To,

THE PRESIDENT OF INDIA

1. We have audited the attached Balance Sheet of Punjab National Bank as at 31st March, 2004, 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

   1. 20 branches and controling offices (including Regional Offices)audited by us,
   2. 3686 branches and 21 other offices, audited by other auditors and
   3. 316 branches not subjected to audit.
   These unaudited branches account for 0.57% of advances, 2.30% of deposits, 0.36% of interest income and 1.65% of interest expenses. The audited branches were selected by the bank in accordance with the guidelines issued by the Reserve Bank of India. These financial statements are the responsibility of the Bank's management. Our responsibility is to express our opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing Standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material mis-statements. An audit includes examining, on 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.

3. 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 Regulation Act, 1949.

4. Assumptions in respect of segmental disclosures are not verifiable.

5. Attention is invited to note no.7 of schedule 18 regarding amortisation of VRS Expenditure and note no.10 of schedule 18 with regard to proposed dividend.
   
   
6. Subject to limitation of the audit as indicated in Para 1 above and as required by the banking companies (Acquisition & Transfer of undertakings) act , 1970 and also subject to the limitations of disclosure required therein, we report that
   
   

   1. 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:

      
      

      1. The Balance Sheet read with Significant Accounting Policies and notes thereon, is a full and fair Balance Sheet containing the necessary particulars and it is properly drawn up so as to exhibit a true and fair view of the affairs of the Bank as at 31st March 2004.
         
         

      2. The Profit and Loss Account read with Significant Accounting Policies and notes thereon, shows a true balance of profit for the year covered by the account and

      3. The Cash Flow Statement gives a true and fair view of cash flows for the period covered by the statement.

   2. 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.

   3. The transactions of the bank, which have come to our notice have been within the powers of the bank.

   4. The returns received from the offices and branches of the bank have been found adequate for the purpose of our audit.
      
      

Place:- New Delhi
Date :- 15.05.2004