1.  We have audited the accompanying financia statements of Canara Bank
 as at 31st March 2011, which comprise the Balance Sheet as at 31st
 March 2011, Profit & Loss Account and the Cash Flow Statement for the
 year then ended, significant Accounting Policies and other explanatory
 information. Incorporated in these financia statements are the returns
 of 20 branches audited by us, 2716 branches audited by Branch Auditors
 and 4 foreign branches audited by local auditors. The Branches audited
 by us and those audited by other auditors have been selected bythe Bank
 in accordance with the guidelines issued by the Reserve Bank of india.
 Also incorporated in the Balance Sheet and the statement of Profit &
 Loss are the returns from 521 Branches, which have not been subjected
 to audit.  These unaudited branches account for 0.37 per cent of
 advances, 1.61 per cent of deposits, 0.16 per cent of interest income
 and 1.20 per cent of interest expenses.
 
 Managements Responsibility for the Financial Statements:
 
 2.  Management is responsible for the preparation of these financial
 statements in accordance with the Banking Regulation Act, 1949. This
 responsibility includes the design, implementation and maintenance of
 internal control relevant to the preparation of the financia I
 statements that a re free from material misstatement, whether due to
 fraud or error.
 
 Auditors Responsibility:
 
 3.  Our responsibility is to express an opinion on these Financial
 Statements based on our audit. We conducted our audit in accordance
 with the Standards on auditing issued by the Institute of Chartered
 Accountants of India. Those Standards requirethatwe comply with ethical
 requirementsand plan and perform the audit to obtain reasonable
 assurance about whether the financial statements arefreefrom material
 misstatement.
 
 4.  An audit involves performing procedures to obtain audit evidence
 about the amounts and disclosures in the financial statements. The
 procedures selected depend on the auditors judgment, including the
 assessment of the risks of material misstatement of the financial
 statements, whether due to fraud or error. In making those risk
 assessments, the auditor considers internal control relevant to the
 banks preparation and fair presentation of the financia statements in
 order to design audit procedures that are appropriate in the
 circumstances. An audit also includes evaluating the appropriateness of
 accounting policies used and the reasonableness of the accounting
 estimates made by the management, as well as evaluating the overall
 presentation of the financial statements
 
 5.  We believe that the audit evidence we have obtained is sufficient
 and appropriate to provide a basis for our auditopinion.
 
 Emphasis of Matter:
 
 6.  Without qualifying our opinion, we draw attention to Note No.5.3 to
 the Schedule 18 of the financia statements, which describes deferment
 of pension and gratuity liability of the Bank to the extent of
 Rs.2026.48 Crore pursuant to the exemption granted bythe Reserve Bankof
 India to the Public Sector Banks from the application of the provisions
 of Accounting Standard (AS) 15, Employee Benefits, vide its circular
 No. DBOD. BP. BC/80/21.04.018/2010-11 dated 09.02.2011 on Re-opening of
 Pension Option to Employees of Public Sector Banks and Enhancement in
 Gratuity Limits-Prudential Regulatory Treatment.
 
 Opinion:
 
 7.  In our opinion, as shown bythe books of the bank, and to the best
 of our information and according to the explanations given to us:
 
 (i) the Balance Sheet read together with the Accounting Policies and
 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 March 31, 2011, in
 conformity with the accounting principles generally accepted in India;
 
 (ii) the Profit & Loss Account read together with the Accounting
 Policies and Notes thereon shows a true balance of profit, in
 conformity with the accounting principles generally accepted in India,
 fortheyearcovered bythe account; and
 
 (iii) the Cash Flow Statement gives a true and fair view of the cash
 flows for the year ended on that date.
 
 Report on Other Legal and Regulatory Requirements:
 
 8.  The Balance Sheet and the Profit &t Loss Account have been drawn up
 in Forms A a nd B respectively of the Third Schedule to the Ban
 king Regulations Act, 1949.
 
 9.  Subject to the limitations of the audit indicated in paragraph lto
 5 above and as required by the Banking Companies (Acquisition and
 Transfer of Undertakings) Act, 1970, and subject also to the
 limitations of disclosure required therein, we reportthat:
 
 a.  We have obtained all the information and explanations, which to the
 best of our knowledge and belief, were necessaryforthe purposes of our
 auditand havefoundthemto be satisfactory.
 
 b.  The transactions of the Bank, which have come to our notice, have
 been within the powers of the Bank.
 
 c.  The returns received from the Offices and Branches of the Bank have
 been found adequate forthe purposes of ouraudit.
 
 10.  In our opinion, the Balance Sheet, Profit & Loss Account and Cash
 Flow Statement comply with the applicable Accounting Standards.
 
 For S Bhandari & Co.                   For Manubhai &Co.
 
 Chartered Accountants                  Chartered Accountants
 
 Firm Registration No.000560C           Firm Registration No,106041W
 
 SS Bhandari                            Hitesh M Pomal
 
 Partner                                Partner
 
 Membership No.011332                   Membership No. 106137
 
 For R K Kumar & Co.                    For Nandy Haider & Ganguli
 
 Chartered Accountants                  Chartered Accountants
 
 Firm Registration No.001595S           Firm Registration No.302017E
 
 C RSundararajan                        Partha S Chanda
 
 Partner                                Partner
 
 Membership No.025400                   Membership No.056653
 
 For H KChaudhry &Co.                   For K. Venkatachalam Aiyer &Co.
 
 Chartered Accountants                  Chartered Accountants
 
 Firm Registration No.006154N           Firm Registration No.004610S
 
 Monish Baweja                          K Narayanan
 
 Partner                                Partner
 
 Membership No.087384                   Membership No.007024
 
 BANGALORE
 MAY 05, 2011