Equity Analysis

To,

The Shareholders,

The Board of Directors of your Company (“The Board”) takes great pleasure in presenting before you the 14^th Annual Report on the Operational and Financial performance of Aavas Financiers Limited (“the Company” or “Aavas”) along with the Audited Standalone and Consolidated Financial Statements for the Financial Year ended March 31, 2024.

BACKGROUND

As a prominent affordable Housing Finance Company in India, your Company serves the requirements of customers within the low and middle-income segments, particularly in semi-urban and rural areas, focusing on underserved and unreached markets.

Aavas primarily offers Home Loans, Home Construction Loans, Loan against Property, Home Improvement Loans and MSME Business Loans. Pursuant to Scale Based Regulation issued by Reserve Bank of India (“RBI”), vide circular dated October 22, 2021 as amended from time to time, your Company falls under the category of Middle Layer Non-Banking Financial Company (“NBFC-ML”).

FINANCIAL PERFORMANCE

During the Financial Year under review, your Company has demonstrated substantial growth and maintained consistent performance.

The Standalone financial performance for the Financial Year ended March 31, 2024 and a comparison with the previous year is summarized below:

(H in crore)

The Standalone and the Consolidated Financial Statements for the Financial Year ended March 31, 2024, forming part of this Annual Report, have been prepared in accordance with Ind AS notified under Section 133 of the Companies Act, 2013 (“the Act”) and other relevant provisions of the Act.

The key financial performance indicators for the Financial Year under review are as follows:

? Total Income, Profit Before Tax, Profit After Tax of your Company:

? Total income for the Financial Year 2023-24 increased to Rs.2,020.30 crore as compared to Rs.1,610.15 crore in the previous year.

? During the year, the Company has earned a Profit Before Tax of Rs.624.45 crore as compared to Rs.548.99 crore in the previous year and the Profit After Tax during the year was Rs.490.69 crore as compared toRs.430.07 crore in the previous year, recording an increase of 14%.

? The Assets under Management (AUM) of your Company stood at Rs.17,312.65 crore (including assignment of Rs.3,722.72 crore) as at March 31, 2024 as against Rs.14,166.66 crore (including assignment of Rs.2,757.23 crore) in the previous Financial Year, with a growth of 22%.

Furthermore, during Financial Year under review, there was no alterations/changes in the core operations or activities or nature of business of the Company.

DIVIDEND

The Board, recognizing the capital-intensive nature of the Company, has deemed it prudent to retain earnings for the Financial Year under review to reinvest in the business. This strategic decision is anticipated to drive further growth and enhance shareholders value. Consequently, no dividend has been recommended for the Financial Year ended March 31, 2024.

In terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, (“SEBI LODR Regulations, 2015”) and Master Direction - Non-Banking Financial Company - Housing Finance Company (Reserve

Bank) Directions, 2021 (‘RBI Master Directions') the Board of Directors of the Company formulated and adopted the Dividend Distribution Policy. The Policy is available on the website of the Company at link https://www.aavas.in/img/ pdf/dividend-distribution-policy.pdf. and forms part of this Report as ‘Annexure-5'.

SHARE CAPITAL/ CAPITAL STRUCTURE AND DEBENTURES

Authorized Capital

There was no change in the Authorized Capital of the Company during the Financial Year under review. The Authorized Capital of the Company is Rs.85,00,00,000/- (Rupees eighty five crore only) divided into 8,50,00,000 (Eight crore fifty lakh) Equity Shares of Rs.10/-(Rupees ten only) each.

Issued, Subscribed & Paid up Capital

The issued, subscribed and paid up Capital of the Company as on March 31, 2024 stood at Rs.79,13,97,050 (Rupees seventy nine crore thirteen lakh ninety seven thousand and fifty only) consisting of 7,91,39,705 (Seven crore ninety one lakh thirty nine thousand seven hundred and five) Equity Shares of Rs.10/- (Rupees ten only) each. During the Financial Year under review, the paid-up Equity Share Capital of the Company has increased on account of allotment of 82,831 Equity Shares of Rs.10/- (Rupees ten only) each pursuant to the exercise of equity stock options by the eligible employees of the Company under Employee Stock Option Plans (ESOPs) of the Company.

The shares of the Company are actively traded on NSE and BSE and have not been suspended from trading.

Details of Secured Debt Securities as on March 31, 2024: (Rs in crore)

TRANSFER TO SPECIAL RESERVE (UNDER SECTION 29C OF THE NATIONAL HOUSING BANK (“NHB”) ACT, 1987)

Your Company has transferred Rs.98.17 crore, i.e., 20% of the net profits to Statutory Reserves during the Financial Year under review as required under the provisions of Section 29C of the NHB Act, 1987.

REVIEW OF OPERATIONS

In the domain of housing finance activities within the vibrant landscape of India, your esteemed Company stands stable, its mission is to be deeply entrenched in meeting the rapidly growing demands for housing loans. With unwavering dedication, we have charted a path of continuous expansion, covering diverse regions with strategic foresight. As of March 31, 2024, our footprint extended gracefully across 13 states, embracing 367 branches that serve as beacons of financial empowerment.

In contrast to many others in our industry who focus on big cities, we have chosen a different route with a meaningful goal. We serve in the sub-urban and rural areas of India, where people with lower to middle incomes aspire to own homes the most. In these areas, surrounded by green fields and growing communities, we feel a strong sense of purpose to help people improve their lives by owning homes.

Our mission is simple: To empower and upgrade the lives of low and middle-income customers by providing them accessible home loans and setting pioneering benchmarks in unserved and underserved markets.

The details with respect to operating and financial performance of your Company has been covered in the

Management Discussion and Analysis Report (MDAR), which forms part of this Annual Report.

Through out the Financial Year under review, your Company demonstrated a strong and resilient performance, as evidenced by the following financial summary:

Income & Profits

Total Income grew by 25% to Rs.2020.30 crore for the Financial Year ended March 31, 2024 as compared to Rs.1,610.15 crore for the previous Financial Year. Profit Before Tax (PBT) was 14% higher at Rs.624.45 crore as compared to Rs.548.99 crore for the previous Financial Year.

Profit after Tax (PAT) was 14% higher at Rs.490.69 crore as compared to Rs.430.07 crore for the previous Financial Year.

Sanctions

During the Financial Year under review, your Company has sanctioned housing loans for Rs.5,670.66 crore as compared to Rs.5,168.83 crore in the previous Financial Year, with an annual growth of 10%. The cumulative loan sanctions since the inception of your Company stood at Rs.29,060.72 crore as at March 31, 2024. Your Company has not granted any loan against the collateral of Gold Jewellery and loan against Shares.

Disbursements

During the Financial Year under review, your Company disbursed housing loans for Rs.5,582.23 crore as compared to Rs.5,024.54 crore in the previous Financial Year registering an annual growth of 11%. The cumulative loan disbursement since inception as at March 31, 2024 was Rs.27,963.78 crore.

Assets under Management (AUM)

The AUM of your Company stood at Rs.17,312.65 crore (including assignment of Rs.3,722.72 crore) as at March 31, 2024 as against Rs.14,166.66 crore (including assignment of Rs.2,757.23 crore) in the previous Financial Year, with a growth of 22%. As of March 31, 2024, the average size of loan sanctioned was Rs.9.3 lakh and average tenure was 198.1 months in the AUM (on origination basis).

Strong Capital and Liquidity Position

The Company's total Capital Adequacy stood at 43.98% (previous Financial Year 46.96%) which is far above the minimum required level of 15% as per the provisions of the RBI Master Directions showing strong position of the Company.

The Company's Liquidity Coverage Ratio (LCR) stood comfortably at 106.14% as of March 31, 2024, against a regulatory requirement of 70%.

Non-Performing Assets (NPA)

Your Company is in adherence to the provisions of Indian Accounting Standards (“Ind AS”) with respect to the computation of Stage-3 Assets (NPA). Your Company's assets have been classified based on expected performance. Exposure at Default (EAD) is the total amount outstanding including accrued interest as on the reporting date. Using a pro-active collection and recovery management system powered by analytics and technology, the GNPA and NNPA as of March 31, 2024 stood at 0.94% and 0.67% respectively (against 0.92% and 0.68% respectively in the previous Financial Year).

CREDIT RATING

During the Financial Year under review, the Company has sustained the long-term bank facility credit ratings of AA; Stable, which has been reaffirmed by both CARE Ratings and ICRA Limited. Outlook on both ratings is Stable. The Company's short term bank and Commercial Paper facility rated as A1+ has been reaffirmed, by CRISIL.

For more details on credit ratings, kindly refer Corporate Governance Report forming part of this report or visit to website of the Company at link https://www.aavas.in/ investor-relations/credit-rating.

REGULATORY & STATUTORY COMPLIANCES

T he Company has complied with all the guidelines, circulars, notifications and directions issued by our Regulators which includes but not limited to RBI, NHB, MCA, SEBI, IRDAI, BSE and NSE from time to time. The Company also places before the Board of Directors at regular intervals all such circulars and notifications to keep the Board informed and report on actions initiated on the same. The Company also complies with the provisions of the Companies Act, 2013, Secretarial Standards issued by Institute of Company Secretaries of India (“ICSI”) and as notified by Ministry of Corporate Affairs, Master Direction - NonBanking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021 (‘RBI Master Directions'), SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (“SEBI LODR Regulations, 2015”), SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021, Income Tax Act 1961 and all other applicable statutory requirements.

Scale Based Regulation (SBR): A Revised Regulatory Framework for NBFCs

The Reserve Bank of India in 2021 issued Scale Based Regulation (SBR) a revised regulatory framework for NBFC's which is applicable to your Company being a NBFC HFC-category falling under middle layer.

With respect to above, the RBI has issued various circulars/ guidelines which were required to be implemented in the Financial Year 2023-24 i.e. Guidelines for appointment of Chief Compliance Officer, Guidelines on Compensation of Key Managerial Personnel and Senior Management, which were duly implemented by the Company including formation of policies, implementing procedures and to review their outcome on periodic basis.

Further, the RBI had issued Master Direction on Information Technology Governance, Risk, Controls and Assurance Practices dated November 07, 2023 effective from April 01, 2024. The Company has duly implemented and adopted the directions ensuring its compliance.

DEPOSITS

As a Non-deposit taking (NBFC-HFC) Housing Finance Company, your Company has not solicited, accepted or renewed any fixed deposits from the public, as defined in Chapter V of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014. Therefore, the disclosure in terms of RBI Master Directions is not required.

AWARDS AND RECOGNITION

? Recognized as the Best BFSI Brand 2024 at The Economic Times Best Brands Conclave - ET Edge.

? Silver Award for Excellence in BRSR - MID Cap (Service Sector) at 3^rd ICAI Sustainability Reporting Awards 2022-23.

? ASSOCHAM-“Excellence in Self-built Green Housing Initiative” Award.

RESOURCE MOBILIZATION

Your Company has in place a borrowing policy framework to cater its borrowings needs. The objective of the policy is to diversify the liability portfolio of the Company and to reduce risk of overdependence on any particular lender and instrument. The Company has diverse set of lenders/ investors that includes Public Sector Bank, Private Sector Bank, National Housing Bank, recognized Multilateral Institution and other financial institutions.

Your Company has vide Special Resolution passed on July 19, 2023, under Section 180 (1) (c) of the Companies Act, 2013, authorized the Board of Directors to borrow money upon such terms and conditions as the Board may think fit in excess of the aggregate of paid up share capital and free reserves of the Company up to an amount of H23,000 crore (Rupees twenty three thousand crore only) and the total amount so borrowed shall remain within the limits as prescribed by RBI.

The Weighted Average Borrowing Cost as at March 31, 2024 was 8.07% (including Securitization/Assignment) as against 7.61% as at the end of the previous Financial Year. As at March 31, 2024, your Company's sources of funding were primarily in the form of Long Term Loans from Banks and Financial Institutions (47%), followed by Securitization/Direct assignment (24%), NHB Refinance (20%), Debt capital market (9%).

Your Company has a comfortable liquidity position as on March 31, 2024 with H1,797.82 crore (including FD's). Further, the Liquidity Coverage Ratio (‘LCR') for the Financial Year ended March 31, 2024 was 106.14% as against the regulatory requirement of 70%.

Term Loans from Banks and Financial Institutions

The Company, during the Financial Year, received aggregate fresh loan sanctions amounting to Rs.2,825 crore and has availed loans aggregating to Rs.3,275.49 crore. The outstanding term loan from Banks and Financial Institutions as at March 31, 2024 were Rs.7,317.01 crore (excluding PTC & CC) with an average tenure of 9.65 years.

Securitization/Assignment of Loan Portfolio

Your Company has actively tapped Securitization/Direct Assignment market, which has enabled it to create liquidity, diversify liability profile and minimizing asset liability mismatches.

During the year under review, your Company received purchase consideration of Rs.1,242.96 crore from assets assigned under transfer of loan portfolio transactions and raised Rs.390.16 crore through Securitization of loan receivables.

The transfer of loan portfolio transactions were carried out in line with RBI guidelines and these assets were derecognized in the books of the Company.

Refinance from National Housing Bank (NHB)

Your Company has received fresh sanction of refinance assistance of Rs.1,000 crore under the NHB refinance scheme. Your Company availed funds of Rs.1,032 crore under various Refinance Schemes such as for Affordable Housing Fund, Regular Refinance Scheme and Special Refinance Facility.

Total outstanding refinance as at March 31, 2024 stood at Rs.3,041.58 crore.

Refinance from SIDBI

During the year under review, your Company received aggregate fresh loan sanction amounting to T300 crore and has availed loans aggregating to T50 crore. The outstanding refinance from SIDBI as on March 31, 2024 stood at T49.9 crore with an average tenure of 7 years.

Non-Convertible Debentures (NCDs)

Your Company has raised long term funding through issuance of debt securities not only to the domestic Financial institution (FI) but also to Multilateral/ Development Financial Institutions (DFI) and Scheduled Commercial Bank (SCB) in India. During the year under review, your Company has raised Rs.150 crore through issuance of debt securities and as on March 31, 2024, the Company's outstanding NCDs stood at H945 crore [FI - 10 % ; DFI - 66 % and SCB- 24 %] as compared to Rs.1,017 crore [FI - 12 % ; DFI - 67 % and SCB- 21 %] as on March 31, 2023.

Your Company has not issued any Commercial Paper & Short Term Instrument during the Financial Year 202324 and as on March 31, 2024, the Company's Commercial Paper outstanding is NIL.

Rupee Denominated External Commercial Borrowing

As on March 31, 2024, the outstanding balance of Rupee Denominated External Commercial Bond stood at H458.19 crore (including outstanding balance of social masala bond of H358.38 crore).

Further, the interest on Non-Convertible Debentures and Masala Bonds issued on private placement basis were paid by the Company on their respective due dates and there was no instance of interest amount not claimed by the investors or not paid by the Company.

Your Company, being listed HFC is exempted from the requirement of creating Debenture Redemption Reserve (DRR) on privately placed debentures. Therefore, your Company has not created DRR. Further the requirement to invest or deposit a sum of not less than 15% of the amount of debentures which are maturing during the Financial Year ending on March 31 of the next year as provided under Rule 18 of the Companies (Share Capital and Debentures) Rules, 2014 has been done away for listed Companies vide notification of Ministry of Corporate Affairs (‘MCA') dated June 05, 2020.

One time explanation for fund raising by Large Corporate

The Company lends loans with average tenure of 15 years at origination and after considering prepayment average tenure of loans comes to around 8 years. Given the rating of the Company at AA/Stable, majority of investor in Debt Capital Markets are willing to invest only up to 3 years only. Since other source of funding are comparatively larger tenure with competitive price which helped us in managing our ALM, the 25% requirement of borrowing through debt securities could not be achieved. However, Company is keen to raise long term funds through Debt Securities.

Further, in compliance with SEBI circular SEBI/HO/ DDHS/DDHS-RACPOD1 /P/CIR/2023/172 dated October 19, 2023, in the event if the Company is identified as a Large Corporate for Financial Year 2025, the requirement of mandatory qualified borrowing will be endeavor to be met in a contiguous block of three years that is FY 2025, FY 2026 and FY 2027.

DISCLOSURE UNDER CHAPTER XI- GUIDELINES ON PRIVATE PLACEMENT OF NON-CONVERTIBLE DEBENTURES (NCDS) OF RBI MASTER DIRECTIONS

(i) The total number of NCDs which have not been claimed by the Investors or not paid by the Company after the date on which the non-convertible debentures became due for redemption: Nil

(ii) The total amount in respect of such debentures remaining unclaimed or unpaid beyond the date referred to in Paragraph (i) as aforesaid: Nil

Further, the Company has in place policy for claiming unclaimed interest, dividend and redemption amount on NCS pursuant to SEBI circular dated November 08, 2023 and is available on the website of the Company at https:// www.aavas.in/codes-and-policies.

TRUSTEE TO SECURITIES HOLDERS

In compliance to the requirements of Securities and Exchange Board of India (Issue and Listing of NonConvertible Securities) Regulation 2021, the Company has appointed IDBI Trusteeship Services Limited as Debenture Trustee to protect the interest of the debenture holders of the Company.

The details of Debenture Trustee are available on the Company's website at https://www.aavas.in/details-of- debenture-trustee-rta-and-grievance. Further the details of Debenture Trustee is also provided at corporate information of this Annual Report.

BRANCH BUILD-UP

A branch is a regional component of a broader Company, each branch is working towards unified goal of ensuring business thrives. The Company by expansion of new branches increase profits and reach new customers, which enhances Company's operating domain across India. As on March 31, 2024, Company is operating in 13 states, with a network of 367 branches , consisting of Rajasthan, Maharashtra, Gujarat, Madhya Pradesh, Haryana, Uttar Pradesh, Chhattisgarh, Delhi, Punjab, Uttarakhand, Himachal Pradesh, Karnataka and Odisha. The Company added 21 new branches during the FY 2023-24.

Your Company has its Registered Office in Jaipur, Raj asthan and its branch network as on March 31, 2024 vis-a-vis the previous Financial Year is detailed hereunder:

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

Your Company's Board of Directors has put integrity at the forefront of all the decisions, which is the foundation of our governance.

The Board of Directors of the Company is a panel of Members having diverse set of abilities, demonstrated experience, personal integrity ethics and Governance expertise. In addition to skills, directors possess certain qualities that make them effective leaders and stewards of the organization.

In accordance with Section 149 of the Companies Act, 2013, Regulation 17 of SEBI LODR Regulations, 2015 and Scale Based Regulation issued by RBI as amended from time to time, your Company has optimum mix of Executive, Non-Executive and Independent Directors.

The Board of Directors of the Company plays a crucial role in overseeing how the management serves the short and long-term interests of stakeholders. This belief is reflected in Aavas governance practices, under which the Company strives to maintain an effective, informed and independent Board.

The Members of the Company's Board of Directors are eminent persons of proven competence and integrity. NonExecutive Directors, including Independent Directors, play a critical role in imparting value to the Board processes by bringing an independent judgment in the areas of strategy, performance, resource management, financial reporting and the overall standard of Company's conducts etc.

The Board of Directors have identified Technical skills, Industry experience, competencies, special knowledge and practical experience, as required in the context of the NBFCs and Housing Finance Company's to function effectively and efficiently e.g. Accounting & Finance, Legal & Compliance, Strategic Development & Execution and Governance Board Role.

The Board of the Company comprises of 9 (Nine) Directors, comprising 3 (Three) Independent Directors (including 2 (Two) Women Directors), 5 (Five) Non-Executive Nominee Directors and 1 (One) Executive Director-Managing Director & Chief Executive Officer as on March 31, 2024, who build strong foundation in business principles and leadership.

The Composition of Board of Directors of the Company is as follows:

*Mr. Kartikeya Dhruv Kaji resigned from the Board of the Company w.e.f May 21, 2024.

**Mr. Rahul Mehta was appointed as a Non-Executive, Additional Director (Promoter Nominee Director on behalf of Lake District Holdings Limited) by the Board w.e.f May 21, 2024.

Pursuant to the provisions of Section 2(51) and 203 of the Act, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended from time to time the following are the Key Managerial Personnel of the Company:

*re-appointed as Chief Risk Officer for a period of 5 years w.e.f. August 01, 2023.

**appointed as Chief Compliance Officer for a period of 3 years w.e.f. October 01, 2023 pursuant to RBI Notification No. DoS.CO.PPG. SEC.01/11.01.005/2022- 23 dated April 11, 2022 on Compliance Function and Role of Chief Compliance Officer (CCO).

APPOINTMENT & RESIGNATION OF DIRECTORS AND KMP

During the year under review and upto the date of this report, the following changes took place in the composition of the Board:

DECLARATION BY INDEPENDENT DIRECTOR

Independent Directors are expected to play a significant role at the Board level and are the change agents of corporate governance. In accordance with the provisions of the Section 149(6) of the Act and Regulation 16(l)(b) & 25 of SEBI LODR Regulations, 2015, the Independent Directors have confirmed that they satisfy the criteria prescribed for Independent Directors.

In the opinion of the Board the Independent Directors fulfill the aforesaid criteria and possess requisite integrity, qualifications, proficiency, experience, expertise and are independent of the management.

The names of all the Independent Directors of the Company have been included in the Independent Director's databank maintained by Indian Institute of Corporate Affairs (“IICA”). The Company has obtained declaration of independence from all the Independent Directors of the Company. None of the Directors have any pecuniary relationship or transactions with the Company.

CERTIFICATE OF NON- DISQUALIFICATION OF DIRECTORS

All the Directors have confirmed that they are not disqualified from being appointed as Directors in terms of Section 164 of the Act, and are not debarred from holding

the office of Director by virtue of any SEBI order or any other such authority. None of the Directors of the Company are related to each other.

Your Company has obtained a certificate from a Company Secretary in practice confirming that none of the Directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as Directors of companies by Securities Exchange Board of India (“SEBI”)/Ministry of Corporate Affairs (“MCA”) or any such statutory authority. The same forms part of this Annual Report as ‘Annexure-1'.

DISCLOSURE UNDER SECTION 197(14) OF THE COMPANIES ACT, 2013

The Managing Director and CEO of the Company has not received any commission from its subsidiary Company.

BOARD MEETINGS

The Company holds at least four Board Meetings in a year, one in each quarter and the dates of the Board Meetings are finalized well in advance after seeking concurrence of all the Directors. All the decisions and urgent matters approved by way of circular resolutions are placed and noted at the subsequent Board Meeting.

During the Financial Year under review, 5 (five) Board Meetings were conveyed and held. All other details of the meetings attended by each Director are detailed in Corporate Governance Report and hence, not repeated here to avoid duplication in the report.

PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS

Board Evaluation is a key means by which board can recognize and correct corporate governance problems and add real value to their organizations. A properly conducted Board Evaluation can contribute significantly to performance improvements on organizational board and individual member level.

The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and individual Directors pursuant to the provisions of the Act and SEBI (LODR) Regulations, 2015 and as per the criteria defined in the said act and regulations.

Pursuant to applicable provisions of the Act and the SEBI (LODR) Regulations, 2015, the Board, in consultation with its Nomination and Remuneration Committee, has formulated a framework containing, inter-alia, the criteria for performance evaluation of the entire Board of the Company, its Committees and individual Directors, including Independent Directors. The framework is monitored,

reviewed and updated by the Board, in consultation with the Nomination and Remuneration Committee, based on need and new compliance requirements.

The evaluation process is carried out through a platform called “Goveva” which is a web based platform, to ease the process of Board Evaluation, to increase the efficiency and to automate report generation.

The details of evaluation process of the Board, its Committees and individual Directors, including Independent Directors have been provided under the Corporate Governance Report, which forms part of this Report.

SEPARATE INDEPENDENT DIRECTORS' MEETINGS

During the Financial Year under review, a separate meeting of Independent Directors was held on March 26, 2024 without the attendance of Non-Independent Directors and the Management of the Company. The Independent Directors inter alia overlooks and discuss the issues arising out of the Committee Meetings and Board discussion including the quality, quantity and timely flow of information between the Company Management and the Board that is necessary for the Board to efficiently perform its obligations.

FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS

Familiarization Programme has been designed considering the specific needs of contemporary Corporate Governance and the expected obligations of Independent Directors in view of the onerous responsibility as prescribed under the Regulation 25(7) of the SEBI LODR Regulations, 2015.

The Program also aims to offer a conceptual framework based upon current expectations, which require the Independent Directors to adhere to a code and standard of ethics and integrity for fulfillment of their responsibilities in a professional and faithful manner to promote confidence of the investment community. Purpose of this program is to enlighten the Independent Directors with their Rights and Obligations and aware them about the regulatory environment and the business model in which Company is running its operations.

The Board is also periodically updated on the various changes, if any, in the regulations governing the conduct of Non-Executive Directors including Independent Directors.

The details of the Familiarization Programme has been hosted on the website of the Company and can be accessed through following link: https://www.aavas.in/img/pdf/ det ails - of-f am iliarizat ion-programme-imp art ed-to - independent-directors.pdf.

POLICY ON DIRECTOR'S APPOINTMENT, REMUNERATION & OTHER DETAILS

With an ambition to become one of the preferred financiers and to outperform its competitors and to remain in front in delivering best financial solutions, the Company has in place Policy on Nominations and Remuneration for Directors, Key Managerial Personnel and Senior Management Personnel to align the aspirations of human resources consistent with the goals of the Company.

T he Policy on Nominations and Remuneration for Directors, Key Managerial Personnel and Senior Management Personnel of the Company is in line with the Section 178 of the Act, provisions of Regulation 19 of SEBI (LODR) Regulations, 2015 and Guidelines on Compensation of Key Managerial Personnel and Senior Management in NBFCs issued by Reserve Bank of India (RBI) vide circular dated RBI/2022-23/36 DOR.GOV.REC.No.29/18.10.002/2022- 23 on April 29, 2022 ("RBI Guidelines”), as amended from time to time.

The Policy is available on the website of the Company and can be accessed at https://www.aavas.in/codes-and- policies and all the details of remuneration paid to the Directors is mentioned in Annual Return in form MGT-7, available on Company's website and can be accessed at https://www.aavas.in/investor-relations/annual-reports.

BOARD COMMITTEES

The Company has the following Nine (9) Board level Committees, which have been constituted in compliance with the requirements of the business and relevant provisions of applicable laws and statutes:

1. Audit Committee (AC)

2. Nomination & Remuneration Committee (NRC)

3. Stakeholders Relationship Committee (SRC)

4. Corporate Social Responsibility & Environment Social Governance Committee (CSR & ESG)

5. Risk Management Committee (RMC)

6. Asset Liability Management Committee (ALCO)

7. Information Technology (IT) Strategy Committee

8. Customer Service & Grievance Redressal Committee (CS&GR)

9. Executive Committee (EC)

During the Financial Year under review, the Board accepted all recommendations made by the above Committees.

The details with respect to the composition, terms of reference, number of Meetings held, etc. of these Committees are given in the Report on Corporate Governance, which forms part of this Annual Report as ‘Annexure-2'.

EMPLOYEE STOCK OPTION PLAN (ESOP)

Employee Stock Options act as a tool for attracting and retaining high-quality employees. Although motivation, employee retention and awarding hard work are the key benefits, which ESOP brings to Company, there are several other significant advantages too. It also provides employees with a sense of belonging because it gives them a real stake in their firm's growth trajectory.

ESOP 2016

Pursuant to the approval accorded by the Shareholders on February 23, 2017 the Company has approved and adopted Employee Stock Option Plan for Employees-2016 (“ESOP- 2016-I”).

During the Financial Year under review, the Company made grant aggregating to 4,500 options on February 01, 2024 under ESOP-2016-I (d).

Performance Stock Option Plan (PSOP-2023)

The Company believes that equity based compensation schemes/plans are an effective tool to reward the talent working with the Company for delivering long-term sustainable performance and creation of stakeholder value. With a view to drive long term performance, retain talent and attract new talent, the Company formulated and implemented ‘Aavas Financiers Limited - Performance Stock Option Plan- 2023' (“PSOP-2023”) as a key component in its reward structure to the eligible employees of the Company. The PSOP-2023 was approved by the Shareholders through postal ballot on November 06, 2023.

During the Financial Year under review, the Company made grant aggregating to 71,044 options on December 12, 2023 under the PSOP-2023.

b Authorization The schemes empower the Board and Nomination & Remuneration Committee to execute the scheme.

c Variation During the Financial Year under review, there have been no changes in the schemes.

(if any)

It is confirmed that all the ESOP Schemes/plan of the Company are in compliance with the provisions of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (‘SEBI SBEB and Sweat Equity Regulations') as amended from time to time.

The Nomination & Remuneration Committee administers and monitors the ESOP Schemes/plan in compliance with the Act, SEBI SBEB and Sweat Equity Regulations and SEBI (LODR) Regulations, 2015.

The Secretarial Auditors of the Company has given a Certificate, confirming that the above ESOP Schemes/ plan have been implemented in accordance with the SEBI SBEB and Sweat Equity Regulations as amended from time to time and will be available for the inspection of the Members of the Company.

The applicable disclosures as stipulated under Regulation 14 of SEBI (Share Based Employee Benefits) Regulations, 2014 with regard to Employees Stock Option Plan of the Company are available on the website of the Company at https://www.aavas.in/investor-relations/annual-reports.

AUDIT & AUDITORS

Statutory Auditors and Auditors' Report

In terms of provisions of Section 139 of the Companies Act 2013, read with the Companies (Audit and Auditors) Rules, 2014, M/s Walker Chandiok & Co LLP, Chartered Accountants (Firm's Registration No. 001076N/N500013) were appointed as Statutory Auditors of the Company for a period of 3 (three) consecutive years and their existing term

shall come to an end till the conclusion of the ensuing 14^th Annual General Meeting (AGM) of the Company. The Audit Committee and the Board of Directors of the Company placed on record its appreciation for the services rendered by M/s Walker Chandiok & Co LLP, Chartered Accountants as the Statutory Auditors.

The Audit Report given by the Statutory Auditors on the financial statements of the Company is part of this Integrated Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report. Further, during the year under review, the Auditors have not reported any fraud under Section 143(12) of the Companies Act, 2013.

Pursuant to the Reserve Bank of India Circular RBI/2021- 22/25Ref.No.DoS.CO.ARG/SEC.01/08.91.001/2021-22 dated April 27, 2021, Guidelines for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs), (“RBI Guidelines”) the Company having assets size of H15,000 Crore and above, as at the end of previous year the statutory audit should be conducted under joint audit of a minimum of two audit firms.

With respect to above, as the Company have crossed the threshold of H15,000 Crore asset size as at March 31, 2024, accordingly the Statutory Audit of the Company shall be conducted under joint audit of a minimum of two audit firms.

Pursuant to section 139 of the Act, read with the Companies (Audit and Auditors) Rules, 2014, RBI Guidelines for appointment of Statutory Auditor(s), the Board of Directors

based on the recommendation of Audit Committee, has recommended, the appointment of M/s. M S K A & Associates Chartered Accountants (FRN: 105047W) and M/s. Borkar & Muzumdar, Chartered Accountants (FRN: 101569W) as the Joint Statutory Auditors of the Company for a period of 3 (three) years effective from the conclusion of 14^th AGM until the conclusion of 17^th AGM subject to approval of the Shareholders of the Company at the ensuing AGM.

The Company has received consent and eligibility certificates from the above audit firms under applicable rules and laws that they are not disqualified and are eligible to hold the office as Auditors of the Company, if appointed.

Secretarial Auditors and Secretarial Audit Report

M/s. Chandrasekaran Associates, Practicing Company Secretaries (Firm Registration No. P1988DE002500), have carried out Secretarial Audit of the Company for the Financial Year 2023-24.

The Secretarial Audit Report forms part of this Integrated Annual Report attached as ‘Annexure-3' and the remarks therein were noted by the Board and do not call for any further comments.

Furthermore, M/s. Chandrasekaran Associates, Practicing Company Secretaries has issued an Annual Secretarial Compliance Report for the Financial Year 2023-2024 in Compliance with Regulation 24A of SEBI (LODR) Regulation, 2015 which forms part of this report as ‘Annexure-4' and is also submitted to Stock Exchanges.

In terms of Section 204 of the Act, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Audit Committee recommended and the Board has re-appointed M/s Chandrasekaran Associates, Practicing Company Secretaries as the Secretarial Auditors of the Company to conduct Secretarial Audit for the Financial Year 2024-25.

INFORMATION SYSTEM AUDIT (IS AUDIT)

The landscape around information systems has been changing, therefore an IS audit focus on the governance and management aspects of technology and cybersecurity as much as it does on specific focus areas of the audit.

The Company has in place an Information Systems Audit Policy which is cognizant of business imperatives and align with the aspirations of the organization, including being agile and innovative and adopting technologies at a rapid pace. Our Head of Internal Audit (HIA) is accountable to the Audit Committee and Management in providing assurance on the adequacy and effectiveness of the Company's risk management, control and governance of information system processes used for controlling its activities and

managing its significant risks and also report material frauds and their investigations and corrective actions.

INTERNAL AUDIT & INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY

The Reserve Bank of India has stipulated that all deposit taking and non-deposit taking NBFC-HFCs are mandated to have a Risk Based Internal Audit Framework in place by June 30, 2022. The Company being a Non-deposit taking NBFC-HFC, the circular of RBIA becomes applicable accordingly, the Company has put in place RBIA framework within the timeline and has developed an in-house team and appointed a Head of Internal Audit (HIA) to conduct audit of functional areas and operations of the Company.

The Internal Audit department is headed by the HIA who reports directly to the Audit Committee of the Board. The primary responsibility of the HIA is to effectively manage the Internal Audit department and to ensure that it adds value to the entity and its objectives. The RBIA framework effectively ensures that internal audit coverage is commensurate with the nature of complexity of business operations on an ongoing basis. HIA ensures compliance with the internal audit principles and standards and the independence of the Internal Audit department, its audit staff and its performance against key performance indicators.

The Audit Committee reviews and evaluates adequacy and effectiveness of the Company's internal control environment and monitors the implementation of audit recommendations.

The Company's internal financial control is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. The Company's internal financial control includes those policies and procedures that pertains to maintenance of records, provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS

There were no significant or material orders passed by the regulators or courts or tribunals against the Company during the Financial Year 2023-2024.

However, BSE Limited (BSE) vide their e-mail dated November 30, 2023 have levied fine of H10,000 excluding

GST on the Company for the delayed compliance with Regulation 60(2) of SEBI (LODR) Regulations, 2015 i.e. Delay in submission of the intimation of Record Date and there is no material impact on the financials, operations or other activities of the Company due to imposition of such fine and the Company has duly paid the fine to BSE.

MATERIAL CHANGES/ EVENTS AND COMMITMENTS, IF ANY

There are no material changes and commitments affecting the financial position of the Company, which have occurred after March 31, 2024 till the date of this report except as mentioned below:

Aavas Finserv Limited, wholly owned subsidiary (“subsidiary”) of the Company had initiated the voluntary liquidation and accordingly the control of subsidiary has been transferred to official liquidator. As on the date of this report the status of subsidiary is “under the process of voluntary liquidation”.

Further, there has been no change in the nature of business of your Company.

MAINTENANCE OF COST RECORDS

The Company being a NBFC-HFC is not required to maintain cost records as per sub-section (1) of Section 148 of the Companies Act 2013.

INFORMATION TECHNOLOGY

Your Company has always been at the forefront of Technology adoption, and effectively leveraging technology solutions to enhance productivity of the teams and provide superior experience to our customers.

The Company is in the process of building a robust and scalable technology architecture as per the charted transformation roadmap to make the Company future ready. Your Company has made significant progress in this roadmap.

T he Company has already adopted a modern and innovative cloud based application stack for loan origination and customer service using Salesforce and Mulesoft platforms which provide 360-degree visibility for the entire customer life cycle. The financial systems have been upgraded to ORACLE Fusion ERP Applications. Further, the Loan Management System is also in the process of upgradation with ORACLE Flexcube Core banking application and the project is in a very advance stage of completion.

By utilising multiple India stack based fintech integrations and advance analytics capabilities, we have significantly

optimised our processes to bring in efficiency and agility at all levels.

The Company has upgraded the information security systems with modern and robust security solutions in the areas of endpoint security, cloud security and data leakage prevention solution. The Company will continue to build resilience by adopting latest technology tools, solutions, policies and procedures in line with evolving regulations and market trend.

HUMAN RESOURCE

Your Company has always believed its employees as its greatest asset and in pursuit of excellence, we continue to uphold our commitment to nurture and empower them. As we reflect on the past Financial Year, 2023, it is evident that our success is intrinsically linked to the quality and competence of our human capital.

Building upon the foundation laid in the preceding years, Aavas introduced strategic initiatives aimed at enhancing the well-being and professional growth of our employees. Notably among these initiatives are our efforts to support holistic well-being of our female employees and development of senior leadership team. During last Financial Year the Company has also come up with performance-based equity scheme to foster the culture of performance and ownership.

The Company continues to invest in a technology-driven HR department workflow and leverage the same to create seamless employee experience. These initiatives, along with our ongoing efforts to strengthen a progressive HR culture, underscore our commitment to provide a conducive and performance driven organisational environment for employee enrichment. The Company's permanent employee count stood at 6,075 as of March 31, 2024.

Looking ahead, your Company remain steadfast to create a better workplace and explore innovative ways to further elevate employee engagement at Aavas. Together, we will continue to strive for excellence, drive sustainable growth, and create value for all stakeholders.

RISK MANAGEMENT FRAMEWORK

Your Company takes risk management seriously by having a dedicated sub-committee of executives and Risk Management Committee of the Board to oversee it. This not only aligns with Regulation 21 of SEBI (LODR) Regulations, 2015 but also ensures compliance with RBI guidelines. Having such a committee helps establish a robust risk culture and governance framework within the company, ultimately contributing to its overall sustainability and success.

The Risk Management Committee meets, at least twice a year and as needed by the Board or Chairperson. This ensures ongoing oversight of the Company's risk landscape. By ensuring appropriate methodologies, processes and systems are in place, the Committee plays a crucial role in monitoring and evaluating risks associated with the business. Additionally, overseeing the implementation of the risk management policy and evaluating the adequacy of risk management systems reflects a proactive approach to risk management within the Company.

T he Company has comprehensive risk management policies in place, including a Board-approved Risk Management Policy, IT Risk Management Policy and an Internal Capital Adequacy Assessment Processes (ICAAP) policy, aligned with RBI guidelines.

The identification and monitoring of key risks such as Credit Risk, ALM Risk, Concentration Risk, Interest Rate Risk, Reputation Risk, Cybersecurity Risk, Fraud Risk, Business Risk, Exposure Risk, Competition Risk and Regulatory Risk are crucial for maintaining the Company's stability and resilience. These risks are reported to the Risk Management Committee on a quarterly basis ensuring transparency and proactive risk management.

Moreover, the utilization of institutional intelligence for underwriting methodology, executed by a qualified and experienced team, including Chartered Accountants, reflects a robust approach to risk assessment in the Company. Additionally, having dedicated vendors and professionally qualified in-house teams to address legal, technical, and operational risks further enhances the Company's risk management capabilities.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY

Pursuant to the provisions of Section 177(9) and (10) of the Act and Regulation 22 of the SEBI LODR, Regulations, 2015 the Company has formulated a Whistle Blower Policy for vigil mechanism of Directors and employees to report to the management genuine concerns or grievances about unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct. The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. To maintain these standards, the Company encourages its employees who have concerns about suspected misconduct to come forward and express their concerns without fear of punishment or unfair treatment. The mechanism provides a channel to the employees and Directors for adequate safeguards against victimization of employees and Directors who use such mechanism and makes provision

for direct access to the Chairperson of the Audit Committee in exceptional cases. The identity of the Whistle Blower is kept confidential so that he/she shall not be subjected to any discriminatory practice. None of the personnel of the Company has been denied access to the Audit Committee. The whistle blower policy is placed on the website of the Company and can be accessed at https://www.aavas.in/ img/pdf/Whistle-Blower-Policy.pdf.

DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013

Sexual Harassment at workplace is an extension of violence in everyday life and is discriminatory and exploitative, as it affects women's right to life and livelihood. Your Company is committed to prevent and deter the commission of acts of sexual harassment against women at workplace. The Company promotes and recognizes the right of women to protect from sexual harassment and the right to work with dignity as enshrined under the Constitution of India and the Convention on the Elimination of all Forms of Discrimination Against Women (CEDAW). In terms of these commitments and the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“the POSH Act”) and the rules made thereunder, the Company has formulated and implemented a Policy for prevention of sexual harassment against women and redressal of complaints thereto and has also constituted Internal Complaints Committee (ICC) under the POSH Act. ICC has been set up to redress complaints received regarding sexual harassment. All employees are covered under this policy. During the year, the Company conducted 326 workshops for employees creating awareness about POSH Act.

The details of complaints received and disposed during the Financial Year are provided in Corporate Governance Report forming part of this Annual report.

CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING IN COMPANY'S SECURITIES

The Company has instituted a mechanism to avoid Insider Trading and abusive self-dealing in the securities of the Company. In accordance with the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (SEBI PIT Regulations), the Company endeavors to preserve the confidentiality and prevent misuse of unpublished price sensitive information (UPSI). The Company has formulated Code of Conduct-Prevention of Insider Trading Policy with an objective to prevent misuse of any UPSI and prohibit any insider trading activity, in order to protect the interest of the Shareholders at large. Mr. Sharad Pathak, Company Secretary and Chief Compliance Officer

of the Company is authorized to act as Compliance Officer under the Code.

Further the Company has maintained a Structural Digital Database (SDD) pursuant to provisions of regulations 3 (5) and (6) of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015.

PARTICULARS OF HOLDING/SUBSIDIARY/ ASSOCIATE COMPANIES

Your Company do not have any Holding Company or Joint Ventures.

Lake District Holdings Limited holds substantial interest in the Company.

Your Company has one unlisted wholly owned subsidiary named ‘Aavas Finserv Limited' which is under Voluntary Liquidation as on March 31, 2024.

In pursuance of Provisions of Section 129(3) of the Act, Company has prepared Consolidated Financial Statements of the Company, which forms part of this Annual Report. Further, a Statement containing salient features of Financial Statement of the Subsidiary in the prescribed format AOC-1 pursuant to Section 129(3) of the Act read with the Companies (Accounts) Rules, 2014, is annexed as ‘Annexure-6' to this Report.

In accordance with Section 136 (1) of the Act, the Annual Report of your Company containing inter alia, Financial Statements including Consolidated Financial Statements, has been placed on our website at https://www.aavas.in/ investor-relations/annual-reports. Further, the Financial Statements of the subsidiary have also been placed on our website at: https://www.aavas.in/investor-relations/ financial-subsidiary.

INVESTOR RELATIONS

Your Company always proactively engaged in strengthening investors trust through fully embracing innovations and it is using technology wisely to sustain performance today, but also leverages it for future growth. Your Company is always looking ahead and take on a holistic perspective of the operating landscape.

Your Company has deeply embraced new digital technologies (mobile applications, artificial intelligence (AI), Concept of Accounts Aggregator) to accelerate the launch of services to accelerate growth for better investor engagement and to increase their trust towards Company's operations.

In connection with the above, your Company has dedicated investor relation team, which helps the Company to communicate with its investors through Information

session on Financial Results for institutional investors and analysts via telephone conference, meetings with investors/ analysts and discussions between Fund Managers and Management. Investor relation team participate in investor relations conferences each quarter in an effort to foster better relationships with investors. Presentations given by investors to fund managers, analysts and investors are posted on the Company website and are also transmitted to stock exchanges. Each quarter, the audio and video recordings of these meetings, along with their transcripts, are posted on the website at https://www.aavas.in/ investor-relations/investor-intimation. Investor relation conferences are a great way to interact with investors and foster better relationships.

PARTICULAR OF EMPLOYEE REMUNERATION AND RELATED DISCLOSURES

Disclosures with respect to the remuneration of Directors and employees as required under Section 197(12) of the Act and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (Rules) and in accordance with the provisions of Rule 5(2) of the above mentioned rules, the names and particulars of the top ten employees in terms of remuneration drawn have been appended as an ‘Annexure 8' to this Report.

In terms of the provisions of Section 136(1) of the Act, the Directors' Report including the said annexure is being sent to all Shareholders of the Company.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company is committed to integrate social and environmental concerns in their business operations and believes that, it is our moral responsibility to give back to the community, participate in philanthropic causes, and provide positive social value and wealth to stakeholders.

As a part of Company's initiatives towards CSR, the Company has undertaken projects in the areas of Rural & Community Development, Promoting Education, Healthcare, Eradicating hunger, conservation, protection and amelioration of environment from over exploitation of resources.

The CSR policy of the Company relates to the activities to be undertaken by the Company, which is in accordance with the provisions of CSR under Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 and Schedule VII of the Act.

The CSR Policy is hosted on Company's website and can be accessed at: https://www.aavas.in/codes-and-policies and the annual report on CSR activities is furnished at 'Annexure-9' which is attached to this report.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars of energy conservation, technology absorption and foreign exchange earnings and outgo in terms of Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 is as follows:

ENVIRONMENT HEALTH AND SAFETY (EHS) PROTECTION

Your Company is committed to high Environmental and Social (ES) Standards in its business and will continue to develop its investment decision-making processes and procedures so as to reflect the requirements of Indian ES legislation, as well as relevant international standards (specifically IFC Performance Standards) as applicable to our housing finance and MSME business lines. The Company always ensures that healthy and safe working environment is provided to all employees of the Company.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORTING

As per Regulation 34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the top 1000 listed entities based on market capitalization, shall attach a Business Responsibility and Sustainability Report (“BRSR”) with the Annual report describing the initiatives taken by the listed entity from an environmental, social and governance perspective.

Pursuant to the SEBI Circular SEBI/HO/CFD/CFD-SEC- 2/P/CIR/2023/122 dated July 12, 2023 related to BRSR Core -Framework for assurance, the top 150 listed entities (by market capitalization) shall make disclosures as per the updated BRSR format, as part of their Annual Report.

However, being a top 500 listed entity and adhering to good Corporate Governance the Company has voluntarily submitted Business Responsibility and Sustainability Report (BRSR) Core for the Financial Year 2023-24, in addition to publishing Annual BRSR as per the latest Regulation.

This framework guides us to reinforce principles of ESG in all aspects of the Company's business and focus its efforts on responsible products, improving efficiency, people power and environmental consciousness aligned with the expectations stated in the Business Responsibility and Sustainability Report (BRSR).

During the Year under review, recognizing the significance of ESG (Environmental, Social, and Governance), the Company designated CSR Committee to oversee the implementation of the Principles and Policies of Business Responsibility and Sustainability Report and reconstituted its CSR Committee as the CSR & ESG Committee. The Company has developed ESG Policy & set ESG targets to align with the growing importance of ESG, showcasing its dedication to sustainability, risk management, and longterm value creation for stakeholders.

The Business Responsibility and Sustainability Report in updated format describing the initiatives taken by the Company from an environmental, social and governance perspective along with Limited Assurance Statement from an Independent Auditor forms part of this Annual Report as ‘Annexure-11'.

ANNUAL RETURN

Pursuant to the provisions of Section 134(3) and Section 92(3) of the Act, read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014 the Annual Return in form MGT-7 as on March 31, 2024 is available on the website of the Company and can be accessed at https:// www.aavas.in/investor-relations/annual-reports.

ADDITIONAL DISCLOSURES UNDER COMPANIES (ACCOUNTS) RULES, 2014

a. The details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the Financial Year:

During the Financial Year under review, the Company neither filed any application nor had any proceedings pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016), therefore, it is not applicable to the Company.

b. The details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereto:

During the Financial Year under review, it is not applicable to the Company.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Since the Company is an HFC, the disclosure regarding particulars of loans given, guarantees given and security provided in the ordinary course of business is exempted under the provisions of Section 186(11) of the Act.

However, the details of loans, guarantees, and investments made as required under the provisions of Section 186 of the Act and the rules made thereunder are set out in the Notes to the Standalone Financial Statements of the Company.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

In accordance with the provisions of Section 188 of the Act and rules made thereunder, all related party transactions entered during Financial Year 2023-24 were on an arm's length basis and in the ordinary course of business under the Act and were not material under the SEBI LODR Regulations, 2015 the details of which are included in the notes forming part of the Financial Statements.

T he details as required to be provided under Section 134(3) (h) of the Act are disclosed in Form AOC-2 as ‘Annexure-7' which forms part of this Report.

A list of all related party transactions is placed before the Audit Committee as well as the Board. The Audit Committee has granted omnibus approval for related party transactions as per the provisions of the Act and the SEBI LODR Regulations, 2015.

Further, as required by SEBI and RBI Master Directions, ‘Policy on transactions with Related Parties' is given as ‘Annexure-10' to this Report and can be accessed on the website of the Company at https://www.aavas.in/img/pdf/ Policy-on-Materiality-of-related-party-transactions-and- on-dealing-with-related-party-transactions.pdf.

INTERNAL GUIDELINES ON CORPORATE GOVERNANCE

Your Company is committed towards achieving the highest standards of Corporate Governance right from its establishment by staying true to its core values of Customer first, transparency, fairness in action, accountability, integrity and equity in all its engagements. The Company's Corporate Governance framework ensures that it makes timely and appropriate disclosures and shares factual and accurate information to its stakeholders so as to make an informed decision.

The Company has approved and adopted the Internal Guidelines on Corporate Governance. The Internal Guidelines on Corporate Governance has been framed in accordance with the Act, SEBI (LODR) Regulations, 2015, RBI Master Directions, 2021 and other applicable rules and regulations.

The guideline is available on the website of the Company and can be accessed at https://www.aavas.in/img/pdf/ internal-guidelines-on-corporate-governance.pdf.

DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(3)(c) read with Section 134(5) of the Act and based on the information provided by the Management, the Board of Directors report that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the profit and loss of the Company for that period;

c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

d) the Directors had prepared the annual accounts on a going concern basis;

e) the Directors had laid down Internal Financial Controls to be followed by the Company and that such Internal Financial Controls are adequate and were operating effectively; and

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

BUSINESS OVERVIEW & FUTURE OUTLOOK

A detailed business review & future outlook of the Company is appended in the Management Discussion and Analysis Section of the Annual Report.

ACKNOWLEDGEMENTS AND APPRECIATION

The Board of Directors extends their gratitude for the valuable guidance and support received from all stakeholders of the Company, including the Reserve Bank of India, National Housing Bank, Ministry of Corporate Affairs, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India, Stock Exchanges i.e BSE and NSE, and other regulatory authorities. They also acknowledge the support of bankers, lenders, financial institutions, members, credit rating agencies, National Securities Depository Limited, Central

Depository Services (India) Limited, NSE IFSC Limited and customers of the Company for their continued trust and support.

The Directors wish to express their appreciation to Kedaara Capital and Partners Group for their invaluable and ongoing support and guidance.

Additionally, the Directors commend the commitment demonstrated by all executives, officers, staff and the Senior Management team of the Company, which contributed to the excellent performance of the Company during the Financial Year.

For and on behalf of the Board of Directors AAVAS FINANCIERS LIMITED

Managing Director and CEO (DIN: 08697657)

Date: July 05, 2024 Place: Mumbai

Promoter Nominee Director (DIN: 05254602)

Date: July 05, 2024 Place: New York, USA

201-202, 2^nd Floor, Southend Square,

Mansarover Industrial Area, Jaipur 302 020, Rajasthan, India CIN:L65922RJ2011PLC034297

E-mail: investorrelations@aavas.in : Website: www.aavas.in

Statutory Reports 99