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Housing Development Finance Corporation Ltd.

BSE: 500010 Sector: Financials
NSE: HDFC ISIN Code: INE001A01036
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VOLUME 99672
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P/E 28.90
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OPEN 2164.25
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VOLUME 99672
52-Week high 3021.10
52-Week low 2026.55
P/E 28.90
Mkt Cap.(Rs cr) 397,188
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Housing Development Finance Corporation Ltd. (HDFC) - Director Report

Company director report

TO THE MEMBERS

Your directors are pleased to present the forty-fifth annual report ofyour Corporation with the audited accounts for the year ended March 31 2022.

Financial Results For the year ended March 31 2022 For the year ended March 31 2021
Rs. in crore Rs. in crore
Profit Before Sale of Investments Dividend and Provision for Expected Credit Loss 17404.30 15631.43
Profit on Sale of Investments 263.02 1397.69
Dividend 1510.99 733.97
Impairment on Financial Instruments (Expected Credit Loss) (1932.00) (2948.00)
Profit Before Tax 17246.31 14815.09
Tax Expense (3504.13) (2787.79)
Net Profit After Tax 13742.18 12027.30
Other Comprehensive Income (OCI) 33.86 1734.22
Total Comprehensive Income 13776.04 13761.52
Retained Earnings
Opening Balance 17328.59 14137.67
Profit for the year 13742.18 12027.30
Re-measurement of Net Defined Benefit Plans through OCI (5.25) 6.30
Amount Available for Appropriations 31065.52 26171.27
Appropriations:
Special Reserve No. II 2100.00 2000.00
General Reserve - 2700.00
Statutory Reserve (Under Section 29C of the National Housing Bank Act 1987) 700.00 500.00
Final Dividend Paid 4152.65 3642.68
Closing Balance Carried Forward 24112.87 17328.59

Dividend

The board after assessing the capital buffers liquidity levels and theimpact of COVID-19 on the operations of the Corporation has recommended payment ofdividend for the financial year ended March 31 2022 of ' 30 per equity share of facevalue of ' 2 each compared to ' 23 per equity share in the previous year.

The dividend pay-out ratio for the year ended March 31 2022 is 39.6%compared to 34.5% in the previous year.

The dividend recommended is in accordance with the principles andcriteria as set out in the Dividend Distribution Policy. The Dividend Distribution Policyis placed on the Corporation's website.

Material Developments: Proposed Scheme of Amalgamation

The Board of Directors of the Corporation at its meeting held on April4 2022 approved a composite scheme of amalgamation ("Scheme") for theamalgamation of: (i) HDFC Investments Limited and HDFC Holdings Limited wholly-ownedsubsidiaries of the Corporation with and into the Corporation and (ii) the Corporationwith and into HDFC Bank Limited ("HDFC Bank") and matters related thereto.

On April 3 2022 the Board of Directors of HDFC Investments Limitedand HDFC Holdings Limited had approved the merger of their respective companies with andinto the Corporation.

With effect from the appointed date and upon the amalgamation of theCorporation with and into HDFC Bank becoming effective the Corporation along with all itsassets liabilities contracts employees licenses records and approvals being theirrespective integral parts shall stand transferred to and vest in or shall be deemed tohave been transferred to and vested in HDFC Bank as a going concern.

Upon the Scheme becoming effective and in consideration of the proposedamalgamation of the Corporation with and into HDFC Bank the Corporation will standdissolved without being wound up and the shareholders of the Corporation as on the recorddate will receive 42 shares of HDFC Bank (each of face value of ' 1) for 25 shares heldin the Corporation (each of face value of ' 2). This share exchange ratio has been arrivedat based on a joint valuation report submitted by two registered valuers and a jointvaluation report submitted by two independent chartered accountancy firms which wassupported by a fairness opinion provided by a Securities and Exchange Board of India(SEBI) registered merchant banker.

During the period between the approval of the Scheme by the respectiveboards of the Corporation and HDFC Bank and up to the effectiveness of the Scheme thebusiness of the Corporation and HDFC Bank shall be carried out with reasonable diligenceand business prudence in the ordinary course consistent with past practice in accordancewith the applicable laws and as mutually agreed.

The Board of Directors of the Corporation and HDFC Bank have opinedthat the proposed amalgamation would be in the best interest of the respective companiestheir shareholders employees creditors and other stakeholders since the proposedamalgamation will yield advantages as set out inter alia below:

(a) The amalgamation is based on leveraging the significantcomplementarities that exist amongst the parties to the Scheme. It would create meaningfulvalue for various stakeholders including respective shareholders customers employeesas the combined business would benefit from increased scale comprehensive productoffering balance sheet resiliency and the ability to drive synergies across revenueopportunities operating efficiencies and underwriting efficiencies amongst others;

(b) HDFC Bank would benefit from a larger balance sheet and networthwhich would allow underwriting of larger ticket loans and also enable a greater flow ofcredit into the Indian economy;

(c) The loan book of the Corporation is diversified havingcumulatively financed 9.3 million dwelling units. With the Corporation's leadership in thehome loan arena developed over the past 45 years HDFC Bank would be able to providecustomers flexible mortgage offerings in a cost-effective and efficient manner;

(d) HDFC Bank has access to funds at lower costs due to its high levelof current and savings accounts deposits (CASA). With the amalgamation of the Corporationwith HDFC Bank HDFC Bank will be able to offer more competitive housing products;

(e) The Corporation's rural housing network and affordable housinglending is likely to qualify for HDFC Bank as priority sector lending and will also enablea higher flow of credit into priority sector lending including agriculture; and

(f) The proposed amalgamation is expected to result in bolstering thecapital base and bringing in resiliency in the balance sheet of HDFC Bank.

The composite Scheme is subject to receipt of requisite approvalsincluding from statutory and regulatory authorities as required under applicable laws.The Scheme has been filed with BSE Limited National Stock Exchange of India Limited andReserve Bank of India (RBI).

Impact of COVID-19

The financial year ended March 31 2022 marked the second year sincethe World Health Organisation declared the outbreak of COVID-19 as a pandemic. During theyear under review countries across the globe continued to face economic and socialdisruptions along with the loss of lives and livelihoods. Eruptions of new waves andvariants of the virus necessitated localised restrictions and lockdown.

In April 2021 India witnessed a second wave of infections followed byanother wave of infections in the fourth quarter of FY22. Details of the impact ofCOVID-19 are elucidated in the Management Discussion and Analysis Report.

Management Discussion and Analysis Report (MD&A) Report of theDirectors on Corporate Governance and Business Responsibility and Sustainability Report

In accordance with the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (Listing Regulations) and directions issued by RBI theMD&A and the Report of the Directors on Corporate Governance form part of this report.

As recommended by SEBI the Corporation has voluntarily adopted theBusiness Responsibility and Sustainability Reporting format in place of the BusinessResponsibility Report. In accordance with the Listing Regulations this report has beenplaced on the Corporation's website.

Key Regulatory Changes

The RBI had mandated the introduction of Risk-Based Internal Audit forall deposit taking housing finance companies with effect from June 30 2022. Accordinglythe Corporation has put in place a Risk-Based Internal Audit Policy and has appointed asenior executive Mr. Arjun Gupta as the Head of Internal Audit.

Further in line with Master Direction - Non-Banking Financial Company- Housing Finance Company (Reserve Bank) Directions 2021 (RBI HFC Directions) theCorporation adopted the guidelines on maintenance of Liquidity Coverage Ratio with effectfrom December 1 2021.

On October 22 2021 RBI notified Scale Based Regulation (SBR): ARevised Regulatory Framework for NBFCs. This is an integrated framework with respect tocapital requirements governance standards prudential regulation effective from October1 2022. Based on the criteria specified in the said framework RBI is expected tointimate NBFCs categorised as NBFC-Upper Layer (NBFC- UL) in accordance with SBR. Entitiesclassified as NBFC-UL would warrant enhanced regulatory requirements based on variousparameters as identified by RBI.

The RBI vide its circular dated November 12 2021 providedclarifications on Prudential Norms on Income Recognition Asset Classification andProvisioning Pertaining to Advances (IRACP). The Corporation has complied with therequirements of the said circular.

The RBI has issued various other circulars in an endeavour tostreamline and harmonise regulations between banks and NBFCs. RBI has provided varioustimelines for compliance with the same for NBFCs. Further details are elucidated in theMD&A.

The Corporation is in compliance with the applicable provisions of theRBI HFC Directions and other directions/ guidelines issued by RBI as applicable.

Lending Operations

The Corporation is a Non-Banking Financial Company - Housing FinanceCompany (NBFC-HFC) and is engaged in financing the purchase and construction ofresidential houses real estate and certain other purposes in India. All other activitiesof the Corporation revolve around the main business.

Despite the challenges posed by the pandemic lending operations of theCorporation continued seamlessly during the year. The demand for individual housingcontinued to remain robust.

During the year individual approvals and disbursements grew by 38% and37% respectively.

The Assets Under Management (AUM) as at March 31 2022 amounted to '653902 crore as compared to ' 569894 crore in the previous year - a growth of 15%.

On an AUM basis the growth in the individual loan book was 17%.

The Corporation's outstanding loan book stood at ' 568363 crore as atMarch 31 2022 compared to ' 498298 crore in the previous year.

During the year the Corporation assigned individual loans amounting to' 28455 crore compared to ' 18980 crore in the previous year.

As at March 31 2022 the outstanding amount in respect of individualloans sold was ' 83880 crore. The Corporation continues to service these loans.

Further details of lending operations are provided in the MD&A.

Market Borrowings

The Corporation is in compliance with the provisions of the guidelineson Private Placement of Non-Convertible Debentures (NCDs) as per the RBI HFC Directions.The Corporation has been regular in payment of principal and interest on the NCDs.

Details of market borrowings are provided in the MD&A and notes toaccounts.

Deposits

Deposits outstanding as at March 31 2022 amounted to ' 160900 croreas compared to ' 150131 crore in the previous year.

CRISIL and ICRA have for the twenty-seventh consecutive yearreaffirmed their 'CRISIL FAAA/Stable' and 'ICRA MAAA/Stable' ratings respectively forHDFC's deposits. These ratings represent the highest degree of safety regarding timelyservicing of financial obligations.

There has been no default in repayment of deposits or payment ofinterest during the year. All the deposits accepted by the Corporation are in compliancewith the requirements of the regulations regarding deposit acceptance.

As at March 31 2022 public deposits amounting to ' 581 crore had notbeen claimed by 29777 depositors. Since then 3697 depositors have claimed or reneweddeposits of ' 95 crore.

Depositors were intimated regarding the maturity of deposits with arequest to either renew or claim their deposits. Where the deposit remains unclaimedreminders are sent to depositors periodically and follow up action is initiated throughthe concerned agent or branch.

Deposits remaining unclaimed for a period of seven years from the datethey became due for payment have to be transferred to the Investor Education andProtection Fund (IEPF) established by the central government. The concerned depositor canclaim the deposit from the IEPF. During the year an amount of ' 5 crore was transferredto the IEPF.

Capital Adequacy Ratio

As at March 31 2022 the Corporation's capital adequacy ratio (CAR)stood at 22.8% of which Tier I capital was 22.2% and Tier II capital was 0.6%.

As per regulatory norms the minimum required capital adequacy ratio is15% of which the minimum Tier I capital requirement is 10%.

Corporate Social Responsibility (CSR)

During the year the Corporation's CSR activities were undertaken inaccordance with the board approved Annual Action Plan which focused primarily on coresectors of education and healthcare including COVID-19 health measures. Other sectorsincluded environment supporting persons with disability community development andlivelihoods.

The Corporation prioritised key sub-thematic areas within each of theabove sectors to ensure that the CSR interventions were targeted optimally. TheCorporation contributed directly to implementing agencies and through the H T ParekhFoundation to the identified social sectors.

Further details on the prescribed CSR spend under Section 135 of theCompanies Act 2013 the amount spent during the year under review and the executivesummaries of impact assessment reports of CSR projects completed are provided in theAnnual Report on CSR activities annexed to this report.

Subsidiary and Associate Companies

In accordance with the provisions of Section 136 of the Companies Act2013 the annual report of the Corporation the annual financial statements and therelated documents of the Corporation's subsidiary companies are placed on the website ofthe Corporation.

Shareholders may download the annual financial statements and detailedinformation on the subsidiary companies from the Corporation's website or may write to theCorporation for the same. Further the documents shall also be available for inspection bythe shareholders at the registered office of the Corporation.

On April 22 2021 the Corporation completed the sale of equity sharesof Good Host Spaces Private Limited (Good Host) aggregating to a total consideration of '216 crore. Post the said sale Good Host ceased to be an associate of the Corporation.

In accordance with the directives issued by RBI with regard toreduction of the Corporation's shareholding in HDFC ERGO General Insurance Company Limited(HDFC ERGO) to 50% or below the Corporation on May 11 2021 completed sale of 4412000equity shares of HDFC ERGO to ERGO International AG the foreign promoter of HDFC ERGO ata price of ' 536 per equity share aggregating to a total consideration of ' 236 crore.Post the said sale the shareholding of the Corporation in HDFC ERGO stood at 49.98% ofits issued and paid-up capital and accordingly HDFC ERGO ceased to be a subsidiary of theCorporation under the Companies Act 2013. It however continues to be consolidated as asubsidiary in terms of Indian Accounting Standards.

On January 1 2022 pursuant to receipt of requisite approvals HDFCLife Insurance Company Limited (HDFC Life) completed the acquisition of 100% shareholdingof Exide Life Insurance Company Limited (Exide Life) from Exide Industries Limited.Consequently Exide Life became a wholly-owned subsidiary of HDFC Life. On January 212022 the Board of Directors of HDFC Life approved a Scheme of Amalgamation between ExideLife and HDFC Life subject to approval of the shareholders and applicable regulatoryauthorities.

During the year subsequent to the rights issue of True North VenturesPrivate Limited (True North) the shareholding of the Corporation in True North reduced to19.79%. Accordingly True North ceased to be an associate of the Corporation.

The Corporation has not made any loans or advances in the nature ofloans to any of its subsidiary or associate company or companies in which its directorsare deemed to be interested other than in the ordinary course of business.

The Corporation is in compliance with the provisions of ForeignExchange Management Act 1999 with respect to downstream investments made by it/by itssubsidiaries during the year. Further as required by the Foreign Exchange Management(Non-Debt Instruments) Rules 2019 the Corporation has obtained a certificate fromstatutory auditors on the same.

A review of the key subsidiary and associate companies of theCorporation forms part of the MD&A which forms part of this report. Further astatement containing salient features of financial statements of the subsidiaries andassociates of the Corporation in the prescribed Form No. AOC-1 is provided elsewhere inthis annual report.

Particulars of Employees

HDFC had 3599 employees as of March 31 2022. During the year 16employees employed throughout the year were in receipt of remuneration of ' 1.02 crore ormore per annum and 4 employees employed for part of the year were in receipt ofremuneration of ' 8.5 lac or more per month.

In accordance with the provisions of Rule 5(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the names andparticulars of the top ten employees in terms of remuneration drawn and of the aforesaidemployees are set out in the annex to the Directors' Report. In terms of the provisions ofSection 136(1) of the Companies Act 2013 read with the rule the Directors' Report isbeing sent to all shareholders of the Corporation excluding the annex. Any shareholderinterested in obtaining a copy of the annex may write to the Corporation.

Further disclosures on managerial remuneration are annexed to thisreport.

Prevention Prohibition and Redressal of SexualHarassment of Women at the Workplace

The Corporation has a policy on prevention prohibition and redressalof sexual harassment of women at the workplace and has an Internal Complaints Committee(ICC) in compliance with the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013. The Corporation's policy on the same is placed onthe Corporation's website. The ICC comprises majority of women members. Members of theCorporation's ICC are responsible for conducting inquiries pertaining to such complaints.

The Corporation on a regular basis sensitises its employees includingoutsourced employees on the prevention of sexual harassment at the workplace throughworkshops group meetings online training modules and awareness programmes which are heldon a regular basis. The Corporation also conducted a special training programme formembers of the ICC. During the year two complaints were received by the ICC which werereviewed and disposed of and accordingly there were no complaints pending as at March 312022.

Particulars of Loans Guarantees or Investments

Since the Corporation is an NBFC-HFC the disclosures regardingparticulars of loans/guarantees given and securities provided is exempt under theprovisions of Section 186(11) of the Companies Act 2013.

As regards investments made by the Corporation the details of the sameare provided in the notes to the financial statements of the Corporation for the yearended March 31 2022 (note 10).

Particulars of Contracts or Arrangements with Related Parties

The particulars of contracts or arrangements with related partiesrequired to be disclosed in Form No. AOC-2 is annexed to this report. Details of relatedparty transactions are given in the notes to the financial statements.

The policy on Related Party Transactions of the Corporation ensuresproper approval and reporting of the concerned transactions between the Corporation andits related parties. During the year pursuant to the amendment of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 with respect to related partytransaction norms the said policy was amended to align it with the applicable amendments.

The policy on Related Party Transactions is published elsewhere in theannual report and is also placed on the Corporation's website.

Particulars regarding Conservation of Energy Technology Absorption andForeign Exchange Earnings and Outgo

During the year ended March 31 2022 earnings in foreign currencystood at ' 0.04 crore and expenditure in foreign currency stood at ' 448 crore (largelypertaining to interest on foreign currency borrowings).

The Corporation is in the business of housing finance and hence itsoperations are not energy intensive. The Corporation is cognisant of the importance ofimbibing measures towards optimum energy utilisation and conservation.

Employees Stock Option Scheme (ESOS)

Presently the stock options granted to the employees operate underESOS-07 ESOS-08 ESOS-14 ESOS-17 and ESOS-20 schemes. During the year there has been novariation in the terms of the options granted under any of the schemes and all the schemesare in compliance with SEBI (Share Based Employee Benefits and Sweat Equity) Regulations2021 (SBEB Regulations). The Corporation has obtained a certificate from secretarialauditors on the same. During the year under review the Corporation granted 266000options under ESOS-20 to a few employees who joined the Corporation in FY22.

The disclosures as required under SBEB Regulations have been placed onthe website of the Corporation.

Further on May 2 2022 the Nomination and Remuneration Committee ofDirectors of the Corporation under ESOS-20 granted 5933952 stock options equally to3672 eligible employees including three whole-time directors at an exercise price of '2229.70 per equity share being the latest available closing price of the equity share onthe National Stock Exchange of India Limited prior to the date of the above-mentionedmeeting. The vesting and exercise schedule is the same as earlier grants under ESOS-20.

Unclaimed Dividend and Shares

As at March 31 2022 dividend amounting to ' 23 crore had not beenclaimed by shareholders of the Corporation.

The Corporation takes various initiatives to reduce the quantum ofunclaimed dividend and has been periodically intimating the concerned shareholdersrequesting them to encash their dividend before it becomes due for transfer to the IEPF.

Unclaimed dividend amounting to ' 3 crore for FY14 was transferred tothe IEPF on August 30 2021. Further in compliance with the Investor Education andProtection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016 as amendedthe Corporation transferred 86465 equity shares of ' 2 each (corresponding to thedividend for FY14 remaining unclaimed for a continuous period of 7 years) in favour of theIEPF. However the concerned shareholders may claim the unclaimed dividend and unclaimedshares from IEPF the procedure of which is detailed on the Corporation's website.

The unclaimed dividend in respect of final dividend for FY15 must beclaimed by shareholders on or before August 26 2022 failing which the Corporation wouldbe required to transfer the unclaimed dividend and the corresponding shares to the IEPFwithin a period of 30 days from the said date.

Directors

Mr. Nasser Munjee and Dr. J. J. Irani retired as the independentdirectors of the Corporation with effect from July 20 2021 on account of completion oftheir respective tenures.

The board places on record its sincere appreciation and gratitude forthe wise counsel guidance and enormous contributions made by Mr. Nasser Munjee and Dr. J.J. Irani to the board over the years by sharing their rich experience knowledge andvaried expertise.

The board based on the recommendation of the Nomination andRemuneration Committee appointed Mr. Rajesh Narain Gupta as an independent director of theCorporation and Mr. P. R. Ramesh as a non-executive non-independent director of theCorporation with effect from August 2 2021. The members of the Corporation on November10 2021 approved the appointment of Mr. Rajesh Narain Gupta as an independent directorfor a period of 5 years and Mr. P. R. Ramesh as a non-executive non-independent directorliable to retire by rotation through postal ballot. Further details are provided in theReport of Directors on Corporate Governance.

In accordance with the provisions of the Companies Act 2013 and theArticles of Association of the Corporation Mr. Deepak S. Parekh and Mr. V. SrinivasaRangan are liable to retire by rotation at the ensuing Annual General Meeting (AGM). Theyare eligible for re-appointment.

The board at its meeting held on May 2 2022 approved there-appointment of Ms. Renu Sud Karnad as the Managing Director of the Corporation for aperiod of 2 years with effect from September 3 2022. The re-appointment is subject to theapproval of the members of the Corporation at the ensuing AGM. Ms. Renu Sud Karnadcontinues to be liable to retire by rotation.

Whilst considering the re-appointment of Ms. Renu Sud Karnad the boardnoted that in view of the proposed amalgamation of the Corporation with and into HDFCBank subject to approvals and being made effective within a period of 12-15 months. Thetenure of Ms. Renu Sud Karnad would be limited to the effective date of amalgamation. Theboard however after considering other contingencies that may arise in future if anyapproved the re-appointment of Ms. Renu Sud Karnad for a period of 2 years.

The necessary resolution for the re-appointment of directors and theirbrief profiles have been included in the notice convening the ensuing AGM.

All the directors of the Corporation have confirmed that they satisfythe fit and proper criteria as prescribed under the applicable regulations and that theyare not disqualified from being appointed as directors in terms of Section 164(2) of theCompanies Act 2013.

The details on the number of board/committee meetings held are providedin the Report of the Directors on Corporate Governance which forms part of this report.

Auditors

During the year the RBI had issued guidelines for the appointment ofstatutory auditors and relevant FAQs (RBI guidelines). Pursuant to the said RBIguidelines Messrs B S R & Co. LLP Chartered Accountants being ineligible tocontinue as the statutory auditors of the Corporation tendered its resignation witheffect from November 10 2021. The board places on record its appreciation for theprofessional services rendered by Messrs B S R & Co. LLP during their association withthe Corporation as its statutory auditors.

In line with the said RBI guidelines and based on the recommendation ofthe Audit and Governance Committee and the Board of Directors the members of theCorporation vide resolution passed by way of postal ballot on November 10 2021 approvedthe appointment of Messrs S.R. Batliboi & Co. LLP Chartered Accountants (FirmRegistration No. 301003E/E300005 issued by The Institute of Chartered Accountants ofIndia) and Messrs G. M. Kapadia & Co. Chartered Accountants (Firm Registration No.104767W issued by The Institute of Chartered Accountants of India) as joint statutoryauditors of the Corporation for a period of 3 consecutive years subject to themcontinuing to fulfil the applicable eligibility norms.

During the year the total remuneration paid by the Corporation andsome of its subsidiaries to Messrs B S R & Co. LLP and its network firm entities toMessrs S.R. Batliboi & Co. LLP and its network firm entities and Messrs G. M. Kapadia& Co. was ' 3.41 crore ' 2.26 crore and ' 1.34 crore respectively. The remunerationpertains to fees for audit internal financial control reporting limited reviews taxaudits and taxation services certifications and other matters during their respectivetenures. Further details of remuneration paid by the Corporation to the said audit firmsare provided in note 33.3 of the financial statements.

The Joint Statutory Auditors' Report annexed to the financial statementfor the year under review does not contain any qualifications.

The joint statutory auditors have confirmed that they continue tosatisfy the eligibility norms and independence criteria as prescribed by RBI guidelinesand the Companies Act 2013.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act 2013and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014Messrs BNP & Associates practicing company secretaries undertook the secretarialaudit of the Corporation for FY22. The Secretarial Audit Report is annexed to this reportand does not contain any qualifications.

The Secretarial Compliance Report as prescribed by SEBI is providedelsewhere in the annual report.

Significant and Material Orders Passed by Regulators

During the year there were no significant or material orders passed bythe regulators or courts or tribunals against the Corporation.

In July 2021 National Housing Bank (NHB) imposed a monetary penalty of' 475000 on the Corporation for technical non-compliance with NHB circular NHB(ND)/DRS/PolNo.58/2013-14 dated November 18 2013 and NHB(ND)/DRS/Policy Circular No.75/2016-17dated July 1 2016. The Corporation paid the penalty on July 19 2021. The Corporationmaintains that this is not significant or material in nature.

Directors' Responsibility Statement

In accordance with the provisions of Section 134(3)(c) of the CompaniesAct 2013 and based on the information provided by the management your directors statethat:

a) In the preparation of annual accounts the applicable accountingstandards have been followed;

b) Accounting policies selected have been applied consistently.Reasonable and prudent judgements and estimates have been made so as to give a true andfair view of the state of affairs of the Corporation as at March 31 2022 and of theprofit of the Corporation for the year ended on that date;

c) Proper and sufficient care has been taken for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Corporation and for preventing and detecting frauds andother irregularities;

d) The annual accounts of the Corporation have been prepared on a goingconcern basis;

e) Internal financial controls have been laid down to be followed bythe Corporation and such internal financial controls are adequate and operatingeffectively; and

f) Systems to ensure compliance with the provisions of all applicablelaws are in place and were adequate and operating effectively.

Internal Financial Control

The Corporation has put in place adequate policies and procedures toensure that the system of internal financial controls is commensurate with the size andnature of the Corporation's business. These systems provide a reasonable assurance inrespect of providing financial and operational information complying with applicablestatutes safeguarding of assets of the Corporation prevention and detection of fraudsaccuracy and completeness of accounting records and ensuring compliance with corporatepolicies.

Annual Return

The Form No. MGT-7 for FY22 is uploaded on the Corporation's website.

Material changes and commitment if any affecting the financialposition of the Corporation from the financial year end till the date of this report

Apart from the proposed amalgamation as disclosed elsewhere in thisreport there are no material changes and commitments affecting the financial position ofthe Corporation which have occurred after March 31 2022 till the date of this report.

Acknowledgements

The directors place on record their gratitude for the support ofvarious regulatory authorities including RBI NHB Competition Commission of India SEBIInsurance Regulatory and Development Authority of India Pension Fund Regulatory andDevelopment Authority Ministry of Finance Ministry of Housing and Urban AffairsMinistry of Corporate Affairs Registrar of Companies Financial Intelligence Unit(India) the stock exchanges National Securities Depository Limited and CentralDepository Services (India) Limited.

The Corporation acknowledges the role of all its key stakeholders -shareholders borrowers channel partners depositors deposit agents and lenders fortheir continued support to the Corporation.

Your directors place on record their appreciation for the hard work anddedication of all the employees and support services of the Corporation and theco-operation of all its subsidiary and associate companies especially during thedifficult times of the pandemic.

.