Suryoday Small Finance Bank Limited
Report on Audit of the Financial Statements
Opinion
We have audited the accompanying Financial Statements of Suryoday Small Finance Bank Limited ("the Bank"), which comprise the Balance Sheet as at March 31, 2026, the Profit and Loss Account and the Cash Flow Statement for the year then ended, and a summary of the significant 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 accompanying financial statements give the information required by the Banking Regulation Act, 1949, the Companies Act, 2013 (“the Act”), and circulars, guidelines and directions issued by the Reserve Bank of India (‘RBI’) from time to time (‘RBI Guidelines’) in the manner so required for Banking companies and give a true and fair view in conformity with the Accounting Standards prescribed under section 133 of the Act read with the Companies (Accounting Standards) Rules, 2021 and other accounting principles generally accepted in India, of the state of affairs of the Bank as at March 31, 2026; the profit for the year ended on that date; and the cash flows for the year ended on that date.
Basis for opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those SAs 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 (“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 thereunder, 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 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 for the financial year ended March 31, 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 matter described below to be the Key audit matters to be communicated in our report.
Identification and provisioning of nonperforming advances (NPA):
Total Loans and Advances (Net of Provision) as at March 31, 2026: Rs. 12,87,87,632 (in ‘000s)
Provision for NPA as at March 31, 2026: Rs.
2,13,982 (in’000s)
(Refer Schedule 9 and Schedule 17)
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Key Audit Matter
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How our audit addressed the key audit matter
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The Reserve Bank of India’s (“RBI”) guidelines on Income recognition and asset classification & Provisioning (“IRAC”) and other circulars and directives issued by the RBI from time to time, which prescribe the prudential norms for identification and classification of performing and non-performing assets (“NPA”) and the minimum provision required for such assets. The Bank is required to have a Board approved policy as per IRAC guidelines for NPA identification and classification of advances and provision thereon.
The management of the Bank relies on its automated IT systems to determine asset classification, income recognition, provisioning for advances and for compliance of applicable regulatory guidelines issued by the RBI. The management supplements its assessment
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Our audit approach included testing the design and operating effectiveness of internal controls, and substantive audit procedures in respect of income recognition, asset classification and provisioning pertaining to advances and investments. In particular:
a. We have evaluated and understood the Bank’s internal control system in adhering to the relevant RBI guidelines regarding income recognition, asset classification and provisioning pertaining to advances.
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Key Audit Matter
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How our audit addressed the key audit matter
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by availing services of experts (like independent valuers,
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b.
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We have tested key IT systems/ applications used and
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lawyers, legal experts and other professionals) to
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their design and implementation as well as operating
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determine the valuation and enforceability of security
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effectiveness of relevant controls, including involvement
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of such advances.
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of manual process and manual controls in relation to
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The Bank also makes additional provisions at higher than prescribed rates on certain identified exposures including advances in stressed sectors of the economy
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income recognition, asset classification, provisioning pertaining to advances and investments and compliances of other regulatory guidelines issued by the RBI.
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as specified under IRAC guidelines and the policy of the
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c.
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We have verified advances on a sample basis, to examine
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Bank.
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the validity of the recorded amounts, loan documentation,
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Since the identification of NPAs and Provisioning for advances require a significant level of estimation and given its significance to the overall audit, we have
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examined the statement of accounts for indicators of impairment, if any, provisions for non-performing assets, and compliance with IRAC guidelines.
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ascertained identification and provisioning for NPAs as
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d.
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We performed data analysis checks on the advance and
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a key audit matter.
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NPA dump provided by the Bank which includes borrower level NPA identification, date of NPA on the basis of days past due, checks on the asset classification etc.
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e.
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We have also reviewed the existence and effectiveness of internal mechanisms in the Bank in the areas of Internal Audit, Systems Audit, and Concurrent Audit and also relied on work done by external experts like valuers, lawyers, concurrent auditors etc. in specific areas.
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f.
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We have reviewed the report of the external auditors regarding compliance of RBI circular in respect of IRAC automation.
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g.
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Assessed the adequacy of disclosures against the relevant accounting standards and RBI requirements relating to NPAs.
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Information Technology (‘IT’) systems and controls impacting financial controls.
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Information Technology (‘IT’) systems and controls
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Our Audit procedures with respect to this matter included:
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impacting financial reporting.
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1)
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General IT controls design, observation and operation:
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The Bank’s IT architecture to process key financial accounting and reporting is complex involving number of independent and interdependent IT systems used in the operations of the Bank, and IT controls to process significant transactions volumes at numerous locations.
As such there is high reliability on IT systems, appropriate IT general controls and application controls are required to ensure that such IT systems are able to process the data, as required, completely, accurately
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2)
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• Obtain an understanding of the IT infrastructure and IT systems.
• Testing the sample of key controls operating over the information technology in relation to financial accounting and reporting systems, including system access, system change management and computer operations.
User access controls operation:
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and consistently for reliable financial reporting..
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• Reviewed processes followed by the management in
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The IT systems and controls, as they impact the financial recording and reporting of transactions, is a key audit
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respect of access rights granted to applicants relevant to financial accounting and reporting systems.
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matter.
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• Assessing the operating effectiveness of controls
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over granting, removal and appropriateness of access rights. Other areas that were assessed under the IT control environment, included password and security related policies were also part of our audit procedures.
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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 Board of Directors either intend to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Bank's financial reporting process.
Auditors' 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:
a. 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.
b. 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 Companies Act, 2013, we are also responsible for expressing our opinion on whether the bank has adequate internal financial controls system in place and the operating effectiveness of such controls.
Information other than financial statements and auditors' report thereon
The Bank’s Board of Directors is responsible for the other information. The Other Information comprises the information included in the Director’s Report including annexures to the Director’s report and Annual Report but does not include the Financial Statements and our Auditors’ Report thereon. The Director’s Report and Annual Report is expected to be made available to us after the date of this auditor’s 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 identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. if, based on the work we have performed, we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take appropriate action as applicable under the relevant laws and regulations.
When we read the Director’s Report and Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance under SA 720 ‘The Auditor’s responsibilities Relating to Other Information’.
Responsibilities of management and those charged with governance for the financial statements
The Bank's Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("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 cashflows of the Bank in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with the Companies (Accounting Standards) Rules, 2021 and other accounting principles generally accepted in India and provisions of Section 29 of the Banking Regulation Act, 1949 and circulars guidelines, and directions 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 and the RBI guidelines 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
c. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
d. 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.
e. 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.
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 year 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 matter
The financial statements for the year ended March 31, 2025 were audited by one of the joint auditors M/s Mukund M Chitale & Co, Chartered Accountants whose
reports dated May 08, 2025, expressed an unmodified audit opinion on such financial statements. These reports have been relied upon by us for the purpose of the audit of the Statement.
Our opinion is not modified in respect of this matter.
Report on other legal and regulatory requirements
1. The Balance Sheet and the Profit and Loss Account have been drawn up in accordance with the provision of Section 29 of the Banking Regulation Act, 1949 read with Section 133 of the Act and the relevant rules issued thereunder.
2. As required by sub-section (3) of section 30 of the Banking Regulation Act, 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 purpose of our audit and have found them to be satisfactory.
b. The transactions of the Bank, which have come to our notice while our audit, have been within the powers of the Bank.
c. Since the key operations of the Bank are automated with the key applications integrated into the core banking systems, the audit is carried out centrally, as all the necessary records and data required for the purposes of our audit are available therein. Therefore, no separate returns are being received from the branches. During our audit we have visited 20 branches to examine the books of account and other records maintained at the branches and performed relevant audit procedures.
3. Further, 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 purpose of our audit;
b. in our opinion, proper books of account as required by law have been kept by the Bank so far as appears from our examination of those books;
c. the Balance Sheet, the Profit and Loss Account and the Statement of Cash Flows dealt with by this report are in agreement with the books of account;
d. in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act read with the Companies (Accounting Standards) Rules, 2021 and read with relevant rules issued thereunder, to the extent they are not inconsistent with the accounting policies prescribed by RBI;
e. on the basis of written representation received from the directors as on March 31, 2026 and taken on record by the Board of Directors, none of the directors are disqualified as on March 31, 2026 from being appointed as director in terms of Section 164(2) of the Companies Act, 2013;
f. with respect to the adequacy of the internal financial controls with reference to financial statements of the Bank and the operating effectiveness of such controls, refer to our separate Report in "Annexure A"; Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Bank’s internal financial controls with reference to financial statements.
g. 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, in our opinion and to the best of our information and according to the explanations given to us;
i. the Bank has disclosed the impact of pending litigations on its financial position in its Financial Statements - Refer Note 20 of Schedule 18 to the financial statements;
ii. The Bank has no long term contracts including derivative contracts during the financial year.
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Bank during the year ended March 31, 2026.
iv. In respect of Rule 11(e) of the Companies
(Audit and Auditors) Rules, 2014,
1. The management has represented that, to the best of its knowledge and belief, 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 persons or entities, 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.
2. The management has represented, that, to the best of its knowledge and belief, no funds have been received by the Bank from any persons or entities, 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
3. Based on such audit procedures that were considered reasonable and appropriate by us 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. The Board of Directors of the Company have proposed 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 and RBI directions, as applicable.
vi. In respect of Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014, based on our examination which included test checks, the Bank has used an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same
has operated throughout the year for all relevant transactions recorded in the software. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with. Additionally, the audit trail has been preserved by the Company as per the statutory requirement for record retention.
h. With respect to the other matter 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 entity being a Banking company, section 197 of the Act related to the managerial remuneration is not applicable by virtue of Section 35B(2A) of the Banking Regulation Act, 1949.
For Mukund M. Chitale & Co For Gokhale & Sathe
Chartered Accountants Chartered Accountants
Firm Registration No: 106655W Firm Registration No: 103264W
Nilesh Joshi Rahul Joglekar
Partner Partner
Membership No. 114749 Membership No. 129389
UDIN: 26114749LCAGUM9970 UDIN : 26129389HRCODX8213
Place: Navi Mumbai Place: Navi Mumbai
Date: May 07, 2026 Date: May 07, 2026
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