3.13 PROVISIONS AND CONTINGENCIES

A provision is recognized when there is a present obligation as a result of past events and it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation in respect of which a reliable estimate can
be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle
the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current
best estimates.

A disclosure of contingent liability is made when there is:

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

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

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

A contingent liability also arises where there is a liability that cannot be recognised because it cannot be measured reliably.
The Bank does not recognise a contingent liability but discloses its existence in the financial statements.

Contingent assets are neither recognised nor disclosed in the financial statements.

3.14 CASH AND CASH EQUIVALENTS

Cash and Cash Equivalents includes cash in hand (including balance in ATM), balances with RBI, balances with other Banks and
money at call and short notice. Cash and Cash Equivalents for the purpose of Cash Flow Statement comprises of Cash at Bank
and in hand and short term Investments with an original maturity of less than three months.

3.15 CASH FLOW STATEMENTS

Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of
a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or
expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities
of the Bank are segregated.

3.16 PROPOSED DIVIDEND

Dividend proposed/declared after the balance sheet date is accounted in the books of the Bank in the year in which the
dividend is declared. As per revised Accounting Standard 4 'Contingencies and Events occurring after the Balance sheet date'
as notified by the Ministry of Corporate Affairs through amendments to Companies (Accounting Standards) Amendment
Rules, 2016, dated 30 March 2016 the Bank will not appropriate the proposed dividend from the Profit and Loss account and
the same will be recognised in the year of actual payment post shareholder's approval.

3.17 TRANSACTIONS INVOLVING FOREIGN EXCHANGE

As per Reserve Bank of India (Small Finance Banks - Financial Statements-Presentation and Disclosures) Directions, 2025 dated
November 28, 2025 , AS 11 is applied in the context of the accounting for transactions in foreign currencies. All transactions
in foreign currency are recognised at the exchange rate prevailing on the date of the transaction.

Initial recognition

Transactions in foreign currencies entered into by the Bank are accounted at the exchange rates prevailing on the date of the
transaction or at rates that closely approximate the rate at the date of the transaction.

Measurement at the Balance Sheet date

Foreign currency monetary items, if any, of the Bank, outstanding at the balance sheet date are restated at the rates prevailing
at the year-end as notified by Foreign Exchange Dealers Association of India('FEDAI'). Non-monetary items of the Bank are
carried at historical cost.

Contingent liabilities on account of foreign exchange contracts, currency future contracts, guarantees, letters of credit,
acceptances and endorsements are reported at closing rates of exchange notified by FEDAI as at the Balance Sheet date.

Treatment of Exchange differences

Exchange differences arising on settlement/restatement of foreign currency monetary assets and liabilities of the Bank are
recognised as income or expense in the Profit and Loss Account.

3.18 CORPORATE SOCIAL RESPONSIBILTY

Expenditure towards Corporate Social Responsibility, in accordance with section 135 of the Act are recognised in the profit
and loss account.

3.19 SHARE ISSUE EXPENSES

Share issue expenses are adjusted from Securities Premium Account as permitted by Section 52 of the Act.

1 Capital

1.1 Capital Infusion

During the year ended March 31, 2026, the Bank allotted 77,10,771 equity shares pursuant to the exercise of stock options
under the approved Employee Stock Option Plan (ESOP) 2019. Further, the bank has granted 1,80,29,186 fresh stock options
to its eligible employees.

During the year ended March 31,2025, the Bank allotted 35,75,134 equity shares pursuant to the exercise of stock options
under the approved Employee Stock Option Plan (ESOP) 2019. Further, the bank has granted 42,75,492 fresh stock options
to its eligible employees. Refer note 18(27) for further details.

1.2 Capital Adequacy Ratio

The Capital Adequacy Ratio ("CAR") has been computed as per RBI Circular No.RBI/DOR/2025-26/182 DOR.CAP.REC.101/21-
01-002/2025-26 (Reserve Bank of India (Small Finance Banks - Prudential Norms on Capital Adequacy) Directions, 2025) dated
November 28, 2025.

As per RBI Circular No.RBI/DOR/2025-26/182 DOR.CAP.REC.101/21-01-002/2025-26 (Reserve Bank of India (Small Finance
Banks - Prudential Norms on Capital Adequacy) Directions, 2025) dated November 28, 2025, the Bank has to maintain a
Minimum Total Capital of 15% of the Credit Risk Weighted Assets (Credit RWA) on an on-going basis. Out of the Minimum
Total Capital, at least 7.5% shall be from Minimum Tier I Capital of which Common Equity Tier I capital shall be 6% and 1.50%
from additional Tier I capital and remaining Tier II Capital shall be 7.5%. Further as per the above circular, no separate risk
charge has been calculated for Market Risk and Operational Risk for capital ratios.

The capital adequacy ratio of the Bank is set out below:

1.3 Reserves and Surplus

I. Statutory Reserve

The Bank has made an appropriation net of taxes of H 173.16 (Previous Year: H 181.53) to the statutory reserve for the
year ended March 31, 2026 out of profits, to the Statutory Reserve, pursuant to the requirements of Section 17 of the
Banking Regulation Act, 1949 and as per Reserve Bank of India (Small Finance Banks - Financial Statements-Presentation
and Disclosures) Directions, 2025 dated November 28, 2025.

II. (i) Capital Reserve

The Bank made an appropriation net of taxes of H 24.30 (Previous Year: H 12.10) from the Profit and Loss Account
to the Capital Reserve during the year ended March 31,2026 on account of profit on sale of HTM.

II. (ii) General Reserve - Investment

The appropriation during the year ended March 31,2025 includes the H 3.02 (net of taxes) created on transition to
the new framework on Classification, valuation and operation of Investment Portfolio of Commercial Banks as per
the RBI Master Direction DOR/2023-24/104 DOR.MRG.36/21.04.141/2023-24 dated September 12, 2023.

III. Share Premium

During the year, there was an addition of H 21.19 in the share premium ( Previous year- H 10.20).

IV. Special Reserve u/s 36(1)(viii) of Income Tax Act 1961

The Bank has made an appropriation of H 9 (Previous year: H 21) to the special reserve for the year ended March 31,2026
to avail the benefit u/s 36(1)(viii) of the Income Tax Act, 1961. Further, the Bank has obtained Board approval to transfer
H 21.5 lying in the Special Reserve account u/s 36(1)(viii) to the General Reserve/ Balance in Profit and loss account
subject to regulatory approvals , as the Bank decided to forego the eligible tax benefit while filing the tax return for
FY 2023-24 (H0.50 crore) and FY 2024-25 (H 21 crore). The inter se transfer under the head Reserves and Surplus is not
given effect in the financial statements.

V. (i) Investment Reserve Account (IRA)

In accordance with RBI Master Direction DOR/2023-24/104 DOR.MRG.36/21.04.141/2023-24 dated September
12, 2023 on Classification, valuation and operation of Investment Portfolio of Commercial Banks, the Bank
has transferred Nil ( Previous Year - H 0.34 ) of IRA to General Reserve, after meeting the minimum regulatory
requirement of IFR.

V. (ii) Investment Fluctuation Reserve (IFR)

In accordance with RBI guidelines, Banks are required to create an IFR of at least 2% of their AFS and FVTPL
(including HFT) Investment portfolio on a continuing basis. Based on the same, in order to cater the dynamic
changes in the Bank's portfolio, the Bank has approved in the ALCO meeting conducted on May 27, 2025 to create
IFR buffer to maintain the balance of H 105 crore. Accordingly, during the year ended March 31,2026, the Bank has
made an appropriation of H 26.23 (Previous year- H 7.10) to IFR from the profit and loss account so as to reach to the
minimum of 2% of its AFS and HFT (including FVTPL) Investment portfolio.

V. (iii) Availbale For Sale (AFS) Reserve

During the year, the bank has not made any addition to AFS Reserve ( Previous Year- 0.12). Also during current year,
the bank has reversed the AFS reserve on account of sale of investments under AFS category.

VI. (iv) General Reserve - Employee stock option scheme

The Bank has created a reserve of H 3.11 (Previous Year - Nil) to the extent of expired unexercised options under
Employee Stock Option Scheme ( ESOP ) out of the ESOP outstanding liability in the books.

Drawdown from Reserves

The Bank has not made a drawdown from the share premium during the year ended March 31 2026 and March 31, 2025.

b) Liquidity Coverage Ratio (LCR)

The Bank adheres to RBI guidelines on Liquidity Coverage Ratio given in "Basel III Framework on Liquidity Standards - Liquidity
Coverage Ratio (LCR), Liquidity Risk Monitoring Tools and the LCR Disclosure Standards" and "Reserve Bank of India (Small
Finance Banks - Asset Liability Management) Directions, 2025, dated Novevember 28, 2025".

(A) Qualitative disclosure around LCR

LCR is the ratio of unencumbered High Quality Liquid Assets (HQLA) to Net Cash Outflows over the next 30 calendar
days. LCR measures the Bank's ability to manage and survive under combined idiosyncratic and market-wide liquidity
stress condition that would result in accelerated withdrawal of deposits from retail as well wholesale depositors, partial
loss of secured funding, increase in collateral requirements, unscheduled draw down of unused credit lines, etc. These
stress conditions are captured as a part of the Net Cash Outflows. HQLA of the Bank consist of cash, unencumbered
excess SLR, a portion of statutory SLR as allowed under the guidelines and cash balance with RBI in excess of statutory
cash reserve requirements.

Liquidity Coverage Ratio (LCR) is aimed at promoting short-term resilience of banks to potential liquidity disruptions by
ensuring that they have sufficient High-Quality Liquid Assets (HQLA) to survive an acute stress scenario lasting for 30 days.

At the executive level, Asset Liability Management Committee (ALCO) ensures adherence to the risk tolerance/limits
set by the Board as well as implementing the liquidity risk management strategy of the Bank in line with Bank's risk
management objectives and risk tolerance. A dedicated desk within Treasury function of the Bank is responsible for the
day-to-day / intra-day liquidity management.

The Bank has been maintaining HQLA (Level 1) primarily in the form of Excess CRR, excess SLR investments over and
above mandatory requirement. LCR is calculated by dividing a Bank's stock of HQLA by its total net cash outflows over a
30 day period. The present minimum regulatory requirement, as on March 31,2026 is 100%.

In order to determine cash outflows, the Bank segregates its deposits into various customer segments, viz., Retail (which
include deposits from individuals), Small Business Customers(those with deposits upto H 7.5 ) and Wholesale (which
would cover all residual deposits). Other contractual funding, including a portion of other liabilities which are expected
to run down in a 30 day time frame are included in the cash outflows. These classifications, based on extant regulatory
guidelines, are part of the Bank's LCR framework, and are also submitted to the RBI. The LCR is calculated by dividing a
Bank's stock of HQLA by its total net cash outflows over a 30 day stress period.

LCR aims to ensure that the Bank has an adequate stock of unencumbered HQLA to meet its liquidity needs for a 30
calendar day liquidity stress scenario. As mentioned in the "Operating Guidelines for Small Finance Banks", the Bank has
to maintain the prescribed level of LCR of 100% effective from January 1,2021.

(c) Net Stable Funding Ratio as on March 31, 2026

i) Qualitative Disclosure

Ujjivan Small Finance Bank, as per the Reserve Bank of India (Small Finance Banks - Asset Liability Management)
Directions, 2025, dated Novevember 28, 2025, is required to maintain the NSFR on an ongoing basis. The minimum
NSFR requirement set out in the RBI guideline is 100%.

NSFR is defined as the amount of available stable funding relative to the amount of required stable funding.
"Available Stable Funding” (ASF) is defined as the portion of capital and liabilities expected to be reliable over the
time horizon considered by the NSFR, which extends to one year. The amount of stable funding required (Required
Stable Funding) (RSF) of a specific institution is a function of the liquidity characteristics and residual maturities of
the various assets held by that institution as well as those of its off-balance sheet (OBS) exposures.

Available Stable Funding-

An increase in available stable funding will impact the NSFR positively. The bank shall aim for higher available
stable funding, which in the form of deposits, and will increase the long-term funding of the bank. The Bank has
been focusing on retail deposits albeit reducing reliance on bulk deposits.

Required Stable Funding-

An increase in required stable funding will impact the NSFR negatively. The required stable funding of the bank is
increasing as it is building loan portfolio between unsecured and secured loans across various products.

c) Particulars of resolution plan and restructuring

There were no accounts that have been restructured under prudential framework on resolution of stressed assets as
per the circular no. RBI/2018-19/203 DBR.No.BP.BC.45/21.04.048/2018-19 dated June 07, 2019 during the year ended
March 31,2026 (Previous year: Nil).

d) Divergence in Asset Classification and Provisioning for NPAs

Reserve Bank of India (Small Finance Banks - Financial Statements-Presentation and Disclosures) Directions, 2025
dated November 28, 2025 has directed that the banks shall make suitable disclosures, if either or both of the following
conditions are satisfied:

a) the additional provisioning for NPAs assessed by RBI exceeds 5 per cent of the reported profit before provisions
and contingencies for the reference period, and

b) the additional Gross NPAs identified by RBI exceed 5 per cent of the published incremental Gross NPAs for the
reference period.

As part of Supervisory process through the mode of Annual Financial Inspection and consequent RBI Inspection and
Risk Assessment Report (Position as on March 2025), there is no financial divergence reported (based on the defined
threshold as per Reserve Bank of India (Small Finance Banks - Financial Statements: Presentation and Disclosures)
Directions, 2025.

e) Transfer of loan exposure

i) Disclosure of transfer of loan not in default

The bank has not transferred any loans under securitisation during the year. The details of loans transferred during
the previous years as given under;

Pursuant to the sale, the shortfall between the aggregate consideration and the net book value of the NPA loans
transferred, amounting to H 69.33 has been debited to the profit and loss account. Pursuant to the RBI Master
Direction on Transfer of Loan Exposures dated 24 September 2021, the Bank has utilised an equivalent amount
of shortfall from the floating provision during the previous year (Refer- Schedule 18(4)(a)). Cash consideration
received pursuant to the transfer of technically written off loans amounting to H 6.63 has been recognised
under other income.

The Bank has received Security Receipts (SRs) as part of the consideration for transfer of stressed loans to other
entities. Investments in SR's as at March 31, 2025 amounting to H 37.30 are valued at Nil/fully provided for in the
books of account on a prudent basis and the same has been debited to other income in the profit and loss account.
During current year, the aforesaid provision was written back on account of redemption of SR amounting to H 30.07
and the balance as on March 31,2026 remains at H 7.23.

h) Disclosure related to project finance :

The bank does not have anything to disclose on project finance for the year ended March 31, 2026
(Previous year- Nil)

i) Details of resolution plan implemented under the Resolution Framework for COVID-19-related Stress as per
RBI circulars dated August 06, 2020 (Resolution Framework 1.0) and May 05, 2021 (Resolution Framework 2.0) is
given below:

j) Details of Single Borrower Limit (SBL) / Group Borrower Limit (GBL) exceeded by the Bank:

During the current and previous year there are no instances of SBL/GBL limit exceeding the sanctioned limit or
outstanding whichever is higher.

k) Provisions on Standard Assets:

Bank has followed the prudential norms on income recognition, asset classification and provisions. The excess provisions
over and above the same is as per the Board approved policy.

The provision on standard assets is included in 'Other Liabilities and Provisions - (iv) Standard asset-General provisions'
in Schedule 5, and is not netted off from Advances.

There is no provision written back in respect of standard assets during the current year and previous year.

7 Derivatives

a) Derivatives/ Exchange Traded Interest Derivatives/Forward rate agreement/Interest rate swap/ Risk Exposure In
Derivatives

The Bank has not entered into any derivative instruments for trading such as Overnight Index Swap (OIS), Interest Rate
Swap (IRS) and Cross Currency Swap (CCS) or Forward Rate Agreement (FRA) in Foreign Exchange or domestic treasury
operations during FY 2025-26.

b) Credit default Swaps

The Bank has not entered into any credit default swap transactions during the current and previous year.

12 Disclosure of penalties imposed by RBI

Year ended March 31,2026

During the FY 2025-26, RBI has not levied any penalty under the provisions of the (i) Banking Regulations Act 1949, (ii)
Payment and Settlement Act, 2007 and (iii) Government Securities Act, 2006 (for bouncing of SGL) as per the Reserve Bank of
India (Small Finance Banks - Financial Statements: Presentation and Disclosures) Directions, 2025, dated November 28, 2025.

Year ended March 31,2025

During the FY 2024-25, RBI vide an order dated February 14, 2025 imposed a monetary penalty of H

0.07 on the Bank for non-compliance with certain directions issued by RBI on 'Loans and Advances
Statutory and Other Restrictions'. This penalty was imposed in exercise of powers conferred on RBI
under the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949.
There was no other regulatory/operational penalty levied by RBI under the provisions of the (i) Banking Regulations Act
1949, (ii) Payment and Settlement Act, 2007 and (iii) Government Securities Act, 2006 (for bouncing of SGL) as per the Master
Direction on Financial Statements - Presentation and Disclosures dated November 28, 2025.

13 Disclosures On Remuneration:

13.1 Qualitative Disclosures

(A) Information relating to the composition and mandate of the Remuneration Committee.

Bank has constituted a Nomination and Remuneration Committee (NRC). The NRC comprises of five members where
four are Independent Directors and one Non-Executive, Non-Independent Director. Mandate of the Nomination and
Remuneration Committee is to oversee the framing, review and implementation of the Bank's Compensation Policy and
Nomination & Remuneration Policy for Whole Time Director/Chief Executive Officer/ Material Risk Takers and Control
Function staff for ensuring effective alignment between remuneration and risks. The Committee also ensures that level
and composition of remuneration is reasonable and sufficient, relationship of remuneration to performance is clear and
meets appropriate performance benchmarks. The Nomination and Remuneration Committee reviews Compensation
policy and Nomination & Remuneration Policy of the Bank with a view to attract, retain and motivate employees.

(B) Information relating to the design and structure of remuneration processes and the key features and objectives
of Compensation Policy and Nomination & Remuneration Policy

The Compensation Policy and Nomination & Remuneration Policy has been laid out keeping the following perspectives
into considerations:

(a) Our Compensation principles should support us in achieving our mission of providing a full range of financial
services to the economically active poor of India who are not adequately served (unserved and underserved) by
financial institutions. Therein, this policy should support us to attract and retain talent and skills required to further
the organizations purpose and ideology.

(b) The pay structure and amounts confirms and shall always conform to applicable Income Tax and other similar statutes.

(c) All practices of the Bank shall comply with applicable labour laws.

(d) The pay structure should be standardized for a level of employees.

(e) Elements eligible for tax exemption may be introduced at appropriate levels to enable employees take applicable
tax breaks. Amounts related to certain benefits may undergo change due to change in grade/ roles/ function/
state/ region in the organization.

(f) he compensation structure shall be easy to understand for all levels of employees.

(g) The compensation policy is designed to promote meritocracy in the organization i.e. other things being equal,
performers in a given role are expected to earn more than his/her peer group.

(h) The directors are paid sitting fees as approved by the Board for attending the Board and Board Committee Meetings.

(C) Description of the ways in which current and future risks are taken into account in the remuneration processes. It
should include the nature and type of the key measures used to take account of these risks.

(a) Structurally, the Control functions such as Credit, Risk and Vigilance are independent of the business functions and
each other, thereby ensuring independent oversight from various aspects on the business functions.

(b) The Bank is in the process of comprehensively measuring and reviewing material risks to which Bank is exposed to
under IGAAP. The Bank also complies with Basel II requirements.

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

(a) The compensation policy is designed to promote meritocracy in the organization i.e. other things being equal,
performers in a given role are expected to earn more than his/her peer group.

(b) The Bank shall, from time to time, benchmark its compensation against identified market participants to define its
pay structure and pay levels.

(c) The merit increments will be finalized and approved by the NHRC year on year, basis organization's budgets and
accomplishments as well as market reality.

(d) The Bank believes in paying its employees in an equitable and fair manner basis the incumbent's Role, Personal
Profile (Education/Experience etc.) as well as Performance on the Job.

(e) Employees rated "Below Expectations” shall not be provided any increments, unless statutorily required.

(E) A discussion of the bank's policy on deferral and vesting of variable remuneration and a discussion of the bank's
policy and criteria for adjusting deferred remuneration before vesting and after vesting.

The performance bonus pay-out shall be Annual. Discretion is typically applied related to staggered pay-out in case large
pay-outs, particularly for functions like Credit and Risk. Bonus is to be prorated for employees who have worked for part
of the year at the Bank.

The Bank believes in the philosophy of collective ownership by its employees. Thus, Employee Stock Options of the
eUFSL are distributed amongst employees basis their criticality and performance.

Typically, all Stock option schemes at the Bank vest in a staggered manner. Besides the statutory requirement of grant
and 1 year vesting, the total set of options vest in various tranches for up to a period of 3 years.

Malus/ Clawback: In the event of negative contributions of the individual towards the achievements of the Banks
objectives in any year, the deferred compensation should be subjected to Malus/Clawback arrangements. Similar
provisions shall apply in case the individual is found guilty of any major non-compliance or misconduct issues.

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

Variable Compensation at the Bank has the following distinct forms:

1. Statutory Bonus

2. Performance Pay:

a. Performance Bonus

b. Monthly Variable Pay

3. Rewards & Recognition

The policy has been laid out keeping the following perspectives into considerations:

The Variable pay structure and amounts shall always conform to applicable Income Tax statutes, Labour Laws, Regulatory
Requirements, any other applicable statutes and prevalent market practice.

It is designed to promote meritocracy in the organization i.e. other things being equal, performers in a given role are
expected to earn more than his/her peer group.

Statutory Bonus: Statutory Bonus in India is paid as per Payment of Bonus Act, 1965.

Performance Bonus: All employees who are not a part of any Monthly Variable Pay but part of the year end performance
review will be covered under the Performance Bonus Plan of the Bank. However, the actual pay-out of performance
bonus shall be paid only to employees who have met our performance criteria.

Sales Awards: Employees in the Sales function, directly responsible for revenue generation shall be covered under the
Sales Award Scheme if meeting the criteria of the respective scheme. Typically some of the entry level roles and up to
two levels of supervision thereof shall be covered by sales awards.

Rewards & Recognition: The Bank shall design schemes and practices from time to time to celebrate employees /
departmental / organizational success. These celebrations may include offering tokens of appreciation to employees
as defined in specific schemes. Fairness of application and transparency of communication shall be the hallmark of all
such schemes. These will be subject to income tax laws, as applicable. Examples of such schemes may include: Long
Service Awards (currently at one, three, five, ten and Fifteen yrs. of completion of service with the Bank), Portfolio
Improvement Reward Scheme; Functional R&R Schemes; Organizational Rewards Schemes such as: Service Champion;
Process Excellence; Customer Connect Awards; Above and Beyond; Recognition program for Liabilities Branches for
Retail Deposits; Recognition program for Asset growth in Branches. The EDGE (Executive Development for Growth and
Excellence) programme is aimed at identifying high performers and assessing their potential for future leadership roles
at the Bank. A mix of behavioral assessments, blended training & development journey and IDPs are deployed to make
the identified individuals (EDGE selects) ready for future leadership roles.

13.2 Quantitative Disclosures

The quantitative disclosures cover the Bank's Whole Time Director (WTD) and Material Risk Takers (MRT). The Bank's MRT
includes Managing Director and Chief Executive Officer (MD & CEO), Executive Director, Business Head-Micro Banking, Chief
Operating Officer#, Chief Credit Officer & Chief Financial Officer.

f) Implementation of IFRS converged Indian Accounting Standards (IND AS)

Reserve Bank of India (RBI) through press release RBI/2018-2019/146 DBR.BP.BC.No.29/21.07.001/2018-19, dated
March 22, 2019, updated all Scheduled Commercial Banks that legislative amendments recommended by the RBI are
under consideration of the Government of India. Accordingly, RBI had decided to defer the implementation of Ind AS till
further notice. Bank is gearing itself to bring the necessary systems in place to facilitate the Proforma submission to RBI.
With respect to various instructions from Ministry of Corporate Affairs and Reserve Bank of India (RBI), the actions taken
by the Bank are as follows:

1. Bank is in the process of Implementing changes required in existing IT architecture and other processes to enable
smooth transition to Ind AS.

2. As directed by RBI, the Bank is submitting half yearly Proforma Ind AS financial statements to RBI within the
stipulated timelines.

3. Training to the employees is imparted in phased manner.

4. The Bank will continue its preparedness towards adoption of Ind AS as per the regulatory requirement, and liaise
with RBI and Industry Bodies on various aspects pertaining to Ind AS implementation.

15 Disclosure on remuneration to Non-Executive Directors:

The Non-Executive Directors are paid Sitting Fees for attending meetings of the Board and its Committees. As per the board
resolution dated June 8, 2022 , the sitting fee per director per meeting is as given as below. During the year the Bank has paid
sitting fee (exclusive of GST) of H 2.19 (Previous year - H 2.52).

* Out of the unspent amount of H 3.52 as at March 31, 2025, H 3.16 was spent during the year ended March 31, 2026 and H 0.36 is remaining unspent.

As per Bank's CSR Policy upto 2% of the average net profit of the last preceding 3 years is allocated for CSR activities. During
the year the Bank has set aside 2% as CSR funds. (March 31,2025 : 2%)

Nature of CSR activities

Children education, waste management, liveable city projects, community school infrastructure, Skill training for rural/
urban youth and women, flood rehabilitation, sustainable development initiatives, Health care support, livelihood support to
disabled, safe water access.

Pursuant to Section 135(5) & 135(6) of Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy)
Rules, 2014(Amended), The Bank has transferred H 6.65 (apart from H 0.36 carried forwarded from previous year) to the
"Unspent CSR Account” for the year ended March 31,2026 (March 31,2025 : Rs 3.52) towards the Ongoing projects approved
by the CSR Committee.

Refer note 18(23) for the related parties involved in activities relating to Corporate Social Responsibility.

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

In reference to the Reserve Bank of India (Small Finance Banks - Financial Statements-Presentation and Disclosures) Directions,
2025 dated November 28, 2025 with respect to the disclosure related to acceptance of green deposits, the Bank has not
raised any funds from green deposits in the current year.

(a) The estimates of future salary increases, considered in actuarial valuation, takes into account, inflation, seniority,
promotions and other relevant factors, such as demand and supply in the employment market.

(b) During the current and previous year the Bank does not have unamortised gratuity and pension liability.

(c) Discount rate is based on the prevailing market yields of Indian Government Bonds as on the Balance Sheet date for the
estimated term of the obligation.

* Past service cost - Impact of Labour code

The Government of India has consolidated multiple existing labour legislations into a unified framework comprising four
Labour Codes collectively referred to as the 'New Labour Codes' on November 21, 2025. Accordingly, the Bank has assessed
the impact of these changes and based on certain estimates and assumptions, has recognised an incremental provision of
H 19.29 for the year ended March 31, 2026 under 'Employees cost'. The Bank continues to monitor further clarifications and
developments relating to Labour Codes and will evaluate the impact of any subsequent changes, if required.

21.2 Compensated Absences

The actuarial assumptions of compensated absences of accumulated privileged leaves of the employees is given below:

22 Segment Reporting

In accordance with the guidelines issued by RBI & AS-17, the Bank has adopted Segment Reporting as under:

A) Treasury:

The Treasury Segment primarily consists of net interest earnings from the Bank's Investment portfolio, money market
borrowing and lending, gains or losses on Investment operations/ foreign exchange trading and a portion of income/loss
from sale/purchase of Priority Sector Lending Certificates ("PSLC").

B) Retail Banking:

The Retail Banking Segment serves retail customers through a branch network and other delivery channels. Retail
Banking includes lending to and deposits from retail customers and identified earnings and expenses of the segment.
This segment raises deposits from customers and provides loans and other services to customers. Revenues of the retail
banking segment are derived from interest earned on retail loans, processing fees earned and other related incomes.
Expenses of this segment primarily comprise interest expense on deposits & Borrowings, infrastructure and premises
expenses for operating the branch network and other delivery channels, personnel costs, other direct overheads and
allocated expenses.

As per the RBI Circular DOR.AUT.REC.12/22.01.001/2022-23 dated April 07, 2022, for the purpose of disclosure under
Accounting Standard 17, Segment reporting, 'Digital Banking' has been identified as a sub-segment under Retail Banking
by Reserve Bank of India (RBI). However, as the proposed Digital Banking Unit (DBU) of the Bank has not yet commenced
operations and having regard to the discussions of the DBU Working Group formed by Indian Banks' Association (IBA)
(which included representatives of banks and RBI), held on July 14, 2022, reporting of Digital Banking as a separate sub¬
segment of Retail Banking Segment will be implemented by the Bank based on the decision of the DBU Working Group.

C) Corporate/ Whole Sale Banking:

The Wholesale Banking Segment provides loans to Corporates and Financial Institutions. Revenues of the wholesale
banking segment consist of interest earned on loans made to customers. The principal expenses of the segment consist of
interest expense on funds borrowed from external sources and other internal segments, premises expenses, personnel
costs, other direct overheads and allocated expenses of delivery channels, specialist product groups, processing units
and support groups.

26.5 Investor education and protection fund

During the year ended March 31, 2026 the Bank has transferred H 0.01 to Investor Education and Protection Fund
(Previous year H 0.02).

26.6 Other Income/Expenditure:

Other Income:

Other income includes processing fees, profit/(loss) on sale of investments, profit/(loss) on revaluation of investments, non¬
fund based income such as commission earned from guarantees, selling of third party products, recovery from loans written
off, income from dealing in PSLC, foreign exchange income etc.

Miscellaneous Income is inclusive of income earned through penal charges in lieu of Fair Practices Code of H 17.68 for the
current year (Previous year : 11.27). RBI had issued guidelines titled 'Fair Lending Practice - Penal Charges in Loan Accounts'
dated August 18, 2023 (later these instructions were subsumed under the RBI Master Directions - Small Finance Banks -
Responsible Business Conduct dated November 28, 2025 amended from time to time) wherein Penalty, if charged, for non¬
compliance of material terms and conditions of loan contract by the borrower shall be treated as 'penal charges' and shall not
be levied in the form of 'penal interest, with intent that there shall be no capitalisation of penal charges i.e., no further interest
computed on such charges. Accordingly, Bank adheres to the aforesaid guidelines.

^Manpower cost includes outsourcing cost and collection agency cost.

**IT related expenses includes Maintenance cost of computer equipment, AMC-Hardware, AMC-Software, Managed IT
services and cost for technology and subscription.

26.7 Other Asset:

There are no reportable items under Other assets in excesss of one per cent of the total assets during the year ended March
31,2026 and March 31,2025.

26.8 Other Liabilities and provision:

There are no reportable items under Other Liabilities and Provisions in excess of one per cent of the total assets during the
year ended March 31,2026 and March 31,2025.

26.9 Provision for Long term contracts

The Bank has a process whereby periodically all long term contract are assessed for material foreseeable losses. At the year
end, the Bank has reviewed and ensured that no provision is required under any law / accounting standards on such long term
contracts as on March 31, 2026 and March 31, 2025.

26.10 Credit card and debit card reward points

The Bank does not have credit card products, hence reward points are not applicable. Reward points accrued as on March 31,
2026 on debit card is Nil.

26.11 Audit Trail

The Bank has used accounting software systems for maintaining its books of account for the financial year ended March 31,
2026 which have the feature of recording audit trail (edit log) facility and the same has operated throughout the year for
all relevant transactions recorded in the software. The Bank has established and maintained an adequate internal financial
controls over financial reporting and based on its assessment, has concluded that the internal controls for the year ended
March 31,2026 were effective.

27 (A) (2) Fair value of share options granted in the year

The weighted average fair value of the share options granted during the FY 2025-26 is H 14.06 per option (Previous
Year -H 13.45 per option). Options were calculated using Black and Scholes Model. Vested ESOPs can be exercised
within five years from their corresponding dates of vesting. ESOPs vested can be exercised between date of vesting
and on or before option expiry date. The term of the option is assumed to be the sum of a) duration till vesting;
and b) the midpoint of the remaining exercise period from date of vesting, in absence of historical exercise pattern.
Volatility of comparable Banks have been considered for the purposes of valuation.

28 The Bank received a notice on March 16, 2021, regarding non-remittance of statutory Provident Fund (PF) dues on the
applicable wage components from February 2017 until March 2019 amounting to H 22.70. Bank had filed the initial responses
to the PF Commissioner and contented that said notice does not have a stand based on definition of basic wages under EPF
Act, 1952 and various case laws. However, due to COVID 19 pandemic, the hearing has been adjourned until further notice.

The Bank had made a provision during the FY 2021-22 for an amount of H 22.70 as a matter of prudence.

The Regional Provident Fund Commissioner (RPFC)-II, Bengaluru, in an inquiry held against the Bank under Section 7A of the
Employees' Provident Fund and Miscellaneous Provisions Act, 1952, passed an Order dated 09-08-2021 against the Bank,
directing the Bank to remit provident fund contribution of H 22.70 on various allowances paid by the Bank to its employees
during the period between February 2017 and March 2019. Against the said Order of the RPFC-II, the Bank preferred an
appeal before the Central Government Industrial Tribunal (CGIT) in Appeal No. 43/2021. Since position of Presiding Officer
in the CGIT was vacant, the Bank filed a writ petition before the Hon'ble High Court of Karnataka in W.P. No. 16635/2021.
The Hon'ble High Court has disposed of the matter on 13/07/2022 holding that there would be stay on depositing the award
amount (i.e., H 22.70) till finality of the appeal pending before CGIT.

30 The Bank, as part of its normal banking business, grants loans and advances, makes investments, provides guarantees,
to and accepts deposits and borrowings from its customers and borrowing from entities. These transactions are part of
Bank's normal banking business, which is conducted ensuring adherence to all regulatory requirements and banks internal
policies as applicable.

Other than the transactions described above, no funds have been advanced or loaned or invested (either from borrowed
funds or securities premium or any other sources or kind of funds) by the Bank to or in any other persons or entities, including
foreign entities ("Intermediaries”) with the understanding, whether recorded in writing or otherwise, that the Intermediary
shall lend or invest in party identified by or on behalf of the Bank (Ultimate Beneficiaries). The Bank has not received any fund
from any parties (Funding Party) with the understanding that the Bank shall whether, directly or indirectly lend or invest in
other persons or entities identified by or on behalf of the Funding Party ("Ultimate Beneficiaries”) or provide any guarantee,
security or the like on behalf of the Ultimate Beneficiaries.