1.  We have audited the attached Balance Sheet of Indian Overseas Bank
 as at 31st March 2011, the Profit and Loss Account and Cash Flows
 Statement of the Bank for the year ended 31st March 2011 annexed
 thereto in which are incorporated the returns of 20 branches and 43
 Regional Offices audited by us and 1786 branches including 6 Overseas
 Branches audited by other auditors. The branches audited by us and
 those audited by other auditors have been selected by the Bank in
 accordance with the guidelines issued by Reserve Bank of India. Also
 incorporated in the Balance Sheet and Profit & Loss Account are the
 returns from 407 branches / centres which have not been subjected to
 audit. These unaudited branches account for 0.58 % of advances, 2.98 %
 of deposits, 1.62 % of interest income and 1.34% of interest expenses.
 These financial statements are the responsibility of the Banks
 Management. Our responsibility is to express an opinion 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 of material mis-statements.  An audit
 includes examination on a test basis, evidence supporting the amounts
 and disclosure 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
 statements 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 Forms A and B respectively of the Third Schedule to the
 Banking Regulation Act, 1949.
 
 4.  The additional disclosures made in Note No.  4.2, 5, 6 and 7 to the
 Notes on Accounts (Schedule 18) with regard to information in respect
 of Restructured Accounts, Business Ratios, Maturity Pattern of Assets
 and Liabilities and Exposure to Sensitive Sectors,
 
 respectively are based on the records/information as certified by the
 Bank and relied upon by us.
 
 5.  As required by the Banking Companies (Acquisition and Transfer of
 Undertakings) Act 1970 and subject to the limitation of the audit
 indicated in Paragraph 1 above and also to the limitation of disclosure
 required therein we report as under:
 
 a) In our opinion and to the best of our information and according to
 the explanations given to us and as shown by the books of the Bank
 maintained in accordance with generally accepted Accounting Principles
 in India.
 
 i) The Balance Sheet is a full and fair Balance Sheet containing the
 necessary particulars, and is properly drawn up so as to exhibit a true
 and fair view of the affairs of the Bank as at 31st March 2011;
 
 ii) The Profit and Loss Account shows a true balance of Profit for the
 year ended 31st March 2011 and
 
 iii) The Cash Flows Statement gives a true and fair view of the cash
 flow for the year ended 31st March 2011.
 
 b) 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 the same to be satisfactory.
 
 c) The transactions of the Bank, which have come to our notice have
 been within the powers of the Bank.
 
 d) The returns received from the offices and branches of the Bank have
 been found adequate for the purpose of our audit.
 
 6.  Without qualifying our opinion, we draw attention to:
 
 a) Note No 9 to the Financial Statements regarding the write off of
 Rs.82.17 crore during the year (previous year Rs.82.17 crore) being one
 third of the deficit arising on the take over of the specific assets
 and liabilities of a bank in the previous year amounting to Rs.246.52
 crore
 
 b) And carry over of balance of Rs.82.17 crore to next year as against
 the writing off the entire deficit in that year; and
 
 c) Note No.10 to the Financial Statements, which describes deferment of
 pension and gratuity liability of the Bank to the extent of Rs.804.17
 crore pursuant to the exemption granted by Reserve Bank of 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 on Reopening of Pension Option to
 Employees of Public Sector Banks and Enhancement of Gratuity Limits -
 Prudential Regulatory Treatment.
 
 For Varma & Varma      For PKF Sridhar & Santhanam    For Bhaskaran &
 Chartered Accountants  Chartered Accountants          Ramesh
 FRN 004532s            FRN 003990s                    Chartered 
                                                       Accountants
                                                       FRN 000462S
 
 
 (K.M.SUKUMARAN)        (S.RAJESHWARI)                 (A.BHASKARAN)
 Partner                Partner                        Partner
 M.No.015707            M.No.024105                    M.No.021948
 
 
 
 For M Bhaskara Rao & Co  For Mittal Gupta & Co   For S R Mohan & Co
 Chartered Accountants    Chartered Accountants   Chartered Accountants
 FRN000459S               FRN001874C              FRN 002111S
 
 
 
 (K.R.RATNAM)           (AKSHAY K GUPTA)     (KODANDA RAMAGUPTA T.N.)
 Partner                 Partner              Partner
 M. No.002316            M.No.070744          M.No.018868
 
 
 
 Place: Chennai 
 Date: 02.05.2011