We have audited the accompanying financial statements
of Ujjivan Small Finance Bank Limited (the "Bank”), which
comprise the Balance Sheet as at March 31, 2026, Profit and
Loss account and the Cash Flow Statement for the year ended
on that date, and notes to the financial statements including
a summary of the significant accounting policies and other
explanatory information ("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 Banking
Regulation Act, 1949 and the Companies Act, 2013 (the "Act”)
and the circulars, guidelines and directions issued by the
Reserve Bank of India (the 'RBI') from time to time (the 'RBI
guidelines'), in the manner so required 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 as applicable to banks and
other accounting principles generally accepted in India, of the
state of affairs of the Bank as at March 31, 2026, its profit 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 ("SA”s) specified
under section 143(10) of the Act. Our responsibilities under
those Standards are further described in the Auditor's
Responsibility 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 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.
We have determined the matters described below to be the
key audit matters to be communicated in our report.
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Sl. No. Key Audit Matter
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Auditor's Response
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1 Identification of Non-Performing Advances and
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Our audit approach in relation to the key audit matter,
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Provisioning for Advances
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included testing the design, operating effectiveness of
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(Refer Schedule 9 read with Note 18.4 to the financial
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internal controls and substantive audit procedures in respect
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statements)
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of income recognition, asset classification and provisioning
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Advances constitute a significant portion of the Bank's
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pertaining to advances. In particular:
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assets, and the quality of these advances is measured in
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• We have evaluated the Bank's policies and internal
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terms of ratio of Non-Performing Advances ("NPA”) to the
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control system in adhering to the relevant RBI guidelines
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gross advances of the Bank. The Bank has gross advances
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and understood the provisioning as per Bank's policy;
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amounting to H 40,50,682 Lakh (Previous Year H 31,93,346
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• We have analysed and understood key IT systems/
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Lakh) and the gross NPA ratio of Bank is 2.26% (Previous
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applications used and tested the design and
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Year 2.18%) as at March 31,2026.
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implementation as well as operational effectiveness of
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The Reserve Bank of India's ('RBI') Directions on Income
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relevant controls, including manual process and controls
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Recognition, Asset Classification and Provisioning
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in relation to income recognition, asset classification,
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('IRAC norms') and other RBI guidelines (herein after
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viz., standard, sub-standard, doubtful and loss with
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referred as "RBI guidelines”) prescribes the norms
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reference to relevant RBI guidelines and provisioning
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for identification and classification of NPAs and the
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pertaining to advances;
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minimum provision required for such assets.
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• We have performed walkthrough of the NPA automation
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The Bank is also required to apply its judgement to
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process and tested the core functionality for selected
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determine the identification and provisioning for NPAs
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sample and tested the identification of NPA and
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by applying quantitative as well as qualitative factors.
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computation of provisions;
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Since the identification of NPAs and provisioning for
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• We test checked advances to examine the validity and
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advances is significant to the overall audit, we have
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accuracy of the recorded amounts with the underlying
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ascertained this as a key audit matter.
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documents, impairment provision for NPAs, and
compliance with IRAC norms and other RBI Guidelines.
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Sl. No. Key Audit Matter
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Auditor's Response
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2 Key Information technology (IT) systems used in
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We involved our IT specialists to obtain an understanding of
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financial reporting process
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the Bank's IT related control environment. Furthermore, we
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As a Small Finance Bank that operates on core banking
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conducted an assessment and identified key IT applications,
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solutions ("CBS”) and other applications across its
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databases and operating systems that are relevant for our
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branches, the reliability and security of IT systems plays
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audit. For the key IT systems used to prepare accounting and
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a key role in the business operations. Since large volume
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financial information, our areas of audit focus included access
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of transactions are processed daily, the IT controls are
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security (including controls over privileged access), program
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required to ensure that applications process data as
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change controls, database management and network
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expected and that changes are made in an appropriate
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operations. In particular, our procedures include:
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manner.
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• We obtained an understanding of the Bank's IT control
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The IT infrastructure is critical for smooth functioning of
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environment and key changes during the audit period that
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the Bank's business operations as well as for timely and
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may be relevant to the audit;
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accurate financial accounting and reporting.
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• We tested the design, implementation and operating
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Due to the pervasive nature and complexity of the IT
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effectiveness of the Bank's General IT controls over the
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environment we have ascertained Key Information
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key IT systems that are critical to financial reporting.
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Technology ("IT”) systems used in financial reporting
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This included evaluation of Bank's controls to evaluate
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process as a key audit matter.
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segregation of duties and access rights being provisioned
/ modified based on duly approved requests, access for
exit cases being revoked in a timely manner and access of
all users being recertified during the period of audit;
• We also tested key automated business cycle controls
and logic for system generated reports relevant
to the audit; and
• We also tested compensating controls and performed
alternate procedures to assess whether there were any
unaddressed IT risks that would materially impact the
financial statements.
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Information Other than the Financial Statements
and Auditor's Report Thereon
• The Bank's Board of Directors is responsible for the
other information. The other information comprises the
Director's Report including annexures to the Director's
report and the Disclosures under New Capital Adequacy
Framework of the Reserve Bank of India included in
the Annual report but does not include the financial
statements and our auditor's report thereon.
• Our opinion on the financial statements does not cover
the other information and above Disclosures available in
the website of the Bank 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.
• 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 to take appropriate action as applicable
under the relevant laws and regulations. We have nothing
to report in this regard.
Responsibilities of Management and Board of Directors for
the Financial Statements
The Financial Statements have been approved by the
Bank's Board of Directors. 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 Standards specified under section 133 of the
Act, read with the Companies (Accounting Standards) Rules,
2021 as applicable to banks, and other accounting principles
generally accepted in India, and provisions of Section 29 of
the Banking Regulation Act, 1949 and the circulars, guidelines
and directions issued by the Reserve Bank of India from
time to time ("RBI Guidelines”) as applicable to the Bank.
This responsibility also includes maintenance of adequate
accounting records in accordance with the provisions of the Act
and RBI Guidelines for safeguarding 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; selection of the appropriate accounting software for
ensuring compliance with applicable laws and regulations; 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 and Board
of Directors are 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 the Board of Directors either intend to
liquidate the Bank or to cease operations, or has no realistic
alternative but to do so.
The Bank's Board of Directors is also responsible for overseeing
the Bank's financial reporting process.
Auditor's Responsibility 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.
• Obtain an understanding of internal financial controls
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 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 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.
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 financial controls 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.
Report on Other Legal and Regulatory Requirements
1. In our opinion, the Balance Sheet and the Profit and Loss
Account have been drawn up in accordance with the
provisions of section 29 of the Banking Regulation Act,
1949 and section 133 of the Act and the relevant rules
issued thereunder.
2. As required by Section 143(3) of the Act and Section 30(3)
of the Banking regulation Act, 1949, based on our audit,
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, the transactions of the Bank which
have come to our notice have been within the
powers of the bank.
c) As explained in the paragraph 3 below, the financial
accounting system of the Bank are centralised and,
therefore, accounting returns are not required to be
submitted by branches.
d) 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.
e) 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.
f) In our opinion, the aforesaid financial statements
comply with the Accounting Standards specified
under Section 133 of the Act read with relevant
Rules issued thereunder, to the extent they are
not inconsistent with the accounting policies
prescribed by the RBI.
g) On the basis of the written representations received
from the directors taken on record by the Board of
Directors, none of the directors is disqualified as on
March 31,2026 from being appointed as a director in
terms of Section 164(2) of the Act.
h) 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.
i) 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 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.
j) 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 Bank has disclosed the impact of pending
litigations, as at March 31, 2026 on its financial
position in its financial statements - Refer
Schedule 12 to the financial statements;
ii) The Bank did not have any long-term contracts
including derivative contracts for which there
were any material foreseeable losses.
iii) There has been no delay in transferring
amounts, required to be transferred, to
the Investor Education and Protection
Fund by the Bank.
iv) (a) The Management has represented that,
to the best of its knowledge and belief,
other than as disclosed in the note
18(30) 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, 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 18(30)
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,
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.
(c) Based on the audit procedures performed
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) The Bank has not declared or paid any dividend
during the year and has not proposed any final
dividend for the year.
vi) Based on our examination, which included
test checks, the Bank has used accounting
software systems for maintaining its books
of account for the financial year ended March
31, 2026 which have the 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 the audit
trail feature being tampered with and the
audit trail has been preserved by the Bank
as per the statutory requirements for record
retention, since enabled.
3. We report that during the course of our audit we have
visited and performed select relevant procedures at 37
branches. Since the Bank considers its key operations
to be automated, with the key applications largely
integrated to the Core Banking System, it does not require
its branches to submit any financial returns. Accordingly,
our audit is carried out centrally at Head Office based on
the records and data required for the purpose of Audit
being made available to us.
For Deloitte Haskins & Sells For Abarna & Ananthan
Chartered Accountants Chartered Accountants
(Firm Registration No. 117365W) (Firm Registration No. 000003S)
G. K. Subramaniam R. Natarajan
Partner Partner
Membership No. 109839 Membership No. 035898
UDIN: 26109839LPPYBU8448 UDIN: 26035898XMDMLP6569
Place: Bengaluru Place: Bengaluru
Date: May 8, 2026 Date: May 8, 2026
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