Karnataka Bank

1. We have audited the attached Balance Sheet of The Karnataka Bank
 Ltd., as on 31st March, 2009 and also the Profit & 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 4 branches and 2
 Regional Offices audited by us, 443 branches, 6 Regional Offices, 1
 International Division, 5 Service Branches, 2 Currency chests, 3 Asset
 Recovery Branches, 1 Data centre,2 Central Processing Centres and 1
 Customer Care Centre audited by branch 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 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 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 our audit provides a reasonable
 basis for our opinion.
 
 3.  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, read with section 211 of the Companies Act, 1956.
 
 4.  We report that-
 
 a. We have obtained all the information and ex - planations 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. 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.
 
 5.  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 sec (3C) of section 211 of the Companies Act, 1956
 
 6.  We further report that:
 
 i) the Balance Sheet and Profit and Loss Account dealt with by the
 report, are in agreement with the books of account and the returns.
 
 ii) 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.
 
 iii) 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.
 
 iv) 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 Act1956,
 
 v) On the basis of the written representations received from the
 Directors, and taken on record by the Board of Directors, we report
 that none of the Directors is disqualified as on 31st March 2009 from
 being appointed as a director in terms of clause(g) of Sub-section(l)
 of Section 274 of the Companies Act 1956.
 
 7.  In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts together with 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
 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 & 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 for the
 year then ended on that date.
 
 
 For KAMATH & RAU
 Charterd Accountants
 
 Sd/-
 (SRINIVAS S. KAMATH)
 (M No.201716)
 Partner
 
 
 Place: Mangalore
 Date : 25th May 2009