1. We have audited the accompanying Financial Statements of UCO Bank(”the Bank”), which comprises the Balance Sheet as at
31st March, 2026, and the Statement of Profit and Loss Account and the Cash Flow Statement for the year then ended, and notes
to the financial statements including a summary of significant accounting policies and other explanatory information in which are
incorporated the returns for the year ended on that date of:
i) The Head Office, 49 Zones, 21 branches inclusive of 1 treasury branch audited by us
ii) 1044 branches (including Service branches and Hubs) audited by statutory branch auditors
iii) 02 overseas branches audited by overseas 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 to the Bank by the Reserve Bank of India. Also incorporated in the Balance Sheet and the Profit and Loss Account and the
Cash Flow Statement are the returns from 2455 branches which have not been subjected to audit. These unaudited branches
account for 21.89% of advances, 46.01% of deposits, 22.61% of interest income and 44.23% of interest expenses.
2. 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 Banking Regulation Act, 1949 in the manner so required for bank and are in conformity with
accounting principles generally accepted in India and give:
a. The 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, 2026;
b. The Profit and Loss Account, read with the notes thereon shows a true balance of profit and
c. The Cash Flow Statement gives a true and fair view of the cash flows for the year ended on that date.
Basis for Opinion
3. 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 Auditor's Responsibilities for the Audit of
the 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 financial
statements and we have fulfilled our other ethical responsibilities in accordance with the accounting principles generally
accepted in India, including the ICAI Accounting Standards, as amended from time to time subject to Directions/Guidelines issued
by the Reserve Bank of India, 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 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.
4. 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 for the year ended 31st March 2026 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. We have
determined the matters described below to be the key audit matters to be communicated in our report:
|
Key Audit Matters
|
Auditor's Response to Key Audit Matters
|
|
Classification of Advances, identification and
Provisioning for non-performing advances
Advances include Bills purchased and discounted, Cash credits,
Overdrafts, Loans repayable on demand and Term loans. These
are further categorized as secured by Tangible assets (including
advances against Book Debts), covered by Bank/ Government
Guarantees and Unsecured advances.
The advances are classified as performing and non-performing
advances (NPA) and provisioning thereon is made in accordance
with the prudential norms as prescribed by the Reserve Bank of
India (RBI). The classification and provisioning is done by Bank's
IT software under its Core Banking Solution (CBS).The extent of
provisioning of NPA under the prudential norms are mainly based
on its ageing and recoverability of the underlined security.
In the event of any improper application of the prudential norms
or consideration of the incorrect value of the security, as the
valuation of the security involves high degree of estimation and
judgement, the carrying value of the advances could be materially
misstated either individually or collectively, and in view of the
significance of the amount of advances in financial statements,
the classification of the advances and provisioning thereon has
been considered as Key Audit Matter in our audit.
|
We obtained an understanding of the Bank's Software, circulars,
guidelines and directives of the RBI and the Bank's internal
instructions and procedures in respect of asset classification
and its provisioning and adopted the following audit procedures:
We evaluated and tested of the effectiveness of the IT software
controls and other key internal control mechanisms with respect
to the advances monitoring, identification/ classification, including
testing of relevant data quality, and review of the data entered in
the software.
Review of the documentations, operations/ performance and
monitoring of the advance accounts, on test check basis of the
large and stressed advances, to ascertain any overdue
unsatisfactory conduct or weakness in any advance account,
to verify that its classification is in accordance with the prudential
norms of RBI. Further, we have also referred many of the reports
of the internal/regulatory inspection, concurrent auditors etc.
and evaluated the consequent impact of the observations therein
on the advance portfolio of the Bank.There is scope for further
strengthening the automation process.
|
|
Classification and Valuation of investments, identification
of and provisioning for Non-Performing investments
Investments include investments made by the Bank in various
Government Securities, Bonds, Debentures, Shares, Security
receipts and other approved securities.
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 non-performing
investments, the corresponding non-recognition of income and
provision there against.
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.
Accordingly, our audit was focused on valuation of investments,
classification, identification of non-performing investments and
provisioning related to investments.
|
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.
We evaluated and made an understanding of the Bank's internal
control mechanism to comply with relevant RBI directions
regarding valuation, classification, identification of NPIs,
provisioning/depreciation related to investments;
We also assessed and evaluated the process adopted for
collection of information from various sources like FIMMDA rates,
rates quoted on BSE/NSE etc., for determining fair value of these
investments;
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 the
security.
We also assessed and evaluated the process of identification of
NPIs and corresponding reversal of income and creation of
provision there against;
In addition to above, we also carried out substantive audit
procedures to re-compute independently the provision to be
maintained and depreciation to be provided in accordance with
the circulars and directives of the RBI. We also evaluated the
presentations of the various investment portfolio related
disclosures in terms of RBI directions.There is scope for further
strengthening the automation process.
|
|
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
The Bank is involved in a number of taxation and other disputes
for which final outcomes cannot be easily predicted and which
could potentially result in significant liabilities. The assessment
of the risks associated with the litigations is based on complex
assumptions, which require the use of judgement and such
judgement relates , primarily , to the assessment of the
uncertainties connected to the prediction of the outcome of the
proceedings and to the adequacy of the disclosures in the
financial statements. Because of the judgement required, the
materiality of such litigations and the complexity of the assessment
process, the area was considered a key matter for our audit.
|
Our audit procedure in response to this key Audit Matter included
• Assessment of the process and relevant controls
implemented to identify legal and tax litigations, and pending
administrative proceedings.
• Assessment of assumptions used in the evaluation of potential
legal and tax risks performed by the Bank considering the
legal precedence and other rulings in similar cases.
• Inquiry with the legal department regarding the status of the
most significant disputes and inspection of the key relevant
documentation.
• Analysis of opinion received from the experts where ever
available.
• Review of the adequacy of the disclosures in the notes to
the financial statements.
|
|
Key Information Technology (IT) systems used in financial
reporting process.
The Bank's operational and financial processes are largely driven
by IT systems, given the high volume of transactions handled on
a daily basis. Consequently, this area has been identified as a
Key Audit Matter, since the accuracy and efficiency of these
processes significantly depend on the Core Banking Solution
(CBS) and other supporting systems.
Our audit approach involved placing reliance on the stable and
consistent performance of the CBS and related application
software for processing transactions relating to investments,
income recognition, asset classification, and provisioning for
advances, in accordance with applicable RBI guidelines. This
reliance also extends to system-driven reconciliation and ageing
of balances under Sundry Assets and Sundry Liabilities, as well
as other associated accounts.
|
Based on our audit procedures, we have assessed the Bank's
dependence on IT systems, including the Core Banking Solution
(CBS) and other allied applications, which support the processing
of high-volume transactions and financial reporting activities.
We have evaluated the design, implementation, and operating
effectiveness of relevant IT controls, including application and
access controls, on a test check basis.We have also verified
the alignment between business rules and system-configured
logic within the applications.
Accordingly, we have placed reliance on the consistent
functioning of the CBS and related systems for transactions
pertaining to investments, income recognition, asset classification,
and provisioning for advances, in accordance with applicable
RBI guidelines. System-driven processes such as reconciliation
and ageing of balances under Sundry Assets and Sundry
Liabilities, along with other relevant accounts, have also been
relied upon based on the results of our testing.
|
5. Other Matters
A) These financial statements incorporate the relevant returns of 938 branches including 2 foreign branches audited by the other
auditors specially appointed for this purpose. These branches audited by other auditors cover 43.54% of advances, 46.27% of
deposits and 81.55% of non-performing assets as on 31stMarch 2026 and 26.30%/27.51%of revenue for the quarter ended
31st March, 2026/ for the year ended 31st March 2026. The financial statements/information of these branches have been
audited by the Statutory Branch Auditors whose reports have been furnished to us, and in our opinion in so far as it relates to
the amounts and disclosures included in respect of branches, are based solely on the report of such branch auditors.
B) In conduct of our audit, we have taken note of the unaudited returns in respect of 2455 branches cover 21.89% of advances,
46.01% of deposits and 16.30% of Non-Performing assets as on 31st March, 2026 and 17.79%/16.98% of revenue for the
quarter ended 31st March, 2026/ for the year ended 31st March 2026.
Our opinion is not modified in respect of this matter.
Information other than the Financial Statements and Auditors' Report thereon
6. The Bank's Board of Directors is responsible for the other information. The other information primarily comprises the information
included in the Management Discussion and Analysis, Director's Report, Pillar 3 Disclosures under Basel III, Leverage Ratio,
Liquidity Coverage Ratio, Corporate Governance and Shareholders Information but does not include the financial statements
and our auditor's report thereon, which is expected to be made available to us after that date.
Our opinion on thefinancial statements does not cover the other information and Pillar 3 disclosures under the Basel III disclosure
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 identified above and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge in
the audit, or otherwise appears to be materially misstated.
Based on the work we have performed on the other information obtained prior to the date of this audit report, if 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 other information, including annexures in annual report, if any, thereon, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
7. The Bank's Board of Directors is responsible with respect to the preparation of this 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 Accounting Standards issued by 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. 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 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, 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.
Auditor's Responsibilities for the Audit of the Financial Statements
8. 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 thesefinancial
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.
• Obtain an understanding of internal control relevant to the audit for expressing our opinion on whether the bank has adequate
internal financial controls with reference to financial statements and the operating effectiveness of such control.
• 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 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 financial statements, including the disclosures, and whether the
financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
9. 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 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 thefinancial statements.
10. 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.
11. 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.
12. 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.
Report on Other Legal and Regulatory Requirements
13. The Balance Sheet and the Profit and Loss Account have been drawn up in accordance with Section 29 of the Banking
Regulation Act, 1949;
14. Subject to the limitations of the audit indicated in above paragraphs and as required by the Banking Companies (Acquisition and
Transfer of Undertakings) Act, 1970, and subject also to the limitations of disclosure required therein as required by sub-section
(3) of section 30 of the Banking Regulation, 1949, 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.
15. 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 purpose of our audit have been received from branches/offices not visited
by us;
b) the Balance Sheet, the Profit and Loss Account and the 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 as per the provisions 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 Balance Sheet, the Profit and Loss Account and the Cash Flow Statement comply with the applicable
accounting standards, to the extent they are not inconsistent with the accounting policies prescribed by RBI.
16. 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 as specified in the aforesaid letter as under:
a) In our opinion, the aforesaid Financial Statements comply with the Accounting Standards issued by ICAI, to the extent they are
not inconsistent with the accounting policies prescribed by the 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) On the basis of the written representations received from the directors as on March 31, 2026, none of the directors is
disqualified as on March 31,2026 from being appointed as a director in terms of sub-section (2) of Section 164 of the Companies
Act, 2013.
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 operating effectiveness of the internal financial controls over financial reporting of the Bank is given in
Annexure A to this report. Our report expresses an unmodified opinion on the operating effectiveness of internal financial
controls over financial reporting of the Bank as at 31st March 2026.
For P S M G & ASSOCIATES For SANJAY DEEP & ASSOCIATES
Chartered Accountants Chartered Accountants
FRN 008567C FRN 015951N
(ca prabuddha GUPTA) (CA nakul MITTAL)
Partner Partner
MRN 400189 MRN 521742
UDIN: 26400189FPZINQ6943 UDIN: 26521742FNFOBM5450
FOR P V A R & ASSOCIATES For H D S G & ASSOCIATES
Chartered Accountants Chartered Accountants
FRN 005223C FRN 002871N
(CA RUCHI AGARWAL) (CA VINOD KUMAR FATEHPURIA)
Partner Partner
MRN 504134 MRN 098709
UDIN: 26504134CCXAKY4477 UDIN: 26098709DILQWS6654
|
