*Cases relating to claims, other than against policies, not acknowledged as debts pertain to litigation pending with various appellate forums/courts #Statutory demands and liabilities in dispute, not provided for, relate to the show cause cum demand notices/assessment orders received by the Company from the respective tax Authorities. The Company has filed appeals against the demand notices/assessment orders with the appellate authorities and has been advised by the experts that the grounds of appeal are well supported in law in view of which the Company does not expect any liability to arise in this regard.

**The company has received demand notice from Employees Provident Fund Organization (EPFO) claiming damages and interest and subsequentlythe final orders from EPFO totaling ' 13,840 thousands. The Company is evaluating the legal options including filing appeal in the Tribunal. The Company does not expect any liability to arise in this regard.

2. Pending litigations

The Company's pending litigations other than those arising in the ordinary course of insurance business comprise of claims against the Company primarily on account of proceedings pending with Tax authorities and Claims, under policies, not acknowledged as debts (net of reinsurance). The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities as applicable, in note 1 of Schedule 16 (B). The Company does not expect the outcome of these proceedings to have a material adverse effect on its financial statements as at March 31, 2023.

3. Actuarial assumptions

The policyholders' actuarial liabilities are determined based on assumptions as to the future experience of the policies. The principal assumptions are related to interest, expenses, mortality, morbidity, persistency, and additionally in the case of participating policies, bonuses and tax. The assumptions are based on prudent estimates of the future experience, and hence include margins for adverse deviations over and above the best estimate assumptions. A brief of the assumptions used by the Appointed Actuary in actuarial valuation is as below:

c) Mortality assumptions:

Mortality assumptions are set in accordance with Clause 5(2) of Schedule II of the IRDAI (Assets, Liabilities and Solvency Margin of Life Insurance Business) Regulations, 2016, in reference to the published Indian Assured Lives Mortality (201214) and are based on the latest experience analysis of the business.

In the case of annuity benefits, mortality assumption is based on the Indian Individual Annuitant's Mortality Table (2012-15).

d) Morbidity assumptions:

Morbidity assumptions are set in accordance with Clause 5(3) of Schedule II of the IRDAI (Assets, Liabilities and Solvency Margin of Life Insurance Business) Regulations, 2016, in reference to the published CIBT 93 Table and are based on the latest experience analysis of the business.

e) Persistency assumptions:

The persistency assumptions are also based on the most recent experience of the Company and vary according to the premium frequency and type of the product.

f) Provision for free-look period:

If a policy which is in force as at the valuation date is subsequently cancelled in the free-look period, then there could be a strain in the policyholder fund on account of the amount payable on free-look cancellation, to the extent the amount is higher than reserves held for that policy. In order to avoid the future valuation strain as a result of the free-look cancellations, reserves on account of the above are held. The free-look reserve is calculated as total strain for all policies that are eligible for free-look cancellations at the valuation date, multiplied by a factor, representing the expected assumptions for free-look cancellations.

g) Bonus rates:

The bonus rates for the participating business as required to be declared in the future is based on the interest expected to be earned as per the valuation assumptions.

h) Tax:

The tax rate as applicable to insurance companies carrying on insurance business is 14.56% p.a. (for the year ended March 31, 2022: 14.56% p.a.).

B) Defined benefit plans:

I. Gratuity:

a) General description of defined benefit plan

This is a funded defined benefit plan for qualifying employees under which the Company makes a contribution to the HDFC Life Insurance Company Limited Employees Gratuity Trust (Trust). The plan provides for a lump sum payment as determined in the manner specified under The Payment of Gratuity Act, 1972, to the vested employees either at retirement or on death while in employment or on termination of employment. The benefit vests after five years of continuous service. Defined benefit obligations are actuarially determined at each quarterly Balance Sheet date using the projected unit credit method as required under Accounting Standard (AS) 15 (Revised), "Employee benefits". Actuarial gains or losses are recognised in the Revenue Account.

e) Actual return on plan assets of the Gratuity plan is a gain of ' 48,336 thousands (Previous year ended March 31, 2022 gain of ' 49,837 thousands).

f) The Company expects to fund ' 275,989 thousands (Previous year ended March 31, 2022'84,038 thousands) towards the Company's Gratuity plan during FY 2023-24.

II. Basis used to determine the overall expected return:

Expected rate of return on investments of the Gratuity plan is determined based on the assessment made by the Company (Trust) at the beginning of the year on the return expected on its existing portfolio, along with the return on estimated incremental investments to be made during the year. Yield on the portfolio is calculated based on suitable mark-up over benchmark Government Securities of similar maturities.

5. Employee Stock Option Scheme (ESOS)

(i) The Company has granted options to employees under the ESOS 2005, ESOS 2010, ESOS 2011 and ESOS 2012 and ESOS (Trust) 2017 schemes. These schemes are administered by the HDFC Life Employees Stock Option Trust. The Trust had subscribed to the capital of the Company and also acquired shares of the Company from Housing Development Finance Corporation Limited, the holding Company then. The options are granted to the employees from these tranches of shares. For all the grants, the mode of settlement is through equity shares. All the grants have graded vesting. The exercise price of ESOS 2005 is based on the holding cost of the shares in the books of the Trust and that of ESOS 2010, ESOS 2011 and ESOS 2012 is based on the fair market value as determined by the Category I Merchant Banker registered with SEBI. The exercise price, of the options granted under ESOS (Trust) 2017 is based on the market price of the shares of the Company, as defined in the ESOS (Trust) 2017 scheme. There are no options outstanding or exercisable for ESOS 2005, ESOS 2010 and ESOS 2011 as of March 31, 2023 and as of March 31, 2022.

(ii) The Company has also granted options to its employees under the ESOS 2014, ESOS 2015, ESOS

2016, ESOS 2017, ESOS 2018, ESOS 2019 and ESOS 2022 schemes. The said schemes are directly administered by the Company. For all the grants, the mode of settlement is through equity shares. All the grants have graded vesting. The exercise price of ESOS 2014, ESOS 2015 and of ESOS 2016 schemes is based on the fair market value as determined by the Category I Merchant Banker registered with SEBI. The exercise price, of the options granted under ESOS

2017, ESOS 2018, ESOS 2019 and ESOS 2022 is based on the market price of the shares of the Company, as defined in the respective ESOS scheme.

(iii) The Company follows the intrinsic value method of accounting for stock options granted to employees. The intrinsic value of the options issued under the above referred schemes is 'Nil' as the exercise price of the option is the same as fair value of the underlying share on the grant date and accordingly, no expenses are recognised in the books. Had the Company followed the fair value method for valuing its options,

the charge to the Revenue Account/Profit & Loss Account for the year would have been aggregated to ' 493,610, thousands (Previous year ended March 31, 2022'2,26,406 thousands) and the profit after tax would have been lower by ' 291,605 thousands (Previous year ended March 31, 2022 ' 1,31,965 thousands). Consequently, Company's basic and diluted earnings per share would have been ' 6.24 and ' 6.24 respectively (Previous year: '5.84 and ' 5.84 respectively).

(iv) Exercise Period under the various ESOS:

The Company's shares were listed on National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) on November 17, 2017. Prior to listing, for all grants issued under the ESOS 2010, ESOS 2011, ESOS 2012, ESOS 2014, ESOS 2015 and ESOS 2016 schemes, the vested options were required to be exercised by the employees within five years from the date of vesting or the date of an Initial Public Offering (IPO) whichever is later subject to the norms prescribed by the Nomination & Remuneration Committee. Post listing of the Company's shares, vested options under all ESOS schemes are required to be exercised by the employees within five years from the date of vesting subject to the norms prescribed by the Nomination & Remuneration Committee.

Salient features of all the existing grants under the various schemes are as stated below:

A) ESOS 2012

There were two grants issued on October 1, 2012 and October 1, 2013. The total number of options granted upto March 31, 2023 are 14,275,310 (Previous year ended March 31, 2022: 14,275,310). The weighted average remaining contractual life of the options outstanding as at March 31, 2023 is Nil years. (Previous year ended March 31, 2022: Nil years).

A summary of status of ESOS 2012 in terms of options granted, forfeited, exercised, outstanding and exercisable along with the weighted average exercise price is as given below:

There were two grants issued on December 1, 2014 and February 1, 2015. The total number of options granted upto March 31, 2023 are 15,034,250 (Previous year ended March 31, 2022: 15,034,250). The weighted average remaining contractual life of the options outstanding as at March 31, 2023 is Nil years (Previous year ended March 31, 2022: 0.84 years).

C) ESOS 2015

There were two grants issued on October 1, 2015 and November 1, 2015. The total number of options granted till March 31, 2023 are 9,733,300 (Previous year ended March 31, 2022: 9,733,300). The weighted average remaining contractual life of the options outstanding as at March 31, 2023 is Nil years (Previous year ended March 31, 2022: 1.30 years).

There were two grants issued on October 1, 2016 and November 1, 2016. The total number of options granted till March 31, 2023 are 3,836,850 (Previous year ended March 31, 2022: 3,836,850). The weighted average remaining contractual life of the options outstanding as at March 31, 2023 is 0.74 years (Previous year ended March 31, 2022: 1.96 years)

E) ESOS 2017

There was one grant issued on March 14, 2018. The total number of options granted till March 31, 2023 are 3,069,206 (Previous year ended March 31, 2022: 3,069,206). The weighted average remaining contractual life of the options outstanding as at March 31, 2023 is 2.41 years. (Previous year ended March 31, 2022: 3.21 years).

F) ESOS (Trust) 2017

There was one grant issued on March 14, 2018. The total number of options granted till March 31, 2023 are 536,394 (Previous year ended March 31, 2022: 536,394). The weighted average remaining contractual life of the options outstanding as at March 31, 2023 is 2.24 years. (Previous year ended March 31, 2022: 3.24 years).

A summary of status of ESOS (Trust) 2017 in terms of options granted, forfeited and exercised, outstanding and exercisable along with the weighted average exercise price is as given below:

ii For employees being on the payroll of the Company for less than 12 months on date of grant

There was one grant issued on September 19, 2019 and one grant issued on October 22, 2021. The total number of options granted till March 31, 2023 are 672,899 (Previous year ended March 31, 2022: 672,889). The weighted average remaining contractual life of the options outstanding as at March 31, 2023 is 5.26 years. (Previous year ended March 31, 2022: 6.26 years).

I) ESOS 2022

i For employees being on the payroll of the Company for more than 12 months on date of grant

There was one grant issued on October 20, 2022 and one grant issued on January 20, 2023 as of March 31, 2023. The total number of options granted till March 31, 2023 are 11,049,368 (Previous year ended March 31, 2022: Nil). The weighted average remaining contractual life of the options outstanding as at March 31, 2023 is 6.68 years (Previous year ended March 31, 2022: Nil).

A summary of status of ESOS 2022 in terms of options granted, forfeited and exercised, outstanding and exercisable along with the weighted average exercise price at the different grant dates is as given below:

J) ESOS 2022

i For employees being on the payroll of the Company for less than 12 months on date of grant

There was one grant issued on October 20, 2022 and one grant issued on January 20, 2023 as of March 31, 2023. The total number of options granted till March 31, 2023 are 490,000 (Previous year ended March 31, 2022: Nil). The weighted average remaining contractual life of the options outstanding as at March 31, 2023 is 8.86 years (Previous year ended March 31, 2022: Nil).

The managerial remuneration mentioned above does not include the perquisite value as per Income Tax Act, 1961 of employee stock options exercised and the actuarially valued employee benefits that are accounted as per Accounting Standard (AS) 15 (Revised), "Employee Benefits", that are determined on an overall Company basis. Managerial remuneration in excess of the prescribed limits by IRDAI has been charged to the Shareholder's Profit and Loss Account.

7. Remuneration paid to non-whole time independent directors ' 5,000 thousands and expense for the year ' 5000 thousands (Previous year ended March 31, 2022 paid '6,000 thousands and expense ' 5,333 thousands) is included under Schedule 3A under the head "Directors Commission".

10. Leases

I n accordance with the Accounting Standard (AS) 19, "Leases", the following disclosures are made in respect of

operating leases:

a) The Company has hired motor vehicles on cancellable operating lease for a term of up to five years. In respect of these operating leases, the lease rentals debited to the Revenue Account are ' 5,320 thousands (Previous year ended March 31, 2022: '139 thousands).

The terms of the lease agreements do not contain any exceptional/restrictive covenants which will have significant detrimental impact on the Company's financials nor are there any options given to the Company to purchase the motor vehicles. The agreements provide for pre-decided increase in lease rentals over the lease period and for change in the rentals if the taxes leviable on such rentals are revised.

b) The Company has taken properties under operating lease. In respect of these operating leases, the lease rentals debited to rent under the head "Rent, rates and taxes" in the Revenue Account are ' 917,133 thousands (Previous year ended March 31, 2022: ' 637,747 thousands).

The lease arrangements contain provisions for renewal and escalation. The terms of the lease agreements do not contain any exceptional/restrictive covenants which will have significant detrimental impact on the Company's financials.

c) The Company has taken furniture and generators under cancellable operating lease. In respect of these operating leases, the lease rentals debited to rent under the head "Rent, rates and taxes" in the Revenue Account are ' 24,481 thousands (Previous year ended March 31, 2022: ' 9,383 thousands).

d) The Company has taken cloud services, networking equipment etc under operating lease. In respect of these operating leases, the lease rentals debited to rent under the head "Rent, rates and taxes" in the Revenue Account are ' 412,529 thousands (Previous year ended March 31, 2022: '319,176 thousands).

Unspent amount pertaining to 'other than ongoing projects' transferred to any fund included in Schedule VII of the Companies Act 2013 is 'Nil (Previous year ended March 31, 2022 ' Nil)

Amounts of related party transactions pertaining to CSR related activities for the year ended March 31, 2023 is ' Nil (Previous year ended March 31, 2022 ' Nil)

14. During the year ended March 31, 2023, the Company issued unsecured, subordinated, fully-paid, rated, listed, redeemable non-convertible debentures (NCDs) in the nature of 'Subordinated Debt' as per the IRDAI (Other Forms of Capital) Regulations, 2015 amounting to ' 35,00,000 thousand at a coupon rate of 8.2% per annum. The said NCDs were allotted on June 22, 2022 and are redeemable at the end of 10 years from the date of allotment with a call option to the Company to redeem the NCDs post the completion of 5 years from the date of allotment and annually thereafter.

Interest of ' 621,937 thousands (Previous year ended March 31, 2022:' 400,200 thousands) on the said NCDs has been charged to the Profit and Loss Account.

15. Derivative contracts:

In accordance with the IRDAI circular no. IRDA/F&I/INV/CIR/138/06/2014 dated June 11, 2014 ('the IRDAI circular on Interest Rate Derivatives') and IRDAI Investment Master Circular (as revised in October 2022) allowing insurers to deal in rupee interest rate derivatives, the Company has in place a derivative policy approved by Board which covers various aspects that apply to the functioning of the derivative transactions undertaken to substantiate the hedge strategy to mitigate the interest rate risk, thereby managing the volatility of returns from future fixed income investments, due to variations in market interest rates.

a) The Company has during the year, as part of its Hedging strategy, entered into Forward Rate Agreements (FRA) and Interest Rate Futures (IRF) transactions to hedge the interest rate sensitivity for highly probable forecasted transactions as permitted by the IRDAI circular on Interest Rate Derivatives.

FRA derivative contracts are over-the-counter (OTC) transactions and IRF are exchange trade standard contracts, agreeing to buy notional value of a debt security or Government Bond (GOI) at a specified future date, at a price determined at the time of the contract with an objective to lock in the price of an interest bearing security at a future date.

The Forward Rate Agreement (FRA) contract is valued at the difference between the market value of underlying bond at the spot reference yield taken from the SEBI approved rating agency and present value of contracted forward price of underlying bond including present value of intermediate coupon inflows from valuation date till FRA contract settlement date, at applicable INR-OIS rate curve.

The Interest Rate Futures (IRF) are exchanged traded derivative instrument and valued at closing settlement prices published by primary stock exchange.

An amount of ' (1,279,721) thousands (Previous year ' (1,319,968) thousands) was recognised in Revenue Account being the portion of loss determined to be ineffective.

Amount that was removed from Hedge Reserve account during the year ended March 31, 2023 in respect of forecast transaction for which hedge accounting had previously been used, but is no longer expected to occur is ' Nil (Previous year ' Nil)

The cash flows from the hedges are expected to occur over the outstanding tenure of underlying policy liabilities and will accordingly flow to the Revenue Account.

Qualitative Disclosures on risk exposure in Fixed Income Derivatives:

Overview of business and processes:

a) Fixed Income Derivative Hedging instruments:

Derivatives are financial instruments whose characteristics are derived from the underlying assets, or from interest and exchange rates or indices. These include forward rate agreements, interest rate swaps and interest rate futures.

The Company during the financial year has entered into FRA and IRF derivative instrument to minimise exposure to fluctuations in interest rates on plan assets and liabilities. This hedge is carried in accordance with its established policies, goals and applicable regulations. The Company does not engage in derivative transactions for speculative purposes.

b) Derivative policy/process and Hedge effectiveness assessment:

The Company has well defined Board approved Derivative Policy and Process document setting out the strategic objectives, regulatory and operational framework and risks associated with interest rate derivatives along with having measurement, monitoring processes and controls thereof. The accounting policy has been clearly laid out for ensuring a process of periodic effectiveness assessment and accounting.

The Company has clearly identified roles and responsibilities to ensure independence and accountability through the investment decision, trade execution, to settlement, accounting and periodic reporting and audit of the Interest Rate Derivative exposures. The overall policy, risk management framework for the Interest Rate Derivatives are monitored by the Risk Management Committee.

c) Scope and nature of risk identification, risk measurement, and risk monitoring:

The Derivative and related Policies as approved by the Board sets appropriate market limits such as sensitivity limits and value-at-risk limits for exposures in interest rate derivatives.

All financial risks of the derivative portfolio are measured and monitored on periodic basis.

Quantitative disclosure on risk exposure in Forward Rate Agreement

A hedge is deemed effective, if it has a high statistical correlation between the change in value of the hedged item and the hedging instrument (FRA/IRF). Gains or losses arising from hedge ineffectiveness, if any, are recognised in the Revenue Account.

The tenure of the hedging instrument may be less than or equal to the tenure of underlying hedged asset/liability

The industry exposure limit for FRA exposure has been calculated on the basis of Credit Equivalent Amount using the Current Exposure Method (CEM) as detailed below:

The Credit Equivalent Amount of a market related off-balance sheet transaction calculated using the CEM is the sum of

a) the current credit exposure (gross positive mark to market value of the contract); and

b) potential future credit exposure which is a product of the notional principal amount across the outstanding contract and a factor that is based on the mandated credit conversion factors as prescribed under the IRDAI circular on Interest Rate Derivatives, which is applied on the residual maturity of the contract.

21. Claims outstanding

As at March 31, 2023, there were 5,535 claims amounting to ' 158,352 thousands (Previous year ended March 31, 2022: 856 claims amounting to ' 97,731 thousands) settled and remaining unpaid for a period of more than six months. These claims remain unpaid awaiting receipt of duly executed discharge documents from the claimants. All claims are to be paid to claimants in India.

During the year ended March 31, 2023 the company has recognized NPA provision of ' 75,000 thousands on investment in NCDs of IL&FS Ltd, classified as NPA in FY 2018-19 owing to the default of interest and principal payment on the Non-Convertible Debentures (NCD's) held in Unit Linked Funds. The additional provision is recognized due to maturity of bonds with corresponding impact of reversal in Fair value change account, and hence have neutral impact on Revenue account.

Further, during the year company has recovered ' 6,205 thousand and ' 7,284 thousand from issuer (IL&FS Financial Services Ltd) in Non-Linked Policyholders' Fund and Shareholders' Fund respectively, towards part payment of principal amount due on NCDs.

23. Segmental reporting

As per Accounting Standard (AS) 17, "Segment Reporting", read with the IRDAI Financial Statements Regulations, Segmental Accounts are disclosed in Annexure 1.

24. Policyholders' surplus

The surplus arising in the non-participating funds amounting to ' 11,390,975 thousands (Previous year ended March 31, 2022, ' 7,374,476 thousands) has been transferred to Profit and Loss account based on the recommendation by the Appointed Actuary.

The above contribution is subject to approval by shareholders at the Annual General Meeting is irreversible in nature and will not be recouped to the Shareholders.

26. Unit Linked Funds

The Company has presented the financial statements of the unit linked funds in Annexure 2 and 3 as required by the Master Circular.

29. Acquisition of Exide Life Insurance Company Limited:

On January 1, 2022, the Company had acquired 100% stake in Exide Life Insurance Company Limited (Exide Life or Subsidiary). Subsequent to the acquisition, the Company had filed a Scheme of amalgamation (Scheme) with National Company Law Tribunal (NCLT) to merge Exide Life with HDFC Life.

NCLT vide its order dated September 16, 2022 and the Insurance Regulatory Development Authority of India (IRDAI) vide its approval dated October 13, 2022 (effective from end of day of October 14, 2022) had approved the said Scheme and same was filed with the Registrar of Companies (RoC) on October 14, 2022, post which, Exide Life ceased to exist.

Based on the approved Scheme, the Company has accordingly given effect of the merger in its financial statement as under:

a) The appointed date for the merger was April 1, 2022.

b) The Company in its financial statements, had accounted the merger with effect from April 1, 2022 (the appointed date) using the Pooling of Interest method as prescribed under the Accounting Standard 14 (AS 14).

c) The difference between the share capital of the subsidiary company and value of investment in the subsidiary company by the Company was accounted as amalgamation reserve. The said amalgamation reserve created on merger has been further adjusted against the Share premium Account as per the terms of NCLT order.

Consequently, the comparative previous year is not comparable.

30. Subsidiaries:

The Company has two subsidiaries, for which information is given as under:

i. HDFC Pension Management Company Limited ("HDFC Pension") is a wholly owned subsidiary of HDFC Life Insurance Company Limited and has been a licensed pension fund manager since 2013 and also licensed as Point of Presence (PoP) for distribution of NPS and servicing to public at large since February 2019. It was granted licence under the new Request for Proposal (RFP) by the PFRDA and was issued certificate of registration dated March 30, 2021 to act as Pension Fund under NPS architecture. HDFC Pension has been a preferred pension fund manager and its Assets Under Management have grown to ' 45,397 crore as at March 31, 2023 (as at March 31, 2022'28,414 crore).

ii. HDFC International Life and Re Company Limited ("HDFC International Life & Re") is a wholly owned foreign subsidiary incorporated in Dubai International Financial Centre ("DIFC") as a Company Limited by Shares under the previous Companies Law, DIFC Law No.2 of 2009 on January 10, 2016 under registration number 2067. The Company has been designated as a Private Company under the Companies Law, DIFC Law no. 5 of 2018 as on the date of its enactment. HDFC International Life & Re is regulated by the Dubai Financial Services Authority (""DFSA"") and is licensed to undertake life reinsurance business. It provides risk-transfer solutions, prudent underwriting solutions and value added services, among others, across individual life, group life and group credit life lines of business. HDFC International Life & Re currently offers reinsurance solutions in the Gulf Cooperation Council ("GCC"), Middle East & North Africa ("MENA") region and India.

In December 2018, HDFC International Life & Re was assigned a long-term insurer public financial strength rating of "BBB" with a stable outlook by S&P Global Ratings. In subsequent years also, S&P Global ratings confirmed the long-term insurer public financial strength rating of HDFC International Life & Re while maintaining the outlook as "Stable". In October 2022, S&P Global Ratings confirmed the long-term insurer -Financial Strength Rating (FSR) of the HDFC International Life & Re, while changing the outlook as "Negative".

31. Final Dividend

The Board of Directors have recommended a final dividend of ' 1.90 per equity share of face value of ' 10 each in its

board meeting held on April 26, 2023, subject to Shareholders approval in the Annual General Meeting.

35. Share application money received pending allotment of shares amounting to ' 31,543 thousands (Previous year ' 33,183 thousands) disclosed in the Balance Sheet as on March 31, 2023 relates to the application money received towards Employee Stock Option Plans under Company's Employee Stock Options Scheme(s).

36. The Company claims credit of Goods and Services Tax ('GST') on input services, which is set off against GST on output services. The unutilised credits towards GST on input services are carried forward under 'Schedule 12 -Advances and Other Assets' in the Balance Sheet.

During the year ended March 31, 2023 the company has recognized NPA provision of ' 75,000 thousands on investment in NCDs of IL&FS Ltd, classified as NPA in FY 2018-19, owing to the default of interest and principal payment on the Non-Convertible Debentures (NCD's) held in Unit Linked Funds (Schedule 8B). The additional provision is recognized due to maturity of bonds with corresponding impact of reversal in Fair value change account, and hence have neutral impact on Revenue account.

Owing to proportionate Mark to Market (MTM) impact of ' 61,510 thousands on the matured NCDs during the year, gross NPA has been increased with corresponding adjustment in the Fair value change account.

During the year, The company has recovered ' 6,205 thousands and ' 7,284 thousands from issuer (IL&FS Financial Services Ltd) in Non-Linked Policyholders' Fund and Shareholders' Fund respectively, towards part payment of principal amount due on NCDs.

The increase in gross NPA Investment Schedules (viz. Schedule 8, Schedule 8A, Schedule 8B) is primarily attributed towards transfer of assets pursuant to amalgamation of Exide Life Insurance Company Ltd.

2. Deposits made under local laws

The Company has no deposit (Previous year ended March 31, 2022: ' Nil) made under local laws or otherwise encumbered in or outside India as of March 31, 2023, except investments and deposits detailed in Note 16 of Schedule 16(B).

a. The persistency ratios are calculated in accordance with the IRDAI circular no. IRDAI/F&A/CIR/MISC/256/09/2021 dated September 30, 2021 and hence are with a lag of one month.

b. The persistency ratios for the year ended March 31, 2023 have been calculated for the policies issued in the March to February period of the relevant years. For eg: the 13^th month persistency for current year is calculated for the policies issued from March 2021 to February 2022. The persistency ratios for the year ended March 31, 2022 have been calculated in a similar manner.

c. Definition for persistency ratio revised in accordance with IRDAI circular on 'Public Disclosures by Insurers' dated September 30, 2021; persistency for individual policies; figures for previous period have been restated as per revised definition.

d. Ratios for previous year have been reclassified/regrouped wherever necessary.

Additional Tierl (ATI) Bonds

During the year ended March 31, 2020 the company had recognized Impairment provision, consequent to the RBI's "Yes Bank Ltd - Reconstruction Scheme 2020" wherein the Bank was directed to write-down certain Basel III Additional Tier1 Bonds (AT1 Bonds) as a part of the reconstruction scheme. An impairment provision of 100% of reporting value, amounting to ' 1,056,419 thousands was made in investment in Yes Bank AT1 Bonds, held in Shareholders Fund. Interest accrual of ' 20,168 thousands on these AT1 Bonds was also reversed in the Revenue Account in Year ending March 31, 2020.

Further during the year ended March 31, 2023 the company had recognized/reversed impairment provision of ' NIL on Additional Tier1 (AT1) Bonds, and ' 6,419 thousands in corresponding previous year ending March 31, 2022. The provision reversal was recognized due to scheduled deemed maturity of bonds with corresponding impact in the loss on sale/redemption of investments in Profit & Loss account, and hence had neutral impact on Profit & Loss Account.

Non-Convertible Debentures (NCD's)/ Bonds

During the year ended March 31, 2023, the company had recognized/reversed impairment provision of NIL and during the corresponding previous year, basis the Company's credit evaluation, owing to asset quality improvement in the long term for specified issuers and receipt of maturity proceeds, a reversal of impairment provision of ' 75,000 thousands had been recognized, both in the Profit & Loss Account and Revenue Account for investments held in Shareholders' and Non-Linked Policyholders' Funds respectively.

17. In accordance with the IRDAI (Investment) Regulations 2016 and IRDAI circular IRDA/F&I/INV/CIR/062/03/2013 dated March 26, 2013, the Company has declared March 31, 2023 as a business day. NAV for all unit linked segments were declared on March 31, 2023. All applications received till 3 PM on March 31, 2023, were processed with NAV of March 31, 2023. Applications received after this cut-off for unit linked funds are taken into the next financial year.

18. Long term contracts

The Company has a process whereby periodically all long term contracts are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provisions as required under any law/ accounting standard for material foreseeable losses on such long term contracts including derivative contracts has been made in the financial statements.

For insurance contracts, actuarial valuation of liabilities for policies in force is done by the Appointed Actuary of the Company. The assumptions used in valuation of liabilities for policies in force are in accordance with the guidelines and norms issued by the IRDAI and the Institute of Actuaries of India in concurrence with the IRDAI.

19. Goods and Services Tax

During the year, Directorate General of Goods and Services Tax Intelligence (DGGI) - Mumbai has initiated an industry wide investigation in relation to Input Tax Credit availed on certain expenses. The Company is providing necessary information and documents to support the department. The Company has not yet received any show cause notice from the department. Upon receipt of the same, the Company will decide on the necessary course of action

20. IND AS Implementation

During the year, the Company has set up a steering committee comprising members from finance, actuarial and technology. The steering committee met at regular intervals to initiate implementation of IND AS standards. Post deliberations, the Company has appointed an external partner to perform an impact assessment. The Company is in the process of aligning its implementation plan with the glide path proposed by IRDAI. The Audit Committee and Board of Directors have been updated regularly in this matter.

21. During the year ended March 31, 2023, the Company has issued 3,57,94,824 equity shares of face value of ' 10 each on a preferential basis to HDFC Limited.

22. No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or any other person or entities, including foreign entities ('Intermediaries') with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lent or invest in party identified by or on behalf of the Company (Ultimate beneficieries). The Company has also not received any fund from any parties (Funding Party) with the understanding that the Company shall whether, directly or indirectly lent or invest in other persons or entities identified by or on behalf of the Funding Party ('Ultimate Beneficiaries') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

23. Code on Social Security, 2020

The Code on Social Security, 2020 ('Code') relating to employee benefits during employment and post-employment benefits has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified.