We have audited the accompanying financial statements of
‘SBI Cards and Payment Services Limited’ (the ‘Company’),
which comprise the Balance Sheet as at March 31, 2025, the
Statement of Profit and Loss (including Other Comprehensive
Income), the Statement of Changes in Equity and the Statement
of Cash Flows for the year then ended, and notes to the financial
statements including a summary of material accounting policies
and other explanatory information (the ‘financial statements’).
In our opinion and to the best of our information and according
to the explanations given to us, the aforesaid financial
statements give the information required by the Companies
Act, 2013, as amended (the ‘Act’) in the manner so required
and give a true and fair view in conformity with the Indian
Accounting Standards (Ind AS) prescribed under section
133 of the Act read with the Companies (Indian Accounting
Standards) Rules, 2015, as amended, (‘Ind AS’) and accounting
principles generally accepted in India, of the state of affairs
of the Company as at March 31, 2025, its profit and other
comprehensive income), its changes in equity and its cash
flows for the year ended on that date.
BASIS FOR OPINION
We conducted our audit of the financial statements in accordance
with the Standards on Auditing (‘SAs’) specified under section
143(10) of the Act. Our responsibilities under those standards
are further described in the ‘Auditor’s responsibilities for the
audit of the financial statements’ section of our report. We
are independent of the Company in accordance with the Code
of Ethics issued by the Institute of Chartered Accountants of
India (ICAI) together with the ethical requirements that are
relevant to our audit of the financial statements under the
provisions of the Act and the rules made thereunder, and we
have fulfilled our other ethical responsibilities in accordance
with these requirements and the ICAI’s Code of Ethics. We
believe that the audit evidence obtained by us is sufficient
and appropriate to provide a basis for our audit opinion on the
financial statements.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the
financial statements of the current period. These matters
were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters. For
each matter below, our description of how our audit addressed
the matter is provided in that context.
We have determined the matters described below to be the key
audit matters to be communicated in our report.
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Sr.
No.
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Key Audit Matter
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How the matter was addressed in the audit
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1
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Assessment of impairment loss allowance based on
expected credit loss (ECL) on Loans (Refer note - 37
of the financial statements)
In accordance with Ind AS 109, the Company applies
expected credit loss (ECL) model for measurement and
recognition of impairment loss on the financial assets.
For recognition of impairment loss on Loans to
customers, where no significant increase in credit risk
(SICR) has been observed, such assets are classified in
“Stage 1" and a 12 months ECL is recognised. Loans
that are categorised into have a significant increase in
credit risk are considered to “Stage 2" and those which
are in default or there exists objective evidence of
impairment are considered to be in “Stage 3". Lifetime
ECL is recognised for stage 2 and stage 3 Loans. At
every reporting date, the historical observed default
rates are updated and changes in the forward-looking
estimates are analysed.
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Our audit procedures relating to the expected credit losses
(ECL) include the following, among others:
We obtained a comprehensive understanding of ECL model (as
revised during the year to comply with RBI requirements & to
match with the changing economics dynamics) with the help
of presentations & active interaction with risk management
team of the Company.
We examined the policies approved by the Board of Directors
of the Company. We also verified the methodology adopted for
computation of ECL (‘ECL Model’) that meets the requirements
of policies approved by the Board of Directors, procedures
and controls for assessing and measuring the credit risk
and that ECL Model itself and output of the ECL Model are
consistent with the documented ECL Model. We also verified
that the ECL Model and its output has the approval of audit
committee of the Board of Directors.
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Sr.
No.
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Key Audit Matter
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How the matter was addressed in the audit
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Quantitative factors like days past due, behaviour of
the customer, historical losses incurred on defaults
and macroeconomic data points identified by the
Management’s expert and qualitative factors like nature
of the underlying loan, deterioration in credit quality
correlation of macro- economic variables to determine
expected losses, revision in the management overlay
and related Reserve Bank of India (RBI) guidelines, to
the extent applicable, etc. have been taken into account
in the ECL computation.
Considering the inherent judgmental nature, the
complexity of model involved, degree of estimate
involved in the model and computation of impairment
loss allowance along with the significance of the
amount and its impact on the financial statements of
the Company, this area has been considered as key
audit matter.
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We examined compliance of the Company’s accounting
policies in relation to impairment allowance with Ind AS 109.
We also evaluated:
• the assumptions used in the calculation of ECL and its
various aspects such as determination of Probability of
Default, Loss Given Default, Exposure at Default, Staging
of Loans, etc.;
• the completeness and accuracy of source data used by
the Management for ECL computation; and,
• ECL computations for their reasonableness. Portfolio
categorisation into appropriate stages (Stage 1, Stage 2
and Stage 3) for purposes of measurement of ECL was
analysed on the basis of their past-due status.
• The adequacy of presentation and disclosure in the
financial statements with respect to expected credit
losses including the specific disclosure made with
regards to revision in ECL model.
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2
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Performing an audit in an Automated environment
that is driven by IT systems & applications
The business operates in an automated environment
and has a complex IT structure as significant number of
transactions are processed through its inter-dependent
IT systems.
Appropriate IT general controls and IT application
controls are required to ensure that such IT systems
process operations in an accurate, complete,
effective, efficient, and consistent way for reliable
financial reporting.
Due to pervasive use of IT systems, high level of
automation and its impact on the financial reporting
of the business we have considered ‘IT Systems and
Controls’ to be a key audit matter.
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Our audit procedures with respect to this matter included
the following:
Having obtained a comprehensive understanding of the IT
systems and the automated environment of the Company,
identification of related checks and balances, information
systems audit report submitted by an outside expert, report
submitted by internal audit cell on internal financial controls
as designed & operative in automated environment, we
redesigned our audit procedures so as to align with the
automated process.
With respect to IT system, our focus includes User access and
security controls, network operations, automated calculations,
and database management. In detail:
• Ensured that systems are developed, configured and
implemented to meet financial reporting objectives.
• Assessed User Access Management i.e., process of
identifying, tracking, controlling and managing a
specified users’ access to an IT system.
• Covered logics & controls over reports used in business
which are system driven.
Where control deficiencies have been identified, we have
tested compensating controls or performed alternative audit
procedures, wherever necessary.
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INFORMATION OTHER THAN THE FINANCIAL
STATEMENTS AND AUDITOR’S REPORT THEREON
The Company’s Board of Directors is responsible for the other
information. The other information comprises the information
included in the Annual Report, but does not include the
financial statements and auditor’s report thereon, The Annual
Report is expected to be made available to us after the date of
this auditors’ report.
Our opinion on the financial statements does not cover the
other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained during the course of our audit, or otherwise appears
to be materially misstated.
When we read the Annual Report, if we conclude that there is a
material misstatement therein, we are required to communicate
the matter to those charged with governance.
RESPONSIBILITIES OF THE MANAGEMENT AND
THOSE CHARGED WITH GOVERNANCE FOR THE
FINANCIAL STATEMENTS
The Company’s Board of Directors is responsible for the
matters stated in section 134(5) of the Act with respect to
the preparation of these financial statements that give a true
and fair view of the financial position, financial performance
including other comprehensive income, changes in equity and
cash flows of the company in accordance with the accounting
principles generally accepted in India, including the Indian
Accounting Standards (“Ind AS") notified under section 133 of
the Act read with the Companies (Indian Accounting Standards)
Rules, 2015, as amended from time to time. This responsibility
also includes maintenance of adequate accounting records in
accordance with the provisions of the Act for safeguarding
the assets of the company 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 financial
statements that give a true and fair view and are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the management and
Board of Directors is responsible for assessing the company’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 the board of directors either intends
to liquidate the company or to cease operations, or has no
realistic alternative but to do so.
The Company’s Board of Directors is also responsible for
overseeing the company’s financial reporting process.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF
THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about
whether the financial statements, as a whole, are free from
material misstatement, whether due to fraud or error, and to
issue an auditor’s 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 the aggregate, they could reasonably be
expected to influence the economic decisions of users taken
on the basis of these 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 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(s).
• Obtain an understanding of internal financial control
relevant to the audit in order to design audit procedures
that are appropriate in the circumstances. Under section
143(3)(i) of the Act, we are also responsible for expressing
our opinion on whether the company has adequate
internal financial controls with reference to financial
statements in place and the operating effectiveness of
such controls.
• Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and
related disclosures made by the 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 company’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
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 company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content
of the financial statements, including the disclosures, and
whether the financial statements represent the underlying
transactions and events in a manner that achieves
fair presentation.
Materiality is the magnitude of misstatements in the financial
statements that, individually or in aggregate, makes it probable
that the economic decisions of a reasonably knowledgeable
user of the financial statements may be influenced. We consider
quantitative materiality and qualitative factors in (i) planning
the scope of our audit work and in evaluating the results
of our work; and (ii) to evaluate the effect of any identified
misstatements in the financial statements.
We communicate with those charged 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 financial statements of the
current period and are therefore the key audit matters. We
describe these matters in our auditor’s 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
The Financial Statements include comparative financial figures
of the Company for the corresponding year ended 31st March,
2024 which has been audited by predecessor firms of joint
statutory auditors vide their audit report dated April 26 April,
2024, in which the predecessor firms of joint statutory auditors
have expressed an unmodified opinion.
We have relied upon the said report for the purpose of our
report on these financial statements. Our opinion is not
modified in respect of the above matter.
REPORT ON OTHER LEGAL AND REGULATORY
REQUIREMENTS
1. As required by the ‘Companies (Auditor’s Report) Order,
2020’ (“the Order"), issued by the Central Government
of India in terms of sub-section (11) of section 143 of the
Act, we give in Annexure - ‘A’, a statement on the matters
specified in paragraph 3 and 4 of the Order.
2. We also enclose our report in terms of section 143(5)
of the Act, on the basis of such checks of the books and
records of the Company as we considered appropriate
and according to the information and explanations given
to us by the management, in Annexure - ‘B’, on the
directions and sub-directions issued by Comptroller and
Auditor General of India.
3. As required by section 143(3) of the Act, we report that:
a. we have sought and obtained all the information and
explanations which to the best of our knowledge and
belief were necessary for the purposes of our audit;
b. in our opinion, proper books of account, as required
by law, have been kept by the company so far as it
appears from our examination of those books;
c. the balance sheet, the statement of profit and
loss (including other comprehensive income), the
statement of changes in equity and the statement
of cash flows dealt with by this the report are in
agreement with the books of account;
d. in our opinion, the aforesaid financial statements
comply with the Indian Accounting Standards (“Ind
AS") notified under section 133 of the Act read with
the Companies (Indian Accounting Standards) Rules,
2015, as amended from time to time;
e. on the basis of the written representations received
from the directors as at March 31, 2025 and taken
on record by the board of directors, none of the
directors are disqualified as at March 31,2025 from
being appointed as a director, in terms of section
164(2) of the Act;
f. with respect to the adequacy of the internal financial
controls with reference to financial statements
of the company and the operating effectiveness
of such controls, refer to our separate report in
Annexure - ‘C’;
g. with respect to the other matters to be included
in the Auditor’s Report in accordance with the
requirements of section 197(16) of the Act, as
amended, in our opinion and to the best of our
information and according to the explanations
given to us, the remuneration paid/ provided by
the Company to its directors during the year is in
accordance with the provisions of section 197 of
the Act;
h. with respect to the other matters to be included in
the Auditor’s Report in accordance with Rule 11 of
the Companies (Audit and Auditors) Rules, 2014,
as amended, in our opinion and to the best of our
information and according to the explanations given
to us:
i. The Company has disclosed the impact of
pending litigations on its financial position
in its financial statements in note 44 to its
financial statements;
ii. The Company has not entered into any
long-term contracts including derivative
contracts for which there were any material
foreseeable losses;
iii. There were no amounts which were required
to be transferred to the Investor Education and
Protection Fund by the Company;
iv. (a) The Management has represented
that, to the best of its knowledge and
belief as disclosed in note no. 8 to the
financials statements, no funds (which
are material either individually or in the
aggregate) have been advanced or loaned
or invested (either from borrowed funds
or share premium or any other sources
or kind of funds) by the Company to or
in any other person or entity, including
foreign entity (“Intermediaries"), with
the understanding, whether recorded in
writing or otherwise, that the Intermediary
shall, whether, directly or indirectly lend
or invest in other persons or entities
identified in any manner whatsoever by
or on behalf of the Company (“Ultimate
Beneficiaries") or provide any guarantee,
security or the like on behalf of the
Ultimate Beneficiaries;
(b) The Management has represented, that,
to the best of its knowledge and belief as
disclosed in note no. 8 to the financials
statements, no funds (which are material
either individually or in aggregate) have
been received by the Company from
any person or entity, including foreign
entity (“Funding Parties"),with the
understanding, whether recorded in
writing or otherwise, that the Company
shall, whether, directly or indirectly, lend
or invest in other persons or entities
identified in any manner whatsoever by or
on behalf of the Funding Party (“Ultimate
Beneficiaries") or provide any guarantee,
security or the like on behalf of the
Ultimate Beneficiaries; and
(c) Based on the audit procedures that
have been considered reasonable and
appropriate in the circumstances, nothing
has come to our notice that has caused us
to believe that the representations under
sub-clause (i) and (ii) of Rule 11(e) as
provided under (a) and (b) above, contain
any material misstatement.
v. During the year the Company has declared and
paid interim dividend, which is in accordance
with section 123 of the Act.
vi. Based on our examination, which included
test checks, and in accordance with the
requirements of Implementation Guide on
Reporting on Audited Trail under Rule 11(g)
of the Companies (Audit and Auditors) Rules
2014, except for our comments below, the
Company has used accounting softwares
for maintaining its books of account for the
financial year ended March 31, 2025 which
have a feature of recording audit trail (edit log)
facility and the same has operated throughout
the year for all relevant transactions recorded
in the respective softwares. Further, during
the course of our audit we did not come
across any instance of the audit trail feature
being tampered with. The audit Trail has been
preserved by the Company as per statutory
requirements for record retention.
i n respect of accounting software operated by a third party service provider and used for payroll and allied functions of the
Company, the feature of recording audit trail (edit log) facility was enabled as confirmed by the consultants of the service provider.
However, we are unable to independently verify and confirm the same. Also we are not in a position to confirm whether the audit
trail feature in the accounting software operated by third party service provider has been tampered with and preserved as per
statutory requirements for record retention.
For V. K. Dhingra & Co. For S. P. Chopra & Co.,
Chartered Accountants Chartered Accountants
Firm Regd. No. 000250N Firm Regd. No. 000346N
Vipul Girotra Ankur Goyal
Partner Partner
Membership No. 084312 Membership No. 099143
UDIN:25084312BMOVEL3145 UDIN:25099143BMKOCT2022
Place: Gurugram Place: Gurugram
Date: April 24, 2025 Date: April 24, 2025
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