1.  We have audited the attached Balance Sheet of INDIAN BANK as at
 31stMarch 2011, the Profit and Loss Account and Cash Flow Statement of
 the Bank for the year ended on that date annexed thereto in which are
 incorporated the returns of (i) 20 Branches and 31 Zonal Offices
 audited by us, (ii) 1556 Branches audited by statutory branch auditors,
 and (iii) 3 foreign branches audited by local statutory auditors. The
 branches audited by us and those audited by other auditors have been
 selected by the Bank in accordance with the guidelines issued to the
 Bank by the Reserve Bank of India. Also incorporated in the Balance
 Sheet and the Profit and Loss Account are the returns of 284 branches
 and 26 other offices, which have not been subjected to audit. These
 unaudited branches account for 0.71 % of advances, 2.07 % of deposits,
 0.54 % of interest income and 1.77 % of interest expenses.
 
 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 conducted our audit in accordance with the 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 from material mis-statement. 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 the Profit and Loss Account have been drawn
 up in Form A and B respectively of the Third Schedule to the
 Banking Regulation Act, 1949.
 
 4.  As required by the Banking Companies (Acquisition and Transfer of
 Undertakings) Act, 1970 and subject to the limitations of disclosures
 required therein and the limitations of the audit indicated in Para (1)
 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.
 
 c) The returns received from the branches and offices of the Bank have
 been found adequate for the purpose of our audit.
 
 5.  In our opinion the Balance Sheet, Profit and Loss Account and Cash
 Flow Statement comply with the applicable accounting standards.
 
 6.  In our opinion, as shown by books of bank, and to the best of our
 information and according to the explanations given to us:
 
 (i) The Balance Sheet read with the notes thereon is a full and fair
 Balance Sheet containing all the necessary particulars and is properly
 drawn up so as to exhibit a true and fair view of state of affairs of
 the Bank as at 31st March 2011 in conformity with accounting principles
 generally accepted in India.
 
 (ii) The Profit and Loss Account read with the notes thereon shows a
 true balance of the Profit in conformity with accounting principles
 generally accepted in India, for the year covered by the account; and
 
 (iii) The Cash Flow Statement gives a true and fair view of the cash
 flows for the year ended on that date.
 
 Emphasis of matter
 
 Without qualifying our opinion, we draw attention to Note 9.2.2 to the
 financial statements, which describes deferment of pension and gratuity
 liability of the bank to the extent of Rs.783.42 crore pursuant to the
 exemption granted by the Reserve Bank of India to the Public Sector
 Banks from application of the provisions of Accounting Standard (AS)
 15, Employee Benefits, vide its circular no.DBOD.
 BRBC/80/21.04.018/2010-11 dt.09.02.2011 on Re- opening of Pension
 Option to Employees of Public Sector Banks and Enhancement in Gratuity
 Limits - Prudential Regulatory Treatment.
 
 For GANESAN AND COMPANY   For CHANDRAN & RAMAN     For SURI & CO
 
 Chartered Accountants     Chartered Accountants    Chartered Accountants
 
 Registration No.000859S   Registration NO.000571S  Registration 
                                                    No.004283S
 
 S SWAMINATHAN             P N RAMCHANDRAN          S SWAMINATHAN
   Partner                 Partner                  Partner
 
 (M.No. 023998)            (M.No. 013871)          (M.No. 020583)
 
 For KALYANASUNDARAM & CO  For S. MOHAN & CO       For ABP & ASSOCIATES
 
 Chartered Accountants    Chartered Accountants    Chartered Accountants
 
 Registration No.001676S  Registration N0.000608N Registration NO.315104E
 
 K. RAMESHKUMAR            V M BHUTANI            BIMAL KUMAR CHANDUKA
 
 Partner                   Partner                 Partner
 
 (M.No. 023962)           (M.No. 012457)          (M.No. 053714)
 
 Place: Chennai
 Oate : April 23, 2011