4.22 Provisions, contingent liabilities, and contingent assets

In accordance with Accounting Standard - 29 “Provisions,
Contingent Liabilities and Contingent Assets" issued by ICAI,
as notified under Section 133 of the Companies Act, 2013
read together with the Companies (Accounting Standards)
Rules, 2021, a provision is recognized when the Bank has a
present obligation as a result of past event, it is probable that
an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be
made of the amount of the obligation.

Provisions (excluding retirement benefits) are not discounted
to its present value and are determined based on management
best 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 best estimates. If it is no longer probable that
an outflow of resources embodying economic benefits will be
required to settle the obligation, the provision is reversed.

No provision is recognized, and a disclosure of contingent
liability is made when there is:

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

II. a present obligation arising from a past event which is
not recognized because:

a) it is not probable that an outflow of resources
embodying economic benefits will be required to
settle the obligation; or

b) a reliable estimate of the amount of the obligation
cannot be made.

The Bank does not expect the outcome of these
contingencies to have a materially adverse effect on its
financial results.

No provision or disclosure of contingent liability is
made when there is a possible obligation or a present
obligation in respect of which the likelihood of outflow of
resources is remote.

Contingent assets, if any, are not recognized nor
disclosed in the financial statements since this may
result in the recognition of income that may never be
realized. However, contingent assets are assessed
continually and if it is virtually certain that an inflow
of economic benefits will arise, the asset and related
income are recognized in the financial statements of the
period in which the change occurs.

4.23 Segment information

The disclosure relating to segment information is in accordance
with Accounting Standard 17 - “Segment Reporting" issued by
the ICAI, as notified under Section 133 of the Companies Act,
2013 read together with the Companies (Accounting Standards)
Rules, 2021 and as per as per RBI Master Direction on Financial
Statements-Presentation and Disclosures, (as amended from
time to time). As per the Master Direction, the reportable
segments are identified as 'Treasury', 'Corporate / Wholesale
Banking, 'Retail Banking' and 'Other banking operations.

• Treasury' includes the entire investment portfolio of the Bank.

• Retail Banking include exposures which fulfill the four
criteria of orientation, product, granularity, and low value
of individual exposures for retail exposures laid down
in Master Directions on Basel III: Capital Regulations.
Individual housing loans also form part of Retail Banking
segment. Further, 'Digital Banking' has been identified as
a sub-segment of the existing 'Retail Banking' segment
as per Reserve Bank of India (RBI) guidelines.

• Corporate / Wholesale Banking include all advances
to trusts, partnership firms, companies, and statutory
bodies, which are not included under 'Retail Banking'.

• Other Banking Business includes all other banking
operations not covered under 'Treasury, 'Wholesale
Banking' and 'Retail Banking' segments. It also includes
all other residual operations such as para banking
transactions / activities.

4.24 Accounting for Dividend

In terms of Accounting Standard 4 - "Contingencies and Events
occurring after the Balance sheet date" issued by the ICAI, as
prescribed under Section 133 of the Companies Act, 2013
read together with the Companies (Accounting Standards)
Rules, 2021, the Bank does not account for proposed dividend
or Dividend declared after balance sheet date as a liability
through appropriation from Profit and Loss Account in
current year balance sheet. This is disclosed in the notes to
accounts. The same is recognized in the year of actual payout
post approval of shareholders. However, the Bank reckons
proposed dividend in determining capital funds in computing
the capital adequacy ratio.

4.25 Cash and Cash Equivalents

Cash and cash equivalents include cash in hand, balances
with Reserve Bank of India and Balances with Other Banks
/ institutions and money at call and short notice (including
the effect of changes in exchange rates on cash and cash
equivalents in foreign currency).

‘Capital Infusion: During the previous year, the Bank had issued 230,477,634 equity shares of H 2 each for cash pursuant to a
Qualified Institution Placement (QIP) as per the relevant provisions of Securities and Exchange Board of India (Issue of Capital
and Disclosure Requirements) Regulations, 2018 at H 131.90 per share aggregating to H 3,040.00 Crores (including share
premium). This resulted in an increase of H 46.10 Crores in share capital and H 2,954.17 Crores (net of issue expenses) in share
premium account.

During the previous year, Bank had issued 72,682,048 equity shares of H 2 each for cash pursuant to a preferential allotment as
per the relevant provisions of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations,
2018 at H 131.91 per share aggregating to H 958.75 Crore (including share premium). This resulted in an increase of H 14.53 Crore
in share capital and H 943.62 Crore (net of share issue expenses) in share premium account.

**During the year ended March 31, 2025 and March 31,2024, the Bank had not raised Tier 2 capital by way of issuance
of Tier 2 Bonds.

During the year ended March 31, 2025 the Bank has redeemed Unsecured Basel III compliant Tier 2 Bonds amounting to
H 300 Crore. (Previous Year : Nil)

In accordance with RBI Guidelines banks are required to make Consolidated Pillar 3 and Net Stable Funding Ratio (NSFR)
disclosures under Basel III capital regulations. The Bank has made these disclosures and the same is available in Bank's
website at the following link: https:Zwww.federalbank.co.in/regulatory-disclosures. The disclosures have not been
subjected to audit.

1.1. B. Reserves and Surplus

a) Statutory Reserve

During the year ended March 31, 2025, the Bank had appropriated H 1,012.97 Crore (previous year: H 930.15 Crore) out of
profits for the year ended March 31, 2025 to the Statutory Reserve in terms of sections 17 of the Banking Regulation Act,
1949 and RBI guidelines.

b) Capital Reserve

During the year ended March 31, 2025, the Bank had appropriated H 83.55 Crore (previous year: H 81.76 Crore), being the
profit from sale or redemption of investments under HTM category, gain / profit arising on the reclassification/ sale of an
investment in associate 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.

c) Revenue Reserve

During the year ended March 31, 2025, the Bank implemented the RBI Master Direction - Classification, Valuation, and
Operation of Investment Portfolio of Commercial Banks (Directions), 2023, dated September 12, 2023. This directive is
applicable to banks from April 01, 2024. Consequent to the transition provisions, the Bank's revenue reserve increased by
H 105.02 crore, on account of revision in the carrying value of investments to the fair value as on such date. Inaddition, during
the year ended March 31, 2025, the Bank had appropriated H 606.72 Crore (previous year: H554.25 Crore) out of profits for
the year ended March 31, 2025 to the Revenue Reserve.

d) Investment Fluctuation Reserve

During the year ended March 31,2025, the Bank had appropriated H 151.93 Crore (previous year: H 66.84 Crore) to Investment
Fluctuation Reserve in compliance with RBI Master Direction - Classification, Valuation, and Operation of Investment
Portfolio of Commercial Banks (Directions), 2023, dated September 12, 2023.

In addition, pursuant to implementation of the RBI Master Direction - Classification, Valuation, and Operation of Investment
Portfolio of Commercial Banks (Directions), 2023, dated September 12, 2023, the Bank had transferred H 16.24 Crore from
Investment Reserve to Investment Fluctuation Reserve.

e) Special Reserve

During the year ended March 31, 2025, the Bank had appropriated H 195.65 Crore (previous year: H 173.68 Crore) out of
profits for the year ended March 31, 2025, to the Special Reserve as required under Income Tax Act, 1961.

f) Investment Reserve

As per RBI Master Direction - Classification, Valuation, and Operation of Investment Portfolio of Commercial Banks
(Directions), 2023, dated September 12, 2023 which is effective from April 01, 2024, the balance in Investment Reserve
Account , if any, as of March 31, 2024, shall be transferred to the Revenue/ General Reserve if the bank meets the minimum
regulatory requirements of Investment Fluctuation Reserve (IFR). If the bank does not meet the minimum IFR requirements,
the balances in IRA shall be transferred to IFR. Accordingly, during the year ended March 31, 2025, the Bank has transferred
the balance of H 16.24 Crore from Investment Reserve to Investment Fluctuation Reserve. During the previous year, the
Bank had appropriated H 16.24 Crore from the Profit and Loss Account to Investment Reserve.

g) Foreign Currency Translation Reserve

As at March 31,2025, the Bank has recognised H (22.02) Crore (previous year: H (17.74) Crore) as Foreign Currency Translation
Reserve on account of translation of foreign currency assets and liabilities of non-integral foreign operations.

h) Employees Stock Options Reserve

During the year ended March 31,2025, the Bank has recognised H 8.49 Crore (previous year: H 1.58 Crore) as Employees Stock
Options Reserve on account of fair valuation of share-linked instruments and an amount of H 0.21 Crore (previous year:H 0.65
Crore) is transferred from Employees Stock Options Reserve on exercise of share-linked instruments, to share premium.

i) AFS Reserve

During the year ended March 31, 2025, pursuant to implementation of the RBI Master Direction - Classification, Valuation,
and Operation of Investment Portfolio of Commercial Banks (Directions), 2023, dated September 12, 2023, the Bank has
recognised H 226.05 Crore (previous year: nil) as AFS Reserve.

j) Cash Flow Hedge Reserve

As at March 31, 2025, the Bank has recognised H 67.91 Crore (previous year: nil) as Cash Flow Hedge Reserve on derivative
contracts designated as cash flow hedge.

Draw down from Reserves

The Bank has not drawn down any amount from any reserves during the years ended March 31, 2025 and March 31, 2024.

1.2.1. C. Additional Details on Investments:

As per Master Direction - Classification, Valuation and Operation of Investment Portfolio of Commercial Banks (Directions), 2023,
Investment fluctuation reserve (IFR) is to be created with an amount not less than lower of net profit on sale of investments during
the year or net profit for the year less mandatory appropriations until the amount of IFR is at least 2 percent of the AFS and FVTPL
(including HFT) portfolio on a continuing basis.

As on March 31, 2025 the Bank is maintaining an IFR of H 425.70 Crore (previous year: H 257.53 Crore) and considered it as part of
Tier II capital for capital adequacy purposes.

1.2.4. Sale and transfers to/ from HTM Category

In accordance with the RBI guidelines, Sales and transfers to/from HTM category does not include one-time transfer of securities to/
from HTM category with the approval of Board of Directors undertaken by banks at the beginning of the accounting year, direct sales
from HTM for bringing down SLR holdings in HTM category consequent to a downward revision in SLR requirements by RBI, sales to
RBI under open market operation auctions (OMO) and government securities acquisition program (GSAP), Repurchase of Government
Securities by Government of India from banks and Repurchase of State Development Loans by respective state governments under
buyback or switch operations, additional shifting of securities explicitly permitted by the Reserve Bank of India.

1.2.5 Government Security Lending (GSL) transactions

During the years ended March 31, 2025 and March 31, 2024, Bank has not participated in GSL transactions.

1.3. Derivatives

Disclosure in respect of Outstanding Interest Rate Swaps (IRS) and Forward Rate Agreement (FRA)

1.3.1. B) The Bank had dealt in exchange traded currency futures during the financial year ended March 31, 2025 and March 31, 2024. As

at March 31, 2025, the notional principal amount outstanding on open contracts is Nil (previous year: H 15,243.70 Crore).

1.3.1. C) The credit exposure with clients, as compared to inter-bank counterparties, are generally secured by permitted collaterals. The

credit exposure includes exposure arising out of swap contracts. However, generally, the collaterals provided by the clients are not
specifically earmarked towards derivatives or swaps. Hence the amount of exposure is arrived conservatively without netting with
the collateral.

1.3.3. Disclosure on Risk exposure in Derivatives

Qualitative disclosures:

(a) Structure and organization for management of risk in derivatives trading, the scope and nature of risk measurement, risk
reporting and risk monitoring systems, policies for hedging and/or mitigating risk and strategies and processes for monitoring
the continuing effectiveness of hedges/ mitigants:

Derivatives are financial instruments whose characteristics are derived from underlying parameter's like interest rates,
exchange rates or indices. The Bank undertakes over the counter and exchange traded derivative transactions for Balance Sheet
management and also for proprietary trading. Bank offers derivative products to the customers to enable them to hedge their
exposure within the prevalent regulatory guidelines. Proprietary trading includes Interest Rate Futures, Currency Futures, Non
Deliverable Forwards and Rupee Interest Rate Swaps under different benchmarks (viz. MIBOR, MIFOR etc.) in over the counter/
exchange traded derivatives.

The Bank also undertakes transactions in Long Term Forex Contracts (LTFX) for hedging its Balance Sheet and also offers them to
its customers. These transactions expose the Bank to various risks primarily credit, market, operational, legal and reputational.
The Bank has adopted the following mechanism for managing risks arising out of the derivative transactions.

The derivative transactions are governed by the Policy for Investment, Forex and Derivative Activities and Market Risk Management
Policy of the Bank as well as by the extant RBI guidelines. Various operational/risk limits are set up and actual exposures are
monitored vis-a-vis the limits allocated. These limits are set up taking into account market volatility, risk appetite, business
strategy and management experience. Risk limits are in place for risk parameters viz. Value at Risk (VaR), Net loss, deal size and
Price Value of a Basis Point (PVBP). Actual positions are monitored against these limits on a daily basis and breaches if any are
reported promptly. Risk assessment of the portfolio is undertaken periodically.

The Treasury front office enters into derivative transaction with customers and interbank counterparties. The Bank has an
independent back office and mid office as per regulatory guidelines. The MTM position of the derivative portfolio is monitored on
a regular basis. The impact on derivative portfolio on account of the probable market movements are assessed on regular basis.
The risk profile of the outstanding portfolio is reviewed by the Board at regular intervals.

Interest rate contracts

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 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

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 agreed rates of exchange 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 at a certain
date in the future at a specified price. The contract specifies the rate of exchange between one unit of currency with another.

Non-Deliverable Derivative Contracts

Non Deliverable Forwards are foreign exchange derivative contract involving the Rupee, entered into with a person resident
outside India and which is settled without involving delivery of the Rupee.

(b) Accounting policy for recording hedge and non-hedge transactions, recognition of income, Premiums and discounts, valuation
of outstanding contracts and provisioning

Bank deals in derivatives for hedging domestic or foreign currency assets/liabilities subject to the prevailing regulatory guidelines.
Transactions for hedging and trading are recorded separately. For hedge transactions the Bank identifies the hedged item (asset
or liability) at the inception of the transaction itself. The effectiveness is ascertained at the time of inception of the hedge and
periodically thereafter. Transactions related to foreign exchange forward / Interest rate Future/IRS/Currency futures are marked
to market daily and the MTM is accounted in the books.

(c) Collateral Security

Bank has provided sufficient collateral to central counter parties and exchanges wherever applicable. As per market practice
no collateral is insisted on for the contracts with counter parties like Banks/Primary Dealers (PDs) etc. but if a Credit Support
Annexure (CSA) is signed then collateral is insisted as per the terms of CSA agreement. For deals with Corporate Clients appropriate
collateral security/margin etc. is stipulated wherever considered necessary as per the CSA agreement.

(d) Credit Risk Mitigation

In the Interbank Space the Bank deals with other major banks and the default risk is perceived as low in this segment. Wherever
the Credit Support Annexure (CSA) is signed the collateral is insisted as per the terms of the CSA agreement. This risk is managed
under the limit framework laid down by the policy on Sovereign and Counterparty Bank Limits. Exposure against clients is mitigated
by collecting proper collateral securities / margin as envisaged by the credit sanctioning team as per the CSA.

# excludes forward exchange contract and includes Non-deliverable forwards.

• The notional principal amount of forward exchange contracts (excluding Cash, tom and spot contracts) classified as
Hedging and Trading outstanding as on March 31, 2025 amounted to H 2,441.51 Crore (previous year H 2,209.73 Crore) and
H 80,366.74 Crore (previous year H 21,292.74 Crore) respectively. For the trading contract, as at March 31 2025 the marked
to market position was asset of H 514.52 Crore and liability of H 603.38 Crore (previous year asset H 301.30 Crore and liability
of H 278.56 Crore). Credit exposure on forward exchange contracts classified as Hedging and Trading as at March 31, 2025
amounted to H 53.70 Crore (previous year H 57.24 Crore) and H 4,577.49 Crore (previous year H 1,001.24 Crore) respectively.
The notional principal amounts of derivatives reflect the volume of transactions outstanding as at the Balance Sheet date
and do not represent the amounts at risk.

• Interest rate derivative represents interest rate swaps and bond FRA.

• The Bank has computed the maximum and minimum of PV01 for the year based on the daily balances for Interest rate
Derivatives and Currency Derivatives.

• In respect of derivative contracts, the Bank evaluates the credit exposure arising therefrom, in line with RBI guidelines. Credit
exposure has been computed using the current exposure method which is the sum of:

a) The current replacement cost (Marked to Market value including accruals of the contract) or zero whichever is higher.

b) The Potential Future Exposure (PFE) is a product of the notional principal amount of the contract and a factor that is
based on the grid of credit conversion factor prescribed in RBI Guidelines, which is applied on the basis of the residual
maturity and the type of contract.