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Punjab & Sind Bank

BSE: 533295 | NSE: PSB |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE608A01012 | SECTOR: Banks - Public Sector

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30-Day
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Volume
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10-Day
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30-Day
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  • Open Price

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  • Bid Price (Qty.)

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  • Offer Price (Qty.)

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Annual Report

For Year :
2019 2017 2016 2015 2014 2013 2012 2011

Auditor's Report

Report on Audit of the Financial Statements

Opinion

1. We have audited the financial statements of Punjab & Sind Bank (''the Bank''), which comprise the Balance Sheet as at 31 March 2019, the Statement of Profit and Loss and the Statement of Cash Flows for the year then ended, and notes to financial statements including a summary of significant accounting policies and other explanatory information in which are included returns for the year ended on that date of 20 branches audited by us and 1 integrated treasury branch audited by us and 634 branches audited by statutory branch 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 included in the Balance Sheet, the Statement of Profit and Loss and Statement of Cash Flows are the returns from 864 branches which have not been subjected to audit. These unaudited branches account for 9.42 percent of advances, 25.69 per cent of deposits, 6.66 per cent of interest income and 20.73 per cent of interest expenses.

2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Banking Regulation Act, 1949 in the manner so required for bank and are in conformity with accounting principles generally accepted in India and give:

a) true and fair view in case of the Balance sheet, of the state of affairs of the Bank as at 31st March, 2019;

b) true balance of loss in case of Profit / loss account for the year ended on that date; and

c) true and fair view in case of statement of cash flows for the year ended on that date.

Basis for Opinion

3. We conducted our audit in accordance with the Standards on Auditing (SAs) issued by ICAI. Our responsibilities under those Standards are further described in the Auditor''s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Bank in accordance with the code of ethics issued by the Institute of Chartered Accountants of India together with ethical requirements that are relevant to our audit of the financial statements in [jurisdiction], and we have fulfilled our other ethical responsibilities in accordance with these requirements and the code of ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Key Audit Matters

Our Response/Procedures

Advances - Classification and Provisioning

Our Audit Procedures:

(Refer Schedule 9 to the financial statements)

The advances are classified as performing and non-performing advances (NPA) and provisioning thereon is made in accordance with the prudential norms as prescribed by the Reserve Bank Of India (RBI).The classification and provisioning is done by the Bank''s IT Software integrated with its Core Banking Solution (CBS). The identification of non-performing assets and creation of provisions on such assets involves key management judgments relating to performance, determination of realizable securities available to bank and their valuation.

We obtained an understanding of the Bank''s Software, circulars, guidelines and directives of the RBI and the Bank''s internal instructions and procedures in respect of the asset''s classification and its provisioning. Our audit approach consisted of testing the design of system for identification of Non - Performing assets to ensure conformity with the guidelines of the RBI in the matter and test checking identification and valuation of Non-performing assets.

- We have reviewed the documentations, operations / performance and monitoring of the advance accounts, on test check basis of the large and stressed advances, to ascertain any overdue, unsatisfactory conduct or weakness in any advance account, to ensure that its classification is in accordance with the prudential norms of RBI ,in respect of the branches audited by us. In respect of the branches, audited by the branch statutory auditors we have placed reliance on their reports and ensured that changes suggested by the Branch auditors were duly carried out wherever necessary.

- Necessary changes were carried out during the course of audit and the effect of same was duly accounted for in the Financial statements for the year ended 31st March, 2019.

Our Results:

The results of our audit process were observed to be adequate and satisfactory considering the materiality of the transactions,

Investments - Valuation, and identification and

Our Audit Procedures:

provisioning for Non-Performing Investments

(Refer Schedule 8 to the financial statements)

Investment portfolio of the bank comprises of Investments in Government Securities, Bonds, Debentures, Shares, Security Receipts and other Approved Securities which are classified under three categories, Held to Maturity, Available for Sale and Held for trade.

Valuation of investments, identification of Non-Performing Investments (NPI) and the corresponding non-recognition of income and provision thereon, is carried out in accordance with the relevant circulars / guidelines / directions of RBI.

Our Audit approach towards Investments with reference to the RBI circulars/ directives included the review and testing of the design, operating effectiveness of internal controls and substantive audit procedures in relation to valuation, classification, identification of Non-Performing Investments, provisioning / depreciation related to Investments. In particular,

- We evaluated and understood the system and internal control as laid down by the Bank to comply with relevant RBI guidelines.

- We assessed and evaluated the process of identification of NPI''s, and corresponding reversal of income and creation of provision.

- We carried out substantive audit procedures to re-compute independently the provision to be created. Necessary changes were carried out during the course of audit and the effect of same was duly accounted for in the Financial statements for the year ended 31st March, 2019.

Our Results:

The results of our audit process were observed to be adequate and satisfactory considering the materiality of the transactions.

Recognition of Deferred Tax Assets

Our Audit Procedures:

Deferred income tax reflects the impact of timing difference between taxable income and accounting income. Deferred tax asset is not recognized unless there is a virtual certainty that sufficient future taxable income will be available against which such asset will be realized.

We have relied upon the management estimates regarding eligibility of carried forward tax losses for setoff against future taxable income and used our own internal expertise in evaluating the claims, assumptions and profitability forecasts and assertions of the management provided to us, that sufficient future taxable income will be available for set off against the tax losses carried forward.

Contingent Liabilities and Claims

Our Audit Procedures:

Contingent Liability is a possible obligation, outcome of which is contingent upon occurrence or non-occurrence of one or more uncertain future events. In the judgement of the management, such claims and litigations including tax demands against the bank would not eventually lead to a liability. However, should there be an adverse outcome, the bank will be liable to pay the disputed amounts with interest/ penalty as may be decided by the competent authorities, the impact of which is uncertain/unascertainable at this stage.

We have reviewed the management note and legal opinions obtained by the bank regarding the claims and tax litigations and involved our internal team to review the nature of such litigations and claims, their sustainability and likelihood of claims/litigations materializing into eventual liability upon final resolution, from the available records and developments to date.

Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements

5. The Bank''s Board of Directors is responsible with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with the accounting principles generally accepted in India, including the Accounting Standards issued by ICAI, and provisions of Section 29 of the Banking Regulation Act, 1949 and circulars and guidelines issued by the Reserve Bank of India (''RBI'') from time to time. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Bank and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Bank''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.

Auditor''s Responsibilities for the Audit of the Financial Statements

6. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

- Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the bank''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the bank to cease to continue as a going concern.

- Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Matter of Emphasis

We draw attention to note no.10.3 regarding change in accounting policy relating to depreciation on Fixed Assets

However, our opinion is not modified in respect of this matter

Other Matter

7. We did not audit the financial statements / information of 634 branches included in the standalone financial statements of the Bank whose financial statements / financial information reflect total advances of Rs. 23013.95 Crore as at 31st March 2019 and total interest income of Rs. 1920.11 Crores for the year ended on that date, as considered in the standalone financial statements. The financial statements / information of these branches have been audited by the branch auditors whose reports have been furnished to us, and in our opinion in so far as it relates to the amounts and disclosures included in respect of branches, is based solely on the report of such branch auditors.

Report on Other Legal and Regulatory Requirements

8. The Balance Sheet and the Profit and Loss Account have been drawn up in accordance with Section 29 of the Banking Regulation Act, 1949;

9. Subject to the limitations of the audit indicated in paragraphs 5 to 7 above and as required by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980, and subject also to the limitations of disclosure required therein, 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; and

c) The returns received from the offices and branches of the Bank have been found adequate for the purposes of our audit.

10. We further report that:

a) in our opinion, proper books of account as required by law have been kept by the Bank so far as it appears from our examination of those books

b) the Balance Sheet, the Profit and Loss Account and the Statement of Cash Flows dealt with by this report are in agreement with the books of account

c) the reports on the accounts of the branch offices audited by branch auditors of the Bank under section 29 of the Banking Regulation Act, 1949 have been sent to us and have been properly dealt with by us in preparing this report; and

d) In our opinion, the Balance Sheet, the Profit and Loss Account and the Statement of Cash Flows comply with the applicable accounting standards, to the extent they are not inconsistent with the accounting policies prescribed by RBI.

For S. Mann & Co. For Baldev Kumar & Co.

Chartered Accountants Chartered Accountants

FRN - 000075N FRN - 013148N

CA. Subhash Mann CA. Baldev Garg

Partner Partner

M.No.080500 M.No.092225

For Suresh Chandra & Associates For Raj Gupta & Co.

Chartered Accountants Chartered Accountants

FRN - 001359N FRN-000203N

CA. Madhur Gupta CA Sandeep Gupta

(Partner) Partner

M.No. 090205 M. No. 529774

Place: New Delhi

Date: 24 May, 2019