Equity Analysis

To

The Members,

Your Board of Directors present the Tenth Annual Report on the business and operations of your Bank, together with the Audited Financial Statement for the Financial Year ('FY') ended March 31, 2024.

The financial highlights for the FY under review, are presented below:

While your Bank completed eight years of its operation during the FY under review, it has continued to demonstrate strong growth both on liability as well as loan side. During the FY, total deposits grew further from Rs.1,08,064.69 crore as on March 31, 2023 to Rs.1,35,201.99 crore as on March 31, 2024 registering a growth of 25.1 per cent. whereas total advances (net) grew further from Rs.1,04,756.77 crore as on March 31, 2023 to Rs.1,21,136.78 crore as on March 31, 2024 registering a growth of 15.6 per cent. Your Bank has also crossed Rs.2.5 lakh crore in terms of total business and the size of Balance Sheet crossed Rs.1.75 lakh crore. The strong growth of your Bank reflects the trust of millions of customers and their continued association over the years with the Bank. Your Bank stayed on the path of building on faith reposed by its customers which is reflected in its staggering customer base of 3.36 crore as on March 31, 2024.

During the FY under review, your Bank has been on the course with its strategic priorities of portfolio diversification. As on March 31, 2024, microfinance loan book has been reduced to 32.7 per cent. of the total asset book from 34.9 per cent. as on March 31, 2023 whereas Commercial Banking portfolio was at 21.6 per cent., Housing portfolio at 24 per cent., Retail portfolio at 4.5 per cent. and SBAL portfolio was at 17.2 per cent. of the total loan book of your Bank as on March 31, 2024.

With regard to the strategic priority of geographical diversification, among the new banking outlets opened during the year under review, the majority were outside of the core markets of East and North East India, resulting in an increased presence in the western and southern parts of the country. During the FY under review, your Bank has added 298 new banking outlets taking the total count of banking outlets to 6,297 as on March 31, 2024. Out of the total banking outlets, 33 per cent. are in rural, 37 per cent. in semiurban, 18 per cent. in urban and 12 per cent. in metro locations. The number of customers has increased from 3 crore as on March 31, 2023 to 3.36 crore as on March 31, 2024. Expansion of network of banking outlets and customer base, resulted in higher deposits growth of 25.1 per cent. The Current Account and Savings Account ('CASA') deposits have recorded an increase of 18.1 per cent. from Rs.42,450.53 crore as on March 31, 2023 to Rs.50,150.70 crore as on March 31, 2024.

During the FY under review, the total income (net) of your Bank has increased by 6.5 per cent. to Rs.12,490.26 crore as against the total income of Rs.11,728.17 crore for FY 2023. Net Interest Income for the FY 2024, stood at Rs.10,325.61 crore compared to Rs.9,259.62 crore for FY 2023, representing a growth of 11.5 per cent. NIM for the FY 2024 was 7.3 per cent. The Profit After Tax ('PAT') stood at Rs.2,229.56 crore for the FY 2024, an increase of 1.6 per cent. as compared to Rs.2,194.64 crore for FY 2023. Consequently, Return on Average Equity ('ROAE') was 10.7 per cent. and Return on Average Asset ('ROAA') was 1.4 per cent. Correspondingly, basic as well as diluted Earnings Per Share ('EPS') increased from Rs.13.62 to Rs.13.84 as at the end of FY 2024 in comparison to FY 2023. The GNPA as on March 31, 2024 was 3.84 per cent. whereas net NPA was 1.11 per cent.

Your Bank continues to focus on financial inclusion by providing various financial services to the underserved. The Reserve Bank of India ('RBI') has mandated Priority Sector Lending ('PSL') of a minimum 40 per cent. of advances for all banks. Your Bank's PSL was Rs.60,123 crore as on March 31, 2024 as compared to Rs.54,176 crore as on March 31, 2023. At the end of FY 2024, PSL as a proportion of the gross advances of Rs.1,24,574.05 crore was 48 per cent.

Highlights of various business segments of your Bank during the FY under review are mentioned below:

The Emerging Entrepreneurs Business ('EEB') of your Bank has been serving borrowers at the bottom of the pyramid with affordable and convenient loans to help them develop into entrepreneurs and transform their lives. Your Bank's EEB strategy is guided by its long-held philosophy of financial inclusion and economic empowerment of the disadvantaged sections of the society. The endeavour of your Bank is to nurture these entrepreneurs and help them move up the socio-economic hierarchy. In their movement upwards, your Bank is by them to support with whichever financial service they may require in the journey.

Your Bank offers a wide array of loans through Banking Unit ('BU') outlets under EEB vertical to benefit small business owners in need of financial assistance. Your Bank operates its Group Loans and Small Business & Agri Loans ('SBAL') business channels from its BU outlets while Small Enterprise Loans ('SEL') are operated from the bank branches.

Each BU is linked to a bank branch for operational convenience. BUs are self-sufficient and empowered to open deposit accounts using TABs and also open loan accounts after necessary credit checks. The highlight of the BUs' operations is the TABs that are connected to the Core Banking System ('CBS') through cellular data. Relationship Officers ('RO') carry these TABs to their group meetings, and the entire instalment reconciliation for the customer happens through these TABs on real-time basis. To ensure timely and effective support to the BUs in their day-to-day functioning, your Bank has a structure comprising Circles, Territories, Divisions, Areas and BU Catchments. A central operation team maintains oversight of the quality of the operations and adherence to prevalent guidelines at all times. Your Bank lays significant emphasis on processes and controls to help maintain uniform and consistent standards in transaction processing and service delivery, as well as compliance with regulatory and statutory guidelines.

During the FY under review, your Bank's commitment towards financial inclusion is also reflected in the fact that it offered loans to 21,09,921 new borrowers under Group Loan and SBAL during the FY 2024. The portfolio for Group Loans stood at Rs.40,745.31 crore whereas SBAL and SEL portfolio stood at Rs.21,501.74 crore and Rs.5,671.83 crore, respectively, at the end of FY 2024, as your Bank worked towards bringing additional measures in credit control in order to improve the quality of its portfolio.

Your Bank now has several loan products under its Group Loans, SBAL and other categories, which are provided from BU outlets and branches to cater better to the varied demands and needs of its customers:

1. Srishti Loan: Timely funds to start a new business or grow an existing one. Loan size is from Rs.15,000 to Rs.1,50,000.

2. Subriddhi Loan: Loan amount is up to 50 per cent. of the disbursement amount of running primary loan. Sanctioned to help customers fulfil their extra business requirement during their ongoing loan.

3. Suraksha Loan: Loan size is up to Rs.15,000 and is sanctioned to help existing customers meet their emergency expenses, e.g.- medical, drinking water and sanitation.

4. Sushiksha Loan: Loan size is up to Rs.10,000 and is sanctioned to help customers meet expenses towards the education of their children.

5. Baazar Loan: With a loan size from Rs.26,000 to Rs.1,50,000, this product is for small entrepreneurs, who have an existing super-saver account with your Bank. This loan provides financial support to deposit customers for their working capital needs.

1. Sahayata Loan: Loan to fund growing business needs of individuals involved in an array of income generation activities. Loan amount is from Rs.50,001 to Rs.5,00,000.

2. Suyog Loan: Loan amount is up to 50 per cent. of the disbursement amount of running Sahayata loan. Sanctioned to help customers fulfil their additional short-term business requirements during their ongoing loan.

In the current economic scenario, India is a country burgeoning with small businesses which are regularly in need of short to medium-term funding to maintain and grow their businesses. The SEL vertical of your Bank empowers these businesses to expand by extending them business loans tailored to suit their needs. As on March 31, 2024, the SEL book stands at Rs.5,671.83 crore, with over 1.22 lakh customers.

Your Bank's SEL product is served through more than 1,400 branches pan India, with presence in 29 states and union territories. With the COVID pandemic now firmly behind us, the SEL portfolio is now expected to grow at a much faster rate than in the recent past, thus making it all the more essential for your Bank to offer loans to these firms, and aid them in their pursuit of growth and expansion, in turn contributing to the overall betterment of the economy.

In an endeavor to understand its customers better, your Bank's SEL vertical has constantly taken inputs from borrowers and with the help of these inputs, updated and added to the catalogue of offered products to remain at par with other leading banks in the country.

The following products are presently offered under SEL:

These are term loans with a tenure of one to three years, and they are aimed towards financing working capital or asset creation needs of small businesses or other short-term business requirements. These loans range from Rs.1.01 lakh to Rs.10 lakh.

This is similar to SEL Term Loans, but it is targeted towards slightly larger enterprises in terms of revenue, which might need loans of value higher than Rs.10 lakh. These loans range from Rs.10.01 lakh to Rs.25 lakh.

This is a revolving credit facility, whereby a limit will be set up in the customer's loan account and the customer can avail of whatever amount is required and pay interest only on the utilised amount. The limit is subject to renewal on a yearly basis. These loans range from Rs.5 lakh to Rs.25 lakh.

This overdraft product has been added to your Bank's SEL product bouquet during FY 2023 with a vision to cater to the MSME borrowers who need working capital in the form of an overdraft and are willing to pledge security for the loan. The range for this product is from Rs.10.01 lakh to Rs.25 lakh and the overdraft limits are subject to renewal on a yearly basis.

During the FY under review, your Bank has taken the following initiatives:

• Your Bank has taken a new step towards digitising its business channels by upgrading to a new CBS in the FY 2024. This step strengthens your Bank's commitment towards providing a quicker, better and hassle-free banking experience to all segments of its customers.

• Your Bank has taken several initiatives to strengthen the credit assessment process for Group Loans and SBAL, and other loans in order to have a better portfolio. Your Bank has further deployed a separate Loan Sanctioning team to manage the loan sanctioning process for Group Loans.

• Your Bank has also deployed a separate independent Recovery Team to improve recovery collections from delinquent customers where the business team will focus on collections from standard accounts to restrict slippages while the recovery team will have a focused approach to collection from NPA accounts.

• Your Bank has deployed several analytics-driven models to improve both, sourcing and recovery. Some of the key initiatives in this regard are: the identification of good borrowers for a higher ticket loan based on a data-driven renewal base, identification of potential borrowers for graduating to individual loan, categorisation of delinquent borrowers based on their propensity to repay and prioritising collections accordingly, etc.

• Awareness about using digital solutions, like smartphone- based transactions and use of credit/ debit cards for online transactions are still persistent issues to the customers under the Banking Unit vertical. To overcome these challenges, your Bank is giving training to make the customers aware about the benefits of digital payments and various other aspects, such as seeding bank accounts with mobile number and Aadhaar. Your Bank has also taken initiative by informing the customers to pay through online transactions.

• Your Bank has always placed strong emphasis on training and development to upskill and reskill staff to ensure that they stay relevant to the fast-changing world across levels and locations. This includes online and classroom training sessions.

Your Bank continuously strives to meet the diverse credit needs across sectors, with a dedicated focus on Institutional Lending catering to Non-Banking Financial Companies ('NBFCs') and Housing Finance Companies ('HFCs') to public financial institutions. In FY 2024-25, your Bank is planning to foray into the financial requirements of Education & Healthcare Institutions through its existing product suite, which includes term loans, working capital limits, cash credit and overdraft facilities. Your Bank also has credit exposure through Direct Assignments and Investment exposure through Pass Through Certificates ('PTCs') and Non-Convertible Debentures ('NCDs'). In the NBFCs segment, your Bank's primary focus is secured financing through housing loan, loan against property, gold loan, business purpose loan, commercial & vehicle financing, etc. While in the NBFC-MFI (Microfinance institutions) segment, the focus is to cater primarily to the priority segment funding.

FIG segment has a diverse portfolio with geographical presence across the country. The Total Advances of the segment stood at Rs.12,814.89 crore as on March 31, 2024 as compared to Rs.10,386.72 crore as on March 31, 2023, a growth of 23 per cent. during FY 2024.

Mid-Market Group ('MMG') offers loan products to majorly Small & Medium Enterprises ('SMEs') and large corporate borrowers for meeting their working capital and capital expenditure requirements, including non-fund based facilities. These are generally secured loans extended to businesses involved in manufacturing, trading, services, etc., with acceptable credit ratings. The segment offers both fund-based and non-fund based facilities including term loan, cash credit, overdraft, loan against property, construction/ project finance, lease rental discounting, Letter of Credit ('LoC'), Bank Guarantee ('BG'), etc. While, the Cash Management Services ('CMS') and Trade Finance have already been launched, the implementation of Supply Chain Finance is in process.

The Total Advances of the segment stood at Rs.6,700.68 crore as on March 31, 2024 as compared to Rs.3,605 crore as on March 31, 2023, a growth of 86 per cent. during FY 2024.

This segment caters primarily to proprietorships, partnerships and private limited companies for Loans Against Property ('LAP'). This is in line with your Bank's overall objective of increasing the secured lending portfolio. The segment will leverage your Bank's more than 300 branches besides sourcing from the open market, along with a higher level of engagement to meet additional financial requirements of customers. As we move along, your Bank will use technology for better turnaround time which is essential for scaling up the business volume in this space. The segment offers a bouquet of income-linked programmes to cater to most of the sectors in the market.

The Total Advances of the segment stood at Rs.515.50 crore as on March 31, 2024 as compared to Rs.53.14 crore as on March 31, 2023, a growth of 870 per cent. during FY 2024.

Business Banking Group ('BBG') offers loan products to the needs of Micro, Small and Medium Enterprises ('MSMEs') to meet their working capital or capital expenditure requirements. These are secured loans generally between Rs.5 lakh to Rs.15 crore extended to businesses involved in manufacturing, trading, and services. The loans are extended in the form of secured credit facilities including term loan, cash credit, overdraft or lease rental discounting or as non-fund-based facilities like letter of credit or bank guarantee. Some of the schematic loan products offered by the segment are as follows:

These loans help entrepreneurs in financing their working capital and capital expenditure requirements against primary security of current or fixed assets and collateral security including residential or commercial property or liquid securities. These loans, ranging from Rs.10 lakh to Rs.5 crore, are provided as fund-based facilities like overdraft, cash credit, or term loan and non-fund-based facilities like letter of credit or bank guarantees.

These loans, for financing entrepreneurs' working capital needs, are provided as an overdraft or fund-based facilities. These loans are offered against collateral security, which can be in the form of current assets, property or liquid securities. The loan quantum ranges from Rs.25 lakh to Rs.3 crore.

Your Bank offers loans to finance the working capital and capital expenditure of Micro and Small Enterprises ('MSEs'). These loans are provided as fund-based and non-fund- based facilities, without any collateral security or third-party guarantee. The loan quantum ranges from Rs.5 lakh to Rs.5 crore, with credit guarantee of CGTMSE up to a maximum limit of Rs.5 crore per borrower. Collateral security for the remaining uncovered portion of the credit facility can be obtained under "Hybrid/ Partial Collateral Security" product, introduced by CGTMSE.

The BBG fund based book was at Rs.1,009.65 crore as on March 31, 2024 as against Rs.535 crore as on March 31, 2023, registering a growth of about 89 per cent. during FY 2024.

Providing credit for agricultural activities not only helps increase crop production but also empowers farmers, and supports the backbone of the Indian economy- the agricultural sector. Your Bank recognises the importance of this sector and offers a wide range of credit facilities to provide financial support to all participants in the Agri value-chain system. Currently, the segment provides Kisan Cash Credit ('KCC') loans to borrowers engaged in farming activities, including animal husbandry, horticulture, pisciculture, etc., with competitive interest rates and minimal documentation.

By doing so, your Bank is making it easier for farmers to access credit and invest in their farms to increase productivity.

Currently, the segment is expanding its reach by offering (i) both fund-based and non-fund-based credit facilities to entities involved in agri-ancillary products and services, such as food and agri processors, agri input dealers, etc.; (ii) credit facilities to support development of agricultural infrastructure; (iii) financing to Corporate Agri customers, with a key focus to on-board quality customers, and (iv) commodity finance.

The Total Advances of the segment stood at Rs.267.78 crore as on March 31, 2024 as compared to Rs.126.52 crore as on March 31, 2023, a growth of 112 per cent. during FY 2024.

Your Bank has continued its focus on the long-term strategy for Housing finance. This business has seen a robust growth in the financial year in spite of the challenging macro-economic environment. In addition to the existing business channels, in the financial year, your Bank has introduced a Prime lending channel, which has impacted positively with a higher disbursement and portfolio growth along with a lowered delinquency risk.

During the FY under review, your Bank has expanded its home loan network to over 450 branches offering housing loans and 320 Banking Units offering micro-home loans spread across 18 states and 2 union territories.

With a focus on acquiring quality business and reducing delinquency, your Bank has disbursed Rs.7,270 crore during the financial year, representing a growth of 14 per cent., and has been able to reduce its GNPA to 1.6 per cent. from 3.9 per cent. in the previous financial year while growing the portfolio to Rs.29,915.65 crore, a growth of around 11 per cent.

Although the Prime channel has been contributing significantly to the overall business, your Bank's focus has still remained its affordable housing business, which is its primary strength. This is indicative by its sanctioning average ticket size of sub Rs.20 lakh. During the FY, your Bank continued the special campaign "Junoon Rahe Barkaraar (JBR)" for higher ticket loans, offering attractive and competitive rates of interest to customers with good credit history and high credit scores. This campaign has continued to attract better credit-worthy customers.

The introduction of Direct Sales Agent ('DSA') in the previous FY has continued to gain traction and has been contributing to overall disbursement. The newly introduced prime channel has also seen steady traction since its introduction during the FY

Your Bank continues to offer loans at floating rates linked to an External Benchmark Rate ('EBR'), which has adopted the repo rate announced by RBI as the EBR rate. Your Bank has continued to offer the existing customers who are not on EBR, an option to convert their loans to EBR linked loans. As per the directive by RBI, your Bank has also provided an option to the customer to choose between "impact to EMI or term or both" based on their eligibility for their benchmark-linked loans at the time of change in benchmark rates during their loan tenure.

In order to cater to a broader demography and mitigate risk, your Bank has constantly strived to introduce and reinforce several Retail Asset products throughout the FY 2024. Customers now have access to a range of loan options including Gold Loans, Personal Loans, Two-Wheeler Loans, Car Loans, and Commercial Vehicle & Construction Equipment ('CVCE') Loans offered by your Bank.

• Gold Loan: Designed to address customers' immediate financial requirements swiftly, our Gold Loan offers a streamlined documentation process, quick processing, and extensive branch coverage. With loan amounts ranging from Rs.10,000 to Rs.40,00,000 and flexible tenure options up to 3 years, customers benefit from competitive interest rates.

• Personal Loan: During the FY 2024, your Bank has constantly recalibrated the personal loan approach and refined the acquisition strategy keeping aligned to the market dynamics. A specialised sales team does the procurement of loans, catering to both existing customers and newcomers to the Bank. Throughout FY 2024, your Bank has been methodically broadening this sector across all distribution channels, encompassing vital markets. Personal loans, featuring competitive interest rates, are available within the range of Rs.50,000 to Rs.25,00,000, with a maximum tenure of 5 years.

• Two-Wheeler Loans: Your Bank has demonstrated

remarkable growth, maintaining a consistent trajectory, and has now surpassed a customer base of over 1,00,000 happy customers, with over 90 per cent. of these being new to bank customers. Harnessing its digital prowess, your Bank streamlined the loan approval process, achieving an impressive approval time of just 5 minutes for more than 90 per cent. of applicants. This revamped loan service is tailored to meet diverse customer needs, offering financing upto Rs.5,00,000. Moreover, your Bank has adapted the product to meet industry standards, introducing a dealer/ channel- based distribution model to extend its reach across various geographical locations.

• Car Loan: The Car Loan product has been meticulously crafted to simplify vehicle ownership and enhance accessibility for all customers. Offering competitive interest rates and adaptable repayment options, its Car Loan extends financial support for the acquisition of both new and pre-owned vehicles. By harnessing our digital capabilities, your Bank streamlines the application process, ensuring a seamless experience with swift approval times, thus enabling customers to realise their dream of owning a car sooner. Your Bank has developed a range of product schemes catering to a diverse array of customer profiles, including salaried individuals, self-employed individuals, and non-individual entities, with loan amounts spanning from Rs.1 lakh to Rs.1 crore. Leveraging its extensive network of manufacturers and dealers, your Bank is committed to delivering the finest deals to both existing and new customers, ensuring unparalleled value and satisfaction.

• CVCE Loan: Road transport is crucial for moving goods and people as it offers complete connectivity and adaptability. Your Bank has introduced Commercial Vehicle Financing for customers to support this sector. It's designed for selfemployed individuals and businesses needing loans from Rs.1 lakh to Rs.15 crore. Your Bank is dedicated to providing exceptional value to its valued customers, using its wide branch network, partnerships with manufacturers, and dealer connections to offer the best deals possible.

Your Bank provides an array of retail liability products designed to promptly and effectively cater to diverse banking requirements across various customer segments. Prioritising customer satisfaction, your Bank consistently innovates and offers convenient banking solutions to meet its customers' needs.

During FY 2024, your Bank's deposit portfolio witnessed a robust growth of 25 per cent. with a total deposit base of Rs.1,35,202 crore as of March 31, 2024. The growth in deposits was primarily driven by the varied liability products of term, savings and current account deposits with the total retail deposit book (CASA + Retail Term Deposits) growing by 22 per cent.

The Affluent segment, comprising our premier products like Elite & Premium Savings Accounts, has progressively bolstered the Savings product proposition. Concurrently, your Bank has prioritised the Senior Citizen demography, by launching 'Inspire', a programme designed to offer specialised services tailored to their needs. Your Bank aims to scale this up and launch other segment-specific offerings catering to the needs of varied customer category. In order to enhance communication efforts, your Bank has developed product-focused campaigns aimed at informing customers about features, rates, and technology-driven services. During FY 2024, your Bank introduced RuPay Platinum Debit Card, remaining committed to providing customers better card value proposition, features and benefits along with a diverse selection of debit card choices. The entire collection of Debit Cards has garnered a total card fee income amounting to more than Rs.70 crore as of March 31, 2024. The card fee income consists of Issuance Fee, Annual Fee and Re-issuance Fee.

The Current Account segment also demonstrated a strong performance during FY 2024, marked by consistent balances and adept financial management. Strategic initiatives including enhanced EDC penetration, CAM Channel development, reengagement with existing customers via the NEEV project, and intensified focus on new branches have effectively met customer demands, demonstrating resilience in a competitive market landscape. The overall Current Account Book has sustained a commendable growth rate of 51 per cent. as of March 31, 2024.

The Merchant Acquiring Business ('MAB') serves as a crucial factor in drawing current account relationships. MAB is actively enrolling POS/ EDC devices with consistent month-on-month increases and offering Payment Gateway services to merchants across all categories. The MAB business has witnessed substantial growth, with 326 per cent. increase in acquisitions over previous year and

52 per cent. rise in throughput, resulting in the accumulation of balances in associated accounts.

Your Bank's expansive branch network has been instrumental in its achievements. Throughout FY 2024, a total of 289 branches were added, elevating your Bank's overall presence to 1,700 branches, spanning diverse locations nationwide.

To fortify its relationship with customers, your Bank is engaging in communication through marketing campaigns, social media outreach, and branch-level initiatives. Your Bank has also seamlessly transitioned to the latest Core Banking System - Flexcube and rolled out a new Internet Banking platform and mBandhan app, boasting upgraded features.

Your Bank will continue to harness technology to provide innovative digital solutions that prioritise security, convenience, and user- friendliness. Your Bank is dedicated to delivering top-notch banking solutions to the customers and eagerly anticipates serving them with unwavering zeal and commitment in the years ahead.

Your Bank currently distributes mutual funds, life insurance and general insurance, including health insurance and 3 in 1 online trading products to its customers. FY 2024 has been a year of transformation and integration. Your Bank continues to demonstrate a continued focus on offering a value-led, robust and comprehensive product proposition to its customers. In the life insurance business, your Bank continues in its quest of offering a wide bouquet of products to cater to different life cycles and life stages of its customers. Your Bank has also been working tirelessly to build a strong distribution ecosystem augmented by analytics and technology to offer the best in class insurance solutions to its customer base. In the General Insurance business, your Bank continued to serve its customers in their quest towards healthy living, by offering them a wide variety of health insurance solution- based product propositions. In mutual funds distribution, your Bank continues to focus on a research-driven distribution strategy with a vision of providing its customers ease and flexibility while planning for investments. This year, your Bank has launched the distribution of Mutual Funds through its Mobile Banking ('mBandhan') platform, which along with the existing distribution available through the Retail Internet Banking ('RIB') platform demonstrated your Bank's continuous efforts towards offering customers further convenience and benefits.

Your Bank continues to invest towards building a customer value- centred, segment-driven, data-led, analytics and research-based, and technology embedded, product distribution propositions, across all Third Party Products and continues to seek out opportunities to add new product suites to serve customers' financial needs holistically.

The total mutual fund AUM managed under your Bank's code during FY under review was Rs.1,024.84 crore, on which the Bank earned an income of Rs.6.31 crore.

A total of Rs.131.55 crore and Rs.519.85 crore of general and retail life insurance business, respectively, were garnered through the retail network during FY 2024, earning a fee income of Rs.15.16 crore and Rs.214.80 crore, respectively. During FY under review, the life insurance business through all asset verticals amounted to Rs.279.59 crore, earning an income of Rs.47.10 crore. The insurer wise segmented commission income is as follow: Bajaj Allianz Life Insurance: Rs.170.24 crore; HDFC Life Insurance: Rs.83.94 crore; Kotak Life Insurance: Rs.7.72 crore; Bajaj Allianz General Insurance: Rs.4.63 crore; Niva Bupa Health Insurance: Rs.7.67 crore; Oriental General Insurance: Rs.2.9 crore; and HDFC ERGO General Insurance: Rs.-0.05 crore.

Your Bank has also earned Rs.0.15 crore as commission for the distribution of Atal Pension Yojana, NPS Lite Swavalamban schemes of PFRDA and others during the FY 2024.

Your Bank's core commitment to creating inclusive growth is reflected in its Corporate Social Responsibility ('CSR') initiatives, which focus on the empowerment of the marginalised sections of the societies residing in the vicinity of its operational area. The marginalised communities are confronted with multi-dimensional vulnerabilities, at the core of which is the challenge to secure sustained livelihoods. Accordingly, the interventions of your Bank's CSR initiatives are appropriately designed to build their capabilities for securing sustainable livelihoods.

To address its societal commitments, your Bank has adopted a comprehensive CSR policy that outlines the CSR programmes of your Bank, which are in line with Schedule VII to the Companies Act, 2013 (the 'Companies Act'). These programmes are being undertaken in the vicinity of your Bank's operational areas.

For the seamless implementation and monitoring of the CSR programme, your Bank has constituted the Corporate Social Responsibility and Sustainability Committee of the Board ('CSR&SCB'), in accordance with the provisions of Section 135 of the Companies Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 ('CSR Rules'). The CSR&SCB also oversees the implementation of the Business Responsibility and Sustainability Reporting ('BRSR') related initiatives of the Bank. The composition of the CSR&SCB is given in the Corporate Governance Report which forms part of this Report.

During the FY under review, your Bank has contributed Rs.40.05 crore towards 16 CSR programmes implemented through a Project Implementing Agency ('PIA') and contribution to PMCARES Funds as stipulated in the clauses of Schedule VII to the Companies Act. Bandhan Konnagar ('BK'), PIA for the CSR programmes of the Bank is also a related party of the Bank and CSR spending through BK is approved by Audit Committee of the Board as related party transaction, in addition to CSR&SCB and the Board. These CSR programmes were spread across 273 project locations covering 5,240 villages in 47 districts of 7 states of India. The outreach during the FY under review was 1,33,243 families, thereby taking the cumulative reach since inception to 24,47,456 families.

In terms of the provisions of Rule 8(3) of the CSR Rules, your Bank appointed Ernst and Young LLP ('EY') to carry out an independent Impact Assessment of its CSR Programmes. Further, in terms of the General Circular No. 14/2021 dated August 25, 2021, issued by the Ministry of Corporate Affairs, Government of India, the Impact Assessment Report is available at the Bank's website https://www. bandhanbank.com/beyond-banking, and the programme wise summary of the same is mentioned in the subsequent sections.

The details of CSR programmes undertaken pursuant to the provisions of the Companies Act and in accordance with the Annual Action Plan, during the FY under review are given as Annex - 1 and form part of this Report. The CSR Policy of the Bank is available on your Bank's website: https://bandhanbank.com/ sites/default/files/2023-01/CSR-Policv-210123.pdf.

Some of the key programmes of your Bank's CSR initiatives are:

During the FY under review, your Bank has contributed Rs.10.90 crore (Rs.16.50 crore in FY 2023 and Rs.27.88 crore in FY 2022) towards Targeting the Hard-Core Poor ('THP') programme. The programme is designed for ultra-poor women-headed households, providing them with a range of gainful micro-enterprises in the form of farm, non-farm and mixed assets, along with handholding support and training on confidence building, enterprise skills, consumer interaction, marketing and financial skills. They are also provided with sustenance allowance to meet their daily needs until they generate substantial income from the provided assets. Within a period of 18-24 months, these ultra-poor women start graduating, uplifting themselves from extreme poverty1 and getting linked to mainstream society1 2.

During the year under review, 3,000 ultra-poor women were provided farm, non-farm and mixed assets to sustain their livelihoods, thereby cumulatively taking the total women-headed households to be impacted through the programme since its inception to 50,500 women. In the current financial year, the programme covered 9 districts of Assam, Jharkhand, Odisha, Uttar Pradesh and West Bengal.

The Impact Assessment Study carried out by EY indicated that 18,000 ultra-poor women-headed households were alleviated from below the poverty line to above the national poverty line1 (Rs.1,059.42 for rural and Rs.1,286 for urban areas1) with a significant increase in their business assets and household income having an average monthly income of Rs.7,200. Additionally, these households had improved savings habits and had access to safe sanitation, social security schemes and health schemes.

During the FY under review, your Bank has contributed Rs.7.01 crore (Rs.12.02 crore in FY 2023 and Rs.18.49 crore in FY 2022) towards six health programmes covering 16 districts in 3 states of India. These health programmes covered 52,578 new beneficiaries during the FY, thereby taking the cumulative coverage to 13,44,558 households.

The Impact Assessment Study conducted by EY indicated that the programme contributed to achieving 100 per cent. access to health services after the implementation of the programme compared to 78 per cent. respondents who did not have access to health services. The health services included Anti Natal Care ('ANC'), institutional delivery, Post Natal Care ('PNC'), nutritional support and child health evaluation, thereby leading to a change in behavioural practices and 100 per cent. of the respondents noticed an improvement in their health and health-seeking behaviour.

The Impact Assessment Study indicated that 100 per cent. of the adolescent girl respondents have received menstrual health and hygiene awareness and access to menstrual hygiene products.

The study also indicated that 100 per pent. of the respondents received access to safe drinking water.

Your Bank's education programme provides quality education to the children belonging to the marginalised section of society in its catchment area. The education programme enables the children to improve their learning outcomes, especially in Science, Technology, Engineering and Mathematics ('STEM') subjects and increase their retention and classroom engagement. The programme also provides training to the teachers belonging to the communities, government schools and schools run by the various charitable trusts that are providing free education to transform their pedagogy and integrate various teaching and learning tools in their lesson plans and track the comprehensive continuous assessment of each child.

Your Bank contributed Rs.9.78 crore (Rs.15.99 crore in FY 2023 and Rs.17.01 crore in FY 2022) towards the education programme enrolling 1,605 new students, thereby taking the cumulative outreach to 1,14,391 marginalised children across 32 districts of five states of India.

The Impact Assessment Study conducted by EY indicated that 100 per cent. of the children received free books and school kits to facilitate their learning. 100 per cent. of the students who completed class 3 were able to identify numbers and alphabets, can read text and perform basic calculations to meet the learning goals of Foundational Literacy and Numeracy1 ('FLN').

Your Bank's skill development initiatives provide market-linked and job-ready employable skills to the youths from marginalised sections of society in various domains. This initiative not only provides on-the-job training and job placement facilitation in the organised sector but also a follow-up of the placements so that the youths are settled in their job post-training. 1

During the FY under review, your Bank contributed Rs.4.08 crore (Rs.3.69 crore in FY 2023 and Rs.4.79 crore in FY 2022) towards the skill development initiatives in eight districts of three states of India. The PIAs operated 12 skill development centres in domains like Warehousing and Logistics, Retail and Customer Care, Sales and Marketing, ITeS and BPO, Refrigeration and Air Conditioning, Computer Accounting, Hardware and Networking, BFSI, etc.

During the FY, 3,227 candidates were enrolled, thereby taking the total to 17,114 youths who have been trained under this programme till date, of which 11,090 were placed with net salaries ranging from Rs.8,000 to Rs.15,000 plus other performance-based allowances and social security benefits like Provident Fund ('PF') and Employee State Insurance ('ESI').

The Impact Assessment Study conducted by EY indicated that 13,707 youths were trained by the end of FY 2023. The study indicated that 85 per cent. of the respondents secured their first job after the completion of the training provided under the Employing the Unemployed Programme ('EUP'). The EUP provided them with job readiness skills, career counselling, job placement assistance and other resources to enhance their employability.

Your Bank has been imparting financial literacy to underprivileged women to raise awareness regarding better financial planning and accessing Banking, Financial Services and Insurance ('BFSI') related products and services, including digital banking. Your Bank recognises the fact that imparting financial knowledge is vital to the financial inclusion agenda and to addressing the sustainable development of rural communities.

Through this initiative, your Bank has financially empowered 4,76,872 women in the states of Assam and West Bengal to improve their savings and access Banking services. According to the EY Impact Assessment Report, 100% of the women, after completing the training, feel that they are more confident in taking independent financial decisions and can also do digital banking.

Your Bank under its CSR initiatives, has piloted a unique initiative to empower underprivileged entrepreneurs to set up small businesses. These entrepreneurs are imparted with professional business incubation training and facilitation for accessing statutory licenses and business loans. They are also trained in various aspects of marketing, customer relationships, financial planning and management, business development plans, filing of various taxation etc.

Through this initiative, your Bank aims to convert the job-seeking to job-creators. To date, 81 youths have been successfully incubated to independently manage their enterprises and 21 are currently being trained to undertake their enterprises.

The Climate Action Programme focuses on climate change adaptation and carbon sequestration. Major initiates are water conservation and afforestation, as mentioned below:

The water conservation initiative aims at water security and drought-proofing in some of the high moisture-stressed regions of India, thereby providing a safety net to agriculture and livestock- based livelihoods. These initiatives facilitate participatory watershed management by empowering the communities to participate in the planning and implementation of local water resource development. Measures such as building, reviving and maintaining water-harvesting structures, prioritisation and judicious use of water for every community member, crop planning and water-efficient farming, use of drought-resistant varieties, cultivation of high-value crops requiring less water, etc., create a multiplier effect in drought-proofing and climate change adaptation measures and higher income generation.

During the FY under review, 27 water harvesting structures, with a storage capacity of 13,500 kilolitres, in the form of farm ponds, were constructed in the farmers' fields to provide them critical irrigation support.

Cumulatively, the programme has supported the construction of 50 water harvesting structures with a storage capacity of over 1,33,500 kilolitres of water in three states. These structures not only provide drinking water to over 1,500 families but also support participatory irrigation of various crops.

Your Bank's afforestation initiatives have contributed towards the project of establishing a "Bio-shield" to save the mangroves in the Bharuch district of Gujarat. Mangrove plantation of 67,540 saplings was carried out on 20 Hectares in a stretch of 1 km of coastline along with plantation of other medical plant species and fodder species, sequestering 2,248 tonnes of CO2 annually. The fodder bank was created to offset the biotic pressure from the mangrove area. The project created 4,629 person-days of employment and benefited 9,123 beneficiaries with additional income-generating avenues from fodder and medicinal plant harvesting.

Additionally, in this FY, the plantation under agroforestry and mangrove plantation reached to 82,238 saplings in West Bengal. Thereby, taking the cumulative plantation to 4,17,525 saplings in 41 districts of 7 states in India.

Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ('SEBI LODR'), the Board of Directors of your Bank has adopted a Dividend Distribution Policy that, inter-alia, balances the objectives of appropriately rewarding shareholders and retaining capital to maintain a healthy capital adequacy ratio. In addition to the Dividend Distribution Policy, the dividend payout ratio of your Bank is also guided by the Circulars on dividend issued by RBI, from time to time. Policies of the Bank are reviewed at least once a year and accordingly, Dividend Distribution Policy of the Bank was reviewed by the Board during the FY, with no changes. The Policy is available on the Bank's website at https://bandhanbank.com/sites/default/ files/2022-09/Dividend-Distribution-Policy.pdf.

In line with this policy and in recognition of the financial performance during FY 2024, while retaining capital to maintain a healthy capital adequacy ratio to meet growth requirements, your Directors are pleased to recommend a dividend of Rs.1.50 per equity share of Rs.10 each fully paid-up (15%) for the FY 2024, as was paid for the FY 2023, for approval of the shareholders at the 10th Annual General Meeting ('AGM') of the Bank.

Pursuant to the provisions of Income-tax Act, 1961 ('IT Act'), dividends paid or distributed by your Bank shall be taxable in the hands of the shareholders and your Bank shall be required to deduct tax at source ('TDS') at the prescribed rates from the dividend to be paid to Members, subject to the approval of dividend by the shareholders in the ensuing AGM. Further details are available in the notice of the 10th AGM of the Bank.

In line with the RBI regulations, your Bank has transferred an amount of Rs.557.39 crore to the statutory reserve during the financial year ended March 31, 2024.

During the FY under review, your Bank has allotted 1,33,268 equity shares of Rs.10 each fully paid-up, pursuant to exercise of stock options by the eligible Employees of your Bank, aggregating to Rs.13,32,680.

Post allotment of aforesaid equity shares, the issued, subscribed and paid-up equity share capital of your Bank stood at Rs.16,10,96,97,480, comprising 1,61,09,69,748 equity shares of Rs.10 each fully paid-up as on March 31, 2024.

Your Bank has not issued any equity shares with differential voting rights during the FY under review.

The authorised share capital of your Bank was Rs.32,00,00,00,000, comprising 3,20,00,00,000 equity shares of Rs.10 each, as on March 31, 2024.

Your Bank's Capital Adequacy Ratio ('CAR'), calculated in line with the RBI Circular on Capital Adequacy Framework, stood at 18.28 per cent. as on March 31, 2024, well above the minimum regulatory requirements, out of which Tier 1 CAR was 17.21 per cent. and Tier 2 CAR was 1.07 per cent.

Your Bank did not have any subsidiary, associate or joint venture company during the FY 2024. Accordingly, no statement is required to be reported in Form AOC-1.

Details of rating of various debt instruments of the Bank as on March 31, 2024 are as under:

(1) rating of ICRA is for Rs.3,000 crore only

The composition of the Board of Directors of your Bank ('Board') is governed by the provisions of the Companies Act, the Banking Regulation Act, 1949 (the 'BR Act'), the SEBI LODR, other applicable laws and its Articles of Association. At the end of March 31, 2024, the Board of your Bank had fourteen Directors, out of which nine were Independent Directors, two were Non-Executive Non-Independent Directors i.e. one Nominee each of Bandhan Financial Holdings Limited ('BFHL') and Caladium Investment Pte. Ltd. ('Caladium'), and the Managing Director & CEO, and two Executive Directors.

The Board of Directors of your Bank, at its meeting held on February 09, 2024, on the basis of the recommendation of the Nomination and Remuneration Committee of the Bank ('NRC'), approved the appointment of Mr. Pankaj Sood (DIN: 05185378) as an Additional Non-Executive Non-Independent Director [Nominee of Caladium, Investor of the Bank], with effect from February 12, 2024, subject to Shareholders approval. Accordingly, Shareholders of the Bank, on April 21, 2024, have accorded their approval, via Postal Ballot process, for the appointment of Mr. Sood as the Non-Executive Non-Independent Director (Nominee of Caladium), with effect from February 12, 2024, liable to retire by rotation.

Mr. Sood, aged 49 years, has over 24 years of experience in private equity and M&A transactions in India. Currently, he heads the Private Equity (Direct Investments) business of GIC Singapore in India and Africa. He joined GIC in 2010 and is based in the Mumbai office. Prior to GIC, Mr. Sood was an investment banker in India in Kotak Investment Bank, Ernst & Young and SBI Capital Markets.

He is a post-graduate from the Indian Institute of Management, Calcutta and has a bachelor's degree in Chemical Engineering from the Indian Institute of Technology, Kharagpur.

The Board of Directors of the Bank, at its meeting held on March 07, 2024, on the basis of the recommendation of the NRC and as per the approval granted by the RBI, had approved the appointment of Mr. Rajinder Kumar Babbar (DIN: 10540386) as the

Whole-time Director [Category: Additional Director], designated as Executive Director & Chief Business Officer ('ED&CBO') and Key Managerial Personnel of the Bank, for a period of three years, liable to retire by rotation, with effect from March 08, 2024, subject to Shareholders' approval. Accordingly, the Shareholders of the Bank, on April 21, 2024, have accorded their approval, via Postal Ballot process, for appointment of Mr. Babbar as the Whole-time Director, designated as ED & CBO and Key Managerial Personnel, for a period of three years, with effect from March 08, 2024 up to March 07, 2027, liable to retire by rotation.

Mr. Babbar, aged 56 years, has over 35 years of experience across the banking sector in various leadership roles. He is an accomplished senior leader, with vast experience across multiple spheres of banking. He has a proven track record of creating new businesses and propelling existing ones, consistently delivering growth multiples in AUM, market share, and profitability.

During his tenure spanning more than 23 years with HDFC Bank, he has handled various leadership assignments and has successfully led large teams across Transportation and Infrastructure Finance, Rural Banking and Retail Liabilities. He was the Group Head - Transportation, Infrastructure and Tractor Finance Group at HDFC Bank. Prior to that, he was responsible for building and managing the Rural Banking Group for the HDFC Bank covering farmer finance, MSME loans to intermediaries, related retail assets and third party products. Under his leadership, the rural businesses witnessed robust growth, making it one of the best rural franchises in the industry for any bank or financial institution in terms of size and profitability. Prior to joining HDFC Bank Ltd, he has worked with Centurion Bank, Bank of Punjab and Central Bank of India, handling various roles and responsibilities.

He is Bachelor in Science, LLB and LLM Corporate Law & Criminal Law and is currently pursuing PhD from NMIMS, Mumbai. He has also completed a leadership development programme from IIM Ahmedabad.

Reserve Bank of India vide its letter dated June 24, 2024, has appointed Mr. Arun Kumar Singh, Chief General Manager (retired), Reserve Bank of India, as an Additional Director on the Board of Bandhan Bank Limited, in exercise of powers conferred to it under Section 36AB of the BR Act, for a period of one year from June 24, 2024 to June 23, 2025 or till further orders, whichever is earlier.

Mr. Chandra Shekhar Ghosh, MD&CEO of the Bank, vide letter dated April 05, 2024, informed the Board of Directors that he would retire from the services of the Bank as the MD&CEO upon completion of his current tenure on July 09, 2024, which was noted by the Board at its meeting held on April 05, 2024. Accordingly, pursuant to the approval of the RBI and on the basis of the recommendation of the NRC, the Board, at its meeting held on July 06, 2024, has approved the appointment of Mr. Ratan Kumar Kesh, Executive Director & Chief Operating Officer ('ED&COO'), as Interim MD&CEO of the Bank, with effect from July 10, 2024, for a period of three months or till new MD&CEO takes charge, whichever is earlier, subject to approval of Shareholders at the ensuing AGM of the Bank.

In terms of the provisions of Section 152 of the Companies Act, Ms. Divya Krishnan, Non-Executive Non-Independent Director, being longest in office, shall retire at the ensuing AGM and being eligible, offers herself for re-appointment.

The resolution(s) in respect of appointment(s)/ re-appointment(s) of the Directors, as aforesaid, have been included in the Notice convening the 10th AGM of the Bank. Brief profiles of these Directors, together with other requisite disclosures/ details, have been annexed to the said Notice. None of the Directors proposed for appointment/ re-appointment, would attain the age of 75 years during the continuation of their tenure on the Board of the Bank.

During the FY under review, following appointments/ re-appointments were approved by the Shareholders by Postal Ballot process on June 22, 2023, and at the 9th AGM of the Bank held on August 18, 2023:

• By way of Postal Ballot approved on June 22, 2023:

(i) Appointment of Mr. Ratan Kumar Kesh (DIN: 10082714) as a Director of the Bank.

(ii) Appointment of Mr. Ratan Kumar Kesh (DIN: 10082714) as Whole-time Director, designated as Executive Director and Key Managerial Personnel of the Bank, liable to retire by rotation, for a period of three years, effective March 31, 2023.

• At the 9th AGM of the Bank held on August 18, 2023:

(i) Re-appointment of Ms. Divya Krishnan (DIN: 09276201) as a Non-Executive Non-Independent Director of the Bank (Nominee of BFHL), being longest in office and

liable to retire by rotation, retired at the 9th AGM of the Bank, and who, being eligible, had offered herself for re-appointment.

(ii) Re-appointment of Mr. Suhail Chander (DIN: 06941577) as an Independent Director of the Bank, not liable to retire by rotation, for the second term of five years, effective March 19, 2024.

(iii) Re-appointment of Mr. Subrata Dutta Gupta (DIN: 08767943) as an Independent Director of the Bank, not liable to retire by rotation, for the second term of five years, effective March 19, 2024.

Pursuant to the provisions of Section 10A(2A)(i) of the BR Act read with relevant RBI Circular, total tenure of a Non-Executive Director, continuously or otherwise, on the board of a bank, shall not exceed eight years. Accordingly, tenure of Dr. Holger Dirk Michaelis (DIN: 07205838), Nominee Director (Nominee of Caladium) on the Board of the Bank expired on the close of business hours on February 11, 2024.

The Board places on record its sincere appreciation for the contributions made by Dr. Holger Dirk Michaelis, during his tenure as Director of the Bank.

Mr. Chandra Shekhar Ghosh, MD&CEO of the Bank, vide letter dated April 05, 2024, informed the Board of Directors that he would retire from the services of the Bank as the MD&CEO upon completion of his current tenure on July 09, 2024, which was noted by the Board at its meeting held on April 05, 2024. Accordingly, Mr. Ghosh retired as the MD&CEO of the Bank at the close of business hours on July 09, 2024.

The Board expressed its deep appreciation and gratitude for the extraordinary contributions that Mr. Chandra Shekhar Ghosh had made as the founder of the Bank. The Board acknowledged that Mr. Ghosh, through his vision, deep dedication and tireless efforts, led the Bank since its inception towards remarkable growth and established it as a respected and trusted universal bank with pan- India presence, providing services in an inclusive and sustainable manner. The Board also affirmed his role in building the Bank's values around business ethics, consumer focus and corporate responsibility towards society at large, which shall continue to guide the Bank in the future.

Necessary disclosures with regard to the above appointments/ re-appointments/ cessations have been made to the Stock Exchanges, the RBI and the Ministry of Corporate Affairs.

During the FY under review, Mr. Rajinder Kumar Babbar was appointed as ED&CBO and Key Managerial Personnel ('KMP') for a period of three years effective March 08, 2024.

Further, Mr. Sunil Samdani, Chief Financial Officer ('CFO') and KMP of the Bank ceased to be associated with the Bank from the close of business hours on October 19, 2023. In the interim, the Board, at its meeting held on October 18, 2023, appointed Mr. Abhijit Ghosh, Head - Finance & Accounts, as the Interim CFO and KMP of the Bank, with effect from October 20, 2023, till the time a new CFO is appointed by the Board.

Mr. Rajeev Mantri was appointed as CFO and KMP of the Bank with effect from February 22, 2024. Accordingly, Mr. Abhijit Ghosh ceased to be the Interim CFO and KMP of the Bank with effect from February 22, 2024.

Accordingly, as on March 31, 2024, Mr. Chandra Shekhar Ghosh, MD & CEO; Mr. Ratan Kumar Kesh, ED&COO; Mr. Rajinder Kumar Babbar, ED&CBO; Mr. Rajeev Mantri, CFO; and Mr. Indranil Banerjee, Company Secretary of the Bank were the KMP of the Bank, as per the provisions of the Companies Act and rules made thereunder. However, post March 31, 2024, Mr. Chandra Shekhar Ghosh ceased to be MD & CEO and KMP of the Bank on the close of business hours on July 09, 2024, upon completion of his tenure, and Mr. Ratan Kumar Kesh, ED&COO, was appointed as the interim MD&CEO and KMP of the Bank from July 10, 2024 for a period of three months or till the time new MD&CEO joins, whichever is earlier.

The Board met eighteen times during the FY under review i.e., on May 17, 2023; May 19, 2023; May 26, 2023; June 04, 2023; July 12, 2023; July 14, 2023; September 09, 2023; October 16, 2023; October 18, 2023; November 24, 2023; February 07, 2024; February 09, 2024; February 22, 2024; February 23, 2024; March 07, 2024; March 19, 2024, March 20, 2024 and March 30, 2024. The details of the Board meetings held during the FY, attendance of Directors at the meetings, and other details have been provided separately in the Report on Corporate Governance forming part of this Report, enclosed as Annex - 4.

Your Bank currently has the following nine Board Committees:

1. Audit Committee of the Board (ACB);

2. Nomination & Remuneration Committee (NRC);

3. Stakeholders' Relationship Committee of the Board (SRCB);

4. Risk Management Committee of the Board (RMCB);

5. IT Strategy Committee of the Board (ITSCB);

6. Customer Service Committee of the Board (CSCB);

7. Corporate Social Responsibility and Sustainability Committee of the Board (CSR&SCB);

8. Committee of Directors (COD);

9. Special Committee for Monitoring High-Value Frauds (SCMHVF).

The details with respect to the composition, terms of reference, numbers of meetings held, attendance of members, etc., of these Board Committees are provided in the Report on Corporate Governance forming part of this Report.

Additionally, meeting(s) of Independent Directors, without the attendance of non-independent directors and members of management, were also held during the FY under review. The details of such meeting(s) have been provided separately in the Report on Corporate Governance forming part of this Report.

The Bank has received necessary declarations from all the Independent Directors under Section 149(7) of the Companies Act and Regulation 25(8) of the SEBI LODR that they meet the criteria of independence laid down under Section 149(6) of the Companies Act read with allied Rules, and Regulation 16(1)(b) of the SEBI LODR, respectively. The Board has reviewed the disclosures of independence submitted by the Independent Directors and is of the opinion that the Independent Directors of the Bank fulfil the conditions specified in the Companies Act and the SEBI LODR, and are independent of the management. In the opinion of the

Board, all the Independent Directors possess requisite expertise, experience, integrity and proficiency as required under the applicable laws and policies of the Bank.

The details of the familiarisation programme(s) for the Independent Directors of the Bank have been provided separately in the Report on Corporate Governance forming part of this Report.

Pursuant to recommendation of the NRC, the Board has framed the 'Performance Evaluation Policy for the Board, Committees, Non- Independent/ Whole-time Directors and Independent Directors' (the 'Board PE Policy'), in accordance with the relevant provisions of the Companies Act, the SEBI LODR and SEBI Guidance Note on Board Evaluation. In terms of the Board PE Policy, performance evaluation of the Board and its Committees, Chairman and individual Directors are done on various parameters. Parameters for the Board include various aspects, such as, structure, meetings, appointments, agenda, discussions, evaluation of risks, strategy, governance and compliance, conflict of interest, etc.

Parameters for Board Committees include various aspects, such as, meetings, effectiveness, agenda, discussion and dissent, minutes, etc.

Parameters for the Directors include various aspects, such as, knowledge and competency, integrity, functioning, commitment, contribution, attendance, initiative, teamwork, communication, corporate governance, updates, etc., and in case of Independent Directors, additional parameters include fulfilment of the independence criteria and their independence from the management.

The evaluation process has been carried out electronically. The Board of Directors has done the evaluation of Independent Directors, excluding the Independent Director being evaluated. Similarly, Independent Directors have done the evaluation of the Board as a whole, Non-Executive Chairman and Non-Independent Directors, Executive Director and the MD & CEO. The respective Chairmen of Board Committees have done performance evaluation of their respective Committees. Thereafter, the report on performance evaluation of Directors, excluding NRC members, and the Chairman was submitted to the NRC, whereas the report on performance evaluation of the Board as a whole, Board Committees and Directors who were NRC members was submitted to the Board for necessary action. The NRC, after considering the performance evaluation report of Directors, excluding NRC members, made its recommendations to the Board for continuation/ re-appointment of Directors. Thereafter, the Board considered the recommendations of the NRC, and report on the performance evaluation of the NRC members, the Board as a whole and the Board Committees. The Board evaluation has provided some valuable inputs for optimising the roles and responsibilities, quality, quantity and timeliness of flow of information between the Bank's management and the Board.

The Board of Directors of the Bank is satisfied with the outcome of the performance evaluation process. They were of the view that the Directors have been discharging their roles and responsibilities as expected by the Board and as required under the applicable regulatory provisions. The Board continues to be duly constituted representing various expertise, skill sets, knowledge and qualification required for the banking business. There was no observation during the performance evaluation of the previous years; and so is the case with the current year.

Appointment of Directors on the Board is guided by the provisions of the BR Act and the guidelines/ circulars issued by the RBI, from time to time, the Companies Act and the SEBI LODR. In view of these provisions, your Bank has adopted a 'Policy on Appointment and Fit & Proper Criteria for Directors'. In terms of this Policy, while appointing directors, the NRC/ Board considers fit and proper criteria, various skill sets, professional knowledge, practical experience, integrity, gender diversity and additionally, status of independence in case of Independent Directors. The details of the same have been included in the Report on Corporate Governance forming part of this Report. The Policy on Appointment and Fit & Proper Criteria for Directors is reviewed on an annual basis and accordingly, the Policy was reviewed by your Board on the recommendations of the NRC during the FY, to align with the regulatory requirements. The Policy is available on the Bank's website at: https://www.bandhanbank.com/pdfViewerJS/index. html#../sites/default/files/2023-12/Policy-on-Appointment-and- Fit%20-Proper-Criteria-for-Directors-website-131223.pdf.

Your Bank has formulated and adopted a comprehensive 'Compensation Policy' for its Directors, Key Managerial Personnel and Employees, in terms of Section 178 of the Companies Act, read with the relevant Rules made thereunder, Regulation 19 of the SEBI LODR and the guidelines/ circulars issued by the RBI, in this regard, from time to time. The details of the same have been included in the Report on Corporate Governance forming part of this Report. The Compensation Policy is reviewed on an annual basis and accordingly, the Policy was reviewed by the Board on the recommendation of the NRC with one addition relating to deferred variable cash pay. The updated Compensation Policy of your Bank is available on your Bank's website at https://bandhanbank. com/pdfViewerJS/index.html#../sites/default/files/2024-07/ Compensation-Policy-20072024.pdf

As on March 31, 2024, your Bank had 75,748 employees. The information with regard to the remuneration of directors and employees of the Bank, as required under Section 197(12) of the Companies Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this Report as Annex - 2.

The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Companies Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forming part of this report, is available for inspection during business hours up to the date of the ensuing AGM in terms of Section 136 of the Companies Act and any member interested in obtaining a copy of the same may send request to the Company Secretary.

Your Bank has instituted Employees Stock Option Scheme ('ESOP'), i.e., Bandhan Bank Employee Stock Option Plan Series 1 ('ESOP Scheme') to enable its employees to participate in your Bank's future growth and financial success. Your Bank provides its employees with a platform for participating in important decision making and instilling long-term commitment towards the future growth of the Bank by way of rewarding them through stock options. ESOP Scheme of your Bank is in compliance with the provisions of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ('SEBI SBEBSE') and no change has been made therein during the financial year under review. The ESOP Scheme is administrated by the NRC. In terms of the ESOP Scheme, the Options would vest not earlier than one year and not later than four years from the date of grant as decided by the NRC/ Board. The Options granted shall be equally vested over four years. The exercise period shall be a maximum of five years from the date of the respective vesting of Options. Since your Bank has been allotting fresh equity shares upon exercise of Options, the source of the shares is of primary issuance.

In terms of the Compensation Policy of your Bank and the Shareholders' approved ESOP Scheme, fresh grants have been made during the financial year under review to the eligible employees. Except the MD&CEO, none of the Directors were allotted equity shares under the ESOP Scheme during the financial year under review. The information pertaining to the ESOP Scheme as prescribed under the SEBI SBEBSE is available on the website of your Bank at https://bandhanbank.com/annual-reports.

Further, as required under the SEBI SBEBSE, a certificate from the Secretarial Auditor of the Bank certifying that your Bank has implemented the ESOP Scheme in accordance with the applicable provisions of the SEBI SBEBSE and resolution(s) passed by Shareholders, will be made available electronically during the AGM.

Being a banking company, the disclosures required as per Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, 2014, read with Sections 73 and 74 of the Companies Act, are not applicable to your Bank. The details of the deposits received and accepted by your Bank, as a banking company, are enumerated in the Financial Statement for the FY ended March 31, 2024, and forms part of this Annual Report for FY 2024.

Your Bank has a Compliance Department ('CD') and an Internal Audit Department ('IAD'), which independently carry out evaluation of the adequacy and effectiveness of internal controls. These departments ensure that operating and business units adhere to the laid down internal processes and procedures as well as to the legal and regulatory/ statutory requirements. For effective discharge of their duties, it is ensured that these departments are manned by appropriately qualified personnel, have necessary know-how and skill set and also undergo regular in-house and external training.

The Compliance Function is one of the key elements in your Bank's corporate governance structure. The compliance starts from the top, and the Board and the Senior Management play an important role in driving the compliance culture. Your Bank remains committed to adhere to the highest standards of compliance vis-avis regulatory prescriptions and internal guidelines. Your Bank has a robust Compliance Policy, outlining the compliance philosophy, and roles and responsibilities of the CD.

The CD assists the Board and Top/ Senior Management in managing the compliance risk of your Bank. The CD ensures that overall business of your Bank is conducted in strict adherence to the guidelines issued by the RBI and other regulators, various statutory provisions, standards and codes prescribed by FEDAI, FIMMDA, etc., by evaluating the products/ processes, guiding business departments on the various regulatory guidelines with a special emphasis on better understanding of the perspective. It closely works with operational risk and internal audit functions and monitors various activities of your Bank with more emphasis on active risk management.

As the focal point of contact with the RBI and other regulatory entities, the CD evaluates the adequacy of internal controls and examines any systemic correction that is required, based on its analysis and interpretation of regulatory guidelines and deviations observed during monitoring and testing. Your Bank has a robust Anti Money Laundering ('AML') framework and tools to manage the AML risk. It periodically apprises Top/ Senior Management, the ACB and the Board on compliance levels, based on the changes in the external regulatory environment. The CD submits the compliance report to the ACB at regular intervals providing the compliance status with the laws/ rules and regulations applicable to your Bank.

The IAD has implemented the Risk Based Audit approach and independently carries out internal and concurrent audit of various functions in your Bank, primarily to assess the effectiveness of internal control in critical systems and processes, and compliance with regulatory guidelines. The IAD also maintains a strong oversight through Off-site Monitoring of various aspects for faster detection and resolution of anomalies, if any, identified. IAD further ensures that independent checks and balances are in place, and that laid down policies and procedures are followed and recommendations for improvements in processes and systems controls are suitably adhered to.

For review of effectiveness of controls, significant audit findings along with corrective and preventive action taken by your Bank are placed before the ACB periodically and directions, if any, given by the ACB are tracked closely for suitable closure in a time bound manner.

To maintain the independence of these departments, the performance evaluation of the Chief Compliance Officer ('CCO') and the Chief Audit Executive ('CAE') is carried out by the ACB.

Your Bank also engages external firms to carry out independent review of internal controls, processes, reporting, etc. and accordingly recommendations, if any, are made by them to your Bank/ the ACB for improvement.

Considering the internal financial controls of the Bank, and the work performed by the auditors, including the audit of internal financial controls over financial reporting by the auditors and the reviews performed by management under the supervision of the ACB, the Board of Directors is of the opinion that the internal financial controls established and maintained by your Bank are adequate.

During the FY under review, there were no materially significant transactions with related parties, which could lead to a potential conflict of interest between your Bank and these parties. Prior approval of the ACB is sought for all the related party transactions. Further, prior omnibus approval is also obtained from the ACB for the related party transactions, which are of a repetitive nature as well as for the normal banking transactions which cannot be foreseen. The quarterly updates on the details of transactions with the related parties, are placed before the ACB. The Related Party Transactions that were entered, during the FY under review, were on an arm's length basis and were in the ordinary course of business, pursuant to the approval of the ACB. In terms of the provisions of Regulation 23 of the SEBI LODR, the approval of Shareholders was obtained at 9th AGM of the Bank for material related party transactions with the promoter entities, i.e., Bandhan Financial Holdings Limited, Bandhan Financial Services Limited, Financial Inclusion Trust, North East Financial Inclusion Trust and promoter group entity, Bandhan AMC Limited, for the FY 2024 and upto 10th AGM of the Bank for banking transactions at arm's length and in the ordinary course of the banking business of the Bank. The proposal for material related party transactions for FY 2025 and upto 11th AGM of the Bank is being submitted before the shareholders at 10th AGM for their approval.

In terms of the amended definition of Related Party under the SEBI LODR, the promoter and member of the promoter group of the Bank are considered as Related Parties with effect from April 01, 2023. Accordingly, as on March 31, 2024, the following entities forming part of the promoter and promoter group are related parties of the Bank:

(a) Bandhan Financial Holdings Limited (Promoter)

(b) Bandhan Financial Services Limited (Promoter)

(c) Financial Inclusion Trust (Promoter)

(d) North East Financial Inclusion Trust (Promoter)

(e) Bandhan Konnagar (Promoter Group)

(f) Bandhan AMC Limited (Promoter Group)

(g) Bandhan Mutual Fund Trustee Limited (Promoter Group)

(h) Bandhan Investment Managers (Mauritius) Limited (Promoter Group)

(i) Quadra Medical Services Private Limited (Promoter Group)

(j) Quadra Hospital And Medical Services Private Limited (Promoter Group)

(k) Gamma Spect - Imaging & Diagnostic Centre Private Limited (Promoter Group)

(l) Quadramedical Research & Foundation Private Limited (Promoter Group)

(m) Bandhan Life Insurance Limited (Promoter Group)

There were no Related Party Transactions required to be reported in Form AOC-2. However, necessary disclosure as required under the Accounting Standards (AS 18) read with RBI's Master Direction No.: RBI/DOR/2021-22/83 DOR.ACC.REC.No.45/21.04.018/2021- 22 dated August 30, 2021, as may be updated from time to time, has been made in the note no. 18.12 to the Annual Financial Statement for the FY 2024. Your Bank has a Policy on dealing with Related Party Transactions, which is reviewed on annual basis and accordingly, the Policy was reviewed by the Board on the recommendation of the ACB, with no changes. The Policy is available on your Bank's website: https://bandhanbank.com/ sites/default/files/2022-09/Policy-on-Dealing-with-Related-Party- Transactions.pdf.

In terms of the provisions of Section 186(11) of the Companies Act, the provisions of Section 186 of the Companies Act, except sub-section (1) thereof, do not apply to any loan made, any guarantee given, security provided, or any investment made by a banking company in the ordinary course of its business. However, the particulars of investments made by your Bank are disclosed in the Financial Statement for the FY 2024, as per the applicable provisions of the BR Act.

Your Bank has adopted the Board approved Vigilance Policy and Whistle Blower Policy, as required under Section 177 of the Companies Act, Regulation 22 of the SEBI LODR and applicable circulars issued by the RBI.

These Policies aim to provide an avenue to raise concerns on Ethical, Legal or Regulatory violations and promptly addressing them while assuring the confidentiality and protection of the Whistle Blower against any form of retaliation. Your Bank is committed to conduct all its business operations and transactions by maintaining highest ethical, moral and legal standards. The complaints/ disclosures under the Scheme covers the areas such as corruption/ malpractices, misuse of office, criminal offences, suspected/ actual fraud, failure to comply with existing rules and regulations, where such acts result in financial loss/ operational risk, loss of reputation, etc., which may be detrimental to the interest of your Bank, its depositors and the public.

Your Bank promotes and makes available at all times, a Clean, Open and Transparent workplace, wherein business transaction, professionalism and productivity are seen as hallmarks of business practice. Your Bank is also committed to conduct all its business operations and transactions by maintaining highest ethical, moral and legal standards.

Your Bank encourages its employees, all stakeholders and members of general public, who have concerns about suspected misconduct, to come forward and express these concerns without fear of retaliation or unfair treatment. The Whistle Blower Policy provides adequate safeguards against the victimisation of the Directors and employees who avail this mechanism and ensures that the personnel get direct access to the Chairman of the ACB. None of the Bank's personnel has been denied access to the ACB.

The said Policies are available on your Bank's website at https:// bandhanbank.com/pdfViewerJS/index.html#../sites/default/ files/2023-12/Whistle-Blower-Policy-141223.pdf and https:// bandhanbank.com/pdfViewerJS/index.html#../sites/default/ files/2023-12/Vigilance-Policy-141223.pdf.

During FY 2024, no significant or material orders were passed by any Regulators or Courts or Tribunals against your Bank impacting its going concern status and operations in future. However, during the FY 2024, the RBI, vide its order dated March 04, 2024, in exercise of the powers conferred under Section 47A(l)(c) read with Section 46(4)(i) of the BR Act, had imposed a penalty of Rs.29.55 lakh on your Bank, for non-compliance with certain directions contained in the 'Reserve Bank of India (Interest Rate on Deposits) Directions, 2016'. Your Bank has enhanced its review and monitoring mechanism to avoid such incidents in future.

In terms of the 'Guidelines for Appointment of Statutory Central Auditors (SCAs)/ Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs)' dated April 27, 2021 ('RBI Guidelines on Auditors') issued by the RBI, banks shall appoint the Statutory Auditors for a continuous period of three years, subject to the firms satisfying the eligibility norms each year and the approval of the RBI on an annual basis. Further, in terms of the RBI Guidelines on Auditors and your Bank's Policy for Appointment of Statutory Auditors, it is required to appoint two Statutory Auditors. Accordingly, the Members of your Bank, at the 8th AGM held on August 10, 2022, had approved the appointment of M/s. Singhi & Co., Chartered Accountants (ICAI Firm Registration No. 302049E), as the Joint Statutory Auditors of your Bank for a period of three years, to hold office from the conclusion of the 8th AGM until the conclusion of the 11th AGM of your Bank to be held in 2025. M/s. Singhi & Co. is holidng the office of Statutory Auditors along with M M Nissim & Co LLP, Chartered Accountants (ICAI Firm Registration No. 107122W/W100672), who will hold office till the conclusion of the 10th AGM.

Therefore, your Bank is required to appoint one more audit firm to act as a Joint Statutory Auditor of the Bank in place of retiring auditors, M M Nissim & Co LLP. Accordingly, on the basis of recommendation of the ACB, the Board of Directors has recommended the appointment of M/s. V Sankar Aiyar & Co., Chartered Accountants (FRN 109208W), as Joint Statutory Auditors of the Bank, for a period of three years to hold office from the conclusion of the 10th AGM until the conclusion of the 13th AGM of the Bank, for the approval of the shareholders at the ensuing AGM, subject to approval of RBI on an annual basis. Approval of RBI has already been received for appointment of M/s. Singhi & Co., Chartered Accountants (FRN 302049E) and M/s. V Sankar Aiyar & Co., Chartered Accountants (FRN 109208W) as the Joint Statutory Auditors of the Bank for the FY 2024-25 for their third year and first year, respectively.

The Independent Auditor's Report, given by the Joint Statutory Auditors on the financial statement of the Bank for the financial year ended March 31, 2024, forms part of this Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report. Also, no offence of fraud was reported by the Joint Statutory Auditors of your Bank under Section 143(12) of the Companies Act read with Rule 13(3) of the Companies (Audit and Auditors) Rule, 2014.

Pursuant to the provisions of Section 204 of the Companies Act and Regulation 24A(1) of the SEBI LODR, the Board had appointed CS Hansraj Jaria, Practising Company Secretary (FCS No.: 7703, C.P. No.: 19394), as the Secretarial Auditor to conduct Secretarial Audit of the Bank for FY 2023-24. Accordingly, the Secretarial Audit Report for FY 2023-24 is enclosed to this Report as Annex - 3. There is no qualification, reservation, adverse remark or disclaimer in the Secretarial Audit Report. Further, no offence of fraud was reported by the Secretarial Auditor of your Bank under Section 143(12) of the Companies Act read with Rule 13(3) of the Companies (Audit and Auditors) Rule, 2014.

In terms of the provisions of Section 148(1) of the Companies Act read with Rule 3 of the Companies (Cost Records and Audit) Rules, 2014, your Bank is not required to maintain cost records and accordingly, is not required to undergo cost audit.

Corporate Governance is based on the principles of conducting business with integrity, fairness and being transparent in all transactions, making necessary disclosures. Decisions are made in compliance with the laws of the land, with full accountability and responsibility towards the stakeholders, and a commitment to conducting all business in an ethical manner. Your Bank is committed to achieving the highest standards of Corporate Governance and adhering to the Corporate Governance requirements set by the regulators. A separate section on Corporate Governance standards followed by your Bank and the relevant disclosures, as stipulated under the SEBI LODR, the Companies Act and rules made thereunder, forms part of this Report as Annex - 4.

A Certificate from CS Anjan Kumar Roy, Practising Company Secretary (FCS No.: 5684/ CP No.: 4557), regarding compliance with the conditions of Corporate Governance, as stipulated in the SEBI LODR, is annexed to the Report on Corporate Governance, which forms part of this Report.

Pursuant to the provisions of Section 92(3) read with Section 134(3)(a) of the Companies Act, the draft Annual Return of your Bank, in Form No. MGT-7, as on March 31, 2024, is available on your Bank's website at https://bandhanbank.com/annual-reports. Further, the final Annual Return of your Bank, as on March 31, 2024, will be available on your Bank's website at the said link, upon filing of the same with the Registrar of Companies under Section 92(4) of the Companies Act.

The Management Discussion & Analysis Report for the FY 2024, as prescribed under the SEBI LODR, forms part of this Report, and is enclosed as Annex - 5.

In terms of the provisions of Regulation 34(2)(f) of the SEBI LODR read with SEBI Circular dated July 12, 2023, Business Responsibility and Sustainability Report ('BRSR') of your Bank providing its performance against the nine principles of the 'National Guidelines on Responsible Business Conduct, 2019' ('NGRBCs'), formulated by Ministry of Corporate Affairs, Government of India, forms part of this Report and, is enclosed as Annex - 6.

Your Bank has been disclosing its ESG performance through an independent Integrated Report following the Internal Framework set by the International Integrated Reporting Council, which shall be hosted separately on the website of your Bank and can be accessed at https://bandhanbank.com/annual-reports. The report provides information including financial and non-financial parameters, which would enable the members to make well- informed decisions and have a better understanding of your Bank's performance. It also deals with various aspects such as organisational strategy, governance framework, performance and prospects of value creation, based on the six forms of capital, viz., financial capital, manufactured capital, intellectual capital, human capital, social and relationship capital, and natural capital.

The Board of Directors affirms that your Bank has complied with the applicable provisions of the Secretarial Standards issued by the Institute of Company Secretaries of India, viz., SS-1 relating to Meetings of the Board and its Committees; and SS-2 relating to General Meetings.

Your Bank has adopted zero tolerance towards any action on the part of any of its employees, which may fall under the ambit of 'sexual harassment' at workplace and is fully committed to uphold and maintain the dignity of every woman constituent associated with your Bank. It takes all necessary measures to ensure a harassment free workplace and has instituted an Internal Committee for redressal of complaints and to prevent/ prohibit sexual harassment, in compliance with the guidelines enumerated in the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. At the beginning of the FY under review, three complaints were pending, which were resolved during the FY Further, nineteen complaints were received during the FY, out of which fifteen complaints had been closed during the FY Four complaints were pending at the end of the FY which have since been closed.

In our endeavour to achieve aggressive goals to reduce carbon footprints, the conservation of energy has been integrated with the vision of the organisation and its operations. Your Bank has made it mandatory to use BEE Standard Energy Efficient equipment and promote Energy Efficient Building Design in line with Energy Conservation Building Code ('ECBC') in the upcoming projects. Some of the steps undertaken by your Bank towards conservation of energy are as under:

• Smart building systems including use of Energy-efficient glass facades to reduce energy consumption and increase sustainability to achieve the highest level of efficiency;

• At banking outlets, the focus is on insulation on walls and roof, optimum window wall ratio, premises shape and orientation, and re-engineering and retrofit of equipment;

• Tracking of energy consumptions at all levels and comparing with the best international benchmarks;

• Incorporation of smart meters for energy use monitoring and engagement with key stakeholders, at regular intervals, to drive energy conservation in the organisation culture;

• Inclusion of the latest technologies in air-conditioning and inductive equipment in terms of variable drives and improved IKW (Consumption per Ton) in HVAC;

• Lighting: Incorporation of 100 per cent. LED for lighting, daylight harvesting, timed illumination of signage through central monitoring system. Natural daylight utilisation is encouraged in your Bank premises;

• Daily operations and usage: Conservation through basic hygiene practices on energy usage through occupancy sensors, zoning of electrical circuits and master switches for premises. In the recent past, your Bank has put up three mega Currency Chests with five star energy ratings;

• Water Conservation: Ground water recharge facilities through rain water harvesting in upcoming projects, volume flow controls at each sink point, water recycling through STPs.

The details on the Information Technology used by your Bank in its operations have been provided under the section on 'Information Technology at the Bank' in this Report.

The foreign exchange loss of your Bank was Rs.33.06 crore {including the net gains/ losses arising in all exchanges/ derivatives transactions} whereas the foreign exchange outgo was Rs.9.20 crore during the Financial Year 2024.

Your Bank acknowledges the vital importance of human capital and aligns its practices with industry best standards. The combination of young and experienced employees fosters innovation and stability. Regular HR policy reviews ensure continued relevance in a constantly evolving environment. Additionally, transitioning processes to digital platforms have enhanced user experience, streamlined operations, and boosted employee productivity.

Your Bank's network has expanded by 4.9 per cent., now totalling 6,297 banking outlets. This growth signifies increased accessibility and outreach to customers. The establishment of 42 retail asset centres reflects a strategic focus on retail banking, addressing consumer loans, mortgages, and other retail financial services.

To support this expansion, your Bank has quadrupled its workforce since inception, underscoring its commitment to superior service delivery and operational excellence.

Your Bank has achieved several significant milestones in creating a workplace that prioritises a human-centric approach:

• Contributing to a positive work environment and long-term organisational success, your Bank has promoted 8,709 employees through a competency-based grade promotion process.

• In alignment with your Bank's Succession Planning Policy, most leadership positions arising from your Bank's growth and expansion were filled through internal role elevations.

• Digitisation has been a core strategy for your Bank, with digital solutions integrated into major HR processes, including an Employee Productivity Dashboard and goalsetting during onboarding.

• Your Bank is committed to fostering a transparent work culture, establishing goals and Key Result Areas (KRAs) during onboarding. This approach provides employees with clear metrics and performance indices, ensuring they understand how to positively impact both the Bank and their own development journey. By integrating the Performance Appraisal process into the HRMS, your Bank aims to provide all employees with clear insights into their performance, assessments, and competencies.

• To promote employee well-being and work-life balance, your Bank has increased the total leave balance by 20 per cent. and introduced Paternity Leave. Numerous sessions with eminent doctors were organised to guide employees towards a healthy lifestyle. A Medical Extension Plan has also been introduced to address outpatient treatment for employees.

• Your Bank undertakes campus recruitment to contribute to the growth and development of young professionals entering the workforce and creating a talent pipeline for the upcoming years. It visited 95 premier institutes and selected 680 young talents.

These initiatives highlight your Bank's commitment to fostering a supportive and progressive workplace environment.

For the FY 2024, your Bank has taken a leap in building the Learning and Development proposition for the employees, aligning with its strategy for growth across new business, skilling and reskilling of existing employees to support continuous expansion and growth. Your Bank has developed programmes to equip employees with the necessary skillset, mindset and knowledge to enable them to meet the challenges of a rapidly changing banking industry.

This year, your Bank has focused on building employee competencies and on the key strategic imperatives by creating engaging learning initiatives. Thematic programmes to improve Employee Productivity, strengthening risk & compliance culture, and Digital Skill building were done in this FY

Key L&D Metrics to drive learning & development initiatives in your Bank during the FY under review are enumerated below:

• 1.13 million learning hours achieved during this FY, a growth of 84 per cent. from the last FY

• Per employee learning hours grew by 66 per cent. to 50.9 hours of training per employee in this FY

• During FY 2024, 99 per cent. employees participated in at least one training programme

• Digital learning penetration among employees doubled in FY 2024. Logins on the Learning Management System (Bandhan Edge) reached to 8,40,310 by March 2024, a whopping 277 per cent. increase from previous FY.

Special Initiatives were taken during the FY 2024 to augment the regular training strategies aimed at skill development for the employees:

• Productivity improvement programmes were launched for new businesses like Affluent channel, government business, Current Account and other business units

• Multi-faceted training interventions covering Classroom trainings, E-Learning courses, Quizzes, Contests, etc., were offered for building operational excellence across business functions. Programs on customer service, First Time Right for Account Opening process and Credit Management were done for the employees

• Management Development Programs to upskill role- elevated employees and Leadership Development Programs for senior management were conducted to hone managerial and leadership skills as per the L&D strategy of your Bank

• "Grow with Bandhan" - a new initiative was launched for all employees to self-nominate themselves for continuous learning. These were specially curated byte-sized trainings to enhance skill, behaviour, attitude, and mindset for personal and professional growth

• "RISE"- A culture building programme was launched as a part of organisational development strategy emphasising areas of Professionalism, Collaboration, Transparency and Speed

• Multiple learning measures were implemented to improve the compliance culture in the Bank. Mandatory training modules on POSH, Information Security, KYC-AML/ CFT were used to train majority of the employees.

Your Bank has an independent and robust risk management framework which effectively addresses both financial and non-financial risks. Risk Management at your Bank includes risk identification, risk assessment, risk measurement and risk mitigation which stands at its core to create maximum value for shareholders, clients, employees, and communities. Your Bank has policies and procedures to systematically measure, assess, monitor, and manage risks across all its portfolios.

Your Bank is committed to creating an environment of risk awareness at all levels. Your Bank's view on risk is dynamic and it aims at constantly upgrading controls and security measures, including cyber security measures, to avoid or mitigate various risks. The ability to manage risk is strongly supported by a strong risk conduct and risk awareness culture.

Your Bank has an independent Risk Governance Structure, which is in line with international best practices, that has been put in place to separate duties and ensure the independence of Risk Measurement, Monitoring and Control functions. This framework visualises the empowerment of Business Units at the operating level, with technology being the key driver, enabling the identification and management of risk at the place of origination.

To address the various risks that your Bank faces in its business, it has established a risk appetite framework which defines the levels and types of risk that are acceptable, within risk capacity, in order to achieve strategic objectives and business plans. Furthermore, risk-specific policies, limits and triggers are implemented to operationalise the appetites for individual risk types.

The risk appetite framework is approved on an annual basis and is a pre-cursor to the strategy of your Bank. A comprehensive dashboard that shows all the risks that your Bank carries at any given time is provided by the Risk Profile, which is a component of the Risk Appetite Framework. It links goals and priorities to risk management in a way that empowers employees to serve customers well and meet financial targets. Your Bank has an annual risk appetite and a long-term risk appetite which is in line with it's near and the long-term goals.

Risk culture is a set of norms, and behaviours related to awareness, management, and controls of risks. In your Bank, risk culture is at the centre of both the risk management framework and risk management practice. The desired risk culture behaviours are aligned to your Bank's core values thus forming an effective basis for risk culture since these are used for performance management, recruitment, and development.

The Board and Senior Management sets the "tone at the top" and has a trickle-down effect on all employees. Thus, it supports a strong culture, which is defined by your Bank's expectations, thereby guiding how employees conduct themselves, work with colleagues, and make decisions. Your Bank has a well-defined Whistle Blower Policy in place.

As part of its awareness campaigns, your Bank circulates and promotes information security awareness contents and materials through several mediums (SMS, Email, Screensaver, Circular, etc.) to cover the Board members, employees, customers, and vendors of the Bank. Your Bank educates staff on risk management through periodic newsletters, circulars, floor-level awareness seminars, workshops, and innovative desktop screensavers.

Your Bank recognises the importance of stress testing as an integral risk management tool. Your Bank's Stress testing includes Scenario testing, which examines the impact of a hypothetical future state to define changes in risk factors as also Sensitivity testing, which examines the impact of an incremental change to one or more risk factors. In addition to standard stress scenarios, your Bank conducts stress testing based on various themes driven by climate, macroeconomic, etc. Your Bank carries out reverse stress testing, in order to identify circumstances that may lead to specific, defined outcomes.

Your Bank conducts a comprehensive Internal Capital Adequacy Assessment Process ('ICAAP') exercise on a yearly basis with respect to the adequacy of Capital under normal and stressed conditions. The examination of capital requirements under normal economic and adverse market conditions enables your Bank to determine whether its projected business performance meets internal and regulatory capital requirements. The assessment is to identify, assess, and manage all risks that could potentially have a significant negative impact on its business, financial position, or capital adequacy.

The ICAAP comprises of a point-in-time assessment of exposures and risks at the end of the financial year, along with a forward-looking stress capital assessment. Your Bank also conducts back-testing assessments as part of ICAAP process to assess its stress scenarios.

Your Bank's Risk Management Framework sets forth the core principles on how it seeks to manage and govern the risk. Your Bank's comprehensive risk management is overseen by its Board of Directors who has the overall responsibility for your Bank's Risk Management, including culture and governance framework. The Risk Management Committee of the Board ('RMCB') assists the Board in discharging these responsibilities effectively. The RMCB annually reviews and approves the risk management framework. The RMCB plays a crucial role in guiding the development of policies, procedures, and systems, and continuously evaluates their suitability and relevance to the evolving business landscape. The RMCB also oversees the Risk Management Department ('RMD') and the Chief Risk Officer ('CRO') reports functionally to the RMCB. The CRO has one-on-one meetings with the RMCB Committee members during the RMCB meeting in the absence of the Whole-time Directors including MD&CEO.

Your Bank's risk management approach is to ensure that major risks and emerging risks, as they evolve, are identified, managed, and incorporated into its existing risk management assessment, measurement, monitoring and escalation processes. By adhering to these protocols, management can be sure that they will be planning as they grow the business and fulfil their ongoing responsibilities for risk supervision. The Board and senior management discuss top and emerging risks on a regular basis.

Asset/ Liability Management involves evaluating, monitoring, and managing interest rate risk, market risk, liquidity, and funding. Your Bank has a well-defined Asset Liability Management policy that outlines the framework for liquidity and interest rate risk management. As a part of assurance towards sound Risk Management practices, your Bank regularly reviews its Internal Policies to adapt to changes in market conditions.

Your Bank's Asset Liability Management Committee ('ALCO') monitors and manages Liquidity and Interest Rate risks. Your Bank actively assesses ALM Risk, which involves evaluating, monitoring, and managing interest rate risk, market risk, liquidity, and funding, which potentially can have a significant earnings impact. Your Bank has implemented a robust mechanism to monitor critical ratios and has always maintained healthy Liquidity ratios; Liquidity Coverage Ratio ('LCR'), much above the regulatory minimum LCR requirement by having significant High Quality Liquid Assets ('HQLA') as also the Net Stable Funding Ratio ('NSFR'), which is measured as the proportion of long-term assets that are funded by stable sources.

Your Bank has incorporated climate risk in its risk management framework. Your Bank has incorporated provision in its Credit Policy to support green financing and considering proposals from such segments to encourage green financing. As part of the stress testing policy, scenarios related to climate risk have been incorporated.

Your Bank defines credit risk as the risk of loss associated with a borrower or counterparty default (failure to meet obligations with agreed upon terms). Your Bank has established robust credit appraisal and risk management frameworks for identifying, measuring, monitoring, and controlling the risks in credit exposures.

Your Bank balances the risk and return by setting certain objectives, e.g., ensuring credit quality is not compromised for growth; mitigating credit risk in transactions, relationships and portfolios; using its credit risk rating and scoring systems or other approved credit risk assessment or rating methodologies, policies and tools; appropriate pricing based on credit risk taken; systems and controls for detecting and preventing inappropriate credit risk; applying consistent credit risk exposure measurements; ongoing credit risk monitoring and administration; and avoiding activities that are inconsistent with its values, code of conduct or policies. Your Bank undertakes studies to identify trends in the movement of NPAs, etc., to keep track of the asset quality.

Cyber security in banks has gained paramount importance as banks have IT platforms in the name of digitisation, competition from peers, customer experience, reduction of transaction cost, etc. Across banks in India, large amounts of confidential data reside in bank's Data Centres and flows through bank's servers and various networks and devices. To protect the IT systems, confidential data of your Bank as well as customers, either in rest or in motion, and to ensure continuity of business, your Bank has policies and frameworks in place for Information security and Cyber risks.

Banks are exposed and susceptible to various types of cybercrime. Cyber-attacks have become more sophisticated and organised and they are continuously carrying attacks in volume, frequency, and severity. Malware perpetrators are inventing and inflicting various types of malware attacks. Distributed Denial of Service ('DDOS') activity is ever-increasing and evolving as they are using Internet of Things ('IOT') devices as platform to conduct such attacks. Your Bank has not experienced any material loss relating to these or other types of cyber-attacks.

Cybersecurity risk is a priority for your Bank, and it continues to develop and enhance its controls, processes, and systems in order to protect its networks, computers, software, and data from attack, damage, or unauthorised access. Your Bank has its own independent 24x7 C-SOC (Cyber Security Operations Centre) for a state-of-art centralised and consolidated cybersecurity incident prevention, security event monitoring, detection, and response which is backed by data and tools for sound analytics. Your Bank is also ISO 27001:2013 certified, for its information security management. Your Bank is also proactively involved in industry cybersecurity efforts and working with other parties, including its third-party service providers and governmental agencies, to continue to enhance defences and improve resiliency to cybersecurity threats.

Your Bank actively manages the Operational risk, which is the risk resulting from inadequate or failed internal processes, people and systems, or external events. Your Bank has a Board approved Operational Risk Management Policy, which outlines the governance structure and processes for managing operational risk. Your Bank has also put in place robust Fraud Risk, Outsourcing Risk and Legal Risk Frameworks within its Operational Risk Management.

Your Bank is committed to provide uninterrupted service to customers. As such, it is essential to protect the critical infrastructure in your Bank from natural and manmade disasters/ events and ensure business continuity of the various operational units. Your Bank has a Business Continuity Management policy in place with the objective to recover critical activities and systems within defined timelines; safety of people and its assets; to communicate with stakeholders during emergency; to manage reputation risk, etc. Business continuity risks are reviewed and regular updates are given Operational Risk Management Committee ('ORMC') and RMCB.

Outsourcing risk refers to potential losses from relying on third- party service providers for delivering banking operations for your Bank, which would be undertaken by it in future, with risk factors including service failures, data breaches, regulatory noncompliance, and lack of control. Your Bank identifies these risks by evaluating outsourced functions and vendor reliability at the time of empanelment by assessing risk through due diligence and compliance reviews, and monitoring performance via regular reviews and audits. Your Bank has implemented a well-defined Risk evaluation and management framework that comprehensively deals with the processes and responsibilities for identification, measurement, mitigation, management, and reporting of risks associated with Outsourcing.

Your Bank's market risk management consists of identifying and measuring risks, control measures, monitoring, and reporting systems. Your Bank actively manages Market risk, which is the risk of possible economic loss from adverse changes in market risk factors, such as, interest rates, credit spreads, foreign exchange rates, equity and commodity prices, and the risk of possible loss due to counterparty exposure. This applies to implied volatility risk, basis risk, and market liquidity risk. Value at Risk (VaR) is a tool for monitoring risk in your Bank's trading portfolio and is used for estimating the potential loss from adverse movements in the financial markets.

Your Bank recognises the utmost importance of regulatory risk. It closely monitors changes in the regulatory landscape and assesses how new regulations might affect its business and strategy. In order to take proactive steps to spot new sectors, your Bank regularly examines the regulatory environment.

Your Bank's reputation is rooted in the perception of its stakeholders, and the trust and loyalty they place in it is core to its purpose as a financial services organisation. Any adverse stakeholder and public perception about your Bank may negatively impact its ability to attract and retain customers and may expose it to litigation and regulatory actions. In today's world where communication is a key, your Bank maintains regular communication with its stakeholders through appropriate engagement mechanisms to address their expectations and address any concerns they may have.

The Reputational Risk Management Framework of your Bank is made up of interconnected characteristics that could have an impact on different stakeholders. Your Bank is also measuring and tracking the idiosyncratic risks related to stock price movement, as also social as well as traditional media sentiments, complaints, regulatory action, etc., on a periodic basis.

Your Bank is monitoring the Strategic Risk by tracking its competitive environment as well as any emerging risks, which may derail the overall Strategic pursuit so that suitable risk mitigation measures are timely taken. As part of strategic risk assessments, your Bank conducts mid-year assessment to review the Business strategy on A/E (Actual vs. Estimated) basis and assessments are presented to RMCB. Your Bank has a robust Business Risk Management Framework in place, which involves monitoring actionable metrics, including various financial indicators, as well as your Bank's competitive position in the industry.

The growth trajectory of your Bank has been significantly shaped by the influence of Information Technology. Recognising its paramount importance, your Bank has embarked on a transformative journey aimed at leveraging cutting-edge technology as a key differentiator in the rapidly evolving competitive financial services sector. Notable initiatives undertaken during the financial year 2024 include the implementation of robust cybersecurity measures and the adoption of innovative digital banking solutions, thereby enhancing both customer experience and operational efficiency. Your Bank has also completely migrated from vendor managed infrastructure to self-managed infrastructure with better control and oversight. Few accomplishments during the FY 2024 are mentioned below:

• IT transformation completed successfully, led by implementation of Oracle FlexCube as new Core Banking System ('CBS') and completely new Digital Banking platforms. Following critical enterprise applications successfully implemented under the purview of the transformation journey:

i. Core Banking System (CBS)

ii. Treasury

iii. Loan Origination System (LOS)

iv. Retail Internet Banking (RIB) and Mobile Banking (MB)

v. Corporate Internet Banking (CIB)

vi. Debit Card Management System (DCMS)

vii. Third Party Products (TPP)

viii. Document Management System (DMS)

ix. Cash Management Services (CMS)

x. Enterprise Data Lake (EDL) to cater to various MIS and Regulatory reports

xi. eGL ERP

xii. Digital Account Opening (Self-assisted)

• Below are the key projects completed post migration during FY 2024:

i. Credit Card implementation for Bank (currently in CUG)

ii. Digital solution of loan process for entire Personal Loan and Small Enterprise Loan (Digi-PL & Digi-SEL)

iii. Bharat QR (BQR) Acquiring

Your Bank has taken the following initiatives on IT Infrastructure as a part of the transformation journey:

• Your Bank has completely migrated its IT infrastructure from hosting model to Bank owned on-prem IT hardware.

• IT Infrastructure capacity has been reviewed and enhanced to address the business growth.

• Your Bank has deployed on-prem Intrusion Prevention System (IPS) to enhance perimeter security.

• Your Bank has upgraded the Network Core and Middletier Firewall for enhanced security and faster expansion of business.

• Credit Card Infrastructure is set up on Hybrid Model (Cloud & On-prem).

There were no material changes and commitments, affecting the financial position of your Bank, which have occurred between the end of the Financial Year of the Bank, i.e., March 31, 2024, to which the financial statement relate, and the date of this Board's Report.

During the financial year 2024, there has been no change in the nature of business of your Bank.

Pursuant to the provisions of Section 134(3)(c) read with Section 134(5) of the Companies Act, the Board of Directors hereby confirms that:

i. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii. We have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the Bank's state of affairs as on March 31, 2024, and of its profit for the FY ended on that date;

iii. We have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

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

v. We have laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and are operating effectively; and

vi. We have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

The Board of Directors of your Bank extends its gratitude for the invaluable support and guidance received from the Reserve Bank of India, other government and regulatory authorities, and financial institutions. The Board also thanks the correspondent banks for their cooperation and help. The Board acknowledges the support of its shareholders, and also places on record its sincere thanks to its valued clients and customers for their patronage.

The Board also expresses its deep sense of appreciation to all the employees for displaying their strong work ethics, excellence at work, professionalism, teamwork, commitment and initiative, which has led to the Bank making good progress. Your Board will continue to strive for improvements as your Bank continues on its journey towards achieving its objectives.