Blood banks are regulated by Drugs and Cosmetics Act, 1940 (Act) and relevant rules made thereunder. Government of India formulated the National Blood Policy (NBP) in April 2002 to bring about a comprehensive, efficient and a total quality management approach to functioning of blood banks throughout the country to ensure easy access to adequate and safe blood. There were 233 blood banks in Andhra Pradesh as of May 2010. This performance audit by the CAG of India carried out, during July - December 2010, reviewed the functioning of 45 (out of 126) blood banks in eight districts over a period of three years (2007-10). This performance audit voices concerns about absence of relevant data, donor safety, sub-optimal utilisation of scarce resource, absence of adequate equipment calibration, huge shortage of drug inspectors as well as ineffective monitoring by drug inspectors. This performance audit found the functioning of blood banks in the State is far from satisfactory. Although specific rules were framed for ensuring the safety of blood donors, a majority of the blood banks verified in audit flouted the rules. Non-compliance with the Rules and ineffective monitoring by the Drug Inspectors had resulted in several deficiencies, endangering the safety of both the donor and the needy patients.