18. Notes forming part of the Financial Statements as at and for the year ended March 31, 2025

Amounts in notes forming part of the financial statements for the year ended March 31, 2025 are denominated in Rcrore. 18.01 Amalgamation of IDFC Limited

The Board of Directors of the Bank at its meeting held on July 03, 2023, had inter - alia, approved a composite scheme of amalgamation which envisages (i) amalgamation of (a) erstwhile IDFC Financial Holding Company Limited (“eIDFC FHCL”) into and with erstwhile IDFC Limited (“eIDFC Limited”); and (b) eIDFC Limited into and with IDFC FIRST Bank Limited and their respective shareholders; and (ii) reduction of securities premium account of the Bank (“Scheme”) pursuant to the provisions of Sections 230 to 232 of the Companies Act read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (“CAA Rules”) and the other applicable provisions of the Companies Act and other applicable laws including the rules and regulations thereunder.

The Hon’ble NCLT, in accordance with Sections 230 to 232 of the Companies Act and rules thereunder, had vide its order dated September 25, 2024, sanctioned the Scheme. Upon receipt of all requisite approvals, the Bank had filed the certified order of NCLT sanctioning the Scheme in form INC - 28 with Registrar of Companies on October 01, 2024, and accordingly, the Scheme has become effective on October 01, 2024 (Effective Date). As per the Scheme, the Appointed Date for the amalgamation of eIDFC Limited with and into the Bank is October 01, 2024, being opening of business hours on the Effective Date.

In terms of the Scheme, the Bank has issued and allotted 2,479,975,876 equity shares to the shareholders of eIDFC Limited as on October 10, 2024, being the record date fixed by the Board of Directors as per the Scheme, in accordance with the Share Exchange Ratio i.e. 155 fully paid - up equity shares of face value of R10/- each of IDFC FIRST Bank Limited for every 100 fully paid - up equity shares of face value of R10/- each of eIDFC Limited. Pursuant to the Scheme, 2,646,438,348 equity shares held by eIDFC Limited in the Bank stood cancelled, and hence there was a corresponding reduction of 166,462,472 equity shares in the paid - up share capital of the Bank. Consequent to the amalgamation becoming effective, the authorized share capital of the Bank automatically stood increased to R22,905.10 crore (21,867,100,000 equity shares of R10/- each and 103,800,000 preference shares of R100/- each).

In compliance with Section 12(1)(i) of the Banking Regulation Act, 1949, the authorized share capital of the Bank has been reduced from 21,867,100,000 Equity Shares of R10/- each and 103,800,000 Preference Shares of R100/- each to 12,962,000,000 Equity Shares of R10/- each and 103,800,000 Preference Shares of R100/- each, with consequent amendment to the Capital Clause (Clause V) of the Memorandum of Association of the Bank (“MOA”). The same has been approved by the shareholders of the Bank through Postal Ballot on March 19, 2025.

The amalgamation has been accounted for under the ‘pooling of interest’ method as prescribed in Accounting Standard - 14 “Accounting for Amalgamations”(“AS - 14”). All assets and liabilities of eIDFC Limited have been recognised by the Bank at their carrying amounts as on the effective date except for adjustments to bring about uniformity of accounting policies as required under AS-14.

The share capital of R2,479.98 crore issued by the Bank as consideration pursuant to the Scheme has been adjusted against the corresponding share capital of amalgamating company (eIDFC Limited) of R 1,599.98 crore and the difference has been debited to Merger Adjustment Account. Further, excess of cost over face value of investment in shares of the Bank by amalgamating Company (eIDFC Limited) of R7,904.31 crore has been debited to Merger Adjustment Account. Further, to bring the uniformity in accounting policies, the Bank has debited an amount of R 12.07 crore to Merger Adjustment Account. Consequently, as a result of these adjustments the Bank has recognised a debit balance of R8,796.38 crore in the Merger Adjustment Account. As mentioned in the composite scheme of amalgamation, the securities premium available with the Bank after consolidation of securities premium of the amalgamating Company (eIDFC Limited) has been reduced against negative balance in Amalgamation Reserve of R231.80 crore and debit balance in Merger Adjustment Account of R8,796.38 crore.

* During the year ended March 31, 2025, the Bank raised additional capital aggregating to R3,200.00 crore (rounded off) through issuance of 396,874,600 equity shares of face value of R10/- each on a preferential basis, at the price of R80.63 per equity share (including securities premium of R70.63 per equity share).

During the year ended March 31, 2024, the Bank raised additional capital aggregating to R3,000.00 crore (rounded off) from qualified institutional buyers through issuance of 332,409,972 equity shares, fully paid-up, at the price of R90.25 per equity share (including securities premium of R80.25 per equity share).

# During the year ended March 31, 2025, the Bank has raised Basel III compliant Tier II bond amounting to RNil (Previous Year R 1,500.00 crore).

I n terms of composite scheme of amalgamation, the Bank has issued and allotted 2,479,975,876 equity shares to the shareholders of eIDFC Limited as on October 10, 2024, being the record date fixed by the Board of Directors as per the Scheme, in accordance with the Share Exchange Ratio i.e. 155 fully paid - up equity shares of face value of R10/- each of IDFC FIRST Bank Limited for every 100 fully paid - up equity shares of face value of R10/- each of eIDFC Limited. Pursuant to the Scheme, 2,646,438,348 equity shares held by eIDFC Limited in the Bank stands cancelled, and hence there is a corresponding reduction of 166,462,472 equity shares in the paid - up share capital of the Bank.

During the year ended March 31, 2025 and March 31, 2024, the Bank has issued 21,771,003 and 119,392,065 equity shares respectively, of face value of R10/- per equity share pursuant to the exercise of options under the Employee Stock Option Scheme.

The Board of Directors at its meeting held on April 26, 2025, proposed a dividend of R0.25 per share (Previous Year RNil), subject to approval of the shareholders at the ensuing Annual General Meeting. Effect of the proposed dividend has been reckoned in determining capital funds in the computation of capital adequacy ratio as at March 31, 2025.

In accordance with the RBI guidelines, banks are required to make Pillar 3 disclosures under the Basel III framework. The Bank has made these disclosures which are available on its website at the link: http://www.idfcfirstbank.com/ investors/regulatory-disclosures.html. These disclosures have not been subjected to audit by the Joint Statutory Auditors of the Bank.

(b) Draw down from reserves

As per the Master Direction - Classification, Valuation and Operation of Investment Portfolio of Commercial Banks (Directions), 2023 (“Master Direction on Investment”), dated September 12, 2023 which is applicable to Banks from April 01, 2024, the Bank has drawn from Investment Fluctuation Reserve an amount of R100.00 crore (Previous Year RNil), being excess of 2% of its AFS and FVTPL (Including HFT) portfolio as at March 31, 2025.

Reserves and Surplus

i. Statutory Reserve

As mandated by the Banking Regulation Act, 1949, all banking companies incorporated in India shall create a reserve fund, out of the balance of profit of each year as disclosed in the Profit and Loss Account and before any dividend is declared and transfer a sum equivalent to not less than twenty five percent of such profit. During the year, the Bank has transferred an amount of R385.00 crore (Previous Year R740.00 crore) to Statutory Reserve Account.

ii. Investment Reserve Account (IRA)

During the year ended March 31, 2025, the Bank implemented the Master Direction on Investment. Consequent to the transition provision, the Bank has transferred an amount of R381.00 crore and balance of R281.50 crore from IRA to Investment Fluctuation Reserve and General reserve, respectively.

iii. Investment Fluctuation Reserve (IFR)

As per the Master Direction on Investment, the banks are required to create an IFR until the amount of IFR is at least 2 percent of the AFS and FVTPL (including HFT) portfolio, on a continuing basis, by transferring to the IFR an amount not less than the lower of the net profit on sale of investments during the year or net profit for the year, less mandatory appropriations. Consequent to transition the Bank has transferred R381.00 crore from IRA to the IFR and subsequently drawn an amount of R 100.00 crore.

iv. Capital Reserve

As per RBI Guidelines, profit on sale of investments in the ‘Held to Maturity’ category is recognised in the Profit and Loss Account and profit is thereafter appropriated (net of applicable taxes and statutory reserve requirements) to Capital Reserve. Profit / loss on sale of investments in Available for Sale’ and ‘Held for Trading’ categories is recognised in the Profit and Loss Account. Profit on sale of premises net of taxes and transfer to Statutory Reserve is also appropriated to Capital Reserve as per the RBI guidelines. Accordingly, the Bank has appropriated R88.00 crore (Previous Year R21.00 crore) to Capital Reserve.

v. Special Reserve

As per the provisions under Section 36(1)(viii) of Income Tax Act, 1961, specified entities like banks are allowed deduction in respect of any special reserve created and maintained, i.e. an amount not exceeding twenty percent of the profits derived from eligible business computed under the head “Profits and gains of business or profession” is carried to such reserve account. This would be applicable till the aggregate of the amounts carried to such reserve account from time to time exceeds twice the amount of the paid - up share capital and general reserves of the entity. During the year, the Bank has transferred an amount of R30.00 crore (Previous Year R63.50 crore) to Special Reserve.

vi. Cash Flow Hedge Reserve

During the year ended March 31, 2025, the Bank has terminated hedge contracts and recognised the gain of R57.31 crore, to be amotised over the balance period of the hedging instrument. Out of this, R2.08 crore has been released to Profit and Loss Account and balance of R55.23 crore is held in Cash Flow Hedge Reserve as at March 31, 2025.

vii. General Reserve

During the year ended March 31, 2025, the Bank implemented the Master Direction on Investment. Consequent to the transition provision, the Bank has accounted net gain of R209.83 crore (post tax) and transferred from IRA an amount of R281.50 crore.

viii. Available for Sale Reserve

During the year ended March 31, 2025, the Bank implemented the Master Direction on Investment. Consequent to the transition provision, the Bank has recognized net gain of R322.64 crore (post tax) to Available for Sale Reserve (AFS). Subsequently, during the year, there has been a net reduction of R 149.92 crore (post tax) on account of MTM on the designated AFS securities.

ix. Foreign Currency Translation Reserve

As at March 31, 2025, the Bank has recognised R4.95 crore (Previous Year RNil) as Foreign Currency Translation Reserve on account of translation of foreign currency assets and liabilities of non - integral foreign operations.

Classification of assets and liabilities under the different maturity buckets is based on the same estimates and assumptions as used by the Bank for compiling the return submitted to the RBI, which has been relied upon by the auditors. Maturity profile of foreign currency assets and liabilities is excluding off Balance Sheet items.

(b) Liquidity Coverage Ratio Qualitative disclosure

Liquidity risk management of the Bank is undertaken by the Balance Sheet Management Group (BSMG) under the central oversight of the Asset Liability Management Committee (ALCO) in accordance with the Board approved policies. The Bank has adopted the Basel III framework on liquidity standards as prescribed by RBI for reporting of the Liquidity Coverage Ratio (LCR). The mandated regulatory threshold as per the transition plan is embedded into the Limit Management Framework of the Bank with appropriate cushion to ensure maintenance of adequate liquidity buffers. Risk department computes the LCR and reports the same to the Asset Liability Management Committee (ALCO), Risk Management Committee of the Board and Board for oversight and periodical review.

The Bank follows the criteria laid down by the RBI for calculation of High Quality Liquid Assets (HQLA), gross outflows and inflows within the next 30 day period. HQLA predominantly comprises cash, excess CRR and investments qualifying to be HQLA as per RBI guidelines. The Bank has maintained LCR above RBI and internal thresholds on an ongoing basis.

The Bank is funded through term deposits, CASA, refinance, issuance of bonds and foreign currency borrowings. All significant outflows and inflows determined in accordance with RBI guidelines are included in the prescribed LCR computation.

The risk department measures and monitors the liquidity profile of the Bank and monitor against Board approved limits using the gap analysis technique supplemented by monitoring of key liquidity ratios and periodical liquidity stress testing. The Bank assesses the impact on short term liquidity gaps dynamically under various scenarios covering business projections under normal as well as varying market conditions. Periodical reports are placed before the Bank’s ALCO for perusal and review.

The average weighted and unweighted amounts are calculated taking daily averages.

All the figures are extracted from the ALM quarterly return filed by the Bank with the RBI.

Note : Classification of inflows and outflows for determining the run off factors is based on the same estimates and assumptions as used by the Bank for compiling the return submitted to the RBI, which has been relied upon by the Joint Statutory Auditors.

(c) Net stable funding ratio

Banks are required to disclose Net Stable Funding Ratio (NSFR) under the Basel III framework in accordance with RBI guidelines. The Bank has made these disclosures which are available on its website at the link: http://wwwidfcfirstbank. com/investors/regulatory-disclosures.html. These disclosures have not been subjected to audit or limited review by the Joint Statutory Auditors of the Bank.

Amounts reported under columns (4), (5), (6) and (7) above are not mutually exclusive.

* Excludes investments in excess SLR governments securities of R 16,836.70 crore.

^A Excludes investments in special bonds, equity shares, units of equity oriented mutual funds / unit issued by category I and II alternative investment funds (AIF’s) / venture capital funds (VCF) and security receipts.

@ Including provision towards non - performing investments, specific provision against identified investments, mark to market depreciation / appreciation on investments.

(e) Repo Transactions

i) The following tables set forth for the period indicated, the details of securities sold and purchased under repo / reverse repo transactions excluding tri - party repo / reverse repo (in face value / market value terms) respectively including transactions under Liquidity Adjustment Facility (LAF) and Marginal Standing Facility (MSF) during the year ended March 31, 2025 and March 31, 2024 :

(f) Government Security Lending (GSL) Transactions

The following tables set forth for the period indicated, the details of securities lent / borrowed (placed / received as collateral) (in term of market value) under Government Security Lending (GSL) transactions during the year ended March 31, 2025 and March 31, 2024 :

(h) Transition on Investment Portfolio

During the year ended March 31, 2025, the Bank 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 transition provisions, the Bank’s net worth has increased by R532.48 crore (post tax) as on April 01, 2024. Accordingly, the amounts for the period prior to April 01, 2024 are not comparable.

(e) Divergence in Asset Classification and Provisioning for NPAs

In terms of the RBI’s Master Direction on Financial Statements - Presentation and Disclosures, banks are required to disclose the divergences in asset classification and provisioning consequent to RBI’s annual supervisory process in their notes to accounts to the financial statements, wherever either or both of the following conditions are satisfied:

(i) the additional provisioning for NPAs assessed by RBI exceeds 5 percent of the reported profit before provisions and contingencies for the reference period and

(ii) the additional Gross NPAs identified by RBI exceed 5 percent of the reported incremental Gross NPAs for the reference period.

Based on the above, no disclosure on divergence in asset classification and provisioning for NPAs is required with respect to the RBI’s annual supervisory process for the years ended March 31, 2024, and March 31, 2023.

* During the year ended March 31, 2024, the Bank has acquired loans amounting to R3.91 crore from another lender which is in the process to exit the line of business completely. Accordingly, there was no retention of beneficial economic interest by the originator.

(i) Micro, Small and Medium Enterprises (MSME) sector - Restructuring of Advances

RBI vide a circular dated January 01, 2019, permitted a one - time restructuring of existing loans to Micro Small and Medium Enterprises (MSMEs) without a downgrade in the asset classification, and this facility was extended vide circular dated February 11, 2020, circular dated August 06, 2020, and circular dated May 05, 2021, subject to certain conditions. Details of such loans to MSMEs that are restructured under the extant guidelines and classified as standard are as below:

(k) Conversion of Debt into Equity

During the year ending March 31, 2025, the Bank jointly with other consortium lenders restructured (i.e. entered into an OTS exceeding 3 months) one NPA borrower account having principal outstanding of R49.13 crore with the Bank. This settlement involved a partial conversion of debt to equity and the Bank received 8,687,530 equity shares accounted for at R11.63 crore and fully provided as at March 31, 2025.

Receivables acquired under factoring are treated as part of loans and advances and reported under the head ‘Bills Purchased and Discounted’ in Schedule 9 of the Balance Sheet. The Bank has factoring exposure of R2,670.10 crore (Previous Year R1,967.77 crore) and outstanding of R 1,676.20 crore (Previous Year R 1,257.67 crore) as on March 31, 2025.

(g) Unhedged Foreign Currency Exposure (UFCE)

The Bank’s Credit Policy outlines the framework for evaluating the risks arising out of unhedged foreign currency exposure of corporates, while extending credit facilities. Computation of UFCE is in line with the extant regulatory guidelines. At the time of sanctioning of limits, the Bank may stipulate limits on the unhedged foreign currency exposure of the corporate. Additionally, the Bank also monitors the unhedged portion of foreign currency exposures of such corporates on a periodic basis and also adhere to the extant regulatory requirements with regards to capital and provisioning requirements for exposures to entities with UFCE. During the year ended March 31, 2025, incremental capital held towards borrowers having UFCE is R173.13 crore (Previous Year R128.09 crore) and made incremental provision of R15.56 crore (Previous Year release of R9.06 crore) towards UFCE. As of March 31, 2025, the Bank held cumulative provision towards UFCE of R61.00 crore (Previous Year R45.44 crore).

Qualitative disclosures :

a. Structure and organization for management of risk in derivatives trading, the scope and nature of risk measurement, risk reporting and risk monitoring systems, policies for hedging and / or mitigating risk and strategies and processes for monitoring the continuing effectiveness of hedges / mitigants:

i. The Bank undertakes transactions in FX and derivatives for the purpose of hedging the Balance Sheet, support customer FX and derivatives hedging / business requirements and takes proprietary positions. The Bank deals in various kinds of products viz. FX spot and forwards, INR and CCY swaps and foreign currency options. The Bank undertakes trading positions FX spot, forward, swaps, futures and FX options.

ii. Treasury Sales Desk is a customer centric desk that caters to customers’ requirements in FX and derivatives products subject to regulatory and internal requirements. Product offering to the clients is based on suitability and appropriateness policy of the Bank as well as by the extant RBI guidelines. The policy ensures that the product being offered by the Bank are in sync with the nature of the underlying risk sought to be hedged giving due regard to the risk appetite of the customer and understanding of the risk by the customer. The Credit Risk related to off Balance Sheet exposures of clients arising out of FX and derivative transactions are monitored by the Bank daily through current exposure method. Exposures are independently monitored and reported.

iii. The Bank recognizes all derivative contracts (other than those designated as hedges) at fair value. The mark to market movement on the positions is monitored daily. Changes in the fair value of derivatives other than those designated as hedges are recognized in the Profit and Loss Account. Hedge transactions are accounted for on an accrual basis or fair value in line with the approved policy. Hedging transactions are undertaken by the Bank to protect the variability in the fair value or the cash flow of the underlying Balance Sheet item.

iv. All the derivative transactions are governed by the FX & Derivative policy, Market Risk Management policy and Limit Management Framework of the Bank. Limit Management Framework details various types of market risk limits which are monitored daily and breaches, if any, are reported in line with the Market Risk Committee approved exception management framework. Risk assessment of the portfolio is undertaken periodically and presented to the Market Risk Committee / Asset Liability Committee. These limits are set up considering market volatility, risk appetite, business strategy and management experience. The Bank has a clear functional segregation of treasury operations between Front Office, Market Risk and Back Office.

b. Accounting policy for recording hedge and non - hedge transactions, recognition of income, premiums and discounts, valuation of outstanding contracts, provisioning, collateral and credit risk mitigation:

For hedge transactions, the Bank identifies the hedged item (asset or liability) and assesses the effectiveness at inception as well as at each reporting date. Hedge derivative transactions are accounted for pursuant to the principles of hedge accounting based on guidelines issued by the RBI. Funding swaps are accounted in accordance with FEDAI guidelines.

Interest rate swaps are booked with the objective of managing the interest rate risk on assets / liabilities. Interest rate swaps in the nature of hedge are recorded on accrual basis or fair value in line with approved policy. Any resultant profit or loss on termination of the hedge swaps is amortised over the life of the swap or underlying liability, whichever is shorter.

Currency interest rate swaps in the nature of hedge, booked with the objective of managing the currency and interest rate risk on foreign currency liabilities are recorded on accrual basis or fair value basis in line with the approved policy. Any resultant profit or loss on termination of hedge swaps is amortised over the life of swap or underlying liability, whichever is shorter. The foreign currency balances on account of principal of currency interest rate swaps outstanding as at the Balance Sheet date are revalued using the closing rate published by FEDAI.

Pursuant to the RBI guidelines, any receivables under derivative contracts which remain overdue for more than 90 days and mark to market gains on all derivative contracts with the same counterparties are reversed in Profit and Loss Account.

The Bank offers a mix of loan products designed in accordance to the needs of customers. The Interest rates for these products may be fixed or variable as per the customer requirements. Further, the Bank raises liabilities to meet its funding requirements.

To manage the Interest rate risk in the Banking book (net interest margin / market value of equity), the Bank may execute interest rate swaps to hedge or minimize the duration gap in the Balance Sheet. The Bank may designate such derivative transactions as cashflow hedge or fair value hedge in accordance with the ICAI guidance note on accounting of derivatives contracts.

The Bank assesses and monitors the hedge strategy on a periodic basis and reports the current status to the Market Risk Committee / Asset Liability Management Committee, as per the internally approved framework.

i. The notional principal amount of derivatives reflect the volume of transactions outstanding as at the Balance Sheet date and do not represent the amounts at risk.

ii. The Bank has computed maximum and minimum of PV01 for the year based on monthly averages.

iii. I n respect of derivative contracts, the Bank evaluates the credit exposure arising therefrom. Credit exposure has been computed using the Current Exposure Method (CEM) which is the sum of :

a. the current replacement cost (marked to market value including accrued interest) of the contract or zero whichever is higher; and

b. the Potential Future Exposure (PFE) is a product of the notional principal amount of the contract and credit conversion factors derived basis the type / residual maturity of the contract, in line with the extant RBI guidelines.

(d) Credit Default Swaps

The Bank has not undertaken any transactions in Credit Default Swaps (CDS) during the year ended March 31, 2025 and March 31, 2024. Further, there are no outstanding CDS as on March 31, 2025 and March 31, 2024.

18.13 Disclosure of penalties imposed by RBI

There were two penalties of R0.001 crore and R0.39 crore imposed on the Bank by the RBI during the year ended March 31, 2025 (Previous Year R 1.001 crore), one with respect to deficiencies observed on exchange of notes during the incognito visit by the RBI at one of the branches of the Bank and another for non - compliance with certain directions issued by the RBI on ‘Know Your Customer (KYC)’, on July 05, 2024 and April 17, 2025 respectively.

18.14 Disclosures on remuneration

(i) Qualitative disclosures

a. Information relating to the composition and mandate of the Nomination and Remuneration Committee :

Name, composition and mandate of the main body overseeing remuneration :

The Nomination and Remuneration Committee of the Board oversees the framing, review and implementation of the Remuneration Policy of the Bank on behalf of the Board. The Committee works in close co-ordination with the Board. Nomination and Remuneration Committee comprised of the following members :

Mr. Sudhir Kapadia Chairperson (w.e.f. December 18, 2024, Member w.e.f. October 26, 2024)

Dr. (Mrs.) Brinda Jagirdar Chairperson (ceased to be member as well as Chairperson w.e.f. December 18,2024) Mr. S. Ganesh Kumar Member

Mr. Vishal Mahadevia Member (ceased w.e.f. October 01, 2024)

Mr. Aashish Kamat Member

Mr. Sanjeeb Chaudhuri Member (w.e.f. October 19, 2024)

Mr. Uday Bhandali Member (w.e.f. October 19, 2024)

Ms. Matangi Gowrishankar Member

Some of the key functions of the Committee inter-alia include the following :

i. Review and recommend to the Board the overall remuneration framework and associated policies of the Bank.

ii. Evaluate performance of the Whole Time Directors (WTDs) (including the Managing Director & CEO) against predetermined parameters.

iii. Evaluate performance of Senior Management.

iv. Make recommendations on remuneration (including Variable Pay [Cash and Non - cash and perquisites]) of Whole Time Directors.

v. Approve policy and quantum of variable pay, bonus, stock options and increments for the employees of the Bank.

vi. Frame guidelines for the Employees Stock Option Scheme (ESOS) and recommend grants of the Bank’s stock options to Whole Time Directors of the Bank.

vii. Review and recommend to the Board the payment of profit related commission to the Non - Executive Directors of the Bank within the overall limits as may be approved by the shareholders of the Bank, in terms of the Companies Act, 2013 and RBI guidelines.

External consultants whose advice has been sought, the body by which they were commissioned, and in what areas of the remuneration process:

The Bank’s Human Resource function commissions ‘Aon Consulting Pvt. Limited’, to conduct market benchmarking of employee compensation. In this process, the Bank participates in the salary benchmarking survey conducted by Aon for the Private Banking firms. Every year Aon conducts salary benchmarking survey and the information gathered by Aon on fixed and variable salary from various private sector peer banks across functions, levels and roles is referred to by the human resource function to evaluate the market competitiveness of Bank’s compensation positioning and practices.

A description of the 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 Bank has defined the below policies to cover its respective personnel as highlighted in the title:

1. Remuneration Policy for Whole Time / Executive Directors, Material Risk Takers, Key Managerial Personnel, Senior Management Personnel, Control Function and all other employees. The scope of this policy covers pan India employees across management levels. Currently, the Bank doesn’t have any foreign subsidiaries and branches except IBU.

2. Remuneration Policy (for Independent Directors) the scope of this policy covers all Independent Directors.

A description of the type of employees covered and number of such employees.

Employees are categorised into the following four categories from remuneration structure and administration stand point. The Head count as at March 31, 2025 is stated against each category :

1. MD & CEO 1

2. Material Risk Takers 18

3. Control Function Staff 7

4. Other Staff 42,164

b. Information relating to the design and structure of remuneration processes and the key features and objectives of remuneration policy :

Objective, Principles and Key Features : The remuneration philosophy of the Bank is guided by the organization’s Philosophy for enabling employee performance to achieve the organization’s short term and long term objectives, balanced with prudent risk taking and are in compliance with the regulatory guidelines.

To achieve this the following principles are adopted :

• The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate talent.

• Respect employee needs basis relevant market anchors and to compensate adequately for the contribution towards the Bank’s growth.

• The cost / income ratio of the Bank supports the remuneration package consistent with maintenance of sound capital adequacy ratio.

• The remuneration is balanced between fixed pay and variable pay, with adequate focus on prudent risk taking and the short term as well as the long term objectives of the Bank and its shareholders.

• The variable pay is balanced between cash linked and share linked component as well as between immediate and deferred component so that remuneration is aligned to performance and risk outcomes over both short term and long term.

• Establish relationship between remuneration and performance with adequate focus on achievement of performance objectives incorporating elements of risk, compliance and service measures.

The Compensation structure of MD & CEO and other Material Risk Takers (MRTs) are aligned to the RBI’s “Guidelines on Compensation of Whole Time Directors / Chief Executive Officers / Material Risk Takers and Control Function Staff” dated November 04, 2019.

The Remuneration Policy was reviewed and revised in FY 2024 - 25 to strengthen the linkage of performance and reumeration and describe the governance process around it and ensure that its in order with the RBI Compensation guidelines :

i) Governance Framework :

All components of remuneration for Whole Time Directors, Executive Directors and Chief Executive Officers is recommended by Nomination and Remuneration Committee (NRC) and approved by the Board and the same is approved by the shareholders of the Bank and Reserve Bank of India.

All components of remuneration for Key Managerial Personnel (KMP), Senior Management Personnel (SMP), Material Risk Takers (MRTs) and Control Function is recommended by Nomination and Remuneration Committee to the Board of Directors of the Bank for their necessary approval.

The remuneration of other employees is determined by CHRO in consultation with MD & CEO of the Bank and placed before the NRC & Board for approval.

A discussion of how the Bank ensures that risk and compliance employees are remunerated independently of the businesses they oversee :

The Bank ensures that risk, internal audit and compliance employees are remunerated independently of the businesses they oversee and is guided by the individual employee performance. The remuneration is determined on the basis of relevant risk measures included in the key deliverables of the respective employee across levels in these functions. The parameters reviewed for performance based rewards are independent of performance of the business area they oversee and commensurate with their individual role in the Bank. Additionally, the ratio of fixed and variable compensation is weighed towards fixed compensation in case of employees in risk, internal audit, and compliance function.

ii) Identification of Material Risk Takers (MRTs) for the Bank based on RBI guidelines :

The Bank has used the combination of qualitative and quantitative criteria in order to identify whether an employee is a material risk taker as per the compensation guidelines of RBI dated November 04, 2019.

Standard Qualitative Criteria

Relates to the role and decision making power of staff members (e.g senior manager, member of management body) having jointly or individually, the authority to commit significantly to risk exposures, etc.

In the context of the Bank, this qualitative criterion translates into members of various committees of the Bank who have decision making authority to cause significant risk exposure, individually or jointly with other committee members.

In addition, following quantitative criteria shall be used to identify the Material Risk Takers (MRTs)

• Quantitative Criteria 1: Their total remuneration exceeds R1.5 crore or

• Quantitative Criteria 2: They are included among top 0.3% of the highest paid employees of the bank or

• Quantitative Criteria 3: Their remuneration is equal to or greater than the lowest total remuneration of senior management and other risk-takers.

Any employee who meets the qualitative criteria and any one of the quantitative criteria will be considered as a Material Risk Taker.

iii) Compensation Structure of WTD, MD & CEO and MRTs :

• At least 50% of total compensation shall be Variable Pay.

• Value of stock options will be included in definition of ‘Total Variable Pay’.

• Total Variable Pay for the MD & CEO/ Whole - time Directors / Material Risk Takers of the Bank would be capped at 300% of Fixed Pay.

• If the Total Variable Pay is up to 200% of the Fixed Pay, a minimum of 50% of the Variable Pay; and in case Variable Pay is above 200%, a minimum of 67% of the Variable Pay shall be paid via employee stock options.

• Minimum 60% of the Total Variable Pay shall be deferred over 3 years. If cash component is part of Total Variable Pay, at least 50% of the cash component of Variable pay should also be deferred over 3 years. In cases where the cash component of Total Variable Pay is under R25 lakh, Variable Pay shall not be deferred.

• All the fixed items of compensation, including retiral benefits and perquisites, will be treated as part of Fixed Pay.

iv) Components of Remuneration - Risk Control and Compliance Staff (Control Function):

Risk Control and Compliance Staff (Control Function Staff) including Internal Audit include heads of functions who have a role and responsibility in defining and monitoring the Bank’s Policies, Credit & Regulatory processes etc and such other functions as may be determined by CHRO in consultation with MD & CEO. They may also be member(s) of various committees of the Bank, however, not directly responsible for business. The total target variable pay for risk control, internal audit and compliance staff shall be less than or equal to fixed pay. Further, a substantial portion of the variable pay should be deferred in the form of cash based or share linked instruments. All other elements of the compensation policy shall be same as that for WTDs and MRTs.

v) Guidelines on Malus & Clawback :

The Bank has defined guidelines on Malus and Clawback Conditions applicable under various scenarios. These conditions are included in the Remuneration Policy and employee terms and conditions.

c. Description of the ways in which current and future risks are taken into account in the remuneration process including the nature and type of the key measures used to take account of these risks :

An overview of the key risks that the Bank takes into account when implementing remuneration measures :

‘ Risk Appetite Statement Framework’ has been designed for the Bank, which provides strategic guidance around various parameters. It includes the Bank’s risk appetite, limits framework and policies and procedures governing various types of risk.

Bank’s Board Approved Risk Appetite Statement (RAS) has clearly articulated & quantified portfolio level risk metrics / measures stipulated for each business segment which includes parameters like on - boarding criteria basis internal rating threshold, restrictions pertaining to specific industries / transactions, portfolio quality metrics, risk - based caps related to exposure, rating concentration, product concentration, group exposure etc. The RAS is communicated to the stakeholders in the form of the various limits and mandates. MD & CEO along with Risk Management Committee of the Bank ensures overall adherence to Risk Appetite Statement of the Bank. Some of the Bank level metrics includes limits on strategic risk, capital adequacy, liquidity risk, reputation risk etc.

Performance and risk measures are part of the performance assessment framework and are factored in while assessing performance. Remuneration is decided basis performance evaluation for the year. The remuneration framework is designed to focus on achieving financial and non-financial objectives, risk - adjusted returns that are consistent with our prudent risk and capital management, as well as emphasis on long - term sustainable outcomes.

The pay - out structure for the WTD, MD & CEO, Senior Management Team, MRTs & Control Function are designed to align to performance payments with the long term sustainable performance of the Bank through deferral and claw -back arrangements.

An overview of the nature and type of key measure used to take account of these risks, including risk difficult to measure : The Bank has a robust system of defining, measuring and reviewing risk parameters. The risk parameters are a part of the Key Result Areas and Deliverables used for setting of performance objectives and for measuring performance, which includes both financial performance and non - financial performance in the areas of Risk, Governance and Compliance, Customer Centricity and People development. Weightage is assigned to each parameter which includes both financial (Quantitative) and non - financial (Qualitative) parameter detailing the outcome to be achieved in each areas.

A discussion of the ways in which these measure affect remuneration :

The aforesaid risk measures are included in the Key Result Areas and Key Performance Index of MD & CEO and WTD, MRTs and all employees. Inclusion of the above mentioned measures ensures that performance parameters are aligned to risk measures at the time of performance evaluation. The Nomination and Remuneration Committee takes into consideration all the above aspects while assessing organisational and individual performance and making compensation related recommendations to the Board.

A 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 :

In the FY 2024-25, the Bank has sharpened the KPIs around Risk, Governance and Compliance besides the metrics around financial performance, people development, customer centricity and operational excellence. It continues to track performance outcome against these key metrics as a part of overall Bank’s performance objective for year ended March 31, 2025 and linked it to Bank’s strategy, with focus on growth, profitability, compliance and sustainability.

d) Description of the ways in which the Bank seeks to link performance during a performance measurement period with levels of remuneration :

An overview of main performance metrics for Bank, top level business lines and individual : Performance and its linkage to levels of remuneration is guided by the objective / principles of the Remuneration and Performance Management Framework defined by the Bank. Cash Variable Pay in form of incentives and performance bonus is determined by the achievement against the defined performance thresholds. The performance thresholds and KPIs covers financial and non - financial metrics defined for the year.

Performance measures are clearly defined in the beginning of the year for all the employees.

While setting performance measures of the MD & CEO, Senior Management team, MRTs & Control Function Staff, Strategy of the Bank is kept in context. Further, Bank identifies key parameters that are important for the growth, success, stability and effective risk management of the Bank, as desired by the Board. Further, non - financial criteria such as maintaining high level of Compliance and Governance, Risk, Customer Centricity, Operations excellence & People management are also considered.

A discussion of how amounts of individual remuneration are linked to the Bank - wide and individual performance:

The Bank follows balance scorecard approach for managing performance and pay-outs. Individual performances are assessed annually, and the rewards are determined on the basis of the achievements against the various financial and non - financial objectives. The performance measures are revised annually to reflect the priorities for the year and ensure its in line with the short term, long term, financial and non - financial objectives. This ensures close linkage between total compensation and our annual and long term business objectives.

A discussion of the measures the Bank will in general implement to adjust remuneration in the event that performance metrics are weak. This should include the Bank's criteria for determining weak performance metrics :

The Bank uses deferral, malus and staff accountability tools to impact compensation pay offs for failures becoming apparent in future years. On an annual basis, performance matrices are defined in the goal sheets of each individual, financial and non - financial - risk measures. The outcomes against these measures are considered and adjustment made basis performance and risk outcomes, where necessary. The Bank evaluates employees on a rating scale of 1-5, with 5 being the highest. For people who have been rated 1 & 2, the Bank pays zero variable pay, including zero annual salary increment. Further, if there is significant impact owing to issues arising out of conduct or items listed under the malus / claw - back clause, the Bank pays zero variable pay (Owing to Bank’s subdued or negative financial performance on account of external factors or any other factors, the variable pay could be zero in particular year). For Non - Cash (ESOP) component of variable pay, Bank has a deferral period of up to 5 years, which adequately covers the time horizon for risk to materialise. A minimum 75% of grants are deferred over a period of 5 years ensuring sensitivity to risk outcomes over a multi year risk horizon. Under the ESOP Scheme of the Bank, there is check made on the ratings of the employees every year to ascertain if the grants vesting for that year can be vested. Grants lapse for those employees who get a rating of 2 or 1 on the 5 point rating scale of the Bank. In case of significantly adverse risk outcomes, malus & claw back provisions become applicable as has been defined in the guideline and Bank’s remuneration policy.

e) Description of the ways in which the Bank seeks to adjust remuneration to take account of the longer term performance disclosure :

A 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 group of employees, a description of the factors that determine the fraction and their relative importance :

The Bank’s Remuneration Policy / Framework is in line with the RBI “Guidelines on Compensation of Whole Time Directors / Chief Executive Officers / Material Risk Takers and Control Function Staff” dated November 04, 2019.

The Remuneration Policy is approved by the Bank's Nomination and Remuneration Committee and the Board.

The Bank remuneration framework consist of guarding against excessive risk taking, wherein Bank has focus on achieving risk adjusted returns that are consistent with our prudent risk management, as well as emphasis on long term sustainable outcomes. Pay - out structures are designed to align variable pay with the long-term performance of the Bank through deferral and malus / claw back arrangements.

Compensation in the Bank has linkages to risk outcomes, time horizon sensitive pay - out schedule in the form of a longer deferral period of 3 to 5 years for the variable remuneration. The cash component of variable pay for WTD and MRTs over R25 lakhs vest in 3 years as per the guidelines. The ESOP vest from 2^nd to 6^th year (20 % each year). In addition, cash bonus, unvested and / or vested shares is subject to malus / claw - back and subject to the events triggered as stated in the Remuneration Policy. The ESOP guideline is applicable to employees across categories, who are eligible for ESOP.

A discussion of the Bank's policy and criteria for adjusting deferred remuneration before vesting and (if permitted by national law) after :

The Total Variable Pay for MD & CEO, Whole Time Directors and other Material Risk Takers of the Bank is subject to malus and clawback clauses, which are defined in the Remuneration Policy of the Bank. Detailed scenarios under which said clauses can be applied, such as event of an enquiry determining gross negligence or breach of integrity, or significant deterioration in financial performance are defined in the Remuneration Policy of the Bank.

The Bank follows a Balanced Scorecard approach for measuring performance at all levels. The Nomination and Remuneration Committee reviews the achievements against the set of parameters which determines the performance of the individuals in these roles.

For all other employees, performance appraisals are conducted annually and initiated by the employee with self -appraisal. The immediate supervisor reviews the appraisal ratings in a joint consultation meeting with the employee and assigns the performance rating. The final ratings are discussed and approved by the head of the departments. Both relative and absolute individual performances are considered for the moderation process. Individual fixed pay increases, variable pay and ESOPs are linked to the final performance ratings.

f) Description of the different forms of variable remuneration (i.e. Cash, Shares, Share - linked instruments and other forms) that the Bank utilizes and the rationale for using these different forms :

An Overview of the forms of variable remuneration offered, 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 Bank has the following forms of variable remuneration pay for WTD & MRTs, Control Function staff and other employees:

• Cash variable pay - In form of incentives for frontline sales staff and performance bonus for Senior Management (including WTD, MRTs, CF) and Non - sales staff members. Performance bonus is part of the annual performance and compensation review cycle and is paid on the basis the performance rating of the individual employee. Incentive payments are subject to achievement of short term minimum threshold target performance on both quantitative and qualitative parameters, as defined in the plan.

• Non cash variable pay - ESOP scheme has been designed for MD, CEO, WTD, MRTs and Control Function staff members, Senior Management staff with a view to ensure an appropriate risk balanced remuneration architecture and establish a sense of ownership amongst these categories of employees.

Variable pay in the form of performance based cash bonus and ESOP is paid out annually and is linked to performance achievement against performance measures and aligned with the principles of meritocracy. The proportion of variable pay in total pay shall be higher at senior management levels. The payment of all forms of variable pay is governed by the affordability of the Bank and based on financial and risk performance outcomes. For MD and CEO and MRTs, a portion of variable compensation as stated above may be paid out in a deferred manner in order to drive prudent behaviour as well as long term & sustainable performance orientation. The quantum of grant of stock options is determined and approved by the Nomination and Remuneration Committee. The current ESOP design has an inbuilt deferral intended to spread and manage risk.

(f) Implementation of IFRS converged Indian Accounting Standards (Ind - AS)

The Reserve Bank of India vide Circular RBI/2018-2019/146 DBR.BP.BC.No.29/21.07.001/2018-19 dated March 22, 2019 had deferred the implementation of Ind AS for banks till further notice.

The Bank has made considerable progress on Ind AS implementation. It may be noted that the Bank used to prepare special purpose condensed “Fit - for - Consolidation” consolidated financial information under Ind AS for submission to erstwhile IDFC Limited (IDFC Limited amalgamated with IDFC FIRST Bank effective October 01, 2024). The said financial information was also reviewed by the Audit Committee and approved by the Board. Further, these were also subject to review / audit by the Statutory Auditors of the Bank. The Bank also prepares Proforma Ind AS financials for submission to the RBI as per the prescribed frequency. The implementation of Ind AS by banks requires certain

legislative changes in the format of financial statements to comply with the disclosures required under Ind AS. Under the RBI guidelines, banks are not allowed to early adopt Ind AS. Accordingly, the general - purpose financial statements of the Bank presented in the Annual Report are not under Ind AS. The results of the Bank upon its first - time adoption of and transition to Ind AS, based on the updated regulations and accounting standards / guidance and business strategy at the date of actual transition, could differ from those reported in the Fit - for - Consolidation information / Proforma Ind AS financials.

The implementation of Ind AS is expected to result in significant changes to the way the Bank prepares and presents its financial statements. The key impact areas would include valuation and classification of financial assets, effective interest rate, fair valuation inputs, methodologies and assumptions, impairment requirement of Ind AS 109 - expected credit loss (ECL) etc. The Bank has implemented the RBI issued regulatory guidelines on investment classification and valuation, the Master Directions - Classification, Valuation and Operations of Investment Portfolio of Commercial Banks (Directions), 2023 with effective date as April 01, 2024. The RBI, through the introduction of these guidelines, has taken the initial stride towards aligning more closely with the Ind AS guidelines. The RBI had issued a discussion paper on “Introduction of Expected Credit Loss framework for provisioning by Banks” which demonstrates the intention of the RBI to move towards Ind AS on a piecemeal basis.

It may further be noted that the above significant impacted areas may change based on the final guidelines to be issued by the RBI. This will further change the way financial statements are read and would bring people, business, and technology changes across the Bank.

18.17 Disclosure of Letters of Comfort (LOCs) issued by banks

The Bank has not issued any Letter of Comfort during the years ended March 31, 2025 and March 31, 2024 and there is no outstanding as at March 31, 2025 and March 31, 2024.

18.24 Movement in stock options granted is as under :

Employee Stock Option Scheme (ESOS) viz. IDFC FIRST Bank ESOS-2015 (“the Scheme”) was framed with an object of encouraging higher participation on the part of employees in the Bank’s financial growth and success. An effective stock option scheme enables retention of talent and aligning employee interest to that of the shareholders.

The shareholders of the Bank at its Extra - Ordinary General Meeting held on December 09, 2014 had approved the scheme. The Scheme was further amended and was approved by the shareholders at its the 1^st Annual General Meeting (AGM) held on September 29, 2015, at the 2^nd AGM held on July 27, 2016 and at 5^th AGM held on July 25, 2019. The Scheme is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 as amended from time to time. The Scheme is administered by the Nomination and Remuneration Committee (‘NRC’) of the Bank. As per the Scheme, the NRC is authorized to determine the specific employees to whom Employee Stock Options (‘options’) would be granted. The options granted under the Scheme would vest for period not less than one year and not more than five year from the date of grant of options, as approved by the NRC and the vesting would be subject to continued employment and achievement of performance criterias. The specific vesting schedule and conditions subject to which vesting would take place is outlined in the letter of grant given to option grantee at the time of grant of options.

Options granted under the Scheme shall be capable of being exercised within a period of 3 years from the date of vesting of the respective options or such other period as may be determined by the NRC. Options granted under the Scheme are settled with equity shares being allotted to the beneficiary upon exercise.

During the year ended March 31, 2025, there has been no material change in the Scheme.

The Bank has used the intrinsic value method to account for the compensation cost of stock options to employees of the Bank (other than Whole Time Directors / Chief Executive Officers / Material Risk Takers and Control Function Staff). Intrinsic value is the amount by which the quoted market price of the underlying share on the date, prior to the date of the grant, exceeds the exercise price on the option. Further, the Bank recognises fair value of share - linked instruments on the date of grant as an expense for all instruments granted after the accounting period ended March 31, 2021 as required in the RBI clarification dated August 30, 2021 on Guidelines on Compensation to Whole Time Directors / Chief Executive Officers / Material Risk Takers and Control Function Staff. In addition, the Bank recognises fair value of share-linked instruments on the date of grant as an expense for all instruments granted after the accounting period ended March 31, 2024 for all other category of employees apart from the Whole Time Directors / Chief Executive Officers / Material Risk Takers and Control Function Staff. The fair value of the stock-based compensation is estimated on the date of grant using Black - Scholes model and is recognised as compensation expense over the vesting period.

* Does not include fair value of stock - based compensation estimated on date of grant using Black - Scholes model for “ Whole Time Directors / Chief Executive Officers / Material Risk Takers and Control Function Staff” amounting to R36.23 crore (Previous Year R24.66 crore) already accounted under “payment to and provisions for employees”.

Effective April 01, 2024, the Bank has changed its accounting policy from the intrinsic value method to the fair value method for all share - linked instruments granted after March 31, 2024 to other category of employees in addition to Whole Time Directors / Chief Executive Officers / Material Risk Takers and Control Function Staff. As a result, “payment to and provisions for employees” for the year ended March 31, 2025 is higher by R55.24 crore, not included in above table.

The weighted average fair value of options granted during the year ended March 31, 2025 was R33.13 (Previous Year R26.74)

Expected dividend during the estimated expected term of the option are based on the dividend declared for one financial year prior to the date of grant. Expected life of option is the period for which the Bank expects the option to be in existence. Risk free interest rates over the expected term of the option are based on the maturity zero coupon yield curve for Government Securities at the time of grant. Expected volatility during the estimated expected term of the option is based on historical volatility determined based on the daily closing market prices of the Bank’s publicly traded equity shares.

18.27 Corporate social responsibility (CSR)

i. Amount required to be spent by the Bank on CSR during the year is R42.40 crore (Previous Year R 16.80 crore).

ii. Amount approved by the Board to be spent during the year R36.75 crore (Previous Year R25.51 crore)

iii. Amount spent towards CSR related activities during the year ended March 31, 2025 is R31.86 crore (Previous Year R25.63 crore), which comprise of following:

18.28 Proposed dividend

The Board of Directors, in their meeting held on April 26, 2025 have proposed a dividend of R0.25 per equity share (Previous Year RNil ) amounting to R 183.05 crore, subject to the approval of shareholders at the ensuing Annual General Meeting.

In terms of Accounting Standard (AS) 4 ‘Contingencies and Events occurring after the Balance sheet date’ as notified by the Ministry of Corporate Affairs through the Companies (Accounting Standards) Rules, 2021, such proposed dividend has not been recognised as a liability as on March 31, 2025.

However, effect of the proposed dividend has been reckoned in determining capital funds in computation of the capital adequacy ratio as at March 31, 2025.

18.31 Description of contingent liabilities

i. Claims against the Bank not acknowledged as debts

The Bank is a party to taxation matters which are in dispute and are under appeal. The demands are either in the process of being stayed / rectified or have been partly or wholly paid / adjusted and will be received as refund (where paid / adjusted) to the extent the matters are decided in favour of the Bank.

The Bank is a party to various legal proceedings in the normal course of business. The Bank does not expect the outcome of these proceedings to have a material adverse effect on the Bank’s financial condition, results of operations or cash flows.

ii. Liability for partly paid investments

This represents amounts remaining unpaid towards liability for partly paid investments. These payment obligations of the Bank do not have any profit / loss impact.

iii. Liability on account of forward exchange contracts

The Bank enters into foreign exchange contracts on its own account and also for customers. Forward exchange contracts are commitments to buy or sell foreign currency at a future date at the contracted rate. With respect to transactions entered by customers, the Bank generally takes off - setting positions in the inter - bank markets which results into higher numbers of outstanding contracts. The same also leads to representation of large gross notional principal of the portfolio, while the net market risk is much smaller.

iv. Liability on account of derivative contracts

The Bank enters into derivative contracts, including interest rate swaps, forward rate agreements, currency swaps and Forex options, on its own accounts and for customers. Interest rate swaps are commitments to exchange fixed and floating interest rate cash flows. Forward rate agreements are agreements to pay or receive a certain sum based on a differential interest rate on a notional amount for an agreed period. Currency swaps are commitments to exchange cash flows by way of interest / principal in one currency against another, based on predetermined rates. A foreign currency option is an agreement between two parties in which one grants to the other the right to buy or sell a specified amount of currency at a specific price within a specified time period or at a specified future time.

With respect to transactions entered by customers, the Bank generally takes off - setting positions in the inter - bank markets, which results into higher numbers of outstanding contracts. Further, for interest rate swaps, the notional amounts are not exchanged. The above leads to representation of large gross notional principal of the portfolio, while the net market risk is much smaller.

Further, the notional amounts of the financial instruments do not represent the current fair value or future cash flows and hence do not indicate the Banks’ exposure to credit or price risk. The derivative instrument becomes an asset / liability basis change in underlying market rates compared to contracted rates.

v. Guarantees given on behalf of constituents

As a part of its banking activities, the Bank issues guarantees on behalf of its customers to enhance their credit standing. Guarantees represent irrevocable assurances that the Bank will make payments in the event of the customer failing to fulfil its financial or performance obligations.

vi. Acceptances, endorsements and other obligations

These include documentary credit issued by the Bank on behalf of its customers and bills drawn by the Bank’s customers that are accepted or endorsed by the Bank.

vii. Other items

Other items represent estimated amount of contracts remaining to be executed on capital account, certain undrawn non - cancellable loan commitments and credit enhancements in respect of securitised and assigned loans. This also includes investments bought and remaining to be settled on the date of financial statements.

18.32 Utilisation of borrowed funds

The Bank, as part of its normal banking business, grants loans and advances, makes investment, provides guarantees to and accept deposits and borrowings from its customers, other entities and persons. These transactions are part of Bank’s normal banking business, which is conducted ensuring adherence to all regulatory requirements.

Given the nature and background of transactions explained 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 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) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

The Bank has also not received any fund from any person(s) or entity(ies), including foreign entities (“Funding Parties”) with the understanding, whether recorded in writing or otherwise, 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.

18.33 Particulars of items exceeding 1% of total income and total assets

Other Liabilities - Others (including provisions)

During the year ended March 31, 2025 and March 31, 2024, none of the items under Others (including provisions) of “Schedule 5 - Other Liabilities and Provisions” have exceeded 1% of total assets of the Bank.

Other Assets - Others

During the year ended March 31, 2025 and March 31, 2024, none of the items under Others of “Schedule 11 - Other Assets” have exceeded 1% of total assets of the Bank.

Other Income - Miscellaneous Income

During the year ended March 31, 2025 and March 31, 2024, none of the items under Miscellaneous Income of “Schedule 14 - Other Income” have exceeded 1% of total income of the Bank.

Operating Expenses - Other expenditure

During the year ended March 31, 2025, other expenditure under “Schedule 16 - Operating Expenses” includes commission to sales agents / business correspondents of R 3,728.44 crore (Previous Year R3,393.90 crore), commission to collection agents of R 1,380.44 crore (Previous Year R993.62 crore) and system management fees of R610.80 crore (Previous Year R629.91 crore) exceeding 1% of total income of the Bank.

18.34 Comparative figures

In view of the accounting for the amalgamation of (a) eIDFC FHCL into and with eIDFC Limited; and (b) eIDFC Limited into and with IDFC FIRST Bank Limited with effective date of October 01, 2024, the figures are not comparable with those of the previous year. Figures for the previous year have been regrouped and reclassified wherever necessary to confirm to the current year’s presentation.

18.35 All figures less than or equal to R50,000 have been represented by 8.