1.8 Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) 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 a
reliable estimate can be made of the amount of the obligation. The expense relating to any provision is presented in the
statement of profit and loss net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects,
when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the
passage of time is recognised as a finance cost.

1.9 Contingent liabilities , Contingent assets and Commitments

The Company does not recognize a contingent liability but discloses its existence in the financial statements Contingent
liability is disclosed in the case of:

• A present obligation arising from past events, when it is not probable that an outflow of resources will be required to
settle the obligation.

• A present obligation arising from past events, when no reliable estimate is possible.

• A possible obligation arising from past events, unless the probability of outflow of resources is remote.

Contingent liabilities are reviewed at each balance sheet date.

Contingent assets are not recognised. A contingent asset is disclosed, as required by Ind AS 37, where an inflow of
economic benefits is probable.

Commitments are future contractual liabilities, classified and disclosed as follows:

• The estimated amount of contracts remaining to be executed on capital account and not provided for;

• Undisbursed commitment relating to loans; and

• Other non-cancellable commitments, if any, to the extent they are considered material and relevant in the
opinion of management

1.10 Retirement and other employee benefits

Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other
than the contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund
scheme as an expense, when an employee renders the related service. If the contribution payable to the scheme for
service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme
is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the
contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent
that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.

The Company provides gratuity benefits which is a defined benefit scheme. The cost of providing gratuity benefits is
determined on the basis of actuarial valuation at each year end. Separate actuarial valuation is carried out for each plan
using the projected unit credit method.

Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included
in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest
on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit
to retained earnings through OCI in the year in which they occur. Remeasurements are not reclassified to profit or loss in
subsequent years.

Past service costs are recognised in Profit or Loss on the earlier of: The date of the plan amendment or curtailment, and
The date that the Company recognises related restructuring costs.

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company
recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss.

Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine
settlements; and Net interest expense or income.

Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit.
The Company measures the expected cost of such absence as the additional amount that it expects to pay as a result of
the unused entitlement that has accumulated at the reporting date.

Other Long term benefits wherein the Company’s liability is ascertainable and is payable over a period more than a year
is charged to the Profit & loss account on proportionate basis.

1.11 Taxes

Tax expense comprises current and deferred tax.

Current income tax

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the
taxation authorities in accordance with Income tax Act, 1961. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted, at the reporting date.

Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other
comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either
in OCI or directly in equity.

Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and
any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences, and the carry forward of unused tax credits and unused
tax losses can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has
become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is
realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the
reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other
comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either
in OCI or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority
basis the criteria given in IND as 12 "Income Taxes".

1.12 Earning per share

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders
by the weighted average number of equity shares outstanding during the year. Partly paid equity shares are treated as a
fraction of an equity share to the extent that they are entitled to participate in dividends relative to a fully paid equity share
during the reporting year.

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity
shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all
dilutive potential equity shares.

1.13 Share based payments

Equity-settled share based payments to employees and others providing similar services are measured at the fair value
of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share
based payments transactions are set out in Note 33.

The fair value determined at the grant date of the equity-settled share based payments is expensed on a straight line
basis over the vesting year, based on the Company's estimate of equity instruments that will eventually vest, with a
corresponding increase in equity. At the end of each reporting year, the Company revises its estimate of the number of
equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in Statement
of Profit and Loss such that the cumulative expenses reflects the revised estimate, with a corresponding adjustment to
the Share Based Payments Reserve.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted
earnings per share.

1.14 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.

1.14.1 Financial Assets

1.14.1.1 Initial recognition and measurement

Financial assets, with the exception of loans and advances to customers, are initially recognised on the trade
date, i.e., the date that the Company becomes a party to the contractual provisions of the instrument. Loans and

advances to customers are recognised when funds are disbursed to the customers. The classification of financial
instruments at initial recognition depends on their purpose and characteristics and the management’s intention
when acquiring them. All financial assets are recognised initially at fair value plus, in the case of financial assets
not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the
financial asset.

Trade Receivable is measured at their transaction price (as defined in Ind AS 115) on initial recognition.

1.14.1.2 Classification and Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in four categories:

• Debt instruments at amortised cost

• Debt instruments at fair value through other comprehensive income (FVTOCI)

• Debt instruments at fair value through profit or loss (FVTPL)

• Equity instruments measured at fair value through other comprehensive income (FVTOCI) and through profit
or loss (FVTPL)

1.14.1.3 Debt instruments at amortised costs

A ‘debt instrument’ is measured at the amortised cost if both the following conditions are met:

• The asset is held within a business model whose objective is to hold assets for collecting contractual
cash flows, and

• Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal
and interest (SPPI) on the principal amount outstanding.

After initial measurement, such financial assets are subsequently measured at amortised cost using the effective
interest rate (EIR) method less impairment. Amortised cost is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in
interest income in the statement of profit or loss. The losses arising from impairment are recognised in the statement
of profit and loss.

1.14.1.4 Debt instruments at FVTOCI

A ‘debt instrument’ is classified as at the FVTOCI if both of the following criteria are met:

• The objective of the business model is achieved both by collecting contractual cash flows and selling the
financial assets, and

• The asset’s contractual cash flows represent SPPI.

Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date
at fair value. Fair value movements are recognized in the other comprehensive income (OCI). However, the
Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the P&L.
On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to
P&L. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.

1.14.1.5 Debt instruments at FVTPL

FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for
categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.

In addition, the company may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI
criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or
recognition inconsistency (referred to as ‘accounting mismatch’). Debt instruments included within the FVTPL
category are measured at fair value with all changes recognized in the P&L.

1.14.1.6 Business Model Test

An assessment of business models for managing financial assets is fundamental to the classification of a
financial asset. The Company determines the business models at a level that reflects how financial assets are
managed together to achieve a particular business objective. The Company’s business model does not depend on
management’s intentions for an individual instrument, therefore the business model assessment is performed at a
higher level of aggregation rather than on an instrument-by-instrument basis. The Company considers all relevant
information available when making the business model assessment. The Company takes into account all relevant
evidence available such as:- How the performance of the business model and the financial assets held within that
business model are evaluated and reported to the Company’s key management personnel; The risks that affect the
performance of the business model (and the financial assets held within that business model) and, in particular,
the way in which those risks are managed; and How managers of the business are compensated (e.g. whether the
compensation is based on the fair value of the assets managed or on the contractual cash flows collected). At initial
recognition of a financial asset, the Company determines whether newly recognized financial assets are part of an
existing business model or whether they reflect a new business model.

1.14.1.7 Equity Instruments

All equity instruments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for
trading classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to
present in other comprehensive income subsequent changes in the fair value. The Company makes such election
on an instrument-by- instrument basis. The classification is made on initial recognition and is irrevocable.

If the company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument,
excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to P&L, even on sale
of investment. However, the company may transfer the cumulative gain or loss within equity.

Equity instruments included within the FVTPL category are measured at fair value with all changes
recognized in the P&L.

1.14.2 Financial Liabilities

1.14.2.1 Initial recognition and measurement

Financial liabilities are classified and measured at amortised cost or FVTPL. A financial liability is classified as at
FVTPL if it is classified as held-for trading or it is designated as on initial recognition. All financial liabilities are
recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable
transaction costs.

The company’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts
and derivative financial instruments.

1.14.2.2 Classification and Subsequent measurement - Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified
as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes
derivative financial instruments entered into by the company that are not designated as hedging instruments in
hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for
trading unless they are designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognised in the profit or loss.

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at
the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL,
fair value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ loss are not
subsequently transferred to P&L. However, the company may transfer the cumulative gain or loss within equity.
All other changes in fair value of such liability are recognised in the statement of profit and loss.

1.14.2.3 Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using
the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as
through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that
are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
This category generally applies to borrowings.

1.14.3 Derivative financial instruments

The Company holds derivative to mitigate the risk of changes in exchange rates on foreign currency exposures as
well as interest fluctuations. The counterparty for these contracts is generally a bank.

Financial assets or financial liabilities, at fair value through profit or loss

This category has derivative financial assets or liabilities which are not designated as hedges. Any derivative that is
not designated a hedge is categorized as a financial asset or financial liability, at fair value through profit or loss.

Derivatives not designated as hedges are recognized initially at fair value and attributable transaction costs are
recognized in net profit in the Statement of Profit and Loss when incurred. Subsequent to initial recognition, these
derivatives are measured at fair value through profit or loss and the resulting exchange gains or losses are included
in Statement of Profit and Loss.

1.14.4 Reclassification of financial assets and liabilities

The company doesn’t reclassify its financial assets subsequent to their initial recognition, apart from the exceptional
circumstances in which the company acquires, disposes of, or terminates a business line. Financial liabilities are
never reclassified.

1.14.5 De-recognition of financial assets and liabilities

1.14.5.1 Financial Assets

A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets)
is de-recognised when the rights to receive cash flows from the financial asset have expired. The Company also
de-recognised the financial asset if it has transferred the financial asset and the transfer qualifies for de recognition.

A financial asset is treated as transferred by company if, and only if:

• It has transferred its contractual rights to receive cash flows from the financial asset or

• It retains the rights to the cash flows, but has assumed an obligation to pay the received cash flows in full
without material delay to a third party under a ‘pass-through’ arrangement.

Pass-through arrangements are transactions whereby the Company retains the contractual rights to receive
the cash flows of a financial asset (the 'original asset'), but assumes a contractual obligation to pay those cash
flows to one or more entities (the 'eventual recipients'), when all of the following three conditions are met:

• The Company has no obligation to pay amounts to the eventual recipients unless it has collected equivalent
amounts from the original asset, excluding short-term advances with the right to full recovery of the amount
lent plus accrued interest at market rates.

• The Company cannot sell or pledge the original asset other than as security to the eventual recipients.

• The Company has to remit any cash flows it collects on behalf of the eventual recipients without material delay.

In addition, the Company is not entitled to reinvest such cash flows, except for investments in cash or cash
equivalents including interest earned, during the year between the collection date and the date of required
remittance to the eventual recipients.

A transfer only qualifies for derecognition if either:

• The Company has transferred substantially all the risks and rewards of the asset or

• The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.

The Company considers control to be transferred if and only if, the transferee has the practical ability to sell the
asset in its entirety to an unrelated third party and is able to exercise that ability unilaterally and without imposing
additional restrictions on the transfer.

When the Company has neither transferred nor retained substantially all the risks and rewards and has retained
control of the asset, the asset continues to be recognised only to the extent of the Company's continuing
involvement, in which case, the Company also recognises an associated liability. The transferred asset and the
associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower
of the original carrying amount of the asset and the maximum amount of consideration the Company could be
required to pay.

If continuing involvement takes the form of a written or purchased option (or both) on the transferred asset, the
continuing involvement is measured at the value the Company would be required to pay upon repurchase. In the
case of a written put option on an asset that is measured at fair value, the extent of the entity's continuing involvement
is limited to the lower of the fair value of the transferred asset and the option exercise price.

The Company, on de-recognition of financial assets under the direct assignment transactions, recognises the right
of excess interest spread (EIS) which is difference between interest on the loan portfolio assigned and the applicable
rate at which the direct assignment is entered into with the assignee. The Company records the discounted value
of behaviour cash flow of the future EIS, entered into with the assignee, upfront in the Statement of Profit and
Loss. The embedded interest component in the future EIS is recognised as interest income in line with Ind AS 109
'Financial instruments'.

1.14.5.2 Financial Liabilities

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.
Where an existing financial liability is replaced by another from the same lender on substantially different terms
or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a
derecognition of the original liability and the recognition of a new liability. The difference between the carrying value
of the original financial liability and the consideration paid is recognised in profit or loss.

1.15 Impairment of financial assets

1.15.1 Overview of the ECL principles

The Company records the allowance for expected credit losses for all loans and other debt financial assets not held
at FVTPL, together with loan commitments and Excess Interest Spread (EIS) receivable, (in this section all referred
to as ‘financial instruments’). Equity instruments are not subject to impairment under Ind AS 109.

The ECL allowance is based on the credit losses expected to arise over the life of the asset (the lifetime expected
credit loss or LTECL), unless there has been no significant increase in credit risk since origination, in which case,
the allowance is based on the 12 months’ expected credit loss (12m ECL). The Company’s policies for determining
if there has been a significant increase in credit risk are set out in Note 5(a)(3)(v).

The 12m ECL is the portion of LTECL that represent the ECL that result from default events on a financial instrument
that are possible within the 12 months after the reporting date.

Both LTECL and 12m ECL are calculated on collective basis, depending on the nature of the underlying portfolio
of financial instruments. The Company’s policy for grouping financial assets measured on a collective basis is
explained in Note 5(a)(1).

The Company has established a policy to perform an assessment, at the end of each reporting year, of whether a
financial instrument’s credit risk has increased significantly since initial recognition. This is further explained in
Note5(a)(3)(v).

Based on the above process, the Company group its loans into Stage 1, Stage 2, Stage 3, as described below:

Stage 1: When loans are first recognised, the Company recognises an allowance based on 12mECL. Stage 1 loans
also include facilities where the credit risk has improved and the loan has been reclassified from Stage 2 or Stage 3.

Stage 2: When a loan has shown a significant increase in credit risk since origination, the Company records an
allowance for the LTECL. Stage 2 loans also include facilities, where the credit risk has improved and the loan has
been reclassified from Stage 3.

Stage 3: Loans considered credit-impaired (as outlined in Note 5(a)(3)(i)). The Company records an allowance for
the LTECL.

For financial assets for which the company has no reasonable expectations of recovering either the entire
outstanding amount, or a proportion thereof, the gross carrying amount of the financial asset is reduced.

1.15.2 The calculation of ECL

The Company calculates ECL on loans and EIS Receivable based on a probability-weighted scenarios and historical
data to measure the expected cash shortfalls, discounted at an approximation to the EIR. A cash shortfall is the
difference between the cash flows that are due to an entity in accordance with the contract and the cash flows that
the entity expects to receive.

Loan commitments: When estimating ECL for undisbursed loan commitments, the Company estimates the
expected portion of the loan commitment that will be drawn down over its expected life. The ECL is then based on
the present value of the expected shortfalls in cash flows if the loan is drawn down. The expected cash shortfalls
are discounted at an approximation to the expected EIR on the loan.For loan commitments, the ECL is recognised
within Provisions.

Provisions for ECL for undisbursed loan commitments are assessed as set out in Note 5(a)(2).

The mechanics of the ECL calculations are outlined below and the key elements are, as follows:

• PD - The Probability of Default is an estimate of the likelihood of default over a given time horizon. A default
may only happen at a certain time over the assessed year, if the facility has not been previously derecognised
and is still in the portfolio.

• EAD - The Exposure at Default is an exposure at a default date. The EAD is further explained in Note 5(a)(3)(iii).

• LGD - The Loss Given Default is an estimate of the loss arising in the case where a default occurs at a given
time. It is based on the difference between the contractual cash flows due and those that the lender would
expect to receive, including from the realisation of any collateral. It is usually expressed as a percentage of the
EAD. The LGD is further explained in Note 5(a)(3)(iv).

The maximum year for which the credit losses are determined is the expected life of a financial instrument.

The mechanics of the ECL method are summarised below:

Stage 1: The 12mECL is calculated as the portion of LTECL that represent the ECL that result from default events on
a financial instrument that are possible within the 12 months after the reporting date. The Company calculates the
12mECL allowance based on the expectation of a default occurring in the 12 months following the reporting date.
These expected 12-month default probabilities are applied to an EAD and multiplied by the expected LGD.

Stage 2: When a loan has shown a significant increase in credit risk since origination, the Company records an
allowance for the LTECL. The mechanics are similar to those explained above, but PDs and LGDs are estimated over
the lifetime of the instrument.

Stage 3: For loans considered credit-impaired (as defined in Note 5(a)(3)(i)), the Company recognizes the lifetime
expected credit losses for these loans. The method is similar to that for Stage 2 assets, with the PD set at 100%.

1.15.3 Forward looking information

The Company considers a broad range of forward-looking information with reference to external forecasts of
economic parameters such as GDP growth, Inflation, Government Expenditure etc., as considered relevant so as to
determine the impact of macro-economic factors on the Company’s ECL estimates.

The inputs and models used for calculating ECLs are recalibrated periodically through the use of available
incremental and recent information. Further, internal estimates of PD, LGD rates used in the ECL model may not
always capture all the characteristics of the market / external environment as at the date of the financial statements.
To reflect this, qualitative adjustments or overlays are made as temporary adjustments to reflect the emerging
risks reasonably.

Annual data from 2018 to 2028 (including forecasts for 4 years) were obtained from World Economic Outlook,
October 2023 published by International Monetary Fund (IMF). IMF provides historical and forecasted data for
important economic indicators country-wise. The data provided for India is used for the analysis. Macro variables
that were compared against default rates at segment level to determine the key variables having correlation with
the default rates using appropriate statistical techniques. Vasicek model has been incorporated to find the Point in
Time (PIT) PD. The company has formulated the methodology for creation of macro-economic scenarios under the
premise of economic baseline, upside and downside condition. A final PIT PD is arrived as the scenario weighted
PIT PD under different macroeconomic scenarios.

1.15.4 Collateral repossession

To mitigate the credit risk on financial assets, the Company seeks to possess collateral, wherever required as per
the powers conferred on the HFC under SARFAESI act. In its normal course of business, the company does not
physically repossess properties or other assets in its retail portfolio, but generally engages external or internal agents
to recover funds generally at auctions to settle outstanding debt. Any surplus funds are returned to the customers/
obligors. As a result of this practice, the residential properties under legal repossession are not continued under
loans and advances and are treated as assets held for sale at (i) fair value less cost to sell or (ii) principle outstanding,
whichever is less, at the repossession date. With effect from April 01, 2022, the Company has discontinued the
treatment of accounting and disclosing such cases as asset held for sale (AFS) and such cases continue to be
included as part of the loan portfolio ( EAD) as at the balance sheet date. Considering the impracticability involved
in verifying the cases under SARFAESI till March 31,2022, the change is effected prospectively by the Company in
these financials statement.

1.15.5 Write-offs

Financial assets are written off either partially or in their entirety only when the Company has stopped pursuing
the recovery. If the amount to be written off is greater than the accumulated loss allowance, the difference is first
treated as an addition to the allowance that is then applied against the gross carrying amount. Any subsequent
recoveries are credited to Statement of profit and loss account.

1.16 Fair value measurement

The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date using
valuation techniques.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the presumption that
the transaction to sell the asset or transfer the liability takes place either:

• In the principal market for the asset or liability, or

• In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when
pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the
asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data
are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised
within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value
measurement as a whole:

Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly
or indirectly observable

Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement
is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines
whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest
level input that is significant to the fair value measurement as a whole) at the end of each reporting year.

The Company recognises gains/loss on fair value change of financial assets measured at FVTPL.

1.17 New Technical Pronouncement

There is no such notification which would have been applicable from April 01,2025.

i) Loans and receivables are non-derivative financial assets which generate a fixed or variable interest income for the Company.
The carrying value may be affected by changes in the credit risk of the counterparties.

ii) Loans granted by the Company are secured by equitable mortgage/registered mortgage of the property and/or undertaking
to create a security and/or personal guarantees and/or hypothecation of assets and/or assignments of life insurance
policies. The process of security creation was in progress for loans to the extent of ' 37,515.01 lakh at March 31,2025 (P.Y.
' 35,026.27 lakh)

iii) Loans sanctioned but undisbursed amount is ' 63,869.02 lakh as on March 31,2025 (P.Y. 60,625.86 lakh)

iv) The company is not granting any loans against gold jewellery as collateral.

v) The company is not granting any loans against security of shares as collateral.

vi) The Company has assigned a pool of loans amounting to ' 1,69,178.29 lakh (P.Y. ' 1,38,107.04 lakh) by way of a direct
assignment transaction during the year. These loan assets have been de-recognised from the loan portfolio of the Company
as the sale of loan assets is an absolute assignment and transfer on a ‘no-recourse’ basis. The Company continues to act as
a servicer to the assignment transaction on behalf of assignee. In terms of the assignment agreement, the Company pays to
assignee, on a monthly basis, the pro-rata collection amounts (refer Note no. 47).

vii) The Company has transfered a pool of loans amounting to ' 12,602.47 lakh (P.Y. 541.30 lakh) by way of a Co-lending transaction
during the year.

viii) The Company has granted loans to staff secured by equitable mortgage/registered mortgage of the property amounting to
' 5,006.24 lakh as on March 31,2025 (P.Y. ' 4,488.76 lakh).

ix) As per RBI Master Direction - Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016 dated September 29, 2016,
Loan assets include Four loans of ' 85.86 lakh (P.Y. two loan of ' 26.18 lakh), which became doubtful due to fraudulent
misrepresentation by the borrowers and same has been provided for.

5(a)(3) Impairment assessment

The references below show where the Company’s impairment assessment and measurement approach is set out in these
notes. It should be read in conjunction with the Summary of material accounting policies.

5(a)(3)(i) Definition of default

The Company considers a loan assets as defaulted and considered it as Stage 3 (credit-impaired) for ECL calculations in all
cases, when the borrower becomes more than 90 days past due (DPD) on its contractual payments on any day irrespective
of reporting cycle. Company upgrade stage 3 cases only if entire arrears of interest and principal are paid by the borrower
i.e. DPD becomes zero. The Probability of Default (PD) is an estimate of the likelihood of default over a given time horizon.
A default may only happen at a certain time over the assessed year, if the facility has not been previously derecognized and is
still in the portfolio.

5(a)(3)(ii) The Company’s process for managing risk

Credit risk is the risk that a customer or counterparty will default on its contractual obligations resulting in financial loss to
the Company. The Company’s main income generating activity is lending to customers and therefore credit risk is a principal
risk. Credit risk mainly arises from loans and advances to customers, investments in debt securities and derivatives that are
an asset position. The Company considers all elements of credit risk exposure such as counterparty default risk, geographical
risk and sector risk for risk management purposes.

5(a)(3)(iii) Exposure at default

The exposure at default (EAD) represents the gross carrying amount of the loan assets subject to the impairment calculation,
addressing both the client’s ability to increase its exposure while approaching default and potential early repayments too.

To calculate the EAD for a Stage 1 loan, the Company assesses the possible default events within 12 months for the calculation
of the 12mECL. For Stage 2 and Stage 3 financial assets, the exposure at default is considered for events over the lifetime of
the loan assets.

5(a)(3)(iv) Loss given default

The Company segments its retail lending products into smaller homogeneous portfolios (housing and non housing), based
on key characteristics that are relevant to the estimation of future cash flows. The data applied is collected loss data and
involves a wider set of transaction characteristics (e.g., product type, wider range of collateral types) as well as borrower
characteristics.

5(a)(3)(v) Significant increase in credit risk

The Company continuously monitors all assets subject to ECL. In order to determine whether a loan asset or a portfolio of
loan assets is subject to 12mECL or LTECL, the Company assesses whether there has been a significant increase in credit risk
since initial recognition. The Company considers an exposure to have significantly increased in credit risk when contractual
payments are more than 30 days past due.

During the financial year ended March 31,2022, RBI issued resolution framework 2.0 dated May 05, 2021 accordance with
that Company offered moratorium on payment of all installment and/or interest as applicable to all eligiable borrowers. For all
such accounts that were granted moratorium, the prudential assets classification remained standstill during the moratorium
period (i.e. the number of days past due shall exclude the moratorium period for the purposes of asset classification under
Income Recognition, Asset Classification and Provisioning Norms). The Company continues to monitor such cases and takes
necessary action based on the repayments and the resolution framework 2.0.

When estimating ECL on a collective basis for a group of similar assets, the Company applies the same principles for assessing
whether there has been a significant increase in credit risk since initial recognition.

5(a)(3)(vi) Risk assessment model

The Company has designed and operates its risk assessment model that factors in both quantitative as well as qualitative
information on the loans and the borrowers. The model uses historical empirical data to arrive at factors that are indicative
of future credit risk and segments the portfolio on the basis of combinations of these parameters into smaller homogenous
portfolios from the perspective of credit behaviour.

5(a)(4) Collateral

The Company holds collateral to mitigate credit risk associated with financial assets.The main types of collateral are registered
/equitable mortgage property. The collateral presented relates to loan assets that are measured at amortised cost.

The Company did not hold any loan assets for which no loss allowance is recognised because of collateral at March 31,2025.
Refer note 44(C) for risk concentration based on Loan to value(LTV).

14(a) Secured term loans from National Housing Bank (NHB) carry rate of interest in the range of 2.80% to 8.50% p.a. The loans

are having tenure of 7 to 15 years from the date of disbursement and are repayable in quarterly instalments. These loans
are secured by hypothecation (exclusive charge) of the loans given by the Company.

14(b) Secured term loans from Banks include loans from various banks and carry rate of interest in the range of 7.48% to 9.75%

p.a. The loans are having tenure of 5 to 15 years from the date of disbursement and are repayable in monthly or quarterly
or yearly instalments. These loans are secured by hypothecation (exclusive charge) of the loans given by the Company.
Secured term loan from banks also include auto loans of ' 452.31 lakh (P.Y. ' 382.18 lakh) carrying rate of interest in the
range of 8.50% to 9.75% p.a. which are secured by hypothecation of Company's vehicles.

14(c) Secured loans from financial institutions include loan from Small Industries Development Bank of India (SIDBI) at carrying

rate of interest in the range of 8.27% to 8.50% p.a. which are secured by hypothecation of receivables. The loans are having
tenure of 5 to 10 years from the date of disbursement and are repayable in monthly or quarterly or yearly instalments.

14(d) Secured term loan from Insurance Company carry rate of interest of 9.60% p.a. The loan is having tenure of 8 years from

the date of disbursement and is repayable in half yearly instalments. The loan is secured by hypothecation (exclusive
charge) of the loans given by the Company.

14(e) Cash credit borrowings from bank are repayable on demand and carry interest rates ranging from 9.15% to 10.50%.

14(f) Other borrowings includes associated liabilities to securitized asset which does not fulfill derecognition criteria as

per Ind AS.

21 (a) Nature and purpose of reserve
Securities premium

Securities premium is used to record the premium on issue of shares. The reserve is utilised in accordance with provisions
of the Companies Act, 2013.

Special reserve

Section 29C (i) of the National Housing Bank Act, 1987 defines that every housing finance institution which is a Company
shall create a reserve fund and transfer therein a sum not less than twenty percent of its net profit every year as disclosed
in the statement of profit and loss before any dividend is declared. For this purpose any special reserve created by the
Company under Section 36(1) (viii) of Income tax Act 1961, is considered to be an eligible transfer. During the year ended
March 31, 2025, the Company has transferred an amount of ' 10,407.66 lakh (P.Y. ' 8,903.57 lakh) to special reserve
in terms of Section 36(1) (viii) of the Income Tax Act 1961 considered eligible for special reserve u/s 29C of NHB Act
1987 and also transferred an amount of ' 1,079.24 lakh (P.Y. ' 913.34 lakh) to the Reserve in terms of Section 29C of the
National Housing Bank (“NHB”) Act, 1987.

Share Based Payments Reserve

This Reserve relates to stock options granted by the Company to employees under various ESOP Schemes. This Reserve
is transferred to Securities Premium Account on exercise of vested options.

Defined Contribution plan

The Company operates defined contribution plan (Provident fund) for all qualifying employees of the Company. The employees
of the Company are members of a retirement contribution plan operated by the government. The Company is required to
contribute a specified percentage of payroll cost to the retirement contribution scheme to fund the benefits. The only
obligation of the Company with respect to the plan is to make the specified contributions. The Company’s contribution to
provident fund aggregating ' 1,360.22 lakh (P.Y. ' 1,278.66 lakh) has been recognised in the statement of profit and loss under
the head employee benefits expense.

Gratuity and other post-employment benefit plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service is eligible
for gratuity on cessation of employment and it is computed at 15 days salary (last drawn salary) for each completed year of
service subject to such limit as prescribed by the Payment of Gratuity Act, 1972 as amended from time to time.

The following tables summarize the components of net benefits expense recognized in the statement of profit and loss and the
funded status and amounts recognized in the balance sheet for the respective plans.

34 Segment information

The Company has only one reportable business segment, i.e. lending to borrowers within India, which have similar nature of
products and services, type/class of customers and the nature of the regulatory environment (which is banking), risks and
returns for the purpose of Ind AS 108 on 'Segment Reporting'. Accordingly, the amounts appearing in the financial statements
relate to the Company’s single business segment. No revenue from transactions with a single external customer aggregates
to 10% or more of the Company's total revenue during the year ended March 31,2025 and March 31,2024.

35 The Company has been granted Certificate of Registration (No. 08.0095.11) to commence/carry on the business as a housing
finance company without accepting public deposits by National Housing Bank on August 04, 2011 and got a revised Certificate
of Registration (02.0104.13) after conversion of Company from a private limited company to a public limited company on
February 08, 2013. Further, the name of Company was changed to AAVAS FINANCIERS LIMITED, pursuant to a Shareholders
resolution passed at the EOGM held on February 23, 2017. A fresh certificate of incorporation consequent to such change
of name was issued on March 29, 2017 by the Registrar of companies, Jaipur and subsequently the revised certificate of
Registration (No.04.0151.17) was issued on April 19, 2017 by National Housing Bank.

Note :

1. AH Related Party Transactions entered during the year were in ordinary course of the business and are on arm’s length basis.

2. Consolidated Remuneration is paid to Non-Executive Directors as profit linked commission instead of paying Sitting fees and
Commission separately.

3. The remuneration to the key managerial personnel does not include the provisions made for gratuity and leave benefits, as
they are determined on an actuarial basis for the Company as a whole.

4. Issue of equity shares includes Share premium amount.

5. The Company granted loan to Mr. Sharad Pathak under employee home loan policy of the Company amounting to ' 30.50
lakhs at the rate of 5.6% for a period of 12 years, approved by the Audit Committee of the Company. It is a fully secured loan.
The company has provided Expected Credit Loss (ECL) of ' 0.02 lakh as at March 31,2025 on the same loan.

4. Khelodaya: Sports Training, Scholarship, Sponsorship.

5. Road Safety and other Awareness programs.

6. Vishwakarma: Construction Worker Development- Focus on Construction Workers and their Families, Skill Building,
Health and Safety, Social Security, Decent Work Environment.

7. Aavas Aahar Program, Health Care and Wellness, improving Health Infrastructure in Rural and Peri-Urban
Areas, Health Camps.

8. Gram Siddhi- Enterprise Development, E-Commerce & Digital Marketing, Refresher Training to existing Gram
Siddhis.

9. Association with Academic Institutions for R&D in the field of Green Housing; Environment Friendly Material,
Designs and Construction Waste Management.

40(h) Details of related party transactions

The Company has paid ' 521.06 lakh for CSR expenditure to Aavas Foundation, public trust registered under section 12A
and 80G of Income Tax Act 1961, established by the Company singly for the purpose of CSR.

41 Fair value measurement
41(a) Valuation Principles

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the
principal (or most advantageous) market at the measurement date under current market conditions (i.e., an exit price),
regardless of whether that price is directly/ indirectly observable or estimated using a valuation technique. In order to show
how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques.

41(b) Fair Value of financial instruments which are not measured at Fair Value

The carrying amounts and fair value of the Company's financial instruments are reasonable approximations of fair values
at financial statement level.

Valuation methodologies of financial instruments not measured at fair value
Loans

Most of the loans are repriced frequently, with interest rate of loans reflecting current market pricing. Hence carrying
value of loans is deemed to be equivalent of fair value.

Borrowings

The most of the Company’s borrowings are at floating rate which approximates the fair value.

Debt securities and subordinate liabilities are fixed rate borrowings and fair value of these fixed rate borrowings is
determined by discounting expected future contractual cash flows using current market interest rates charged for similar
new loans and carrying value approximates the fair value for fixed rate borrowing at financial statement level.

Short Term and Other Financial Assets and Liabilities

The management assessed that cash and cash equivalents, investments, other financial assets, trade payables and other
financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

Assets held for sale

Real estate properties are valued based on a well progressed sale process with price quotes.

42 Transfer of Financial assets

Transfers of financial assets that are not derecognised in their entirety
Securitisation:

The Company uses securitisations as a source of finance. Such transactions generally result in the transfer of contractual
cash flows from portfolios of financial assets to holders of issued debt securities. Securitisation has resulted in the continued
recognition of the securitised assets.

The table below outlines the carrying amounts and fair values of all financial assets transferred that are not derecognised in
their entirety and associated liabilities.

Assignment Deal:

During the year ended March 31,2025, the Company has sold some loans and advances measured at amortised cost as per
assignment deals, as a source of finance. As per the terms of these deals, since substantial risk and rewards related to these
assets were transferred to the buyer, the assets have been derecognised from the Company’s balance sheet.

The management has evaluated the impact of assignment transactions done during the year for its business model. Based on
the future business plan , the company business model remains to hold the assets for collecting contractual cash flows.

The table below summarises the carrying amount of the derecognised financial assets measured at amortised cost and the
gain on derecognition.

Co-lending Deal:

During the year ended March 31, 2025, the Company has transfered a pool of loans amounting to ' 12,602.47 lakh (P.Y.
541.30 lakh) by way of a Co-lending transaction during the year. These loan assets have been de-recognised from the
loan portfolio of the Company as the sale of loan assets is an absolute assignment and transfer on a ‘no-recourse’ basis.
The Company continues to act as a servicer to the Co-lending transaction on behalf of lender.

The table below summarises the carrying amount of the derecognised financial assets measured at amortised cost and the
gain on derecognition.

43 Capital management:

For the purpose of the Company’s capital management, capital includes issued equity capital, Securities premium and all
other equity reserves attributable to the equity holders of the Company net of intangible assets. The primary objective of the
Company’s capital management is safety and security of share capital and maximize the shareholder value.

The Company manages its capital structure in light of changes in economic conditions and the requirements of the financial
covenants. The Company monitors capital using a gearing ratio, which is total debt divided by net worth. The Company’s
policy is to keep the gearing ratio at reasonable level of 6-8 times in imminent year while the Master Direction - Non-Banking
Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021 currently permits HFCs to borrow up to 12
times of their net owned funds (“NOF”). The Company includes with in debt, its all interest bearing loans and borrowings.

In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that it
meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements.
Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have
been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current year.

44 Financial risk management objectives and policies

The Company’s Principal financial liabilities comprise loans and borrowings. The main purpose of these financial liabilities is
to finance the company’s operations. At the other hand company’s Principal financial assets include loans and cash and cash
equivalents that derive directly from its operations.

As a lending institution, Company is exposed to various risks that are related to lending business and operating environment.
The Principal Objective in Company's risk management processes is to measure and monitor the various risks that Company
is subject to and to follow policies and procedures to address such risks. Company 's risk management framework is driven
by Board and its subcommittees including the Audit Committee, the Asset Liability Management Committee and the Risk
Management Committee. Company gives due importance to prudent lending practices and have implemented suitable
measures for risk mitigation, which include verification of credit history from credit information bureaus, personal verification
of a customer’s business and residence, technical and legal verifications, conservative loan to value, and required term cover
for insurance. The major types of risk Company face in businesses are liquidity risk, credit risk, interest rate risk.

(A) Liquidity risk

Liquidity Risk refers to the risk that the company can not meet its financial obligations. The objective of Liquidity
risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirement.
The unavailability of adequate amount of funds at optimum cost and co-terminus tenure to repay the financial liabilities
and further growth of business resultantly may face an Asset Liability Management (ALM) mismatch caused by a
difference in the maturity profile of Company assets and liabilities. This risk may arise from the unexpected increase in
the cost of funding an asset portfolio at the appropriate maturity and the risk of being unable to liquidate a position in a
timely manner and at a reasonable price. The Company manages liquidity risk by maintaining adequate cash reserves
and undrawn credit facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity
profiles of financial assets and liabilities.

The Company has given cash collateral for the securitisation transactions and do not expect any net cash outflow and
hence guarantees given for securitisation transactions have not been shown as part of below table. Further, undisbursed
loan amount being cancellable in nature are not disclosed as part of below mentioned maturity profile.

(B) Credit risk

Credit Risk arises from the risk of loss that may occur from the default of Company's customers under loan agreements.
Customer defaults and inadequate collateral may lead to higher credit impaired assets. Company address credit risks
by using a set of credit norms and policies, which are approved by Board and backed by analytics and technology.
Company has implemented a structured and standardized credit approval process, including customer selection criteria,
comprehensive credit risk assessment and cash flow analysis, which encompasses analysis of relevant quantitative
and qualitative information to ascertain the credit worthiness of a potential customer. Actual credit exposures, credit
limits and asset quality are regularly monitored and analysed at various levels. Company has created a robust credit
assessment and underwriting practice that enables to fairly price credit risks.

The Company has created more than 60 templates of customer profiles through its experience over the years, with
risk assessment measures for each geography in which it operates. The Company continuously seek to develop and
update such profiles in order to identify and source reliable customers and improve efficiencies. The Company also
conduct an analysis of the existing cash flow of customer’s business to assess their repayment abilities. The Company
has implemented a four prong system of credit assessment comprising underwriting, legal assessments, technical
assessments and a risk containment unit.

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk
was ' 16,72,893.09 lakh and ' 14,42,255.64 lakh as of March 31,2025 and March 31,2024 respectively, being the total
of the carrying amount of Loan assets and EIS receivable.

(C) Analysis of risk concentration

The Company’s concentrations of risk are managed based on Loan to value (LTV) segregation as well as geographical
spread. The following tables stratify credit exposures from housing and other loans to customers by range of loan-to-value
(LTV) ratio .LTV is calculated as the ratio of gross amount of the loan - or the amount committed for loan commitments
- to the value of the collateral. The value of the collateral for housing and other loans is based on collateral value
at origination.

(D) Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market factors. Such changes in the values of financial instruments may result from changes in the interest rates, credit,
liquidity and other market changes. The Company’s exposure to market risk is primarily on account of interest rate risk.

(I) Interest Rate Risk:-

The company is subject to interest rate risk, primarily since it lends to customers at rates and for maturity years
that may differ from funding sources. Interest rates are highly sensitive to many factors beyond control, including
the monetary policies of the Reserve Bank of India, deregulation of the financial sector in India, domestic and
international economic and political conditions, inflation and other factors. In order to manage interest rate risk, the
company seek to optimize borrowing profile between short-term and long-term loans. The company adopts funding

strategies to ensure diversified resource-raising options to minimize cost and maximize stability of funds. Assets and
liabilities are categorized into various time buckets based on their maturities and Asset Liability Management
Committee supervise an interest rate sensitivity report periodically for assessment of interest rate risks.

Due to the very nature of housing finance, the company is exposed to moderate to higher Interest Rate Risk.
This risk has a major impact on the balance sheet as well as the income statement of the company. Interest Rate
Risk arises due to:

i) Changes in Regulatory or Market Conditions affecting the interest rates

ii) Short term volatility

iii) Prepayment risk translating into a reinvestment risk

iv) Real interest rate risk.

In short run, change in interest rate affects Company’s earnings (measured by NII or NIM) and in long run it affects
Market Value of Equity (MVE) or net worth. It is essential for the company to not only quantify the interest rate risk
but also to manage it proactively. The company mitigates its interest rate risk by keeping a balanced portfolio of
fixed and variable rate loans and borrowings. Further company carries out Earnings at risk analysis and maturity gap
analysis at quarterly intervals to quantify the risk.

(II) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of
changes in foreign currency rates. The Company’s exposure to the risk of changes in foreign exchange rates relates
primary to the foreign currency borrowings taken from bank.

(E) Operational risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and system or from
external events. Operational risk is associated with human error, system failures and inadequate procedures and
controls. It is the risk of loss arising from the potential that inadequate information system; technology failures, breaches
in internal controls, fraud, unforeseen catastrophes, or other operational problems may result in unexpected losses or
reputation problems. Operational risk exists in all products and business activities.

The Company recognizes that operational risk event types that have the potential to result in substantial losses
includes Internal fraud, External fraud, employment practices and workplace safety, clients, products and business
practices, business disruption and system failures, damage to physical assets, and finally execution, delivery and
process management.

The Company cannot expect to eliminate all operational risks, but it endeavours to manage these risks through a
control framework and by monitoring and responding to potential risks. Controls include effective segregation of duties,
access, authorisation and reconciliation procedures, staff education and assessment processes, such as the use of
internal audit.

Qualitative Disclosure:

The Company’s Board of Directors (“Board”) has laid down Foreign Currency Risk Management Policy (“Policy”) with
respect managing foreign currency and related risk which include exchange and interest rate risk by using appropriate
derivative instruments.

Board has empowered the Executive Committee of Board (hereinafter referred to as “EC”) to decide the hedging level by using
appropriate derivative instruments for borrowing transactions and, based on ALCO Committee review and recommendation,
for non borrowing transaction.

Management continuously identifies potential foreign currency and related risks for any foreign currency borrowing at each
and every transaction level, analyse them and takes precautionary steps such as hedging and/ or use of appropriate derivative
instrument to reduce/curb the foreign currency and related risk as per the Policy.

Periodical report of all hedging/derivative transactions are being presented to Risk Management Committee of the
Board and/or ALCO.

As per the Companies Act, 2013 and with reference to various guidelines issued by RBI/NHB from time to time, the company
is following the applicable accounting standards issued by ICAI for accounting of such transactions and accordingly due
disclosures has been made in notes to accounts. During the period under review the Company has used Forward Contracts
to mitigate exchange rate risk with respect to all contractual cash flows of Foreign Currency Term Loan of USD 2.367 Cr
availed by Company.

2) The company has unhedged foreign currency liability on March 31,2025 of ' Nil (P.Y. 156.30 lakh)

(vi) Institutional set-up for liquidity risk Management

The company has an Asset Liability Management Committee (ALCO) to monitor asset liability mismatches to ensure that
there is no imbalances or excessive concentration on the either side of the balance sheet. The company maintains a judicious
mix of borrowings in the form of Term Loans, Refinance, Capital Market Instruments, Securitization, Working Capital and
continues to diversify its source of borrowings with the emphasis on longer tenor borrowings. The company has diversified
mix of investors/lenders which includes Banks, National Housing Bank, Development Financial Institution, Mutual Funds,
Insurance Companies etc.

The Liquidity Risk Management (LRM) of the company is governed by the LRM Policy approved by the Board. The Asset Liability
Committee (ALCO) is responsible for implementing and monitoring the liquidity risk management strategy of the company in
line with its risk management objectives and ensures adherence to the risk tolerance/limits set by the Board.

Refer note no. 44 of financial statements.

46.14 Loans against security of shares - Nil

Refer to the note no. 5(v) of Loans

46.15 Loans against security of single product - gold jewellery - Nil

Refer to the note no. 5(iv) of Loans

Qualitative Disclosure of LCR

RBI had issued guidelines on liquidity risk management for NBFCs/HFCs vide Circular No. RBI/2019-20/88 DOR.NBFC (PD)
CC.No.102/03.10.001/2019-20 dated November 4, 2019 wherein RBI introduced Liquidity Coverage Ratio (LCR). The objective
of the guidelines is to ensure that NBFCs/HFCs maintains a liquidity buffer in terms of LCR in addition to various process
related aspects of liquidity risk management framework. LCR has to be maintained in the form sufficient High Quality Liquid
Asset (HQLA) to survive any acute liquidity stress scenario lasting for subsequent 30 calendar days. LCR is one of the key
parameters closely monitored by RBI to enable a more resilient financial sector. Further, RBI vide Circular No. RBI/2020-21/60
DOR. NBFC (HFC).CC. No.118/03.10.136/2020-21 dated October 22, 2020, provided non deposit taking HFCs with time
extension for minimum LCR of 50% to be maintained by December 01,2021 which is to be gradually increased to 100% by
December 01,2025. The LCR is expected to improve the ability of financial sector to absorb the shocks arising from financial
and/or economic stress, thus reducing the risk of spill over from financial sector to real economy.

The liquidity risk management including LCR of the Company is governed by the Liquidity Risk Management (LRM) Policy
approved by the board. The Asset Liability Committee (ALCO) is responsible for managing the LCR of the Company in line with
the LRM Policy. Company regularly reviews the position of inflows, outflows and the liquidity buffers and ensures maintenance
of sufficient quantum of High Quality Liquid Assets.

For computation of stressed cash outflow, all expected and contracted cash outflows are considered by applying a stress
of 15%. Similarly, stressed cash inflows for the Company is arrived at by considering all expected and contracted inflows by
applying a haircut of 25%. Finally, Net Cash Outflow is arrived by deducting the stressed cash inflows from stressed cash
outflow. However, total net cash outflows will be subjected to a minimum of 25% of total stressed cash outflows. The LCR is
computed by dividing the stock of HQLA by its total net stressed cash outflows over next 30 days

Cash outflow under secured wholesale funding majorly includes contractual obligations under Term loans, NHB Re-Finance,
NCDs, Interest payable within next 30 days. Outflow under credit and liquidity facilities, the Company considers the expected
cash outflow of the committed credit facilities contracted with the customers. Outflow under other contractual funding
obligations primarily includes outflow on account of expected operating expenses and other dues. In Inflows from fully
performing exposures, Company considers the collection from performing advances in next 30 days. Other Cash inflows
includes investments in mutual funds, FDs which can be liquidate within 30 days including interest receivable thereon.
Company has no meaningful currency mismatch in LCR and Company is not expecting any cash outflow within next 30 days
on account of derivative exposure and potential collateral requirement. For concentration of funding sources refer disclosure
on the Liquidity Risk Management Framework as per note 46.13.

Tabled above the Intra-period changes as well as changes over time in the various components of the LCR, HQLA & average
LCR. The Average LCR for the quarter ended March 31,2025 was 124.55% which is well above present prescribed minimum
requirement of 85% and the average LCR of previous periods during the year were also well above the prescribed minimum
requirement of respective period.

As on March 31, 2025 most of the HQLAs of the Company are in the form of unencumbered government securities and
unencumbered Cash and Bank balances and composition of unencumbered government securities in the HQLA was 96.74%
for the quarter ended March 31,2025.

46.17 Principal Business Criteria for HFCs

"Housing finance Company” shall mean a Company incorporated under the Companies Act, 2013 that fulfils the
following conditions:

a) It is an NBFC whose financial assets, in the business of providing finance for housing, constitute at least 60% of its total
assets (netted off by intangible assets).

b) Out of the total assets (netted off by intangible assets), not less than 50% should be by way of housing financing
for individuals.

RBI vide its circular number RBI/2020-21/73/DOR.NBFC (HFC) CC.NO 120/03.10.136/2020-21 dated february 17,2021
(as Amended) defined the principal business criteria for HFCs. The Company meets the aforesaid principal business
criteria for HFCs.

49 Additional Regulatory Information

49.1 There is no immovable property whose title deeds are not held in the name of the Company in current year and
previous year.

49.2 There are no investment property as on March 31,2025 (P.Y. ' Nil)

49.3 The Company has not revalued its Property, Plant and Equipment (including Right-of Use Assets) based on the valuation
by a registered valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017 in current
year and previous year.

49.4 The Company has not revalued its Intangible assets based on the valuation by a registered valuer as defined under rule
2 of Companies (Registered Valuers and Valuation) Rules, 2017 in current year and previous year.

49.5 Loans or Advances in the nature of loans are granted to promoters, directors, KMPs and the related parties (as defined
under Companies Act, 2013,) either severally or jointly with any other person, that are:

(a) repayable on demand or

(b) without specifying any terms or period of repayment

49.6 No proceeding has been initiated or pending against the Company for holding any benami property under the
Benami Transactions (Prohibition) Act, 1988 (45 of 1988) as amended and rules made thereunder in current year and
previous year.

49.7 The Company has not taken borrowings from banks or financial institutions on the basis of security of current assets in
current year and previous year.

49.8 The Company has not been declared wilful defaulter by any bank or financial Institution or other lender in current year
and previous year.

49.9 The company does not have any transactions with companies struck off under section 248 of the Companies Act,
2013 or section 560 of Companies Act, 1956 in current year and previous year.

49.10 No charges or satisfaction yet to be registered with ROC beyond the statutory period.

49.11 The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with
Companies (Restriction on number of Layers) Rules, 2017

49.12 No Scheme of Arrangements has been approved by the Competent Authority in terms of sections 230 to 237 of the
Companies Act, 2013.

49.13 Utilisation of Borrowed funds and share premium

(a) The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other
sources or kind of funds) in current year and previous year to any other person(s) or entity(ies), including foreign entities
(Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall:-

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on
behalf of the company (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries;

(b) The Company has not received any fund in current year and previous year from any person(s) or entity(ies),
including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the
company shall :-

(i) 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

(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries

49.14 There are no transaction or undisclosed income that need to be disclosed in accordance with the provision of Income
Tax Act, 1961 in current year and previous year.

49.15 The Company has not traded or invested in Crypto currency or Virtual Currency during current year and previous year.

50 Breach of covenants

The Company has complied with all the material covenants of borrowing facilities throughout the year ended March 31,2025
and March 31,2024.

51 There has been no divergence in asset classification and provisioning requirements as assessed by NHB during the year ended
March 31,2025 and March 31,2024.

52 Previous year figures have been regrouped/ reclassified wherever applicable. The impact, if any, are not material to Financial
Statements.

For M S K A & Associates For Borkar & Muzumdar For and on behalf of the Board of Directors

Chartered Accountants Chartered Accountants AAVAS FINANCIERS LIMITED

Firm Registration No. 105047W Firm Registration No. 101569W

Tushar Kurani Brijmohan Agarwal Nishant Sharma Sachinderpalsingh

Partner Partner (Non-executive Promoter Jitendrasingh Bhinder

Membership No. 118580 Membership No. 033254 Nominee Director) (Managing Director and CEO)

DIN:03117012 DIN:08697657

Place : Mumbai Ghanshyam Rawat Saurabh Sharma

Date : April 24, 2025 (President and (Company Secretary and

Chief Financial Officer) Compliance Officer)

ACS-60350