Your Directors take pleasure in presenting the Nineteenth Annual Report on the business and financial operations of your Company together with the audited accounts for the Financial Year ended March 31, 2026.

SUMMARY OF FINANCIAL PERFORMANCE

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

There are no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this Report.

MATERIAL DEVELOPMENT

During the year under review, the Company has achieved significant milestone with listing of its equity shares on the National Stock Exchange of India Limited and BSE Limited. Your Company has successfully concluded its Initial Public Offer of '12,500 Crore (Rupees Twelve Thousand Five Hundred Crore Only) comprising of a fresh issue aggregating up to '2,500 Crore (Rupees Two Thousand Five Hundred Crore Only) and an offer for sale aggregating up to '10,000 Crore (Rupees Ten Thousand Crore Only). The Companies equity shares were listed on stock exchanges on July 02, 2025. Consequently, HDFC Bank's shareholding in the Company reduced to 74.19%.

Details of Stock Exchanges where securities of the Company are listed

The International Securities Identification Number ('ISIN') for Depositories (NSDL and CDSL) in respect of equity shares is INE756I01012. The Debt securities are listed on Wholesale Debt Market (WDM) segment of the BSE Limited and Commercial Papers are listed on National Stock Exchange of India Limited.

CAPITAL STRUCTURE

As at March 31, 2026, the issued, subscribed and paid-up share capital of your Company is '8,30,32,72,160/- (Rupees Eight Hundred Thirty Crore Thirty Two Lakhs Seventy Two Thousand One Hundred Sixty Only) comprising of 83,03,27,216 (Eighty Three Crore Three Lakhs Twenty Seven Thousand Two Hundred and Sixteen Only) equity shares of '10 each.

CAPITAL ADEQUACY

Capital adequacy as at March 31, 2026 under Ind-AS stood at 21.40 % which is well above the minimum regulatory norms for non-deposit accepting NBFCs.

RATINGS

The CARE Ratings Limited (CARE) and CRISIL Ratings Limited (CRISIL) and ICRA Limited have reaffirmed highest ratings for the various facilities availed by the Company, details of which are given below:

All of the above ratings indicate a high degree of safety with regard to timely payment of interest and principal amount. BORROWINGS

Your Company has diversified funding sources from Public Sector, Private Sector, Foreign Banks, Mutual Funds, Insurance Companies, Pension Funds, Financial Institutions etc. Funds were raised in line with Company's Resource Planning Policy through Term Loans, Non-Convertible Debentures ("NCDs") and Commercial Papers Instruments. The details of funds raised during the year are as below:

No interest payment or principal repayment of the Term Loans was due and unpaid as on March 31, 2026. The assets of the Company which are available by way of security are sufficient to discharge the claims of the banks and financial institutions as and when they become due.

Secured Redeemable Non-Convertible Debentures, Unsecured Redeemable Subordinated Bonds, Unsecured Perpetual Debt Instruments are issued by your Company on private placement basis and the rating for various facilities indicates the highest degree of safety with regard to timely servicing of financial obligations.

Perpetual Debt Securities are 7.74% of Tier I capital of the Company. An amount of '1500 Crore are outstanding as on March 31,2026.

NCDs were issued with maturity period ranging from 13 to 60 months. The interest payable on all the debt securities is either annually or on maturity. No interest was due and unpaid as on March 31, 2026. The Company had not received any grievance from the debt security holders during the year under review. The assets of the Company which are available by way of security are sufficient to discharge the claims of the debt security holders as and when they become due.

The above mentioned Debt securities are listed on Wholesale Debt Market (WDM) segment of the BSE Limited and Commercial Papers were listed on National Stock Exchange of India Limited.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company believes that CSR is a way of creating shared value and contributing to social and environmental good. Our endeavour is to mainstream economically, physically and socially challenged groups and to draw them into the cycle of growth, development and empowerment. To achieve this, your Company collaborates with development-focused organisations, involves local communities in the development process and works with systems & frontline staff to achieve desirable social outcomes in an effective and sustainable manner.

The Company's CSR Projects are compliant with the CSR mandate as specified under Section 135 read with Schedule VII of the Act along with the Companies (Corporate Social Responsibility Policy) Rules, 2014 ("CSR Rules"), as amended from time to time and in line with notifications issued by the Ministry of Corporate Affairs ("MCA"), from time to time.

The Company's CSR interventions are designed to strengthen the healthcare services and infrastructure, impart skill training and basic literacy for better livelihoods and to promote environmentally sustainable initiatives. All CSR initiatives are implemented in accordance with the Schedule VII of the Companies Act, 2013 ("Act").

The brief outline of CSR Policy, including overview of the program proposed to be undertaken, the composition of the CSR Committee, average net profits of the Company for the past three financial years, prescribed CSR expenditure and details of amount spent on CSR activities during the financial year have been disclosed in "Annexure A" to this report, as mandated under the said Rules. Further, the Corporate Social Responsibility Policy of the Company as approved by the Board has been hosted on the website of the Company at https://www.hdbfs.com/sites/default/files/policies/CSR Policy final 2 23042026.pdf

As per Section 135 of the Act, the Company was required to spend an amount of '58.97 Crore equivalent to 2% of the 'average net profits' of the last three (3) financial years. After adjusting the excess spend of '0.44 Crore for FY 2024-25, the total CSR obligation of the Company was '58.53 Crore. During the FY 2025-26, the Company has spent an amount of '58.92 Crore on CSR activities as against total CSR obligation of '58.53 Crore.

BOARD OF DIRECTORS

As on March 31,2026, the Board comprised of eight members consisting of one Executive Director, one Non-Executive Director and six Non-Executive Independent Directors including two Women Directors. Changes in Directors during the financial year 2025-26 are given below:

The Board places on record its sincere appreciation for the valuable guidance, leadership and contributions of Mr. Arijit Basu during his tenure as Part-Time Chairman and Independent Director of the Company. The Board acknowledges his strategic insights and stewardship, which significantly support the Company's governance framework and growth journey, express its gratitude for his association

with HDBFS and extends its best wishes in his future endeavours.

Mr. Natarajan Srinivasan has been appointed as the Non-Executive Chairman and an Additional Independent Director on the Board of HDB Financial Services Limited for a period of three (3) years, commencing from May 14, 2026 to May 13, 2029, subject to the shareholders' approval. The shareholders' approval would be sought at the ensuing Annual General Meeting, scheduled on Thursday, June 25, 2026.

KEY MANAGERIAL PERSONNEL

During the financial year 2025-26, no changes were observed in the Key Managerial Personnel of the Company. As on the date of this report, following are the Key Managerial Personnel (the "KMP") as per Section 203(1) read with Section 2(51) of the Act and Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

DECLARATION BY DIRECTORS

The Company has received necessary declarations / disclosures from each Independent Directors of the Company under Section 149(7) of the Act and Regulation 25(8) of the SEBI Listing Regulations that they fulfil the criteria of Independence as prescribed under Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations and have also confirmed that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgement and without any external influence.

The Independent Directors have also confirmed that they have registered themselves with the Independent Director's Database maintained by the Indian Institute of Corporate Affairs. All the Independent Directors have qualified the online proficiency self-assessment test or are exempt from passing the test as required in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014.

None of the Director of the Company are disqualified from being appointed as a Director, continue to act as a Director, as specified under section 164(1) and 164(2) of the Act read with Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014 (including any statutory modification(s) and or re-enactment(s) thereof for the time being in force) or are debarred or disqualified by the Securities and Exchange Board of India ("SEBI"), Ministry of Corporate Affairs ("MCA") or any other such statutory authority.

All the Directors of the Company have confirmed that they satisfy the 'fit and proper' criteria as prescribed under Reserve Bank of India (Non-Banking Financial Companies -Governance) Directions, 2025.

All members of the Board and Senior Management have affirmed compliance with the Code of Conduct for Board and Senior Management for the financial year 2025-26.

Each of the Directors of the Company have confirmed that he / she is not debarred from holding the office of director by virtue of any order by SEBI or any other authority.

Further, based on these disclosures and confirmations, the Board is of the opinion that the Directors of the Company are distinguished persons with integrity and have necessary expertise and experience to continue to discharge their responsibilities as the Director of the Company.

DIRECTOR E-KYC

Pursuant to the requirement prescribed under the Companies (Appointment and Qualification of Directors) Rules, 2014, the Directors with active Director Identification Number need to file an eForm DIR-3 KYC annually on the MCA portal verifying their mobile number and personal e-mail address. All the Directors of the Company have complied with the KYC registration on the MCA portal for the FY 2025-26.

DIRECTORS & OFFICERS LIABILITY INSURANCE

The Directors and Officers (D&O) insurance is liability insurance which covers or protects Directors, Officers and Employees of the Company from claims which may arise from decisions and actions taken while serving their duty. During the FY 2025-26, the Company has taken Directors & Officers Liability Insurance for all its Board of Directors and members of Senior Management for such quantum and risks as determined by the Board.

SUCCESSION PLANNING

The Nomination and Remuneration Committee and the Board maintain a proactive, continuous oversight of succession planning and leadership transitions. At the Board level, this involves a systematic and ongoing evaluation of composition and expertise to ensure that desired skill sets are maintained and potential vacancies are addressed well in advance. Similarly, for Senior Management, including both business and assurance functions, the review process ensures leadership depth and continuity up to two levels below the Managing Director. By identifying and preparing successors before positions actually become vacant, the organisation ensures a smooth, seamless transition that preserves institutional stability.

BOARD MEETINGS

During the year, twelve Board Meetings were convened and held, the details of which are given in the report on Corporate Governance, which is forming a part of this Board Report. The intervening gap between the said Board Meetings was within the period prescribed under the Companies Act, 2013 and Listing Regulations. The details of the Board and Committee Meetings and the attendance of Directors thereat, forms part of the Corporate Governance Report, which is annexed to this Directors' Report.

BOARD COMMITTEES

Your Company has nine Board Level Committees - Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Corporate Social Responsibility & ESG Committee, Risk Management Committee, Information Technology Strategy Committee, Customer Service Review Committee, Special Committee of the Board for Monitoring and Follow-up of cases of frauds and Review Committee for Identification of Wilful Defaulters.

The details of the role and composition of these Committees, including the number of meetings held during the financial year and attendance at these meetings are provided in the Corporate Governance Section of the Annual Report. Further, the functions, roles & responsibilities and terms of reference of these committees are included in the Corporate Governance Code available on the Company's website at https://www.hdbfs.com/sites/default/files/policies/ Corporate Governance Code 24042026.pdf

Board of Directors at its meeting held on January 14, 2026 approved dissolution of Strategic Transaction Committee

with immediate effect since purpose for which Committee was constituted had been fulfilled.

PERFORMANCE EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and SEBI Listing Regulations, the Annual Performance Evaluation of the Board, its Committees, Chairman and individual Director has been carried out for the year under review. The evaluation framework covers key aspects such as composition, effectiveness, governance practices and contribution of Directors and is periodically reviewed to align with regulatory expectations and evolving best practices.

The evaluations of the Board as whole, the Individual Performance of the Independent Directors, the Committees and the Chairman of the Board were undertaken through circulation of questionnaires each for the Individual Performance of Directors, the Board, the Committees and the Chairman of the Board. The performance of the Board as whole was assessed on selected parameters related to Board Composition & Quality, Board Meetings and Procedures, Board Development, Board Strategy and Risk Management, Board and Management Relations, Stakeholder value and responsibility. The evaluation criterions for the Individual Performance of Directors were based on their Knowledge, Diligence & Participation, Leadership, Personal Attributes etc. The evaluation criteria for the Committees related to its Function and Duties, Management Relations, Committee Meetings and Procedures. The evaluation criteria for the Chairman of the Board besides the general criteria adopted for assessment of all Directors, Participation at Board / Committee Meetings, Managing Relationship, Knowledge and Skill, Personal Attributes, Independence and Leadership. The details of evaluation process of the Board, its Committees, Chairman and individual Directors have been disclosed in the Corporate Governance Report forming part of this Annual Report.

COMPLIANCE WITH SECRETARIAL STANDARDS

The Secretarial Standards are guidelines, which lays down the standard procedure and structure for undertaking specific tasks and actions within an organisation, which is in addition to the provisions of the original law i.e., Companies Act, 2013 and not in substitution of the original law. In terms of Section 118(10) of the Companies Act, 2013, every Company is required to observe the Secretarial Standards issued by the Institute of Company Secretaries of India with respect to Board Meetings and General Meetings.

The Company has complied with the applicable provisions of Secretarial Standard-1 on Meetings of the Board of Directors (SS-1) and Secretarial Standard -2 on General Meetings (SS-2) issued by the Institute of Company Secretaries of India.

DIRECTORS' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Act:

i. that in preparation of the annual financial statements for the year ended March 31, 2026, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii. that appropriate accounting policies have been selected and applied consistently and judgements and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended March 31, 2026 and of the profits of the Company for the said year;

iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. that the annual accounts have been prepared on a going concern basis;

v. that the Company had laid down internal financial controls to be followed and that such internal financial controls are adequate and were operating effectively; and

vi. that systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

As per the provisions of Section 177(9) of the Act and Regulation 22 of the SEBI Listing Regulations, the Company is required to establish an effective Vigil Mechanism for Directors and employees to report genuine concerns. The Company as part of the 'vigil mechanism' has in place a Board approved 'Whistle Blower Policy' to deal with instances of fraud and mismanagement, if any. The Whistle Blower Policy has been placed on the website of the Company

and can be accessed at https://www.hdbfs.com/sites/ default/files/policies/Whistle Blower Policy July25 Final Revised 15.07.25 Website 11082025.pdf

This vigil mechanism of the Company is overseen by the Audit Committee and provides adequate safeguard against victimisation of employees and directors and also provides direct access to the Chairman of the Audit Committee in exceptional circumstances. The whistle blower complaints were reviewed by the Audit Committee on a quarterly basis.

The Policy covers malpractices and events which have taken place / suspected to have taken place involving:

i) Abuse of authority

ii) Breach of Code of Conduct or employment contract

iii) Manipulation of company data / records

iv) Financial or compliance irregularities, including fraud, or suspected fraud

v) Criminal offence having repercussions on the company or its reputation

vi) Theft of confidential / proprietary information

vii) Deliberate violation of law / regulation

viii) Misappropriation or misuse of Company funds / assets

ix) Breach of employee Code of Conduct or Rules

x) Leakage / suspected leakage of unpublished price sensitive information

xi) Any other illegal, unethical, imprudent deed

The policy does not cover the following types of complaints which if made would not qualify as being reportable under this Policy:

(i) Anonymous complaints unless otherwise determined by the Whistle Blower Committee

(ii) An interpersonal conflict between two employees including with supervisor

(iii) Matter relating to a personal grievance including a decision relating to employment or engagement of employees, such as a transfer, promotion, increments, working hours or disciplinary action etc.

(iv) Allegations relating to sexual harassment - such complaints will be dealt in accordance with Policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at the Workplace (POSH Policy)

(v) Matters which are pending before a court of law, tribunal, other quasi-judicial bodies or any governmental authority

All Protected Disclosures made under Policy are made to the Whistle Blower Committee through e-mail or by way of a letter.

Details of whistle blower complaints received and subsequent action taken and the functioning of the whistle blower mechanism are reviewed periodically by the Audit Committee. During the FY 2025-26, a total of 13 such complaints were received, 12 complaints were closed and 1 complaint was under investigation as on March 31, 2026. As on date, the pending complaint was closed. The broad categories of whistle blower complaints were in the areas of misappropriation of Bank / customer funds, forgery related cases, improper business practices and corruption.

None of the personnel of your Company were denied access to the Audit Committee.

COMPLIANCE MANAGEMENT

The Company has in place a comprehensive and robust regulatory compliance management tool, which is devised to ensure compliance with all applicable laws and regulations which impact the Company's business. Automated alerts are sent to compliance owners to ensure adherence within stipulated timelines. This measure helps keep on track and avoid any penalties or other enforcement actions that could arise from non-compliance. The compliance owners certify the compliance status which is reviewed by compliance approvers and a consolidated dashboard is presented to the respective functional heads and Compliance Officer. A certificate of compliance with all applicable laws and regulations along with the corrective and preventive action, if any, is placed before the Audit Committee and Board of Directors on a quarterly basis.

DISCLOSURES PURSUANT TO THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

In line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 your Company has adopted a Policy on Prevention of Sexual Harassment (POSH) at Workplace and Rules framed thereunder. The said policy is uploaded on the website of the Company which can be accessed at https://www.hdbfs.com/ sites/default/files/policies/POSH Policy 21012026.pdf Your

Company has complied with the provisions relating to the constitution of Internal Complaints Committee under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The policy provides guidelines for prompt redressal of complaints related to sexual harassment and in compliance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (the "Act"). The policy aims at defining sexual harassment and providing a clearly stated codified redressal mechanism for any sexual harassment occurring at workplace. The main objective of the policy is to enable all those working with the Company to raise their concerns and make complaints without any fear and be heard in a fair and unbiased manner.

The details of complaints for FY 2025-26 are provided below:

All Fourteen open complaints pertaining to the previous year ending March 31,2025, were closed during the reporting year.

Due to ongoing enquiries, six complaints remained pending for more than 90 days as on March 31, 2026.

COMPLIANCE TO MATERNITY BENEFIT ACT, 1961

The Company has complied with the applicable provisions of Maternity Benefit Act, 1961 for female employees of the Company with respect to leaves and maternity benefits thereunder.

PROHIBITION OF INSIDER TRADING

Your Company has adopted the Code of Conduct for regulating, monitoring and reporting of Trading by insiders ('Code") for prohibition of insider trading in the securities of the Company, code of practices and procedures for fair disclosure of unpublished price sensitive information (UPSI) and policy & procedure for inquiry in case of leak or suspected leak of UPSI. Pursuant to the listing of Company's equity shares during the year and considering the existing listed debt securities, the Company has strengthened and aligned its code on prevention of insider trading in accordance with the provisions of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015.

The objective of the Code is to prevent persons who have access to UPSI relating to the Company and / or its Securities to misuse such information and / or profit from such information. The Code lays down guidance for Designated Persons and their Immediate Relatives, to understand their obligations under the PIT Regulations, including the procedures to be followed at the time of Trading in the Securities of and dealing with UPSI related to the Company or its Securities.

Company conducts periodic training sessions as well as share awareness mailers for its personnel, Designated Persons, Board and senior management, so as to sensitise them of the compliances under the PIT Regulations on an on-going basis.

Your Company has also formulated and adopted the policy for Determination of Materiality of Events or Information of the Company, in terms of Regulation 30 of the SEBI Listing Regulations. The policy for Determination of Materiality of events / Information is available on the Company's website viz, https://www.hdbfs.com/sites/default/files/policies/Policy for Determination of Materiality of Events 03072025.pdf

ANNUAL RETURN

Pursuant to the provisions of Section 134(3)(a) and Section 92(3) of the Act read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the Annual Return of the Company is available on the Company's website viz; https://www.hdbfs.com/investor/dur62-annual-returns#DISCLOSURES

PARTICULARS OF EMPLOYEES

As on March 31, 2026, the full-time employee strength of the Company was 88,162.

Disclosures in terms of Section 197(12) read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in 'Annexure B'. Further, the statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in an Annexure and forms part of this report. In terms of Section 136(1) of the Act, the annual report and the financial statements are being sent to the Members excluding the aforesaid Annexure. The Annexure is available for inspection and any Member interested in obtaining a copy of the Annexure may write to the Company Secretary of the Company.

STATUTORY AUDITORS AND THEIR REPORT

Pursuant to the provisions of Sections 139 and 141 of the Act and Rules made thereunder, the Shareholders in the 17^th Annual General Meeting had appointed M/s. Kalyaniwalla & Mistry LLP and M/s. G D Apte & Co. as the Joint Statutory Auditors of the Company, to hold office for a continuous period of three years until the conclusion of the 20^th Annual General Meeting of the Company.

M/s. Kalyaniwalla & Mistry LLP and M/s. G D Apte & Co. have given their confirmation to the effect that they are eligible to be act as a Statutory Auditors and that they have not been disqualified in any manner from continuing as Statutory Auditors of the Company.

Further, the Auditors' Report "with an unmodified opinion", given by the Statutory Auditors on the Financial Statements of the Company for FY 2025-26, is disclosed in the Financial Statements forming part of the Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Statutory Auditor in their Report for the year under review.

During the year, Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 under subsection (12) of section 143 of the Act, for one instance of fraud identified by the Management, has been filed with Central Government within stipulated time.

SECRETARIAL AUDITORS AND THEIR REPORT

Pursuant to the provisions of Section 204 of the Act and Rules thereunder and Regulation 24A of the SEBI Listing Regulations, M/s. N. L. Bhatia & Associates, Company Secretaries, were appointed as the Secretarial Auditor of the Company, for a term of 5 (Five) consecutive years commencing from the financial year 2025-26.

The Report of the Secretarial Auditor in Form MR-3 is annexed as 'Annexure C'. There has been no qualification, reservation, adverse remark or disclaimer given by the Secretarial Auditor in its Report for the year under review.

MAINTENANCE OF COST RECORDS

Maintenance of cost records and requirement of cost audit as prescribed under the provisions of section 148(1) of the Companies Act, 2013 are not applicable for the business activities carried out by the Company as the Central Government has not prescribed the maintenance of cost records under Section 148 of the Act for the services rendered by the Company.

NOMINATION AND REMUNERATION POLICY

Pursuant to the provisions of Section 178(3) of the Act and Regulation 19 of the SEBI Listing Regulations, the Board has formulated Nomination and Remuneration Policy of the Company, which inter alia, includes the criteria for determining qualifications, positive attributes and independence of Directors, identification of persons who are qualified to become Directors, Key Managerial Personnel and Senior Management. The Nomination and Remuneration Policy also covers the Remuneration of the Directors, Key Managerial Personnel, Senior Management and other employees of the Company. The Nomination and Remuneration Policy is available on the website of the Company at https://www. hdbfs.com/sites/default/files/policies/Nomination and Remuneration Policy 20052026.pdf

EMPLOYEES STOCK OPTION SCHEME (ESOS)

There are three Employee Stock Options Schemes viz; ESOS 2014, ESOS 2017 and ESOS 2022. During the FY 2025-26, the members of the Company approved the alignment of these three ESOP Schemes of the Company with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 through postal ballot.

The objective of the ESOS Schemes is to enable the Company to attract and retain appropriate human talent and encourage value creation and value sharing with the employees by aligning the interests of the employees with the long-term interests of the Company.

The information pertaining to ESOS in terms of Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014 is given in 'Annexure D'.

RELATED PARTY TRANSACTIONS

All the related party transactions that were entered into during the financial year were on arm's length basis and in ordinary course of business. There were no contracts or arrangements entered into with related parties referred to in Section 188(1) of the Act during FY 2025-26 and hence Form AOC-2 is not required to be enclosed with Directors Report in accordance with Rule 8(2) of the Companies (Accounts) Rules, 2014. During the FY 2025-26, there were no materially significant related party transactions that may have potential conflict with the interest of the Company at large. The Related Party Transactions Policy has been hosted on the website of the Company at https://www.hdbfs.com/sites/default/files/ policies/RPT Policy Jan 2026 for website 28012026.pdf

CORPORATE GOVERNANCE REPORT

Your Company is committed to maintain the highest standards of Corporate Governance and adheres to the Corporate Governance requirements set out by SEBI. The report on Corporate Governance of the Company forms part of the Annual Report.

The Quarterly Report on Corporate Governance has been submitted by the Company to the Stock Exchanges, in terms of Regulation 27(2) of the SEBI Listing Regulations. The said reports have been uploaded on the website of the Company at https://www.hdbfs.com/investor/investor-compliances

The Report on Corporate Governance for the FY 2025-26 along with the Certificate issued by the Secretarial Auditors of the Company regarding compliance of conditions of corporate governance, is annexed as 'Annexure E' to this Report confirming compliance with the mandatory requirements relating to Corporate Governance as stipulated under Chapter IV of the SEBI Listing Regulations,

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND THE COMPANY'S OPERATIONS IN FUTURE

There are no significant and material orders passed by the regulators or courts or tribunals that would impact the going concern status of the Company and its future operations.

CHANGES IN NATURE OF BUSINESS

There has been no change in the existing nature of business and operations of the Company during the year under review.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Pursuant to section 186(11) of the Act, the provisions related to loans made, guarantees given and securities provided do not apply to the Company.

As regards investments made by the Company, the details of the same are provided in note no. 9 to the financial statements of the Company for the year ended March 31, 2026.

SUBSIDIARIES, JOINT VENTURES, ASSOCIATE COMPANIES

During the year under review, your Company had no subsidiary, joint venture or associate company. Also, the Company did not become a part of any Joint Venture during the year.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The provisions of Section 134(3)(m) of the Act, the rules made there under relating to conservation of energy, technology absorption do not apply to your Company as it is not a manufacturing Company. However, your Company has been increasingly using information technology in its operations and promotes conservation of resources. The details of foreign exchange earnings and foreign exchange expenditures are as below:

FIXED DEPOSITS

Your Company is a non-deposit taking Company. The Company has not accepted any fixed deposit during the FY 2025-26. The Company has passed a Board resolution for non-acceptance of deposits from public.

TRANSFER OF UNCLAIMED DIVIDEND AND EQUITY SHARES TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Pursuant to the applicable provisions of the Act read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules"), all unpaid or unclaimed dividends are required to be transferred by the Company to IEPF, after the completion of seven years. Further, according to the IEPF Rules, the shares

on which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to IEPF. During the year under review, dividend amount of '28,744.8 remaining unclaimed for consecutive seven (7) years from the date of its transfer to the Unpaid Dividend Account of the Company has been transferred to IEPF Authority. During the year under review, there were no equity shares due to be transferred to the IEPF Authority pursuant to IEPF Rules.

Any claimant of dividend transferred above shall be entitled to claim the dividend from Investor Education and Protection Fund (IEPF) in accordance with such rules, procedure and submission of documents as prescribed. No claim shall lie in respect thereof with the Company. As advised by MCA through their circular dated July 19, 2018, the Company has provided webpage link of IEPF Authority for refund on its website at https://www.hdbfs.com/sites/default/files/ investor-service/HDBFSL Shareholder FAQs 25082025.pdf to facilitate refund procedure for its investors/claimants. The details of the nodal officer are available on the website https://www.hdbfs.com/investors#investor services

RBI GUIDELINES

Reserve Bank of India ("RBI") granted the Certificate of Registration to the Company in December 2007 vide Registration No. N.01.00477, to commence the business of a Non-Banking Financial Institution without accepting deposits. Your Company is a Non-Banking Financial Company - Upper Layer (NBFC - UL). Your Company has complied with and continues to comply with applicable RBI Regulations and other regulations issued by sectoral regulators like SEBI / IRDAI as may be applicable to the entity.