Punjab National Bank

1.  We have audited the attached Balance Sheet of Punjab National Bank
 as at 31st March, 2009, the Profit and Loss Account and Cash Flow
 Statement annexed thereto for the year ended on that date, in which are
 incorporated the returns of (i) 20 branches and controlling offices
 (including circle offices) audited by us (ii) 3671 branches (including
 2 foreign branches and 1 Offshore Banking Unit) and 38 other offices
 audited by other auditors and (iii) 738 branches not subjected to
 audit. These unaudited branches account for 1.24% of advances, 4.48% of
 deposits, 0.72% of interest income and 3.38% of interest expenses. The
 branches selected by the Bank for audit are in accordance with the
 guidelines issued by the Reserve Bank of India.
 
 2.  These financial statements are the responsibility of the Bank’s
 management. Our responsibility is to express an opinion on these
 financial statements based on our audit.
 
 3.  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 misstatements. 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.
 
 4.  The Balance Sheet and Profit and Loss Account have been drawn up in
 forms A and B respectively of the third schedule to the Banking
 Regulations Act, 1949.
 
 5.  We draw attention:
 
 i. to note no.24f of Schedule-18, the bank has disputed tax demands of
 Rs.1155.15 crores against which payment of Rs.1094.83 crores has been
 made.
 
 ii. to footnote to note no.6c of Schedule-18, Provision for diminution
 in fair value of restructures of advances of Rs. 1 crore to 25 each has
 been provided @ 5% of outstanding amount instead of calculating the
 diminution in each case as prescribed by Reserve Bank of India.
 
 6.  Subject to limitation of the audit as indicated in paragraph 1 and
 as required by the Banking Companies (Acquisition and Transfer of
 Undertakings) Act, 1970 and also subject to the limitations of
 disclosure required therein, we report that:
 
 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 and
 in conformity with the accounting principles generally accepted in
 India:
 
 I.  The Balance Sheet read with significant accounting policies and
 notes thereon, 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 state of affairs of the Bank as at 31st March
 2009.
 
 II.  The Profit and Loss Account read with the significant accounting
 policies and notes thereon shows a true balance of the profit for the
 year covered by the account and
 
 III.  The Cash Flow Statement gives a true and fair view of cash flows
 for the year covered by the statement.
 
 b) In our opinion the Balance Sheet, Profit and Loss Account and the
 Cash Flow Statement comply with the applicable Accounting Standards.
 
 c) 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.
 
 d) The transactions of the Bank, which have come to our notice, have
 been within its powers.
 
 e) The returns received from the offices and branches of the Bank have
 been found adequate for the purpose of our audit.
 
 
 For V Sankar Aiyar & Co.                       For N C Rajagopal & Co.
 Chartered Accountants                           Chartered Accountants
 
 R Raghuraman                                         V Chandrasekaran
 Partner                                                       Partner
 Membership No 81350                              Membership No. 24844
 
 For Gupta & Gupta                                    For P.Jain & Co.
 Chartered Accountants                           Chartered Accountants
 
 S B Gupta                                                 Pankaj Jain
 Partner                                                       Partner
 Membershp No 06099                                Membership No 97279
 
 For Kalani & Co.                                 For Anjaneyulu & Co.
 Chartered Accountants                           Chartered Accountants
 
 Vikas Gupta                                           D.V. Anjaneyulu
 Partner                                                       Partner
 Membership No 77076                               Membership No 21036
 
 
 New Delhi
 
 DATE: 20th May 2009