No trade or other receivable are due from directors or other officers of the Company either severally or jointly with any other person. Further, no trade or other receivable are due from firms or private companies respectively in which any director is a partner, a director or a member.

No expected credit loss provision is required due to the short term nature of these receivables.

The Company’s business model is to collect contractual cash flows, being the payment of Principal and Interest and accordingly the loans are measured at amortized cost.

Loans granted by the Company are secured or partly secured by one or a combination of the following securities:-Registered/ equitable mortgage of property, Hypothecation of assets including Gold.

Loans where fraud has been committed and reported for the year is ' Nil (31 March 2023: ' Nil)

The Company has not provided any loans or advances to promoters, directors, KMPs and the related parties.

The Company has securitised certain term loans and managed servicing of such loan accounts. The carrying value of these assets have not been de-recognised in the books. Refer Note 49 for securitised term loans not derecognised in their entirety.

Unsecured Loans includes unsecured business loans which is guaranteed by Credit Guarantee Fund Trust for Micro and Small Enterprises amounting to ' 2.27 Million (31 March 2023: ' 14.03 Million)

On 6 December 2022, the Company has incorporated a wholly owned subsidiary, namely SBFC Home Finance Private Limited (“Subsidiary”), with Corporate Identification Number U65992MH2022PTC394642. The Subsidiary has made an application to the RBI for obtaining a Certificate of Registration to operate as a ‘Housing Finance Company’ on 29 March 2023. In order to meet the minimum net owned funds requirement of the Subsidiary under Paragraph 5.1 of the Master Directions - Non Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021, on 18 January 2024 the Subsidiary had made a rights issue of equity shares during the year where 20,996,640 equity shares were offered to the Company and the remaining 8 nominee shareholders were offered 420 equity shares each. Further all the nominee shareholders renounced their shares in the favor of the Company. The Board of Directors of Subsidiary approved the allotment of 21,000,000 equity shares of ' 10 each, aggregating to ' 210,000,000 shares on rights basis. The said equity shares so allotted, shall rank pari passu with the existing equity shares issued.

The Company has invested in Government Securities and Treasury Bills which are sovereign in nature. Hence, the Company has not provided for any impairment allowance on these investments.

There is no impairment allowance for existing Investment in Pass Through Certificates considering the performance of the underlying loans and the risk cover.

With respect to Receivable on sale of Investment in PTC, the Company has created an interest receivable strip, with corresponding credit to statement of profit and loss, which has been computed by discounting excess interest spread to present value.

The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed using derivative instruments are foreign currency risk and interest rate risk. The Company’s risk management strategy and how it is applied to manage risk are explained in note 48.4.

The Company had requested its supplier to confirm the status so as to whether they are covered under the Micro, Small and Medium Enterprises Development Act, 2006 and is in the continuous process of obtaining such confirmation from its suppliers. The disclosure relating to unpaid amount as at the year end together with interest paid/ payable as required under the said Act have been given to the extent such parties could be identified on the basis of the information available with the Company regarding the status of the suppliers under MSMED Act, 2006.

The aforementioned is based on the responses received by the Company to its inquiries with suppliers with regard to applicability under the said Act. This has been relied upon by the auditors.

8.57% Secured Rated Listed Redeemable Non-Convertible Debentures: Face value of Non Convertible Debentures is ' 1.00 Million. These debentures are redeemable at the end of 36 months from the date of allotment. Payment of Interest is yearly and principal repayment at maturity.

Secured Rated Listed Redeemable Non Convertible Debenture Series A1 Tranche 1 Date Of Maturity 27/05/2025 (9.37% - March 2024): Face value of Non Convertible Debentures is '0.10 Million. These debentures are redeemable at the end of 15 months from the date of allotment. Payment of Interest is Monthly and principal repayment at maturity.

Secured Rated Listed Redeemable Non Convertible Debenture Series A1 Tranche 2 Date Of Maturity 19/03/2025 (9.37% - March 2024): Face value of Non Convertible Debentures is ' 0.10 Million. These debentures are redeemable at the end of 12 months 20 days from the date of allotment. Payment of Interest is Monthly and principal repayment at maturity.

9.00% Secured Rated Listed Redeemable Non Convertible Debenture Series A2 Date Of Maturity 04/03/2027: Face value of Non Convertible Debentures is ' 0.10 Million. These debentures are redeemable at the end of 36 months from the date of allotment. Payment of Interest is Yearly and principal repayment at maturity.

The debentures are secured by way of first pari passu charge against the book debts, Investment in PTC and loan assets of the Company which are standard. Minimum security cover of 1.1 times is required to be maintained throughout the year.

I a) Term loan from banks: These are secured by First Pari Passu charge by way of hypothecation of standard loan receivables of the Company, Investments in PTC and on all other book debts and current assets of the Company. Minimum security cover of 1.1 times is required to be maintained throughout the year.

b) Term loan from financial institutions: These are secured by First Pari Passu charge by way of hypothecation of standard loan receivables of the Company, Investments in PTC and on all other book debts and current assets of the Company. Minimum security cover of 1.1 times is required to be maintained throughout the year.

c) Working capital demand loan from banks: These are secured by First Pari Passu charge by way of hypothecation of standard loan receivables of the Company, Investments in PTC and on all other book debts and current assets of the Company. Minimum security cover of 1.1 times is required to be maintained throughout the year.

d) Foreign Currency loan from banks: These are secured by First Pari Passu charge by way of hypothecation of standard loan receivables of the Company, Investments in PTC and on all other book debts and current assets of the Company. Minimum security cover of 1.1 times is required to be maintained throughout the year.

e) Collateralized borrowings are secured against pool of Loan Assets. Refer Note 49 for more details.

! No term loan and any other borrowing is guaranteed by directors and/ or others.

1 The Company has not defaulted in repayment of principal and interest during the year ended 31 March 2024 and year

ended 31 March 2023.

1 The repayment of borrowings is done monthly and quarterly as per the sanctioned terms.

Terms and rights attached to equity shares:

The Company has single class equity shares having a par value of ' 10 per equity share. Accordingly, all equity shares rank equally with regard to dividends and share in the Company’s residual assets. The equity shares are entitled to receive dividend as declared from time to time subject to payment of dividend to preference shareholders if any. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts in proportion to the number of equity shares held. Upon show of hands, every Member present in person and holding any equity share capital therein, shall have one vote, in respect of such capital, on every resolution placed before the Company.

The holders of equity shares are entitled to dividends, if any, proposed by the Board of Directors and approved by Shareholders at the Annual General Meeting.

Pursuant to the share purchase agreement dated 25 July 2023, certain Promoters of the Company i.e. SBFC Holdings Pte Ltd, Arpwood Partners Investment Advisors LLP, Arpwood Capital Private Limited and Eight45 Services LLP have sold an aggregate of 15,789,473 Equity Shares at ' 57 per share to SBI Optimal Equity Fund- Long Term, ICICI Prudential Banking and Financial Services Fund, HDFC Banking and Financial Services Fund, SBI Retirement Benefit Fund- Aggressive Plan, SBI Retirement Benefit Fund Conservative Plan, SBI Retirement Benefit Fund - Conservative Hybrid Plan, SBI Retirement Benefit Fund - Aggressive Hybrid Plan.

There are no bonus shares issued or shares bought back or shares issued for consideration other than cash by the Company during five years immediately preceding the balance sheet date.

The Company’s equity shares have been listed on National Stock Exchange of India Limited (“NSE”) and on BSE Limited (“BSE”) on 16 August 2023, by completing the Initial Public Offering (IPO) of 179,863,285 equity shares of face value of ' 10 each at an issue price of ' 57 (employees were issued at ' 55) per equity share, consisting of fresh issue of 105,301,883 equity shares and an offer for sale of 74,561,402 equity shares by the selling shareholders. The Company had received an amount of ' 5,520.30 million (net off estimated offer expenses ' 479.70 million, including pre IPO related estimated expenses) from proceeds of fresh issue of equity shares. Further, the fund raised from Offer for sale were remitted to the selling shareholders (net off estimated offer expenses borne by the selling shareholders). The utilisation of the net proceeds is summarised as below:

i 5,586,000 equity shares have been transferred from Vistra ITCL (India) Limited, Trustee of SBFC Employee Welfare Trust to eligible employees pursuant to exercise of the outstanding vested options during the year. 44,156,694 equity shares have been issued to eligible employees pursuant to exercise of the outstanding vested Options under various SBFC Stock option policies during the year.

Statutory reserve u/s 45-IC of the RBI Act, 1934: As required by section 45-IC of the RBI Act 1934, the Company maintains a reserve fund and transfers there in a sum not less than twenty per cent of its net profit every year as disclosed in the statement of profit and loss and before any dividend is declared.

Employee share option outstanding: The Company has a share option scheme under which options to subscribe for the Company’s shares have been granted to certain employees including key management personnel. The share-based payment reserve is used to recognize the value of equity-settled share-based payments provided to employees, as part of their remuneration.

Securities Premium Reserve: Securities premium is used to record the premium on issue of shares. It can be utilised only for limited purposes in accordance with the provisions of the Companies Act, 2013. In case of equity settled share based payment transactions, the difference between fair value on grant date and nominal value share is accounted as securities premium.

Retained Earnings: Retained earnings are the profits that the Company has earned till date, less any transfers to statutory reserve.

Remeasurement gain/ (loss) on defined benefit plans: It represents the gains/ (losses) arising on account of actuarial valuation of defined benefit obligation.

Other comprehensive income on cash flow hedge reserve: It represents the cumulative gains/(losses) arising on revaluation of the derivative instruments designated as cash flow hedges through OCI and underlying hedged items.

No amount has been spent by the Company for the construction/ acquisition of any new asset during the year ended 31 March 2024 and year ended 31 March 2023.

There have been no related party transactions during the year ended 31 March 2024 and 31 March 2023 in respect of CSR activities.

Section 198(4)(a) allows usual working charges to be deducted while computing the net profits for the purpose of section 198. The usual working charges can be interpreted as the expenditure incurred by the Company in the ordinary course of the business. Being an NBFC, the Company provides loans to various customers with or without collaterals. Given the fact that the Company is into the lending business, any credit losses incurred by the Company could be construed and ‘usual working charges’ i.e. credit losses are integral part of the lending business and should not be considered as capital in nature. Accordingly, Expected Credit Loss (ECL) provision has been treated as an allowable expenditure for the purpose of calculation of profits under section 198 of the Companies Act, 2013 for Corporate Social Responsibility.

Reconciliation of income tax expense of the year:

The tax charge shown in the statement of profit and loss differs from the tax charge that would apply if all the profits had been charged at India corporate tax rate. A reconciliation between the tax expense and the accounting profit multiplied by India’s domestic tax rate is as follows:

. Maturity analysis of assets and liabilities

The table below shows an analysis of assets and liabilities analyzed according to when they are expected to be recovered or settled. They have been classified to mature and/or be repaid within 12 months or after 12 months. With regard to loans and advances to customers, the Company uses the same basis of expected repayment as used for estimating the Effective Interest Rate (EIR).

Fair value hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognized and measured at fair value and (b) measured at amortized cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

Valuation technique used to determine fair value

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Level 1 to Level 3, as described below.

Quoted prices in an active market (Level 1): This level of hierarchy includes financial assets that are measured by reference to quoted prices (adjusted/unadjusted) for identical assets. This category consists of quoted mutual fund units and government securities.

Valuation techniques with observable inputs (Level 2): This level of hierarchy includes financial assets, measured using inputs other than quoted prices included within Level 1 that are observable for the asset, either directly (i.e.; as prices) or indirectly (i.e.; derived from prices). This category includes derivative financial instruments.

Valuation techniques with significant unobservable inputs (Level 3): This level of hierarchy includes financial assets measured using inputs that are not based on observable market data. Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. This category includes investment in Pass-through Certificates.

There has been no transfer between level 1, level 2 and level 3 for the year ended 31 March 2024 and 31 March 2023.

The carrying amounts of trade receivables, trade payables and cash and cash equivalents are considered to be the same as their fair values, due to their short-term nature.

The fair value of Loan approximates the carrying amount.

For financial assets and liabilities measured at fair value, the carrying amounts approximates the fair values.Fair

40. Employee Benefits

a) Defined Contribution plans Provident Fund

The Company makes Provident Fund contributions to defined contribution retirement benefit plans for eligible employees. Under the schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions as specified under the law are paid to the Employee Provident Fund Organization (Government).

The Company recognized expense as contribution to provident fund amounting to ' 95.78 Million (31 March 2023: ' 67.01 Million) in the statement of profit and loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

b) Defined benefit plans Gratuity Fund

Characteristics of defined benefit plan

The Company has a defined benefit gratuity plan in India (funded). The Company’s defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to SBFC Finance Limited employees group gratuity cash accumulation scheme.

Risks associated with defined benefit plan

Gratuity is a defined benefit plan and Company is exposed to the following risks:

A. Actuarial Risk: It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons:

Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an increase in Obligation at a rate that is higher than expected.

Variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption than the Gratuity Benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cashflow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate.

Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption than the Gratuity Benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.

B. Investment Risk: For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.

C. Liquidity Risk: Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign/ retire from the Company there can be strain on the cashflows.

D. Market Risk: Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate/ government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.

E. Legislative Risk: Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/regulation. The government may amend the Payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation and the same will have to be recognized immediately in the year when any such amendment is effective.

During the year ended 31 March 2024 and 31 March 2023, there were no plan amendments, curtailments and settlements.

The Life Insurance Corporation is managing the Gratuity Plan and the contributions to it is done as guided by rule 103 of Income Tax Rules, 1962.

Other Post Retirement Benefit Plan

The details of the Company’s post-retirement benefit plans for its employees including whole-time directors are given below which is as certified by the actuary and relied upon by the auditors.

c) Code on Social Security

The Indian parliament has approved Code on Social Security, 2020 (“the Code”) which would impact the contributions by the Company towards Provident Fund and Gratuity. The Ministry of Labour and Employment has released draft rules for the Code on Social Security, 2020 on 13 November 2020 and has invited suggestions from stakeholders which are under active consideration by the Ministry. The Company will assess the impact and its evaluation once the subject rules are notified and will give appropriate impact in its financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.

The sensitivity analysis have been performed by varying a single parameter while keeping all other parameters unchanged.

The sensitivity analysis presented above fails to focus on the inter-relationship between underlying parameters. Hence, the results may vary if two or more variables are changed simultaneously.

Furthermore, in presenting the above sensitivity analysis, the present value of the projected benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same method as applied in calculating the projected benefit obligation as recognized in the balance sheet.

If Vesting prior to IPO then upto 6 months from date of IPO, If Vesting after IPO then upto 6 months from date of Vesting

I f Vesting prior to IPO then within 12 months from the date of the IPO, If Vesting after IPO then within 12 (Twelve) months from the date of the vesting

If Vesting prior to IPO then 24 months from date of IPO, If Vesting after IPO then 6 months from date of Vesting,

l Method used for accounting for shared based payment plan:

The Company uses fair value to account for the compensation cost of stock options to employees of the Company.

5 Fair value methodology:

The fair value of options have been estimated on the dates of each grant using the Black-Scholes model. The shares of Company are not listed on any stock exchange. Accordingly, the Company had considered the volatility of the Company’s stock price based on historical volatility of similar listed enterprises. The various assumptions considered in the pricing model for the stock options granted by the Company are:

Segment Information

The Company operates mainly in the business segment of fund based financing activity. All other activities revolve around the main business. Further, all activities are carried out within India. As such, there are no separate reportable segments as per the provisions of Ind AS 108 on ‘Operating Segments’.

Related party disclosures

Compensation of key management personnel of the Company

Key management personnel are those individuals who have the authority and responsibility for planning and exercising power to directly or indirectly control the activities of the Company and its employees. The Company includes the members of the Board of Directors which include independent directors (and its sub-committees) and Executive Committee to be key management personnel for the purposes of Ind AS 24 Related Party Disclosures.

As on the date of balance sheet, there were no internal or external indications exists that require management to assess the recoverability amount of the asset. Therefore, the Company believes no impairment of assets is required as per Ind AS 36 “Impairment of Assets”.

The Company has carried impairment testing by discounting the projected future cash flows and has enough head room against the carrying amount of ' 2,603.92 Million Considering the head room that the Company has, there is no need for impairment. Therefore, there is no Impairment of Goodwill in the books as on 31 March 2024 and 31 March 2023.

44.4 Impact of Ind AS 116 in the Statement of Profit and Loss:

i) Rental expense recorded for short-term leases for the year ended 31 March 2024 was ' 49.36 Million (31 March 2023: ' 27.75 Million)

ii) The aggregate depreciation on Right to use assets has been included under depreciation and amortisation expense in the Statement of Profit and Loss.

iii) The aggregate interest on Lease liabilities has been included under Finance costs in the Statement of Profit and Loss.

The Company’s pending litigations comprise of claims against the Company by the customers and proceedings pending with other authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in the financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial statements.

Risk Disclosures

The Company’s risk is managed through an integrated risk management framework, including ongoing identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Company’s continuing profitability and each individual within the Company is accountable for the risk exposures relating to his or her responsibilities. The Company is exposed to credit risk, liquidity risk, interest rate risk and price risk.

It is the Company’s policy to ensure that a robust risk awareness is embedded in its organizational risk culture.

Credit risk

Credit risk is the risk that the Company will incur a loss because its customers or counterparties fail to discharge their contractual obligations. The Company manages and controls credit risk by setting limits on the amount of risk it is willing to accept for individual counterparties.

48.1.1 Impairment assessment Exposure at Default

EAD is taken as the gross exposure under a facility upon default of an obligor. The amortized principal and the interest accrued is considered as EAD for the purpose of ECL computation

The advances have been bifurcated into following three stages:

Stage 1

All exposures where there has not been a significant increase in credit risk since initial recognition or that has low credit risk at the reporting date and that are not credit impaired upon origination are classified under this stage. The Company classifies all standard advances and advances up to 0-29 days default under this category. Stage 1 loans also include facilities where the credit risk has improved, and the loan has been reclassified from Stage 2.

Stage 2

All exposures where there has been a significant increase in credit risk since initial recognition but are not credit impaired are classified under this stage. Financial assets past due for 30-89 days are classified under this stage. The Company uses the below criteria for assessing movement to Stage 2:

a) Financial assets past due between 30-89

b) The Company becomes aware about any deterioration in the financial condition and reputation of the obligor which the management believes may lead to significant deterioration in credit risk

Stage 3

All exposures assessed as credit impaired when one or more events that have a detrimental impact on the estimated future cash flows of that asset have occurred are classified in this stage. For exposures that have become credit impaired, a lifetime ECL is recognised and interest revenue is calculated by applying the effective interest rate to the amortised cost (net of provision) rather than the gross carrying amount. 90 days Past Due is considered as default for classifying a financial instrument as credit impaired. If an event warrants a provision higher than as mandated under ECL methodology, the Company may classify the financial asset in Stage 3 accordingly.

Non performing Asset classification is done in line with Reserve Bank of India Master Circular on Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances and Clarifications dated 12 November 2021 and dated February 15, 2022.

Significant increase in credit risk

The ECL allowance is based on the credit losses expected to arise over the life of the asset (the lifetime expected credit loss), unless there has been no significant increase in credit risk since origination, in which case, the allowance is based on the 12 months’ expected credit loss.

The Company has established a policy to perform an assessment, at the end of each reporting period, of whether a financial instrument’s credit risk has increased significantly since initial recognition, by considering the change in the risk of default occurring over the remaining life of the financial instrument. The Company does the assessment of significant increase in credit risk at a borrower level. If a borrower has various facilities having different past due status, then the highest days past due (DPD) is considered to be applicable for all the facilities of that borrower.

PD estimation process

Probability of default (“PD”) is defined as the likelihood of default over a particular time horizon. The PD of an obligor is a fundamental risk parameter in credit risk analysis and depends on obligor specific as well as macroeconomic risk factors. The impact of macroeconomic criteria on the PD results in two different PD estimates, through-the-cycle (“TTC”) and the point-in-time (“PIT”) PD. A TTC PD estimate remains largely unaffected by the economic cycle, while a PIT PD estimate varies with the economic cycle.

Loss given default

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

48.1.2 Analysis of risk concentration - Refer Note 53.14.3

48.1.3 Collateral and other credit enhancements

The amount and type of collateral required depends on an assessment of the credit risk of the counterparty. Company has Guidelines in place covering the acceptability and valuation of each type of collateral. The Company also adheres to the RBI guidelines in respect of maintenance of adequate Loan to Value Ratios.

The main types of collateral for loans are Registered / equitable mortgage of property, Hypothecation of assets including Gold.

Management monitors the market value of collateral and requests additional collateral in accordance with the underlying agreement.

In case of defaults by customers, where the Company is unable to recover the dues, the Company through a legal process enforces the security and recover the dues.

48.2 Liquidity risk and funding management

Liquidity risk is defined as the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Liquidity risk arises because of the possibility that the Company might be unable to meet its payment obligations when they fall due as a result of mismatches in the timing of the cash flows under both normal and stress circumstances. Such scenarios could occur when funding needed for illiquid asset positions is not available to the Company on acceptable terms. To limit this risk, management has arranged for diversified funding sources and adopted a policy of managing assets with liquidity in mind and monitoring future cash flows and liquidity on a daily basis.

Liquidity risk is managed in accordance with our Asset Liability Management Policy. This policy is framed as per the current regulatory guidelines and is approved by the Board of Directors. The Asset Liability Management Policy is reviewed periodically to incorporate changes as required by regulatory stipulation or to realign the policy with changes in the economic landscape. The Company also maintains LCR in accordance with RBI guidelines and board approved Liquidity risk framework. The Asset Liability Committee (ALCO) of the Company formulates and reviews strategies,LCR and provides guidance for management of liquidity risk within the framework laid out in the Asset Liability Management Policy.

Analysis of financial assets and liabilities by remaining contractual maturities is provided in Note 38

48.3 Interest rate risk

Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values of financial instruments.

The core business of the Company is providing loan against property, loan against gold and personal loans. The Company borrows through various financial instruments to finance its core lending activity. These activities expose the Company to interest rate risk.

I nterest rate risk is measured through earnings at risk from an earnings perspective and through duration of equity from an economic value perspective. Further, exposure to fluctuations in interest rates is also measured by way of gap analysis, providing a static view of the maturity and re-pricing characteristic of Balance sheet positions. An interest rate sensitivity gap report is prepared by classifying all rate sensitive assets and rate sensitive liabilities into various time period categories according to contracted/ behavioural maturities or anticipated re-pricing date. The difference in the amount of rate sensitive assets and rate sensitive liabilities maturing or being re-priced in any time period category, gives an indication of the extent of exposure to the risk of potential changes in the margins on new or re-priced assets and liabilities. The interest rate risk is monitored on a quarterly basis.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates (all other variables being considered as constant) of the Company’s statement of profit and loss and equity.

48.4 Foreign Currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign currency rates. The Company is mainly exposed to changes in USD. The below table demonstrates the sensitivity to a 5% increase or decrease in the respective foreign currency rates against INR, with all other variables held constant. The sensitivity analysis is prepared on the net unhedged exposure of the Company as at the reporting date. 5% represents management’s assessment of reasonably possible change in foreign exchange rate.The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the foreign currency borrowings from banks and vendor payments. The Company has hedged its foreign currency exposure arising from bank borrowings through forward contracts in such a manner that it has fixed determinate outflows in its functional currency and as such there would be no significant impact of movement in foreign currency rates on the Company.

As of balance sheet date, Company’s net foreign currency exposure expressed in INR that is not hedged is ' Nil (31 March 2023 - ' 10.91 million)

Transferred financial assets that are not derecognized in their entirety

The Company has entered into securitization arrangements to transfer the part of its portfolio of Loan against property and Loan against gold. The terms of the arrangement included over collateralization of the assets of the Company through lien on Fixed deposits. Since the Company had retained significant risk in the transfer of the portfolio, the asset is retained in the books. Consequently, the amount received as sale consideration is shown as Collateralized borrowings in the financial statements.

Following are the additional disclosures required as per Schedule III to the Companies Act, 2013 vide Notification dated March 24, 2021:

Relationship with Struck off Companies:

To the best of the abilities, the Company has not identified any relationship with Company except mentioned below which has been struck off by the respective Registrar of Companies and such information is available vide public notice (Form No. STK-7) u/s 248 of the Act.

51.4 The Company has taken borrowings from banks and financial institutions and utilised them for the specific purpose for which they were taken as at the Balance sheet date. Unutilised funds as at 31 March 2024 are held by the Company in the form of bank balances, debt mutual funds and short term fixed deposits till the time the utilisation is made subsequently.

51.5 Details of Benami Property held:

No proceedings have been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder, as at 31 March 2024 and 31 March 2023.

51.6 Wilful Defaulter:

The Company is not a declared wilful defaulter by any bank or financial Institution or other lender, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India, during the year ended 31 March 2024 and 31 March 2023.

51.7 Compliance with number of layers of companies:

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

51.8 Undisclosed Income:

There have been no transactions which have not been recorded in the books of accounts, that have been surrendered or disclosed as income during the year ended 31 March 2024 and 31 March 2023, in the tax assessments under the Income Tax Act, 1961. There have been no previously unrecorded income and related assets which were to be properly recorded in the books of account during the year ended 31 March 2024 and 31 March 2023.

51.9 Details of Crypto Currency or Virtual Currency:

The Company has not traded or invested in Crypto currency or Virtual Currency during the year ended 31 March 2024 and 31 March 2023.

51.10 Title Deeds of Immovable Properties not held in the name of the Company:

The Company does not hold any immovable property as on 31 March 2024 and 31 March 2023. All the lease agreements are duly executed in favour of the Company for properties where the Company is the lessee.

51.11 Revaluation of Property, plant and equipment and Intangible assets

There is no revaluation of Property, plant and equipment and other intangible assets during the year ended 31 March 2024 and 31 March 2023.

51.12 Utilisation of Borrowed funds and share premium:

As a part of normal lending business, the Company grants loans and advances on the basis of security/ guarantee provided by the Borrower/ co-borrower and makes investments. These transactions are part of Company’s normal non-banking finance business, which is conducted ensuring adherence to all regulatory requirements.

51.13 a) Other than the transactions described above, no funds have been advanced or loaned or invested (either from

borrowed funds or share premium or any other sources or kind of funds) by the Company 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 Company (Ultimate Beneficiaries).

b) The Company has also not received any fund from any parties (Funding Party) with the understanding that the Company 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.

53.4.3 Disclosures on Risk Exposure in Derivatives Qualitative Disclosures

The Company has a Board approved policy in dealing with derivative transactions. Derivative transaction consists of hedging of foreign exchange transactions, which includes forward contracts. The Company undertakes derivative

transactions for hedging on-balance sheet assets and liabilities. Such outstanding derivative transactions are accounted on accrual basis over the life of the underlying instrument. The Asset Liability Management Committee and Risk Management Committee closely monitors such transactions and reviews the risks involved.

The Company has entered into derivative agreement to mitigate the foreign exchange risk pertaining to foreign currency borrowing. The description of risk policies and risk mitigation strategies are disclosed in note 48.4 of the standalone financial statements.

53.5.5 Unsecured Advances

Gross carrying amount of Unsecured Loans as on 31 March 2024 is ' 841.46 Million (31 March 2023: ' 1,595.12 Million).

53.6 Registration obtained from other financial sector regulators

The Company has not engaged into any business activity which are governed by other financial sector regulator. Hence, no registration was obtained.

53.7 Disclosure of Penalties imposed by RBI and other regulators

During the current year, the Company had, suo moto, filed a compounding application dated January 25, 2021 with the Registrar of Companies (“ROC”) under the Companies Act. The Compounding Application pertained to compounding the offence committed under Section 179(3)(d) and Section 179(3)(f) of the Companies Act read with Secretarial Standards 1 on “Meetings of the Board of Directors” with respect to items of business which should not have been passed by a circular resolution. In accordance with the second explanation to paragraph 1.3.8 and the explanation to paragraph 6.1.1 of the Secretarial Standards 1, items of business in relation to borrowing money other than by issue of debentures and providing security in respect of loans should be placed in a board meeting of a company and shall not be passed by a circular resolution. In contravention of the above, our Company had passed certain circular resolutions to avail credit and loan facilities. By way of order signed on May 31,2023, the RoC has disposed off the Compounding Applications and the offences thereunder have been compounded, after payment of fees of ' 0.97 million by the Company and the KMP’s.

There is no other instance of penalty or stricture imposed on the Company by RBI or any other regulatory on matter during the current or previous year.

53.8 Related Party Transaction

Refer Note 43 for details in relation to Related party transactions.

53.9 Ratings assigned by credit rating agencies and migration of ratings during the year ended:

53.12 Net profit or loss for the period, prior period items and changes in accounting policies

There are no prior period items that have impact on the current year’s or previous year’s profit and loss.

53.13 Revenue Recognition

There is no transaction in which the Revenue recognition has been postponed or pending the resolution of significant uncertainty

53.14 Indian Accounting Standard 110 -Consolidated Financial Statements (CFS)

On December 6, 2022, the Company has incorporated a wholly owned subsidiary in the name of - SBFC Home Finance Private Limited having Corporate Identification Number U65992MH2022PTC394642. The consolidated financial statements are separately presented.

The Whistleblower Committee received an information dated 29^th September 2023 against the concerned staff of Surat branch on certain unapproved cash transactions. The committee conducted a thorough investigation in line with the informer’s statement and has observed that the Information was correct. The branch regularly engaged in the practice of giving cash out without recording in the system. On investigation it was observed, hat a certain individual would take cash out in the morning and return with the same amount of cash in the evening.

56. Disclosure on Liquidity Coverage Ratio

As per RBI guidelines no DOR.NBFC (PD) CC. No.102/03.10.001/2019-20 Dated November 04, 2019, NBFCs assets with more than ' 5000 crores, required to maintain Liquidity Coverage Ratio (LCR) as mentioned therein.

As on 31^st October 2022, our Company has crossed ' 5000 crores assets mark and adopted to start complying with the monitoring and tracking of Liquidity Coverage Ratio (LCR) as part of Liquidity Risk Management framework from 25^th November 2022 onwards as per RBI guidelines. The objective of this policy is to create an institutional mechanism to compute, review and monitor periodically all the elements of the liquidity, develop suitable Liquidity Risk Management Framework, identify potential risks, take suitable decisions and mitigate such risks.

As per RBI guidelines to ensure strong liquidity, NBFCs shall maintain an adequate level of unencumbered High Quality Liquid Assets (HQLA) that can be converted into cash to meet its liquidity needs for a 30-day calendar time horizon under a significantly severe liquidity stress scenario.

The Company follows the criteria laid down by RBI for calculation of Liquidity coverage Ratio (LCR) which is represented by the ratio “Stock of HQLA” divided by “Total Net Cash Outflows over the next 30 calendar days”. Total expected cash outflows (stressed outflows) are calculated by multiplying the outstanding balances of various categories or types of liabilities and off-balance sheet commitments by 115% (15% being the rate at which they are expected to run off further or be drawn down). Total expected cash inflows (stressed inflows) are calculated by multiplying the outstanding balances of various categories of contractual receivables by 75% (25% being the rate at which they are expected to under-flow). However, total cash inflows will be subjected to an aggregate cap of 75% of total expected cash outflows. In other words, total net cash outflows over the next 30 days = Stressed Outflows - Min (stressed inflows; 75% of stressed outflows).

Company for purpose of computing cash outflows, have considered:

1. Secured wholesale funding i.e., all the contractual debt repayments,

2. Liquidity needs (e.g., collateral calls) related to financing transactions, derivatives and other contracts where ‘downgrade triggers’ up to and including a 3-notch downgrade,

3. Currently undrawn committed credit and liquidity facilities,

4. Any other contractual outflows not captured elsewhere in the template i.e., operational expenditure Cash Inflows comprises of:

1. All other assets i.e., expected receipt from all performing loans,

2. Lines of credit - Credit or liquidity facilities or other contingent funding facilities that the NBFC holds at other institutions for its own purpose (Facilities which are sanctioned but not yet disbursed)

3. Other contractual cash inflows (Includes fixed deposits and mutual funds)

HQLA is considered as per RBI guidelines.

The Company exceeds the regulatory requirement of LCR which mandated maintaining 60% of expected net cash outflows for next 30 days in a stressed scenario in high quality liquid assets (HQLA) by December 2022; which has to be increased to 100% by December 2024 in a phased manner. During quarter ended June 23, September 23, December 23 and March 24 the Company maintained a LCR of 177%,187%, 220% and 237%, well in excess of the RBI’s stipulated norm of 85%.

vi) Institutional set-up for liquidity risk management

1) The Liquidity Risk Management framework of the Company is governed by its Liquidity Risk Management policy and procedures approved by the Board.

2) The Board of Directors of the Company have the overall responsibility of management of liquidity risk. Board decides the strategy, policies and procedures of the NBFC to manage liquidity risk in accordance with the liquidity risk tolerance/limits decided by it.

3) Risk Management Committee (RMC) reports to the Board and evaluates overall risks faced by the Company including liquidity risk.

4) Asset Liability Management Committee (ALCO) of the Company implements the liquidity risk management strategy and ensures adherence to the risk tolerance/limits set by the Board.

5) In order to ensure a diversified borrowing mix, concentration of borrowing through various sources are monitored.

58. Disclosures as required under Section I of Master Direction - Reserve Bank of India (Non-Banking Financial

Company - Scale Based Regulation) Directions, 2023 (Updated as on March 21,2024)

58.4.5 Details of non compliance with requirements of the Companies Act, 2013

During the year, the Company has generally complied with the provisions of the Act, Old Act, Rules, Regulations, Guidelines, Standards under the Companies Act, 2013 and the rules made thereunder.

58.4.6 During the current year, the Company had, suo moto, filed a compounding application dated January 25, 2021 with the RoC under the Companies Act. The Compounding Application pertained to compounding the offence committed under Section 179(3)(d) and Section 179(3)(f) of the Companies Act read with Secretarial Standards 1 on “Meetings of the Board of Directors” with respect to items of business which should not have been passed by a circular resolution. In accordance with the second explanation to paragraph 1.3.8 and the explanation to paragraph 6.1.1 of the Secretarial Standards 1, items of business in relation to borrowing money other than by issue of debentures and providing security in respect of loans should be placed in a board meeting of a company and shall not be passed by a circular resolution. In contravention of the above, our Company had passed certain circular resolutions to avail credit and loan facilities. By way of order signed on May 31,2023, the RoC has disposed off the Compounding Applications and the offences thereunder have been compounded, after payment of fees of ' 0.97 million by the Company and the KMP’s.

There is no other instance of penalty or stricture imposed on the Company by RBI or any other regulatory on matter during the current or previous year.

58.4.7 There are no instances of breach of covenant of loan availed or debt securities issued except, in one instance there was delay in deduction and payment of TDS on interest on debt securities.

58.4.8 Divergence in Asset Classification and Provisioning

Below two conditions are not satisfied hence the details of diversions are not required to be disclosed:

a) No additional provisions have been assessed by RBI exceeding 5 percent of the reported profits before tax and impairment loss on financial instruments for the year ended 31 March 2024 and 31 March 2023.

b) RBI has not identified additional GNPAs exceeding 5 percent of reported GNPAs for the year ended 31 March 2024 and 31 March 2023.

60 Balances of certain trade receivables, advances given and trade payables are subject to confirmation / reconciliation, if any. The management does not expect any material difference affecting the financial statements on such reconciliation / adjustments.

61 Previous Year Figures

Previous year’s figures have been regrouped and reclassified wherever necessary to conform to current year classification/ presentation.