3.3 Sale and Transfers to/ from HTM Category

During the years ended March 31, 2025 and March 31, 2024, the Bank has not sold and transferred securities to or from HTM category exceeding 5% of the book value of investment held in HTM category at the beginning of the year. The 5% threshold referred to above does not include sale of securities to the RBI under liquidity management operations of RBI like Open Market Operations ('OMO') and the Government Securities Acquisition Programme ('GSAP') and sale of securities or transfer to AFS/ HFT consequent to the reduction of ceiling on SLR securities under HTM.

3.6 Disclosures on Reserve Bank of India (Government Securities Lending) Directions, 2023 circular dated December 27, 2023

The Bank has not lent/ borrowed/ placed securities as collateral/ received securities as collateral under GSL transactions.

3.7 With effect from April 01, 2024, the Bank has adopted the revised framework as detailed in the RBI Master Direction on Classification, Valuation and Operation of Investment Portfolio issued on September 12, 2023. Accordingly, as prescribed under the transition provisions of the aforesaid framework, the Bank has credited ' 18.61 crore (net of tax) to the general reserve, resulting into increase in the net-worth of the Bank, on account of:

a. reversal of the balance in provision for depreciation on Investments as at March 31, 2024; and

b. adjustment to the general reserve as on April 01, 2024, being the difference between the carrying value of its investment portfolio as per the revised framework and the previous carrying value as at March 31, 2024, including for adjustment due to amortization of discount on securities classified under the Held to Maturity category.

Further, in compliance with the above-mentioned RBI Master Direction, the valuation gains and losses at the period ended March 31, 2025, in respect of all performing investments held under Available for Sale ('AFS') is aggregated and the net gain/loss has been directly recognised to "AFS Reserve". The securities held in Fair Value through Profit and Loss ('FVTPL') (including Held for Trading) is fair valued at the period ended March 31, 2025 and the revaluation gain/ loss arising on such valuation has been credited/ debited respectively to the Profit and Loss Account. Accordingly, the corresponding previous period figures furnished in the financial statements are not comparable.

3.8 As at March 31, 2025, the Bank continues to hold provision of ' 4.54 crore (Previous year: ' 4.54 crore) in respect of investments in Alternate Investment Funds ('AIF') pursuant to the RBI circular dated December 19, 2023.

4.5 Disclosures on risk exposure in derivatives a) Qualitative Disclosures

Management of Risk in Derivatives Trading

The Bank's market risk unit plays a key role in setting up of the limits and laying down of the risk assessment and monitoring methods. The policies of the Bank include setting limits upon the PV01 (sensitivity of the portfolio to one basis point change in the interest rate), notional principal value of product specific gaps, maximum tenor, overall outstanding and the setting-up of counter party-wise, tenor-wise limits.

All limits are monitored on a daily basis by the Mid Office. Exposure reports are submitted to the Treasurer as well as the CRO and any limit excesses are brought to the notice of the management immediately for further action.

Policies for Hedging Risk

All transactions undertaken by the Bank for trading purposes are classified under the Trading Book. All other transactions are classified as a part of the Banking Book. The Banking Book includes transactions concluded for the purpose of providing structures to customers on a back-to-back basis. It also consists of transactions in the nature of hedges based on identification of supporting trades, with appropriate linkages done for matching amounts and tenor within the approved tolerance limits.

The accounting for all derivative trades is done for the notional amount on the trade date. The valuation of all outstanding trades is done category wise. The valuation for outstanding trades under the Trading portfolio is

done on a daily basis and the net marked to market ('MTM') is accounted in the Profit and Loss Account. The valuation for outstanding trades under the hedged portfolio is done on a monthly basis and the residual MTM, if any, is accounted in the Profit and Loss Account on a monthly basis.

The MTM position on all outstanding trades of individual corporate customers is reported on a monthly basis to Credit Risk department for exposure monitoring.

Provisioning

The Bank conforms to the RBI guidelines with regard to provisioning requirements. Overdue receivables representing crystallised positive mark-to-market value of a derivative contract are treated as non-performing assets, if these remain unpaid for 90 days or more. Full provision is made for the entire amount of overdue and future receivables relating to positive marked to market value of non-performing derivative contracts.

5.2 Divergence in the asset classification and provisioning

The divergence observed by RBI for FY 2023-24 in respect of the Bank's asset classification and provisioning under the extant prudential norms on Income Recognition, Asset Classification and Provisioning (IRACP) was within the threshold as per RBI Circular on 'Divergence in the asset classification and provision i ng' and accordingly no disclosures are required to be given.

There was no divergence observed by the RBI during FY 2022-23.

1. Working funds have been considered as the average of total monthly assets as reported to the Reserve Bank of India in Form X under Section 27 of the Banking Regulation Act, 1949 during the financial year.

2. Ratio of Net Interest Income to average earning assets.

3. For the purpose of this ratio, Operating Profit is profit for the year before provisions and contingencies.

4. Assets have been considered as the average of total monthly assets as reported to the Reserve Bank of India in Form X under Section 27 of the Banking Regulation Act, 1949.

5. For the purpose of this ratio, business has been recorded as deposits (excluding interbank deposits) plus net advances outstanding as at the year end.

6. For the purpose of this ratio, employees have been considered as the average of the total employees at the end of each month of the year.

(B) Qualitative Disclosures

The Bank maintains Liquidity Coverage Ratio ('LCR') which is a ratio of High-Quality Liquid Assets ('HQLA') to Expected Net Cash Outflow over the next 30 calendar days, as per the RBI guidelines. Banks, in India, are required to meet the minimum required level of 100% LCR.

The LCR is being computed and monitored on daily simple average basis. The objective of the LCR is to ensure that the Bank maintains an adequate level of unencumbered HQLAs that can be converted into cash to meet its liquidity needs for a 30 calendar day time horizon under a significantly severe liquidity stress scenario specified by supervisors. Further at a minimum, the stock of liquid assets should enable the Bank to survive until day 30 of the stress scenario, by which time it is assumed that appropriate corrective actions can be taken.

The numerator, High Quality Liquid Assets comprises mainly of excess SLR securities, cash, excess CRR balances, Marginal Standing Facility ('MSF') to the extent of 2 per cent with effect from January 01, 2022 of Net Demand and Time Liabilities ('NDTL') as guided by the RBI Circular and Facility to Avail Liquidity for Liquidity Coverage Ratio ('FALLCR') up to 15 per cent of NDTL till April 17, 2022 and 16 per cent of NDTL thereafter, as guided by the RBI Circular dated April 18, 2022. The denominator i.e. cash outflow over next 30 days comprises mainly of the deposit maturities and other cash outflows net of cash inflows in next 30 day period. As a part of its strategy to manage the liquidity requirements, the Bank has been consistently investing in SLR securities of about 2% to 5% of its NDTL, over and above the regulatory SLR requirement.

HQLA of the Bank comprises of mainly Level-1 assets as per the RBI guidelines i.e. government securities apart from cash, Standing Deposit Facility ('SDF') and excess CRR.

The major source of funding for the Bank is deposits from customers. The Bank does not rely on interbank borrowings. However, long term refinance from SIDBI, NABARD and NHB is availed against eligible loan assets. Further, the Bank has committed lines of credit from select public and private sector banks and also have foreign currency borrowings from private sector bank.

The Bank does not have any derivative exposure other than the forward contracts entered by the Bank which does not affect LCR of the Bank significantly.

Apart from computing the LCR in the domestic currency, the Bank is also required to compute LCR in the currency in which aggregate liabilities denominated in that currency amount to 5 per cent or more of the Bank's total liabilities. To comply with the said requirement, the Bank computes the LCR in USD as the dollar denominated liabilities are more than 5% of the Bank's total liabilities.

The liquidity management of the Bank is centralized at Treasury. Treasury Front Office shall, depending upon the expected outflows and inflows for the day, decide to borrow or lend to maintain optimal liquidity. Treasury Back Office monitors the expected inflows and outflows by way of maintaining a register which records the expected outflows and inflows that are informed in advance by the branches as well as by Treasury Front Office before making any investment. For this purpose, branches are required to inform the Treasury Back Office in advance of any expected large flows above ' 5 crore. Also, Treasury Back Office takes into account the deposits that are scheduled to mature in order to arrive at the expected cash outflows for that particular day. As a part of effective liquidity management, the Bank always maintains excess SLR securities which can be pledged to meet the shortfall in intraday liquidity, if any.

(B) Qualitative Disclosures

Pursuant to the RBI guidelines on NSFR dated May 17, 2018, the Bank has adopted and complied with the Basel III standards pertaining to NSFR from October 01, 2021. NSFR aims to improve the resilience of banks by promoting long-term funding stability. It mandates banks to maintain a stable funding profile vis-a-vis the composition of their assets and off-balance sheet activities. It reduces the probability of erosion of a bank's liquidity position due to disruptions to its regular sources of funding. The NSFR guidelines of RBI stipulate the applicable Required Stable Funding ('RSF') factor for each category of asset and Available Stable Funding (ASF') factor for each type of funding source. NSFR represents the ratio of the bank's ASF to RSF. The breakdown of the bank's ASF and RSF amounts after applying the respective ASF or RSF factors are provided in the "weighted amount” column of the NSFR disclosure format.

The Available Stable Funding (ASF') is primarily driven by the total regulatory capital as per Basle III Capital Adequacy guidelines stipulated by RBI and deposits from retail customers, small business customers and nonfinancial corporate customers. Under the Required Stable Funding ('RSF'), the primary drivers are unencumbered performing loans with residual maturities of one year or more, excluding loans to financial institutions.

10.4 Details of Large Exposures Framework limits exceeded by the Bank

As per regulatory guidelines, with effect from April 01, 2019 in case of single counterparty, the sum of all the exposure values of a bank to a single counterparty must not be higher than 20 percent of the bank's available eligible capital base at all times. In exceptional cases, Board of bank may allow an additional 5 percent exposure of the bank's available eligible capital base. In case of group of connected counterparties, the sum of all the exposure values of a bank to a group of connected counterparties must not be higher than 25 percent of the bank's available eligible capital base at all times.

The eligible capital base for this purpose is the effective amount of Tier 1 capital fulfilling the criteria defined in Master Circular on Basel III - Capital Regulation/ Master Direction on 'Basel III Capital Regulations' as per the last audited balance sheet.

During the years ended March 31, 2025 and March 31, 2024, the Bank has not exceeded the prudential exposure limits as laid down by the RBI guidelines under Large Exposure Framework.

10.7 Factoring Business

The outstanding receivables acquired by the Bank under factoring business were ' 328.61 crore as at March 31, 2025 (Previous year: ' 251.03 crore).

10.8 Unhedged Foreign Currency Exposure(UFCE)

In accordance with the RBI guidelines on banks' exposures to entities with Unhedged Foreign Currency Exposure ('UFCE'), the Bank has put in place a mechanism to seek information from its borrowers and to evaluate the currency induced credit risk. In the case of listed entities, the Bank obtains information relating to unhedged positions based on the latest available audited/ reviewed financial statements; whilst in the case of unlisted/ private companies, the Bank obtains the aforesaid information based on the latest available audited financial statements (not exceeding a financial year) so as to estimate the extent of likely loss and to provide for incremental capital or to recognize incremental provision in accordance with the aforesaid guidelines. Further, as per the above-mentioned guidelines, the Bank obtains audited and certified UFCE information from the statutory auditors of the borrowers on an annual basis. In the case of smaller entities i.e. entities with exposure to banking industry of less than ' 50 crore and as identified by the Bank as having any foreign exchange exposure, the Bank recognizes an incremental provision at 10 basis points on all such exposures.

11 COMPLIANCE WITH ACCOUNTING STANDARDS, READ WITH THE RBI GUIDELINES 11.1 Employee Benefits (Accounting Standard 15)

The contribution to Employees' Provident Fund included under "Payments to and Provisions for Employees” in Schedule 16 amounted to ' 28.77 crore for the year ended March 31, 2025 (Previous year ' 24.35 crore).

During the year, the Bank has contributed ' 1.56 crore (previous year ' 1.26 crore) to the National Pension Scheme for employees who had opted for the scheme.

The Bank has a gratuity trust approved by Income Tax Department namely "DCB Bank Limited Staff Gratuity Fund”. Every employee who has completed 5 years or more of service gets gratuity on separation at half month's last drawn salary for each completed year of service, subject to a cap of ' 20.00 lakhs for employees who joined after April 01, 2006 and without any such limit for other employees.

Estimated rate of return on plan assets is based on the Bank's expectation of the average long-term rate of return expected on investments of the Fund during the estimated term of the obligations.

The contribution expected to be paid to the plan during the annual period beginning after the Balance Sheet date is ' 4.64 crore (Previous year: ' 2.24 crore).

The estimates of future salary increases, considered in actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

In computing the above information, certain estimates have been made by the Bank's management which have been relied upon by the auditors.

11.2 Earnings Per Share (‘EPS’)

The Bank reports basic and diluted earnings per equity share in accordance with AS-20, "Earnings per Share”. The dilutive impact is due to stock options granted to employees by the Bank.

11.3 Employees’ Stock Option Plan

The Shareholders of the Bank had approved an ESOP plan Phase I in November 2005, enabling the Board and/ or the Nomination Committee to grant such number of equity shares and/ or equity linked instruments, including options of the Bank not exceeding 4% of the Issued Capital or 60,00,000 Equity Shares of the Bank. The Shareholders, at the Annual General Meeting held on September 11, 2006 had approved an additional 3% of the Issued Capital, aggregating the total Equity Share Capital reserved for all ESOPs to 7% of the Issued Capital from time to time. As the shares of the Bank were subsequently listed, confirmation of shareholders was obtained at the Extraordinary General Meeting held on December 15, 2006 in line with the guidelines of the Securities & Exchange Board of India. Pursuant thereto, during the year the Nomination and Remuneration Committee of the Board did not grant any options.

Method used for accounting for ESOP

RBI, vide its clarification dated August 30, 2021 on Guidelines on Compensation of Whole Time Directors/ Chief Executive Officers/ Material Risk Takers and Control Function Staff, advised Banks that the fair value of share-linked instruments on the date of grant should be recognised as an expense for all instruments granted after the accounting period ending March 31, 2021. Accordingly, the Bank has valued its stock options granted after March 31, 2021 using the fair value method under its Employee' Stock Options Plan. The fair value of the stock options is estimated on the date of grant using Black-Scholes model and is recognised as employee cost over the vesting period.

Fair value Methodology

The fair value of options used to compute proforma net income and earnings per equity share have been estimated using the binomial option-pricing model for options granted upto March 31, 2021. The Bank estimated the volatility based on the historical share prices.

The fair value of the stock options granted after March 31, 2021 is estimated on the date of grant using Black-Scholes model and is recognised as employee cost over the vesting period. Accordingly, the Bank has recognised ' 0.25 crore during the financial year 2024-25 (Previous year ' 0.70 crore).

There were no options granted during the years ended March 31, 2025 and March 31, 2024.

Impact of Fair Value Method on Net Profit and EPS

Had the compensation cost for the Bank's stock option plans on outstanding ESOPs granted upto March 31, 2021 been determined based on the fair value approach, the Bank's net profit and earnings per share would have been as per the proforma amounts indicated below:

11.4 Cash Settled Stock Appreciation Rights (CSARs)

The Bank has adopted CSAR as an instrument under the aegis of the compensation policy. This is in addition to the ESOP Plan of the Bank. Both the instruments are considered under non-cash components for variable pay in the Bank. The Board had vide its resolution dated September 17, 2022 approved the Plan envisaging Grant of not exceeding 10,000,000 CSARs to Employees in one or more tranches, from time to time, with each such CSAR conferring a right upon the CSAR Grantee to receive Appreciation as per terms of the Plan and grants made under the Plan.

The maximum number of CSARs that may be granted to an eligible Employee and in aggregate under the Plan shall vary depending upon the designation, role, criticality and the appraisal process. However, the maximum number of CSARs granted per employee shall not exceed 3,000,000 CSARs at any time under the Plan.

CSAR granted under the Plan would vest subject to minimum Vesting Period of 1 year but not later than the maximum Vesting Period of 4 years from the Grant Date of such CSARs. Subject to the minimum and maximum Vesting Periods stated above and provisions of acceptance of the grant, the Committee shall prescribe the Vesting schedule of CSARs granted under the Plan. Vesting shall be no faster than on a pro rata basis (i.e. vesting shall not be front loaded). Additionally, vesting shall not take place more frequently than on a yearly basis.

The Board has approved a CSAR grant of 822,270 units on April 24, 2024 (Previous year: 929,668 units on June 02, 2023).

Method used for accounting for CSARs

The Bank has valued its CSARs units using the fair value method under its CSAR Plan. The fair value of the CSARs units is estimated on the date of grant using Black-Scholes model and is recognised as employee cost over the vesting period with a recognition of corresponding liability. This liability is remeasured at each balance sheet date up to and including the vesting date with changes in fair value recognised in the profit and loss account in 'Payments to and Provision for Employees'.

The lease rents are paid by the Bank for premises leased for its business operations. The above contingent rents have been determined based on terms of individual lease agreements over the lease period. The terms of renewal/ purchase options and escalation clauses are those normally prevalent in similar agreements. There are no undue restrictions or onerous clauses in the agreements.

11.9 Revaluation of Fixed Assets

The Bank revalued its owned premises as at December 31, 2022 which resulted in a revaluation gain of ' 78.10 crore which has been credited to Revaluation Reserve as at that date. The Bank computes depreciation on such revalued premises over its estimated remaining useful life.

During the financial year 2024-25 an amount of ' 6.84 crore (Previous year: ' 6.86 crore) has been charged to the Profit and Loss Account and this amount has been transferred from Revaluation Reserve to "Balance in Profit and Loss Account”.

11.10 Contingent Liabilities

The Bank has an "Integrated Complaints Management System” in which complaints are logged and addressed. Complaints are reviewed on a regular basis to ensure timely response to customers.

The Bank conducts a root cause analysis on complaints and has taken measures to reduce complaints across categories such as loans & advances, internet/ mobile banking, difficulty in operation of accounts, para-banking and mis-selling. ATM/ Debit cards increased due to an increase in usage of cards overseas and on online platforms.

The Bank has developed systems in order to make customer interface services automated/ system driven. The Bank shall continue to improve processes in order to bring in faster resolutions and efficiency.

As compiled by the Management and relied upon by the auditors.

12.4 Letters of Comfort (LoC)/ Letters of Undertaking (‘LoU’)

The Bank has stopped issuing any fresh LoU in line with the RBI guidelines dated March 13, 2018 in this regard. Outstanding LoU as on March 31, 2025 was ' NIL (Previous year: ' NIL).

12.5 Small and Micro Industries

Under the Micro, Small and Medium Enterprises Development Act, 2006, certain disclosures are required to be made relating to Micro, Small and Medium Enterprises. There have been no reported cases of delays in payments to micro and small enterprises or of interest payments due to delays in such payments. The above is based on the information available with the Bank which has been relied upon by the auditors.

12.8 Income from Marketing and distribution

The Bank has received fees of ' NIL (Previous year: ' 18.96 crores) with respect to marketing and distribution function (excluding bancassurance business) during the financial year 2024-25.

12.9 Implementation of IFRS converged Indian Accounting Standards (Ind AS)

The Ministry of Corporate Affairs '(MCA'), Government of India notified the Companies (Indian Accounting Standards) Rules, 2015 on February 16, 2015. Further, a Press Release was issued by the MCA on January 18, 2016 outlining the roadmap for implementation of Indian Accounting Standards ('Ind AS') converged with International Financial Reporting Standards ('IFRS') for banks. As per earlier instructions, banks in India were required to comply with the Ind AS for financial statements for accounting periods beginning from April 01, 2018 onwards, with comparatives for the periods ending March 31, 2018 or thereafter. On April 05, 2018, RBI announced deferment of implementation date by one year with Ind AS being applicable to banks for accounting periods beginning April 01, 2019 onwards. On March 22, 2019, RBI further announced deferment of the implementation of Ind AS by banks till further notice.

The Bank has formed Steering Committee for Ind AS implementation. The Steering Committee is headed by the Chief Financial officer ('CFO') comprises representatives from Finance, Risk, Credit, Information Technology and Treasury. The Committee closely reviews progress of Ind AS implementation in the Bank and provides guidance on critical aspects of the implementation, including, review of possible impacts of the discussion papers issued by the RBI from time to time. In the interim, bank continues to prepare proforma Ind AS financial statements on half yearly basis and the bank submits the same to RBI.

13 OTHER MATTERS

13.1 Disclosure of penalties imposed by RBI

During the year ended March 31, 2025, RBI had imposed penalty of ' 0.003 crore on the Bank, for violation of the RBI guidelines on "Monitoring of Availability of Cash in ATMs,” on account of "Cash Out”, at Banks ATM throughout the FY 2024-25.

During the year ended March 31, 2024, RBI had imposed penalty of ' 0.003 crore on the Bank, for violation of the RBI guidelines on "Monitoring of Availability of Cash in ATMs,” on account of "Cash Out”, at Banks ATM throughout the FY 2023-24.

During the year ended March 31, 2024, RBI had imposed a penalty of ' 0.002 crore on the Bank due to the failure in Customer Service (failure in providing exchange facility for the soiled notes & mutilated notes).

During the year ended March 31, 2024, RBI had imposed penalty of ' 0.636 crore on the Bank, for failing to reset interest rates in MCLR-linked loans and benchmarking retail and MSME advances to MCLR instead of EBLR.

The Bank was required to spend ' 11.56 crore (Previous year: ' 9.77 crore) during the financial year 2024-25 towards Corporate Social Responsibility (CSR), in accordance with Companies Act, 2013.

The Bank has spent an amount of ' 11.84 crore (Previous year: ' 9.97 crore) in respect of CSR activities across the country.

None of the CSR expenditure incurred by the Bank is to entities controlled by related parties identified by the Bank as per Accounting Standard 18, Related Party Disclosures.

13.3 Remuneration a) Qualitative disclosures

Nomination and Remuneration Committee (‘NRC’)

The Nomination and Remuneration Committee of the Board consists of Independent Directors with one member

from the Risk Management Committee of the Board.

The main mandate of the Nomination & Remuneration Committee of the Board are:

• Deciding the size and composition of the Board and appointment of persons for the same.

• Recommending to the Board a policy, relating to the remuneration for the directors, key managerial personnel and other employees.

• Evaluation of every director's performance and making recommendations for remuneration for NonExecutive Directors, Senior Management and the Key Managerial Personnel ('KMP') of the Bank.

• Approving the ESOP and creation, subscription and allotment of shares to the eligible employees under this approved ESOP.

• Review appointments, promotions, demotions, terminations and review performance appraisals of CEO, KMP and Senior Management of the Bank.

• Review and approve succession plans Board, KMP and Senior Management.

• To evaluate/approve/review key Human Resource ('HR') Policies of the Bank and Rewards Approach annually as applicable. HR policies to include all such policies which have any applicable impact from a regulatory and statutory perspective, such as compensation policy, whistle blower policy, job rotation policy, matters related to retirement age beyond 60 years, fixed pay bands and sanctioned strength for the Bank, and any other matter referred by the Board or recommended by the People Forum.

Design and Structure/ Objectives of Compensation Policy

The Bank has put in place a Board approved Compensation Policy. The Bank's objective is to maintain a Compensation Policy that the Bank is able to attract, retain talent and motivate talent to perform at high standards. It facilitates a performance culture in the Bank. The compensation will be risk aligned taking into account, the long term performance of the Bank. The Compensation Policy is aligned with the statutory and regulatory guidelines.

This Policy is applicable to all employees of the Bank including;

• Whole Time Directors (WTDs')

• Managing Director & Chief Executive Officer ('MD & CEO')

• Material Risk Takers ('MRTs'): Material Risk Takers as defined as those employees whose actions have a material impact on the risk exposure of the Bank.

• Risk, Compliance and Control employees

• Other categories of employees: All employees in support and other management functions including front line employees.

Compensation structure consisting of:

i) fixed pay including perquisites, contributions towards superannuation/ retiral benefits,

ii) variable pay in cash and equity linked instruments including ESOP/ CSARs.

Risk adjustments in remuneration

In general, the review of Risk Management framework shall be an integral part of the annual performance review applicable to all employees. The methodologies for adjusting remuneration to risk and performance will be consistent with the general risk management and corporate governance framework of the Bank. A wide variety of measures of credit, market, liquidity and other risks shall be taken into consideration in implementation of risk adjustment, such that no risks over the accepted risk appetite of the Bank are being taken against the interest of the Bank.

Performance linked variable compensation

The Bank aims to align pay structure across levels in the annual rewards exercise (Compensation Revision) carried out keeping the following considerations, namely performance of the bank, individual and business unit, alignment of risks with the remuneration, encouraging rewards based on the long term contributions to the bank, cost/ income ratio of the bank, capital adequacy ratio, employee turnover on account of increased demand of talent in the industry and other related factors.

Malus/ Clawback clause is an integral part of the compensation Policy and is applicable as a risk adjustment/ alignment measure, wherein Malus permits the Bank to prevent vesting in full or in part of the amount of a deferred remuneration for an employee. Clawback is an agreement between the employee and the Bank in which the employee agrees to return previously paid or vested remuneration to the Bank. Conditions for Malus/ Bank have been specified in the Bank's Compensation Policy.

In alignment to the RBI Guidelines applicable from April 01, 2020, the Bank has a policy on deferral and vesting of variable pay for applicable categories of employees as follows:

Deferral of Variable Pay: A minimum of 60% of the total variable pay shall be under deferral arrangements. At least 50% of the cash bonus shall be deferred. However, in cases where the cash component of variable pay is under ' 25 lakhs, deferral would not be required.

Period of Deferral Arrangement: This would be applied to both the cash and equity linked components of the variable pay. The deferral period shall be for a minimum period of three years.

Vesting: The vesting shall be no faster than on pro-rata basis. Vesting shall not take place more frequently than on a yearly basis to ensure a proper assessment of risks before the application of any adjustments.

Limit on Variable pay: At least 50% of the total compensation shall be variable. Variable pay shall be limited to a maximum of 300% of the fixed pay. Where the variable pay is up to 200% of the fixed pay, a minimum of 50% of the variable pay shall be via equity linked instruments; and in case the variable pay is above 200%, a minimum of 67% of the variable pay shall be via equity linked instruments. In an event that an employee is barred by statute/ regulation from grant of equity linked instruments, their variable pay shall be capped at 150% of the fixed pay.

*Pertains to FY 2023-24 paid in FY 2024-25 (Previous year: pertains to FY 2022-23 paid in FY 2023-24)

** Fair value computed using Black-Scholes options pricing model as on the grant date.

#One MRT retired on April 28, 2024 (Previous year: One MRT separated on February 07, 2024 accordingly remuneration is considered). Fixed remuneration Includes Fixed CTC and Perquisites.

RBI has approved variable pay of ' 15,000,000 for Ex-Managing Director & CEO for FY 2023-24 paid in accordance to RBI guidelines and Compensation policy of the Bank.

13.4 Disclosure on remuneration to Non-Executive Directors

Remuneration (including sitting fees, fixed remunerations and honorarium) paid to Non-Executive Directors during the year is ' 2.82 crore (Previous year: ' 2.23 crore).

13.5 Proposed Dividend

The Board of Directors have recommended a dividend of ' 1.35 per share (13.5%) for the year ended March 31, 2025 subject to approval of the shareholders in the ensuing Annual General Meeting.

Dividend paid during the year, represents dividend (' 1.25 per equity share) for the year ended March 31, 2024 paid pursuant to approval of shareholders at Annual General Meeting held on June 12, 2024.

13.6 Disclosure under Rule 11(e) of the Companies (Audit & Auditors) Rules, 2014

The Bank, as part of its normal business, grants loans and advances (including loans against third party deposits or other margins/ security), makes investment, provides guarantees (including against margin/ guarantees received from third parties/ banks) to and accepts deposits and borrowings from its customers, other entities and persons. These transactions are part of Bank's normal banking finance business, which is conducted ensuring adherence to regulatory requirements.

Other than the transactions described above

(a) 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 lend or invest in other persons or entities identified by or on behalf of the Bank ('Ultimate Beneficiaries') or provide any guarantee, security or like on behalf of the Ultimate Beneficiaries.

(b) The Bank has not received any funds from any person(s) or entity(ies) ('Funding Party') with the understanding, whether recorded in writing or otherwise, that the Bank shall, whether, directly or indirectly, lend or invest in other persons or entities identified by or on behalf of the Funding Party ('Ultimate Beneficiaries') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

14 The Bank pays loan servicing fees to Business Correspondents ('BC') for services rendered towards sourcing and servicing of loans and other related activities, which is netted off from "Interest/ Discount on Advances/Bills” in Schedule 13. Such fees was amounted to ' 86.80 crore for financial year 2024-25 (Previous year: ' 76.75 crore).

15 Net overnight open position outstanding as on March 31, 2025 was ' 26.53 crore (Previous year: ' 5.37 crore).

16 The Bank's pending litigations comprise of claims against the Bank by the clients and proceedings pending with Income Tax authorities. The Bank has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in its financial statements. The Management believes that the possibility of an outflow of resources embodying economic benefits in these cases is possible but not probable and hence no provision is required in these cases. However, a contingent liability has been disclosed with respect to these cases. Refer note 11.10 for details on contingent liabilities.

17 The Bank has a process whereby periodically all long-term contracts (including derivative contracts) are assessed for material foreseeable losses. The Bank reviews and ensures that adequate provision as required under any law/ accounting standards for material foreseeable losses on such long-term contracts (including derivative contracts) has been made in the books of account.

18 These are the notes appended to and forming part of the financial statements for the year ended March 31, 2025.