Provisions and Contingent Liabilities

Provisions involving substantial degree of estimation in
measurement are recognised when the Company has a
present obligation (legal or constructive), as a result of
past events, and it is probable that an outflow of resources,
that can be reliably estimated, will be required to settle
such an obligation.

The amount recognised as a provision is the best estimate of
the consideration required to settle the present obligation
at the balance sheet date, taking into account the risks and
uncertainties surrounding the obligation. When a provision
is measured using the cash flows estimated to settle the
present obligation, its carrying amount is the present value
of those cash flows (when the effect of the time value of
money is material).

When some or all of the economic benefits required to
settle a provision are expected to be recovered from a
third party, a receivable is recognised as an asset if it is
virtually certain that reimbursement will be received and
the amount of the receivable can be measured reliably.

The expense relating to a provision is presented in the
Statement of Profit and Loss net of any reimbursement.
If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate that
reflects, when appropriate, the risks specific to the liability.
When discounting is used, the increase in the provision
due to the passage of time is recognised as a finance cost.

A Contingent Liability is a possible obligation that arises
from past events and the existence of which will be
confirmed only by the occurrence or non-occurrence of
one or more uncertain future events not wholly within the
control of the company or a present obligation that arises
from past events that may, but probably will not, require
an outflow of resources.

Both provisions and contingent liabilities are reviewed
at each Balance Sheet date and adjusted to reflect the
current best estimates. Contingent Liabilities are not
recognised but are disclosed in the notes. A contingent
asset is disclosed in the Financial Statements, where an
inflow of economic benefits is probable.

Onerous contracts

Present obligations arising under onerous contracts are
recognised and measured as provisions. An onerous
contract is considered to exist where the Company has
a contract under which the unavoidable costs of meeting
the obligations under the contract exceed the economic
benefits expected to be received from the contract.

2.13 Investment in Subsidiaries and Associates

Investment in subsidiaries and associates are recognized
and carried at cost. Where the carrying amount of an
investment is greater than its estimated recoverable
amount, it is written down immediately to its recoverable
amount and the difference is transferred to the Statement
of Profit and Loss. On disposal of investment, the
difference between the net disposal proceeds and the

carrying amount is charged or credited to the Statement
of Profit and Loss.

2.14 Financial Instruments

Financial assets and financial liabilities are recognized when
an entity becomes a party to the contractual provisions of
the instrument.

Financial assets and financial liabilities are initially measured
at fair value. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial liabilities
at Fair Value through Profit or Loss (FVTPL)) are added
to or deducted from the fair value of the financial assets
or financial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition of
financial assets or financial liabilities at Fair Value through
Profit or Loss are recognised immediately in Statement of
Profit and Loss.

A. Financial Assets

a) Recognition and initial measurement

The Company initially recognises loans and advances,
deposits and debt securities purchased on the date on
which they originate. Purchases and sale of financial
assets are recognised on the trade date, which is the
date on which the Company becomes a party to the
contractual provisions of the instrument.

All financial assets are recognised initially at fair value
except investment in subsidiaries and associates.
In the case of financial assets not recorded at FVTPL,
transaction costs that are directly attributable to its
acquisition of financial assets are included therein.

b) Classification of Financial Assets and Subsequent
Measurement

On initial recognition, a financial asset is classified to
be measured at -

• Amortised cost; or

• Fair Value through Other Comprehensive

Income (FVTOCI) - debt investment; or

• Fair Value through Other Comprehensive

Income (FVTOCI) - equity investment; or

• Fair Value through Profit or Loss (FVTPL)

A financial asset is measured at amortised cost if it
meets both of the following conditions and is not
designated at FVTPL:

• The asset is held within a business model whose
objective is to hold assets to collect contractual
cash flows; and

• The contractual terms of the financial asset give
rise on specified dates to cash flows that are
solely payments of principal and interest on the
principal amount outstanding.

A debt instrument is classified as FVTOCI only if it
meets both of the following conditions and is not
recognised at FVTPL:

• The asset is held within a business model
whose objective is achieved by both
collecting contractual cash flows and selling
financial assets; and

• The contractual terms of the financial asset give
rise on specified dates to cash flows that are
solely payments of principal and interest on the
principal amount outstanding.

Debt instruments included within the FVTOCI
category are measured initially as well as at each
reporting date at fair value. Fair value movements
are recognised in the Other Comprehensive Income
(OCI). However, the Company recognises interest
income, impairment losses & reversals and foreign
exchange gain or loss in the Statement of Profit and
Loss. On derecognition of the asset, cumulative gain
or loss previously recognised in OCI is reclassified from
equity to Statement of Profit and Loss. Interest earned
whilst holding FVTOCI debt instrument is reported as
interest income using the EIR method.

All equity investments in scope of Ind AS 109 are
measured at fair value. Equity instruments which
are held for trading and contingent consideration
recognised by an acquirer in a business combination
to which Ind AS 103 applies are classified as at FVTPL.
For all other equity instruments, the Company may
make an irrevocable election to present in other
comprehensive income subsequent changes in the
fair value. The Company makes such election on an
instrument-by-instrument basis. The classification is
made on initial recognition and is irrevocable.

If the Company decides to classify an equity
instrument as at FVTOCI, then all fair value changes on
the instrument, excluding dividends, are recognised
in the OCI. There is no recycling of the amounts from
OCI to Statement of Profit and Loss, even on sale of
investment. However, on sale/disposal the Company
may transfer the cumulative gain or loss within equity.

Equity instruments included within the FVTPL
category are measured at fair value with all changes
recognised in the Statement of Profit and Loss.

All other financial assets are classified as
measured at FVTPL.

In addition, on initial recognition, the Company may
irrevocably designate a financial asset that otherwise
meets the requirements to be measured at amortised
cost or at FVTOCI as at FVTPL if doing so eliminates
or significantly reduces accounting mismatch that
would otherwise arise.

Financial assets at FVTPL are measured at fair value
at the end of each reporting period, with any gains
and losses arising on re-measurement recognised
in Statement of Profit and Loss. The net gain or
loss recognised in Statement of Profit and Loss
incorporates any dividend or interest earned on the
financial asset and is included in the 'other income'
line item. Dividend on financial assets at FVTPL is
recognised when:

• The Company's right to receive the dividends
is established,

• It is probable that the economic benefits
associated with the dividends will flow
to the Company,

• The dividend does not represent a recovery of
part of cost of the investment and the amount
of dividend can be measured reliably.

c) Business Model Test

The Company determines its business model at the
level that best reflects how it manages a group of
financial assets to achieve its business objective.

The Company's business model is not assessed on
instrument to instrument basis, but at a higher level
of aggregated portfolios and is based on observable
factors such as:

• How the performance of the business model
and the financial assets held within that
business model are evaluated and reported to
the Company's key management personnel;

• The risks that affect the performance of the
business model (and the financial assets held
within that business model) and, in particular,
the way in which those risks are managed.

At initial recognition of a financial asset, the Company
determines whether newly recognised financial

assets are part of an existing business model or
whether they reflect a new business model.

d) Solely Payments of Principal and Interest (“SPPI”)
on the principal amount outstanding

The Company assesses the contractual terms
of financial assets to identify whether they
meet the SPPI test.

'Principal' for the purpose of this test is defined as the
fair value of the financial asset at initial recognition
and may change over the life of the financial asset
(for example, if there are repayments of principal or
amortization of the premium/discount)

The most significant elements of interest within a
lending arrangement are typically the consideration
for the time value of money and credit risk. To make
the SPPI assessment, the Company applies judgement
and considers relevant factors.

Contractual terms that introduce exposure to risks
or volatility in the contractual cash flows that are
unrelated to a basic lending arrangement, such as
exposure to changes in equity prices or commodity
prices, do not give rise to contractual cash
flows that are SPPI.

e) Derecognition of Financial Assets

The Company derecognises a financial asset when
the contractual rights to the cash flows from the
financial asset expire, or when it transfers the financial
asset and substantially all the risks and rewards
of ownership of the asset to another party. If the
Company neither transfers nor retains substantially
all the risks and rewards of ownership and continues
to control the transferred asset, the Company
recognises its retained interest in the asset and an
associated liability for amounts it may have to pay.
If the Company retains substantially all the risks and
rewards of ownership of a transferred financial asset,
the Company continues to recognise the financial
asset and also recognises a collateralised borrowing
for the proceeds received.

On derecognition of a financial asset in its entirety,
the difference between the asset's carrying amount
and the sum of the consideration received and
receivable and the cumulative gain or loss that had
been recognised in other comprehensive income and
accumulated in equity is recognised in Statement
of Profit and Loss if such gain or loss would have
otherwise been recognised in Statement of Profit and
Loss on disposal of that financial asset.

On derecognition of a financial asset other than
in its entirety (e.g. when the Company retains an
option to repurchase part of a transferred asset), the
Company allocates the previous carrying amount
of the financial asset between the part it continues
to recognise under continuing involvement, and
the part it no longer recognises on the basis of the
relative fair values of those parts on the date of the
transfer. The difference between the carrying amount
allocated to the part that is no longer recognised
and the sum of the consideration received for the
part no longer recognised and any cumulative gain
or loss allocated to it that had been recognised in
other comprehensive income is recognised in profit
or loss if such gain or loss would have otherwise been
recognised in Statement of Profit and Loss on disposal
of that financial asset. A cumulative gain or loss that
had been recognised in other comprehensive income
is allocated between the part that continues to be
recognised and the part that is no longer recognised
on the basis of the relative fair values of those parts.

Modification of contractual cash flows

When the contractual cash flows of a financial asset
are renegotiated or otherwise modified, and the
renegotiation or modification does not result in the
derecognition of that financial asset, the Company
recalculates the gross carrying amount of the financial
asset and shall recognise a modification gain or loss
in profit or loss. The gross carrying amount of the
financial asset shall be recalculated as at the present
value of the renegotiated or modified contractual
cash flows that are discounted at the financial asset's
original effective interest rate (or credit-adjusted
effective interest rate for purchased or originated
credit-impaired financial assets) or, when applicable,
the revised effective interest rate. Any costs or fees
incurred adjust the carrying amount of the modified
financial asset and are amortised over the remaining
term of the modified financial asset.

f) Impairment of Financial Assets

The Company applies the expected credit loss (ECL)
model for recognising impairment loss on financial
assets. The Company applies a three-stage approach
for measuring ECL for the following categories of
financial assets that are not measured at Fair Value
through Profit or Loss:

• debt instruments measured at amortised
cost and Fair Value through Other
Comprehensive Income; and

• financial guarantee contracts.

No ECL is recognised on equity investments,
classified as FVTPL.

Expected credit losses is the weighted average of
credit losses with the respective risks of default
occurring as the weights. Credit loss is the difference
between all contractual cash flows that are due to the
Company in accordance with the contract and all the
cash flows that the Company expects to receive (i.e.
all cash shortfalls), discounted at the original effective
interest rate (or credit-adjusted effective interest
rate for purchased or originated credit-impaired
financial assets). The Company estimates cash flows
by considering all contractual terms of the financial
instrument (for example, prepayment, extension, call
and similar options) through the expected life of that
financial instrument.

Financial assets migrate through the following three
stages based on the change in credit risk since
initial recognition:

Stage 1: 12-months ECL

The Company assesses ECL on exposures where
there has not been a significant increase in credit
risk since initial recognition and that were not credit
impaired upon origination. For these exposures,
the Company recognises as a collective provision
the portion of the lifetime ECL associated with the
probability of default events occurring within the
next 12 months. The Company does not conduct
an individual assessment of exposures in Stage 1 as
there is no evidence of one or more events occurring
that would have a detrimental impact on estimated
future cash flows.

Stage 2: Lifetime ECL - not credit impaired

The Company collectively assesses ECL on exposures
where there has been a significant increase in credit
risk since initial recognition but are not credit impaired.
For these exposures, the Company recognises as a
collective provision, a lifetime ECL (i.e. reflecting the
remaining lifetime of the financial asset). Similar to
Stage 1, the Company does not conduct an individual
assessment on Stage 2 exposures as the increase in
credit risk is not, of itself, an event that could have a
detrimental impact on future cash flows.

Stage 3: Lifetime ECL - credit impaired

The Company identifies, both collectively and
individually, ECL on those exposures that are
assessed as credit impaired based on whether one
or more events, that have a detrimental impact

on the estimated future cash flows of that asset
have occurred. For exposures that have become
credit impaired, a lifetime ECL is recognised as a
collective or specific provision, and interest revenue
is calculated by applying the effective interest rate to
the amortised cost (net of provision) rather than the
gross carrying amount.

Determining the stage for impairment

At each reporting date, the Company assesses whether
there has been a significant increase in credit risk for
exposures since initial recognition by comparing the
risk of default occurring over the remaining expected
life from the reporting date and the date of initial
recognition. The Company considers reasonable and
supportable information that is relevant and available
without undue cost or effort for this purpose.
This includes quantitative and qualitative information
and also, forward-looking analysis.

An exposure will migrate through the ECL stages
as asset quality deteriorates. If, in a subsequent
period, asset quality improves and also reverses any
previously assessed significant increase in credit risk
since origination, then the provision for impairment
losses reverts from lifetime ECL to 12-months ECL.
Exposures that have not deteriorated significantly
since origination are considered to have a low
credit risk. The provision for impairment losses for
these financial assets is based on a 12-months ECL.
When an asset is uncollectible, it is written off against
the related provision. Such assets are written off after
all the necessary procedures have been completed
and the amount of the loss has been determined.
Subsequent recoveries of amounts previously
written off reduce the amount of the expense in the
income statement.

The Company assesses whether the credit risk on an
exposure has increased significantly on an individual
or collective basis. For the purposes of a collective
evaluation of impairment, financial instruments
are grouped on the basis of shared credit risk
characteristics, taking into account instrument type,
class of borrowers, credit risk ratings, date of initial
recognition, remaining term to maturity, industry and
other relevant factors.

Measurement of ECL

ECL are derived from unbiased and
probability-weighted estimates of expected loss, and
are measured as follows:

• Financial assets that are not credit-impaired
at the reporting date: as the present value
of all cash shortfalls over the expected life of
the financial asset discounted by the effective
interest rate. The cash shortfall is the difference
between the cash flows due to the Company
in accordance with the contract and the cash
flows that the Company expects to receive.
If the credit risk on a financial instrument
has not increased significantly since initial
recognition, the Company measures the loss
allowance for that financial instrument at an
amount equal to 12-month expected credit
losses. 12-month expected credit losses is a
portion of the life-time expected credit losses
and represents the lifetime cash shortfalls
that will result if default occurs within the 12
months after the reporting date and thus, are
not cash shortfalls that are predicted over the
next 12 months.

• Financial assets that are credit-impaired at the
reporting date: as the difference between the
gross carrying amount and the present value of
estimated future cash flows discounted by the
effective interest rate.

For further details on how the Company calculates
ECL including the use of forward looking information,
refer to the Credit quality of financial assets in Note ....
Financial risk management.

ECL is recognised using a provision for impairment
losses in Statement of Profit and Loss. In the case of
debt instruments measured at Fair Value through
Other Comprehensive Income, the measurement of
ECL is based on the three-stage approach as applied
to financial assets at amortised cost. The Company
recognises the provision charge in profit and loss,
with the corresponding amount recognised in other
comprehensive income, with no reduction in the
carrying amount of the asset in the Balance Sheet.

Further, for the purpose of measuring lifetime
expected credit loss allowance for trade receivables,
the Company has used a practical expedient as
permitted under Ind AS 109. This expected credit loss
is computed based on a provision matrix which takes
into account historical credit loss experience and
adjusted for forward-looking information.

g) Effective interest method

The effective interest method is a method of
calculating the amortised cost of a debt instrument

and allocating interest income over the relevant
period. The effective interest rate is the rate that
exactly discounts estimated future cash receipts
(including all fees and points paid or received that
form an integral part of the effective interest rate,
transaction costs and other premiums or discounts)
through the expected life of the debt instrument,
or, where appropriate, a shorter period, to the net
carrying amount on initial recognition.

Income is recognised on an effective interest basis
for debt instruments other than those financial
assets classified as at FVTPL and Interest income is
recognised in Statement of Profit and Loss.

h) Reclassification of Financial Assets

The Company determines classification of financial
assets and liabilities on initial recognition. After initial
recognition, no reclassification is made for financial

assets which are equity instruments and financial
liabilities. For financial assets which are debt
instruments, a reclassification is made only if there is
a change in the business model for managing those
assets. Changes to the business model are expected
to be infrequent. The Company's management
determines change in the business model as a result
of external or internal changes which are significant
to the Company's operations. Such changes are
evident to external parties. A change in the business
model occurs when the Company either begins or
ceases to perform an activity that is significant to
its operations. If the Company reclassifies financial
assets, it applies the reclassification prospectively
from the reclassification date which is the first day
of the immediately next reporting period following
the change in business model. The Company does
not restate any previously recognised gains, losses
(including impairment gains or losses) or interest.

B. Financial Liabilities and Equity Instruments

a) Classification as Debt or Equity

Debt and equity instruments issued by a
company are classified as either financial
liabilities or as equity in accordance with the
substance of the contractual arrangements
and the definitions of a financial liability and an
equity instrument.

b) Equity Instruments

An equity instrument is any contract that
evidences a residual interest in the assets of
the Company after deducting all of its liabilities.

Equity instruments issued by the Company are
recognised at the proceeds received, net of
directly attributable transaction costs.

c) Financial Liabilities

Financial liabilities are classified as measured at
amortised cost or 'FVTPL'.

A Financial Liability is classified as at FVTPL
if it is classified as held-for-trading or it is
a derivative (that does not meet hedge
accounting requirements) or it is designated as
such on initial recognition.

A financial liability is classified as held
for trading if:

• It has been incurred principally for
the purpose of repurchasing it in
the near term; or

• on initial recognition it is part of a portfolio
of identified financial instruments that
the Company manages together and
has a recent actual pattern of short-term
profit-taking; or

• it is a derivative that is not designated and
effective as a hedging instrument.

A financial liability other than a financial liability
held for trading may be designated as at FVTPL
upon initial recognition if:

• such designation eliminates or significantly
reduces a measurement or recognition
inconsistency that would otherwise arise;

• the financial liability forms part of a
group of financial assets or financial
liabilities or both, which is managed
and its performance is evaluated on a
fair value basis, in accordance with the
Company's documented risk management
or investment strategy, and information
about the grouping is provided internally
on that basis; or

• it forms part of a contract containing
one or more embedded derivatives, and
Ind AS 109 permits the entire combined
contract to be designated as at FVTPL in
accordance with Ind AS 109.

Financial liabilities at FVTPL are stated at
fair value, with any gains or losses arising on
remeasurement recognised in Statement of
Profit and Loss. The net gain or loss recognised
in Statement of Profit and Loss incorporates
any interest paid on the financial liability and is
included in the 'other gains and losses' line item
in the Statement of Profit and Loss.

d) Other Financial Liabilities

Other financial liabilities (including borrowings
and trade and other payables) are subsequently
measured at amortised cost using the effective
interest method.

e) Derecognition of Financial Liabilities

The Company derecognises financial liabilities
when, and only when, the Company's obligations

are discharged, cancelled or have expired.
An exchange with a lender of debt instruments
with substantially different terms is accounted
for as an extinguishment of the original financial
liability and the recognition of a new financial
liability. Similarly, a substantial modification
of the terms of an existing financial liability
(whether or not attributable to the financial
difficulty of the debtor) is accounted for as an
extinguishment of the original financial liability
and the recognition of a new financial liability.
The difference between the carrying amount
of the financial liability derecognised and the
consideration paid and payable is recognised in
profit or loss.

2.15 Assets held for sale

The Company physically repossess properties or other
assets in retail portfolio to settle outstanding recoverable
and the surplus (if any) post auction is refunded to the
loanees. These assets are acquired by the company under
SARFEASI Act, 2002 has been classified as assets held for
sale, as their carrying amounts will be recovered through a
sale of asset. In accordance with Ind AS 105, the company
is committed to sell these assets under possession, are
measured on balance sheet at the lower of carrying value
or fair value and no depreciation is charged on them.

2.16 Hedge Accounting

The Company uses derivative instruments to manage
exposures to interest rate and foreign currency risks.

The hedging transactions entered into by the Company
is within the overall scope of the Derivative Policy
and within the Risk Management framework of the
company as approved by the Board from time to time
and for the risks identified to be hedged in accordance
with the same policies. All derivative contracts are
recognised on the Balance Sheet and measured at fair
value. Hedge accounting is applied to all the derivative
instruments as per Ind AS 109. Hedge effectiveness is
ascertained periodically on a forward looking basis and is
reviewed at each reporting period. Hedge effectiveness is
measured by the degree to which changes in the fair value
or cash flows of the hedged item that are attributed to
the hedged risk are offset by changes in the fair value or
cashflows of the hedging instrument.

Hedges that meet the criteria for hedge accounting are
accounted for, as described below:

Fair Value Hedges

Fair value hedge is a hedge of the exposure to changes in
fair value of a recognized asset or liability or unrecognized

commitment, or a component of any such item, that is
attributable to a particular risk and could affect profit or
loss. The cumulative change in the fair value of a hedging
derivative is recognised in the Statement of Profit and
Loss in net gain on fair value changes. Meanwhile, the
cumulative change in the fair value of the hedged item is
recorded as part of the carrying value of the hedged item
in the Balance Sheet and is also recognized as net gain
on fair value changes in the Statement of Profit and Loss
. The Company classifies a fair value hedge relationship
when the hedged item (or group of items) is a distinctively
identifiable asset or liability hedged by one or a few
hedging instruments. The financial instruments hedged for
interest rate risk in a fair value hedge relationship is fixed
rate debt issued and other borrowed funds. If the hedging
instrument expires or is sold, terminated or exercised, or
where the hedge no longer meets the criteria for hedge
accounting, the hedge relationship is discontinued
prospectively. If the relationship does not meet hedge
effectiveness criteria, the Company discontinues hedge
accounting from the date on which the qualifying criteria
are no longer met. For hedged items recorded at amortised
cost, the accumulated fair value hedge adjustment to the
carrying amount of the hedged item on termination of
the hedge accounting relationship is amortised over the
remaining term of the original hedge using the recalculated
EIR method by recalculating the EIR at the date when the
amortisation begins. If the hedged item is derecognised,
the unamortised fair value adjustment is recognised
immediately in the Statement of Profit and Loss.

Cash Flow Hedges

Cash flow hedge is a hedge of the exposure to variability
in the cash flows of a specific asset or liability, or of a
forecasted transaction, that is attributable to a particular
risk. It is possible to only hedge the risks associated with
a portion of an asset, liability, or forecasted transaction,
as long as the effectiveness of the related hedge can be
measured. The accounting for a cash flow hedge will be
to recognize the effective portion of any gain or loss in
Other Comprehensive Income (OCI), and recognize the
ineffective portion of any gain or loss in Finance cost in the
Statement of Profit and Loss. When a hedging instrument
expires, is sold, terminated, exercised, or when a hedge
no longer meets the criteria for hedge accounting, any
cumulative gain or loss that has been recognised in OCI
at that time remains in OCI and is recognised when the
hedged forecast transaction is ultimately recognised in the
Statement of Profit and Loss. When a forecast transaction
is no longer expected to occur, the cumulative gain or loss
that was reported in OCI is immediately transferred to the
Statement of Profit and Loss.

Interest rate benchmark reforms:

Hedging relationships that are directly affected by interest
rate benchmark reform gives rise to uncertainties about:

a) the interest rate benchmark (contractually or
non-contractually specified) designated as a
hedged risk; and/or

b) the timing or the amount of interest rate
benchmark-based cash flows of the hedged item or
of the hedging instrument.

This may adversely affect the existing hedging relationships
so long as the uncertainties exist. In order to provide relief
to such hedging relationships the accounting standard Ind
AS 109 provides for some relief measures which should be
mandatorily applied for such cases.

Accordingly, the Company applies the relief by
assuming the following:

1. that the interest rate benchmark on which the
hedged cash flows are based is not altered as a
result of the reform.

2. when performing prospective assessments, the
Company assumes that the interest rate benchmark
on which the hedged item, hedged risk and/or
hedging instrument are based is not altered as a
result of the interest rate benchmark reform.

3. for hedges of a non-contractually specified benchmark
component of interest rate risk, the Company applies
the separately identifiable requirement only at the
inception of such hedging relationships.

As per the requirements of IND AS, the Company shall
cease applying the aforesaid exceptions when:

a) the uncertainty arising from interest rate benchmark
reform is no longer present with respect to
the timing and the amount of the interest rate
benchmark-based cash flows; or

b) the hedging relationship is discontinued,
whichever is earlier.

2.17 Cash and Cash Equivalent

Cash and cash equivalent in Balance Sheet comprise of
cash at bank, cash and cheques on hand and short-term
deposits with an original maturity of three months or less
which are subject to insignificant risk of changes in value.

2.18 Earnings Per Share

Basic earnings per share is calculated by dividing the net
profit or loss after tax for the year attributable to equity
shareholders by the weighted average number of equity
shares outstanding during the year. The weighted average
number of equity shares outstanding during the year are
adjusted for events including a bonus issue, bonus element
in right issue to existing shareholders, share split, and
reverse share split (consolidation of shares).

For the purpose of calculating diluted earnings per share,
the net profit or loss after tax as adjusted for dividend,
interest and other charges to expense or income (net of
any attributable taxes) relating to the dilutive potential
equity shares divided by weighted average no of equity
shares year which are adjusted for the effects of all dilutive
potential equity shares.

2.19 Statement of Cash Flow

Cash flows are reported using the indirect method,
whereby profit / (loss) before tax is adjusted for the
effects of transactions of non-cash nature and any
deferrals or accruals of past or future cash receipts or
payments. The cash flows from operating, investing and
financing activities are segregated based on the activities
of the Company.

2.20 Commitments

Commitments are future liabilities for contractual
expenditure. The commitments are classified and
disclosed as follows:

i. The estimated amount of contracts remaining to be
executed on capital account and not provided for; and

ii. Other non-cancellable commitments, if any, to the
extent they are considered material and relevant in
the opinion of the Management.

2.21 Segment Reporting

Operating segments are reported in a manner consistent
with the internal reporting provided to the Chief Operating
Decision Maker (CODM).

The Managing Director & CEO is identified as the Chief
Operating Decision Maker (CODM) by the management
of the Company. CODM has identified only one operating
segment of providing loans for purchase, construction,
repairs renovation etc. and has its operations entirely
within India. All other activities of the Company revolve
around the main business. As such, there are no separate
reportable segments, as per the Indian Accounting
Standard (Ind AS) 108 on 'Segment Reporting'.

3. KEY ESTIMATES AND JUDGEMENTS:

The preparation of the financial statements in conformity
with Indian Accounting Standards ("Ind AS”) requires
the management to make estimates, judgements
and assumptions. These estimates, judgements and
assumptions affect the application of accounting policies
and the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities at
the date of the financial statements and the reported
amounts of revenues and expenses during the year.
Accounting estimates could change from period to
period. Actual results could differ from those estimates.
Revisions to accounting estimates are recognised
prospectively. The Management believes that the
estimates used in preparation of the financial statements
are prudent and reasonable. Future results could differ due
to these estimates and the differences between the actual
results and the estimates are recognised in the periods in
which the results are known / materialise.

3.1 Determination of Expected Credit Loss (“ECL”)

The measurement of impairment losses (ECL) across
all categories of financial assets requires judgement, in
particular, the estimation of the amount and timing of
future cash flows based on Company's historical experience
and collateral values when determining impairment losses
along with the assessment of a significant increase in credit
risk. These estimates are driven by a number of factors,
changes in which can result in different levels of allowances.

Elements of the ECL models that are considered accounting
judgements and estimates include:

• Bifurcation of the financial assets into different
portfolios when ECL is assessed on collective basis.

• Company's criteria for assessing if there has been a
significant increase in credit risk.

• Development of ECL models, including choice of
inputs / assumptions used.

The various inputs used and process followed by the
Company in measurement of ECL has been detailed
in Note 37.4.2.3

3.2 Fair Value Measurements

In case of financial assets and financial liabilities recorded
or disclosed in financial statements the company uses
the quoted prices in active markets for identical assets or
based on inputs which are observable either directly or
indirectly for determining the fair value. However in certain
cases, the Company adopts valuation techniques and
inputs which are not based on market data. When Market
observable information is not available, the Company has

applied appropriate valuation techniques and inputs to the
valuation model.

The Company uses valuation techniques that are
appropriate in the circumstances and for which sufficient
data is available to measure fair value, maximising the
use of relevant observable inputs and minimising the use
of unobservable inputs. Information about the valuation
techniques and inputs used in determining the fair value of
Investments are disclosed in Note 37.3.

3.3 Income Taxes

The Company's tax jurisdiction is in India.
Significant judgements are involved in determining the
provision for direct and indirect taxes, including amount
expected to be paid/recovered for certain tax positions.

3.4 Evaluation of Business Model

Classification and measurement of financial instruments
depends on the results of the solely payments of principal
and interest on the principal amount outstanding ("SPPI”)
and the business model test. The Company determines the
business model at a level that reflects how the Company's
financial instruments are managed together to achieve a
particular business objective.

The Company monitors financial assets measured at
amortised cost or fair value through other comprehensive
income that are derecognised prior to their maturity to
understand the reason for their disposal and whether
the reasons are consistent with the objective of the
business for which the asset was held. Monitoring is part
of the Company's continuous assessment of whether
the business model for which the remaining financial
assets are held continues to be appropriate and if it is not
appropriate whether there has been a change in business
model and so a prospective change to the classification of
those instruments.

3.5 Provisions and Liabilities

Provisions and liabilities are recognised in the period when
they become probable that there will be an outflow of
funds resulting from past operations or events that can be
reasonably estimated. The timing of recognition requires
judgment to existing facts and circumstances which may
be subject to change.

4. RECENT INDIAN ACCOUNTING STANDARDS
(IND AS)

Ministry of Corporate Affairs ("MCA”) notifies new
standards or amendments to the existing standards.
There is no such notification which would have been
applicable from April 1, 2023.