L Provisions and contingencies
The Bank recognises a provision when there is present obligation as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when
there is a possible obligation or a present obligation that may but probably will not, require an outflow of resources. When there
is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or
disclosure is made.
Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that
an outflow of resources would be required to settle the obligation, the provision is reversed.
Contingent assets are not recognized in the financial statements. However, contingent assets are assessed continually and if it is
virtually certain that an inflow of economic benefits will arise, the asset and related income are recognized in the period in which the
change occurs.
M Earnings per share (EPS)
Basic earnings per share is calculated by dividing the net profit or loss after tax for the year attributable to equity shareholders by the
weighted average number of equity shares outstanding during the year.
Diluted earnings per share reflect the potential dilution that could occur if contracts to issue equity shares were exercised or
converted during the year. Diluted earnings per equity share is computed using the weighted average number of equity shares and
dilutive potential equity shares outstanding during the year, except where the results are anti-dilutive.
N Cash and cash equivalents
Cash and Cash equivalents include cash in hand, balances with RBI, balances with other banks and money at call and short notice.
O 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.
P Segment reporting
The disclosures relating to segment reporting is done as per guidelines issued by the RBI.
Q Priority Sector Lending Certificates
The Bank vide RBI circular FIDDCO.Plan.BC.23/04.09.01/2015-16 dated April 07, 2016 trades in Priority Sector portfolio by selling or
buying Priority Sector Lending Certificates (PSLCs). There is no transfer of risk on loan assets in these transactions. The fee paid for
purchase of the PSLC is treated as an 'Expense’ and the fee received for the sale of PSLCs is recognised upfront and is treated as
'Miscellaneous Income’.
Notes:
1. The Bank has followed Master Circular No. DBR.No.BP.BC.4/21.06.001/2015-16 (as amended from time to time) on Prudential
Guidelines on Capital Adequacy and Market Discipline - New Capital Adequacy Framework (NCAF) issued by RBI dated July 01,
2015 for the purpose of computing Capital Adequacy Ratio.
2. As per RBI, letter DBR.NBD. No. 4502/16.13.218/2017-18 (as amended from time to time) dated November 08, 2017, it is clarified that
no separate capital charge is being prescribed for market risk and operational risk for the time being.
18.1.2 Tier II Capital
The Bank has acquired Basel II compliant debt capital instruments in the form of NCD of H200 crore on June 28, 2024 and H105 crore on
November 27, 2024 during the year ended March 31, 2025 (March 31, 2024: NIL).
18.1.3 Capital Infusion
During the year ended March 31,2025, the Bank has allotted 21,52,440 equity shares of H10 each under ESOP scheme exercised for cash
aggregating to H5,79,19,323. Accordingly, share capital increased by H2.15 crore and share premium increased by H3.64 crore (Previous
year ended March 31, 2024, the Bank had completed the process of initial public offer (IPO) and raised H500 crore by issue of 20 crore
equity shares which got listed on BSE Limited (“BSE”) and National Stock Exchange of India Limited (“NSE”) on July 21,2023. Further the
Bank has allotted 35,52,797 equity shares of H10 each under ESOP scheme exercised for cash aggregating to H9,62,66,189. Accordingly,
share capital increased by H203.55 crore and share premium increased by H306.07 crore. Expense towards the public issue of equity
shares amounting to H41.92 crore had been adjusted with Securitries Premium Account.)
Schedule 18 (Contd.)
18.2.2 Liquidity Coverage Ratio (LCR)
Qualitative disclosure around LCR
The Liquidity Coverage Ratio (LCR) is one of the Basel Committee’s key reforms to develop a more resilient banking sector. Liquidity
Coverage Ratio (LCR) is a global minimum standard for Bank’s liquidity The ratio aims to ensure that a bank has an adequate stock of
unencumbered High - Quality Liquid Assets (HQLA) that can be converted into cash easily and immediately to meet its liquidity needs for
a 30 calendar days of severe liquidity stress scenario.
The objective of the LCR is to promote the short-term resilience of the liquidity risk profile of banks. It does this by ensuring that banks
have an adequate stock of unencumbered high-quality liquid assets (HQLA) to total estimated net outflows over a stressed period of 30
calendar days.
The net cash outflows are calculated by applying RBI prescribed outflow factors to the various categories of liabilities (deposits,
unsecured and secured wholesale borrowings), as well as to undrawn commitments and derivative-related exposures, partially offset by
inflows from assets maturing within 30 days.
The Board of Directors has the overall responsibility for management of liquidity risk. The Board at overall level decides the liquidity risk
tolerance/limits and accordingly decides the strategy policies and procedures of the Bank for managing liquidity risk.
The Board has constituted Risk Management Committee (RMC), which reports to the Board, and consisting of Chief Executive
Officer (CEO) /Chairman and certain other Board members. The Committee is responsible for evaluating the overall risks faced by
the Bank including liquidity risk. The potential interaction of liquidity risk with other risks is included in the risks addressed by the Risk
Management Committee.
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.
ALCO of the Bank channelizes various business segments of the Bank to target good quality asset and liability profile to meet the Bank’s
profitability as well as Liquidity requirements with the help of robust MIS and Risk Limit architecture of the Bank.
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, 2025 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 H7.5 crore) and Wholesale (which would cover all residual deposits).
Other contractual funding, including a portion of other liabilities which are expected to run down in a 30 day 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. The present
minimum requirement, as on March 31, 2025 is 100%.
In the Indian context, the run-off factors for the stressed scenarios are prescribed by the RBI, for various categories of liabilities (viz.,
deposits, unsecured and secured wholesale borrowings), undrawn commitments, derivative-related exposures, and offset with inflows
emanating from assets maturing within the same time period. Given below is a table of run-off factors and the average LCR maintained
by the Bank quarter-wise over the past two years as below:
18.2.3 Net Stable Funding Ratio (NSFR)
Qualitative disclosure around NSFR
In the backdrop of the global financial crisis that started in 2007, the Basel Committee on Banking Supervision (BCBS) proposed certain
reforms to strengthen global capital and liquidity regulations with the objective of promoting a more resilient banking sector In this regard,
comes into picture - “Basel III: International framework for liquidity risk measurement, standards and monitoring” which presented two
minimum standards, viz., Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) for funding liquidity.
The 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 of 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.
Minimum Requirement: ASF(Available Stable Funding)/RSF(Require Stable Funding)>=100. The Bank is required to maintain the NSFR
on an ongoing basis on a standalone basis. The minimum NSFR requirement set out in the RBI guideline effective October 1,2021 is 100%.
The Board of Directors has the overall responsibility for management of liquidity risk. The Board at overall level decides the liquidity risk
tolerance/limits and accordingly decides the strategy, policies and procedures of the Bank for managing liquidity risk.
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.
Quantitative Disclosures
Following is the quantitative disclosures relating to NSFR for the year ended March 31, 2025, wherein the amounts are average of daily
positions during the year:
(i) The days on which there were Nil outstanding have been ignored while arriving at the amount of minimum outstanding during
the year.
(ii) Actual number of days of transactions have been considered in computation of daily average outstanding during the year.
(iii) In respect of triparty repo and triparty reverse repo transactions, amount of funds borrowed or lent have been disclosed in the
tables above.
18.3.7 Government Security Lending (GSL) transactions
In reference to the RBI Notification No: FMRD.DIRDNo.06/14.03.061/2023-2024 dated December 27, 2023 with respect to the disclosure
related to Government securities lending and borrowing transactions undertaken Over-the-Counter markets, the bank has not entered
into any such type of transactions in the current year.
18.4.5 Divergence in asset classification and provisioning:
RBI vide circular no. DOR.ACC.REC.No.74/21.04.018/2022-23 dated October 11, 2022, has directed that banks shall make suitable
disclosures, wherever (a) the additional provisioning requirement assessed by RBI exceeds 5 percent of the reported profit before
provisions and contingencies for the reference period, or (b) the additional Gross NPA identified by RBI exceeds 5 percent of the published
incremental Gross NPA for the reference period, or both. Based on the annual inspection conducted with respect to the Bank’s position
as at March 31, 2024 there are no reportable matters under (a) and (b) of the above-mentioned circular.
18.4.6 Transfer of loans exposures
Details of loans transferred / acquired during the year ended March 31,2025 under the RBI Master Direction on Transfer of Loan Exposure
dated September 24, 2021 is given below:
(i) The Bank has not acquired/transferred any loans not in default to other entities during the year ended March 31, 2025 and March
31, 2024.
(ii) Details of Stressed Loans transfered to Asset Reconstruction Company (ARC) is given below:
Schedule 18 (Contd.)
18.7 Derivatives :
18.7.1 Forward Rate Agreement/ Interest Rate Swap/ Cross currency swap :
There are no forward rate agreement / interest rate swap / cross currency swap enterest into and outstanding during the year ended
March 31, 2025 and March 31, 2024.
18.7.2 Exchange Traded Interest Rate Derivatives
There are no exchange traded interest rate derivative entered into and outstanding during the year ended March 31, 2025 and March
31, 2024.
18.7.3 Risk Exposure in Derivatives:
The Bank has not engaged in any derivatives contracts during the year ended March 31, 2025 and March 31, 2024. However, Bank
acquired a CCS contract pursuant to Business Transfer Agreement from Holding Company in the year ended March 31, 2017 The
disclosure to the extent applicable is given below.
Quantitative disclosure on risk exposure in derivatives
The bank has not entered into any derivative instruments for trading / speculative purposes either in Foreign Exchange or domestic
treasury operations during the year ended March 31, 2025 and March 31, 2024.
18.7.4 Credit Default Swap
The Bank has not entered into Credit Default Swap during the year ended March 31, 2025 and March 31, 2024.
18.12 Penalties imposed by the Reserve Bank of India
No penalty was imposed by RBI on the Bank during the year ended March 31, 2025 and March 31, 2024.
18.13 Disclosure on Remuneration
Qualitative Disclosure
A. Information relating to the bodies that oversee remuneration
a) Name, composition and mandate of the main body overseeing remuneration
The Nomination and Remuneration Committee (NRC) of the Board is the main body overseeing remuneration. As on March 31,
2025, The NRC comprises of two Independent Directors viz Ms Kalpana Prakash Pandey and Mr. Parveen Kumar Gupta, one
non-independent Director viz Mr. Muralidharan Rajamani.
Role and functions of the Committee related to Nomination
A. Appointment criteria and qualifications
i) To identify and approve appointment of persons who are qualified to become directors in the bank and who may be
appointed as KMPs or SMPs in the bank, who possess integrity independence, adequate knowledge, skill, qualification,
experience in the field of his/her specialisation commensurate with the proposed role and responsibility as Director,
KMP or SMP and shall have the ability to manage the responsibility assigned to him/her.
ii) To ensure that the Bank appoints or continues the employment of any person as Managing Director / Whole-time
Director subject to the conditions laid down under Part I of Schedule V of the Companies Act, 2013 and in line with
extant RBI guidelines and relevant provisions of the Banking Regulation Act 1949.
iii) To ensure that the Bank shall appoint or continue the service of any person as Independent Director subject to the
provisions of Section 149 read with Schedule IV and other applicable provisions of the Companies Act, 2013 and
Banking Regulation Act 1949.
iv) Appointment for any Senior Management Personnel (Executives one level below the MD & CEO) shall be approved
by the Committee, subject to the candidate having been interviewed by at least two (2) members of the Committee.
Basis the recommendation of the panel members, the Committee may approve the appointment. Appointment of any
executive whose fixed salary exceeds H0.70 crore p.a. will need to be approved by the NRC.
B. Following are the functions of Nomination and Remuneration Committee:
1. Review the structure, size, composition, diversity of the Board and make necessary recommendations to the Board
with regard to any changes as necessary and formulation of policy thereon.
2. Evaluate the skills that exist, and those that are absent but needed at the Board level, and search for appropriate
candidates who have the profile to provide such skill sets.
3. To evaluate the performance of the members of the Board and provide necessary report to the Board
4. Advise criteria for evaluation of Independent Directors and the Board & its Committees and carry out evaluation of
every directors’ performance.
5. To formulate the criteria for determining qualifications, positive attributes and independence of a director.
6. To recommend to the Board a policy, relating to the remuneration for directors, Key Managerial Personnel, Senior
Management Personnel and other employees.
7. To formulate criteria for payment to Key Managerial Personnel and Senior Management Personnel performance
based incentives / rewards based on Bank’s performance.
8. Examine vacancies that will come up at the Board on account of reti rement or otherwise and suggest course of action.
9. Undertake a process of due diligence to determine the suitability of any person for appointment / continuing to hold
appointment as a director on the Board, based upon qualification, expertise, track record, integrity other 'fit and proper’
criteria, positive attributes and independence (if applicable) and formulate the criteria relating thereto.
10. Review the composition of Committees of the Board, and identify and recommend to the Board the Directors who can
best serve as members of each Board Committee.
11. Review and recommend to the Board for approval the appointment of Managing Director & CEO and other whole¬
time Directors and the overall remuneration framework and associated policy of the Bank (including remuneration
policy for directors and key managerial personnel) the level and structure of fixed pay, variable pay, perquisites, bonus
pool, stock-based compensation and any other form of compensation as may be included from time to time to all the
employees of the Bank including the Managing Director & CEO, other Whole-time Directors and senior managers one
level below the Board.
12. Review and recommend to the Board for approval the total increase in manpower cost budget of the Bank as a whole,
at an aggregate level, for the next year.
13. Recommend to the Board the compensation payable to the Non-Executive Chairman of the Bank.
14. Review the Code of Conduct and HR strategy, policy and performance appraisal process within the Bank, as well as
any material changes in the organization structure which could have wide ranging implications.
15. Review and recommend to the Board for approval of various other HR related policies including the Talent Management
Policy and Succession Policy in the Bank for ensuring business continuity, especially at the level of Board, MD & CEO,
other Whole Time Directors, Senior Management Personnel (one level below the MD & CEO and other key roles).
16. Review and recommend to the Board for approval:
1. the creation of new positions one level below MD & CEO, wherever required
2. appointments, promotions and exits of senior managers one level below the MD & CEO”
b) External consultants whose advice has been sought, the body by which they were commissioned, and in what areas of
the remuneration process
No external consultant has been engaged in the current year.
c) Scope of the Bank’s remuneration policy (e.g. by regions, business lines), including the extent to which it is applicable
to foreign subsidiaries and branches
The Compensation and Remuneration Policy of the Bank has been approved by the Board of Directors in its meeting dated March
08, 2025 pursuant to the guidelines issued by RBI, to cover all employees of the Bank. Further the Board had recommended RBI
the revised remuneration of MD & CEO which has been approved by Reserve Bank of India vide its letter dated September 16,
2024. The Bank also has in place a Policy on Risk Alignment of Compensation applicable for MD & CEO, WTD and employees in
Risk Control and Compliance Department which is approved by the Board of Directors on March 08, 2025.
d) Type of employees covered and number of such employees
All the employees of the Bank are covered. The total number of employees of the Bank as at March 31,2025 were 19,779 (March
31,2024: 16,081)
B. Information relating to the design and structure of remuneration processes.
Key features and objectives of remuneration policy: The Bank has, under the guidance of the Nomination and Remuneration
Committee (“NRC”) and the Board, followed remuneration practices intended to drive meritocracy and performance based on a
prudent risk management framework.
Effective governance of compensation: The NRC has oversight over compensation to senior management personnel and also
provides overall guidance to the compensation paid to other employees.
Alignment of compensation philosophy with prudent risk taking: While the Bank seeks to achieve a mix of fixed and variable
remuneration that is prudent, it currently has predominantly a fixed remuneration structure with no guaranteed bonuses. Further, the
remuneration of employees in financial and risk control functions is not linked to business outcomes and solely depends on their
performance. The Bank seeks to align remuneration with financial and non-financial performance indicators.
Whether the remuneration committee reviewed the Bank’s remuneration policy during the past year, and if so, an
overview of any changes that were made: There has been no change in the Bank’s remuneration policy during the past year.
Discussion of how the Bank ensures that risk and compliance employees are remunerated independently of the
businesses they oversee: The remuneration of employees in control functions such as Risk and Compliance depends solely on
their individual and overall functional performance and is not linked to any business outcomes. The same is also reflected in their
KRAs. The Bank also has in place a Policy on Risk Alignment of Compensation applicable for MD & CEO and Risk and Compliance.
C. Description of the ways in which current and future risks are taken into account in the remuneration processes.
Overview of the key risks that the Bank takes into account when implementing remuneration measures: The Board
approves the overall risk management policy including risk framework, limits, etc. The Bank conducts all its business activities within
this framework. The NRC while assessing the performance of the Bank and senior management, shall consider adherence to the
policies and accordingly make its recommendations to the Board.
Overview of the nature and type of key measures used to take account of these risks, including risk difficult to
measure: The evaluation process shall incorporate both qualitative and quantitative aspects including asset quality, provisioning,
increase in stable funding sources, refinement/improvement of the risk management framework, effective management of
stakeholder relationships and mentoring key members of the top and senior management.
Discussion of the ways in which these measures affect remuneration: In order to ensure alignment of remuneration with
prudent practices, the NRC takes into account adherence to the risk framework in addition to business performance.
Discussion of how the nature and type of these measures have changed over the past year and reasons for the
changes, as well as the impact of changes on remuneration: There has been no change in the nature and type of measures
over the past year.
D. Description of the ways in which the Bank seeks to link performance during a performance measurement year with levels
of remuneration.
Overview of main performance metrics for the Bank, top level business lines and individuals: The main performance
metrics include profitability, business growth, asset quality, compliance, and customer service.
Discussion of how amounts of individual remuneration are linked to the Bank-wide and individual performance:
The assessment of employees shall be based on their performance with respect to their result areas and shall include the metrics
mentioned above.
Discussion of the measures the Bank will in general implement to adjust remuneration in the event that performance
metrics are weak, including the Bank’s criteria for determining ‘weak’ performance metrics: In case such an event should
occur, the Board/NRC shall review and provide overall guidance on the corrective measures to be taken.
E. Description of the ways in which the Bank seeks to link performance during a performance measurement year with levels
of remuneration.
As a part of the performance management process in the bank at the beginning of each financial year , the bank rolls out individual
KRA’s to each and every employee in the bank. These KRAs are broken down based on the strategic objectives and business
budgets set by the Board of the bank. Apart from regular feedback which each manager provides to his / her subordinates a bank
as formal process of Mid-Year Review and Year End Review to assess performance of each role holder in the bank. Based on the
performance review at an organizational / Functional / Individual the bank decided on percentage of salary increments to be given
at various levels of performance.
Discussion of the Bank’s policy on deferral and vesting of variable remuneration and, if the fraction of variable
remuneration that is deferred differs across employees or groups of employees, a description of the factors that
determine the fraction and their relative importance:
The various deferral arrangement of variable remuneration in the bank broadly are as follows -
a) For MD & CEO and WTD - The variable remuneration of the MD & CEO and WTD is approved by the Reserve Bank of India
which includes deferral arrangement for the cash and non cash part of the variable pay which is implemented by the bank as per
the advice of the RBI.
b) All ESOP 's which are granted across all levels in the organization have deferral arrangement in them
c) Monthly / Quarterly Variable Pay - Based on the nature of the scheme , deferral arrangements are made in the same which differ
from channel to channel.
The fraction of deferral to be considered is dependent upon -
a) Guidelines issued by the Regulator from time to time
b) Approval as per the overall performance framework approved by the NRC and the Board
c) Driving right behaviours via the various incentive schemes.”
Discussion of the Bank’s policy and criteria for adjusting deferred remuneration before vesting and (if permitted by national
law) after vesting through claw back arrangements:
The Bank also has in place a Policy on Risk Alignment of Compensation applicable for MD & CEO and Risk Control and Compliance.
This policy deals with the deferred payment of variable pay and claw back guidelines.
F. Description of the different forms of variable remuneration that the Bank utilizes and the rationale for using these
different forms.
The Bank has variable pay that is paid based on the performance that is applicable to all levels. The ESOP options of the Holding
Company and the Bank are currently given to eligible employees in Chief Manager and above grade subject to performance.
Employees in sales function do have incentives based on monthly business performance.
Overview of the forms of variable remuneration offered. A discussion of the use of different forms of variable
remuneration and if the mix of different forms of variable remuneration differs across employees or group of
employees, a description of the factors that determine the mix and their relative importance.
The variable remuneration is offered in the form of annual performance bonus. The same is determined on the basis of comprehensive
performance appraisal system wherein the performance of each employee is evaluated on the basis of defined Goal Sheet and KRA
at the beginning of year and achievement against them.
Discount rate: The discount rate is based on the prevailing market yields of Indian government securities as at the balance sheet date
for the estimated term of the obligations.
Salary escalation rate: The estimates of future salary increases considered taking into account the inflation, seniority, promotion and
other relevant factors.
Expected rate of return: The overall expected rate of return on assets is determined based on the average long term rate of return
expected on investment of the fund during the estimated term of the obligations.
Attrition Rate: The reduction in staff/employees of a company through normal means, such as retirement and resignation. This is natural
in any business and industry.
18.18 (A) Business Segments:
In terms of AS-17 (Segment Reporting) issued by ICAI and RBI circular Ref. DBOD.No. BPBC.81/21.04.018/2006-07 dated April 18, 2007
read with DBR.BP BC No.23/21.04.018/2015-16 dated July 01, 2015 and amendments thereto, the following business segments have
been disclosed:
Corporate/ Wholesale Banking: Includes lending, deposits and other banking services provided to corporate customers of the Bank.
Retail Banking: Includes lending, deposits and other banking services provided to retail customers of the Bank through branch network.
Treasury: Includes dealings in SLR and Non SLR investments, maintenance of reserve requirements and resource mobilization from
other Banks and financial Institutions.
Other Banking Operations: Includes other activities which are not covered under wholesale, retail or treasury activity.
Geographical segments: The business operations of the Bank are concentrated in India hence the Bank is considered to operate in
domestic segment only.
18.23.1 Contingent liabilities
1. Description of nature of contingent liabilities is set out below:
a. Contractual payments for Capital commitments
b. Pending litigation under Income Tax.
c. Other pending litigation against the Bank.
The Bank’s pending litigations include claims against the Bank by counterparties and proceedings pending with tax authorities. The Bank
has reviewed its pending litigations and proceedings and has adequately provided for where provisions are required, and disclosed as
contingent liabilities where applicable.
Refer Schedule 12 for amounts relating to contingent liabilities.
18.26 The Bank was carrying floating asset provision of H148.62 crore as at year ended March 31, 2024. During the year pursuant to
the approval from Reserve Bank of India (RBI) , the Bank has fully utilized the floating asset provision as per relevant RBI regulations.
Consequently, the provision for NPA (“Provisions and Contingencies”) has been adjusted by H148.62 crore for the year ended March 31,
2025.
18.27 The Board of Directors of the Bank and Utkarsh Core Invest Limited (UCL), the Holding Company, have approved a draft scheme
of amalgamation of the latter with the former in terms of Section 230 to 232 of the Companies Act, 2013 on September 20, 2024. The
appointed date under the said scheme is April 01, 2025 or such other date as may be approved by NCLT or such other competent
authority The amalgamation is subject to the provisions of the said scheme document and receipt of the relevant regulatory and
statutory approvals. The Bank has received no-objection from RBI on January 02, 2025, to proceed with the approval of NCLT and other
relevant statutory authorities, ensuring compliance with certain conditions/procedural matters in this regard. However, other necessary
approvals from relevant competent authority is under process.
18.28 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
Schedule 18 (Contd.)
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.
18.29 During the year SEBI has determined the settlement amount of Rs.1.24 crore which was paid by the bank, pursuant to suo-moto
settlement application filed by the Bank with respect to certain non-compliances in filings with SEBI which were subsequently mitigated
by the Bank. The matter has been fully settled.
18.30A The Bank has changed its accounting policy with effect from April 01,2024 on recognition of loan processing fees collected from
the borrowers and allied expenses for more appropriate presentation of the financial statement and alignment with industry practice.
Hitherto the Bank was recognizing the income/expense over the tenure of the loan which is now recognized as income when it becomes
due.
Increase in Other Income, Other Operating Expenses and the Net Profit (Before Tax) of the Bank due to change in the aforesaid
accounting policy for the year ended March 31, 2025 is H164.66 crore, H70.09 crore and 94.57 crore respectively.
Further, if the Bank would have followed the revised accounting policy in the previous financial year ended March 31, 2024, increase in
Other Income, Other Operating Expenses and the Net Profit (Before Tax) of the Bank for the year ended March 31,2024 would have been
H144.45 crore, H28.33 crore and 116.11 crore respectively.
18.30B The Bank has implemented the Master Direction - Classification, Valuation and Operation of Investment Portfolio of Commercial
Banks (Directions), 2023 dated September 12, 2023 which is applicable to banks from April 01, 2024. Consequent to the transitions
provisions, the Bank’s net worth and investments have increased by Rs.1.32 crore (post tax) and Rs. 1.76 crore (pre-tax) respectively
as on April 01, 2024 on account of revision in the carrying value to the fair value as on such date. Subsequent changes in fair value of
performing investments under Available for Sale (AFS) and Fair Value Through Profit and Loss ('FVTPL’) (including Held For Trading
('HFT’)) categories have been recognized through AFS reserve and Profit and Loss Account respectively Figures for the previous year/
period are not comparable to that extent.
18.31 As per the requirements of rule 3(1) of the Companies (Accounts) Rules 2014 the Bank uses only such accounting software for
maintaining its books of account that have a feature of recording audit trail of each and every transaction creating an audit log of each
change made in the books of account along with the date when such changes were made within such accounting software. This feature
of recording audit trail has operated throughout the year and was not tampered with during the year. The Bank has established and
maintained an adequate internal control framework and based on its assessment, believes that this was effective as of March 31, 2025.
18.32 Figures of the previous year have been regrouped / reclassified, wherever necessary to confirm current year classification.
As per our report of even date attached
for M/s Deloitte Haskins & Sells for M/s Kirtane & Pandit LLP for and on behalf of the Board of Directors of
Chartered Accountants Chartered Accountants Utkarsh Small Finance Bank Limited
ICAI Firm Registration No. 117365W ICAI Firm Registration No. 105215W/W100057 CIN: L65992UP2016PLC082804
G.K. Subramaniam Sandeep D Welling Parveen Kumar Gupta Nagesh Pinge
Partner Partner Chairman Director
Membership No. 109839 Membership No. 044576 DIN : 02895343 DIN: 00062900
Govind Singh Sarju Simaria
Managing Director & CEO Chief Financial Officer
DIN: 02470880 FCA : 046998
Muthiah Ganapathy
Company Secretary
FCS 5674
Place : Mumbai Place : Mumbai
Date : May 03, 2025 Date : May 03, 2025
| 