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INDEPENDENT AUDITORS’ REPORT
The President of India
Report on the Financial Statements:
1. We have audited the accompanying financial statements of Bank of India (“the Bank”) as at March 31, 2016, which comprise the Balance Sheet as at March 31, 2016, the Profit and Loss Account and the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information. Incorporated in these financial statements are the returns of:
a. The Head Office, 20 branches and Treasury branch audited by us;
b. 3102 domestic branches audited by other auditors; and
c. 27 foreign branches audited by local auditors.
The branches audited by us and those audited by other auditors have been selected by the Bank in accordance with the guidelines issued by the Reserve Bank of India except for a foreign branch not audited by local auditor, which account for 1.38% of advances, 1.27% of deposits, 0.45% of interest income and 0.33% of interest expenses.
Also incorporated in the Balance Sheet and the Profit and Loss Account are the returns from 1893 domestic branches which have not been subjected to audit and 1 foreign branch which has not been audited. These unaudited branches account for 5.20% of advances, 14.03% of deposits, 3.66% of interest income and 13.02% of interest expenses.
Management’s Responsibility for the Financial Statements:
2. The Management is responsible for the preparation of these financial statements in accordance with the requirement of Reserve Bank of India, provisions of the Banking Regulation Act, 1949, Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, recognised accounting practices including the Accounting Standards issued by the Institute of Chartered Accountants of India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.
3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the bank’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
6. In our opinion, as shown by books of Bank, and to the best of our information and according to the explanations given to us:
a. The Balance Sheet, read with significant accounting policies and 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 state of affairs of the Bank as at March 31, 2016 in conformity with accounting principles generally accepted in India;
b. The Profit and Loss Account, read with significant accounting policies and notes thereon shows a true balance of loss, in conformity with accounting principles generally accepted in India, for the year covered by the account; and
c. The Cash Flow Statement gives a true and fair view of the cash flows for the year ended on that date.
Emphasis of Matter:
7. We draw attention to:
a. Note No.18.4 to the financial statements relating to change in accounting policy for provisioning in respect of NPAs classified as Doubtful (secured portion) – one year to three years resulting in decrease in provision for NPAs for the year by Rs. 2,835.68 Crores with consequential decrease in Net loss for the year (net of tax) by Rs. 1,854.31 Crores;
b. Note No. 18.9(b) to the financial statements regarding the deferment of the loss on sale of financial assets to ARCs resulting in decrease in operating expenses by Rs. 214.24 Crores with consequential decrease in Net loss for the year (net of tax) by Rs. 140.10 Crores;
c. Note No 18.9(c) to the financial statements regarding provision in respect of food credit availed by Government of Punjab, as per RBI Circular dated 12th April 2016.
d. Note No. 18.9(f) to the financial statements regarding reclassification and additional provision in respect of certain advances pursuant to Asset Quality Review conducted by Reserve Bank of India;
e. Note No 18.9(i) to the financial statements regarding recognition of Deferred Tax Asset on account of provisions for Non Performing Assets;
f. Note No. 18.9(j) to the financial statements regarding amortisation of provision for certain NPAs and loss on sale of certain NPAs during the year, which was deferred from March 2015;
g. Note No 18.9(k) to the financial statements regarding provision in respect of loans/bonds of Power Distribution Companies (DISCOM), as per extant RBI guidelines.
Our opinion is not qualified in respect of these 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 Banking Regulation Act, 1949.
9. Subject to the limitations of the audit indicated in paragraph 1 to 5 above and as required by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 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.
10. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the applicable Accounting Standards.
For M. M. Nissim and Co.
M. No. 044577
For J. P. Kapur & Uberai
M. No. 093323
For D. Singh & Co.
M. No. 098641
For Grover Lalla & Mehta
M. No. 502661
For B Rattan & Associates
Bishamver Kumar Karn
M. No. 094790
For G D Apte & Co.
Karn Saurabh Peshwe
M. No. 121546
Place : Mumbai
Date : 24th May 2016