You are here » Home » Companies » Company Overview » AU Small Finance Bank Ltd

AU Small Finance Bank Ltd.

BSE: 540611 Sector: Financials
BSE 00:00 | 27 May 1312.30 -8.50






NSE 00:00 | 27 May 1312.40 -9.10






OPEN 1345.00
VOLUME 34973
52-Week high 1465.80
52-Week low 935.00
P/E 36.60
Mkt Cap.(Rs cr) 41,349
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1345.00
CLOSE 1320.80
VOLUME 34973
52-Week high 1465.80
52-Week low 935.00
P/E 36.60
Mkt Cap.(Rs cr) 41,349
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

AU Small Finance Bank Ltd. (AUBANK) - Director Report

Company director report

Dear Members

Your Board of Directors have pleasure in presenting the Twenty-Sixth Annual Reportcovering Business and Operations together with the Audited Financial Statements for thefinancial year ended 31st March 2021.

In a year heightened by uncertainty Your Bank posted a credible performanceregistered growth in key performance parameters.

A. Financial Performance & State of Bank's Affairs

The summary of the financial performance of your Bank for FY 2020-21 is presentedbelow:

(Rs. in crore)

For the year ended

Growth (%) 31st March 2021 31st March 2020
Total Income 28.24% 6401.60 4991.98
Interest Income 15.50% 4950.05 4285.89
Other Income 105.57% 1451.55 706.09
Interest Expenditure 8.74% 2584.61 2376.94
Operating Expenses (excluding depreciation) 16.91% 1554.06 1329.25
Profit before Depreciation Provisions and Tax 76.00% 2262.93 1285.79
Depreciation 1 7.77% 104.37 88.62
Provision for Income Tax 20.33% 287.82 239.19
Other Provisions and Write-offs 147.20% 700.06 283.20
Net Profit 73.49% 11 70.68 674.78
Transfer to Statutory Reserve 292.67 168.70
Transfer to Special Reserve u/s 36(1) (viii) of Income Tax Act 1961 77.00 67.00
Transfer to Capital Reserve 28.87 6.93
Transfer to Investment Fluctuation Reserve (31.65) 90.43
Dividend (including tax/cess thereon) pertaining to previous year paid during the year 0.00 26.44
Dividend (in Rs.) (Per Equity Share) - -
Surplus carried over to Balance Sheet 2691.10 1887.32
Earnings Per Share (EPS) (in Rs.)

(After excluding Exceptional Items not annualised)

Basic (in Rs.) 38.19 22.78
Diluted (in Rs.) 37.86 22.32

Key Performance Indicators

Your Bank witnessed growth and consistent performance in FY 2020-21. The key financialindicators for performance

are as follows:

• Profit Before Tax for FY 2020-21 (including sale of investment of AavasFinanciers Limited) increased to ^1458.51 crore vis-a-vis Rs.913.97 crorefor FY 2019-20registering YoY growth of 59.58%. Earnings Per Share (EPS) has increased to Rs.38.19compared to X22.78 last year.

• Net Profit After Tax (including sale of investment of Aavas Financiers Limited)grew by 73.49% to ^1170.68 crore for FY 2020 - 21 vis-d-vis f674.78 crore for FY2019-20.

• Balance sheet size grew by 22.42% YoY to Rs.51591.31 crore as on 31stMarch 2021 vis-d-vis Rs.42143.07 crore as on 31st March 2020 driven by coreprofits sale of investment of Aavas Financiers Limited and Capital Issuance via QIP routeand assets growth.

• Capital Adequacy Ratio increased to 23.37% as on 31st March 2021vis-a-vis 21.99% as on 31st March 2020.

• Deposits continue to scale driven by increasing brand awareness granulardeposits branch expansion and improved digital offerings. CASA ratio improved to 23% inFY2020-21 from 14% in FY 2019-20 and overall cost of funds reduced by 86 bps to 6.83% inFY 2020-21 from 7.69% in FY 2019-20.

• Gross NPA and Net NPA was 4.25% and 2.18% respectively as on 31stMarch 2021 as compared to 1.68% and 0.81% respectively as on 31st March 2020mainly due to impact on borrowers of COVID-19 pandemic and lockdowns during FY 2020-21.

Analysis of overall performance have been covered in detail in Management Discussion& Analysis section of the Annual Report.

Business Overview

Your Bank has made significant strides in its journey over past four years to become aretail focused tech-led preferred trusted Bank. During FY 2020-21 the Bank expandeddistribution and opened 37 newbank branches and entered newer states and union territoriesviz. Jammu & Kashmir West Bengal Telangana Odisha and Karnataka. The Bank has itspresence in 15 states & 2 UTs having total 744 touch points (552 bank branches 177BCBOs & 15 BCs) and 343 ATMs as on 31st March 2021. The Bank is committedin bringing more unbanked and underbanked people in the ambit of formal banking channelsby offering seamless banking experience.

Leveraging skills in the small ticket secured retail lending segment and focusing onretail deposits base Bank continue to offer the wide range of products and services tocater to the evolving needs of its customers. The Bank's customer base crossed themilestone of 2 million customers during FY 2020-21.

Despite the difficult circumstances during FY2020-21 due to COVID-19 pandemic therewas an increase in branch deposits higher customer traction with a 38% annual growth inaggregate deposits and CASA ratio was at 23% as of 31st March 2021. During theyear. Bank raised capital and maintained healthy capital adequacy ratio of 23.37% andTier-1 ratio at 21.53% which was well above minimum requirements of 15% and 7.5%respectively.

Assets Under Management (AUM) of the Bank increased by 22% to Rs.37712 crore as on 31stMarch 2021 vis-a-vis Rs.30893 crore as on 31st March 2020 primarily driven bygrowth in the retail assets under management.

Your Bank is constantly innovating for making banking simple by providing integratedand tailor-made solutions for its customers with tech-led approach faster digitaladoption at low cost supported by robust IT risk management governance structureproducts processes policies and systems in place.

The key business developments and segment wise position of business and its operationsare covered in detail under the Management Discussion & Analysis section of the AnnualReport.

B. Credit Rating:

The details of credit rating obtained by the Bank in respect of debt instruments issuedby it and outstanding as on 31st March 2021 along with outlook is given hereunder:

Nature of Debt Instrument Nature of Term CRISIL India Ratings ICRA CARE
Fixed Deposits* Long Term FAA+ /Stable - - -
Non-Convertible Debentures Long Term AA- /Stable AA-/Stable AA- /Stable -
Subordinated Debt/Tier II Bonds Long Term AA- /Stable AA-/Stable AA- /Stable -
Bank Loans Long Term - AA- /Stable AA- /Stable AA- /Stable
Certificate of Deposits Short Term A1 + A1 + - A1 +

*CRISIL vide their communication dated 3[d December 2020 has assigned"FAA+/Stable" Rating for the Fixed Deposit Program of Rs.40000 crore (RupeesForty Thousand crore).

C. Dividend

The Board of Directors of the Bank have adopted a Dividend Distribution Policy in termsof Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 and Reserve Bank of India (RBI) guidelines with an objective to appropriately rewardshareholders through dividends for reposing their confidence in the Bank while retainingthe capital required for supporting future business growth. The Bank proposes Dividend incompliance with the Dividend Distribution Policy of the Bank and RBI guidelines in thisregard. The Policy of the Bank is disclosed on the website .

The Board of Directors have not recommended any dividend for FY 2020-21 hence norecord date is kept for the purpose of dividend.

D. Change in Nature of Business

During the year under review there has been no change in the nature of business of theBank. Further information on the business overview and outlook and state of the affairsof the Bank is covered under the Management Discussion & Analysis section of theAnnual Report.

E. Transfer to Reserves

In terms of RBI regulations and other applicable regulations the Bank has transferredthe following amounts to various reserves during the financial year ended 31stMarch 2021.

Transfer to Reserves
Amount transferred to Amount (Rs. in crore)
Statutory Reserve 292.67
Transfer to Special Reserve U/s 36 (1) (viii) 77.00
Transfer to Capital Reserve 28.87
Transfer to Investment Fluctuation Reserve (31.65)

The Board of Directors has not proposed to transfer any amount to general reserve forthe financial year ended 31st March 2021.

F. Transfer to the Investor Education and Protection Fund (IEPF)

In terms of Section 124 and 125 of the Companies Act 2013 read with applicable rulesas amended from time to time dividends that are unpaid or unclaimed for a period of 7(seven) years from the date of transfer to unpaid dividend account are required to betransferred to the IEPF. Further the equity shares of the Bank for which dividend has notbeen paid or claimed for seven consecutive years or more shall also liable to betransferred to the IEPF in accordance with the IEPF rules.

There was no such unclaimed/unpaid dividend or shares liable to be transfered to theIEPF for the year under review. The Bank has disclosed the details of unclaimed dividendamounts lying with the Bank on its website at .

G. Deposits

Being a Banking company the disclosures required as per Rule 8(5)(v) & (vi) of theCompanies (Accounts) Rules 2014 read with Sections 73 and 74 of the Companies Act 2013and Companies (Acceptance of Deposits) Rules 2014 are not applicable. The details of thedeposits received and accepted by your Bank as a banking company have been disclosed inthe financial statements for the financial year ended 31st March 2021.

H. Inclusion In ‘Futures & Options' Segment and Bank Nifty Index of NSE

During the year under review the National Stock Exchange (NSE) vide its Circular no.NSE/FAOP/47161 dated 29th January 2021 notified that future & options(F&O) contracts of AU Small Finance Bank Limited will be available for trading witheffect from 26th February 2021. Accordingly the F&O contracts onsecurities of the Bank were available from said date for trading. Further from 31stMarch 2021 your Bank has also been included in Bank Nifty Index.

I. Capital Structure & Fund Raising

During the period under review there has been no change in the authorised sharecapital of the Bank. The Board of Directors has allotted 3090063 equity shares pursuantto exercise of ESOP under different ESOP Schemes.

Further considering significant opportunities available in retail and MSME financingand keeping in mind growth projections the Bank decided to raise further capital from themarket. Accordingly the Board of Directors in its meeting dated 2nd May 2020approved the raising of equity capital up to '2500 crore (Rupees Two Thousand FiveHundred crore only) through Qualified Institutions Placement ("QIP") or anyother alternative permissible mode. The same was approved by the shareholders in theAnnual General Meeting held on 21st July 2020.

Accordingly pursuant to provisions of the SEBI (Issue of Capital and DisclosureRequirements) Regulations 2018 and the Companies Act 2013 the Bank successfullycompleted Qualified Institutions Placement (QIP) of 5000000 equity shares of face valueof '10 each at an issue price of '1251 per Equity Share (including a security premium of'1241 per Equity Share) on subscription by Qualified Institutional Buyers (QIB)aggregating to '625.50 crore.

With respect to disclosure under Regulation 32(7A) of SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015 the funds raised through QIP issue during theyear has been fully utilised for the intended object as mentioned in the private placementdocument and there was no deviation or variation in utilisation of the said funds.

Pursuant to the above allotments of equity shares the total issued and paid-up equityshare capital of the Bank increased by '8.09 crore to '312.21 crore as on 31stMarch 2021 as compared to '304.12 crore as on 31st March 2020.

During the year Bank has sold 4962374 Equity Shares at a total consideration of'737.18 crore held in Aavas Financiers Limited thereby making Bank well capitalised forits business expansion needs.

Further the Bank has redeemed total Non-Convertible Debentures (NCDs) of '481.67 croreduring the FY 2020-21. Accordingly total outstanding NCDs stood at '1175 crore as on 31stMarch 2021 against '1656.67 crore as on 31st March 2020.

J. Employee Stock Option Schemes

Your Bank has formulated different Employee Stock Option Schemes ("Schemes")which have been duly approved by the shareholders of the Bank. The Schemes have beendevised in accordance with the SEBI (Share Based Employee Benefits) Regulations 2014 asamended from time to time.

The grants in the schemes are approved by the Nomination and Remuneration Committeebased on the pre-determined criteria. In terms of Compensation Policy of the Bankemployees are granted options as part of Annual Performance Review of their performanceand at the time of hiring. Several factors including scale designation performancegrades period of service criticality of role and their contribution for the Bank'soverall performance is taken into consideration for deciding number of options to begranted to the employees.

During the year under review with the approval of shareholders at the Annual GeneralMeeting held on 21st July 2020 modifications have been carried out in theEmployees Stock Option Scheme 2015 Plan A & B Employees Stock Option Scheme 2016& Employees Stock Option Scheme 2018 w.r.t. ‘Section 8 - Change in CapitalStructure or Corporate Action clause'.

During the year under review Shareholders have approved the Employees Stock OptionScheme 2020 (ESOP 2020) consisting of 5000000 ESOPs through postal ballot on 23rdDecember 2020.

Presently following are the Employee Stock Option Schemes:

• Employee Stock Option Scheme 2015 - Plan A (ESOP 2015 - Plan A)

• Employee Stock Option Scheme 2015 - Plan B (ESOP 2015 - Plan B)

• Employee Stock Option Scheme 2016 - (ESOP 2016)

• Employee Stock Option Scheme 2018 - (ESOP 2018)

• Employee Stock Option Scheme 2020 - (ESOP 2020)

The details of vesting of various schemes are as follows:

ESOP Scheme & Plan Vesting Period % of vesting of options
ESOP 2015 - Plan A 1 year from the date of grant or at the time of IPO whichever is later 20%
Expiry of 1 year from 1st vesting 30%
Expiry of 2 years from 1st vesting 50%
Total 100%
ESOP 2015 - Plan B 1 year from the date of grant or at the time of IPO whichever is later 20%
Expiry of 1 year from 1st vesting 30%
Expiry of 2 years from 1st vesting 50%
Total 100%
ESOP 2016 Options granted under this scheme would vest after one year but not later than six years from the date of grant of options 100%
ESOP 2018 Options granted under this scheme would vest after one year but not later than six years from the date of grant of options 100%
ESOP 2020 Options granted under this scheme would vest after one year but not later than six years from the date of grant of options 100%

Note: Options granted may be exercised within four years from the date of first vestingof the options under ESOP 2015 and six years from the date of first vesting of the optionsunder ESOP 2016 ESOP 2018 and ESOP 2020.

The Brief Details of Existing ESOP Schemes as on 31st March 2021 is givenbelow:

Particulars ESOP Plan A 2015 ESOP Plan B 2015 ESOP Scheme 2016 ESOP Scheme 2018 ESOP Scheme 2020
Date of Shareholders Approval 31st August 2015 31st August 2015 10th October 2016 07th August 2018 23rd December 2020
Total Number of Options approved 3836058 4933194 2100000 4933200 5000000
Total Number of Options outstanding at the Beginning of the period 1411428 1243496 797337 4283256
Total No. of Options granted (during FY 2020-21) 38702 1030758 995960 448138 117177
Source of shares Primary
The Pricing Formula 10.11 33.37 Market price linked# Market price linked Market price linked
Options Vested (during FY 2020-21) 219202 1046612 362612 908691 -
Options Exercised (during FY 2020-21) 1284094 1147527 306738 351704 -
Total No. of shares arising as a result of exercise of Option 1284094 1147527 306738 351704 -


Particulars ESOP Plan A 2015 ESOP Plan B2015 ESOP Scheme 2016 ESOP Scheme 2018 ESOP Scheme 2020
Options lapsed/ Forfeited (during FY 2020-21) (Available for re-issue) ' 49329 148883
Total No. of Options exercisable at the end of the 166036 1114154 181774 667735 -
Total No. of options outstanding at the end of the year 166036 1126727 1437230 4230807 117177
Variation in terms of Options

Modification in ESOP Schemes w.r.t. 'Change in Capital Structure or No Corporate Action clause' was done vide Shareholders approval obtained in the Annual General Meeting dated 21st July 2020 in compliance of SEBI (Share Based Employee Benefits) Regulations 2014. There is no impact of amendment carried out in the schemes for the employees to whom options were granted.

Money realised on exercise of Options (during FY 2020-21)

(in Rs.)

12982190 38292976 42943320 230566640
Total No. of Options granted to Senior Management Personnel (SMPs) Please refer Note 5 1
Any other employee who received a grant in any one year of options amounting to 5% or more of options granted during that year NIL NIL NIL NIL NIL
Identified employees who are granted options during any one year equal to or exceeding 1 % of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant NIL NIL NIL NIL NIL
Diluted Earnings Per Share (EPS) of the Bank after considering the effect of potential equity shares on account of exercise of Options Refer Note 2
Impact of the difference between the Intrinsic Value of the Options and the Fair Value of the Options on Profits and on EPS Refer Note 2
Weighted average share/ exercise price of the shares exercised during the year (in Rs.) 10.11 33.37 140.00 655.57* **
Weighted average fair values of the outstanding options (in Rs.)

Please refer Schedule 18 and point no. 7 to Notes to accounts to Audited Financial Results for FY 2020-21

Mr. Uttam Tibrewal was granted 38702 ESOPs under ESOP Scheme 2015 - Plan A &1018758 ESOPs under ESOP Scheme 2015 - Plan B on 27th October 2017 atexercise price of Rs.10.11 & Rs.33.37 each respectively. The RBI pursuant to itsletter dated 5th February 2021 intimated to the Bank that the ESOPs granted toMr. Uttam Tibrewal pertains to the period prior to his appointment as the Whole-TimeDirector of the Bank and thus the approval of RBI is not required and the Board ofDirectors of the Bank may take appropriate decision in this regard subject to adherence tostatutory norms as applicable. The Board of Directors in its meeting held on 27thMarch 2021 approved exercise of said ESOPs granted to Mr. Uttam Tibrewal and the grantdate stands good from 27th October 2017 vesting period and exercise of thesaid ESOPs remains unimpacted. The said ESOPs which were not included in ESOP grantedduring FY 2017-18 are shown under options granted vested and exercisable in the abovetable.

Proposal for Variable Pay for Mr. Uttam Tibrewal Whole-time Director in form ofPerformance Bonus and ESOPs for FY 2019-20 was submitted to RBI for approval. RBI vide itsletter dated 3rd May 2021 did not acceded the proposal and the proposal wasreconsidered by the NRC & Board and the same is pending with RBI for its approval.

* Pricing for ESOP Scheme 2016 was changed from fixed price of Rs.140 to marketlinked price with the approval of shareholders obtained in the Annual General Meeting heldon 19th July 2019.

* 256969 ESOPs were allotted at the exercise price of Rs.66410314 ESOPs wereallotted at the exercise price of Rs.643237 ESOPs were allotted at the exercise Price ofRs.622 500 ESOPs were allotted at the exercise Price of Rs.589 81208 ESOPs wereallotted at the exercise price of Rs.630 1576 ESOPs were allotted at the exercise priceof Rs.668 and 900 ESOPs were allotted at the exercise price of Rs.724 under ESOP Scheme2018. "No Options were exercisable under ESOP scheme 2020 in FY 2020-21.

Note 1

Following are the total number of stock options that have been granted to SeniorManagement Personnel (SMPs) during the financial year ended 31st March 2021:

S. No. Name Designations No. of ESOP granted in ESOP 2014 No. of ESOP granted in ESOP 2020
1 Mr. Deepak Jain* Chief Operating Officer 20107 0
2 Mr. Rishi Dhariwal Group Plead Branch Banking 14526 0
3 Mr. Bhaskar Vittal Karkera Chief of Wheels 16981 0
4 Mr. Manoj Tibrewal Group Plead - Distribution Enterprise Salary & Merchant Acquiring 10221 0
5 Mr. Vimal Jain* Chief Financial Officer 9487 0
6 Mr. Yogesh Jain Chief of Staff 12211 0
7 Mr. Mayank Markanday** Chief Risk Officer 10311 0
8 Mr. Vivek Tripathi Chief of Strategy-Commercial Banking 11060 0
9 Mr. Ankur Tripathi Chief Information Officer 10231 0
10 Mr. Pankaj Sharma National Business Manager-SBL MSME 6185 0
11 Mr. Aalekh Vijayvargiya National Credit Manager SBL (MSME) 9521 0
12 Mr. Shantanu Prasad Chief of Treasury & Wholesale Liability 6686 0
13 Mr. Ashok Kumar Khandelwal Chief Compliance Officer 5485 0
14 Mr. Vikrant Jethi Chief of Collections 10573 0
15 Mr. Naveen Vashisht National Business Manager Wheels Used 7411 0
16 Mr. Aditya Sharma Chief Technical & Legal Officer - Mortgages 9830 0
17 Mr. Shoorveer Singh Shekhawat Chief of Products & Communication-Liabilities 8695 0
18 Mr. Vijendra Singh Shekhawat President - Core Market Banking Rajasthan 6763 0
19 Mr. Alok Gupta*** Chief Risk Officer 0 20000
20 Mr. Sachin Kumar Jain National Credit Manager Wheels 5751 0
21 Mr. Raj Kumar Sharma National Collection Manager Wheels 7920 0
22 Mr. Shekhar Shukla Chief of Operations-Liabilities 8727 0
23 Mr. Yogesh Soni Chief of Branch Banking Operations 6880 0
24 Mr. Prince Tiwari Chief of Financial Institutions Group (FIG) & Investor Relations (IR) 10543 0
25 Mr. Sultan Ram Jat Senior Vice President Retail Banking 7115 0
26 Mr. Avinash Sharan Circle Manager Branch Banking - North 8527 0
27 Mr. Manmohan Parnami Company Secretary 4680 0
28 Mr. Abhinav Garg National Product & Communication Manager Wheels 5437 0
29 Mr. Sumit Sharma National Collection Manager SBL-HL 7370 0
30 Mr. Akhil Kumar Patni National Product & Communication Manager Secured Business Loans 3749 0
31 Mr. Vikas Chowdhry Lead Operations - Retail Assets & SBL 4646 0

ESOPs granted under ESOP 2016 and ESOP 2020 at an exercise price of Rs.614 andRs.929 respectively.

*Mr. Deepak Jain and Mr. Vimal Jain was elevated as Chief Operating Officer and ChiefFinancial Officer respectively w.e.f. 1st April 2020. "Mr. MayankMarkanday was Chief Risk Officer of the Bank till 31st March 2021 and he isdesignated as Chief of Credit Card Business & Merchant Solution Group w.e.f. 1slApril 2021.

"*Mr. Alok Gupta was designated as Chief Risk Officer of the Bank w.e.f. 1slApril 2021.

Note 2

The Securities and Exchange Board of India (SEBI) has prescribed two methods to accountfor stock grants; namely

(i) the intrinsic value method;

(ii) the fair value method. The Bank adopts the intrinsic value method to account forthe stock options grants to the employees. The Bank also calculates the fair value ofoptions at the time of grant using Black- Scholes pricing model with the followingassumptions:

Particulars 31st March 2021
Risk-free interest rate (%) 5.84%-6.12%
Expected life (years) 3 years - 5.5 years
Expected volatility (%) 41.72%-42.29%
Expected dividend rate (%) 0%

The Bank measures the cost of ESOP using the intrinsic value method. Had the Bank usedthe fair value model to determine compensation its profit after tax and earnings pershare as reported would have changed to the amounts indicated below:

( Rs. in crore)
Particulars Year ended 31st March 2021 Year ended 31st March 2020
Profit after tax as reported 11 70.68 674.78
Add: ESOP cost using intrinsic value method (net of tax) 57.46 17.76
Less: ESOP cost using fair value method (net of tax) 92.81 51.64
Profit after tax (adjusted) 1135.33 640.90
Earnings Per Share
As reported 38.19 22.78
Adjusted for ESOP cost using fair value method 37.04 21.64
As reported 37.86 22.32
Adjusted for ESOP cost using fair value method 36.72 21.20


( Rs. in crore)
Particulars As on

31st March 2021

As on

31st March 2020

Stock options outstanding (gross) 188.76 104.14
Deferred compensation cost outstanding 29.35 21.52
Stock options outstanding (net) 159.41 82.62

In accordance with SEBI circular no. CIR/CFD/POLICY CELL/2/2015 dated 16thJune 2015 necessary disclosures are made in Schedule 18 - Notes forming part of thefinancial statements for FY 2020-21 and are included in the annual report and alsodisclosed on the website of the Bank at .

K. Board of Directors and Key Managerial Personnel

During the year under review following changes took place in the Board of Directorsand Key Managerial Personnel of the Bank:

1. Shareholers vide resolution passed through postal ballot dated 22ndJanuary 2020 approved the appointment of Mr. Raj Vikash Verma as Independent Director ofthe Ban k for second term for a period of three years effective from 30thJanuary 2021. Further shareholders vide resolution passed through postal ballot dated 28thOctober 2020 has

approved his appointment as Part-Time Chairman on 23rd December 2020 subjectto approval of RBI for a period of 2 (Two) years with effect from 8th April2021. RBI vide its letter dated 8th April 2021 has approved reappointment ofMr. Raj Vikash Verma as Part-time Chairman of the Bank for a period of 2 (two) yearsw.e.f. 8th April 2021.

Mr. Raj Vikash Verma's vast and diversified experience of over ~40 years in fields ofFinance Economics Banking Regulatory Compliances Housing & Mortgage Finance andthe Real Estate Sector shall help the Bank to build a strong foundation on which it canprofitably and sustainably scale its operations. Further his regulatory experience shallbenefit the Bank in enhancing the qualitative and quantitative matters that should belooked by the Board and Committees of Board.

2. Mr. Narendra Ostawal Non-executive Director expressed his desire to step down fromthe Board due

to his other engagements. The Board of Directors in their meeting dated 28thOctober 2020 accepted his resignation with effect from close of business hours on 28thOctober 2020. Your directors place on record sincere appreciation for his contribution tothe Bank during his tenure and conveys best wishes for his future endeavours.

3. With the approval of the shareholders obtained at 25th Annual GeneralMeeting of the Bank Mr. Mankal ShankarSriram (MSSriram) and Mr. PushpinderSingh wereappointed as Independent Directors for a period of 3 years i.e. up to 20thOctober 2022 and Mr. Kannan Gopalaraghavan Vellur (V G Kannan) was appointed asIndependent Director for a period of 3 years i.e. upto 21st January 2023.

Mr. M S Sriram has vast experience in financial inclusion microfinance understandingof rural economy co-operatives Agriculture and Agriculture Finance and his inclusion onBoard shall strengthen the Bank's ability to increase credit flow at the bottom of thepyramid and further deepen the impact of its financial inclusion initiatives. Mr.Pushpinder Singh's expertise in banking technology will greatly aid the Bank's aspirationof becoming customer-centric and technology driven Bank in the rapidly changingdigital-banking infrastructure with emergence of newer technologies and payment systems.Mr. Kannan is a banking industry veteran with over 38 years of experience in Banking &Financial Services (BFSI) sector and he is acknowledged an authority in credit treasuryrisk and investment management in the Banking sector.

The Board of Directors of the Bank is of the opinion that Mr. M S Sriram Mr.Pushpinder Singh and Mr. V G Kannan are persons of integrity and has relevant experienceand expertise for appointment as Independent Directors of the Bank.

4. Pursuant to the section 152 of Companies Act 2013 Mr. Sanjay Agarwal ManagingDirector & CEO retired at the previous Annual General Meeting and shareholdersapproved his re-appointment. Further Mr. Uttam Tibrewal Whole Time Director of the Bankshall retire at the ensuing Annual General Meeting and being eligible for reappointmentoffers himself for re-appointment.

With the approval of the Board of Directors the proposal for re-appointment of Mr.Sanjay Agarwal Managing Director & CEO and Mr. Uttam Tibrewal Whole Time Directorwas submitted to Reserve Bank of India for a period of 3 years with effect from 19thApril 2020. The said proposal was approved by Reserve Bank of India.

5. Mr. Vimal Jain Chief of Finance and Accounts has been elevated as Chief FinancialOfficer with effect from 1st April 2020 by the Board on the recommendation ofAudit Committee and Nomination and Remuneration Committee.

6. Mr. Deepak Jain Chief Financial Officer has been elevated as Chief OperatingOfficer by the Board of Directors and designated as Key Managerial Personnel in terms ofsection 2(51) of the Companies Act 2013 with effect from 1st April 2020 onthe recommendation of the Nomination and Remuneration Committee.

During the year no other changes took place in the Board of Directors or in KeyManagerial Personnel of the Bank. The composition of the Board of Directors and KeyManagerial Personnel of the Bank was compliant with the applicable regulatory norms.

Further none of the Directors have been debarred from holding office as Director byvirtue of any order of the SEBI or any other authority.

L. Code of Conduct for Directors including Independent Directors and SMPs

The Board of Directors of the Bank adopted the Code of Conduct for the Directors andSenior Management Personnel (SMPs) of the Bank in compliance of Regulation 17(5) of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and the code ofconduct sets forth the guiding principles for orderly & fair conduct by BoardDirectors and SMPs. For FY 2020-21 all Board members and SMPs have affirmed thecompliance with the code and a declaration to this effect signed by the Managing Director& CEO forms part of Corporate Governance Report annexed with Board's Report as Annexure- I. The Bank's Code of Conduct for Directors and SMPs is disclosed on thewebsite of the Bank at .

M. Number of Meetings of Board

During the period under review eleven (11) Board meetings were convened and duly heldon the following dates:

• 2nd May 2020

• 30th May 2020

• 23rd July 2020

• 5th September 2020

• 24th October 2020

• 28th October 2020

• 15th December 2020

• 28th January 2021

• 27th February 2021

• 12th March 2021

• 27th March 2021

The intervening gap between the said meetings were in accordance with the provisions ofCompanies Act 2013 relevant Rules made thereunder. Secretarial Standard-1 Issued byInstitute of Company Secretaries of India and provisions of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. The dates of Board meetings and details ofattendance of each director have been disclosed in the Corporate Governance Report annexedwith Board's Report as Annexure-I.

Committees of the Board

The Bank believes that Board Committees are crucial to promote best CorporateGovernance within the Bank. Accordingly the Bank has constituted various Board Committeesto improve the Board efficiency and to support in decision making. The constitution ofthese Committees is in acquiescence of provisions of the Companies Act 2013 the relevantrules made thereunder SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 Banking Regulation Act 1949 the Articles of Association of the Bank and otherguidelines issued from time to time. The details of the Board Committees of the Bank aredisclosed in the Corporate Governance Report annexed with Board's Report as Annexure-I.

Meeting of Independent Directors

Your Bank conducted a separate meeting of Independent Directors on 1st May2020 and 12th March 2021 without the presence of the Non-Independent Directorsand members of Management of the Bank.

The Independent Directors in the said meetings discussed about the flow of informationto the Board its Committees Governance Compliance and other areas of improvements.Further performance of Non-Independent Directors the Board as a whole and the Chairmanwas also evaluated.

Familiarisation Programme for Independent Directors

Pursuant to Regulation 25(7) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and RBI guidelines various familiarisation programme were organisedduring FY 2020-21 for the Independent Directors to enable them to familiarise with theBank its Management Bank's business and its operations for better understanding oftheir roles rights and responsibilities for effective contribution in growth of the Bank.Details of familiarisation programme attended by Board members during FY 2020-21 aredisclosed on the website of the Bank under .

The detail about familiarisation programme and other training programme is disclosed inthe Corporate Governance Report annexed with Board's Report as Annexure-I.

N. Declaration of Independence

In accordance with provisions of sections 149(6) and 149(7) of the Companies Act 2013Schedule IV and Regulation 16 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 all the Independent Directors have submitted thedeclaration of independence confirming that they meet the criteria of independence. Interms of Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 Board has examined the veracity of declarations submitted by respectiveBoard members. The Board opined that Independent Directors appointed during the financialyear are having requisite integrity expertise specialised knowledge experience and theproficiency.

The Independent Directors have complied with the Code applicable for IndependentDirectors as stipulated under schedule IV of the Companies Act 2013. Further all theIndependent Directors have registered themself in the Independent Director Databank andpaid the relevant fees. All the compliances of rule 6 (1) & (2) of the Companies(Appointment and Qualifications of Directors) Rules 2014 have been complied with.

O. Compensation Policy for Directors Key Managerial Personnel Senior ManagementPersonnel and Other Employees

In accordance with the provisions of section 178(3) of the Companies Act 2013 readwith rules made thereunder RBI guidelines and on the recommendation of the Nomination andRemuneration Committee the Bank has formulated and adopted a comprehensive compensationpolicy for its Directors Key Managerial Personnel Senior Management Personnel and otherEmployees.

The objectives of the Compensation policy along with the other details has beenprovided in Corporate Governance Report annexed with Board's Report as Annexure-I anddisclosure in this regard have been made in schedule to notes to accounts of the auditedfinancial statements for FY 2020-21.

Criteria for Appointment of Director & Senior Management Personnel

The proposal for appointment of Directors is put up to the Nomination and RemunerationCommittee along with requisite documents/disclosures received in the prescribed format forhis/her proposed candidature as director.

The Nomination and Remuneration Committee carry out the fit and proper assessment afterascertaining the veracity of documents being submitted experience and qualificationsrequired for the post and if deem fit recommends the profile for appointment to Board ofDirectors for their approval.

The Nomination and Remuneration Committee and the Board ensures that the remunerationto be paid to the proposed appointee is in accordance with the compensation policy and RBIguidelines issued in this regard.

During the FY 2020-21 as a part of Annual review the Board of Directors reviewed theCompensation Policy which regulates the appointment of Directors Key ManagerialPersonnel Senior Managerial Personnel and other employees of the Bank.

The terms of reference of the Nomination and Remuneration Committee CompensationPolicy and evaluation process has been detailed in Corporate Governance Report annexedwith Board's Report as Annexure-I. The Compensation Policy of the Bank is disclosedon the website of the Bank at https://www.

Evaluation of the Directors the Board and Committees

The description and details of evaluation process has been provided in CorporateGovernance Report annexed with Board's Report as Annexure-I.

P. Statutory Auditors and their Report

M/s. S. R. Batliboi & Associates LLP (Firm Registration No. 101049W/E300004) wasappointed as the Statutory Auditors for a period of four (4) years by the shareholders ofthe Bank at the Twenty Second (22nd) Annual General Meeting held on 27thSeptember 2017 to hold office from the conclusion of the 22nd Annual GeneralMeeting till the conclusion of the 26th Annual General Meeting of the Bank inaccordance with the provisions of the Companies Act 2013.

There are no qualifications reservations or adverse remarks made by M/s. S.R. Batliboi& Associates LLP Chartered Accountants Statutory Auditors of the Bank in theirreport on the financial statements for the FY 2020-21. Further pursuant to Section143(12) of the Companies Act 2013 the Statutory Auditors of the Bank have not reportedany instances of frauds committed in the Bank by its officers or employees.

Further as the tenure of the M/s. S. R. Batliboi & Associates LLP is ending at theconclusion of 26th Annual General Meeting of the Bank the Board of Directorsat its meeting held on 8th July 2021 on the recommendation of the AuditCommittee has proposed the appointment of Deloitte Haskins and Sells CharteredAccountants (Registration no. 117365W) and G. M. Kapadia & Co. Chartered Accountants(Registration no. 104767W) as the Joint Statutory Auditors (SAs) of the Bank for a periodof three (3) years from the conclusion of 26th Annual General Meeting until theconclusion of 29th Annual General Meeting of the Bank to be held in thecalendar year 2024 subject to the approval of the shareholders and the Reserve Bank ofIndia. Reserve Bank of India has approved the appointment of the above SAs for FY 2021-22.

The Statutory Auditors have confirmed their eligibility under Section 141 of theCompanies Act 2013.

Further as required under the relevant provisions of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Statutory Auditors had also confirmed thatthey had subjected themselves to the peer review process of the Institute of CharteredAccountants of India (ICAI) and they hold a valid certificate issued by the Peer ReviewBoard of ICAI.

Q. Secretarial Auditors and their Report

In compliance with the provisions of Section 204 of the Companies Act 2013 and theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 andRegulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 the Board in its meeting held on 2nd May 2020 upon recommendation of theAudit Committee appointed M/s. V.M. & Associates Company Secretaries (RegistrationNo. P1984RJ039200) to undertake the Secretarial Audit of the Bank for the financial yearended 31st March 2021.

During the year under review no frauds have been reported by the Secretarial Auditorsand there were no observations or qualifications made by the Secretarial Auditors in theirReport. The Secretarial Audit Report for FY 2020-21 annexed with Board's Report as Annexure-IV.

R. Loans Guarantees and Investments under Section 186

Pursuant to Section 186(11) of Companies Act 2013 loans made guarantees given orsecurities provided or acquisition of securities by a banking company are carried out inits ordinary course of business and are exempted from disclosure requirement in the AnnualReport. Hence there is no disclosure being made herein in this regard.

S. Related Party Transactions

During the year under review no related party transaction has been entered by the Bankwith the related parties as falling under the purview of Section 188 of the Companies Act2013. Audit Committee of the Board has given omnibus approval for related partytransactions of repetitive nature. All transactions with related parties were in theordinary course of the business and on an arm's length basis. No transaction has beenentered that could lead to potential conflict of interest between the Bank and relatedparties. All the transactions entered by the Bank with related parties were reported tothe Audit Committee and accordingly required disclosures are made to the Committee forreview.

Hence pursuant to Section 134(3)(h) of the Companies Act 2013 read with Rule 8 (2) ofthe Companies (Accounts) Rules 2014 there are no related party transactions that arerequired to be reported in form AOC-2. The requisite disclosure has been made underSchedule 18 of the notes forming part of audited financial statements for the year ended31st March 2021.

Your Bank has in place a Board approved Policy on Related Party Transactions &Materiality which provide for the process procedure and steps required for approval ofrelated party transactions in compliance of applicable requirements of appropriatereporting and disclosure of transactions between the Bank and related parties.

The Policy on Related Party Transactions & Materiality as approved by the Board isdisclosed on the website of the Bank at .

T. Material Changes and Commitments if any affecting the Financial Position of theBank

There are no material changes and commitments affecting the financial position of theBank which have occurred between the end of the financial year i.e. 31st March2021 and the date of this Report.

The world has endured a year of the unexpected onslaught by the COVID-19 virus with asignificant macroeconomic impact all over the world the second wave had hit India inApril-2021 and it is observed that Business environment shall take some time to get backto normalcy with expectation that vaccination drive will bring back positivity in Economic& Business outlook faster. It is acknowledged that Government of India & StateGovernments and Reserve Bank of India are taking all requisite initiatives in this regard.

U. Conservation of Energy Technology Absorption & Foreign Exchange Earnings andOutgo

With each step we take into a more digital world your bank is committed formaintaining a balance between growth and optimal utilisation of resources. Your bank isalso focused towards undertaking initiatives for absorption of technology withconservation of energy.

(a) Conservation of Energy

Being a responsible institution your bank is committed towards saving energy andperforming business operations in a sustainable manner. Your Bank has undertaken severalenergy conservation initiatives by upgrading its systems and by engaging technologicalinnovations for it's IT Systems.

Steps taken or impact on conservation of energy utilising alternate sources of energyand capital investment on energy conservation equipments

Your bank strives to employ the best practices of Energy Conservation in FacilityManagement through robust planning administration and maintenance. Your bank uses energyefficient LED lights in branches offices and uses maximum of natural light in the officepremises during the daytime.

Your bank also makes use of IT hardware that meets the Environmental Safeguard Agency's(EPA) Power Star Advisory to minimise electricity consumption in the bank. Thisoptimisation of resources also extends to machines such as workstations desktopslaptops and notebooks. Additionally your bank also uses machines with multi-coreprocessors that elevate a machine's performance without drawing on too much energy whichin turn results in higher efficiency and performance enhancement.

Your bank is also driving a digital revolution in the banking sector through theeffective use of Paperless Two-Wheeler Lending Process. To achieve this digitisation thebank uses a Tab-based system thereby eliminating the need of paper for documentation ofany kind. Your Bank has also introduced Instant Account Opening facility through WhatsAppand other digital channels. This has helped your bank to adopt a smooth user- friendlyapproach of account opening. Such digital initiatives have gone a long way to help yourbank reduce the carbon footprint and moving closer to its goal of digital excellence.

Using power supervision technology and guidelines

Your bank uses devices with the latest Operating System that work on Advanced SettingsPower Use Interface (ACPI) to increase computational efficiency and reduce energyconsumption. Using a machine in the power-saving configuration means that it willautomatically switch to energy saving mode once left idle for certain amount of time.

Using Cloud based technology and virtualised info center

Your bank strives to channelise its efforts and investment towards infrastructuredevelopment in the digital space. Your bank makes use of virtual machines and cloud-basedtechnologies to create a virtual ecosystem. This not only reduces dependency on physicalservers thereby reducing operational wattage and space but also means that the newenergy efficient reliable and vastly advanced cloud-based systems are put into place toenhance the user experience.

Recycling systems and supplies

Your bank also practices highly efficient management methods to refurbish aging ITsystems. This is carried out to avoid sending hazardous materials into huge landfills andscaling down the load on already overburdened junkyards. The bank also employs a coherentsystem of recycling slightly older IT systems by assigning them to the staff that does notneed to perform heavy data processing on their system. By doing so the bank successfullyreduces the demand for new desktops and laptops even with our growing workforce.

(b) Technology Absorption

I) The efforts made towards Technology absorption:

Your Bank is continuously improving its product offerings and operations through theadoption of technological advancements. The bank has observed a strong growth in theadoption of IOS and Android based Mobile banking Internet banking TAB-based accountopening and Account opening through digital channels. The bank has channelised its effortstowards digitising the banking services in a user-friendly manner that empowers ourcustomers to carry out their tasks in a hassle free paper free manner that also savestheir time. Bank has also enriched our customer's experience by integrating differentpayment platforms and providing most of banking services for customers delight.

II) The benefits derived like product improvement cost reduction product developmentor import substitution:

Through the advent of digital banking and mobile based initiatives your bank has beenable to not only enrich the customer experience but also provide cost effective products& services by focussing on bringing down the transaction cost. Your bank also makesuse of efficient end point devices and IT Hardware that makes optimal electric consumptionwhile providing high performance.

III) In case of imported technology (imported during the last three years reckoned fromthe beginning of the financial year):

a) The details of technology imported: Nil

b) The year of import: Nil

c) Whether the technology been fully absorbed: Nil

d) If not fully absorbed areas where absorption has not taken place and the reasonsthereof: Nil

IV) Expenditure incurred on Research and Development

Since financial services is being primarily covered under Service Sector hence thesaid point is not directly applicable on Banking Industry.

(c) Foreign Exchange Earnings and Outgo

During the year ended 31st March 2021 the foreign exchange earnings of theBank was ' 0.57 crore and foreign exchange outgo was '1.08 crore.


Over quite some time the finance industry witnessed significant transformations due toadvancements in technologies business model transformations changing regulatorystandards and many other external and internal factors. Risk is the most critical elementfor the Bank and in the banking industry this element became even more criticalconsidering the Bank being custodian of public deposits. The nature of Risk in a BankingIndustry has a wide array which evolves around Credit Risk Market Risk Liquidity RiskOperational Risk IT and Cyber Security Risk and other risks. Your bank has adopted amulti-layered risk management process to identify assess monitor and manage risksthrough the effective use of processes information and technology.

The good risk management practices of the bank have facilitated navigating throughpandemic times and its Enterprise Risk Management (ERM) framework has helped usstrategically benchmark its practices across different business lines to best-in-classlevels.

The Risk Management Process is monitored by risk management policies and the delegationmatrix approved by Board of Directors. The Board is supported by an experienced executivemanagement team Board Committees and Board Delegated Committees as part of the RiskGovernance Framework. The Board has an oversight of the management's efforts to balancegrowth and prudent risk management while creating value for stakeholders.

Pursuant to Regulation 21 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Bank has constituted a Risk Management Committee andas mandated by the regulatory provisions Bank has appointed Chief Risk Officer("CRO") who administers the risk associated key verticals through dedicateddivisions

i.e. Credit Risk Market Risk Operational Risk Fraud Risk Information Security Riskand other Risks under the aegis of the Board approved risk management policies and inaccordance with the approval and responsibility delegation matrix. The CRO has unhinderedaccess to the Risk Management Committee of the Board. The details of the Risk ManagementCommittee and its terms of reference are set out in the Corporate Governance Reportannexed with Board's Report as Annexure-I.

The Risk Management framework is a layered structure and broadly consists of thefollowing aspects for effective risk management across the Bank.

(a) Credit Risk Management

Risk: Credit risk arises from business operations that give rise to actualcontingent or potential claims against any counterparty borrower or obligor. The goalof credit risk management is to strengthen underwriting norms focus on good asset qualityand concentrations at individual exposures as well as at the portfolio level.

Mitigation: Credit Committee and Credit Risk & NPA Management Committee(CRNPAC) overseas and reviews the credit risk and is responsible for formulation ofstandards financial covenants rating standards and benchmarks delegation of creditapproving powers prudential limits on large credit exposures asset concentrationstandards for loan collateral portfolio management loan review mechanism riskconcentration monitoring and evaluation provisioning regulatory and other issues aroundit. Further Bank has in place credit appraisal models for appraising cases including riskassessment checks and balances. The Board Delegated Credit committees submit theirupdates to Risk Management Committee of the Board at regular intervals. All aspects ofcredit risk are governed by the Credit Risk Management Policy and other Policies. Thescope of the Credit Risk unit includes measuring assessing and monitoring credit riskwithin our Bank. Your Bank has laid down prudential limits and caps on various aspects tocontrol the magnitude of credit risk. Loan administration and monitoring is carried outthrough Portfolio Profiling Early Warning Framework Rapid Portfolio Review and AnnualMonitoring of High Value Customers.

(b) Operational Risk Management

Risk: Operational risks arise from inadequate and/ or missing controls in internalprocesses people and systems or from external events or a combination of all the four.

Mitigation: The Bank has the Board delegated Operational Risk Management Committee(ORMC) to review and advise on implementation of measures for risk mitigation whichfurther reports to Risk Management Committee of the Board. The Bank follows an integratedrisk approach where operational risks and its monitoring folds into Chief Risk Officer(CRO) and ORMC. The Bank has in place a board approved Operational Risk Management Policywhich includes a comprehensive Operational Risk Management Framework for documentingassessing and periodic monitoring of various risks and controls linked to variousprocesses across all business verticals.

Your Bank has Risk Containment Unit (RCU) that is guided by a Board approved Fraud RiskManagement Policy. Fraud cases reported in the Bank are apprised to the Audit Committeeand the Board and fraud cases in excess of Rs.1 crore or more are specifically reportedand dealt by the Special Committee for Fraud Monitoring (SFMC) of the Board. The Bank iscontinuously strengthening its systems.

Operational practices and processes procedures controls and review mechanism sothatfraud-prone areas are sanitised against internal and external breaches and bycontinuously monitoring that these control measures are operating effectively.

Your Bank has in place a comprehensive Business Continuity Management (BCM) planpolicy and procedures in place to ensure continuity of critical operations of the Bank inthe event of any disaster/ incident affecting business continuity. The Bank's businesscontinuity programme is developed considering the criticality of the functions performedand the systems have been designed to minimise the operational financial legal andother material consequences arising from such a disaster and focus is on ensuring fasterrecovery of/ minimising impact on the IT systems of the Bank. We hereby report that theBank's Business Continuity Management was operating effectively throughout the year and nofraud case of Rs.1 crore or more was reported during period under review.

Your Bank has responded to the COVID-19 pandemic adequately through robust Businesscontinuity management by promptly catering to customer and other stakeholder'srequirements without fail. Your Bank has been constantly working to simplify the businessprocesses to become even more customer centric during these tough times. Further YourBank has Cyber Crisis Management Plan in place to address any disruption due to cyberevents.

(c) Market Risk Liquidity and Asset Liability Management

Risk: Market Risk for the Bank originates from investment and trading insecurities which are undertaken both for the customers and on a proprietary basis. Themarket risk management framework of the Bank sets benchmark for market risk exposures theperformance of portfolios vis-a-vis the market risk limits and comparable benchmarkswhich provide guidance to optimise the risk- adjusted rate of return of the Bank'sinvestment portfolio. Liquidity risk refers to Bank's inability to fund an increase inassets or withdrawal of liabilities and meet both expected and unexpected cash &collateral obligations at reasonable cost without adversely impacting its financialcondition.

Mitigation: Market risk management is guided by well-defined policies guidelinesprocesses and systems for the identification measurement monitoring and reporting ofexposures against various risk limits set in accordance with the risk appetite of theBank. The Bank utilises the analytical tools for the market risk management of its tradingand investment portfolios.

The Asset Liability Management (ALM) Policy of the Bank stipulates a broad frameworkfor liquidity risk management to ensure that the Bank is in a position to meet itsliquidity obligations as well as to withstand a period of liquidity stress from bank-levelfactors market-wide factors or a combination of both. The Board approved policy capturesthe risk appetite around the liquidity and market risk of the Bank and helps to put inplace defined governance structure in consonance with the Bank's Risk Appetite.

The Asset Liability Management Committee (ALCO)/ Investment Committee (1C) of the Bankoversees the framework for identification measurement and management of market riskinterest rate risk and liquidity risk in the Bank and ensures compliance with establishedinternal and regulatory prudential limits and operate within the approved risk appetite bythe Board.

(d) IT Risk Management

Risk: Your Bank is growing with digitisation and aimed at leveraging digitaltechnology to provide a best-in-class experience for its customers while simultaneouslyenhancing productivity and improve on IT risk management. Risk of cyber-attacks on yourBank's systems arises among others from computer viruses malicious or destructive codephishing attacks denial of service or information application vulnerability and othersecurity breaches resulting in disruption of its services or theft or leak of sensitiveinternal data or customer information.

Mitigation: The Bank has established a robust information and cyber securityframework for securing its IT infrastructure and systems. IT Steering Committee andInformation Security Risk Management committee reports to Board- level IT Strategy &Information Systems Security Committee. This committee reviews and monitors IT securityinfrastructure and vigilance over IT related vulnerabilities against emerging cybersecurity risks. The Chief Information Security Officer ("CISO") is responsiblefor monitoring the information security risks covering all aspects of data security forthe Bank who reports to Chief Risk Officer (CRO). Cyber Security Operation Center (CSOC)with qualified professionals is reporting to CISO for monitoring of real-time cybersecurity glitches. Your Bank has also deployed advanced controls at various layers toensure that cyber security risk in minimised.

Further your Bank has a cyber security management framework a combination offechnologies processes and practices designed to protect networks computers programmesand data from cyber-attacks damage or unauthorised access.

(e) Reputation Risk Management

Risk: Reputation risk can impact the Bank's ability to attract or retain customersand expose it to litigation and regulatory action.

Mitigation: Your Bank communicates with its stakeholders regularly throughappropriate engagement mechanisms to address stakeholder expectations and assuage theirconcerns if any. There is Zero tolerance for knowingly engaging in any activities thatare not consistent with values. Code of Conduct or policies of fhe Bank.

(f) Compliance Risk management

Risk: Unprecedented changes in laws regulations and regulatory policies canincrease the risks of non-compliance and regulatory actions in the form of penaltiesfines restrictions or other sanctions in case of regulatory failures.

Mitigation: The Bank has a dedicated Compliance Department that continuouslymonitors new developments and updates the Bank's Board and senior management about itsimplications. The Bank has a strong compliance culture and have well- articulated policieswith regard to code of conduct Vigil Mechanism AML& KYC and engagement with thirdparty vendors.

In the overarching risk management framework the relevant risk and mitigates have beencovered under Management Discussion & Analysis section of the Annual Report.

W. Corporate Social Responsibility

Over the years the Bank has pioneered in its Corporate Social Responsibility ('CSR')initiatives. The objective of the Bank's CSR initiatives is to improve the quality of lifeof communities and create long-term value for all stakeholders. In compliance of theprovisions of Section 135 of the Companies Act 2013 read with the Companies (CorporateSocial Responsibility Policy) Rules 2014 the Bank has a CSR Committee and Board approvedCSR policy to provide guidelines for carrying out CSR activities. The Bank's flagship CSRprogrammes are designed for bringing positive change and to address critical developmentissues in areas of education sports development women empowerment and Financial &Digital literacy in areas of its operations.

Considering the global pandemic of COVID-19 in 2020-21 the Bank has contributedsubstantial amount of its CSR allocation for health and safety initiatives. During theyear under review the Bank has reached out to the lives of over 13.91+ lakh peoplethrough innovative initiatives in drinking water education livelihood sports amongstothers.

Pursuant to the amendment in CSR provisions of the Companies Act 2013 and rules madethereunder that came into force on 22nd January 2021 Bank has classified itsCSR allocation into ongoing projects and transferred '3.46 crore into Unspent CorporateSocial Responsibility Account and such amount shall be spent by the Bank in pursuance ofthe Corporate Social Responsibility Policy for its CSR obligations within a period of 3financial years.

The terms of reference of CSR committee have been disclosed in the Corporate GovernanceReport and a detailed breakup of expenditure carried out and other details related to CSRactivities has been disclosed in the Corporate Social Responsibility Report annexed withBoard's Report as Annexure-II. The CSR Policy is disclosed on the website of theBank at investors/secretarial-policies .

X. Disclosure under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013

Your Bank has in place a Policy on Prevention and Redressal Against Sexual Harassment.The primary objective of the said policy is to provide all safeguards to employees fromsexual harassment at the workplace. Bank has zero tolerance towards sexual harassment atworkplace and persists to uphold and maintain its work environment safe and secure. YourBank has constituted Internal Complaints Committee in compliance of the provisions of theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013to review investigate and take suitable actions on complaint and there is a Board levelDisciplinary Committee that reviews the decisions taken by Internal Complaints Committee.

The disclosure required under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 is provided in Corporate Governance Report annexedwith Board's Report as Annexure-I.

Y. Subsidiary & Associate Companies

The Bank does not have any company which is its subsidiary or associate. Hence thedetails of this clause are not applicable to the Bank. Accordingly the Bank is also notrequired to formulate a specific policy on dealing with material subsidiaries.

Z. Material Orders Passed by Regulators or Courts or Tribunals

During the period under review no material orders have been passed by theRegulators/Courts/Tribunals which would impact the going concern status of the Bank andits future operations.

AA. Internal Controls System & their Adequacy

Your Bank has an effective internal control system in line with the risk appetite ofthe Bank and aligned to the scale size and complexity of its operations. The scope andauthority of the risk based internal audit function is defined in the Internal AuditPolicy of the Bank which is duly approved by the Board.

The audit function essentially validates the compliances of Bank's processes andoperations with regulatory guidelines accounting procedures and Bank's own internal rulesand guidelines.

The internal audit function provides independent assurance to the Board of Directorsand Audit Committee on the quality and effectiveness of the Bank's internal control riskmanagement and governance systems and processes.

Proper internal controls were in place and operating effectively for the period underreview. Further in compliance with the requirements of Companies Act 2013 statutoryauditors have issued an opinion with respect to the adequacy of the internal controls overfinancial reporting of the Bank and the operating effectiveness of such controls detailsof which may be referred to in the Auditor's Report attached to the audited financialstatements of FY 2020-21.

AB. Cost Records

The provisions for maintenance of cost records as specified by the Central Governmentunder section 148(1) of the Companies Act 2013 are not applicable to the Bank.

AC. Corporate Governance

The Bank's activities are carried out in accordance with good corporate governancepractices and the Bank is constantly striving to make them better with the time. The Bankbelieves that Governance framework and good practices helps in creating right culture andin turn enhances long-term sustainable value for all its stakeholders. Bank adheres to theCorporate Governance requirements set out by the SEBI.

The Corporate Governance Report for FY 2020-21 along with certificate issued by CSManoj Maheshwari Partner M/s V. M. & Associates Company Secretaries confirming thecompliance to applicable requirements related to corporate governance as stipulated underthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is annexedwith Board's Report as Annexure-I.

AD. Business Responsibility Report

Pursuant to Regulation 34(2)(f) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a Business Responsibility Report (BRR) is required to bepublished by the Top 1000 listed companies based on market capitalisation. The BRRdescribes the initiatives taken by the Bank from environmental social and governanceperspective in the format prescribed under SEBI Circular No. CIR/CFD/CMD/10/2015 dated 4thNovember 2015 and the same has been disclosed in the Business Responsibility Reportannexed with Board's Report as Annexure-V and disclosed on the website of the Bankat .

AE. Social Environmental and Management System

The Social Environmental and Management System (SEMS) is a set of policies andprocedures that helps in setting guiding principles for identifying and managing financialinstitution's exposure to the environmental and social risks of its customers. The Bankendeavours to benchmark itself with the best of corporates in India and continued itsfocus to implement best Environmental Social and Governance (ESG) practices in itsoperations with responsible lending approach. The procedures and decision-making processof the SEMS are systematically incorporated at each stage of appraisal and monitoring.Awareness is also created among vendors and customers to comply with applicable social andenvironmental laws to inculcate right practices in their operations.

AF. Particulars of Employee Remuneration

The ratio of the remuneration of each Director to the median employee's remunerationand other details in terms of sub-section 12 of Section 197 of the Companies Act 2013read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 annexed with Board's Report as Annexure-III.

The statement containing particulars of employees as required under Section 197(12) ofthe Companies Act 2013 read with Rule 5(2) and Rule 5(3) of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 as amended is given in an Annexureand forms part of this report. In terms of Section 136(1) of the Companies Act 2013 theannual report is being sent to the Members excluding the aforesaid Annexure. The Annexureis available for inspection upto the date of Annual General Meeting at the registeredoffice of the Bank and any Member interested in obtaining a copy of the Annexure may writeto the Company Secretary of the Bank at .

AG. Management Discussion and Analysis

The Management Discussion and Analysis Report for FY 2020-21 is covered in a separatesection forming part of the Annual Report.

AH. Annual Return

In accordance with the provisions of Section 134(3) read with Section 92(3) of theCompanies Act 2013 the Annual Return for the financial year ended on 31stMarch 2021 in the prescribed form MGT-7 is disclosed on the website of the Bank at .

AI. Whistle Blower Policy & Vigil Mechanism

The details have been provided in Corporate Governance Report annexed with Board'sReport as Annexure-I.

Whistle Blower Policy & Vigil Mechanism as approved by Board is disclosed on thewebsite of the Bank at https:// .

AJ. Anti-bribery and Anti-corruption Policy

The Bank follows a ‘zero-tolerance approach' to bribery corruption and otherwrong practices. The Bank is resolute to act professionally fairly and with integrity inits dealings and operations. The Bank has a Board approved Anti-Bribery andAnti-Corruption Policy laying down the principles for carrying out banking business in anhonest and ethical manner. The said policy is disclosed on the website of the Bank at .

AK. Compliance of Secretarial Standards issued by ICSI

The Bank has complied with the provisions prescribed in Secretarial Standards issued bythe Institute of Company Secretaries of India (ICSI).

AL. Status of Ind AS Implementation.

As per RBI circular RBI/2015-16/315 DBR.BP.BC. No.76/21.07.001/2015-16 dated 11thFebruary 2016 Implementation of Indian Accounting Standards (Ind AS) Banks are advisedthat scheduled commercial banks (excluding RRBs) shall follow the Indian AccountingStandards as notified under the Companies (Indian Accounting Standards) Rules 2015subject to any guideline or direction issued by the Reserve Bank in this regard. Banks inIndia currently prepare their financial statements as per the guidelines issued by RBIthe Accounting Standards notified under section 133 of the Companies Act 2013 andgenerally accepted accounting principles in India (Indian GAAP). In January 2016 theMinistry of Corporate Affairs issued the roadmap for implementation of new IndianAccounting Standards (Ind AS) which were based on convergence with the InternationalFinancial Reporting Standards (IFRS) for scheduled commercial banks insurance companiesand non-banking financial companies (NBFCs). In March 2019 RBI deferred theimplementation of Ind AS for banks till further notice as the recommended legislativeamendments were under consideration of Government of India. The Bank had undertakenpreliminary diagnostic analysis of the GAAP differences between Indian GAAP vis-a-vis IndAS and shall proceed for ensuring the compliance as per applicable requirements anddirections in this regard and the Bank is submitting Proforma Ind AS Financial Statementsto RBI on a quarterly basis.

Directors Responsibility Statement

Pursuant to Section 134(3)(c) read with Section 134(5) of the Companies Act 2013 theBoard of Directors hereby confirm that:

1) In the preparation of the annual accounts for the year ended 31st March2021 the applicable accounting standards have been followed along with proper explanationrelating to material departures if any.

2) We have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Bank as on 31st March 2021 and of theprofit of the Bank for the year ended on that date.

3) We have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theBank's assets and for preventing and detecting fraud and other irregularities.

4) We have prepared the annual accounts on a going concern basis.

5) We have laid down internal financial controls to be followed by the Bank and ensuredthat such internal financial controls are adequate and were operating effectively.

6) We have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

Acknowledgment and Appreciation

The Board places on record its gratitude to the Government of India various StateGovernments RBI SEBI MCA IRDAI IBA UIDAI CERSAI Bankers Lenders DebentureTrustees Registrar & Share Transfer Agent Vendors Service Providers and others fortheir continued support and faith reposed in the Bank. The Board would also like to thankthe BSE Limited the National Stock Exchange of India Limited National SecuritiesDepository Limited Central Depository Services (India) Limited and the Credit RatingAgencies for their continued cooperation.

The Board hereby convey its sincere thanks to the Shareholders Debenture/Bond Holdersand esteemed customers of the Bank for their unstinted patronage.

The Board also expresses its deep appreciation for the dedication and commitment of theemployees at all levels for their strong work ethics professionalism reinforcingcustomer centricity and commendable progress made in challenging environment during theyear.

For and on behalf of the Board of Directors
Sd/- Sd/-
Sanjay Agarwal Uttam Tibrewal
Managing Director & CEO Whole Time Director
DIN: 00009526 DIN: 01024940
Date: 8th July 2021 Date: 8th July 2021
Place: Jaipur Place: Mumbai
CIN: L36911RJ1996PLC011381
Registered Office: 19-A Dhuleshwar Garden
Ajmer Road Jaipur - 302001 Rajasthan