We have audited the financial statements of DCB Bank Limited (the “Bank”), which comprise the balance sheet as at31 March 2026, and the profit and loss account and the cash flow statement for the year then ended, and notes to the financialstatements, including a summary of the significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financialstatements 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 give a true and fair view in conformity with the accounting principlesgenerally accepted in India, of the state of affairs of the Bank as at 31 March 2026, and its profit and its cash flows for theyear ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act.Our responsibilities under those SAs are further described in the Auditor’s Responsibilities for the Audit of the financialstatements section of our report. We are independent of the Bank in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financialstatements under the provisions of the Act and the Rules thereunder, Banking Regulation Act, 1949 and applicable circulars,directions and guidelines issued by the Reserve Bank of India ('RBI') from time to time and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion on the financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financialstatements of the current year. These matters were addressed in the context of our audit of the financial statements as awhole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determinedmatters described below to be the key audit matters to be communicated in our report.
Description of Key audit matter
Key audit matter
How the matter was addressed in our audit
Identification and provisioning on non-performing advances (NPA)
Total Advances (Net of provisions) as at 31 March 2026: Rs. 60,021.76 croresProvision for NPAs as at 31 March 2026: Rs. 758.96 crores
Refer Schedule 9 and Schedule 18(12.1) to the financial statements
Subjective estimate
The Bank is required to comply with “RBI (Commercial Banks- Income Recognition, Asset Classification and Provisioning)Directions, 2025” ('IRAC norms'). IRAC norms prescribe theguidelines for identification and asset classification of non¬performing advances ('NPA') and the minimum provisionrequired for such advances.
As required under IRAC norms, the Bank has a Boardapproved policy for NPA identification and provisioning basedon which the Bank recognises provisions for NPAs at or higherthan the minimum rate prescribed under RBI guidelines.
We performed the following key audit procedures:
Design and operating effectiveness of controls
• Understood Bank's policy and procedures relating toidentification of NPAs and provisioning, systems andcontrols implemented in this regard and its compliancewith IRAC norms.
• Tested the design, implementation and operatingeffectiveness of key internal financial controls overmonitoring of overdue loans, identification of NPAaccounts, collateral valuation, measurement of provisionon the basis of IRAC norms as well as application ofBank's judgment for establishing provisions beyond theminimum prescribed under IRAC norms. Our testingalso included assessment of the reliability of informationgenerated from the Bank's IT systems such as 'overdue'reports that were used by the Bank for the aforesaidcontrols.
The Bank's accounting policy also requires recognition on aprudent basis, provisions towards exposures that are not NPAas per IRAC norms but where the Bank, based on currentcircumstances and information, has reasons to believe thatthere is possible deterioration.
Since the identification of NPAs and provisioning for advancesalso involves, to some extent, management judgement andestimation including management estimate of higher provisionover IRAC norms, with some manual intervention and itssignificance to the financial statements of the Bank, we haveascertained identification and provisioning of NPAs as a keyaudit matter.
• Tested key information technology-based controlsoperating in relation to the Bank's NPA system, includingsystem access, system change management andcomputer operations.
• Tested the Bank's controls for identification of loans withindicators of stress or occurrence of event of defaultrequiring such loans to be considered as NPA or requiringhigher provision.
Substantive tests
• Performed test of details over calculation of NPAprovisions for assessing its completeness and accuracybased on relevant data and its compliance with theBank's NPA policy as well as IRAC norms.
• For a sample of performing loans, independentlyassessed as to whether there was a need to classifysuch loans as NPA.
• Tested the appropriateness of Bank's rationale forestablishing additional provisions over and above RBInorms and testing the adequacy of such provisions.
• Assessed the appropriateness, accuracy and adequacyof related presentation and disclosures in accordance withthe applicable accounting standards and requirements ofRBI with respect to NPAs and restructured advances.
• Referred to RBI Inspection report to assess impact ofobservations, if any, relating to asset classification andrelated provisions.
• Tested remediated controls and/or performed alternativeaudit procedures, where necessary.
Information technology (IT) system and controls
The Bank's key financial accounting and reporting processesare highly dependent on information systems includingautomated controls, resulting in a risk of gaps in the IT controlenvironment which could result in the financial accounting andreporting records being misstated.
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.
We evaluated and tested relevant IT general controls and ITapplication controls of the in-scope IT systems identified asrelevant for our audit of the financial statements and financialreporting process of the Bank.
On such in-scope IT systems, we have tested key IT generalcontrols with respect to the following domains:
• Program change management which includes controlsdesigned for movement of program changes to theproduction environment as per defined procedures andrestriction over developers and production personnelfrom accessing to change applications, the operatingsystem or databases in the production environment.
Adequate IT general controls and application controls arenecessary for obtaining accurate, consistent and reliableinformation for financial reporting.
We have identified 'IT systems and automated controls' asa key audit matter because of the high level of automation,quantum of systems being used by the Bank and the relativecomplexity of the IT architecture.
• User access management which includes controls forgranting access rights, new user creation, removal ofuser rights, periodic access review, preventive controlsdesigned to enforce segregation of duties, passwordmanagement and granting of privilege access toauthorized personnel.
• IT operations, which includes controls for job scheduling,monitoring, backup and recovery.
Our audit procedures with regards to aforesaid in-scope IT
systems, included the following:
• Tested the effectiveness of key IT general controls duringthe period covered by the audit.
• Tested the effectiveness during the period covered by ouraudit of key IT application controls and other key aspectssuch as automated calculations, system interface/reconciliation controls and system generated reports.
• Wherever required, we tested compensating controls.
Information Other than the Financial Statements and Auditor's Report Thereon
The Bank's Management and Board of Directors are responsible for the other information. The other information comprisesthe information included in the Bank's annual report but does not include the financial statements and the Auditor's Reportthereon. The Bank's Annual report is expected to be made available to us after the date of this auditor's report.
Our opinion on the financial statements does not cover the other information and we will not express any form of assuranceconclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified abovewhen it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financialstatements 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 communicatethe matter to those charged with governance and take necessary actions, as applicable under the relevant laws and regulations.
Management's and Board of Directors' Responsibilities for the Financial Statements
The Bank's Management and Board of Directors are responsible for the matters stated in Section 134(5) of the Act withrespect to the preparation of these financial statements that give a true and fair view of the state of affairs, profit/loss 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, provisions of Section 29 of the Banking Regulation Act, 1949 and applicablecirculars, directions and guidelines issued by the RBI from time to time. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act, Banking Regulation Act, 1949 and applicablecirculars, directions and guidelines issued by the RBI, for safeguarding of the assets of the Bank and for preventing anddetecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgmentsand estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to thepreparation 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, Bank's Management and Board of Directors are responsible for assessing the Bank'sability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concernbasis of accounting unless the Board of Directors either intends to liquidate the Bank or to cease operations, or has no realisticalternative but to do so.
The Board of Directors is also responsible for overseeing the Bank's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from materialmisstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect amaterial misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individuallyor in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis ofthese financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticismthroughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, designand perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriateto provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher thanfor one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride 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 financial statements in place and the operatingeffectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and relateddisclosures made by Management and the Board of Directors.
• Conclude on the appropriateness of the Management and Board of Directors' use of the going concern basis of accountingin preparation of financial statements and, based on the audit evidence obtained, whether a material uncertainty existsrelated to events or conditions that may cast significant doubt on the Bank's ability to continue as a going concern. Ifwe conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the relateddisclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions arebased on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions maycause 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 whetherthe 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 theaudit 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 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.
From the matters communicated with those charged with governance, we determine those matters that were of mostsignificance in the audit of the financial statements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, inextremely rare circumstances, we determine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.Report on Other Legal and Regulatory Requirements
1. In our opinion, the balance sheet and the profit and loss account have been drawn up in accordance with the provisionsof Section 29 of the Banking Regulation Act, 1949 and Section 133 of the Act.
2. 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, werenecessary 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) during the course of audit, we have visited 26 branches to examine the records maintained at the branches andperform relevant audit procedures. Since the key operations of the Bank are automated with the key applications
integrated to the core banking systems, the audit is carried out centrally as all the necessary records and datarequired for the purposes of our audit are made available therein. Hence, no returns are being called from thebranch offices of the Bank; and
(d) the profit and loss account for the year ended 31 March 2026 shows a true balance of profits for the period coveredby such accounts.
3. (A) 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 andbelief were necessary for the purposes of our audit;
b) I n our opinion, proper books of account as required by law have been kept by the Bank so far as it appearsfrom our examination of those books;
c) Reporting on the accounts of any branch office of the Bank is not applicable due to centralized banking system.Kindly refer our comments in paragraph 2(c) above;
d) The balance sheet, the profit and loss account, and the cash flow statement dealt with by this Report are inagreement with the books of account;
e) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified underSection 133 of the Act, to the extent they are not inconsistent with the applicable circulars, guidelines anddirections prescribed by the RBI;
f) On the basis of the written representations received from the directors as on 31 March 2026, 1 April 2026 and13 April 2026 taken on record by the Board of Directors, none of the directors are disqualified as on 31 March2026 from being appointed as a director in terms of Section 164(2) of the Act; and
g) With respect to the adequacy of the internal financial controls with reference to financial statements of theBank and the operating effectiveness of such controls, refer to our separate Report in “Annexure A”.
(B) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies(Audit and Auditor's) Rules, 2014, in our opinion and to the best of our information and according to the explanationsgiven to us:
a) The Bank has disclosed the impact of pending litigations as at 31 March 2026 on its financial position in itsfinancial statements-refer schedule 18(16) to the financial statements.
b) The Bank has made provision, as required under the applicable law or accounting standards, for materialforeseeable losses, if any, on long-term contracts including derivative contracts-refer schedule 18(12.1) andschedule 18(17) to the financial statements.
c) There has been no delay in transferring amounts, required to be transferred, to the Investor Education andProtection Fund by the Bank.
d) (i) The Management has represented that, to the best of its knowledge and belief, other than as disclosed in
schedule 18(13.6) to the financial statements, no funds have been advanced or loaned or invested (eitherfrom borrowed funds or share premium or any other sources or kind of funds) by the Bank to or in anyother person(s) or entity(ies), including foreign entities (“Intermediaries”), with the understanding, whetherrecorded in writing or otherwise, that the Intermediary shall:
• directly or indirectly lend or invest in other persons or entities identified in any manner whatsoeverby or on behalf of the Bank (“Ultimate Beneficiaries”); or
• provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(ii) The Management has represented that, to the best of its knowledge and belief, other than as disclosedin the schedule 18(13.6) to the financial statements, no funds have been received by the Bank from anyperson(s) or entity(ies), including foreign entities (“Funding Parties”), with the understanding, whetherrecorded in writing or otherwise, that the Bank shall:
• directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoeverby or on behalf of the Funding Party (“Ultimate Beneficiaries”); or
(iii) Based on the audit procedures, that have been considered reasonable and appropriate in thecircumstances, performed by us, nothing has come to our notice that has caused us to believe thatthe representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (i) and (ii) above,contain any material misstatement.
e) The final dividend paid by the Bank during the year, in respect of the same declared for the previous year, is inaccordance with section 123 of the Act to the extent it applies to payment of dividend.
f) As stated in schedule 18(13.5) to the financial statements, the Board of Directors of the Bank have proposedfinal dividend for the year which is subject to the approval of the members at the ensuing Annual GeneralMeeting. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declarationof dividend.
g) Based on our examination which included test checks, the Bank has used accounting software for maintainingits books of account which, along with access management tools, have a feature of recording audit trail (edit log)facility and the same has operated throughout the year for all relevant transactions recorded in the software.Further, during the course of our audit, we did not come across any instance of audit trail feature beingtampered with. Additionally, the audit trail has been preserved by the Bank as per the statutory requirementsfor record retention.
(C) With respect to the matter to be included in the Auditor's Report under Section 197(16) of the Act:
The Bank is a banking company as defined under the Banking Regulation Act, 1949. Accordingly, the requirementsprescribed under Section 197 of the Act are not applicable.
For B S R & Co. LLP For Varma & Varma
Chartered Accountants Chartered Accountants
Firm Registration no.: 101248W/W-100022 Firm Registration no.: 004532S
Ashwin Suvarna K P Srinivas
Partner Partner
Membership No.: 109503 Membership No.: 208520
UDIN: 26109503LAWHKS3333 UDIN: 26208520EMJZAO4689
Place: Mumbai Place: Mumbai
Date: 24 April 2026 Date: 24 April 2026