1. We have jointly audited the accompanying Standalone Financial Statements of HDFC Bank Limited (“the Bank”), whichcomprise the Standalone Balance Sheet as at March 31, 2025, and the Standalone Profit and Loss Account and theStandalone Cash Flow Statement for the year then ended, and notes to the Standalone Financial Statements including asummary of significant accounting policies and other explanatory information (together known as the “Standalone FinancialStatements”).
2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid StandaloneFinancial 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 generallyaccepted 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 itscash flows for the year ended on that date.
3. We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Actand other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India (“ICAI”). Ourresponsibilities under those Standards are further described in the “Auditor's responsibilities for the audit of StandaloneFinancial Statements” section of our report. We are independent of the Bank in accordance with the Code of Ethics issuedby the ICAI together with the ethical requirements that are relevant to our audit of the Standalone Financial Statements underthe provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordancewith these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of theStandalone Financial Statements for the year ended March 31, 2025. These matters were addressed in the context ofour audit of the Standalone Financial Statements as a whole and in forming our opinion thereon, and we do not providea separate opinion on these matters. We have determined the matters described below to be the key audit matters to becommunicated in our report.
Identification and Provisioning of Non-performing Advances (NPA):
Total NPA as at March 31,2025: ' 35,194.95 croresProvision 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 datedApril 02, 2024 issued by the Reserve Bank of India (“RBI”) on“Prudential Norms on Income Recognition, Asset Classificationand Provisioning pertaining to Advances” (the “IRAC norms”)and amendments thereto, which prescribe the guidelines foridentification and classification of Non-performing Advances andthe minimum provision required for such assets.
The Bank is also required to apply its judgement to determinethe identification and provision required against Non-performingAdvances considering various quantitative as well as qualitativefactors. The identification of Non-performing Advances is alsoaffected by factors like stress and liquidity concerns in certainsectors.
The provision for identified Non-performing Advances is estimatedbased on ageing and classification of Non-performing Advances,nature of product, value of security etc., and is also subject tothe minimum provisioning norms specified by RBI. Since theidentification of Non-performing Advances and provisioning for Non¬performing Advances requires considerable level of managementestimation, application of various regulatory requirements and inview of its significance to the overall audit, we have identified this asa key audit matter.
Our audit procedures included the following:
> Understood the process and controls, and tested thedesign and operating effectiveness of key controls, includingInformation Technology based controls, and focused on thefollowing:
• Monitoring of credit quality which amongst other thingsincludes the monitoring of overdue loan accounts anddrawing power, pending security creation;
• Identification and classification of Non-performingAdvances in accordance with IRAC norms andconsideration of qualitative factors; and
• Testing of application controls including testing ofautomated controls, reports and system reconciliations.
> Evaluated the governance process and controls overcalculations of provision for Non-performing Advances andtested that the basis of provisioning is in accordance with theBoard of Directors approved policy and IRAC norms.
> On a sample basis, recomputed the Days Past Due, verifiedthe date of Non-performing Advances and verified theclassification of Non-performing Advances.
>
On a test check basis, verified the classification of accountsreported 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 samplebasis taking into consideration the value of security, whereapplicable, the IRAC norms and the policy of the Bank, andcompared our outcome to that prepared by the managementand evaluated relevant assumptions and judgements andother qualitative factors considered by the management.
Information Technology (“IT”) Systems and Controls impacting Financial Reporting
The IT environment of the Bank is complex and involves a largenumber of independent and interdependent IT systems used in theoperations of the Bank for processing and recording a large volumeof transactions.
As a result, there is a high degree of reliance and dependency onsuch IT systems for the financial reporting process of the Bank.
Appropriate IT general controls and IT application controls arerequired to ensure that such IT systems are able to process the dataas required, completely, accurately, and consistently for reliablefinancial reporting.
We have identified certain key IT systems (“in-scope” IT systems)which have an impact on the financial reporting process and therelated controls testing as a key audit matter because of the highlevel of automation, significant number of systems being used bythe Bank for processing financial transactions, the complexity of theIT architecture and its impact on the financial records and financialreporting 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, weinvolved our technology specialists to obtain an understandingof the IT environment, IT infrastructure and IT systems. Weevaluated and tested relevant IT general controls over the “in¬scope” IT systems and IT dependencies identified as relevantfor our audit of the Standalone Financial Statements andfinancial reporting process of the Bank. On such “in-scope”IT systems, we tested key IT general controls with respect tothe following domains:
• Program change management, which includes thatprogram changes are moved to the productionenvironment as per defined procedures and relevantsegregation of environment is ensured.
• User access management, which includes user accessprovisioning, de-provisioning, access review, passwordmanagement, sensitive access rights and segregationof duties to ensure that privilege access to applications,operating systems and databases in the productionenvironment were granted only to authorized personnel.
• Program development, which includes controls over ITapplication development or implementation and relatedinfrastructure, which are relied upon for financial reporting.
• IT operations, which includes job scheduling, monitoringand backup and recovery.
We also evaluated the design and tested the operatingeffectiveness of relevant key IT dependencies within the keybusiness process, which included testing automated controls,automated calculations / accounting procedures, interfaces,segregation of duties and system generated reports, asapplicable.
We communicated with those charged with governance andmanagement and tested a combination of compensatingcontrols or remediated controls and / or performed alternativeaudit procedures, where necessary.
5. The Bank's Board of Directors is responsible for the other information. The other information comprises the informationincluded 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 formof assurance conclusion thereon.
In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information identifiedabove when it becomes available and, in doing so, consider whether the other information is materially inconsistent with theStandalone 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 tocommunicate the matter to those charged with governance and take appropriate action as applicable under the relevantlaws and regulations.
6. The Bank's Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparationof these Standalone Financial Statements that give a true and fair view of the financial position, financial performance andcash flows of the Bank in accordance with the accounting principles generally accepted in India, including the AccountingStandards specified under Section 133 of the Act, and the provisions of Section 29 of the Banking Regulations Act, 1949and circulars, guidelines and directions issued by the RBI from time to time. This responsibility also includes maintenanceof adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Bankand for preventing and detecting frauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenanceof adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of theaccounting records, relevant to the preparation and presentation of the Standalone Financial Statements that give a trueand 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 tocontinue as a going concern, disclosing, as applicable, matters related to going concern and using the going concernbasis of accounting unless Board of Directors either intends to liquidate the Bank or to cease operations, or has no realisticalternative but to do so.
8. The Board of Directors is also responsible for overseeing the Bank's financial reporting process.
9. Our objectives are to obtain reasonable assurance about whether the Standalone Financial Statements as a whole arefree 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 SAswill always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of userstaken 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 scepticismthroughout the audit. We also:
• I dentify and assess the risks of material misstatement of the Standalone Financial Statements, whether due tofraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that issufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resultingfrom 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 appropriatein the circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whetherthe Bank has adequate internal financial controls with reference to Standalone Financial Statements in place and theoperating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and relateddisclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on theaudit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significantdoubt on the Bank's ability to continue as a going concern. If we conclude that a material uncertainty exists, we arerequired 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 obtainedup to the date of our auditor's report. However, future events or conditions may cause the Bank to cease to continueas a going concern.
• Evaluate the overall presentation, structure and content of the Standalone Financial Statements, including thedisclosures, and whether the Standalone Financial Statements represent the underlying transactions and events in amanner that achieves fair presentation.
11. We communicate with those charged with governance regarding, among other matters, the planned scope and timingof the audit and significant audit findings, including any significant deficiencies in internal control that we identify duringour audit.
12. We also provide those charged with governance with a statement that we have complied with relevant ethical requirementsregarding independence, and to communicate with them all relationships and other matters that may reasonably be thoughtto 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 mostsignificance in the audit of the Standalone Financial Statements of the current year and are therefore the key auditmatters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about thematter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits ofsuch communication.
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 April20, 2024, expressed an unmodified opinion on those Standalone Financial Statements. Accordingly, Batliboi & Purohit donot 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.
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 necessaryfor 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 thanthose relating to leasing of immovable properties acquired on amalgamation of the erstwhile HDFC Limited with theBank, 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 recordsmaintained at the branch and performed other relevant audit procedures. Since the key operations of the Bank areautomated with the key applications integrated to the core banking system, the audit is carried out centrally at Bank'sHead office located in Mumbai, as all the necessary records and data required for the purposes of our audit areavailable 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 werenecessary 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 ourexamination 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 Statementdealt 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 underSection 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 theBoard of Directors, none of the directors is disqualified as at March 31, 2025 from being appointed as a director interms of Section 164(2) of the Act.
(f) With respect to the maintenance of accounts and other matters connected therewith, reference is made to ourcomment in paragraph 17(b) above on reporting under Section 143(3)(b) and paragraph 17(h)(vi) below on reportingunder 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 ofthe 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 theexplanations 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 FinancialStatements.
ii. The Bank has made provision, as required under the applicable law or accounting standards, for materialforeseeable 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 andProtection 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 fundsor 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 identifiedin 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 theSchedule 18 note 36, no funds have been received by the Bank from any person(s) or entity(ies), includingforeign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that theBank shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any mannerwhatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, securityor 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 formaintaining its books of account which have a feature of recording audit trail (edit log) facility, which have operatedthroughout the year for all relevant transactions recorded in the software, except that the audit trail feature was notenabled for part of the year for certain masters in two accounting software and two databases and throughoutthe 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 beingtampered with. Further, the Bank has preserved the audit trail for the prior financial year in compliance withstatutory record retention requirements, except in relation to certain software and databases for which the audittrail 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 Section197 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 accordancewith 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