4.14 Accounting for Provisions, Contingent Liabilities
and Contingent Assets

The Bank recognises provisions only when it has
a present obligation as a result of a past event, it is
probable that an outflow of resources embodying
economic benefits will be required to settle the
obligation, and when a reliable estimate of the amount
of the obligation can be made. Contingent assets are
not recognised in the financial statements.

Provisions (excluding retirement benefits) are not
discounted to its present value and are determined
based on best estimate required to settle the obligation
at the Balance Sheet date. These are reviewed at each
Balance Sheet date and adjusted to reflect the current
best estimates.

Provisions for onerous contracts are recognised when
the expected benefits to be derived by the Bank from
a contract are lower than the unavoidable costs of
meeting the future obligations under the contract. The
provision is measured at the present value of the lower
of the expected cost of terminating the contract and
the expected net cost of continuing with the contract.
Before a provision is established, the Bank recognises
any impairment loss on the assets associated with
that contract.

A disclosure of contingent liability is made when there
is:

• a possible obligation arising from a past event,
the existence of which will be confirmed by
occurrence or non-occurrence of one or more
uncertain future events not within the control of
the Bank; or

• a present obligation arising from a past event
which is not recognised as it is not probable
that an outflow of resources will be required to
settle the obligation or a reliable estimate of the
amount of the obligation cannot be made.

When there is a possible obligation or a present
obligation in respect of which the likelihood of outflow
of resources is remote, no provision or disclosure is
made.

4.15 Proposed Dividend

In terms of Accounting Standard (AS) 4 "Contingencies
and Events occurring after the Balance sheet date” as
notified by the Ministry of Corporate Affairs through
amendments to Companies (Accounting Standards)
Amendment Rules, 2016 dated March 30, 2016,
Proposed Dividend or Dividend declared after Balance
Sheet date, if any, are not shown as liability in current
year Balance Sheet. This is disclosed in the notes to
accounts.

4.16 Corporate Social Responsibility

Expenditure towards corporate social responsibility, in
accordance with Companies Act, 2013 are recognised
in the Profit and Loss Account.

4.17 Input Credit under GST

Goods & Service tax input credit is accounted for in
the books within the time limit prescribed under CGST
Rules, 2017, as amended.

4.18 Priority Sector Lending Certificates (PSLC)

The Bank vide RBI circular FIDD.CO.Plan.BC.23/
04.09.01/2015-16 dated April 07, 2016 trades in
priority sector portfolio by selling or buying PSLC.
In case of a purchase transaction the Bank buys the
fulfilment of priority sector obligation and in case
of a sale transaction, the Bank sells the fulfilment
of priority sector obligation through the RBI trading
platform without any transfer of underlying risk or
loan assets. There is no transfer of risks or loan assets
in these transactions. The fee paid for purchase of the
PSLC is treated as ‘Other Expense' in Schedule 16 and
the fee received from the sale of PSLCs is treated as
‘Miscellaneous Income' in Schedule 14 of the Profit and
Loss Account in accordance with Master Direction on
Financial Statements - Presentation and Disclosures
2021, as amended from time to time.

4.19 Cash and Cash Equivalents

Cash and cash equivalents include cash in hand,
balances with Reserve Bank of India and Balances
with Other Banks / institutions and money at call
and short notice (including the effect of changes in
exchange rates on cash and cash equivalents in foreign
currency).

b) Draw Down from Reserves - The Bank has not

drawn any amount from Reserves.

Appropriation to Reserves

i) Statutory Reserve

As mandated by the Banking Regulation Act,
1949, all Banking companies incorporated in
India shall create a reserve fund, out of the
balance of profit of each year as disclosed
in the Profit and Loss Account and before
any dividend is declared and transfer a sum
equivalent to not less than twenty-five per
cent of such profit. Accordingly, the Bank
has transferred an amount of ' 148.45
crore from current year Net Profit (Previous
Year: ' 141.71 crore).

ii) Investment Fluctuation Reserve (IFR)

As per RBI circular RBI/2023-24/104/
DOR.MRG.36/21.04.141/2023-24 dated
September 12, 2023, Investment Fluctuation
Reserve (IFR) is to be created with an amount
not less than the lower of net profit on sale
of investments during the year or net profit
for the year less mandatory appropriations,
until the amount of IFR is at least 2 percent
of the AFS and FVTPL (including HFT)
portfolio, on a continuing basis. As on March
31, 2025, the Bank is maintaining an IFR of
' 170.32 crore (Previous Year ' 59.08 crore)
as against the minimum requirement of
' 151.40 crore (Previous Year ' 30.59 crore)
and is considered it as part of Tier II capital
for Capital Adequacy purposes.

iii) Investment Reserve Account (IRA)

As per RBI circular RBI/2023-24/104/DOR.
MRG.36/21.04.141/2023-24 dated September
12, 2023, The balances in Investment Reserve
Account (IRA), if any, as of March 31, 2024,
shall be transferred to the Revenue/ General
Reserve if the Bank meets the minimum
regulatory requirements of IFR. If the Bank
does not meet the minimum IFR requirements,
the balances in IRA shall be transferred to IFR.
Accordingly, balance of ' 4.02 crore as on
April 01, 2024 was transferred to IFR during
current financial year.

The Bank had transferred an amount of ' 4.02
crore to Investment Reserve from Net Profit
in previous year pursuant to RBI circular RBI/
DOR/2021-22/81DOR.MRG.42/21.04.141/2021-
22 dated April 02, 2018.

iv) Capital Reserve

As per RBI Guidelines, profit/loss on sale
of investments in the ‘Held to Maturity'
(HTM) category is recognised in the Profit
and Loss Account and is thereafter the
profit on sale of an investments in HTM
appropriated (net of applicable taxes and
statutory reserve requirements) to Capital
Reserve. Accordingly, an amount of ' Nil
crore (Previous Year: ' 1.53 crore) net of tax
and appropriation to Statutory Reserves
has been transferred to Capital Reserve.
Any profit/loss on sale of debt instruments
under ‘Available for Sale' (AFS) category is
recognised in the Profit and Loss Account
and gain or loss on equity instruments
designated under AFS at time on initial
recognition is transferred from AFS-Reserve
to the Capital Reserve.

v) Special Reserve

As per the provisions under Section 36(1)
(viii) of Income Tax Act, 1961, specified
entities like Banks are allowed deduction in
respect of any special reserve created and
maintained, i.e. an amount not exceeding
twenty per cent of the profits derived from
eligible business computed under the head
"Profits and gains of business or profession”
is carried to such reserve account. This
would be applicable till the aggregate of the
amounts carried to such reserve account
from time to time exceeds twice the amount
of the paid up share capital and general
reserves of the entity. During the year, the
Bank has transferred an amount of ' 4.40
crore (Previous Year ' 4.29 crore) to Special
Reserve.

vi) General Reserve

During the year ended March 31, 2025 an
amount of ' 2.00 crore (Previous year ' 1.49
crore) was transferred to the General reserve
from revaluation reserve and recognised
transition gain ' 1.11 crore net of taxes as
per master direction dated September 12,
2023, for the classification, valuation and
operation of Investment Portfolio of Banks,
which became applicable from April 01,
2024 issued by RBI and recognised ' 0.03
crore on account of ESOP options lapsed
due to expiry of exercised period.

vii) Employee Stock Option Reserve

During the year ended March 31,2025, the
Bank has recognised ' 9.79 crore (Previous
year ' 7.89 crore) as Employee Stock Option
Reserve on account of fair valuation of share
linked instruments and transferred ' 0.03
crore (Previous year ' Nil crore) in General
Reserve as options lapsed due to expiry of
exercised period and ' 3.22 crore (Previous
year ' 8.92 crore) transferred to Securities
Premium on account of options exercised by
employees during the year.

viii) AFS Reserve

As per RBI circular RBI/2023-24/ DOR.
MRG.36/21.04.141/2023-24 dated

September 12, 2023 which became

applicable to Banks from April 01, 2024,
the valuation gains and losses across all
performing investments, irrespective of
classification, held under AFS is to be
aggregated and the net appreciation or
depreciation is to be directly credited or
debited to a reserve named AFS Reserve
without routing through the Profit & Loss
Account. Consequent to the transition
provisions, the Bank has recognised fair
valuation gain (net of tax) ' 10.47 crore
(Gross amount ' 14.00 crore) in AFS reserve
during current year. Apart from transfer
due to transition the Bank has recognised
fair valuation gain of ' 78.92 crore in AFS
reserve during the current year.

ix) Share Premium

During the year ended March 31,2025, the
Bank recognised ' 3.22 crore (Previous year
' 8.92 crore) on account of ESOP exercised
by employees.

2.3.6 Disclosure on Government Security Lending (GSL) Transactions -

During the years ended March 31, 2025 and March 31, 2024, Bank has not participated in GSL transactions.

2.3.7 Transition impact

The RBI, vide its master direction dated September 12, 2023, issued revised norms for the classification, valuation and
operation of Investment Portfolio of Banks, which became applicable from April 01, 2024. While hitherto, the investment
portfolio was classified under the Held to Maturity (HTM), Available for Sale (AFS) and Held for Trading (HFT) categories.
The revised norms bring in a principle-based classification of Investments portfolio and a symmetric treatment of
Fair Value gains and losses. In accordance with the revised norms and the Bank's Board approved policy, the Bank has
classified its investment portfolio as on April 01, 2024 under the categories of Held to Maturity (HTM), Available for Sale
(AFS), and Fair value through Profit and Loss (FVTPL) with Held for Trading (HFT) as a sub-category of FVTPL, and from
that date, measures and value the investment Portfolio under the revised framework. On transition to the framework
on April 01, 2024, the Bank has recognised fair valuation gain (net of tax) of '.1.11 crore (Gross amount ' 1.49 crore)
to General Reserve and fair valuation gain (net of tax) ' 10.47 crore (Gross amount ' 14.00 crore) to AFS reserve, in
accordance with the said norms. The transition gain of ' 1.49 crore and AFS Reserve of ' 14.00 crore which has been
considered as income and the Tax Payable thereon amounting to ' 3.90 crore is taken to other liabilities in the balance
sheet as the transition gain amount is directly taken to reserve.

2.5.7 Unhedged Foreign Currency Exposure

The Bank has in place a policy on managing credit risk arising out of unhedged foreign currency exposures of its
borrowers. The objective of this policy is to maximise the hedging on foreign currency exposures of borrowers by
reviewing their foreign currency exposures and encouraging them to hedge the unhedged portion. The policy framework
also articulates the methodologies for ascertaining the amount of unhedged foreign currency exposures, estimating
the extent of likely loss, estimating the riskiness of the unhedged position and making appropriate provisions and capital
charge as per extant RBI guidelines. In line with the policy, assessment of unhedged foreign currency exposure is a
part of credit appraisal while proposing limits or at the review stage. Further, the Bank reviews the unhedged foreign
currency exposure across its portfolio on a periodic basis. The Bank maintains incremental provisions and additional
capital for the unhedged foreign currency exposures of its borrowers in line with the extant RBI Circular RBI/2022-
23/131/DOR.MRG.76/00-00-007/2022-23 dated October 11, 2022 as given below;

2.7.3 Disclosures on risk exposure in derivatives:

Qualitative disclosures:

Derivatives are financial instruments whose characteristics are derived from underlying parameter's like interest rates,
exchange rates or indices. Bank offers derivative products to the customers to enable them to hedge their exposure
within the prevalent regulatory guidelines. The Bank also undertakes transactions in Long Term Forex Contracts (LTFX)
for hedging its Balance Sheet and also offers them to its customers. These transactions expose the Bank to various
risks primarily credit, market, operational, legal and reputational. The Bank has adopted the following mechanism for
managing risks arising out of the derivative transactions. The derivative transactions are governed by the Policy for
Investment, Forex and Derivative Activities and Market Risk Management Policy of the Bank as well as by the extant RBI
guidelines. Various operational/risk limits are set up and actual exposures are monitored vis-a-vis the limits allocated.
These limits are set up taking into account market volatility, risk appetite, business strategy and management
experience. Risk limits are in place for risk parameters viz. Value at Risk (VaR), Net loss, deal size and Price Value of a
Basis Point (PVBP). Actual positions are monitored against these limits on a daily basis and breaches if any are reported
promptly. Risk assessment of the portfolio is undertaken periodically. The Treasury front office enters into derivative
transaction with customers and interBank counterparties. The Bank has an independent back office and mid office as
per regulatory guidelines. The MTM position of the derivative portfolio is monitored on a regular basis. The impact on
derivative portfolio on account of the probable market movements are assessed on regular basis.

The Bank deals in derivatives for hedging foreign currency assets/liabilities subject to the prevailing regulatory
guidelines. Transactions for hedging and trading are recorded separately. For hedge transactions the Bank identifies
the hedged item (asset or liability) at the inception of the transaction itself. The effectiveness is ascertained at the
time of inception of the hedge and periodically thereafter. Transactions related to foreign exchange forward / Interest
rate Swaps , are marked to market daily and the MTM is accounted in the books. Bank has provided sufficient collateral
to central counter parties and exchanges wherever applicable. In the Interbank Space the Bank deals with other major
Banks and the default risk is perceived as low in this segment.

Notes pertaining to financial year ended March 31, 2025

1. Fixed remuneration includes salary, consolidated benefit allowance, gratuity, residential accommodation
and Bank's contributions towards National Pension Scheme/Provident Fund etc. The value of perquisite is
calculated as cost to the Bank. The salaries of separated MRTs have been considered for the period they were
in service with the Bank.

2. Employees received variable pay includes MD & CEO (past and present), WTDs and other Material Risk Takers
(MRTs) based on the revised criteria given by RBI in its guidelines dated November 04, 2019 and variable pay
includes cash bonus paid and stock options granted/ vested/ exercised during the year. Deferred remuneration
(both cash and stock options) reported here includes deferred remuneration paid out in the financial year/
outstanding at the end of the financial year in the case of cash bonus and vested/unvested/exercised in the
case of stock options w.r.t. the said MRTs.

As per the Compensation policy of the Bank read with the guidelines, MRTS who had resigned are not eligible
for deferred remuneration (cash bonus and unvested stock options) but are eligible to exercise vested options
within prescribed time as per CSB Employee Stock Option Scheme 2019. Hence, the deferred remuneration
reported (outstanding/ paid out) in the financial year did not include the deferred remuneration of resigned
MRTs but include vested options exercised by them within the prescribed time as per CSB Employee Stock
Option Scheme 2019. The unvested options of resigned MRTs stands lapsed as per the scheme, hence excluded
from the unvested/vested options reported.

3. Fair value is the weighted average fair value of stock options computed using Black-Scholes options pricing
model as on the grant date.

4. i. The Bank, on October 22, 2024, received approval of Reserve Bank of India in terms of Section 35B of

the Banking Regulation Act, 1949, for revision of the fixed pay of Mr. Pralay Mondal, Managing Director
& CEO, from ' 2,42,00,000 p.a. to ' 2,54,00,000 p.a., with effect from April 01, 2024.

4. ii. The Bank, on October 22, 2024, received approval of Reserve Bank of India in terms of Section 35B of

the Banking Regulation Act, 1949, for grant/ payment of variable pay of ' 2,42,00,000 to Mr. Pralay
Mondal, Managing Director & CEO, for the performance period from April 01, 2023 to March 31, 2024,
out of which ' 1,62,14,000/- shall be in non-cash form (stock options) and the balance in cash.

5. Payments of deferred portion of variable pay (Cash) made to Mr. C. VR. Rajendran, ex-Managing Director &
CEO of the Bank, during the financial year 2024-2025 were also included as part of the total payments
made to WTDs/MRTs and accordingly, reporting was made at respective places. A similar approach has been
followed in the case of the options granted to him in the previous financial year(s) and vested/exercised in the
year.

6. No remuneration/sitting fee was paid to the Non-Executive Non-Independent Directors.

7. Payment of sitting fee to Non-Executive Independent Directors was made within the limits as prescribed in
Section 197(5) of the Companies Act, 2013 read with rule 4 of Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014.

8. Remuneration paid to Mr. B K Divakara, Executive Director, also includes the arrears paid to him for the period
from March 15, 2024 4 to March 31, 2024 for the said position.

Notes pertaining to financial year ended March 31, 2024

1. Fixed remuneration includes salary, consolidated benefit allowance, gratuity, residential accommodation
and Bank's contributions towards National Pension Scheme/Provident Fund etc. The value of perquisite is
calculated as cost to the Bank. The salaries of separated MRTs have been considered for the period they were
in service with the Bank. The fixed pay also includes arrear payments of MD & CEO for FY 2022-23.

2. Employees received variable pay includes MD & CEO, WTDs and other Material Risk Takers (MRTs) based on
the revised criteria given by RBI in its guideline dated November 04, 2019. Further this also includes MD &
CEO/MRTs who have retired or transferred other roles who were paid variable pay in the year (both cash
and stock option) including the deferred portion of variable pay of previous years and stock options being
granted/vested during the year. Variable pay includes cash bonus and stock options (as per RBI guideline
dated November 04, 2019) that are paid/ granted/ vested during the year.

3. Fair value is the weighted average fair value of stock options computed using Black-Scholes options pricing
model as on the grant date.

4. i. The Bank, on May 04, 2023, received approval of Reserve Bank of India in terms of Section 35B of the

Banking Regulation Act, 1949, for payment of fixed pay of ' 2.30 crore per annum to Mr. Pralay Mondal
for his position as Managing Director & CEO of the Bank with effect from the date of appointment,
i.e., September 15, 2022. Further, the Bank, on December 20, 2023, received approval of Reserve Bank
of India in terms of Section 35B of the Banking Regulation Act, 1949, for revision of the fixed pay of
Mr. Pralay Mondal, Managing Director & CEO, from ' 2,30,00,000 p.a. to ' 2,42,00,000 p.a., with effect
from April 01, 2023.

4. ii. The Bank, on May 4, 2023, received approval of Reserve Bank of India in terms of Section 35B of the
Banking Regulation Act, 1949, for grant/ payment of variable pay of ' 31,64,384/- to Mr Pralay Mondal,
out of which '15,82,192/- shall be in non-cash form (stock options) and the balance in cash, for the period
he had held the position of Deputy Managing Director from February 17, 2022 to September 14, 2022.

4. iii. The Bank, on December 20, 2023, received approval of Reserve Bank of India in terms of Section 35B

of the Banking Regulation Act, 1949, for grant/ payment of variable pay of ' 1,25,00,000/-to Mr. Pralay
Mondal, Managing Director & CEO out of which ' 62,50,000/- shall be in non-cash form (stock options)
and the balance in cash, for the performance period from September 15, 2022 to March 31, 2023.

5. Remuneration paid to Mr. B.K. Divakara for the financial year 2023-24 and disclosed includes payment of
fixed pay and variable pay made to him in the capacity of ‘Chief Financial Officer/Head Strategy & Corporate
Legal for the period up to March 14, 2024, and thereafter from March 15, 2024 onwards, in the capacity of
the Whole Time Director.

The implementation of Ind AS by Banks requires certain legislative amendments to make the format of financial
statements, prescribed in the Third Schedule to Banking Regulation Act, 1949, compatible with accounts under Ind
AS. Considering the amendments needed to the Banking Regulation Act, 1949, as well as the level of preparedness of
several Banks, RBI, through its Statement on Developmental and Regulatory Policies dated April 05, 2018, had deferred
the implementation of Ind AS by a year. The legislative amendments recommended by the Reserve Bank are under
consideration of the Government of India. Accordingly, RBI through its notification dated March 22, 2019 deferred the
implementation of Ind AS till further notice.

Even though RBI has deferred the implementation , the Bank is gearing itself to bring the necessary systems and
processes in place to facilitate the Proforma submission to RBI and seamless transition to Ind AS. With respect to the
various instructions from Ministry of Corporate Affairs and Reserve Bank of India (RBI), the actions taken by the Bank
are summarised as follows:

• Bank is in the process of implementing changes required in existing IT architecture and other processes to enable
smooth transition to Ind AS

• As directed by the RBI, the Bank is submitting half yearly Proforma Ind AS financial statements to the RBI within
the stipulated timeline

• Training to the employees is imparted in a phased manner

• The Bank will continue its preparedness towards adoption of IND AS as per regulatory requirement and to liaise
with RBI and industry bodies on various aspects pertaining to IND AS implementation.

2.17 Assets and Liabilities exceeding one percentage of the Total Assets

Details of items under "Others (including provisions)” in Schedule 5 - Other Liabilities and provisions & "Others” in
Schedule 11 - Other Assets exceeding 1% of total assets of the Bank : Nil

2.18 Disclosure on green deposits

During the year 2024-25, the Bank has not raised Green deposits and hence the Portfolio level information on use of
funds and reporting on allocation of proceeds of Green deposits to green activities/projects as mentioned in circular
RBI/2023-24/14 DOR.SFG.REC.10/30.01.021/2023-24 dated April 11, 2023 is not applicable.

2.19 Credit exposure to Single Borrower and Group Borrower

During the years ended March 31, 2025 and March 31, 2024, the Bank's credit exposure to single borrower and group
borrowers was within the prudential exposure limits prescribed by RBI. Exposure is computed as per the definition in RBI
Master Circular on Exposure Norms DBR. No. Dir.BC.12/13.03.00/ 2015-16 dated July 01, 2015.

(d) The extent to which fair values of the items were determined directly by reference to observable prices in an
active market or recent market transactions on arm's length terms or were estimated using other valuation
techniques - Fair value as explained in item (c) above

(e) The revaluation surplus, indicating the change for the period and any restrictions on the distribution of the
balance to shareholders

Revaluation surplus as on March 31, 2025: ' 173.83 crore (Previous Year ' 175.84 crore)

Change for the period: During the year Bank has not revalued the assets held under the category premises. An
amount of ' 1.75 crore (Previous Year ' 1.15 crore) has been transferred from Revaluation Reserve to General
Reserves being depreciation based on the revalued carried amount.

As per para 44 of AS 10 - Property, Plant & Equipment, revaluation surplus of ' 0.25 crore (Previous Year
' 0.34 crore) is transferred to the General Reserve relating to asset derecognised during the year.

3.2.4 CSB Employee Stock Option Scheme

Pursuant to the requisite approval of the members on May 04, 2019, the Bank has formulated a stock option scheme
called "CSB Employees Stock Option Scheme2019” ("ESOS 2019” or "Scheme”). The scheme is intended to promote the
culture of employee ownership and as well as to attract, retain, motivate and incentivise talents in the Bank. The Scheme
shall be administered through an employee stock option trust viz., CSB ESOS Trust ("ESOS Trust”/"Trust”) in the nature
of an irrevocable employee welfare trust in due compliance with the applicable laws. Under the Scheme, the Bank can
allot a maximum of 50 lakh shares to the Trust, over a period of time. Under the trust route, the Bank allots shares to the
trust and trust will transfer the shares to the eligible employees at the time of exercise of option by eligible employees
on meeting terms of grant fixed by the Nomination &Remuneration Committee.

Being a Pre-IPO Scheme, in terms of Regulation 12(1) of the erstwhile Securities and Exchange Board of India (Share
Based Employee Benefits) Regulations, 2014 ("SEBI SBEB Regulations”), any fresh grant of Options can be made under
ESOS 2019 in case such ESOS 2019 is in compliance with the SEBI SBEB Regulations and ratified by the members of the
Bank post IPO. Accordingly, the ESOS 2019 was placed before the members at the Annual General Meeting held on July
20, 2020, post listing of shares on December 4, 2019, for ratification though the ESOS 2019 and as well as the Trust as
originally introduced were already in conformity with the SEBI SBEB Regulations and ratification obtained. No options
were granted prior to the amendment/ratification of the scheme/listing of shares of the Bank.

The first amendment was made in the Scheme at the Annual General meeting of the Bank held on July 20, 2020, inter
alia, to increase the Options Reserve by an additional quantum of 1,16,72,791. The source of corresponding number of
shares equivalent to 1,16,72,791 options shall be in the form of (i) fresh issue of shares up to 30,00,000 shares and (ii)
secondary acquisition by the Trust up to 86,72,791 shares. With this, the total Options Reserve under ESOS 2019 stood
at 1,66,72,791 options. A few other modifications were also made in the scheme as per the prevailing regulations and also
to effect change of name of the Bank in the Scheme document.

The second amendment was made in the Scheme at the Annual General Meeting of the Bank held on August 12, 2021,
permitting vesting of unvested employee stock options after the date of retirement/early retirement as per original
Vesting schedule as specified in the Grant Letter, subject to the provision of the applicable laws and at the discretion of
the Nomination and Remuneration Committee of the Board.

Post amendments, under the Scheme, the quantum of secondary acquisition is capped at 5 % (Five percent) of the
paid-up equity share capital of the Bank as on March 31, 2020, which is line with the statutory ceiling prescribed under
the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and (ii) Acquisition of shares by the Trust
in any financial year shall not exceed the ceilings, which is currently 2% of the paid up equity capital as at the end of
the previous financial year, prescribed in SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 as
amended from time to time.

Vesting Period for any Options granted under this Scheme shall be subject to statutory minimum period of 1 (One)
year from the date of Grant during which no Vesting shall be allowed. Subject to this statutory minimum period, any
staggered Vesting prescribed for any Grant shall be over a Vesting schedule of minimum of 3 (Three) years and maximum
of 10 (Ten) years from the date of Grant. The exercise period in respect of a vested option shall be a period commencing
from the relevant vesting date of such option and shall end with the expiry of 10 (Ten) years or such other shorter period
as approved by the Committee from the date of grant of such option.

In case of trust route of issuance of ESOPs, the trust on its own will not have funds to be able to acquire the shares from
the Bank as the trust is not a business trust and is specifically created with the objective of issuance of ESOPs to the
employees. Trust has to find out other avenues for sourcing of fund for purchasing shares from the Bank. In terms of
Section 20 of the Banking Regulation Act, 1949, the Bank cannot lend to trust to purchase its own shares. Trust shall
not deal in derivatives, and shall undertake only delivery based transactions for the purposes of secondary acquisition
and for the purpose of the Plan.

As on March 31, 2025, 41,67,933 shares of the Bank were held by CSB ESOS Trust as per the scheme which were allotted
to the trust on July 12, 2019. No shares were allotted to the trust in the financial year 2024-25 (Previous year: Nil)
Stock option activity under the scheme during the financial year ended March 31, 2025 and March 31, 2024 is set out
below:

The weighted average fair value, based on Black-Scholes model, of options granted during the financial year ended
March 31, 2025, was ' 135.74 (Financial year ended March 31, 2024 was ' 135.54).

Bank uses Intrinsic Value Method for accounting the value of Options granted under the Scheme up to and including March
31, 2021 and thereafter Fair Value method by using Black-Scholes Model, for accounting the value of Options granted. For
accounting the value of Options granted under the Scheme by using Intrinsic Value Method, the difference between the
market price and exercise price is considered as the value of an Employee Stock Option and expensed over the period of
vesting. The market price for this purpose is the latest available closing price on a recognised stock exchange on which the
shares of the company are listed on the date immediately prior to the relevant date. If such shares are listed on more than
one recognised stock exchange, then the closing price on the recognised stock exchange having higher trading volume
shall be considered as the market price which is in line with Securities and Exchange Board of India (Share Based Employee
Benefits and Sweat Equity) Regulations, 2021. In case of valuation of options is done by using fair value method by using
Black- Scholes Model, the fair value thus arrived at should be recognised as expense beginning with the accounting period
for which the approval has been granted and accounting of the options granted shall be made for, accordingly.

The value of option arrived at will be amortised over the period of vesting/ expensed beginning with the accounting period for
which approval has been granted, in line with para 42 of GN (A) 18 (Issued 2005) Guidance Note on Accounting for Employee
Share-based Payments and further clarification of Reserve Bank of India dated August 30, 2021 on Reserve Bank of India
Guidelines on Compensation of Whole Time Directors/ Chief Executive Officers/ Material Risk Takers and Control Function
staff dated November 04, 2019. In case, the options granted under the Scheme do not vest on one date but have graded
vesting schedule, total options granted shall be segregated into different groups, depending upon the vesting dates and each
vesting date should be considered as a separate option grant, and evaluated and accounted for, accordingly.

On applying the fair value based method in Guidance Note on ‘Accounting for Employee Share-based Payments' for the
options granted up to and including March 31, 2024, the impact on reported net profit and EPS in the financial year
ended March 31, 2025 would be as follows:

Corporate/Wholesale Banking

This segment provides loans and other Banking services to Corporate and other clients where value of individual
exposure to the clients exceeds ' 7.5 crore as defined by RBI. Revenue of this segment consists of interest and fees
earned on loans to such customers and charges and fees earned from other Banking services. Expenses of this segment
primarily consist of interest expense on funds utilised and allocated overheads.

Retail Banking

Retail Banking constitutes lending and other Banking services to individuals/small business customers, other than
corporate/wholesale Banking customers, identified on the basis of RBI guidelines. Revenue of this segment consists of
interest earned on loans made to such customers and charges /fees carried from other Banking services to them. The
principal expenses of the segment consist of interest expenses on funds borrowed and other expenses.

Additional disclosure of the Digital Banking Segment as a sub-segment within the existing "Retail Banking Segment”-
RBI circular RBI/2022-2023/19 DOR.AUT.REC.12/22.01.001/2022-23 dated April 07, 2022
Other Banking Operations

This segment includes para Banking activities like third party product distribution and other Banking transactions, not
covered under any of the above segments. The income from such services and associated costs are disclosed in this
segment.

Assumptions

The risk-free interest rate being considered for the calculation is the interest rate applicable for maturity equal to the
expected life of the options based on the zero-yield curve for Government Securities. Expected Life of options is the period
for which the Bank expects the options to be live. The minimum life of a stock option is the minimum period before which
the options cannot be exercised, and the maximum life is the period after which the options cannot be exercised. Expected
dividends during the estimated expected term of the option are based on recent dividend activity. Expected forfeiture is
based on expected exercise behaviour which is based on the historical stock option exercise pattern of the Bank
Expected volatility is a measure of the amount by which a price has fluctuated or is expected to fluctuate during a
period. The measure of volatility used in the Black-Scholes option pricing model is the annualised standard deviation of
the continuously compounded rates of return on the stock over a period of time. Expected volatility has been computed
by considering the historical data on daily volatility in Bank's share price.

3.3 Accounting Standard 17 - Segment Reporting

Part A: Business Segments

Business of the Bank is divided into four segments viz. Treasury, Corporate or Wholesale Banking, Retail Banking and
Other Banking Operations. The principal activities of these segments and income and expense structure are as follows:
Treasury

Treasury operations include trading and investments in Government and corporate debt instruments, equity and mutual
funds, derivative trading and foreign exchange operations on proprietary account and for customers. The income of
this segment primarily consists of earnings from the investment portfolio of the Bank, gains and losses on trading
operations. The principal expense of the segment consists of interest expense on funds borrowed/utilised and other
allocated overheads.

A. Notes pertaining financial year ended March 31, 2025

1. -** represents insignificant amount.

2. Value of the options arrived based on the exercise price of the respective options exercised.

3. ^AThe transactions pertaining to payment of interest to KMP's and related parties are in the nature of
banker and customer relationship only.

4. @The amount reported represents margin amount/service charge collected for the foreign exchange
transaction carried out.

B. Notes pertaining to financial year ended March 31, 2024

1. -** represents insignificant amount.

2. Value of the options arrived based on the exercise price of the respective options exercised

3. Fee income/brokerage received from 3-in-1 tie-up arrangement in the nature of ‘referral programme' with
IIFL Securities Limited ("IIFL Securities") and as part of the programme, IIFL Securities will share a part
of fee income on a revenue sharing basis of 40% of the brokerage earned from the customers sourced
by the Bank.

4. Transactions reported are the transactions with related parties defined and coming under AS 18 - Related
Party Disclosures notified under Sections 133 of the Companies Act 2013, read together with paragraph
7 of the Companies (Accounts) Rules 2014, Companies (Accounting Standards) Amendments Rules 2016
and Companies (Accounting Standards ) Rules 2021, Section 188 of the Companies Act, 2013, Regulation
2(zb), 2 (zc) and 23 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, RBI
Master Direction No. DOR.ACC.REC. No.45/21.04.018/2021-22 dated August 30, 2021 on Financial
Statements - presentation and disclosures, as amended from time to time.

5. The Bank, on May 04, 2023, received approval of Reserve Bank of India in terms of Section 35B of the
Banking Regulation Act, 1949, for payment of fixed pay of ' 2.30 crore p.a. to Mr. Pralay Mondal for
his position as Managing Director & CEO of the Bank with effect from the date of appointment, i.e.,
September 15, 2022. Further, the Bank, on December 20, 2023, received approval of Reserve Bank
of India in terms of Section 35B of the Banking Regulation Act, 1949, for revision of the fixed pay of
Mr. Pralay Mondal, Managing Director & CEO, from ' 2,30,00,000 p.a. to ' 2,42,00,000 p.a., with effect
from April 01, 2023.

6. The Bank, on May 04, 2023, received approval of Reserve Bank of India in terms of Section 35B of the
Banking Regulation Act, 1949, for grant/ payment of variable pay of ' 31,64,384/- to Mr. Pralay Mondal
for the period he had held the position of Deputy Managing Director from February 17, 2022 to September
14, 2022, out of which ' 15,82,192/- shall be in non-cash form (stock options) and the balance in cash.

7. Further, the Bank, on December 20, 2023, received approval of Reserve Bank of India in terms of Section
35B of the Banking Regulation Act, 1949, for grant/ payment of variable pay of ' 1,25,00,000/- to
Mr. Pralay Mondal, Managing Director & CEO for the performance period from September 15, 2022 to
March 31, 2023, out of which ' 62,50,000/- shall be in non-cash form (stock options) and the balance in
cash.

8. Mr. B. K. Divakara was elevated and appointed as the Whole-time Director (designated as Executive
Director) of the Bank with effect from March 15, 2024. Hence, except the details of remuneration paid,
only the transactions from the effective date of his appointment as the whole-time director is considered
for the purpose of this reporting.

9. #Remuneration paid to Mr. B.K. Divakara for the financial year 2023-24 and disclosed includes payment
of fixed pay and variable pay made to him in the capacity of Chief Financial Officer/Head Strategy &
Corporate Legal for the period up to March 14, 2024, and thereafter from March 15, 2024 onwards, in
the capacity of the Whole Time Director. RBI, vide its letter dated March 04, 2024, approved for payment
of fixed pay of ' 80 lakh per annum to Mr. B.K. Divakara.

10. AThe transactions pertaining to payment of interest to KMP's and related parties are in the nature of
Banker and customer relationship.

11. A transaction with a related party shall be considered material, if the transaction(s) during a financial
year, exceeds ' 1,000 crore or ten per cent of the annual turnover (interest income) of the Bank as per its
last audited financial statements, whichever is lower.

12. $ IIFL Finance Limited (IIFL) ceased to be a related party of the Bank w.e.f. December 22, 2023, due to
reduction in shareholding by FIH Mauritius Investment Ltd, promoter of the Bank, in IIFL Finance from
22.31% to 15.12% in the paid-up equity share capital of IIFL. Accordingly, the transactions reported here
is for the period upto December 22, 2023.

13. Shareholders of the Bank vide postal resolution dated March 06, 2024 had approved material related
party transactions in the nature of a) Acceptance of deposits in current account or any other similar /
other types of accounts permitted to be opened under applicable laws, b) Transactions pertaining to
permitted foreign exchange transactions including international cross border transactions wherein the
Bank act as an authorised dealer in foreign exchange, with FIH Mauritius Investments Ltd, promoter of
the Bank. However, no transactions were carried out by the Bank with FIH Mauritius Investments Ltd
during the reporting period.

14. Shareholders of the Bank vide postal resolution dated March 06, 2024 had approved material related
party transactions in the nature of a) Acceptance of deposits in current account or any other similar
/other types of accounts permitted to be opened under applicable laws, b) Transactions pertaining to
permitted foreign exchange transactions including international cross border transactions wherein the
Bank act as an authorised dealer in foreign exchange, FIH Private Investments Ltd, an entity forming
part of the promoter group of the Bank. However, no transactions were carried out by the Bank with FIH
Private Investments Ltd during the reporting period.

15. *Pursuant to requisite approvals obtained for acquisition of gold loan receivables by way of direct
assignment transactions/pass through certificates from IIFL Finance Limited for a value of transaction/s
not exceeding ' 1200 crore at any point of time during the period, the Bank continued to acquire gold
loan receivables by way of direct assignment transactions/pass through certificates during the financial
year 2023-24. During the financial year the Bank had also paid an amount of ' 35,400 as service charge
to IIFL Finance Limited under the terms of DA/PTC arrangements.

) Material transactions with related parties

The following table sets forth, for the periods indicated, the material transactions between the Bank and its related
parties. A transaction with a related party shall be considered material, if the transaction(s) during a financial year,
exceeds ' 1,000 crore or ten per cent of the annual turnover (interest income) of the Bank as per its last audited
financial statements, whichever is lower.

Notes pertaining to financial year ended March 31, 2025

1. @The amount reported represents margin amount/service charge collected for the foreign exchange

transaction carried out by the Bank.

Notes pertaining to financial year ended March 31, 2024

1. **- represents insignificant amount.

2. A transaction with a related party shall be considered material, if the transaction(s) during a financial year,
exceeds ' 1,000 crore or ten per cent of the annual turnover (interest income) of the Bank as per its last
audited financial statements, whichever is lower.

3. $IIFL Finance Limited (IIFL) ceased to be a related party of the Bank w.e.f. December 22, 2023, due to reduction
in shareholding by FIH Mauritius Investment Ltd, promoter of the Bank, in 11 FL Finance from 22.31% to 15.12%
in the paid-up equity share capital of 11 FL. Accordingly, the transactions reported here is for the period upto
December 22, 2023.

4. Shareholders of the Bank vide postal resolution dated March 06, 2024 had approved material related party
transactions in the nature of a) Acceptance of deposits in current account or any other similar /other
types of accounts permitted to be opened under applicable laws, b) Transactions pertaining to permitted
foreign exchange transactions including international cross border transactions wherein the Bank act as an
authorised dealer in foreign exchange, with FIH Mauritius Investments Ltd, promoter of the Bank. However, no
transactions were carried out by the Bank with FIH Mauritius Investments Ltd during the reporting period.

5. Shareholders of the Bank vide postal resolution dated March 06, 2024 had approved material related party
transactions in the nature of a) Acceptance of deposits in current account or any other similar /other types of
accounts permitted to be opened under applicable laws, b) Transactions pertaining to permitted foreign exchange
transactions including international cross border transactions wherein the Bank act as an authorised dealer in
foreign exchange, FIH Private Investments Ltd, an entity forming part of the promoter group of the Bank. However,
no transactions were carried out by the Bank with FIH Private Investments Ltd during the reporting period.

6. *Pursuant to requisite approvals obtained for acquisition of gold loan receivables by way of direct assignment
transactions/pass through certificates from IIFL Finance Limited for a value of transaction/s not exceeding
' 1200 crore at any point of time during the period, the Bank continued to acquire gold loan receivables by way
of direct assignment transactions/pass through certificates during the financial year 2023-24. During the
financial year the Bank had also paid an amount of ' 35,400 as service charge to IIFL Finance Limited under
the terms of DA/PTC arrangements.

4. ADDITIONAL DISCLOSURES

4.1 Disclosure of Letter of Comforts (LOCs) issued by Bank

Bank has no subsidiaries and hence the Letter of Comforts issued to subsidiaries as on March 31, 2025 is Nil.

4.2 Proposed Dividend

The Board of Directors have not recommended any dividend for Financial Year 2025 (Year ended March 31, 2024: Nil)

4.3 Provision for Long Term Contracts

The Bank has a process whereby periodically all long term contracts (including derivative contracts) are assessed
for material foreseeable losses. At the year end, the Bank has reviewed and recorded adequate provision as required
under any Law/Accounting Standards for material foreseeable losses on such long term contracts (including derivative
contracts) in the books of account and disclosed the same under the relevant notes in the financial statements.

4.4 Investor education and protection fund

The Bank had not declared any dividends since the financial year 2014-15, no amount was required to be transferred to
the Investor Education and Protection Fund (the "Fund”) by the Bank for the financial year ended March 31, 2025.

All the unclaimed dividends pertaining to the prior period/ financial years, which remained unclaimed for a period of
seven (7) consecutive years or more, were transferred to the Fund in the corresponding previous financial years within
the stipulated time and in the manner as prescribed in Section 124(6) of the Companies Act, 2013, read with the Investor
Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, as amended from time
to time.

4.5 Corporate Social Responsibility

Pursuant to Section 135 of the Companies Act, 2013 and Schedule VII of the said Act read with the Companies (Corporate
Social Responsibility Policy) Rules, 2014 and further, in accordance with the Corporate Social Responsibility Policy of
the Bank, the amount required to be earmarked by the Bank for CSR activities for the financial year 2024-25 was
' 13.90 crore (Previous year ' 10.82 crore), being two percent of the average net profits of the Bank as per Section
135(5) of the Companies Act, 2013.

The Bank has successfully made use of the whole of the CSR budget earmarked, for the purpose of undertaking
various CSR activities/projects including an ongoing project, in line with the annual action plan as approved by the CSR
Committee and the Board.

*Reason for delay: As of March 31, 2025, there were three pending invoices. Two of these invoices were paid within the
45-day time frame on April 05, 2025. The third invoice exceeded the 45-day period due to a delay in reconciliation. Later
this was also paid on April 5, 2025.

Note: Outstanding dues to those vendors/suppliers who are registered as micro/small enterprise under the Micro,
Small and Medium Enterprises Development Act, (MSMED) 2006 and having an Udyam Registration are only counted as
qualified MSME for the purpose of the reporting.

4.8 The Code on Social Security, 2020

The Government has formulated four Labour Codes, namely, the Code on Wages, 2019, the Industrial Relations Code,
2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020
which are yet to be implemented. The four Labour Codes envisage strengthening the protection available to workers,
including unorganised workers in terms of statutory minimum wage, social security and healthcare of workers. As these
Labour Codes have not been effective, the impact of these Labour Codes in the financial statement for the year ended
March 31, 2025 has not been factored.

4.9 Intermediary Transactions

The Bank, as part of its normal Banking business that is conducted ensuring adherence to all regulatory requirements,
grants loans and advances, makes investment, provides guarantees to and accept deposits and borrowings from its
customers, other entities and persons.

a) Funds Given

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 Bank to or in any other person(s) or entity(ies), including foreign entities
("Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall,

whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or
on behalf of the Bank("Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Bank
other than those in the ordinary course of Banking business.

b) Funds Taken.

The Bank has not received any fund from any person(s) or entity(ies), including foreign entities ("Funding Parties”),
with the understanding, whether recorded in writing or otherwise, that the Bank shall, directly or indirectly, lend
or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party
("Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries than
those in the ordinary course of Banking business.

4.10 Audit Trail

As per the requirements of Rule 3(1) of the Companies (Accounts) Rules 2014 the Bank uses such accounting software
for maintaining its books of account that have a feature of recording audit trail of each and every transaction creating
an edit log of each change made in the books of account along with the date when such changes were made within such
accounting software. This feature of recording audit trail has enabled throughout the year and was not tampered with
during the year. The Bank has established and maintained an adequate internal control framework and based on its
assessment, believes that this was effective as of March 31, 2025.

Comparative Figures

The previous year's figures have been regrouped and reclassified wherever necessary to conform to current year's
presentation.

As per our attached report of even date For and on behalf of the Board of Directors

For Sundaram & Srinivasan

Chartered Accountants
Firm Registration No: 004207S

Sd/- Sd/- Sd/-

P. Menakshi Sundaram Biswamohan Mahapatra Pralay Mondal

Partner Independent Director Managing Director & CEO

(Membership No. 217914) DIN:06990345 DIN: 00117994

Sd/- Sd/-

For Walker Chandiok & Co LLP Sharmila Abhay Karve B.K. Divakara

Chartered Accountants Chairperson-Audit Committee Executive Director

Firm Registration No:001076N/N500013 DIN: 05018751 DIN: 06439053

Sd/- Sd/- Sd/-

Sudhir N. Pillai Madhavan Menon Sijo Varghese

Partner Director Company Secretary

(Membership No 105782) DIN: 00008542

Sd/-

Date : April 28, 2025 Date : April 28, 2025 Satish Gundewar

Place : Mumbai Place : Thrissur Chief Financial Officer