The Board of Directors of Utkarsh Small Finance Bank Limited
(the Bank or Utkarsh SFBL) is pleased to present the 9^th Annual
Report and the Audited Financial Statements of the Bank for the
Financial Year ended, March 31, 2025 with immense PRIDE* - our
guiding values.

Highlights of major achievements of the Bank:

Ý Total deposits increased to H21,566 crore as on March 31,
2025, from H17,473 crore as on March 31, 2024

Ý Net Advances increased to H18,716 crore as on March 31,
2025, from H16,365 crore as on March 31, 2024

Ý Bank’s operating profit increased to H1,007 crore for FY25
from H997 crore in FY24.

Ý The Bank reported annual profit of H24 crore for FY25.

Ý On the asset quality, Bank witnessed Net NPAs at 4.8% as on
March 31, 2025 vs. 0.03% as on March 31, 2024.

Ý Bank’s overall provision cover was at 51.2% as on March
31, 2025.

Ý The capital adequacy ratio of the Bank is 20.9% as on March
31, 2025.

Ý Bank’s capital plus reserves increased to H2,975 crore as on
March 31, 2025 from H2,973 crore as on March 31, 2024

Ý There are 1,092 Branches spread across 23 States and 4
Union Territories as on March 31, 2025

BUSINESS UPDATE AND STATE OF BANK’S
AFFAIRS

The details on the state of affairs and the business update of the
Bank are separately provided in the Management Discussion and
Analysis Report, which forms an integral part of the Annual Report
of the Bank. However, the summary of the Bank’s performance
has been covered hereunder:

Liabilities Business

The Liabilities franchise accelerated its momentum in building
sustainable franchise by delivering competitive blend of physical
reach and digital innovation. With a strong focus on financial
inclusion and deepening the retail deposits mix.

As on March 31,2025, total deposits stood at H21,566 Crore, driven
by CASA growth to H4,699 crore at 31.2% YoY and Retail Term
deposits to H10,635 at 33.5% YoY, and Bulk term deposit book
to H6,232 crore at 5.2% YoY Growth. CASA Ratio stood at 21.8%,
while CASA RTD formed 71.1% of total deposits - highlighting
deposits granularity

To scale outreach, the bank added 204 new branches (55 general
banking & 149 micro banking), taking total banking outlets to 1,092
across 23 states and 4UTs. ATM and Micro ATM presence rose to
1,129 terminals, with 190 new touchpoints rolled out - enhancing
access to services like cash deposits, withdrawals and green
pin generation.

In addition to strengthening the branch & ATM networks, the
Bank further augmented its digital banking channels such as net
banking, mobile banking, tab banking, digital onboarding, among
others. During this period, the Bank expanded its bouquet of
products and services to the customers including, NR Banking
(on pilot), RERA Accounts, WhatsApp Banking, Public Financial
Management System, E-ASBA, SPARSH (System for Pension
Administration) among others. These innovations reinforce bank’s
ambition to expand inclusive reach.

Assets Business

As a Small Finance Bank (SFB), the Bank, which is primarily
focussed on micro banking products, has diversified its product
offerings to its customers viz. retail loans, unsecured loans,
business loans, personal loans, and secured loans such as loans
against property wholesale lending that includes short term and
long-term loan facilities to small and medium enterprises (SMEs),
mid and large corporate and institutional clients and gold loans. In
addition, we offer housing loans with a focus on affordable housing.

Our micro banking and retail loan products are primarily aimed at
customers who are not a part of the formal banking infrastructure.

(A) Micro Banking

Micro banking is widespread business which provides a
comprehensive package of financial inclusion products and
business development services to the underprivileged or
low- income individuals or groups who have limited access
to financial services. In micro banking, the Bank offers 'Joint
Liability Group’ (JLG) loans and business loans along with
entire gamut of liabilities products through MB branches.
In addition, the Bank provides micro banking loans through
Business Correspondent (BC) partners also.

The Bank provides group loans built on the peer-guarantee
loan model (Joint Liability Group), which enables individuals
to take collateral free loan in groups while promoting credit
discipline. This is achieved through mutual support within
the group, prudent financial conduct among the group and
prompt repayment of their loans.

During FY25, JLG business through Micro Banking (MB)
recorded a de-growth of H1,884 crore and reached to H8,740
crore vis-a-vis the previous financial year mainly due to
industry headwinds. 149 new MB branches were opened in
existing operational states.

To meet the increasing fund requirement of customers who
have completed multiple loan cycles and are considered as
matured borrowers, the Bank kept expanding Micro Banking
business loans to other existing branches. The Bank provides
individual loans especially to those who have begun their
formal credit cycle under JLG.

The total portfolio of JLG (excluding BC), MBBL and PM
SVANIDHI stood at H9,650 crore as on March 31, 2025, with
a total base of more than 29 lakh clients consisting of active
loans through the branch network.

The JLG portfolio through Business Correspondents
reached to H446 crores in FY25. The Bank has seven (7)
Business Correspondents which are operating in nine (9)
states covering 83 districts through 162 branches.

Liabilities base under MB vertical stood at H439.65 crore as
of March 2025.

In FY25, the Bank implemented several initiatives in its
processes for JLG clients, some of them are SI mandate, less
cash module through FINO Payment Bank, e-Sign and e-KYC

through virtual ID, PAN card verification, Micro ATM geo
tagging, cash carry approval from BM, CB guardrails, Track-
OD application, Net-off disbursement, KFS implementation.
To facilitate digital collections from MB clients, Bank
implemented SMS- linked payment.

(B) Retail Loans:

(a) Micro Small & Medium Enterprises (MSME):

The Bank extends a diverse array of both secured
and unsecured loans tailored to meet the needs of
individuals and non-individual entities, including micro,
small, and medium enterprises (MSMEs). We have
curated specialized products with adaptable security
prerequisites to enhance accessibility to credit for retail
and MSME borrowers.

Throughout the fiscal year 24-25, our retail assets
loan portfolio demonstrated robust growth, expanding
by 52% year-on-year to H3875 crore, compared to
H2,557 crore in FY24. The expansion in our MSME loan
portfolio was propelled by the incorporation of new
service locations and the introduction of a wide range of
products to address diverse customer segments.

(b) Housing Loans (HL):

The Bank provides comprehensive home loan solutions
to individuals seeking financing for the construction,
purchase, repair, and renovation of homes. We
meticulously assess our customers’ repayment capacity
and tailor loan solutions accordingly.

As of March 31, 2025, our Housing Loan portfolio,
managed by our Mortgage team across 63 branches,
amounted to H918.29 crore, marking a significant year-
on-year growth of 36% compared to H676.59crore as of
March 31, 2024.

(c) Wheels

The Wheels business which was launched in October
2020 with 2 businesses i.e., Commercial Vehicles
& Construction Equipment Loans being offered in
Chandigarh, Delhi NCR, Jharkhand, Rajasthan, Uttar
Pradesh, Uttarakhand & West Bengal regions from
15 branch outlets. As of March 31, 2025 these loans
are offered from states of Bihar, Chandigarh, Delhi
NCR, Haryana, Jharkhand, Madhya Pradesh, Punjab,
Rajasthan, Uttar Pradesh, Uttarakhand & West Bengal
from 48 branches. The Bank’s wheels loan portfolio
grew to H1,179 crores as on March 31, 2025 from H926.77
crores as on March 31, 2024.

Book has grown by 21.39% in March 31, 2025 as
compared to March 31, 2024. Growth was driven by
addition in new locations and new product offerings in

Used CV & CE, Light Commercial Vehicles, and fast-
moving Construction Equipment like Backhoe loaders.

(C) Wholesale Banking Business

The Wholesale lending vertical includes lending, deposits
and other banking services provided to corporate customers
of the Bank.

(a) Wholesale Lending

The Bank’s Wholesale Lending-Business Banking, book
stood at H902.72 crore as on March 31, 2025 compared
to H595.73 crore in March 31, 2024. The Bank also offers
both fund based (WC & TL) & non-fund-based limits in
the form of bank guarantee to the customers through
BBG Wholesale Lending vertical.

The Bank’s Wholesale Lending book stood at H2,239.73
crore (H903 Crore for Business Banking and H1,337
crore for NBFC) as on March 31, 2025 compared to
H1,882.41 crore (H595.73 Crore for Business Banking and
H1,286.68 crore for NBFC) in March 31, 2024. The NBFC
customers are being offered term loans for on-lending to
their customers and overdraft for meeting their working
capital requirement.

(D) Business Correspondent (BC)

The strategy of the Bank is to build its asset portfolio through
a combination approach.

1. Own Branches

2. Partnership Approach.

The partnership approach with a well-entrenched and
networked individual/entity will help it gain significant
presence in those markets of business interest. As on
March 31, 2025 the Bank had total loan book aggregating
to H1,093.69 crore compared to H721.07 crores in March
31, 2024. The portfolio comprised of JLG loans of H446.20
crore, Retail Assets loans of H101.23 crore, PL H485.54,
and BL & SCF H60.72 contributing 41%, 9%, 44% and 6 %
respectively of the total portfolio

A. FINANCIAL DISCLOSURES

Capital Raising and Capital Adequacy Ratio

During the FY 24-25, the Bank raised Tier II Capital of
H200 crore & H105 crore in June 2024 & November
2024 respectively.

The Bank allotted 21,52,440 equity shares (of face value of
H10 each) pursuant to exercise undertaken by employees
(including Managing Director & CEO) of vested Employees
Stock Option Plan (ESOP).

Ratings

As at March 31, 2025

Dividend

The Board of Directors did not recommend dividend for the
financial year ended on March 31, 2025.

Transfer to Reserves

In accordance with the RBI regulations, the Bank had
transferred the following amount to reserves during the
financial year ended March 31, 2025:

Net Worth

As on March 31, 2025, the Bank’s net worth was H2775.84*
crore.

*as per RBI norms

Internal Control and Compliance

The Bank’s internal controls, policies and procedures are
adequate and are reviewed periodically by the Internal Audit
Department for all its business units. The Audit Committee
and Board reviews the effectiveness of the control as per the
regulatory requirements from time to time / regular intervals.

CORPORATE GOVERNANCE

Bank’s Philosophy

Corporate Governance report forming part of the Board’s
report for the year under review is attached separately as
Annexure A.

Constitution of the Board of Directors

The Board of Directors of the Bank are constituted in
accordance with the provisions of the Companies Act,
2013 (Act), Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations
2015, the Banking Regulation Act, 1949 (the BR Act, 1949)
and the Articles of Association. The Board consists of
eminent persons with considerable professional expertise
in business administration, audit, banking, payment &
settlement, compliance, account, finance, human resource,
risk, strategy, information technology etc. Their experience

and professional credentials helped the Bank to gain insights
for strategy formulation, monitoring control framework
and direction, and adding value to set a strong foundation,
enabling the overall growth objectives.

The composition of Board forms part of the corporate
governance report.

Further, the following changes had taken place during
FY 2024-25 and till the date of the report:

Further, in terms of Section 152 of the Companies Act,
2013, Mr. Muralidharan Rajamani, Non- Executive Non¬
Independent Director who retires by rotation this year,
meets the fit and proper criteria as provided for under the
RBI directions and as amended from time to time and being
eligible offers himself for re-appointment at the 9^th Annual
General Meeting (AGM).

Board Evaluation:

Pursuant to the provisions of the Companies Act 2013,
Securities Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015 (SEBI LODR),
the Board has carried out annual performance evaluation of
its Committees, individual Directors and the Board as a whole.

The manner in which the evaluation was carried out is set out
in the Corporate Governance Report which forms part of the
Board report.

Certificate from Independent Company Secretary w.r.t.
compliance with Corporate Governance Norms under SEBI
LODR & Non-Disqualification of Directors is appended
herewith as Annexure B & C respectively.

Number of Meetings of Board

The details of the Board meetings and attendance of each
Director forms part of the Corporate Governance Report.

Committees of the Board

The details of the Board Committees viz. constitution, their
scope, number & date of meetings held during FY 24-25
and attendance thereof are disclosed in the Corporate
Governance Report.

Meeting of Independent Directors

In accordance with the Section 149(8) read with Schedule
IV of Act and Regulation 25 of SEBI Listing Regulations,
the Independent Directors of the Bank met 2 (twice) on
September 20, 2024 and March 22, 2025, which was
attended by all the Independent Directors of the Bank.

Familiarisation Programme for Independent
Directors

The Details of familiarisation programme carried out by the
Bank forms part of the Corporate Governance Report which
is available on the website of the Bank https://www.utkarsh.
bank/uploads/pdf/our-policy/template_ten/Policy-for-
familiarisation-Programme-for-Directors.pdf.

Declaration of Independence

In accordance with provisions of Sections 149(6) and 149(7)
of the Act, Schedule IV and Regulation 16(1)(b) and 25(8)
of the SEBI Listing Regulations, the Bank has received
necessary declarations/disclosures from all the Independent
Directors confirming that they meet and comply with the
criteria of independence.

Status of Ind AS Implementation

In January 2016, the Ministry of Corporate Affairs issued
the roadmap for implementation of new Indian Accounting
Standards (Ind AS), which were based on convergence with
the International Financial Reporting Standards (IFRS), for
scheduled commercial Banks, insurance companies and
non-banking financial companies (NBFCs). In March 2019,
RBI deferred the implementation of Ind AS for Banks till
further notice as the recommended legislative amendments
were under consideration of Government of India.

The Banks are advised to follow the Indian Accounting
Standards as notified under the Companies (Indian
Accounting Standards) Rules, 2015, . The Banks in India
currently prepare their financial statements as per the
guidelines issued by the RBI, the Accounting Standards
notified under Section 133 of the Act and generally accepted
accounting principles in India (Indian GAAP).

The Bank submits its Proforma Ind-AS financials on half
yearly basis to RBI based on the GAP assessment carried
out by the Bank. The Bank is currently handling the impact
analysis and reporting offline through excel based financial.
The Bank has implemented system solutions (IndAS 109 and
116).

B. STATUTORY DISCLOSURE

Annual Return

As required under the provisions of Sections 92(3) and 134(3)
(a) of the Companies Act, 2013 read with the rules framed
thereunder, the Annual Return of the Bank in the prescribed
Form MGT-7 for the year under review is available on the
website of the Bank https://www.utkarsh.bank/investors

Conservation of Energy and Technology
Absorption

The particulars to be disclosed under Section 134(3)(m)
of the Companies Act, 2013, relating to conservation of
energy and technology absorption does not apply to the
Bank. The Bank is constantly pursuing its goal in upgrading
technology to deliver quality service to its customers in a
cost-effective manner.

Foreign Exchange Earnings / Outgo

The Bank has foreign exchange earnings of H1.66 crore
during the financial year under review which includes cross
border settlements. During the year under review, there was
no foreign exchange outgo.

Whistle Blower Policy (Vigil Mechanism)

In compliance with the provisions of Section 177(9) of the Act
read with Rule 7 of the Companies (Meetings of Board and
its Powers) Rules, 2014 the Bank has formulated a whistle
blower policy/ vigil mechanism for directors and employees
to report any concerns. The said policy is available on Banks
website https://www.utkarsh.bank/uploads/template_forty_
pdf/Whistle_Blower_Policy_Revised_13_12_2022.pdf.

In addition to the above, the Bank has formulated a Vigilance
Policy for effectively managing the risks arising on account of
possible corruption, malpractices, and frauds.

Vigilance & Security

The Bank has a Vigilance & Security Department for
investigating frauds, bribery cases, and complaints, including
complaints received under the whistle-blower policy of
the Bank.

Vigilance & Security Department makes concerted efforts
to curb fraud, forgery, and burglary incidents in the Bank with
the help of new ideas, technology, previous experiences,

and adopting preventive vigilance measures with
appropriate tools.

Statutory Auditors

RBI, on April 27 2021, had issued guidelines for appointment of
Statutory Central Auditors/Statutory Auditors of Commercial
Banks (excluding RRBs), UCBs and NBFCs (including HFCs).
As per the said guidelines statutory audit of entities with asset
size of H15,000 crore and above as at the end of previous year,
should be conducted under joint audit of a minimum of two
audit firms. The audit firms can be appointed as the Statutory
Auditors (SA) of the Bank for a continuous period of 3 years
only and thereafter, reappointment in the same entity will be
possible only after a cooling period of six years. Further, prior
approval of RBI for appointment/reappointment of SAs on an
annual basis is required in terms of the above guidelines.

The Members of the Bank at the 8^th Annual General Meeting
(“AGM”) had approved the re-appointment of M/s Deloitte
Haskins & Sells, Chartered Accountants (FRN 117365W)
and M/s. Kirtane & Pandit, LLP, Chartered Accountants (FRN
105215W/ W100057) as the Joint Statutory Auditors of the
Bank to hold office till the conclusion of 9^th Annual General
Meeting of the Bank, being their third year as Joint Statutory
Auditors of the Bank.

The observation(s) made in the Auditor’s Report are self
explanatory and therefore, do not call for any further
comments under Section 134(3)(f) of the Act. The Auditor’s
Report does not contain any qualifications, reservations or
adverse remarks.

Based on recommendation of Audit Committee of the Bank
and the approval of Reserve Bank of India (RBI) vide their letter
no. Ref D0S.C0.RPD.No.S506/08.60.005/2025-26 dated
April 21, 2025, the Board of Directors, subject to approval of
the Shareholders and prior approval of the Reserve Bank
of India (RBI) every year, had proposed the appointment of
M/s M. M. NISSIM & CO LLP, Chartered Accountants and
M/s KKC & Associates LLP, Chartered Accountants as Joint
Statutory Auditors of the Bank from FY 25-26 for a period of
3 years . Accordingly, the proposal for their appointment is
being placed in the ensuing 9^th Annual General Meeting.

Secretarial Auditors

In accordance with the provisions of Section 204 and other
applicable provisions, if any, of the Companies Act, 2013
(“the Act”), read with Rule 9 of the Companies (Appointment

& Remuneration of Managerial Personnel) Rules, 2014,
(including any statutory modification(s) or re-enactment(s)
thereof, for the time being in force), and Regulation 24A of the
Securities and Exchange Board of India (Listing Obligations
and Disclosure Requirements) Regulations, 2015, and the
recommendation of the Audit Committee and the Board
of Directors, subject to the approval of the Shareholders,
proposed the appointment of M/s. BNP & Associates,
Company Secretaries (FRN P2014MH037400) as the
Secretarial Auditor of the Company for one term of 5 (five)
consecutive years and to hold office till conclusion of Annual
General Meeting for FY 2029-30.

Annual Secretarial Audit Report for FY 24-25 issued by
M/s BNP & Associates, Company Secretaries is appended
herewith as Annexure D.

Employees Stock Option Plan (ESOP)

During FY 24-25, the Shareholders vide Postal Ballot
resolution dated December 17, 2024 approved increase in
the limit of share pool of USFBL Employee Stock Option Plan
2020 to 1,15,00,893 and implementation of USFBL Employee
Stock Option 2024 - Scheme II (collectively called as ESOP
Plan).

Further, the details of ESOPs forms part of Corporate
Governance Report.

A certificate from the Secretarial Auditor of the Bank that
the ESOP Plan has been implemented in accordance with
the Securities and Exchange Board of India (Share Based
Employee Benefits and Sweat Equity) Regulations, 2021
(“SBEB & SE Regulations”) is attached as Annexure E.

Deposits

Being a Banking Company, the disclosures required as per
Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, 2014,
read with Section 73 and 74 of the Companies Act, 2013 are
not applicable.

Particulars of Employees

The ratio of the remuneration of each Director to the
employees’ median remuneration and other details in terms
of sub-section 12 of Section 197 of Companies Act 2013
read with Rule 5(1) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, are
given below: -

(i) The ratio of the remuneration of each Director to the median remuneration of the employees of the Bank for the FY 24-25:

* Mr. Kajal Ghose ceased form the post of Director w.e.f January 16, 2025

Apart from sitting fees, the Bank also pays remuneration to Non-Executive Directors at H1,00,000 to Audit Committee Chairman
and H75,000 to other Non-Executive Directors. The part time Non-Executive Chairman of the Board is entitled to a monthly
remuneration, as approved by the RBI and the Shareholders of the Bank.

(ii) The percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer, Company Secretary
for FY 24-25 are as follows:

(iii) The percentage increase in the median remuneration of
employees in the financial year was NIL.

(iv) The number of permanent employees on the rolls of the
Bank, as on March 31, 2025 was 19,779 (includes 16,928
male employees and 2,851 female employees).

(v) Average increase in remuneration is NIL for managerial
personnel (Executive Directors including Managing
Director and Chief Executive Officer, Chief Financial
Officer, and Company Secretary) and employees other
than managerial personnel’s .

(vi) The key parameters for any variable component of
remuneration availed by the Directors are as specified in
the Remuneration Policy.

(vii) Remuneration is as per the remuneration policy of the
Bank. The Bank is in compliance with its Remuneration
Policy.

In terms of Section 136 of Companies Act 2013, the Annual
Report is being sent to the members, excluding the information
as required under Rule 5(2) as mentioned aforesaid and
the same is open for inspection at the Registered Office of
the Bank. A copy of this statement may be obtained by the
members by writing to the Company Secretary of the Bank at
secretarial.usfb@utkarsh.bank.

Remuneration Policy

In terms of the provisions of the Act , Listing Regulations
and applicable provisions of the Banking Regulation Act,
1949, the Board on the recommendation of the Nomination

& Remuneration Committee (NRC), formulated a Policy
for payment of remuneration to Directors, Key Managerial
Personnel (KMPs) & Senior Management Officials.The
Policy is available on the website of the Bank at : https://www.
utkarsh.bank/uploads/template_forty_pdf/NRC_Policy.pdf

The details of remuneration paid to Executive and Non
executive Directors during the year forms part of the
Corporate Governance report.

Transfer to the Investor Education and Protection
Fund (“IEPF”)

In accordance with Section 124 and 125 of the Act read with
applicable rules, as amended, there was no unclaimed/
unpaid dividend or shares or interest liable to be transferred
to the IEPF during the FY 24-25.

Further, details of the unclaimed/un-encashed interest/
dividends lying in the unpaid dividend accounts as on end
of the financial year and details of Nodal Officer for IEPF
are provided on website of the Bank at https://www.utkarsh.
bank/uploads/pdf/disclosures/template_eleven/IEPF_2-
FY_23-24.pdf,

https://www.utkarsh.bank/uploads/pdf/disclosures/

template_eleven/IEPF_2_unclaimed_interest_

March_31_2023.pdf.

Other Statutory Disclosures:

Ý The Bank is in the list of Top 1000 listed entities of
India as per list published by the BSE Limited and
National Stock Exchange of India Limited basis the
market capitalization.

Ý During the year under review the Bank had increase
the Authorised Share Capital from H15,00,00,00,000/-
(Rupees One Thousand Five Hundred Crore) to
H20,00,00,00,000/- (Rupees Two Thousand Crore).

Ý The Bank has not changed its nature of business during
FY 24-25.

Ý Pursuant to Section 186(11) of the Companies Act, 2013,
loans made, guarantees given or securities provided
or acquisition of securities by a banking company in
the ordinary course of its business are exempted from
disclosure in the Annual Report.

Ý All related party transactions for FY 24-25 were on an
arm’s length basis and in the ordinary course of business
and accordingly, AOC - 2 is not applicable to the Bank.
The Bank has policy on related party which is available
at: https://www.utkarsh.bank/uploads/template_forty_
pdf/Related_Party_Transaction.pdf

Ý There were no significant/material orders passed by
the Regulators / a Court / Tribunal etc. during FY 24-25,
which would impact the going concern status of the
Bank and its future operations.

Ý There was no application made or any proceeding
pending under the Insolvency and Bankruptcy Code,
2016 (31 of 2016) during the year under review.

Ý The details of Risk Management Policy & its framework
are separately provided in the Management Discussion
and Analysis Report.

Ý The Bank is a subsidiary company of Utkarsh Coreinvest
Limited. The Bank does not have subsidiary or associate
company. Hence the details of sub-section (3) of section
129 read with rule 5 of Companies (Accounts) Rules,
2014 are not applicable to the Bank;

Ý During FY 24-25, the Board of Directors of the Bank and
the Utkarsh Coreinvest Limited (UCL) approved Scheme
of Amalgamation providing for Reverse Merger of UCL
with the Bank and accordingly, the Bank submitted
applications with RBI and Stock Exchanges seeking
their No Objection Certificate to the aforementioned
Scheme of Amalgamation. The Bank received RBI’s
NOC vide their letter dated January 02, 2025, However,
at the end of FY the application remained under
consideration of SEBI.

Ý The provisions for maintenance of cost records as
specified by the Central Government under sub-section
(1) of section 148 of the Companies Act, 2013 are not
applicable to the Bank.

Ý There are no adverse observations/qualifications
in the Statutory Auditors’ Report. Further, Pursuant
to Section 143(12) of the Companies Act, 2013, the
Statutory Auditors of the Bank have not reported any
instances of frauds committed in the Bank by its officers
or employees.

Ý All recommendations of the Audit Committee were approved by
the Board.

Ý Dividend distribution policy is available on the website of the Bank at
https://www.utkarsh.bank/uploads/template_forty_pdf/
Dividend_Distribution_Policy.pdf

Ý Proper internal financial controls are in place, and that the
financial controls have been adequate and operating effectively.

Ý There are no material changes and commitments, affecting
the financial position of the Bank that have occurred between the
end of the financial year of the Bank i.e. FY 24-25 and the date of the
Boards’ Report.

C. OTHER DISCLOSURES
Code of Conduct

For a financial institution, transparency and the highest
standards of corporate governance are important
prerequisites for establishing a compliance-oriented bank.
Towards this end, the Bank endeavours to ensure that all
its activities are fairly aligned with the highest standards
of personal and professional integrity and the highest
level of ethical conduct. The Bank has adopted a Code of
Conduct and norms for the avoidance of conflict of interest,
all the Senior Management officials, KMPs, Employees
with loan sanctioning authority, employees directly
related with sourcing/servicing corporate or wholesale
banking relationships and employees directly involved in
the procurement of goods and services, conduct duties
according to the aforesaid Code of Conduct. Some of the
areas that have been covered by the Code of Conduct are:
fairness of employment practices, protection of intellectual
property, integrity, customer confidentiality and conflict
of interest. The Bank’s Code of Conduct for Directors
and Senior Management is hosted on the website of the
Bank at https://www.utkarsh.bank/uploads/pdf/our-policy/
template_ten/CODE_OF_CONDUCT_FOR_THE_BOARD_
OF_DIRECTORS_AND_SENIOR_MANAGEMENT_
PERSONNEL.pdf.

A declaration on compliance with code of conduct for
FY 24-25 is appended herewith as Annexure F.

Corporate Social Responsibility (CSR)

In accordance with Section 135 of the Act, the Board of
Directors on the recommendation of CSR Committee had
approved the CSR Policy, which is available on the Bank’s
website https://wwwutkarsh.bank/uploads/template_forty_
pdf/Corporate_Social_Responsibility_Policy.pdf.

In line with the statutory requirements under the Companies
Act, 2013 and it’s CSR Policy, the Bank had undertaken
projects in the areas of financial literacy, health initiatives, skill
and entrepreneurship development programmes and other
philanthropic initiatives (supporting orphanages and care
centres for the elderly).

During the year under review, the Bank spent H7.72 crore
(including interest earned of H14.37 lakh) towards aforesaid
CSR projects and H92.22 lakh which was unspent was
transferred to “Utkarsh Small Finance Bank Limited Unspent

CSR Account FY 24-25“ with HDFC Bank Limited. Further
out of the previous unspent CSR amount of H1.88 crore for
FY 23-24, during the year an amount of H1.73 crore was spent
and H15.93 lakh is carried forward in “Utkarsh Small Finance
Bank Limited Unspent CSR Account FY 23-24 “ with HDFC
Bank Limited.

The required disclosure as per Rule 8 of Companies
(Corporate Social Responsibility Policy) Rules 2014 forms
part of this report as Annexure G.

Know Your Customer (KYC) / Anti-Money
Laundering (AML)

The Bank adheres to the RBI’s KYC / AML Guidelines
issued from time to time. The Bank’s KYC / AML Policy
has been prepared in accordance with the Prevention of
Money Laundering Act, 2002 (PMLA) and RBI / Indian
Banks’ Association (IBA) guidelines, amended from time to
time. The Bank complies with, various regulatory reporting
requirements, as set out by the Financial Intelligence Unit
(FIU) of the Government of India. The Bank has a transaction
monitoring mechanism in line with regulatory requirements
with an automated system solution, closely monitored by a
centralised AML team. The Bank’s employees are imparted
training on KYC / AML aspects regularly. Executives of the
Bank also attend periodic workshops/seminars organised by
FIU - IND, RBI, IBA and National Institute of Bank Management
(NIBM) to enhance their awareness in these aspects.
Recent changes as contained in the PMLA notifications
and RBI guidelines have been followed and embedded
in the customer acquisition processes of the Bank. The
Bank’s KYC/AML Policy was duly reviewed by the Board on
annual basis taking into account the various amendments to
guidelines / regulations.

Prevention of Sexual Harassment

The Bank has formulated and adopted a Policy on Prevention
of Sexual Harassment of Women at workplace. The Bank has
complied with the provisions relating to the constitution of
Internal Committee under the Sexual Harassment of Women
at Workplace (Prevention, Prohibition and Redressal) Act,
2013. The information relating to complaints received and
redressed during financial year 2024-25 is provided in the
Corporate Governance Report.

The POSH Policy is periodically communicated to all
employees and is available on the Bank’s website https://
www.utkarsh.bank/uploads/policy/Prevention_of_Sexual_
Harassment_Policy.pdf

Human Resources

The Bank’s Human Resources Policy (HR Policy) is aligned
for the achievement of the Bank’s vision and mission and
constant efforts are made to motivate its employees for
excellence in performance and at the same time endeavors to
provide a better work-life balance through various employee
welfare activities.

In its constant endeavor to promote learning and capacity
building of all its employees, the Bank utilised its “Learning
Management System (Utkarsh U-Leam)” to engage its
employees through continuous educational programs
delivered via e-modules and virtual classrooms.

Technology

In today’s rapidly evolving technological landscape, meeting
shifting customer expectations is paramount. Automation
and digitization are key enablers in leveraging technology to
address the unique needs and preferences of our customers,
thereby driving business growth.

As part of our digital transformation journey, the Bank has
launched several initiatives this year to provide seamless
access to our services. These include the introduction of
new secured credit card products, a personal loan platform,
Aadhaar Enabled Payment Systems (AEPS), and multiple
automation initiatives within our Micro Banking segment.
These efforts aim to expand our product offerings while
embedding robust operational controls into our systems.
Additionally, we introduced WhatsApp Banking to enhance
customer service accessibility.

We have also strengthened our technological capabilities
through collaborations with multiple fintech partners to
enhance our liability, asset, and card product portfolios.
Our Know Your Customer (KYC) process has been fortified
with the integration of Video KYC (VKYC), biometric
verification, and facial authentication. Furthermore, we
have upgraded existing products with features such as
cardless cash withdrawals at ATMs, eMandates for NACH,
and ASBA functionalities via Internet and Mobile Banking.
Enhancements to our Digi Onboarding platforms have
significantly improved customer acquisition turnaround
times (TAT). We have also enriched various features in our
existing business applications to improve product offerings
and customer service, while reinforcing operational controls
and efficiency.

In line with our unwavering commitment to innovation, we
have re-architected and refreshed our systems to enhance
scalability, reliability, and security. Strategic technology
acquisitions and investments in automation tools, analytics,
and machine learning have been made to boost operational
efficiency and risk management. Key focus areas include
API banking and middleware platforms, low-code/no-code
development platforms, cloud infrastructure, and extended
collaboration through Office 365. Several infrastructure-led
initiatives have been implemented to revamp and upgrade
platforms, thereby enhancing business-critical applications
to support increased business volumes.

We have also completed a comprehensive blueprint for our
Business Transformation project, which includes a detailed
review of existing products, operational processes, and our
current technology stack. This initiative is being led by a
specialized team known as the Transformation Management
Office (TMO), which oversees the Bank’s transformation

journey. The project is currently in the “Implementation”
phase, during which various internal systems, processes,
and applications are being modernized. As part of this
effort, the Bank has embarked on a major Core Banking
replacement project, transitioning to the Infosys Finacle Core
Banking platform.

Compliance with Secretarial Standards

The Bank has complied with the provisions of Secretarial
Standards specified by the Institute of Company Secretaries
of India and notified by the Ministry of Corporate Affairs under
Section 118(10) of the Companies Act, 2013.

Basis the Market Capitalization published by the BSE Limited
and National Stock Exchange of India Limited, the Bank is in
the Top 1000 listed entities.

The Business Responsibility and Sustainability Report
(“BRSR”) is annexed with Board’s Report as Annexure H
and disclosed on the website of the Bank at https://www.
utkarsh.bank/investors

Compliance with Maternity Benefit Act

The Bank has complied with the provisions of Maternity
Benefit Act, 1961

Basel III (Pillar 3) Disclosures

RBI Master Circular DBR.No.BP.BC.4/21.06.001/2015-16
dated July 01, 2015, on 'Prudential guideline on Capital
Adequacy and Market Discipline - New Capital Adequacy
Framework (NCAF)’ requires banks to make Pillar 3
disclosures, as applicable. These disclosures have not been
subjected to audit or limited review. These disclosures are
available on the Bank’s website at https://www.utkarsh.bank/

Prospects

FY25 has been a challenging year from financial performance
perspective for the Bank. The Bank reported annual profit
after tax of H23 crore in FY 24-25. The Bank’s JLG loan
portfolio registered degrowth but deposits registered
healthy business growth. The Directors are of the view that
there is an immense opportunity to cater to the unserved
and underserved sections of client base in the country,
particularly the area in which the Bank is currently operating.

Directors’ Responsibility Statement

As per the requirements of Section 134(3)(c) of the Act, the
Directors hereby confirm and declare that:

Ý In the preparation of the annual accounts for the financial
year ended March 31, 2025, the applicable accounting
standards have been followed, and there is no material
departure from the same;

Ý The Directors have selected such accounting policies
and applied them consistently and made judgments and
estimates that are reasonable and prudent so as to give
a true and fair view of the state of affairs of the Bank as on
March 31, 2025, and of the profit of the Bank for the year
ended March 31, 2025;

Ý The Directors have taken proper and sufficient care
for the maintenance of adequate accounting records
in accordance with the provisions of the Act for
safeguarding the assets of the Bank and for preventing
and detecting fraud and other irregularities.

Ý The Directors have prepared the annual accounts for
the financial year ended March 31, 2025 on a going
concern basis.

Ý The Directors had laid down internal financial controls to
be followed by the Bank and that such internal financial
controls are adequate and operating effectively.

Ý The Directors had devised proper systems to ensure
compliance with the provisions of all applicable
laws, and that such systems were adequate and
operating effectively.

Acknowledgement

The Board expresses its gratitude to the Central and State
Governments, Reserve Bank of India, Ministry of Corporate
Affairs, SEBI, NABARD, SIDBI, MUDRA, NHB and all other
Regulatory Authorities including Local Governing Bodies for
the continuous support and guidance provided to the Bank.

The Board appreciates the precious support provided by the
Auditors, Lawyers and Consultants. We place on record our
appreciation for the contribution made by our employees at
all levels. Our consistent growth has been made possible by
their hard work, solidarity cooperation, and support.

The Directors wish to place on record their gratitude to
Shareholders of the Bank for the confidence reposed by
them and thank all the clients, dealers, and other business
associates for their contribution to the Bank’s growth and for
extending their assistance and co-operation.

The Directors also express their gratitude to all stakeholders
and partners for extending their support.

For and on behalf of the Board of Directors

Parveen Kumar Gupta Govind Singh

Place: Mumbai Part Time Non-Executive Chairman and Independent Director Managing Director & CEO

Date: June 07, 2025 DIN - 02895343 DIN - 02470880