15. ACCOUNTING FOR PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions are recognised when there is a present legal or statutory obligation as a result of past events leading to
probable outflow of resources, where a reliable estimate can be made of the amount required to settle the obligation.
Contingent Liabilities are recognised only when there is a possible obligation arising from past events due to occurrence
or non-occurrence of one or more uncertain future events, not wholly within the control of the Bank, or where there is 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.

Contingent assets are neither recognised nor disclosed in the financial statements.

16. EMPLOYEE SHARE BASED PAYMENTS

Measurement and disclosure of employee share-based employment plans is done in accordance with the Securities and
Exchange Board of India (Share Based Employee Benefits) Regulations, 2014/Guidance Note on Accounting for the
Employee Share-based Payments issued by The Institute of Chartered Accountants ('ICAI’) of India. The Bank measures
compensation cost relating to employee stock options/cash settled stock appreciation rights using the fair value method.
Deferred compensation expense is amortized over the vesting period.

17. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders
(after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity
shareholders and the weighted average number of shares outstanding during the year are adjusted for the effect of
dilutive potential equity shares.

18. SHARE ISSUE EXPENSES

Share issue expenses are adjusted from Securities Premium Account in terms of Section 52 of the Companies Act, 2013.

19. CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash in hand and ATMs, balances with the Reserve Bank of India, balances with other
banks and money at call and short notice (including effect of changes in exchange rates on cash and cash equivalents
in foreign currency).

20. LEASES

Leases where the Lessor effectively retains substantially all risks and benefits of ownership of the leased asset are
classified as operating leases. Operating lease payments are recognised as an expense in the Profit and Loss Account
on a straight-line basis over the lease term.

21. SEGMENT REPORTING

As per the RBI guidelines on Segment Reporting, the Bank has classified its activity into Treasury Operations, Corporate/
Wholesale Banking, Retail Banking and Other Banking Operations.

21.1 Treasury Operations includes all financial markets activities undertaken on behalf of the Bank's customers,
proprietary trading, maintenance of reserve requirements and resource mobilization from other banks and financial
institutions.

21.2 Wholesale Banking includes lending, deposit taking and other services offered to corporate customers.

21.3 Retail Banking includes lending, deposit taking and other services offered to retail customers.

21.4 Other Banking Operations includes para banking activities like third party product distribution, merchant
banking, etc.

22. CORPORATE SOCIAL RESPONSIBILITY

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

1. Pursuant to the approval from the Shareholders of the Bank and the approval granted on September 29, 2025 by the Reserve
Bank of India to Aga Khan Fund for Economic Development S.A (AKFED), the promoter, to acquire 60,58,394 equity shares of
the Bank, the Board of Directors approved the allotment of 60,58,394 equity shares of face value of f 10/- each, on a preferential
basis, to AKFED on October 10, 2025 at an issue price of f 137/- per equity share (including a premium of f 127/- per equity
share), for a total consideration of f 83.00 Crore. The preferential allotment was undertaken in accordance with the provisions of
the SEBIICDR regulations and other applicable rules/regulations/guidelines, prescribed by any regulatory or statutory authorities.

2. The Bank has allotted during the year 1,555,985 (Previous year 1,482,909) equity shares consequent to exercise of ESOPs
vested. Accordingly, the share capital increased by ' 1.56 Crore (Previous year: ' 1.48 Crore) and securities premium increased
by ' 9.32 Crore (Previous year: ' 7.37 Crore).

1.2 Reserves and Surplus(a) Statutory Reserve

During the year ended March 31,2026, the Bank has appropriated ' 182.89 Crore (previous year: ' 153.83 Crore)
out of profits for the year ended March 31, 2026 to the Statutory Reserve in terms of sections 17 of the Banking
Regulation Act, 1949 and RBI guidelines.

(b) Capital Reserve

During the year ended March 31, 2026, the Bank has appropriated ' 61.31 Crore (previous year: ' 43.28 Crore),
being the profit from sale or redemption of investments under HTM category and profit on sale of immovable
properties, net of taxes and transfer to statutory reserve, from the Profit and Loss Account to the Capital Reserve.

(c) Special Reserve

During the year ended March 31,2026, the Bank has appropriated ' 59.20 Crore (previous year: ' 43.50 Crore) out
of profits for the year ended March 31, 2026 to the Special Reserve as required under Income Tax Act, 1961.

(d) Investment Fluctuation Reserve

During the year ended March 31, 2026, the Bank has appropriated ' 15.81 Crore (previous year: drawn down
' 49.44 Crore) to Investment Fluctuation Reserve in compliance with extant RBI guidelines.

(e) Revaluation Reserve

During the year ended March 31, 2026, the Bank has transferred ' 7.54 Crore (previous year: ' 6.84 Crore) from
Revaluation Reserve to Profit and Loss Account. The Bank revalued its owned premises during the year, which
resulted in a revaluation gain of ' 108.22 Crore which has been credited to Revaluation Reserve.

(f) Draw down from Reserves

The Bank has not undertaken any draw down of reserves during the financial year 2025-26.

The Bank has drawn down ' 49.44 Crore from Investment Fluctuation Reserve in terms of RBI guidelines during the
financial year 2024-25.

3.5 Details of sales made out of HTM

During the years ended March 31, 2026 and March 31,2025, 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.

3.8 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.

3.9 Reclassification between categories of investments

During the period under review, the Bank has not carried out any reclassification between categories of investments.

3.10 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.

The details under the revised framework are as under:

Represents gross amount, f 18.61 Crore (net of tax)

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.

3.11 As at March 31, 2026, the Bank holds NIL provision (Previous year: ' 4.54 Crore) in respect of investments in Alternate
Investment Funds (AIF).

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
crystallized 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.

4.4 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 to
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.

Notes:

1 Foreign exchange forward contracts have not been included in the above disclosure.

2 The notional principal amount of forward exchange contracts classified as Hedging and Trading amounted to ' 18,864.55 Crore
(Previous year: ' 8,186.71 Crore).

4.5 Credit Default Swaps

The Bank has not transacted in credit default swaps during the year ended March 31, 2026 (Previous year: NIL).

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% 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% of NDTL till April 17, 2022 and 16% 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% 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.

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 Basel III Capital Adequacy
guidelines stipulated by RBI and deposits from retail customers, small business customers and non-financial 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.

Note: Exposures reported above include both funded and non-funded exposures [including advances and investments
(other than SLR Investments)] with limits or outstanding whichever is higher, for other than fully drawn term loans and
NPAs. In case of fully drawn term loan and NPAs, the outstanding amount has been considered for this purpose. The
exposure figure above also includes non-inter bank credit exposure on derivatives including forward exchange contracts.

10.7 Factoring Business

The outstanding receivables acquired by the Bank under factoring business were ' 314.72 Crore as at March 31, 2026
(Previous year: ' 332.59 Crore).

10.8 Unhedged Foreign Currency Exposure (UFCE)

I n 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 recognise 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 recognises an incremental provision at 10 basis points on all such exposures.

11 COMPLIANCE WITH ACCOUNTING STANDARDS, READ WITH THE RBI GUIDELINES11.1 Employee Benefits (Accounting Standard 15)

The contribution to Employees' Provident Fund included under “Payments to and Provisions for Employees” in Schedule
16 amounted to ' 30.20 Crore for the year ended March 31, 2026 (Previous year ' 28.77 Crore).

During the year, the Bank has contributed ' 2.11 Crore (previous year ' 1.56 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 1, 2006
and without any such limit for other employees.

Reconciliation of opening and closing balance of the present value of the defined benefit obligation for gratuity benefits
is given below:

All the plan assets are invested by the gratuity trust namely “DCB Bank Limited Staff Gratuity Fund” in Government
securities (CY about 50%, PY about 53%), high rated corporate bonds (CY about 41%, PY about 38%), units of mutual
funds/ insurance companies (CY about 5%, PY about 5%) and others (CY about 4%, PY about 4%) set up as dedicated
funds for management of gratuity funds.

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
' 4.73 Crore (Previous year: ' 4.64 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.

On November 21, 2025, the Government of India notified four labour codes 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, collectively referred to as the 'New Labour Codes', consolidating 29 existing labour laws. Accordingly, the
Bank has recognised an estimated incremental impact of ' 26.87 Crore under 'Employees' cost' in the Profit and Loss

Account during the financial year 2025-26. The Bank continues to monitor the finalization of Central and State Rules and
clarifications from the Government on the New Labour Codes and would provide appropriate accounting effect on the
basis of such developments, as needed.

I n 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.

The computation of earnings per share is given below: -

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 granted the following options.

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.

Activity in options outstanding under Employees Stock Option Plan

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 ' 2.20 Crore
during the financial year 2025-26 (Previous year ' 0.25 Crore).

The various assumptions considered in the pricing model for ESOPs granted during the year ended March 31, 2026
were:

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 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'.

11.9 Revaluation of Fixed Assets

The Bank revalued its owned premises as at December 31, 2025 which resulted in a revaluation gain of ' 108.22 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 2025-26 an amount of ' 7.54 Crore (Previous year: ' 6.84 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”.

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, ATM/Debit cards, internet/mobile banking, difficulty in operation of accounts, para-banking
and mis-selling.

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, 2026 was ' NIL (Previous year: ' NIL).

12.5 Small and Micro Industries

Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from October 02, 2006,
certain disclosures are required to be made relating to Micro, Small and Medium enterprises. The details are mentioned
as below:

12.8 Income from Marketing and distribution

The Bank has received fees of ' NIL (Previous year: ' NIL) with respect to marketing and distribution function (excluding
bancassurance business) during the financial year 2025-26.

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 1, 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.

During FY 2023-24, Reserve Bank of India (RBI) issued a Master Direction on Classification, Valuation and Operation of
Investment Portfolio of Commercial Banks (Directions), 2023, which became effective from April 01, 2024. The revised
Master direction brings the classification and accounting of investments closer to Ind AS. The Bank has implemented the
required changes as per the Master direction. Further, the RBI has also issued the Reserve Bank of India (Scheduled
Commercial Banks - Asset Classification, Provisioning and Income Recognition) Directions, 2025 for comments. These
directions aim to align with the requirements of ECL. The Bank is currently in the process of evaluating the impact of the
draft directions.

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.

12.11 Green Deposits

The Bank has not yet offered green deposits to its customers.

13 OTHER MATTERS13.1 Disclosure of penalties imposed by RBI

During the year ended March 31, 2026, RBI vide it's letter dated February 13, 2026 levied a penalty of ' 0.296 Crore on
the Bank, for non-compliance with certain directions issued by RBI on loans extended against pledge of gold ornaments
and jewellery for non-agricultural end uses. The penalty was paid by the Bank on February 13, 2026.

During the year ended March 31,2026, RBI had imposed a penalty of ' 0.001 Crore on DCB Bank, Mehsana Branch, for
exchange of mutilated notes during RBI incognito dated November 13, 2025 and penalty levied on December 30, 2025.
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.

13.2 Corporate Social Responsibility (CSR)

The Bank was required to spend ' 14.35 Crore (Previous year: ' 11.56 Crore) during the FY 2025-26 towards Corporate
Social Responsibility (CSR), in accordance with Companies Act, 2013.

The Bank has spent an amount of ' 14.74 Crore (Previous year: ' 11.84 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.

The details of amount spent during FY 2025-26 towards CSR are as under:

13.3 Remunerationa) Qualitative disclosures

Nomination and Remuneration Committee (NRC)

The Nomination and Remuneration Committee (NRC) of the Board comprises Independent Directors, including one
member of the Risk Management Committee of the Board. The Committee functions in accordance with applicable
statutory and regulatory requirements.

Roles and Responsibilities of the NRC

The principal mandate of the Nomination and Remuneration Committee includes:

• Determining the size, structure and composition of the Board and recommending appointment of suitable persons.

• Recommending to the Board a policy relating to remuneration of Directors, Key Managerial Personnel (KMP) and
other employees.

• Evaluating the performance of every Director and recommending remuneration for Non-Executive Directors, Senior
Management and KMP of the Bank.

• Approving Employee Stock Option Plans (ESOPs) and overseeing the creation, subscription and allotment of
shares to eligible employees under the approved ESOP.

• Reviewing appointments, promotions, demotions, terminations and performance appraisals of the Chief Executive
Officer (CEO), KMP and Senior Management.

• Reviewing and approving succession planning for the Board, KMP and Senior Management.

• Evaluating, approving and reviewing key Human Resource (HR) policies and the Rewards Approach on an annual
basis, as applicable. These include policies with regulatory or statutory implications such as the Compensation
Policy, Whistle Blower Policy, Job Rotation Policy, retirement age matters beyond 60 years, fixed pay bands,
sanctioned strength of 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 implemented a Board-approved Compensation Policy with the objective of attracting, retaining and
motivating highquality talent while fostering a strong performance-driven culture. The Compensation Policy ensures
alignment between employee remuneration, long-term performance of the Bank and prudent risk-taking.

The Policy is risk-aligned and structured to support sustainable growth, while complying with all applicable statutory and
regulatory guidelines.

Applicability of the Compensation Policy

The Compensation Policy applies to all employees of the Bank, including:

• Whole-Time Directors (WTDs)

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

• Material Risk Takers (MRTs), defined as employees whose actions may have a material impact on the Bank's risk
exposure

• Employees in Risk, Compliance and Control functions

• All other employees, including those in support, management and frontline roles
Compensation Structure

Compensation under the Policy comprises the following components:

1. Fixed Pay, including salary, perquisites and contributions towards superannuation and retiral benefits

2. Variable Pay, payable in cash and/or equity-linked instruments, including ESOPs and Cash-Settled Appreciation
Rights (CSARs)

Risk Adjustment in Remuneration

I n 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 aligns compensation across employee levels through an annual rewards exercise (Compensation Revision),
taking into consideration:

• Overall performance of the Bank

• Individual and business unit performance

• Alignment of risk outcomes with remuneration

• Emphasis on long-term value creation

• Cost-to-income ratio

• Capital adequacy

• Industry talent demand and employee attrition trends

• Other relevant internal and external factors
Forms of Variable Pay

Variable Pay is paid through cash bonuses, equity-linked instruments, or a combination of both, depending on the role,
responsibility level and risk profile of the employee.

Performance bonuses and equity-linked instruments are typically offered to relevant employees in middle and senior
management. These forms of variable pay and calibrated payout schedules are used to reflect the time horizon of risks,
including appropriate deferral mechanisms in line with the Compensation Policy.

Malus and Clawback Provisions

The Compensation Policy includes Malus and Clawback provisions as risk adjustment mechanisms:

• Malus enables the Bank to reduce or cancel deferred remuneration prior to vesting, in whole or in part.

• Clawback allows the Bank to recover remuneration that has already been paid or vested under specified
circumstances.

The conditions triggering Malus and Clawback are defined in the Compensation Policy and are applied to ensure
accountability and alignment with prudent risk management.

Deferral, Vesting and Limits on Variable Pay

In accordance with RBI Guidelines effective from April 01, 2020, the Bank follows the deferral and vesting framework
outlined below for applicable categories of employees:

Deferral of Variable Pay

• A minimum of 60% of total variable pay is subject to deferral.

• At least 50% of the cash bonus is deferred.

• Deferral does not apply where the cash component of variable pay is below ' 25 Lakhs.

Deferral Period

• Deferral applies to both cash and equity-linked components.

• The minimum deferral period is three years.

Vesting

• Vesting occurs on a pro-rata basis, not more frequently than annually.

• This ensures adequate assessment of risks prior to vesting and application of any necessary adjustments.

Limits on Variable Pay

• Variable pay constitutes at least 50% of total compensation.

• Variable pay is capped at 300% of fixed pay.

• Where variable pay is up to 200% of fixed pay, at least 50% must be in equity-linked instruments.

• Where variable pay exceeds 200% of fixed pay, at least 67% must be in equity-linked instruments.

For employees barred by statute or regulation from receiving equity-linked instruments, variable pay is capped at 150%
of fixed pay.

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 ' 2.53 Crore (Previous year: ' 2.82 Crore).

13.5 Proposed Dividend

The Board of Directors have recommended a dividend of ' 1.45 per share (14.50%) for the year ended March 31, 2026
subject to approval of the shareholders in the ensuing Annual General Meeting.

Dividend paid during the year, represents dividend (' 1.35 per equity share) for the year ended March 31, 2025 paid
pursuant to approval of shareholders at Annual General Meeting held on August 06, 2025.

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 ' 47.64 Crore for financial year 2025-26 (Previous year: ' 86.80 Crore).

15 Net overnight open position outstanding as on March 31, 2026 was ' 69.50 Crore (Previous year: ' 26.53 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.