Federal Bank

1.  We have audited the attached Balance Sheet of THE FEDERAL BANK
 LIMITED, Aluva as at 31 st March 2009 and also the Profit and Loss
 Account of the Bank and the Cash Flow Statement annexed thereto for the
 year ended on that date in which are incorporated the returns of 16
 branches/offices audited by us and 610 branches/offices audited by
 other auditors. These financial statements are the responsibility of
 the Banks management. Our responsibility is to express an opinion on
 these financial statements based on our audit.
 
 2.  We have conducted our audit in accordance with auditing standards
 generally accepted in India.  Those standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatement. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by the management, as well as evaluating the overall financial
 statement presentation. We believe that our audit provides a reasonable
 basis for our opinion.
 
 3.  The Balance Sheet and Profit and Loss Account have been drawn up in
 accordance with the provisions of section 29 of the Banking Regulations
 Act, 1949, read with section 211 of the Companies Act, 1956.
 
 4.  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) In our opinion, 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 for the purpose of our audit;
 
 d) In our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement comply with the Accounting Standards referred
 to in sub-section (3C) of section 211 of the Companies Act, 1956;
 
 e) The Banks Balance Sheet and Profit and Loss Account dealt with by
 this report, are in agreement with the books of account and the
 returns;
 
 f) 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;
 
 g) The reports on the accounts of the branches audited by branch
 auditors have been dealt with in preparing our report in the manner
 considered necessary by us;
 
 h) As per information and explanation given to us the Central
 Government has, till date, not prescribed any cess payable under
 Section 441A of the Companies Act, 1956;
 
 i) On the basis of written representation received from the directors,
 as on 31st March 2009 and taken on record by the Board of Directors,
 none of the directors is disqualified as on 31 st March 2009 from being
 appointed as a director in terms of clause (g) of sub-section (1) of
 section 274 of the Companies Act, 1956.
 
 Auditors Report
 
 5. In our opinion and to the best of our information and according \o
 the explanations given to us, the said accounts read with the
 Accounting policies followed by the Bank and the notes thereon, give
 the information required by the Banking Regulation Act, 1949 as well as
 the Companies Act, 1956, in the manner so required for the banking
 companies and give a true and fair view in conformity with the
 accounting principles generally accepted in India:
 
 i) in the case of the Balance Sheet, of the state of affairs of the
 Bank as at 31 st March 2009; ii) in the case of the Profit and Loss
 Account, of the profit of the Bank for the year ended on that
 
 date; and iii) in the case of the Cash Flow Statement, of the cash
 flows of the Bank for the year ended on that date.
 
                 For Varma and Varma     For Price Patt & Co.,
                 Chartered Accountants   Chartered Accountants
                 Venugopal C. Govind         M. Naganathan
                   Membership No. 7230     Membership No. 7547
 
 Place: Kochi
 
 Date: 22nd May, 2009