
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valuation, classification, identification of Non-Performing
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Held for Trading. Investments comprise a substantial
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Investments, provisioning/ depreciation related to
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portion of the Bank's total assets.
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Investments. In particular:
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Valuation of Investments, identification of Non-
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Performing Investments (NPI) and the corresponding
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• We assessed and understood the system and
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non-recognition of income and provision thereon, is
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internal control as laid down by the Bank to comply
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carried out in accordance with the relevant circulars /
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with relevant RBI guidelines regarding valuation,
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guidelines / directions of RBI. (refer Schedule 8 read
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classification, identification of Non- Performing
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with Note 5 of Schedule 17 to the standalone financial
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Investments, Provisioning and depreciation on
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statements)
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Investments.
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The valuation of each type of aforesaid security is to
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• Tested accuracy and compliance for selected
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be carried out as per the methodology prescribed in
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sample of investments with the RBI Master circulars
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the circulars and directives issued by the RBI which
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and directions by re-performing valuation for each
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involves collection of data/ information from various
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category of security in accordance with the RBI
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sources such as FBIL rates, rates quoted on BSE/
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guidelines.
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NSE, financial statements of unlisted companies,
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• We assessed and evaluated the process of
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NAV in case of security receipts etc.
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identification of NPIs, and corresponding reversal of
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As per the RBI directions, there are certain
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income and creation of provision.
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investments that are valued at market price however
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• We carried out substantive audit procedures to re-
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certain investments are based on the valuation
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compute independently the provision to be created
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methodologies that include statistical models with
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and depreciation to be provided.
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inherent assumptions, assessment of price for
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• We assessed that the standalone financial statement
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valuation based on financial statements etc. The price
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disclosures appropriately reflected the Bank's
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discovered for the valuation of these Investments is
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exposure to investments valuation risks with reference
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only a fair assessment of the Investments.
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to the requirements of the prevailing accounting
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Hence, the valuation of Investments requires special attention and further in view of the significance of the amount of Investments in the financial statements, the same has been considered as Key Audit Matter in our audit
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standards and the RBI guidelines.
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Key Audit Matters
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Auditors' response
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3. Information technology (IT) systems used in
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We conducted an assessment and identified key IT
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financial reporting process
The Bank's operational and financial reporting processes are dependent on IT systems run through Core Banking Solutions (CBS) and other integrated software with automated processes and controls large volume of transactions.
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applications, database and operating systems that are relevant to our audit and have identified CBS and Treasury System primarily as relevant for financial reporting. For the key IT systems pertaining to CBS and treasury operations used to prepare accounting and financial information, our areas of audit focus included Access Security (including controls over privileged access), application change
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The process and controls are to ensure appropriate
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controls, database management and network operations.
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user access and management processes in use.
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In particular:
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The Bank has an in-house Department of Information & technology (DIT) run under the supervision of the
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• We obtained an understanding of the Bank's IT control
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top management and with the support of expert
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environment and key changes during the audit period
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consulting agencies, for maintaining IT services.
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that may be relevant to the audit.
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Accordingly, our audit was focused on key IT systems
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• We tested the design, implementation and operating
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and controls due to the pervasive Impact on the
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effectiveness of the Bank's General IT controls over
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standalone financial statements and the same has
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the key IT systems that are critical to financial reporting
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been considered as Key Audit Matter in our audit.
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including obtaining reports from independent experts. This included evaluation of Bank's controls to evaluate segregation of duties and access rights being provisioned / modified based on duly approved requests, access for exit cases being revoked in a timely manner.
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• We also tested key automated and manual business
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cycle controls and logic for system generated reports relevant to the audit; including testing of compensating controls or performed alternate procedures to assess whether there were any unaddressed IT risks that would materially impact the standalone financial statements, information other than the standalone Financial Statements and Auditors' Report thereon.
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4. Provisions, Contingent Liabilities and Claims:
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We have obtained an understanding of Internal Controls
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Assessment of Provisions and Contingent Liability in
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relevant to the audit in order to design our audit procedures
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respect of certain litigations on various claims filed by other parties not acknowledged as debt (Note No. 13
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that are appropriate in the circumstances.
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of Schedule 17 and Note No. 15(h) of Schedule 18).
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We broadly reviewed the underlying assumptions and estimates used by the management for provisioning but as
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There is high level of judgement required in estimating the level of provisioning. The Bank's assessment is
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the extent of impact is dependent on future developments which are highly uncertain, we primarily relied on those
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supported by the facts of matter, their own judgement,
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assumptions and estimates, which are subject matter of
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past experience, and advice from legal and independent experts wherever considered necessary.
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periodic review by the Bank.
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Accordingly, unexpected adverse outcomes may significantly impact the Bank's reported profit and state of affairs presented in Balance Sheet.
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We have relied upon the management note and legal opinions obtained by the bank regarding the claims and tax litigations and involved our internal team to review
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Contingent Liability is a possible obligation, outcome
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the nature of such litigations and claims, their current
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of which is contingent upon occurrence or non-
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status, sustainability, examining recent orders and/or
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occurrence of one or more uncertain future events. In
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communication received from various tax authorities/
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the judgement of the management, such claims and
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judicial forums and follow up actions thereon and
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litigations including tax demands against the bank
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likelihood of claims/litigations materializing into eventual
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would not eventually lead to a liability.
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liability upon final resolution, from the available records
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However, unexpected adverse outcomes may significantly impact the Bank's reported financial results which is uncertain/ unascertainable at this stage.
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and developments to date.
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Considering the uncertainty relating to the outcome of these matters which requires application of judgment in interpretation of law, this has been determined as a key Audit Matter.
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Information other than the Standalone Financial
Statements and Auditors' report thereon
5. The Bank's Board of Directors is responsible for the other information. The other information comprises the Corporate Governance Report, which we obtained at the time of issuance of this auditors' report, and the Directors' Report including annexures, Business Responsibility, Dividend Distribution Policy and Sustainability Report 2023-24 and Management Discussion and Analysis which is expected to be made available to us after that date but does not include the standalone financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other information and the Pillar 3 disclosures under Capital Adequacy Framework (Basel III disclosures) and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements, or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date prior to the date of auditors' report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
When we read the Directors' Report including annexures, and Management Discussion and Analysis, if we conclude that there is material misstatement therein, we are required to communicate the matter to those charged with governance and determine the actions under the applicable laws and regulations.
Responsibilities of Management and Those Charged
With Governance for the Standalone Financial
Statements
6. The Bank's Board of Directors is responsible with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with the accounting principles generally accepted in India, including the applicable Accounting Standards, and provisions of Section 29 of the Banking Regulation Act, 1949 and circulars and guidelines issued by the Reserve Bank of India (‘RBI') from time to time (“RBI guidelines”) and judicial pronouncements. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Bank and for preventing and detecting frauds and other irregularities;
selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, management is responsible for assessing the Bank's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Bank's financial reporting process.
Auditors' responsibilities for the audit of the standalone financial statements
7. Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Bank to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the Standalone financial statements, including the disclosures, and whether the Standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of the misstatements in the standalone financial statements that, individually or aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning of the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatement in the standalone financial statements.
We communicate with those charge with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Standalone financial statements of the current period and are therefore the key audit matters.
We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Other Matters
8. We did not audit the financial statements/ information of 1356 branches included in the standalone financial statements of the Bank whose financial statements / financial information reflect total assets of ' 2,07,912 crore as at 31st March 2024 and total revenue of ' 8,313 crore for the year ended on that date, as considered in the standalone financial statements. These branches cover 30.08 per cent of advances, 48.99 per cent of deposits and 16.02 per cent of non-performing assets as at 31st March 2024 and 38.33 per cent of revenue for the year ended on that date. The financial statements/ information of these branches have been audited by the branch auditors whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of branches, is based solely on the report of such branch auditors.
9. In the conduct of our audit, we have taken note of the unaudited returns in respect of 3124 branches certified by the respective branch's management whose financial statements/ information reflect total assets of ' 1,13,873 crore as at 31st March 2024 and total revenue of ' 7,632 crore for the year ended on that date. These unaudited branches cover 27.74 per cent of advances, 47.37 per cent of deposits and 15.82 per cent of non-performing assets as on 31st March 2024 and 35.19 per cent of revenue for the year then ended.
Our opinion is not modified in respect of the above matters.
Report on Other Legal and Regulatory Requirements
10. The standalone Balance sheet and the standalone Profit and Loss Account have been drawn up in accordance with Section 29 of the Banking Regulation Act, 1949;
Subject to the limitations of the audit indicated in paragraphs 5 to 9 above and as required by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980, and subject also to the limitations of disclosure required therein, we report that:
a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit and have found them to be satisfactory.
b) The transactions of the Bank, which have come to our notice, have been within the powers of the Bank; and
c) The returns received from the offices and branches of the Bank have been found adequate for the purposes of our audit.
11. As required by letter No. DOS.ARG.No. 6270/08.91.001/2019-20 dated March 17, 2020 on “Appointment of Statutory Central Auditors (SCAs) in Public Sector Banks - Reporting obligations for SCAs from FY 2019-20”, read with subsequent communication dated May 19, 2020 issued by the RBI, we further report on the matters specified in paragraph 2 of the aforesaid letter as under:
a) In our opinion, the aforesaid standalone financial statements comply with the applicable Accounting Standards issued by ICAI, to the extent they are not inconsistent with the accounting policies prescribed by RBI.
b) There are no observations or comments on financial transactions or matters which have any adverse effect on the functioning of the Bank.
c) As the Bank is not registered under the Companies Act, 2013 the disqualifications from being a director of the bank under sub-section (2) of Section 164 of the Companies Act, 2013 do not apply to the bank.
d) There are no qualifications, reservations or adverse remarks relating to the maintenance of accounts and other matters connected therewith.
e) Our audit report on the adequacy and operating effectiveness of the Bank's internal financial controls over financial reporting as required by the RBI Letter No. DOS. ARG. No. 6270/ 08.91.001/2019-
20 dated March 17, 2020 (as amended) is given in Annexure A to this report. Our report expresses an unmodified opinion on the Bank's internal financial controls over financial reporting with reference to the standalone financial statements as at 31st March 2024.
12. We further report that:
a) in our opinion, proper books of account as required by law have been kept by the Bank so far as it appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from branches not visited by us.
b) the standalone Balance Sheet, the standalone Profit and Loss Account and the Standalone Cash Flow Statement dealt with by this report are in agreement with the books of account and with the returns received from the branches not visited by us.
c) the reports on the accounts of the branch offices audited by branch auditors of the Bank under section 29 of the Banking Regulation Act, 1949 have been sent to us and have been properly dealt with by us in preparing this report; and
d) In our opinion, the Standalone Balance Sheet, the Standalone Profit and Loss Account and the Standalone Cash Flow Statement comply with the applicable accounting standards, to the extent they are not inconsistent with the accounting policies prescribed by RBI.
FOR KISHORE & KISHORE FOR A.R. & CO.
CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANTS
F.R. No. 000291N FR. No.002744C
CA P.R. KARANTH CA PAWAN GOEL
PARTNER PARTNER
M. No.018808 M.No.072209
UDIN: 24018808BKDZIJ2220 UDIN: 24072209BKFDGL6298
For ADB & COMPANY
CHARTERED ACCOUNTANTS F.R. No. 005593C
CA BANKIM SHUKLA
PARTNER M. No. 074272
UDIN: 24074272BKEHFU9660
Place : Mumbai Date : 30.04.2024
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