1. We have audited the accompanying financial
statements of M/s. Tamilnad Mercantile Bank
Limited ("the Bank"), which comprise the Balance
Sheet as at March 31, 2025, the Profit and Loss
Account and the Statement of Cash Flows for the
year then ended, and notes to financial statements
including a summary of significant accounting
policies and other explanatory information (the
"financial statements")in which are included the
returns for the year ended on that date, of

i) Top 24 branches, Head Office, Integrated
Treasury and International Banking Division
audited by us and

ii) 554 branches audited by Statutory Branch
Auditors located across India.

2. In our opinion and to the best of our information
and according to the explanations given to us,
and based on the consideration of the reports
of the Statutory Branch Auditors as referred to
in paragraph 20 below, the aforesaid financial
statements, read with notes thereon, give the
information required by the Banking Regulation Act,
1949 as well as the Companies Act, 2013 ("the Act"),
as amended, and circulars and guidelines issued
by the Reserve Bank of India ("RBI"), in the manner
so required for banking companies, give a true and
fair view and are in conformity with the accounting
principles generally accepted in India including the
Accounting Standards prescribed under Section
133 of the Act read with Companies (Accounting
Standards) Rules, 2021, of the state of affairs of the
Bank as at March 31, 2025, its profit, and its cash
flows for the year ended on that date.

Basis for Opinion

3. 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 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 in accordance
with the accounting principles generally accepted
in India, including the Accounting Standards
prescribed under Section 133 of the Act read with
Companies (Accounting Standards) Rules, 2021,
provisions of Section 29 of the Banking Regulation
Act, 1949, circulars and guidelines issued by 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 and that
obtained by the Statutory Branch Auditors, in terms
of their reports referred in paragraph 20 is sufficient
and appropriate to provide a basis for our opinion.

Key Audit Matters

4. Key audit matters are those matters that, in
our professional judgment, and based on the
consideration of the reports of the Statutory Branch
Auditors as referred to paragraph 20 below, were
of most significance in our audit of the financial
statements for the financial year ended March 31,
2025. 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.

5. We have determined the matters described below
to be the key audit matters to be communicated
in our report. We have fulfilled the responsibilities
described in the Auditor's responsibilities for the
audit of the financial statements section of our
report, including in relation to these matters.
Accordingly, our audit included the performance of
procedures designed to respond to our assessment
of the risks of material misstatement of the financial
statements. The results of our audit procedures,
including the procedures performed to address
the matters below, provide the basis for our audit
opinion on the accompanying financial statements.

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 comprises
the Corporate Overview, Directors' Report including
annexures to Directors' Report, Management
Discussion and Analysis, Basel III - Pillar 3 disclosures
and Corporate Governance report included in the
Annual Report but does not include the financial
statements and our auditor's report thereon. The
other information is expected to be made available
to us after the date of this auditor's report.

7. Our opinion on the financial statements does not
cover the other information and we do not express
any form of assurance / conclusion thereon.

8. In connection with our audit of the financial
statements, our responsibility is to read the other
information identified above when it becomes
available and, in doing so, consider whether
such other information is materially inconsistent
with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be
materially misstated.

9. When we read the other information, if we conclude
that there is a material misstatement therein, we
are required to communicate the matter to those
charged with governance.

We have nothing to report in this regard.

Responsibilities of Management and Those
Charged with Governance for the Financial
Statements

10. The Bank'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 and cash
flows of the Bank in accordance with the accounting
principles generally accepted in India, including the
Accounting Standards prescribed under Section
133 of the Act read with Companies (Accounting
Standards) Rules, 2021 in so far as they apply to the
Bank and provisions of Section 29 of the Banking
Regulation Act, 1949 and circulars and guidelines
issued by the 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 the 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.

11. In preparing the financial statements, the Board
of Directors 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.

12. The Board of Directors are also responsible for
overseeing the Bank's financial reporting process.

Auditor's Responsibilities for the Audit of the
Financial Statements

13. 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.

14. 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 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 Bank has adequate
internal financial controls system 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 in
the financial statements 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.

• Obtain sufficient appropriate audit evidence
regarding the financial information of the
Bank to express an opinion on the financial
statements. We are responsible for the
direction, supervision and performance of the
audit of the financial information of the Bank
and such branches included in the financial
statements, of which we are the independent
auditors. For the other branches included in
the financial statements, which have been
audited by Statutory Branch Auditors, such
branch auditors remain responsible for the
direction, supervision and performance of the
audits carried out by them. We remain solely
responsible for our audit opinion.

15. Materiality is the magnitude of the misstatements
in the financial statements that, individually or
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 of the scope of our audit work
and evaluating the results of our work; and (ii) to
evaluate the effect of any identified misstatement
in the financial statements.

16. 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.

17. 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.

18. 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 for the financial year
ended March 31, 2025 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.

Emphasis of Matter

19. We draw attention to Note No. 14(j) of Schedule
18 - Pending disposal of the appeal before the
Appellate Tribunal, the Bank has pre-deposited
penalty of Rs. 16.99 Crores on December 16, 2022,
relating to alleged irregularity under FEMA in respect
of transfer of shares, during the years 2007, 2011
& 2012. The Bank has also pre-deposited Penalty
amount of Rs.45 Lakhs, on May 25, 2024, being 20%
of Rs.225 Lakhs, levied by Directorate of Enforcement
for alleged FEMA Violation against 11 persons who
were directors / Company Secretary of the Bank at
the time of transfer of above shares and is shown
as Contingent Liabilities. Further, the bank has also
provided a sum of Rs.2 lakhs on the basis of legal
opinion towards penalty in respect of show-cause
notice from Directorate of Enforcement, for the issue
of Bonus Shares to the above-said transferees.

Our opinion is not modified in respect of
the above matter.

Other Matters

20. The Statement incorporates the relevant Financial
Statements / information of 554 branches audited
by Statutory Branch Auditors of respective branch
appointed by the Bank for this purpose whose
Financial Statement / information reflect total assets
of Rs. 52,115 Crores as at March 31, 2025 and the total
revenue of Rs. 3,886 Crores for the year ended on that
date, as considered in the Financial Statements. These
branches cover 84.47% of Advances, 75.40% of Deposits
and 52.58% of Non-Performing assets as at March 31,
2025, and 63.27% of revenue for the year ended March
31, 2025. The Financial Statements / information of these
branches have been audited by the Statutory 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 solely
based on the report of such branch auditors.

21. Our opinion on the financial statements, and our
report on other legal and regulatory requirements
below, are not modified in respect of the above
matters with respect to our reliance on the work done
by and the reports of the statutory branch auditors.

22. The comparative figures for the financial year
ended March 31, 2024, provided in the Financial
Statements including the disclosures were audited
by predecessor, Joint Statutory Central Auditors
of the bank, who have expressed an unmodified
opinion on the Financial Statements on April 22, 2024.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory
Requirements

23. The Balance Sheet and the Profit and Loss Account
have been drawn up in accordance with Section 29
of the Banking Regulation Act, 1949 and Accounting
Standards as per section 133 of the Act read with
Companies (Accounting Standards) Rules, 2021.

24. As required by sub-section (3) of section 30 of the
Banking Regulation Act, 1949 and communication
received by the Bank from Reserve Bank of India, and
on the consideration of the reports of the Statutory
Branch Auditors as referred in paragraph 20 above,
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 to be
adequate for the purpose of our audit.

d) The Profit and Loss account shows a true
balance of profit for the year then ended.

With respect to the matter to be included in the
auditor's report under section 197(16) of the Act, we

report that since the Bank is a banking company,
as defined under the Banking Regulation Act, 1949;
the reporting under section 197(16) in relation to
whether the remuneration paid by the Bank is in
accordance with the provisions of section 197 of the
Act and whether any excess remuneration has been
paid in accordance with the aforesaid section is
not applicable.

25. Being a Banking Company, the Companies (Auditor's
Report) Order, 2020 issued by the Central Government
of India in terms of the powers conferred by subsection
(11) of Section 143 of the Act, is not applicable.

26. As required by Section 143(3) of the Act, based on
our audit and on the consideration of the reports
of the statutory branch auditors as referred to in
paragraph 20 above, we further report to the extent
applicable 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 purpose of our audit.

(b) In our opinion, proper books of accounts 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
the branches not visited by us.

(c) The reports on the accounts of the branch
offices of the Bank audited under section 143(8)
of the Act by the Statutory Branch Auditors of
the Bank have been sent to us and have been
properly dealt with by us in preparing this report.

(d) The Balance Sheet, 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 audited returns from the branches.

(e) In our opinion, the aforesaid financial statements
comply with the Accounting Standards
specified under Section 133 of the Act read with
Companies (Accounting Standards) Rules, 2021
to the extent they are not consistent with the
policies prescribed by the RBI.

(f) On the basis of the written representation received
from the directors and taken on record by the Board
of Directors, none of the directors is disqualified

as on March 31, 2025 from being appointed as a
director in terms of section 164(2) of the Act.

(g) With respect to the adequacy of Internal
Financial Controls with reference to the financial
statements of the Bank and the operating
effectiveness of such controls, our separate
report in Annexure A is attached.

(h) The entity being a banking company as
defined under Banking Regulation Act, 1949,
the remuneration to its directors during the
year ended March 31, 2025 has been paid /
provided by the Bank in accordance with the
provisions of Section 35B(1) of the Banking
Regulation Act, 1949.

(i) With respect to the other matters to be included
in the Auditors 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 knowledge and belief and according to
the information and explanation given to us:

i. The Bank has disclosed the impact of
pending litigations on its financial position
in Schedule 12, Note 14(j) of Schedule 18 of
the financial statements;

ii. The Bank has made provision as required
under the applicable law or accounting
standards, for material foreseeable losses,
if any, on long term contracts including
derivative contracts as detailed in
Schedule 12 and Note 7 of Schedule 18 to
the financial statements and;

iii. There has been delay in transferring
amounts, required to be transferred, to the
Investor Education and Protection Fund by
the Bank and the details are disclosed in its
financial statements - Refer Note No. 14(k)
of Schedule 18 to the financial statements.

iv. a) The management has represented

that, to the best of its knowledge
and belief, other than as disclosed
in the Note 15 of Schedule 18 to the
financial statements, no funds have
been advanced or loaned or invested
(either from borrowed funds or share
premium or any other sources or kind

of funds) by the Bank to or in any other
person(s) or entity(ies), including
foreign entities ("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 Bank
("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, other than as disclosed
in the Note 15 of Schedule 18 to the
financial statements, no funds have
been received by the Bank from any
person(s) or entity(ies), including
foreign entities ("Funding Parties"), with
the understanding, whether recorded
in writing or otherwise, that the Bank
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 such audit procedures that were
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 (a) and (b) contain any
material misstatement.

v. As stated in note 1.b of Schedule 18
and as disclosed in Profit and Loss
Account under 'Appropriations' to the
Financial Statements:

(a) The final dividend proposed in the
previous year, declared, and paid
by the Bank during the year is in
accordance with Section 123 of the
Act, as applicable.

(b) The Bank did not pay any interim
dividend during the year.

(c) The Board of Directors of the Bank
have proposed final dividend for the
year which is subject to the approval
of the members at the ensuing Annual
General Meeting. The amount of
dividend proposed is in accordance
with section 123 of the Act, as applicable,
until the date of this report.

vi. Reporting under Rule 11(g) of the
Companies (Audit and Auditors) Rules, 2014
is applicable from 01 April 2023.

Based on our examination which included
test checks the Company has used multiple

accounting software for maintaining its
books of account, which has a feature
of recording audit trail (edit log) and the
same has operated throughout the year
for all relevant transactions recorded in
the respective software.

Further, for the periods where audit
trail (edit log) facility was enabled and
operated throughout the year for the
respective accounting software, we did not
come across any instance of the audit trail
feature being tampered with. Additionally,
the audit trail has been preserved
by the company as per the statutory
requirements for record retention.

For Sundaram & Srinivasan, For Chandran & Raman,

Chartered Accountants Chartered Accountants

FRN: 004207S FRN: 000571S

S Ramkumar S G Kalyanaraman

Partner Partner

M. No.: 238820 M. No.: 010652

UDIN: 25238820BMKNFP3556 UDIN:25010652BMIBLE9818

Place: Thoothukudi Place: Thoothukudi

Date: April 23, 2025 Date: April 23, 2025