18. Accounting for provisions, contingent liabilities and
contingent assets

I n accordance with AS-29, “Provisions, Contingent
Liabilities and Contingent Assets”, the Bank recognises
provisions when it has a present obligation as a result of
a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the
obligation and when a reliable estimate of the amount of the
obligation can be made.

Provisions are determined based on management estimate
required to settle the obligation at the Balance Sheet date,
supplemented by experience of similar transactions. These
are reviewed at each Balance Sheet date and adjusted to
reflect the current management estimates.

A disclosure of contingent liability is made when
there is:

• a possible obligation arising from a past event, the
existence of which will be confirmed by the occurrence
or non-occurrence of one or more uncertain future
events not within the control of the Bank; or

• a present obligation arising from a past event which
is not recognised as it is not probable that an outflow
of resources will be required to settle the obligation
or a reliable estimate of the amount of the obligation
cannot be made.

When there is a possible obligation or a present obligation
in respect of which the likelihood of outflow of resources is
remote, no provision or disclosure is made.

Contingent assets, if any, are not recognised in the financial
statements since this may result in the recognition of
income that may never be realised.

19. Cash and cash equivalents

Cash and cash equivalents include cash, rupee digital
currency, balances with RBI, balances with other banks
and money at call and short notice.

20. Interest expense

Interest expense on deposits accepted and borrowings is
recognised in the Profit and Loss Account on an accrual
basis, in accordance with the terms of the respective
deposits and borrowings.

21. Share issue expenses

Share issue expenses are adjusted against Share Premium
Account in terms of Section 52 of the Companies Act, 2013.

22. Corporate social responsibility

Expenditure towards corporate social responsibility, in
accordance with Companies Act, 2013, is recognised in
the Profit and Loss Account.

SCHEDULE 18 - SCHEDULES FORMING PART OF THE STANDALONE FINANCIAL STATEMENTS FOR
THE YEAR ENDED MARCH 31, 2026

Amounts in notes forming part of the standalone financial statements for the year ended March 31,2026 are denominated in rupee
crore to conform to extant RBI guidelines, except where stated otherwise.

1. Bonus issue

During the year ended March 31, 2026, the shareholders of the Bank have approved, through postal ballot, the issuance of
bonus shares, in the proportion of 1:1, i.e. 1 (One) bonus equity share of ' 1/- each for every 1 (One) fully paid-up equity share
held as on the record date. Accordingly, the Bank has allotted 7,67,70,39,761 equity shares as bonus shares on August 28,
2025, by utilisation of share premium. All shares and per share information in the financial statements reflect the effect of bonus
shares issuance retrospectively. Further, pursuant to the shareholders’ approval obtained through the postal ballot, the Bank
has increased its authorised share capital to 2,000.00 crore (20,00,00,00,000 shares of ' 1/- each) during the year ended March
31,2026.

2. Interim and Proposed dividend

The Bank paid special interim dividend of ' 5.00 per equity share (pre-bonus) approved by Board of Directors at its meeting
held on July 19, 2025, amounting to ' 3,836.57 crore. The Board of Directors, at its meeting held on April 18, 2026, proposed
a final dividend of ' 13.00 per equity share, subject to the approval of shareholders at the ensuing Annual General Meeting.
Adjusted for the bonus issue, total dividend per equity share for the financial year 2025-26 is ' 15.50 (previous year: ' 11.00)
and the total dividend aggregates to ' 23,847.94 crore (previous year ' 16,869.41 crore). In terms of the AS-4 “Contingencies
and events occurring after the balance sheet date”, the Bank has not appropriated the proposed dividend from the Profit and
Loss Account and the same will be recognised in the year of actual payout post approval. Effect of the proposed dividend has
been reckoned in determining capital funds in computation of the capital adequacy ratio.

3. Capital adequacy

The Bank’s capital to risk-weighted assets ratio (‘Capital Adequacy Ratio’) is calculated in accordance with the RBI guidelines
on Basel III capital regulations (‘Basel III’). The minimum capital ratio requirement under Basel III is as follows:

As on March 31,2026, the Bank’s subordinated and perpetual debt capital instruments amounted to ' 22,000.00 crore (previous
year: ' 22,000.00 crore) and ' 13,222.50 crore (previous year: '12,286.50 crore) respectively. In accordance with the RBI guidelines,
banks are required to make consolidated Pillar 3 and Net Stable Funding Ratio (NSFR) disclosures under the Basel III Framework.
These disclosures would be available on the Bank's website at the following link: https://www.hdfc.bank.in/about-us/regulatory-
disclosures. These disclosures have not been subjected to audit by the statutory auditors of the Bank.

Capital infusion

During the year ended March 31, 2026, the Bank allotted 6,41,06,893 equity shares (previous year: 5,53,11,012 equity shares)
aggregating to face value of ' 6.41 crore (previous year: ' 5.53 crore) on exercise of stock options / units. Accordingly, the share
capital increased by ' 6.41 crore (previous year: ' 5.53 crore) and the share premium increased by ' 5,102.09 crore (previous year:
' 6,340.97 crore).

4. Employees Stock Options / Units Outstanding

The cost of stock-based compensation is determined using the fair value method based on the Black-Scholes model. For the
year ended March 31,2026, an amount of ' 1,971.07 crore (previous year: ' 1,890.70 crore) is recognised in the Profit and Loss
Account and credited to Employees Stock Options / Units Outstanding account.

During the year ended March 31,2026, on exercise of share-linked instruments, an amount of ' 1,179.83 crore (previous year:
' 723.11 crore) is transferred from Employees Stock Options / Units Outstanding to share premium and on lapses of share-
linked instruments, an amount of ' 51.32 crore (previous year: ' 15.11 crore) is transferred from Employees Stock Options /
Units Outstanding to General reserve.

Accounting for employee share based payments

The shareholders of the Bank approved the grant of equity stock options under Plan “C” in June 2005, Plan “D” in June 2007,
Plan “E” in June 2010, Plan “F” in June 2013, Plan “G” in July 2016 and Plan “H” in August 2024. The Bank also approved
the Employee Stock Incentive Master Scheme in May 2022. Under the terms of each of these plans, the Bank may issue to
its employees and Whole Time Directors, Equity Stock Options (‘ESOPs’) or Restricted Stock Units (‘Units’) each of which is
convertible into one equity share. Further, pursuant to the amalgamation of eHDFC Limited with and into Bank effective from
July 01, 2023, the existing ESOP Schemes of the eHDFC Limited comprising of eHDFC 2007, eHDFC 2008, eHDFC 2014,
eHDFC 2017 and eHDFC 2020 were taken over by the Bank.

All the plans were framed in accordance with the SEBI (Employee Stock Option Scheme & Employee Stock Purchase Scheme)
Guidelines, 1999 as amended from time to time and as applicable at the time of the grant. The accounting for the stock options
has been in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity)
Regulations, 2021 and RBI guidelines to the extent applicable.

The plans provide for the issuance of options at the recommendation of the Governance, Nomination and Remuneration
Committee of the Board (‘GNRC’) at the closing price on the working day immediately preceding the date when options are
granted. This closing price is the closing price of the Bank’s equity share on an Indian stock exchange with the highest trading
volume as of the working day preceding the date of grant. Further, the units are issued at the face value of the equity share of
' 1/- each. The vesting conditions applicable to the options / units are at the discretion of the GNRC. These options / units are
exercisable on vesting, for a period as set forth by the GNRC at the time of the grant. The period in which the options and units
may be exercised cannot exceed five years and one year respectively from the date of vesting period.

Pursuant to the issuance of bonus shares in the ratio of 1:1 approved by the shareholders on July 19, 2025, stock options /
units and the exercise price of options were proportionately adjusted.

c) Fair Value on the grant date:

The fair value at grant date is determined using “Black-Scholes Model” which takes into account the exercise price, term
of the option, share price at grant date and expected price volatility of the underlying shares, expected dividend yield and
the risk-free interest rate for the term of the option / units.

Expected volatility is based on GARCH volatility forecasting model using historical stock price of Bank shares.

The weighted average fair value of options granted during the year ended March 31, 2026 was ' 292.15 (previous year:
' 270.12) and of units granted during the year ended March 31, 2026 was ' 937.54 (previous year: ' 848.04).

The assumptions considered in the model for valuing the ESOPs and RSUs granted during the year ended are given below:

5. Reserves and Surplus
Statutory Reserve

During the year ended March 31,2026, the Bank has made an appropriation of ' 18,667.82 crore (previous year: ' 16,836.84
crore) out of profits for the year to the Statutory Reserve pursuant to the requirements of Section 17 of the Banking Regulation
Act, 1949 read with RBI guidelines.

General Reserve

During the year ended March 31,2026, the Bank has made an appropriation of ' 7,467.13 crore (previous year: ' 6,734.74 crore)
out of profits for the year to the General Reserve. Further, the Bank has transferred ' 51.32 crore (previous year: ' 15.11 crore)
from Employee Stock Options Outstanding to General Reserve on lapses of share-linked instruments.

During the previous year, on transition to the revised norms on the classification, valuation and operation of Investment portfolio
of Banks, which became applicable from April 01, 2024 (herein after referred as ‘revised norms on investments’), the Bank
recognised a net gain of ' 482.87 crore (net of tax ' 127.00 crore) which was credited to General Reserve.

Special Reserve

During the year ended March 31, 2026, the Bank has made an appropriation of ' 3,000.00 crore (previous year: ' 3,200.00
crore) to the Special Reserve as per Section 36(1)(viii) of the Income-tax Act, 1961.

Amalgamation Reserve I

The balance of ' 1,063.56 crore represents excess of net assets taken over the paid-up value of equity shares issued as
consideration with respect to amalgamation of Times Bank Limited during FY 2000 and Centurion Bank of Punjab Limited
during FY 2009 with the Bank.

Amalgamation Reserve II

The net debit balance of ' 13,947.06 crore includes: (i) ' 59.25 crore representing the excess of net assets taken over the paid-
up value of equity shares issued as consideration, and (ii) excess of cost over face value of Investment in shares of the Bank
by eHDFC Limited of ' 14,006.31 crore, pursuant to amalgamation of eHDFC Limited with the Bank during FY 2023-24.

Capital Reserve

During the year ended March 31,2026, the Bank has made an of appropriation ' 8,320.40 crore (previous year: ' 507.00 crore),
representing the profit on sale of investments classified under HTM and Group Cos. categories and profit on sale of immovable
properties, net of taxes and transfer to statutory reserve, from the Profit and Loss Account to the Capital Reserve.

Investment Reserve Account

In the previous year, on transition to the revised norms on investments, the Bank transferred ' 529.42 crore from the Investment
Reserve Account (IRA) to Investment Fluctuation Reserve (IFR).

Investment Fluctuation Reserve

During the year ended March 31, 2026, the Bank has made an appropriation of Nil (previous year: Nil) to IFR. As per RBI
guidelines, banks are required to maintain an IFR equivalent to 2.00% of their AFS and FVTPL investment portfolios. The
balance in the IFR as at March 31, 2026 is 2.67% (previous year: 2.55%) of the Bank’s AFS and FVTPL investment portfolios.

In the previous year, on transition to the revised norms on investments, the Bank transferred ' 529.42 crore from the IRA to IFR.

Foreign Currency Translation Reserve

As at March 31,2026, the Bank has recognised ' 2,168.78 crore (previous year: ' 1,073.94 crore) as Foreign Currency Translation
Reserve on account of translation of foreign currency assets and liabilities of non-integral foreign operations.

Cash Flow Hedge Reserve

As at March 31,2026, the Bank has recognised debit balance of ' 41.32 crore (previous year: debit balance of ' 32.73 crore)
as Cash Flow Hedge Reserve on derivative contracts designated as cash flow hedge.

AFS Reserve

Pursuant to the revised norms on investments, the net appreciation or depreciation on all performing investments held under
AFS category is directly credited or debited to AFS Reserve. Accordingly, as at March 31,2026 the Bank has recognised debit
balance of ' 38.05 crore (previous year: credit balance of ' 616.81 crore), net of taxes as AFS Reserve.

Drawdown from Reserves

The Bank has not undertaken any drawdown from reserves during the years ended March 31, 2026 and March 31,2025.

Qualitative disclosure on LCR

The Liquidity Coverage Ratio (LCR) is one of the Basel Committee’s key reforms to develop a more resilient banking sector.
The objective of the LCR is to promote the short-term resilience of the liquidity risk profile of Banks. It does this by ensuring
that Banks have an adequate stock of unencumbered high-quality liquid assets (HQLA) that can be converted easily and
immediately into cash to meet their liquidity needs for a 30 calendar day liquidity stress scenario. The LCR is expected to
improve the banking sector’s ability to absorb shocks arising from financial and economic stress, whatever the source, thus
reducing the risk of spillovers from the financial sector to the real economy.

The Liquidity Risk Management of the Bank is governed by the Asset Liability Management (ALM) Policy approved by the Board.
The Asset Liability Committee (ALCO) is a decision-making unit responsible for implementing the liquidity and interest rate
risk management strategy of the Bank in line with its risk management objectives and ensures adherence to the risk tolerance
/ limits set by the Board. The Bank has also set up a senior level management committee, viz., the Group Risk Management
Committee (GRMC) under the ICAAP framework of the Bank, to establish a formal and dedicated structure to periodically
assess the nature / quantum of material risks of the subsidiaries and adequacy of its risk management processes, including
providing oversight for managing liquidity risk. Liquidity for the Bank’s domestic banking operations is directly managed at
the Head Office. The overseas branches and offshore unit of the Bank independently manage their liquidity requirements with
support from the Head Office. Similarly, the Bank’s subsidiaries independently manage their liquidity requirements under
guidance of the GRMC, which, along with senior management of the subsidiaries, reviews the risk assessment of material
risks at the subsidiaries. Further, the Bank maintains suitable systems and processes to monitor liquidity requirements in other
currencies as appropriate.

In order to determine cash outflows, the Bank segregates its deposits into various customer segments, viz., Retail (which
include deposits from individuals), Small Business Customers (those with deposits upto ' 7.5 crore), and Wholesale (which
would cover all residual deposits). Other contractual funding, including a portion of other liabilities which are expected to run
down in a 30-day timeframe are included in the cash outflows. These classifications, based on extant regulatory guidelines,
are part of the Bank’s LCR framework, and are also submitted to the RBI.

The LCR is calculated by dividing a Bank's stock of HQLA by its total net cash outflows over a 30-day stress period. The present
minimum requirement, as on March 31,2026, is 100%.

In the Indian context, the run-off factors for the stressed scenarios are prescribed by the RBI, for various categories of liabilities
(viz., deposits, unsecured and secured wholesale borrowings), undrawn commitments, derivative-related exposures, and
offset with inflows emanating from assets maturing within the same time period. Given below is a table of run-off factors and
the average LCR maintained by the Bank quarter-wise over the past two years:

The average LCR for the quarter ended March 31, 2026, was at 114.17% as against 118.96% for the quarter ended March 31,

2025, and above the present prescribed minimum requirement of 100%. The average HQLA for the quarter ending March 31,

2026, was ' 772,640.21 crore, as against ' 725,568.81 crore for the quarter ended March 31,2025. During the same period the
composition of government securities and treasury bills in the HQLA was at 91.01% as compared to 96.55% in the previous year.

For the quarter ended March 31, 2026, derivative exposures (net of cash inflows) / collateral requirements and undrawn
commitments constituted around 0.47% and 1.55% respectively of average cash outflow as against 0.47% and 1.28%
respectively for quarter ended March 31, 2025. The Bank has a significant portion of funding through deposits. As of March
31,2026, the top 20 depositors comprised of 4.81% of total deposits indicating a healthy and stable deposit profile.

• Divergence in the asset classification and provisioning

In terms of the RBI guidelines, banks are required to disclose the divergence in asset classification and provisioning consequent
to RBI’s annual supervisory process in their notes to accounts to the financial statements, wherever the additional provisioning
assessed / additional gross NPAs identified by RBI exceeds the threshold specified by RBI. The threshold for provisioning is
5 per cent of the reported profit before provisions and contingencies for the reference period and / or that for additional gross
NPAs is 5 per cent of the published incremental Gross NPAs for the reference period.

There was no reportable divergence in asset classification and provisioning for standard advances / NPAs for the year ended
March 31, 2025 and March 31, 2024.

• Unsecured advances

Advances for which intangible collaterals such as rights, licenses, authority, trademarks, patents, etc. are charged in
favour of the Bank in respect of projects financed by the Bank, are reckoned as unsecured advances under Schedule
9 of the Balance Sheet in line with the extant RBI guidelines. There are no such advances outstanding as at March 31,
2026 (previous year: Nil).

• Details of factoring exposure

The factoring exposure of the Bank as at March 31, 2026 is ' 56,797.90 crore (previous year: ' 38,922.37 crore).

• Unhedged foreign currency exposure

The Bank has in place a policy and process for managing currency induced credit risk. The credit appraisal memorandum
prepared at the time of origination and review of a credit facility is required to discuss the exchange risk that the customer
is exposed to from all sources, including trade related, foreign currency borrowings and external commercial borrowings.
It could cover the natural hedge available to the customer as well as other hedging methods adopted by the customer
to mitigate exchange risk. For foreign currency loans granted by the Bank beyond a defined threshold the customer is
encouraged to enter into appropriate risk hedging mechanisms with the Bank. Alternatively, the Bank satisfies itself
that the customer has the financial capacity to bear the exchange risk in the normal course of its business and / or has
other mitigants to reduce the risk. On a periodic basis, the Bank reviews information on the unhedged portion of foreign
currency exposures of customers, whose total foreign currency exposure with the Bank exceeds a defined threshold.
A Board approved credit risk rating linked limit on unhedged foreign currency position of customers is applicable when
extending credit facilities to a customer. The compliance with the limit is assessed by estimating the extent of drop in
a customer’s annual Earnings Before Interest and Depreciation (‘EBID’) due to a potentially large adverse movement in
exchange rate impacting the unhedged foreign currency exposure of the customer. Where a breach is observed in such
a simulation, the customer is suitably advised to review and manage its unhedged exposure, where deemed necessary.
The Bank holds standard asset provisions of ' 312.47 crore (previous year: ' 318.05 crore) and maintains capital (including
D-SIB) of ' 2,543.38 crore (previous year: ' 1,551.56 crore) as at March 31, 2026, in respect of the unhedged foreign
currency exposure of its customers.

• Inter-bank Participation with risk sharing

The aggregate amount of participation issued by the Bank and reduced from advances as per regulatory guidelines as
at March 31,2026 was ' 46,680.00 crore (previous year: ' 77,703.73 crore).

• Qualitative disclosures on risk exposure in derivatives
Overview of business and processes

Derivatives are financial instruments whose characteristics are derived from underlying assets, or from interest rates,
exchange rates or indices. These include forwards, swaps, futures and options. The notional amounts of financial
instruments such as foreign exchange contracts and derivatives provide a basis for comparison with the instruments
recognised on the Balance Sheet but do not necessarily indicate the amounts of future cash flows involved or the current
fair value of the instruments and, therefore, do not indicate the Bank’s exposure to credit or price risks. The following
sections outline the nature and terms of the derivative transactions generally undertaken by the Bank.

Interest rate contracts

Forward rate agreements give the buyer the ability to determine the underlying rate of interest for a specified period
commencing on a specified future date (the settlement date). The underlying rate of interest could be an interest rate curve,
interest rate index or bond yield. There is no exchange of principal and settlement is effected on the settlement date. The
settlement amount is the difference between the contracted rate and the market rate prevailing on the settlement date
discounted for the interest period of the agreement.

Interest rate swaps involve the exchange of interest obligations with the counterparty for a specified period without
exchanging the underlying (or notional) principal.

Interest rate caps and floors give the buyer the ability to fix the maximum or minimum rate of interest. The writer of
the contract pays the amount by which the market rate exceeds or is less than the cap rate or the floor rate respectively.
A combination of interest rate caps and floors can create structures such as interest rate collar, cap spreads and
floor spreads.

Interest rate futures are standardised interest rate derivative contracts traded on a recognised stock exchange to buy
or sell a notional security or any other interest bearing instrument or an index of such instruments or interest rates at a
specified future date, at a price determined at the time of the contract.

Exchange rate contracts

Forward foreign exchange contracts are agreements to buy or sell fixed amounts of currency at an agreed exchange rate
on a future date. These instruments are carried at fair value, determined based on either FEDAI rates or market quotations.

Cross currency swaps are agreements to exchange principal amounts denominated in different currencies. Cross
currency swaps may also involve the exchange of interest payments on one specified currency for interest payments in
another specified currency for a specified period.

Currency options (including Exchange Traded Currency Option) give the buyer, on payment of a premium, the right
but not an obligation, to buy or sell specified amounts of currency at an agreed exchange rate on or before a specified
future date.

Currency futures contract is a standardised contract traded on an exchange, to buy or sell a certain underlying currency
on a certain date in the future, at a specified price. The contract specifies the rate of exchange between one unit of
currency with another.

The Bank’s derivative transactions relate to sales and trading activities. Sale activities include the structuring and
marketing of derivatives to customers to enable them to hedge their market risks (both interest rate and exchange risks),
within the regulatory framework as applicable from time to time. The Bank deals in derivatives on its own account (trading
activity) principally for the purpose of generating a profit from short term fluctuations in price yields or implied volatility.
The Bank also deals in derivatives to hedge the risk embedded in some of its Balance Sheet assets or liabilities.

Constituents involved in derivative business

The Treasury front-office enters into derivative transactions with customers and inter-bank counterparties. The Bank
has an independent back-office and mid-office as per regulatory guidelines. The Bank has credit risk and market risk
departments, as part of the Risk Management Group, that assesses counterparty credit risk and market risk limits, within
the risk architecture and processes of the Bank.

Derivative policy

The Bank has in place a Derivative policy which covers various aspects that apply to the functioning of the derivative
business. The derivative business is administered through various market risk limits such as position limits, tenor limits,
sensitivity limits, scenario based profit and loss limit for option portfolio, stop loss trigger levels and value-at-risk limits
that are recommended by the Risk Policy and Monitoring Committee (‘RPMC’) to the Board of Directors for approval.
All methodologies that are used to assess market and credit risks for derivative transactions are specified by the market
risk and credit risk units. Limits are monitored on a daily basis by the mid-office.

The Bank has a Board approved policy on Customer Suitability & Appropriateness, which forms part of the Derivative
policy, to ensure that derivative transactions entered into are appropriate and suitable to the customer’s nature of
business / operations. Before entering into a derivative deal with a customer, the Bank scores the customer on various
risk parameters and based on the overall score level it determines the kind of product that best suits its risk appetite and
the customer’s requirements.

Classification of derivatives book

The derivative book is classified into trading and hedging book. Classification of the derivative book is made on the basis
of the definitions of the trading and hedging specified in the RBI guidelines. The trading book is managed within the
trading limits recommended by the RPMC and approved by the Board of Directors.

Hedging policy

For derivative contracts designated as hedging instruments, the Bank documents, at inception of the hedge, the
relationship between the hedging instrument and the hedged item, the risk management objective for undertaking
the hedge and the methods used to assess the hedge effectiveness. Hedge effectiveness is ascertained at the time of
inception of the hedge and periodically thereafter. Hedge effectiveness is measured by the degree to which changes in
the fair value or cash flows of the hedged item that are attributable to a hedged risk are offset by changes in the fair value
or cash flows of the hedging instrument using various qualitative and quantitative methods.

The hedging book consists of transactions to hedge Balance Sheet assets or liabilities. The tenor of hedging instrument
may be less than or equal to the tenor of underlying hedged asset or liability. The Bank as part of its risk management
strategy, makes use of derivative instruments, including foreign exchange forward contracts, for hedging the risk
embedded in some of its financial assets or liabilities recognised on the Balance Sheet. In case of a fair value hedge, the
changes in the fair value of the hedging instruments and hedged items are recognised in the Profit and Loss Account and

in case of cash flow hedges other than for foreign exchange forward contracts and principal only swaps, the changes in
fair value of effective portion are recognised in Reserves and Surplus under ‘Cash flow hedge reserve’ and ineffective
portion of an effective hedging relationship, if any, is recognised in the Profit and Loss Account. The accumulated balance
in the cash flow hedge reserve, in an effective hedging relationship, is recycled in the Profit and Loss Account at the
same time that the impact from the hedged item is recognised in the Profit and Loss Account. Foreign exchange forward
contracts and principal only swaps not intended for trading, that are entered into to establish the amount of reporting
currency required or available at the settlement date of a transaction, and are outstanding at the Balance Sheet date, are
accounted in accordance with AS-11. Accordingly, such contracts are not marked to market and only translated at spot
rate. The premia or discount arising at the inception of such forward exchange contract is amortised as expense or income
over the life of the contract. The interest income / expense on such POS transaction is accounted on accrual basis.

• Provisioning, collateral and credit risk mitigation

The Bank enters into derivative transactions with counterparties based on their business ranking and financial position.
The Bank sets up appropriate appetite / limits upon evaluating the ability of the counterparty to honour its obligations
in the event of crystallisation of the exposure. Appropriate credit covenants are stipulated where required, as trigger
events to call for collaterals or terminate a transaction and contain the risk. Further, to mitigate the current exposure in
non-centrally cleared forex and derivative transactions, Bank has entered into Credit Support Annex (‘CSA’) agreements
with some of the major international counterparty banks and few Indian financial institutions.

The Bank, at the minimum, conforms to the RBI guidelines with regard to provisioning requirements. Overdue receivables
representing crystallised positive mark to market value of a derivative contract are transferred to the account of the
borrower and treated as non-performing assets, if these remain unpaid for 90 days or more. Full provision is made
for the entire amount of overdue and future receivables relating to positive marked to market value of non-performing
derivative contracts.

• RBI vide its letter dated November 28, 2025, levied a penalty of ' 9,100,000 on the Bank for not adopting a uniform
external benchmark within a loan category, for the Bank’s subsidiary undertaking a business not covered under Section
6 of the Banking Regulation Act, 1949, and for outsourcing offline verification of KYC documents to Direct Selling Agents
(DSAs), in contravention to the Reserve Bank Directions on ‘Interest Rate on Advances’, the Reserve Bank Guidelines
on Managing Risks and Code of Conduct in Outsourcing of Financial Services read with provisions of Reserve Bank of
India (Know Your Customer (KYC)) Directions, and the provisions of the Banking Regulation Act, 1949.

The penalties have been paid by the Bank and has initiated / taken corrective measures, as necessary, to align the
operations / procedures in line with the applicable regulations.

During the year ended March 31, 2025, RBI has levied following penalties on the Bank:

• RBI vide its letter dated September 10, 2024 levied a penalty of ' 10,000,000 on the Bank for giving gifts to the depositors
at the time of accepting deposits, for opening certain savings accounts in the names of ineligible entities and for failure
to ensure that customers are not contacted after 7 pm and before 7 am, in contravention to the Reserve Bank directions
on ‘lnterest Rate on Deposits’ and ‘Recovery Agents engaged by Banks’.

• RBI vide its letter dated March 26, 2025 levied a penalty of ' 7,500,000 on the Bank for not categorising certain customers
into low, medium and high-risk category based on its assessment and risk perception and for allotting multiple customer
identification code to certain customers instead of a Unique Customer ldentification Code (UCIC) for each customer,
which were in contravention to Reserve Bank directions on ‘Know Your Customer (KYC)’.

The penalties were paid by the Bank and initiated / took corrective measures, as necessary, to align the operations /
procedures in line with the applicable regulations.

17. Disclosures on remuneration

Qualitative Disclosures

A. Information relating to the bodies that oversee remuneration
Name and composition

The Board of Directors of the Bank has constituted the Governance, Nomination and Remuneration Committee
(hereinafter, the ‘GNRC’) for overseeing and governing the compensation policies of the Bank. The GNRC is comprised
of four non-executive directors as of March 31, 2026. Further, two members of the GNRC are also members of the Risk
Policy and Monitoring Committee (hereinafter, the ‘RPMC’) of the Board.

As of March 31,2026, the GNRC is comprised of Dr. Harsh Kumar Bhanwala, Mr. Sandeep Parekh, Mr. M.D. Ranganath
and Mr. Keki Mistry. Further, Mr. M.D. Ranganath and Mr. Sandeep Parekh are also the members of the RPMC.
Dr. Harsh Kumar Bhanwala is the chairperson of the GNRC.

Mandate of the GNRC

The primary mandate of the GNRC is to actively oversee and review the implementation of compensation policy of
the Bank. The GNRC periodically reviews the overall Remuneration Policy of the Bank with a view to attract, retain
and motivate employees. In this capacity it is required to review and approve the design of the total compensation
framework, including compensation strategy programs and plans, ensure alignment with prudent risk taking on behalf
of the Board of Directors. The compensation structure and pay revision for the Group Heads, Material Risk Takers,
Senior Management, Risk and Control Staff, Key Management Personnel and Whole Time Directors (who are also
Material Risk Takers) of the Bank is approved by the GNRC and subsequently approved by the Board of Directors.
The compensation of the Whole Time Directors requires the additional approval of the Reserve Bank of India. The
GNRC co-ordinates with the RPMC to ensure that compensation is aligned with prudent risk taking. Further, the
GNRC also reviews the appointments of individuals at the levels of Group Heads, Key Management Personnel, Senior
Management and Whole Time Directors of the Bank.

External Consultants:

The Bank engaged with the following consultants during the year ended March 31, 2026:

1. AON Consulting Private Limited - in respect of the Bank’s annual salary market benchmarking exercise.

2. Deloitte Touche Tohmatsu India LLP - in respect of the Bank’s benchmarking exercise pertaining to executive
compensation and compensation philosophy.

3. Mercer Consulting (India) Private Limited - in the area of job evaluation.

4. Grant Thornton for Black Scholes Valuation of ESOPs and RSUs.

5. Willis Towers Watson - in respect of Bank’s annual salary market benchmarking exercise for C1 & above employees.

6. Overseas Legal Counsel (multiple consultants - OLN Law, Howard and Kennedy, ENS Africa, Al Tamini Allen &
Gladhill) for employment related policies for the Bank’s presence outside India.

Scope of the Bank’s Remuneration Policy:

The Remuneration Policy of the Bank includes within its scope all business lines and functions, and all permanent
staff in the Bank’s domestic as well as international offices. The principles articulated in the compensation policy are
applicable uniformly across the Bank. However, any statutory/regulatory provisions applicable in overseas locations
take precedence over the Remuneration Policy of the Bank.

All permanent employees of the Bank except those covered under the long-term wage agreement is covered by the said
Remuneration Policy. The number of employees covered under the compensation policy was 2,10,969 as on March 31,
2026 (previous year: 2,14,308, i.e. as on March 31, 2025).

B. Information relating to the design and structure of remuneration processes and the key features and objectives
of remuneration policy

I. Key Features and Objectives of Remuneration Policy

The Bank’s Remuneration Policy (the ‘Policy’) is aligned to business strategy, market dynamics, internal characteristics
and complexities within the Bank. The ultimate objective of the Policy is to provide a fair and transparent structure
that helps in acquiring and retaining the talent pool critical to build competitive advantage and brand equity. The
Policy has been designed basis the principles for sound compensation practices in accordance with regulatory
requirements and provides a framework to create, modify and maintain appropriate compensation programs and
processes with adequate supervision and control.

The Bank’s performance management system provides a sound basis for assessing employee performance
holistically. The Bank’s compensation framework is aligned with the performance management system and
differentiates pay appropriately amongst its employees based on degree of contribution, performance, skill,
experience, grade and availability of talent owing to competitive market forces. Further, the Bank also considers
compliance to processes, regulatory compliance and risk management as an integral part of its performance
appraisal process. These factors are given due weightage for the purposes of the final performance rating of
employees for a given performance year.

The GNRC considers the aforementioned principles enunciated in the Bank’s compensation policy and ensures that:

(a) the compensation is adjusted for all types of prudent risk taking;

(b) compensation outcomes are symmetric with risk outcomes;

(c) compensation payouts are sensitive to the time horizon of risk; and

(d) the mix of cash, equity and other forms of compensation are aligned with risk.

Review of Remuneration Policy of the Bank

In line with Annual Review of the Compensation Policy for the Bank, the same was proposed by the Bank to the GNRC
with the proposal of changes basis observations of Audit on specific inclusions.

This was reviewed and approved by the GNRC during the year ended March 31, 2026, vide GNRC dated February
25, 2026.

II. Design and Structure of Remuneration

The design and structure of remuneration in accordance with the RBI guidelines dated November 4, 2019, for the
financial year ended March 31, 2026, is as follows:

a) Fixed Pay

The Remuneration Policy ensures that the fixed component of the compensation is reasonable, taking into account
all relevant factors including industry practice.

Elements of Fixed Pay:

The fixed pay component of the Bank’s compensation structure typically consists of elements such as base salary,
allowances, perquisites and retirement benefits. Perquisites extended are in the nature of company car, company
leased accommodation, club membership and such other benefits or allowances in lieu of such perquisites
/ benefits. Retirement benefits include contributions to Provident Fund, Superannuation Fund (for employees
above certain job bands), National Pension Scheme and Gratuity. The Bank also provides pension to certain
employees of the erstwhile Lord Krishna Bank (eLKB) under the Indian Banks’ Association (‘IBA’) structure.

Determinants of Fixed Pay:

The fixed pay is primarily determined by taking into account factors such as the job size, performance, experience,
location, market competitiveness of pay and is designed to meet the following key objectives of:

(a) fair compensation given the role complexity and size;

(b) fair compensation given the individual’s skill, competence, experience and market pay position;

(c) contribution to post retirement benefits; and

(d) compliance with all statutory obligations.

The quantum of fixed pay for the Top Management i.e., Employees in Executive Vice President and above grades,
who are Material Risk Takers (including the Whole Time Directors), Risk and Control Staff and Key Management
Personnel are approved by the GNRC and the Board.

The quantum of fixed pay for Whole Time Directors is approved by the GNRC and the Board, and is subject to the
approval of the RBI.

b) Variable Pay - For Top Management

The performance management system forms the basis for variable pay allocation of the Bank. The Remuneration
Policy of the Bank ensures that the performance management system is comprehensive and considers both,
quantitative and qualitative performance measures.

(i) Composition of Variable pay

The variable pay will be in the form of share linked instruments or a mix of cash and share linked instruments.
The share linked instrument used in the financial year 2025-26 was the Employee Stock Options. All plans for
grant of options are framed in accordance with the SEBI guidelines, 1999 as amended from time to time and
are approved by the shareholders of the Bank. These plans provide for the grant of options post approval by
the GNRC. For the Whole Time Directors, the variable pay is approved by the GNRC, Board and the Reserve
Bank of India.

The Bank will ensure that there is a proper balance between Fixed Pay and Variable Pay. In cases where
compensation by way of share-linked instruments is not permitted by law / regulations, the entire variable pay
will be in cash.

(ii) Limits on Variable pay

For the Material Risk Takers including the Whole Time Directors, a substantial portion of compensation i.e. at
least 50% will be variable and paid on the basis of individual, business-unit and organization performance.
This will be in line with the principle that, at higher levels of responsibility, the proportion of variable pay will be
higher. The total variable pay shall be limited to a maximum of 300% of the fixed pay (for the relative performance
period).

In case the variable pay is up to 200% of the fixed pay, a minimum of 50% of the variable pay; and in case the
variable pay is above 200%, a minimum of 67% of the variable pay shall be via non-cash instruments. The non¬
cash component in 2025-26 comprised of Employee Stock Options.

In the event that the employee is barred by statute or regulation from grant of share-linked instruments, his/her
variable pay will be capped at 150% of fixed pay but shall not be less than 50% of the fixed pay.

For the Risk and Control staff, their Total Compensation is weighed in favor of Fixed Pay.

(iii) Deferral of Variable pay

For top management including Whole Time Directors (WTDs) and Material Risk Takers (MRTs), deferral
arrangements exist for the variable pay. A minimum of 60% of total variable pay is under deferral arrangements.
If cash component is a part of the variable pay, at least 50% of the cash bonus is deferred. In cases where cash
component of the bonus is under ' 25 lakh, deferral arrangements is not necessary.

The deferral period is a minimum of three years and is applicable to both cash and non-cash components of
variable pay. The deferral period for share linked instruments / ESOPs / RSUs is governed by the ESOP / RSU
Scheme Rules which is approved by the GNRC and the Board. In 2025-26, the deferment of variable pay,
wherever applicable, was at least 3 years.

(iv) Vesting of Variable pay

The deferred portion of the remuneration vests at the end of deferral period and is spread out over the course
of the deferral period. The first vesting is not before one year from the commencement of the deferral period.
The vesting is no faster than on a pro rata basis and the frequency of the vesting is more than a year in order to
ensure appropriate assessment of risk.

(v) Malus / Clawback Arrangement

The Bank believes in sustained business performance in tandem with prudent risk taking. The Bank, therefore,
has devised appropriate deterrents in order to institutionalize the aforementioned commitment.

Malus Arrangement: The provision of a Malus arrangement would entail cancellation of payout for the deferred
portion of reward (cash variable pay / long term incentive (LTI) i.e., any Share Linked Instrument). The RBI
guidelines thus define malus as “A malus arrangement permits the bank to prevent vesting of all or part of the
amount of a deferred remuneration. Malus arrangement does not reverse vesting after it has already occurred.”

Clawback Arrangement: The provision of Clawback arrangement would entail return of payout of reward (cash
variable pay / long term incentive (LTI) i.e., any Share Linked Instrument) made in the previous years attributable
to a given reference year wherein the incident has occurred. The return would be in terms of net amount. The RBI
thus define clawback as “A clawback is a contractual agreement between the employee and the bank in which
the employee agrees to return previously paid or vested remuneration to the bank under certain circumstances.”

The malus and clawback clause will be actioned when the employee demonstrates behaviour involving fraudulent
behaviour, moral turpitude, lack of integrity, flagrant breach of company policies and statutory norms resulting
in financial or non-financial losses. Manifestation of behaviour listed above is presumed to have a malafide
intent. Illustrative list of conditions is enumerated below. The occurrence of any / some / all of the following
conditions / events shall trigger a review by the GNRC for the application of the Malus or the Clawback
arrangement:

a) Substantial Financial Deterioration in profitability or risk parameters

b) Reckless, negligent or willful actions or exhibited inappropriate values and behavior

c) Fraud that requires a financial restatement

d) Reputational harm

e) Exposing the bank to substantial risk

f) Such other conditions or events, of similar nature as above, as determined by GNRC for triggering review
by GNRC for the purpose of application of the Malus or the Clawback arrangement

In determining the causes for deterioration in financial performance under (a), the GNRC may take into
consideration and have due regard to the fact whether the deterioration was for factors within control or
whether it was on account of conditions like global market headwinds, industry performance, changes in legal
/ regulatory regime, force majeure events like occurrence of natural disasters, pandemic, other socio-economic
conditions etc.

While undertaking the review for the concerned person for the application of the Malus or the Clawback
arrangement based on any trigger events, when determining accountability of the concerned person, the GNRC
shall be guided by the principles of proportionality, culpability or proximity or nexus to the event or misconduct.

In accordance with the RBI guidelines, wherever the assessed divergence in Bank’s provisioning for Non¬
Performing Assets (NPAs) or asset classification exceeds the prescribed threshold for public disclosure, the
Bank shall not pay the unvested portion of the variable compensation for the assessment year under ‘malus’
arrangement. Further, in such situations, no proposal for increase in variable pay (for the assessment year)
shall be entertained. In case the Bank’s post assessment Gross NPAs are less than 2.0%, these restrictions
will apply only if criteria for public disclosure are triggered either on account of divergence in provisioning or
both provisioning and asset classification.

The GNRC may decide to apply malus on part, or all of the variable pay. The time horizon for the application of
malus / clawback clause shall be four years from the date of reward.

The GNRC shall review the act of misconduct / incident to ascertain the degree of accountability attributable
to a Whole Time Director / Material Risk Taker / Top Management (Job Bands C1 and above) prior to applying
the Malus or Clawback arrangement.

The criteria for Malus / Clawback will be reviewed by the Governance, Nomination and Remuneration
Committee annually.

The GNRC and Board of Directors has also approved an addendum to the compensation policy on Clawback
of Incentive Compensation in view of the final rules on listing standards for the recovery of erroneously awarded
compensation adopted by the Securities and Exchange Commission on October 26, 2022, applicable to
companies listed on the New York Stock Exchange and NASDAQ.

This addendum shall be read with, and is in addition to, the Compensation Policy formulated and approved by
the Board of Directors of the Bank. The same has been formulated to comply with the requirements of Section
10D promulgated under the U.S. Securities Exchange Act of 1934, as amended (“Exchange Act”), and Section
303A.14 of the NYSE so as to recover certain compensation in the event of an accounting restatement due to any
material non-compliance relating to any financial reporting requirements under the applicable U.S. securities
laws, and shall be interpreted and applied consistent therewith.

(vi) Approval Process:

The Variable Pay for Senior Management, who are Material Risk Takers (including the Whole Time Directors)
Risk and control staff is approved by the GNRC and the Board. For Whole Time Directors the variable pay is
approved by the GNRC, Board and the Reserve Bank of India.

Employees other than Senior Management, Material Risk Takers, Whole Time Directors

The Bank has formulated the following variable pay plans:

(i) Annual Bonus Plan

The quantum of variable payout is a function of the performance of the Bank, performance of the
business unit, performance of the individual employee, job band of the employee and the functional
category. Basis these key determinants and due adjustment for risk alignment, a payout matrix for
variable pay is developed. Market trends for specific businesses / functions along with inputs from
compensation surveys may also be used in finalizing the payout.

Bonus pools are designed to meet specific business needs therefore resulting in differentiation in both
the quantum and the method of payout across functions.

(ii) Performance-linked Plans (PLPs)

PLPs are formulated for employees in sales, collections, customer service and relationship roles who
are given business / service targets but have limited impact on risk since credit decisions are exercised
independent of these functions. All PLP payouts are based on a balanced scorecard framework which
factors not just quantitative, but also qualitative measures, and are subject to achievement of individual
targets enumerated in the respective scorecards of the employees. A portion of the PLP payouts is
deferred till the end of the financial year to provide for any unforeseen performance risks. Employees who
are on the PLPs for the entire financial year are excluded from the Annual Bonus Plan.

(iii) Employee Stock Option Plan (ESOPs)

Employees in Job Bands D4 and above also receive ESOPs as a vehicle to create a balance between
short term rewards and long term sustainable value creation. ESOPs play a key role in the attraction and
retention of key talent.

The GNRC grants options after considering parameters such as the incumbent’s grade and performance
rating, and such other factors as may be deemed appropriate by the GNRC.

All plans for grant of options are framed in accordance with the SEBI guidelines, 1999 as amended from
time to time and are approved by the shareholders of the Bank. These plans provide for the grant of options
post approval by the GNRC.

The Bank grants ESOPs to eligible employees. Such ESOPs vest over four tranches spread over a period
of 48 months.

In accordance with the RBI guidelines, Employee Stock Options is included as part of Variable Pay.

(iv) Restricted Stock Units (Units)

The Bank granted RSUs to employees at E3 - D3 bands (up to 10 levels below the MD). The same was
approved by the GNRC after considering parameters such as the employee’s grade, performance rating
and any other factors as may be deemed appropriate by the GNRC.

RSUs are granted based on one or more of the pre-defined performance cond itions as may be determined by
the GNRC on a case-to-case basis: Organization performance basis factors such as, i) Total Shareholders’
Return ii) Asset Quality iii) Return on Asset iv) Profitability v) Return on Equity vi) Relative performance
vis-a-vis peers, Business Unit Performance and individual performance.

All plans for grant of units are framed in accordance with the SEBI guidelines, 1999 as amended from time
to time and are approved by the shareholders of the Bank. These plans provide for the grant of units post
approval by the GNRC.

Such units vest over three to four tranches spread over a period of 36 to 48 months.

Risk, Control and Compliance Staff

The Bank has separated the Risk, Control and Compliance functions from the Business functions in
order to create a strong culture of checks and balances and to eliminate any possible conflict of interest
between revenue generation and risk management and control. Accordingly, the overall variable pay as
well as the annual salary increment of the employees in the Risk, Control and Compliance functions is
based on their performance, functional objectives and goals. The Bank ensures that the mix of fixed to
variable compensation for these functions is weighted in favor of fixed compensation.

Guaranteed Bonus

Guaranteed bonuses are not consistent with sound risk management or pay for performance principles
of the Bank and therefore do not form an integral part of the general compensation practice.

For critical hiring for some select strategic roles, the Bank may consider granting of bonus, based on the
performance rating upon confirmation, as a prudent way to avoid loading the entire cost of attraction into
the fixed component of the compensation which could have a long term cost implication for the Bank.
For such hiring, the said bonus is generally decided by taking into account appropriate risk factors and
market conditions.

For hiring at levels of Whole Time Directors / Managing Director / Material Risk Takers and certain employees
in select strategic roles, a sign-on bonus, if any, is limited to the first year only and would be in the form of
Employee Stock Options or Units.

Joining / Sign-On Bonus in the form of RSUs were granted to select employees in FY 2025-26 - however,
as per the RBI Guidelines dated November 04, 2019, such Bonus are neither considered part of Fixed Pay
nor part of Variable Pay. The Bank grants such bonus to employees in line with the Compensation Policy
of the Bank, post approval by the GNRC.

Severance Pay

The Bank does not grant severance pay other than accrued benefits (such as gratuity, pension) except in
cases where it is mandated by any statute.

Hedging

The Bank does not provide any facility or fund or permit its Whole Time Directors and employees to insure or hedge
their compensation structure to offset the risk alignment effects embedded in their compensation arrangement.

Statutory Bonus

Some employees are also paid statutory bonus as per the Payment of Bonus Act, 1965 as amended from time
to time.

III. Remuneration Processes
Fitment at the time of Hire

Pay scales at the Bank are set basis the job size, experience, location and the academic and professional credentials
of the incumbent.

The compensation of new hires is in line with the existing pay ranges and consistent with the compensation levels
of the existing employees of the Bank at similar profiles. The pay ranges are subject to change basis market trends
and the Bank’s talent management priorities. While the Bank believes in the internal equity and parity as a key
determinant of pay, it does acknowledge the external competitive pressures of the talent market. Accordingly,
there could be certain key profiles with critical competencies which may be hired at a premium and treated as an
exception to the overall pay philosophy. Any deviation from the defined pay ranges is treated as a hiring exception
requiring approval with appropriate justification.

Pay Increment / Pay Revision

The Bank strives to ensure external competitiveness as well as internal equity without diluting the overall focus on
optimizing cost. In order to enhance the Bank’s external competitiveness, it participates in an annual salary survey of
the banking sector to understand key market trends as well as get insights on relative market pay position compared
to peers. The Bank endeavors to ensure that most employees progress to the median of the market in terms of fixed
pay over time. This coupled with key internal data indicators like performance score, job family, experience, job
grade and salary budget form the basis of decision making on revisions in fixed pay.

Increments in fixed pay for majority of the employee population are generally undertaken once every financial year.
However, promotions, confirmations and change in job dimensions could also lead to a change in the fixed pay
during other times of the financial year.

The Bank also makes salary corrections and adjustments during the financial year for competitive pay positioning
for the purpose of retention of critical skills and critical talent in the domain of Information Technology, Digital,
Information Security, Data Science as well as other segments that are strategic focus areas of the Bank. However,
such pay revisions are done on a need basis.

The Fixed Pay for the Material Risk Takers (other than Whole Time Directors), Senior Management, Key Management
Personnel is approved by the GNRC and the Board. The Fixed Pay for the Whole Time Directors is approved by the
GNRC, Board and the Reserve Bank of India.

C. Description of the ways in which current and future risks are taken into account in the remuneration processes,
including the nature and type of the key measures used to take account of these risks

The Bank takes into account various types of risks in its remuneration processes. The Bank follows a comprehensive
framework that includes within its ambit the key dimensions of remuneration such as fixed pay, variable pay and long
term incentives (i.e., Employee Stock Options).

Fixed pay: The Bank conducts a comprehensive market benchmarking study to ensure that employees are competitively
positioned in terms of fixed pay. The Bank follows a robust salary review process wherein revisions in fixed compensation
are based on performance. The Bank also makes salary adjustments taking into consideration pay positioning of
employees vis-a-vis market reference points. Through this approach the Bank endeavors to ensure that the talent
risk due to attrition is mitigated. Fixed pay could be revised downwards as well, in the event of certain proven cases of
misconduct by an employee.

Variable pay: The Bank has distinct types of variable pay plans as given below:

• Quarterly / monthly performance-linked pay (PLP) plans:

All quarterly / monthly PLP plans are based on the principle of balanced scorecard framework that includes within
its ambit both quantitative and qualitative factors including key strategic objectives that ensure future competitive
advantage for the Bank. PLP plans, by design, have deterrents that play a role of moderating payouts based on the
non-fulfillment of established quantitative / qualitative risk factors. Deterrents also include risks arising out of non¬
compliance, mis-sell etc. Further, a portion of all payouts under the PLP plans is deferred till the end of the financial
year to provide for any unforeseen performance risks. Employees who are part of the PLP plans for the entire financial
year are excluded from the Annual Bonus Plan.

• Variable Pay:

The Bank takes into consideration the fact that a portion of the Bank’s profits are directly attributable to various types
of risks the Bank is exposed to such as credit risk, operational risk, market risk etc.

The framework developed by the Bank in order to arrive at the quantum of bonus pool is based on the performance of
the Bank and profitability. The annual variable pay is distributed based on business unit and individual performance
and job band and role of the individual for non-business functions. The business unit performance is based on factors
such as growth in revenue, growth in profit, improvement in cost to income ratio, improvement in Gross NPA, Key
objectives met. Bonus pay out for an individual employee in a particular grade is linked to the performance rating
of the employee and subject to meeting the Bank’s standards of ethical conduct.

The Bank has devised appropriate malus and clawback clauses as a risk mitigant for Whole Time Directors, Material
Risk Takers, Senior Management (i.e. Employees in the job Bands of Executive Vice President and above). Under the
malus clause the incumbent could forego the vesting of the deferred variable pay in full or in part. Under the clawback
clause the incumbent is obligated to return all the tranches of variable pay payout pertaining to the reference
performance year. The deferred variable pay is paid out post review and approval by the GNRC and the Board.

D. Description of the ways in which the Bank seeks to link performance during a performance measurement
period with levels of remuneration

The Bank has a robust performance management system for evaluating the performance of its Whole Time Directors.
The performance appraisal system is based on a Balanced Scorecard Framework and considers qualitative as well as
quantitative factors of performance which includes the parameters at overall organization level and at Target Business
Level. Following is an illustrative list of few which are covered in the Balanced Scorecards of Whole Time Directors.

1. Business Performance - This includes business growth, profitability, asset quality and shareholder value.

2. Risk, Audit and Compliance - This includes internal reports, audit reports and compliance with the regulations
RBI inspection.

3. Digital Transformation - This includes performance on initiatives required to run the Bank and grow the Bank.

4. People Excellence - This includes succession planning and employee attrition.

The above list is not exhaustive.

While the above parameters form the core evaluation parameters for the Bank and the remuneration of its Whole Time
Directors, each of the business units are measured on the following from a remuneration standpoint:

a) Growth in Net Revenue (%) over previous year;

b) Growth in Profit Before Tax (%) over previous year;

c) Improvement in Cost to Income over the previous year;

d) Improvement in Gross NPA over the previous year and

e) Achievement of Key Strategic Objectives.

The process by which levels of remuneration in the Bank are aligned to the performance of the Bank, business unit and
individual employees is articulated below:

Fixed Pay

The Bank reviews the fixed pay portion of the compensation structure basis merit-based increments and market
corrections. These are based on a combination of performance rating, job band and the functional category of the
individual employee. For a given job band, the merit increment is directly related to the performance rating of an employee.
The Bank strives to ensure that most employees progress to the median of the market in terms of fixed pay over time.
All other things remaining equal, the correction percentage is directly related to the tenure and performance rating of
the individual. Multiple factors such as past Performance Ratings, Job Size of the position etc, are considered to take
decisions on employee promotions which also results into increase in an employees Fixed Pay.

Variable Pay

Basis the performance of the business unit, individual performance and role, the Bank has formulated the following variable
pay plans:

• Variable Pay Plans:

For Employees in Job Bands of Sr Vice President I and Above (includes employees in Senior Management, Material
Risk Takers, Whole Time Directors, Risk & Control staff) the variable pay intends to reward short term as well as long
term sustained performance of the Bank and shareholder value creation.

Short term Performance: Short term performance is realized in the form of cash variable pay. The cash variable
pay is based on performance rating and the job band of the individual and is further enhanced or moderated by the
business performance multiplier and role. The cash variable pay is computed on the gross salary.

Long term Performance: Employee Stock Options are granted to employees based on their performance rating and
job band and the value of the same is realized vide long term performance of the Bank and creation of shareholder
value. The units granted vest over multiple years.

For Employees in job bands Vice President and below:

At these levels the variable pay is primarily in the form of cash variable pay and is based on the annual performance.
In FY 2025-26, the Bank granted RSUs at E3-D3 bands based on their performance rating, grade and any other such
parameter as approved by the GNRC.

The Bank’s annual bonus is computed as a percentage of the gross salary for every job band. The bonus multiple
is based on performance of the business unit (based on the parameters mentioned above, wherever applicable),
individual performance rating, job band and the functional category of the individual employee. The business
performance category determines the multiplier for the bonus. All other things remaining equal, for a given job
band, the bonus is directly related to the performance rating. Employees who are part of the annual cash Variable
Pay plan for the entire financial year are not part of the Performance Linked Plans mentioned below.

• Performance-linked Plans (PLPs)

The Bank has formulated PLPs for its sales, collections, customer service and relationship roles who are given
sales, collections and service targets basis a balanced scorecard methodology. All PLP payouts are subject to the
achievement of individual targets enumerated in the respective scorecards of the employees and moderated by
qualitative parameters. A portion of the PLP payouts is deferred till the end of the financial year to provide for any
unforeseen performance risks. All PLPs are based on a balanced scorecard framework and, depending on the plan,
could be paid out monthly or quarterly.

E. Description of the ways in which the Bank seeks to adjust remuneration to take account of the longer term
performance

For employees in Senior Management, Material Risk Takers including Whole Time Directors, and Risk & Control staff the
Bank seeks the Bank seeks to adjust remuneration to take account of the longer term performance in the following way.

(i) Limits on variable pay

For Material Risk Takers including the Whole Time Directors, a substantial portion of compensation i.e., at least 50%
will be variable and paid on the basis of individual, business-unit and organization performance as applicable. This
will be in line with the principle that, at higher levels of responsibility, the proportion of variable pay will be higher. The
total variable pay shall be limited to a maximum of 300% of the fixed pay.

In case the variable pay is up to 200% of the fixed pay, a minimum of 50% of the variable pay; and in case the
variable pay is above 200%, a minimum of 67% of the variable pay shall be via non-cash instruments. The non-cash
component in 2025-26 comprised of Employee Stock Options.

In the event that the employee is barred by statute or regulation from grant of share-linked instruments, his / her
variable pay will be capped at 150% of fixed pay but shall not be less than 50% of the fixed pay.

For the Risk and Control staff, their Total Compensation is weighed in favor of Fixed Pay.

(ii) Deferral of variable pay

For top management including Whole Time Directors (WTDs) and Material Risk Takers (MRTs), deferral arrangements
will exist for the variable pay. A minimum of 60% of total variable pay will be under deferral arrangements. If cash
component is a part of the variable pay, at least 50% of the cash bonus shall be deferred. In cases where cash
component of the bonus is under ' 25 lakh, deferral arrangements would not be necessary.

The deferral period would be a minimum of three years and will be applicable to both cash and non-cash components
of variable pay. The deferral period for share linked instruments / ESOPs will be governed by the ESOP Scheme
Rules which will be approved by the GNRC and the Board. In FY 2025-26, the deferment of variable pay, wherever
applicable, was at least 3 years.

(iii) Vesting of Variable Pay

The deferred portion of the remuneration will vest at the end of deferral period and will be spread out over the course
of the deferral period. The first vesting would not be before one year from the commencement of the deferral period.
The vesting would be no faster than on a pro rata basis and the frequency of the vesting would be more than a year
in order to ensure appropriate assessment of risk.

The Bank believes in sustained business performance in tandem with prudent risk taking. The Bank, therefore, has
devised appropriate deterrents in order to institutionalize the aforementioned commitment.

Malus Arrangement: The provision of a Malus arrangement would entail cancellation of payout for the deferred
portion of reward (cash variable pay / long term incentive (LTI) i.e., any Share Linked Instrument). The RBI guidelines
thus define malus as “A malus arrangement permits the bank to prevent vesting of all or part of the amount of a
deferred remuneration. Malus arrangement does not reverse vesting after it has already occurred.”

Clawback Arrangement: The provision of Clawback Arrangement would entail return of payout of reward (cash
variable pay / long term incentive (LTI) i.e., any Share Linked Instrument) made in the previous year’s attributable
to a given reference year wherein the incident has occurred. The return would be in terms of net amount. The
RBI guidelines thus define clawback as “A clawback is a contractual agreement between the employee and the
bank in which the employee agrees to return previously paid or vested remuneration to the bank under certain
circumstances.”

The malus and clawback clause will be actioned when the employee demonstrates behavior involving fraudulent
behavior, moral turpitude, lack of integrity, flagrant breach of company policies and statutory norms resulting
in financial or non-financial losses. Manifestation of behavior listed above is presumed to have a malafide
intent. Illustrative list of conditions is enumerated below. The occurrence of any / some / all of the following
conditions / events shall trigger a review by the GNRC for the application of the Malus or the Clawback arrangement:

a) Substantial financial deterioration in profitability or risk parameters

b) Reckless, negligent or willful actions or exhibited inappropriate values and behavior

c) Fraud that requires a financial restatement

d) Reputational harm

e) Exposing the bank to substantial risk

f) Such other conditions or events, of similar nature as above, as determined by GNRC for triggering review by
GNRC for the purpose of application of the Malus or the Clawback arrangement

In determining the causes for deterioration in financial performance under (a), the GNRC may take into consideration
and have due regard to the fact whether the deterioration was for factors within control or whether it was on account
of conditions like global market headwinds, industry performance, changes in legal / regulatory regime, force majeure
events like occurrence of natural disasters, pandemic, other socio-economic conditions etc.

While undertaking the review for the concerned person for the application of the Malus or the Clawback arrangement
based on any trigger events, when determining accountability of the concerned person, the GNRC shall be guided
by the principles of proportionality, culpability or proximity or nexus to the event or misconduct.

In accordance with the RBI guidelines, wherever the assessed divergence in bank’s provisioning for Non-Performing
Assets (NPAs) or asset classification exceeds the prescribed threshold for public disclosure, the bank shall not pay
the unvested portion of the variable compensation for the assessment year under ‘malus’ arrangement. Further,
in such situations, no proposal for increase in variable pay (for the assessment year) shall be entertained. In case
the bank’s post assessment Gross NPAs are less than 2.0%, these restrictions will apply only if criteria for public
disclosure are triggered either on account of divergence in provisioning or both provisioning and asset classification.

The GNRC may decide to apply malus on part, or all of the unvested deferred Variable pay. The time horizon for the
application of malus / clawback clause shall be four years from the date of reward.

The GNRC shall review the act of misconduct / incident to ascertain the degree of accountability attributable to
a Whole Time Director / Material Risk Taker / Senior Management (C1 and above) prior to applying the Malus or
Clawback arrangement.

The GNRC and Board of Directors has also approved an addendum to the compensation policy on Clawback
of Incentive Compensation in view of the final rules on listing standards for the recovery of erroneously awarded
compensation adopted by the Securities and Exchange Commission on October 26, 2022, applicable to companies
listed on the New York Stock Exchange and NASDAQ.

This addendum shall be read with, and is in addition to, the Compensation Policy formulated and approved by the
Board of Directors of the Bank. The same has been formulated to comply with the requirements of Section 10D
promulgated under the U.S. Securities Exchange Act of 1934, as amended (“Exchange Act”), and Section 303A.14
of the NYSE so as to recover certain compensation in the event of an accounting restatement due to any material
non-compliance relating to any financial reporting requirements under the applicable U.S. securities laws, and shall
be interpreted and applied consistent therewith.

Employees other than Whole Time Directors, Material Risk Takers and Senior Management

The Bank has formulated the following variable pay plans:

• Annual Cash Variable Pay plan:

The quantum of variable payout is a function of the performance of the Bank, performance of the individual
employee, job band of the employee and the functional category. Basis these key determinants and due
adjustment for risk alignment, a payout matrix for variable pay is developed. Market trends for specific
businesses / functions along with inputs from compensation surveys may also be used in finalizing the payout.

Bonus pools are designed to meet specific business needs therefore resulting in differentiation in both the
quantum and the method of payout across functions. Typically, higher levels of responsibility receive a higher
proportion of variable pay vis-a-vis fixed pay.

For Employees in Job Bands of Sr Vice President I and Above (includes employees in Senior Management,
Material Risk Takers, Whole Time Directors, Risk & Control staff) the variable pay intends to reward short term
as well as long term sustained performance of the Bank and shareholder value creation.

Short term Performance: Short term performance is realized in the form of cash variable pay. The cash variable
pay is based on performance rating and the job band of the individual and is further enhanced or moderated
by the business performance multiplier and role. The cash variable pay is computed on the gross salary.

Long term Performance: Employee Stock Options are granted to employees based on their performance rating
and job band and the value of the same is realized vide long term performance of the Bank and creation of
shareholder value. The units granted vest over multiple years.

For Employees in job bands Vice President and below: At these levels the variable pay is primarily in the form
of cash variable pay and is based on the annual performance. In FY 2025-26, the Bank granted RSUs at E3-D3
bands based on their performance rating, grade and any other such parameter as approved by the GNRC.

• Performance-linked Plans (PLPs)

The Bank has formulated PLPs for its sales, collections, customer service and relationship roles who are given
sales, collections and service targets basis a balanced scorecard methodology. All PLP payouts are subject to
the achievement of individual targets enumerated in the respective scorecards of the employees and moderated
by qualitative parameters. A portion of the PLP payouts is deferred till the end of the financial year to provide for
any unforeseen performance risks. All PLPs are based on a balanced scorecard framework and, depending on
the plan, could be paid out monthly or quarterly.

F. Description of the different forms of variable remuneration (i.e. cash, shares, ESOPs and other forms) that
the Bank utilises and the rationale for using these different forms

The Bank recognises the importance of variable pay in reinforcing a pay for performance culture. Variable pay stimulates
employees to stretch their abilities to exceed expectations.

• Annual Cash Variable Pay

These are paid to reward performance for a given financial year. This covers all employees (excluding employees
under PLPs for the entire financial year). This is based on performance of the business unit, performance rating,
job band and functional category of the individual. For higher job bands the proportion of variable pay to total
compensation tends to be higher. For Material Risk Takers, Senior Management and Whole Time Directors 50% of
the cash variable pay is deferred over 3 years in the event the cash variable pay exceeds ' 25 lakhs.

• Performance-linked Plans (PLPs)

The Bank has formulated PLPs for its sales, collections, customer service and relationship roles who are given
sales, collections and service targets basis a balanced scorecard methodology. All PLP payouts are subject to the
achievement of individual targets enumerated in the respective scorecards of the employees and moderated by
qualitative parameters. A portion of the PLP payouts is deferred till the end of the financial year to provide for any
unforeseen performance risks. All PLPs are based on a balanced scorecard framework and, depending on the plan,
could be paid out monthly or quarterly.

• Employee Stock Option Plan (ESOP)

This is to reward for contribution of employees in creating a long term, sustainable earnings and enhancing shareholder
value. Only employees in a certain job bands and with a specific performance rating are eligible for stock options.
Performance is the key criteria for granting stock options.

• Restricted Stock Units (Units)

The Bank granted Restricted Stock Units (Units) to employees at E3-D3 bands in FY 2025-26. The units would vest
over 3 to 4 years.

Quantitative disclosures

The quantitative disclosures for the financial year ended March 31, 2026 cover the Bank’s Whole Time Directors and
Material Risk Takers. The material risk takers are identified in accordance with the revised guidelines on remuneration
issued by the RBI on November 04, 2019. Hitherto, the quantitative disclosures would cover the Bank’s Whole Time
Directors and Key Risk Takers as per the erstwhile guidelines on remuneration dated January 13, 2012.

18.2 Bancassurance business

Commission income for the year ended March 31,2026 includes fees of ' 5,687.53 crore (previous year: ' 5,026.97 crore)
in respect of life insurance business and ' 1,239.69 crore (previous year: ' 1,281.30 crore) in respect of general insurance
and health insurance business.

18.3 Marketing and distribution

Commission income for the year ended March 31, 2026 includes income from marketing and distribution of ' 1,266.58
crore (previous year: ' 1,629.86 crore), which comprises of income for displaying publicity materials at the Bank’s
branches / ATMs, commission on mutual funds, pension and other investment / saving products and sourcing and
referral income.

18.4 Details of Priority Sector Lending Certificates (PSLCs)

The Bank enters into transactions for the sale or purchase of Priority Sector Lending Certificates (PSLCs). In the case of
a sale transaction, the Bank sells the fulfilment of priority sector obligation and in the case of a purchase transaction
the Bank buys the fulfilment of priority sector obligation through RBI trading platform. There is no transfer of risks or
loan assets in such transactions. The details of purchase / sale of PSLCs during the year are as under:

18.6 Implementation of IFRS converged Indian Accounting Standards

The Ministry of Corporate Affairs, in its press release dated January 18, 2016, had issued a roadmap for implementation
of Indian Accounting Standards (IND-AS) for scheduled commercial banks, insurers / insurance companies and non¬
banking financial companies, which was subsequently confirmed by the RBI through its circular dated February 11,
2016. This roadmap required these institutions to prepare IND-AS based financial statements for the accounting periods
beginning April 01, 2018 with comparatives for the periods ending March 31, 2018. The implementation of IND-AS by
banks requires certain legislative changes in the format of financial statements to comply with the disclosures required
under IND-AS. In April 2018, the RBI deferred the implementation of IND-AS by a year by when the necessary legislative
amendments were expected. The legislative amendments recommended by the RBI are under consideration by the
Government of India. Accordingly, the RBI, through its circular dated March 22, 2019, deferred the implementation of
IND-AS until further notice.

Presently, the Bank prepares and submits its IND-AS Proforma information to the RBI on a half yearly basis. The Bank
is well prepared for IND-AS implementation as and when it becomes applicable, with due consideration to updated
regulations, accounting standards / guidance and business strategy at the date of actual transition.

The RBI, vide its circular dated September 12, 2023 revised the norms on classification, measurement and valuation
of investments, in view of the significant development in the global standards. These norms are closer to IND-AS. The
Bank has implemented the revised norms with effect from April 01, 2024.

18.8 Disclosure of Letters of Comfort (LoCs) issued by the Bank

The Bank has not issued Letter of Comfort during the year ended March 31, 2026 and March 31, 2025 and there is no
outstanding as at March 31, 2026 and March 31, 2025.

18.9 Portfolio-level information on the use of funds raised from green deposits

The Bank has not raised green deposits on or after June 01, 2023 based on the framework for the acceptance of
green deposits issued by RBI.

19. Other liabilities

• The Bank held provisions towards standard assets amounting to ' 11,620.77 crore as at March 31, 2026 (previous
year: ' 10,862.90 crore). These are included under other liabilities.

S Provision for standard assets is made @ 0.25% for direct advances to agriculture, individual housing loans and Small
and Micro Enterprises (SMEs) sectors, @ 1% for advances to commercial real estate sector, @ 0.75% for advances
to commercial real estate - residential housing sector, @ 5% on restructured standard advances, @ 2% until after
one year from the date on which the rates are reset at higher rates for housing loans offered at a comparatively lower
rate of interest in the first few years and @ 2% on all exposures to the wholly owned step down subsidiaries of the
overseas subsidiaries of Indian companies, sanctioned / renewed after December 31,2015.

S Provision is maintained at rates higher than the regulatory minimum, on standard advances based on evaluation of
the risk and stress in various sectors as per the policy approved by the Board of the Bank.

S In accordance with regulatory guidelines and based on the information made available by its customers to the Bank,
for exposures to customers who have not hedged their foreign currency exposures, provision for standard assets
is made at levels ranging from 0.10% to 0.80% depending on the likely loss the entities could incur on account of
exchange rate movements.

S Provision for standard assets of overseas branches is made at higher of rates prescribed by the overseas regulator
or RBI.

S For all other loans and advances including credit exposures computed as per the current marked to market values
of interest rate and foreign exchange derivative contracts, provision for standard assets is made @ 0.40%.

• Other liabilities include contingent provisions of ' 16,395.59 crore as at March 31,2026 (previous year: ' 14,219.29 crore)
in respect of advances and investments. Further, inter office adjustments is Nil as at March 31,2026 (previous year: Nil).

• The Bank has presented gross unrealised gain on foreign exchange and derivative contracts under other assets and
gross unrealised loss on foreign exchange and derivative contracts under other liabilities. Accordingly, other liabilities as
at March 31, 2026 include unrealised loss on foreign exchange and derivative contracts of ' 55,890.98 crore (previous
year: ' 14,079.86 crore).

• Unrealised loss on foreign exchange and derivative contracts exceeded 1% of total assets as at March 31,2026 reported
under Other Liabilities and Provisions “Others (including provisions)”. There was no item under Other Liabilities and
Provisions “Others (including provisions)” exceeding 1% of total assets as at March 31, 2025.

23. Interest earned

Interest income under the sub-head Income on investments includes dividend on units of mutual funds and equity and
preference shares received during the year ended March 31,2026 amounting to ' 1,832.82 crore (previous year: ' 2,073.95
crore).

24. Other income

• Commission, exchange and brokerage income

Commission, exchange and brokerage income is presented net of related commission expenses.

• Profit on sale of Investments

During the year ended March 31, 2026, the Bank’s subsidiary company, HDB Financial Services Limited (“HDBFS”)
launched its initial public offering (“IPO”), comprised of a fresh issuance of equity shares aggregating to ' 2,500.00 crore
and an offer for sale (“OFS”) of equity shares by the Bank, aggregating to ' 10,000.00 crore. Under the OFS, the Bank
divested 13,51,35,135 equity shares of ' 10/- each of HDBFS at ' 740/- per share, for a consideration aggregating to
' 10,000.00 crore. Consequently, the net gain to the Bank on sale of shares under the OFS is ' 9,179.40 crore (before tax
and net of IPO related expenses).

• Miscellaneous income

Miscellaneous income includes recoveries from written-off accounts amounting to ' 4,014.44 crore (previous year:
' 3,785.01 crore) exceeding 1% of the total income of the Bank.

Provident fund

The guidance note on AS 15, Employee Benefits, states that employer established provident funds, where interest is guaranteed
are to be considered as defined benefit plans and the liability has to be valued. The Institute of Actuaries of India (IAI) has issued
a guidance note on valuation of interest rate guarantees on exempt provident funds. The actuary has accordingly valued the
same and the Bank held a provision of Nil as at March 31,2026 (previous year: Nil), towards the present value of the guaranteed
interest benefit obligation. The actuary has followed the deterministic approach as prescribed by the guidance note.

The Bank does not have any unfunded defined benefit plan. The Bank contributed ' 809.03 crore (previous year: ' 750.43
crore) to the provident fund, ' 51.30 crore (previous year: ' 21.00 crore) to the National Pension Scheme (for employees who
opted) and ' 97.94 crore (previous year: ' 95.95 crore) to the superannuation plan.

On November 21,2025, the Government of India notified four Labour Codes - the Code on Wages, 2019, the Industrial Relations
Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020,
collectively referred to as the ‘New Labour Codes’, consolidating 29 existing labour laws. The Ministry of Labour & Employment
has published draft Central Rules and FAQs on December 30, 2025, to facilitate assessment of the financial impact arising from
these regulatory changes. Accordingly, the Bank has recognised an estimated incremental impact of ' 800.00 crore under
Schedule 16 - Operating expenses -‘Payments to and provisions for employees’ in the Profit and Loss Account during the
year ended March 31, 2026, considering best information available. The Bank continues to monitor the finalisation of Central
and State Rules and clarifications from the Government on the New Labour Codes and would provide appropriate accounting
effect on the basis of such developments, as needed.

27. Segment reporting

Business segments

Business segments have been identified and reported taking into account, the target customer profile, the nature of products
and services, the differing risks and returns, the organisation structure, the internal business reporting system and the guidelines
prescribed by RBI. The Bank operates in the following segments:

a) Treasury

The treasury segment primarily consists of net interest earnings from the Bank’s investment portfolio, money market
borrowing and lending, gains or losses on investment operations and on account of trading in foreign exchange and
derivative contracts.

b) Retail banking

i. Digital banking

The digital banking segment represents business by Digital Banking Units (DBUs) of the Bank. The said DBUs serves
retail customers through the Bank’s digital network and other online channels. This segment raises deposits from
customers and provides loans and other services to customers.

Revenues of the DBUs are derived from interest earned on retail loans, fees from services rendered, etc. Expenses of
this segment primarily comprise of interest expense on deposits, infrastructure and premises expenses for operating
the DBUs, other direct overheads and allocated expenses of specialist product groups.

ii. Non-Digital Banking

The retail banking segment serves retail customers through the Bank’s branch network and other channels. This
segment raises deposits from customers and provides loans and other services to customers with the help of
specialist product groups. Exposures are classified under retail banking taking into account the status of the
borrower (orientation criterion), the nature of product, granularity of the exposure and the quantum thereof.

Revenues of the retail banking segment are derived from interest earned on retail loans, interest earned from other
segments for surplus funds placed with those segments, subvention received from dealers and manufacturers,
fees from services rendered, foreign exchange earnings on retail products, etc. Expenses of this segment primarily
comprise interest expense on deposits, commission paid to retail assets sales agents, infrastructure and premises
expenses for operating the branch network and other delivery channels, personnel costs, other direct overheads
and allocated expenses of specialist product groups, processing units and support groups.

c) Wholesale banking

The wholesale banking segment provides loans, non-fund facilities and transaction services to large corporates, emerging
corporates, public sector units, government bodies, financial institutions and medium scale enterprises. It also sources
deposits from wholesale entities and raises funds through securitisation and assignment transactions. Revenues of the
wholesale banking segment consist of interest earned on loans made to customers, interest / fees earned on the cash
float arising from transaction services, earnings from trade services and other non-fund facilities and also earnings from
foreign exchange and derivative transactions on behalf of customers. The principal expenses of the segment consist of
interest expense on funds borrowed from external sources and other internal segments, premises expenses, personnel
costs, other direct overheads and allocated expenses of delivery channels, specialist product groups, processing units
and support groups.

d) Other banking Operations

This segment includes income from parabanking activities such as credit cards, debit cards, third party product
distribution, primary dealership business and the associated costs.

e) Unallocated

All items which are reckoned at an enterprise level are classified under this segment. This includes capital and reserves,
debt classified as Tier 1 or Tier 2 capital and other unallocable assets and liabilities such as deferred tax, etc.

Segment revenue includes earnings from external customers plus earnings from funds transferred to other segments.
Segment result includes revenue less interest expense less operating expense and provisions, if any, for that segment.
Segment-wise income and expenses include certain allocations. Interest income is charged by a segment that provides
funding to another segment, based on yields benchmarked to an internally approved yield curve or at a certain agreed
transfer price rate. Transaction charges are levied by the retail banking segment to the wholesale banking segment for
the use by its customers of the retail banking segment’s branch network or other delivery channels.

Geographic segments

The geographic segments of the Bank are categorised as domestic operations and foreign operations. Domestic
operations comprise branches in India and foreign operations comprise branches outside India including offshore banking
units in India.

The significant transactions between the Bank and related parties for year ended March 31,2026 are given below. A specific

related party transaction is a significant transaction wherever it exceeds 10% of all related party transactions in that category:

• Interest paid: HDFC Life Insurance Company Limited ' 347.12 crore (previous year: ' 382.33 crore); HDFC ERGO General
Insurance Company Limited ' 89.06 crore (previous year: ' 87.90 crore)

• Interest received: HDB Financial Services Limited ' 577.49 crore (previous year: ' 690.51 crore)

• Rendering of services: HDFC Life Insurance Company Limited ' 3,850.25 crore (previous year: ' 3,789.23 crore); HDFC
ERGO General Insurance Company Limited ' 682.65 crore (previous year: ' 699.66 crore)

• Receiving of services: HDB Financial Services Limited ' 1,223.91 crore (previous year: ' 1,216.66 crore); HDFC Sales
Private Limited ' 910.79 crore (previous year: ' 964.36 crore); HDFC ERGO General Insurance Company Limited ' 341.15
crore (previous year: ' 207.63 crore)

• Dividend paid: Mr. Kaizad Bharucha ' 5.37 crore (previous year: ' 4.12 crore); Mr. Sashidhar Jagdishan ' 4.14 crore
(previous year: ' 3.00 crore); Mr. V. Srinivasa Rangan ' 3.66 crore (previous year: ' 2.86 crore); Ms. Mala Zaveri ' 1.55
crore (previous year: ' 1.12 crore)

• Dividend received: HDFC Securities Limited ' 697.33 crore (previous year: ' 851.92 crore); HDFC Asset Management
Company Limited ' 1,009.62 crore (previous year: ' 785.26 crore); HDFC Life Insurance Company Limited ' 227.50 crore
(previous year: ' 216.67 crore)

• Fixed Assets purchased from: Aurionpro Solutions Limited ' 4.50 crore (previous year: ' 9.55 crore)

• Fixed asset sold to: HDFC Sales Private Limited ' 0.95 crore (previous year: Nil)

The Bank’s related party balances and transactions for the year ended March 31,2026 are summarised as follows:

• Figures in bracket in dicate maximum balance outstanding during the year based on comparison of the total outstan ding balances at each quarter-
end.

• Remuneration paid is ' 15.13 crore to Mr. Sashidhar Jagdishan, ' 17.14 crore to Mr. Kaizad Bharucha, ' 7.12 crore to Mr. Bhavesh Zaveri and ' 11.28
crore to Mr. V. Srinivasa Rang an (above excludes value of employee stock options exercised during the year).

• Bonus and retiral benefits for key managerial personnel are accrued as a part of an overall pool and are not allocated against the key managerial
personnel. These will be paid based on approval from RBI. As of March 31, 2026, approved unpaid deferred bonus in respect of earlier years was
' 1726 crore.

During the year ended March 31,2026, the Bank sold SLR securities of Nil (previous year: ' 125.15 crore) to HDFC ERGO
General Insurance Company Limited.

During the year ended March 31, 2026, the Bank bought back Non SLR securities of Nil (previous year: ' 174.63 crore)
from HDFC Life Insurance Company Limited.

During the year ended March 31, 2026, the Bank sold Non SLR securities of ' 851.75 crore (previous year: ' 2,052.09
crore) to HDFC Life Insurance Company Limited, ' 575.33 crore (previous year: ' 888.02 crore) to HDFC ERGO General
Insurance Company Limited and Nil (previous year: ' 5.01 crore) to HDFC Pension Fund Management Limited.

The deposit outstanding from HDB Employees Welfare Trust as at March 31,2026 was ' 1.93 crore (previous year: ' 0.94
crore) and interest on deposit aggregating to ' 0.07 crore (previous year: ' 0.10 crore).

The Bank’s related party balances and transactions for the year ended March 31,2025 are summarised as follows:

• Includes HDFC Education and Development Services Private Limited, ceased to be a subsidiary with effect from October 18,2024.

• Figures in bracket indicate maximum balance outstanding during the year based on comparison of the total outstanding balances at each quarter-
end.

• Remuneration paid is ' 11.23 crore to Mr. Sashidhar Jagdishan, ' 8.02 crore to Mr. Kaizad Bharucha, ' 6.52 crore to Mr. Bhavesh Zaveri and ' 8.85
crore to Mr. V. Srinivasa Rang an

(above excludes value of employee stock options exercised during the year).

• Bonus and retiral benefits for key managerial personnel are accrued as a part of an overall pool and are not allocated against the key managerial
personnel. These will be paid based on approval from RBI. As of March 31,2025, approved unpaid deferred bonus in respect of earlier years was
' 14.51 crore.

29. Leases

Operating leases primarily comprise office premises, staff residences and Automated Teller Machines (‘ATM’s), which are
renewable at the option of the Bank.

Lease Payments

The details of maturity profile of future operating lease payments are given below:

30. Earnings per equity share

Basic and diluted earnings per equity share are computed in accordance with AS-20 - Earnings per share. Basic earnings
per equity share is computed by dividing the net profit after tax of ' 74,671.29 crore (previous year: ' 67,347.36 crore) by the
weighted average number of equity shares outstanding during the year. Diluted earnings per equity share is computed using
the weighted average number of equity shares and weighted average number of dilutive potential equity shares outstanding
during the year. The dilutive impact is on account of stock options / units granted to employees by the Bank. There is no impact
of dilution on the profits in the current year and previous year.

During the year ended March 31, 2026, the shareholders of the Bank have approved, through postal ballot, the issuance of
bonus shares, in the proportion of 1:1, i.e. 1 (One) bonus equity share of ' 1 each for every 1 (One) fully paid-up equity share
held as on the record date. Accordingly, the Bank has allotted 7,67,70,39,761 equity shares as bonus shares on August 28,
2025, by utilisation of share premium. Pursuant to the issue, the earnings per share have been restated for the year ended
March 31, 2025.

32. Small and micro industries

Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from October 2, 2006, certain
disclosures are required to be made relating to Micro, Small and Medium enterprises. There have been no reported cases of
delays in payments to micro and small enterprises or of interest payments due to delays in such payments during the years
ended March 31, 2026 and March 31, 2025. The above is based on the information available with the Bank which has been
relied upon by the auditors.

33. Corporate social responsibility

The details of Corporate Social Responsibility (CSR) activities carried out in line with the CSR Policy of the Bank are
given below:

34. Investor education and protection fund

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, 2026 and March 31, 2025.

35. Disclosure under Rule 11 (e) of the Companies (Audit and Auditors) Rules, 2014

The Bank, as part of its normal banking business, grants loans and advances to its constituents including foreign
entities with permission to lend / invest / provide guarantee or security or the like in other entities identified by
such constituents. Similarly, the Bank accepts deposits from its constituents, who may instruct the Bank to lend /
invest / provide guarantee or security or the like against such deposit in other entities identified by such constituents.
These transactions are part of Bank’s normal banking business, which is conducted after exercising proper due diligence
including adherence to “Know Your Customer” guidelines as applicable in respective jurisdiction.

Other than the nature of transactions described above, the Bank has not advanced or loaned or invested (either from borrowed
funds or share premium or any other sources or kind of funds) 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 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. The Bank has not received
any funds 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 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.

36. Audit trail

As per the requirements of rule 3(1) of the Companies (Accounts) Rules 2014 the Bank uses only such accounting software for
maintaining its books of account that have a feature of recording audit trail (edit log). This feature of recording audit trail has
operated throughout the year and was not tampered with, except that in respect of the accounting software used for maintaining
the core banking system the feature of recording audit trail (edit log) facility was enabled at the database level to log any direct
data changes from March 4, 2026. Further, where audit trail facility was enabled in the previous year, the audit trail has been
preserved by the Bank as per the statutory requirements for record retention. The Bank has established and maintained an
adequate internal control framework and based on its assessment, believes that this was effective as of March 31, 2026.

37. Receipt of Decision Notice from DFSA

As intimated to the Stock Exchanges on September 26, 2025, the Bank’s branch at the Dubai International Financial Centre
(“DIFC Branch”) received a decision notice dated September 25, 2025 from the Dubai Financial Services Authority (“DFSA”),
prohibiting, amongst other things, the branch from soliciting or conducting business with new clients for specified financial
services. The prohibition does not affect servicing of existing customers and will remain in place until otherwise amended or
revoked in writing by DFSA. The Bank is taking necessary steps to comply with the directives in the above-referred notice.

The business undertaken at the DIFC Branch is not material to the Bank’s operations or its financial position and accordingly
no material impact is expected with respect to the overall operations or financial position of the Bank.

38. Resignation of former Part-time Chairman and Independent Director of the Bank

As intimated to the Stock Exchanges on March 24, 2026, the Board of Directors of the Bank approved the appointment
of external law firms (domestic and international) to conduct a review related to the resignation letter of the Bank’s former
Part-time Chairman and Independent Director, Mr. Atanu Chakraborty. The Bank does not expect any material impact on
the financial statements as of and for the year ended March 31, 2026, arising from the external law firms’ review, which is
currently in progress. The Bank continues to be committed to corporate governance standards and remains adequately
capitalised in accordance with the regulatory requirements.

39. Comparative figures

Figures for the previous year have been regrouped and reclassified wherever necessary to conform to the current
year’s presentation. The previous year comparative numbers were jointly audited by Price Waterhouse LLP, Chartered
Accountants and Batliboi & Purohit, Chartered Accountants.