1. We have jointly audited the accompanying Standalone Financial Statements of HDFC Bank Limited (“the Bank”), which
comprise the Standalone Balance Sheet as at March 31, 2025, and the Standalone Profit and Loss Account and the
Standalone Cash Flow Statement for the year then ended, and notes to the Standalone Financial Statements including a
summary of significant accounting policies and other explanatory information (together known as the “Standalone Financial
Statements”).
2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone
Financial Statements give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 2013
(“the Act”) in the manner so required for banking companies and are in conformity with accounting principles generally
accepted in India and give a true and fair view of the state of affairs of the Bank as at March 31, 2025, and its profit and its
cash flows for the year ended on that date.
I Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act
and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India (“ICAI”). Our
responsibilities under those Standards are further described in the “Auditor's responsibilities for the audit of Standalone
Financial Statements” section of our report. We are independent of the Bank in accordance with the Code of Ethics issued
by the ICAI together with the ethical requirements that are relevant to our audit of the Standalone Financial Statements under
the provisions of the Act and the Rules thereunder, 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.
I Key audit matters
4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
Standalone Financial Statements for the year ended March 31, 2025. These matters were addressed in the context of
our audit of the Standalone 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.
|
Identification and Provisioning of Non-performing Advances (NPA):
Total NPA as at March 31,2025: ' 35,194.95 crores
Provision for NPA as at March 31, 2025: ' 23,874.52 crores
(Refer Schedule 17 (C)(3), Schedule 18 note 10)
|
|
Key Audit Matter
|
How our audit addressed the key audit matter
|
|
The Bank is required to comply with the Master Circular dated
April 02, 2024 issued by the Reserve Bank of India (“RBI”) on
“Prudential Norms on Income Recognition, Asset Classification
and Provisioning pertaining to Advances” (the “IRAC norms”)
and amendments thereto, which prescribe the guidelines for
identification and classification of Non-performing Advances and
the minimum provision required for such assets.
The Bank is also required to apply its judgement to determine
the identification and provision required against Non-performing
Advances considering various quantitative as well as qualitative
factors. The identification of Non-performing Advances is also
affected by factors like stress and liquidity concerns in certain
sectors.
The provision for identified Non-performing Advances is estimated
based on ageing and classification of Non-performing Advances,
nature of product, value of security etc., and is also subject to
the minimum provisioning norms specified by RBI. Since the
identification of Non-performing Advances and provisioning for Non¬
performing Advances requires considerable level of management
estimation, application of various regulatory requirements and in
view of its significance to the overall audit, we have identified this as
a key audit matter.
|
Our audit procedures included the following:
> Understood the process and controls, and tested the
design and operating effectiveness of key controls, including
Information Technology based controls, and focused on the
following:
• Monitoring of credit quality which amongst other things
includes the monitoring of overdue loan accounts and
drawing power, pending security creation;
• Identification and classification of Non-performing
Advances in accordance with IRAC norms and
consideration of qualitative factors; and
• Testing of application controls including testing of
automated controls, reports and system reconciliations.
> Evaluated the governance process and controls over
calculations of provision for Non-performing Advances and
tested that the basis of provisioning is in accordance with the
Board of Directors approved policy and IRAC norms.
> On a sample basis, recomputed the Days Past Due, verified
the date of Non-performing Advances and verified the
classification of Non-performing Advances.
|
| |
>
|
On a test check basis, verified the classification of accounts
reported by the Bank as Special Mention Accounts (‘SMA')
in RBI's Central Repository of Information on Large Credits
(‘CRILC').
|
| |
>
|
With respect to provisions recognised towards Non¬
performing Advances, calculated provision on a sample
basis taking into consideration the value of security, where
applicable, the IRAC norms and the policy of the Bank, and
compared our outcome to that prepared by the management
and evaluated relevant assumptions and judgements and
other qualitative factors considered by the management.
|
|
Information Technology (“IT”) Systems and Controls impacting Financial Reporting
|
|
Key Audit Matter
|
How our audit addressed the key audit matter
|
|
The IT environment of the Bank is complex and involves a large
number of independent and interdependent IT systems used in the
operations of the Bank for processing and recording a large volume
of transactions.
As a result, there is a high degree of reliance and dependency on
such IT systems for the financial reporting process of the Bank.
Appropriate IT general controls and IT application controls are
required to ensure that such IT systems are able to process the data
as required, completely, accurately, and consistently for reliable
financial reporting.
We have identified certain key IT systems (“in-scope” IT systems)
which have an impact on the financial reporting process and the
related controls testing as a key audit matter because of the high
level of automation, significant number of systems being used by
the Bank for processing financial transactions, the complexity of the
IT architecture and its impact on the financial records and financial
reporting process of the Bank.
|
Our procedures with respect to this matter included the following:
> In assessing the controls over the IT systems of the Bank, we
involved our technology specialists to obtain an understanding
of the IT environment, IT infrastructure and IT systems. We
evaluated and tested relevant IT general controls over the “in¬
scope” IT systems and IT dependencies identified as relevant
for our audit of the Standalone Financial Statements and
financial reporting process of the Bank. On such “in-scope”
IT systems, we tested key IT general controls with respect to
the following domains:
• Program change management, which includes that
program changes are moved to the production
environment as per defined procedures and relevant
segregation of environment is ensured.
• User access management, which includes user access
provisioning, de-provisioning, access review, password
management, sensitive access rights and segregation
of duties to ensure that privilege access to applications,
operating systems and databases in the production
environment were granted only to authorized personnel.
|
| |
|
• Program development, which includes controls over IT
application development or implementation and related
infrastructure, which are relied upon for financial reporting.
|
| |
|
• IT operations, which includes job scheduling, monitoring
and backup and recovery.
|
| |
>
|
We also evaluated the design and tested the operating
effectiveness of relevant key IT dependencies within the key
business process, which included testing automated controls,
automated calculations / accounting procedures, interfaces,
segregation of duties and system generated reports, as
applicable.
|
| |
>
|
We communicated with those charged with governance and
management and tested a combination of compensating
controls or remediated controls and / or performed alternative
audit procedures, where necessary.
|
I Other Information
5. The Bank's Board of Directors is responsible for the other information. The other information comprises the information
included in the Annual report, but does not include the Standalone Financial Statements and our auditor's report thereon.
The Annual report is expected to be made available to us after the date of this auditor's report.
Our opinion on the Standalone Financial Statements does not cover the other information and we will not express any form
of assurance conclusion thereon.
In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information identified
above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the
Standalone Financial Statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
When we read the Annual report, if we conclude that there is a material misstatement therein, we are required to
communicate the matter to those charged with governance and take appropriate action as applicable under the relevant
laws and regulations.
Responsibilities of the Management and Those Charged with Governance for the Standalone
Financial Statements
6. The Bank's Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation
of these Standalone 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 specified under Section 133 of the Act, and the provisions of Section 29 of the Banking Regulations Act, 1949
and circulars, guidelines and directions issued by the 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 Standalone Financial Statements that give a true
and fair view and are free from material misstatement, whether due to fraud or error.
7. I n preparing the Standalone Financial Statements, Board of Directors 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 Board of Directors either intends to liquidate the Bank or to cease operations, or has no realistic
alternative but to do so.
8. The Board of Directors is also responsible for overseeing the Bank's financial reporting process.
I Auditor’s responsibilities for the audit of the Standalone Financial Statements
9. Our objectives are to obtain reasonable assurance about whether the Standalone 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 Standalone Financial Statements.
10. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism
throughout the audit. We also:
• I dentify and assess the risks of material misstatement of the Standalone 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.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether
the Bank has adequate internal financial controls with reference to Standalone Financial Statements in place and the
operating effectiveness of such controls.
• 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 Standalone 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 Standalone Financial Statements, including the
disclosures, and whether the Standalone Financial Statements represent the underlying transactions and events in a
manner that achieves fair presentation.
11. 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.
12. 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.
13. From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the Standalone Financial Statements of the current year 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.
I Other Matters
14. The Standalone Financial Statements of the Bank for the year ended March 31, 2024, were jointly audited by M M Nissim &
Co LLP and Price Waterhouse LLP under the Act and the Banking Regulation Act, 1949, who, vide their report dated April
20, 2024, expressed an unmodified opinion on those Standalone Financial Statements. Accordingly, Batliboi & Purohit do
not express any opinion on the figures reported in the Standalone Financial Statements for the year ended March 31,2024.
Our opinion is not modified in respect of this matter.
I Report on other legal and regulatory requirements
15. I n our opinion, the Standalone Balance Sheet and the Standalone Profit and Loss Account have been drawn up in
accordance with the provisions of Section 29 of the Banking Regulation Act, 1949 and Section 133 of the Act.
16. As required by sub-section (3) of Section 30 of the Banking Regulation Act, 1949, 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 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, other than
those relating to leasing of immovable properties acquired on amalgamation of the erstwhile HDFC Limited with the
Bank, as disclosed in Schedule 18 note 1 to the Standalone Financial Statements; and
(c) During the course of our audit, we have visited 73 branches to examine the books of account and other records
maintained at the branch and performed other relevant audit procedures. Since the key operations of the Bank are
automated with the key applications integrated to the core banking system, the audit is carried out centrally at Bank's
Head office located in Mumbai, as all the necessary records and data required for the purposes of our audit are
available there.
17. Further, as required by Section 143(3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were
necessary for the purposes of our audit.
(b) 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, except for the matters stated in paragraph 17(h)(vi) below on reporting under Rule 11(g)
of the Companies (Audit and Auditors) Rules, 2014 (as amended).
(c) The Standalone Balance Sheet, the Standalone Profit and Loss Account and the Standalone Cash Flow Statement
dealt with by this report are in agreement with the books of account.
(d) In our opinion, the aforesaid Standalone Financial Statements comply with the Accounting Standards specified under
Section 133 of the Act, to the extent they are not inconsistent with the accounting policies prescribed by RBI.
(e) On the basis of the written representations received from the directors as at March 31, 2025 taken on record by the
Board of Directors, none of the directors is disqualified as at March 31, 2025 from being appointed as a director in
terms of Section 164(2) of the Act.
(f) With respect to the maintenance of accounts and other matters connected therewith, reference is made to our
comment in paragraph 17(b) above on reporting under Section 143(3)(b) and paragraph 17(h)(vi) below on reporting
under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended).
(g) With respect to the adequacy of the internal financial controls with reference to Standalone Financial Statements of
the Bank and the operating effectiveness of such controls, refer to our separate report in “Annexure A”.
(h) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies
(Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the
explanations given to us:
i. The Bank has disclosed the impact of pending litigations on its financial position in its financial statements -
Refer Schedule 12(1) and (II), Schedule 17(C)(18) and Schedule 18 note 19.5 and 32(b) to the Standalone Financial
Statements.
ii. The Bank has made provision, as required under the applicable law or accounting standards, for material
foreseeable losses on long-term contracts including derivative contracts - Schedule 17(C)(9) and 17(C)(18),
Schedule 18 Note 19.5 and 32(b) to the Standalone Financial Statements;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and
Protection Fund by the Bank, during the year ended March 31, 2025.
iv. (a) The management has represented that, to the best of its knowledge and belief, other than as disclosed in
the Schedule 18 note 36, no funds have been advanced or loaned or invested (either from borrowed funds
or share premium or any other sources or kind of funds) by the Bank to or in any other person(s) or entity(ies),
including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise,
that the Intermediary shall, whether, directly or indirectly, lend or invest in other persons or entities identified
in any manner whatsoever by or on behalf of the Bank (“Ultimate Beneficiaries”) or provide any guarantee,
security or the like on behalf of the Ultimate Beneficiaries;
(b) The management has represented that, to the best of its knowledge and belief, other than as disclosed in the
Schedule 18 note 36, no funds have been received by the Bank from any person(s) or entity(ies), including
foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the
Bank shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner
whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security
or the like on behalf of the Ultimate Beneficiaries; and
(c) Based on such audit procedures that we considered reasonable and appropriate in the circumstances,
nothing has come to our notice that has caused us to believe that the representations under sub-clause (a)
and (b) contain any material misstatement.
v. The dividend declared and paid during the year by the Bank is in compliance with Section 123 of the Act.
vi. Based on our examination, which included test checks, the Bank has used various accounting software for
maintaining its books of account which have a feature of recording audit trail (edit log) facility, which have operated
throughout the year for all relevant transactions recorded in the software, except that the audit trail feature was not
enabled for part of the year for certain masters in two accounting software and two databases and throughout
the year for other databases (also, refer Schedule 18 note 37 to the Standalone Financial Statements of the Bank).
During the course of performing our procedures, other than the aforesaid instances of audit trail not enabled,
where the question of our commenting does not arise, we did not notice any instance of audit trail feature being
tampered with. Further, the Bank has preserved the audit trail for the prior financial year in compliance with
statutory record retention requirements, except in relation to certain software and databases for which the audit
trail feature was not enabled.
18. In our opinion and to the best of our information and according to the explanations given to us, the provisions of Section
197 of the Act are not applicable to the Bank by virtue of Section 35B(2A) of the Banking Regulation Act, 1949. Accordingly,
the reporting under Section 197(16) of the Act regarding payment / provision for managerial remuneration in accordance
with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act, is not applicable.
For Price Waterhouse LLP For Batliboi & Purohit
Chartered Accountants Chartered Accountants
Firm Registration Number: Firm Registration Number:
301112E/E300264 101048W
Sharad Vasant Janak Mehta
Partner Partner
Membership Number: 101119 Membership Number: 116976
UDIN: 25101119BMIFBA5214 UDIN: 25116976BMOKOV9481
Place: Mumbai Place: Mumbai
Date: April 19, 2025 Date: April 19, 2025
|