the obligation at the reporting date. These
estimates are reviewed at each reporting
date and adjusted to reflect the current best
estimates.

A contingent liability is a possible obligation
that arises from past events whose existence
will be confirmed by the occurrence or non¬
occurrence of one or more uncertain future
events beyond the control of the Bank or
a present obligation that is not recognized
because it is not probable that an outflow
of resources will be required to settle the
obligation. A contingent liability also arises in
extremely rare cases where there is a liability
that cannot be recognized because it cannot
be measured reliably. The Bank does not
recognize a contingent liability but discloses
its existence in the financial statements.
Contingent assets are neither recognised
nor disclosed in the financial statements.

3.17. CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprises of
Cash in Hand and Balances with RBI and
Balances with Banks and Money at Call and
Short Notice. The same item are considered
as cash and cash equivalents in preparation
of Cash Flow Statement.

3.18. SHORT SALE TRANSACTIONS

In respect of the short sale transactions
in Central Government dated securities,
the short position is covered by outright
purchase of an equivalent amount of the
same security within a maximum period of
three months including the day of trade. The
short position is reflected as the amount
received on sale in a separate account and is
classified under 'Other Liabilities'. The short
position is marked to market and loss, if any,
is charged to the Profit and Loss account,
while gain, if any, is not recognised. Profit
or loss on settlement of the short position is
recognised in the Profit and Loss account.

3.19. REWARD POINTS

The Bank runs a loyalty program, which seeks
to recognize and reward customers based
on their relationship with the Bank. Under
the program, eligible customers are granted
loyalty points redeemable in future, subject

to certain conditions. The Bank estimates
the probable redemption of such loyalty/
reward points using an actuarial method at
the Balance Sheet date by employing an
independent actuary. Provision for the said
reward points is then made based on the
actuarial valuation report as furnished by the
said independent actuary.

As per paragraph 53 of Reserve Bank of India (Small Finance Banks - Classification, Valuation, and Operation
of Investment Portfolio) Directions, 2025 dated November 28, 2025, the Bank transferred an amount of ' 0.17
Crore (Previous year ' Nil) from AFS - Reserve to Capital Reserve.

(iii) Special reserve

As per the provisions under Section 36(1)(viii) of Income Tax Act, 1961, the specified entity is allowed the
deduction in respect of any special reserve created and maintained by it, 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: (before making any deduction under this clause). 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 (excluding the amounts capitalized from reserves) of the entity. During the year,
the Bank has transferred an amount of ' 6.88 Crore (Previous year ' 724 Crore) to Special Reserve. There is
no drawdown from this reserve during FY 2025-26 and FY 2024-25.

(iv) Investment Reserve and Revenue Reserve

During the current year, the Bank has not transferred any amount to Revenue Reserves.

During the previous year ended March 31, 2025, the Bank has implemented the revised RBI norms for the
classification, valuation and operation of investment portfolio, which became applicable from April 01, 2024.
In accordance with the revised RBI 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 values the investment portfolio under the revised framework.

Consequently, the Bank has accounted net transition valuation gain of ' 2.66 Crore (net of tax) in Revenue
Reserve, resulting into net positive impact on networth of the Bank on transition. The Bank has also transferred
balance in Investment Reserve amounting to ' 4.08 Crore on the date of the transition to Revenue Reserve in
compliance with these directions.

(v) Investment Fluctuation Reserve

During the FY 2025-26, the bank has apportioned ' Nil (Previous year : ' 20.00 Crore) to Investment
Fluctuation Reserve, based on the value of investments in FVTPL (including HFT) and AFS category, to
protect against future increase in yield, in accordance with RBI guidelines.

(vi) Declaration of Dividends

The Board of Directors has not recommended any dividend for the Financial Year 2025-26 and Financial
Year 2024-25.

The Liquidity Coverage Ratio (LCR) is a global minimum standard for bank liquidity. It aims to ensure that bank
has a adequate stock of unencumbered high-quality liquid assets (HQLA) that can be converted into cash
immediately to meet its liquidity needs for a 30 calendar day time horizon under stress scenario.

The LCR is calculated by dividing the amount of high quality liquid unencumbered assets (HQLA) by the estimated
net outflows over 30 calendar day period. The net cash outflows are calculated by applying RBI prescribed
outflow factors to the various categories of liabilities (deposits, unsecured and secured wholesale borrowings),
as well as to undrawn commitments and derivatives-related exposures, after netting for cash inflows from assets
maturing within 30 days.

Liquidity management of the Bank is undertaken by the Treasury department under the supervision of the Asset
Liability Management Committee (ALCO) in accordance with the Board approved policies and ALCO approved
funding plans.

The mandated regulatory threshold, with appropriate cushion to ensure maintenance of adequate liquidity
buffers is as per the board approved ALM policy of the Bank. Risk Management Department computes the LCR
and monitors the same as per the Operating guidelines for small finance banks. The Bank has been submitting
LCR reports to RBI since December 2016.

Currently the Liquidity Coverage Ratio is significantly higher than minimum regulatory threshold. As part of
its liquidity management strategy, the Bank invests in Level I assets thus ensuring comfortable level of HQLA
at all times to address any kind of liquidity stress. The Bank follows the criteria laid down by the RBI for the
calculation of High Quality Liquid Assets (HQLA), gross outflows and inflows within the next 30-days period.
HQLA predominantly comprises of Government securities viz. Treasury Bills, Central and State Government
securities.

The Bank is primarily funded through long term borrowings viz. Refinances & Customer Deposits. The Risk
Management Department measures and monitors the liquidity profile of the Bank with reference to the Board
approved limits on a static as well as on a dynamic basis supplemented by monitoring of key liquidity parameters.
The Bank assesses the impact on short term liquidity covering business projections under normal as well as
varying market conditions.The LCR reports along with projections are placed before the Bank's ALCO for periodic
review and guidance of the committee.

The LCR is calculated by dividing the amount of high quality liquid unencumbered assets (HQLA) by the estimated
net outflows over 30 calendar day period. The net cash outflows are calculated by applying RBI prescribed
outflow factors to the various categories of liabilities (deposits, unsecured and secured wholesale borrowings),
as well as to undrawn commitments and derivatives-related exposures, after netting for cash inflows from assets
maturing within 30 days.

Liquidity management of the Bank is undertaken by the Treasury department under the supervision of the Asset
Liability Management Committee (ALCO) in accordance with the Board approved policies and ALCO approved
funding plans.

The mandated regulatory threshold, with appropriate cushion to ensure maintenance of adequate liquidity
buffers is as per the board approved ALM policy of the Bank. Risk Management Department computes the LCR
and monitors the same as per the Operating guidelines for small finance banks. The Bank has been submitting
LCR reports to RBI since December 2016.

Currently the Liquidity Coverage Ratio is significantly higher than minimum regulatory threshold. As part of
its liquidity management strategy, the Bank invests in Level I assets thus ensuring comfortable level of HQLA
at all times to address any kind of liquidity stress. The Bank follows the criteria laid down by the RBI for the
calculation of High Quality Liquid Assets (HQLA), gross outflows and inflows within the next 30-days period.
HQLA predominantly comprises of Government securities viz. Treasury Bills, Central and State Government
securities.

The Bank is primarily funded through long term borrowings viz. Refinances & Customer Deposits. The Risk
Management Department measures and monitors the liquidity profile of the Bank with reference to the Board
approved limits on a static as well as on a dynamic basis supplemented by monitoring of key liquidity parameters.
The Bank assesses the impact on short term liquidity covering business projections under normal as well as
varying market conditions.The LCR reports along with projections are placed before the Bank's ALCO for periodic
review and guidance of the committee.

The objective of NSFR is to ensure that the Bank maintains a stable funding profile in relation to the composition
of its assets and off-balance sheet activities. A sustainable funding structure is intended to reduce the probability
of erosion of the Bank's liquidity position due to disruptions in the Bank's regular sources of funding that
would increase the risk of its failure and potentially lead to broader systemic stress. The NSFR limits the Bank's
overreliance on short-term wholesale funding, thus encouraging better assessment of funding risk across all on-
and off-balance sheet items while promoting funding stability.

The NSFR is defined as the amount of available stable funding relative to the amount of required stable funding.
“Available stable funding" (ASF) is defined as the portion of capital and liabilities expected to be reliable over
the time horizon considered by the NSFR, which extends to one year. The amount of stable funding required
(“Required stable funding”) (RSF) of a Bank is a function of the liquidity characteristics and residual maturities of
its on-and off balance sheet exposures.

Liquidity management of the Bank is undertaken by the Treasury department under the supervision of the Asset
Liability Management Committee (ALCO) in accordance with the Board approved policies and ALCO approved
funding plans. The mandated regulatory threshold with appropriate cushion to ensure maintenance of adequate
liquidity buffers is as per the board approved ALM policy of the Bank. Risk Management Department computes
the NSFR and monitors the same as per the operating guidelines for small finance banks. The Bank has been
submitting NSFR reports to RBI since December 2021.Currently the Net Stable Funding Ratio is at a comfortable
level well above the prescribed regulatory limit of 100%. The NSFR reports are placed before the Bank's ALCO for
periodic review and guidance of the committee.

In accordance with the RBI guidelines, Banks are required to make consolidated pillar III and Net Stable Funding
Ratio (NSFR) disclosures under the Basel III Framework. These disclosures are available on the Bank's website
at the following link: https://ir.equitas.bank.in/reports-and-presentations/. These disclosures are not subjected to
audit by the Statutory auditors of the Bank.

The objective of NSFR is to ensure that the Bank maintains a stable funding profile in relation to the composition
of its assets and off-balance sheet activities. A sustainable funding structure is intended to reduce the probability
of erosion of the Bank's liquidity position due to disruptions in the Bank's regular sources of funding that
would increase the risk of its failure and potentially lead to broader systemic stress. The NSFR limits the Bank's
overreliance on short-term wholesale funding, thus encouraging better assessment of funding risk across all on-
and off-balance sheet items while promoting funding stability.

The NSFR is defined as the amount of available stable funding relative to the amount of required stable funding.
“Available stable funding” (ASF) is defined as the portion of capital and liabilities expected to be reliable over
the time horizon considered by the NSFR, which extends to one year. The amount of stable funding required
(“Required stable funding”) (RSF) of a Bank is a function of the liquidity characteristics and residual maturities of
its on-and off balance sheet exposures.

Liquidity management of the Bank is undertaken by the Treasury department under the supervision of the Asset
Liability Management Committee (ALCO) in accordance with the Board approved policies and ALCO approved
funding plans. The mandated regulatory threshold with appropriate cushion to ensure maintenance of adequate
liquidity buffers is as per the board approved ALM policy of the Bank. Risk Management Department computes
the NSFR and monitors the same as per the operating guidelines for small finance banks. The Bank has been
submitting NSFR reports to RBI since December 2021.Currently the Net Stable Funding Ratio is at a comfortable
level well above the prescribed regulatory limit of 100%. The NSFR reports are placed before the Bank's ALCO for
periodic review and guidance of the committee.

g) Sale and transfer of securities to/from HTM category

During the current year, through Conversion/Switch of security/Buyback auctions conducted by RBI, Bank
had sold SLR securities from HTM category with Book Value ' 996.02 Crore and subscribed government
securities as per the RBI press release. The bank had sold HTM securities with book value of ' 832.22 Crore
through open market operations(OMO) and ' 718.94 crore through buyback conducted by RBI. The bank
had also made outright sale transaction from HTM category of Book Value ' 348.18 Crore. As on March 31,
2026, Book value of the investments held in the HTM category is ' 7,312.41 Crore and book value over market
value is ' 126.79 Crore.

During the previous year, through Conversion/Switch of security auctions conducted by RBI, Bank had sold
SLR securities from HTM category with book value ' 100.60 Crore and subscribed government securities
as per the RBI press release. The Bank had sold HTM securities having book value of ' 616.66 Crore through
open market operations(OMO) conducted by RBI. The Bank had also made outright sale transaction from
HTM category of book value ' 321.36 Crore. As on March 31, 2025, market value of the investments held in
the HTM category is ' 7,278.56 Crore and market value over book value is ' 58.21 Crore.

g) Unhedged foreign currency exposure

The Bank monitors the Unhedged Foreign Currency Exposure (UFCE) of its borrowers in accordance with
the Reserve Bank of India's Credit Risk Management guidelines on UFCE, as applicable to Small Finance
Banks and as amended from time to time.

In line with regulatory requirements, the Bank has established a robust framework for the identification,
measurement, and ongoing monitoring of UFCE as an integral part of its overall credit risk management
process. The Bank obtains periodic information on foreign currency exposures from borrowers, after
excluding fully hedged exposures and natural hedges, wherever applicable. The risks arising from UFCE are
factored into the internal credit rating framework and the credit appraisal and approval process.

The Bank assesses the potential loss arising from UFCE by applying exchange rate volatility factors, based
on historical data, to the unhedged foreign currency exposure. The borrower's capacity to absorb such
losses is evaluated by comparing the estimated potential loss with earnings before interest and depreciation
(EBID). Based on this assessment, exposures are classified into prescribed risk buckets, which determine the
applicable incremental provisioning and capital requirements, in line with RBI guidelines, as detailed below:

(b) Forward rate agreement/Interest rate swap : Nil(c) Exchange traded interest rate derivatives: Nil(d) Disclosures on risk exposure in derivativesI) Qualitative disclosures

(i) The bank has a Market Risk Management department which oversees the management of risk in derivatives
trading. The Head of Market Risk reports to the Chief Risk Officer

(ii) The bank has employed advanced Treasury and Risk management systems to measure and monitor risks
involved in derivatives exposures. The Top management of the bank is informed on the risk exposures on a
daily basis.

(iii) The Bank's policies on Trading and Investments include derivatives as an instrument for hedging
and/or mitigating risk and strategies and processes for monitoring the continuing effectiveness of
hedges/mitigants.

(iv) The bank has an adequate accounting policy for recording hedge and non-hedge transactions; recognition
of income, premiums and discounts; valuation of outstanding contracts; provisioning, collateral, and credit
risk mitigation.

(v) The Bank did not have any long-term contracts including derivative contracts as at year end for which there
were any material foreseeable losses.

12 DISCLOSURE OF PENALTIES IMPOSED BY THE RESERVE BANK OF INDIA

(i) During the year ended March 31, 2026, there are no penalties imposed by the Reserve Bank of India under

the provisions of the

(i) Banking Regulation Act, 1949,

(ii) Payment and Settlement Systems Act, 2007, and

(iii) Government Securities Act, 2006 (for bouncing of SGL)

During the previous year ended March 31, 2025, RBI has imposed penalty of ' 65 lakhs on the Bank for

non-compliance as under:

a) The Bank levied foreclosure charges in 479 floating rate term loans sanctioned to individual borrowers for
purposes other than business in non-compliance with RBI Directions on prohibiting levy of Foreclosure
Charges/Pre-payment Penalty on Floating Rate Term Loans to individuals for non-business purposes
and

b) The Bank obtained collateral security for 2,027 agricultural loans upto ' 1.6 lakhs in non-compliance with
RBI Circular on 'Credit Flow to Agriculture - Collateral free agricultural loans' prohibiting banks from
obtaining collateral for agricultural loans upto ' 1.6 lakhs.)

(ii) Bank has not defaulted on reverse repo-related transactions during the current year or the previous year.

13 DISCLOSURE ON REMUNERATIONa) Qualitative disclosures(a) Information relating to the composition and mandate of the Nomination and Remuneration
Committee.

The Nomination and Remuneration Committee is chaired by an Independent Director and comprises
of four (4) other Independent Directors. The functions of the committee include: recommendation of
appointment of Directors to the board, evaluation of performance of the Directors, approval of the policy
for remuneration payable to Directors, employees, including senior management and key management

personnel, framing guidelines for the Employee Stock Option Scheme (ESOP Scheme) and deciding on
the grant of stock options to the employees and Whole-Time Director/s of the Bank.

(b) Information relating to the design and structure of remuneration processes and the key features and
objectives of remuneration policy:

Remuneration Policy of the Bank covers remuneration payable for directors and employees of the Bank
and all aspects of the compensation structure such as fixed pay, perquisites, bonus, guaranteed pay,
severance package, stock, pension plan and gratuity.

The Bank believes in a sound compensation practice that ensures effective governance of compensation,
alignment of compensation with prudent risk taking and effective supervisory oversight and stakeholder
engagement. This policy is framed in accordance with the guidelines laid down by Reserve Bank of India
(RBI) vide their Circular Reference no DOR. Appt. BC. No. 23/ 29.67001/ 2019-20 dated November 4,
2019 and replaced with RBI Master Directions RBI/DoR/2025-26/204 DoR.SOG(SPE).REC.No.123/13-
04-001/2025-26 dated November 28, 2025 and as amended thereafter.

The remuneration payable to Managing Director (:MD:)/Chief Executive Officer (:CEO:) and Executive
Director (ED) shall be based on the scope and responsibility that goes with such positions, shall be
comparable to the compensation of similar profiles in similar organizations and would be performance
linked. From time to time, the NRC may fix a maximum ceiling on the fixed/variable component of
compensation, subject to the approval of Reserve Bank of India and shareholders.

The Non-Executive Directors (:NED:) including Independent Directors of the Bank shall be paid
remuneration as a percentage of the net profits of the Bank for the financial year as may be fixed by the
Board from time to time, calculated as per the provisions of the Companies Act, 2013 and subject to the
limits fixed by the Reserve Bank of India, from time to time.

Further, within the above ceiling, the remuneration payable to the Chairman of the Board upto two times
the amount payable to other Non-Executive Directors and Independent Directors and further subject to
approval of RBI and the remuneration payable to the Chairman of the Audit Committee upto 1.5 times
the amount payable to other Non-Executive Directors and Independent Directors.

NEDs are to be paid sitting fee for each meeting of the Board/ Committees of the Board attended by
them, as may be approved by the Board pursuant to provisions of Section 197 of the Companies Act, 2013
read with Section 35B (1) of the Banking Regulation Act 1949. NEDs including Independent Directors shall
be reimbursed any out of pocket expenses incurred by them while performing duties for the Bank.

For the other categories of staff, the compensation is structured taking into account all relevant factors
such as the level of the position, roles and responsibilities and the prevailing compensation structure in
the industry for the similar role.

(c) Description of the ways in which current and future risks are taken into account in the remuneration
processes.

The Board of Directors through the Nomination and Remuneration Committee (“NRC”) is responsible for
formulating and making the necessary amendments to the Remuneration Policy for the Directors, Key
Managerial Persons (“KMP”) and Senior Executives of the Bank from time to time. The NRC considers
different aspects like risk-return alignment, cost to income ratio and the like in framing the remuneration
policy and practice.

Performance parameters specified for the MD/ CEO also includes risk and control considerations such as
Asset quality, implementation of guidelines on Compliance Risk Assessment, reviewing and enhancing
controls of the operating risk processes of the Bank.

The variable remuneration payable to MD/CEO & other Material Risk Takers are subject to malus and
clawback clauses to address issues such as losses in subsequent years due to acts in a given performance
year, gross negligence, serious lapses in credit underwriting process, serious violations in AML / KYC,
frauds and misconducts.

Further, the KRA's for Senior Executives of the Bank are clearly defined with adequate weightage given to
Risk, Compliance, Credit & Asset Quality to ensure risks are assessed and mitigated. KRA's of Executives
working in control functions like Risk & Compliance are defined independent of buisness results and no
weightage is given for achievement of business parameters/ targets to ensure independent evaluation.

(d) Description of the ways in which the Bank seeks to link performance during a performance
measurement period with levels of remuneration

The Bank follows Annual Performance Review (12 months period) to link performance. Remuneration is
fixed based on the grade and merit rating for all the employees. Individual performances are assessed
in line with business or deliveries of the Key Result Areas (KRA), top priorities of business, budgets,
risk alignment etc. The Performance Appraisal system assigns a rating based on the achievement or
otherwise of the KRAs. The change in remuneration is largely dependent on the rating assigned.

(e) A discussion of the bank’s policy on deferral and vesting of variable remuneration and a discussion of
the Bank’s policy and criteria for adjusting deferred remuneration before vesting and after vesting.

The Bank has ensured the remuneration for Material Risk Takers in line with the RBI circular dated
November 04, 2019 and repalced with RBI Master Directions RBI/DoR/2025-26/204 DoR.SOG(SPE).
REC.No.123/13-04-001/2025-26 dated November 28, 2025 and as amended thereafter. Accordingly, the
variable pay of identified MRTs is determined between 100% to 300% of fixed pay. This variable pay is
further divided into cash and ESOPs. Both the cash and ESOPs of the said MRTs is to be deferred over
a period of three year in line with the risk taken and as per relevant RBI approval received from time to
time. Each such MRT has performance measures aligned to risk measures and the vesting of variable
pay is also pro-rated till the end of the deferral period.

(f) Description of the different forms of variable remuneration (i.e. cash, shares, ESOPs and other forms)
that the Bank utilizes and the rationale for using these different forms.

Employees of the Bank are eligible for variable pay in terms of both cash and ESOPs. At field level the
variable pay is linked to defined performance targets. Other roles may be given variable pay based on
their performance ratings. The variable pay amount varies depending on both the role of the individual as
well as his/her performance levels. For Senior Executives of the Bank due consideration is also given to
the overall performance of the Bank & respective Division / Function apart from individual performance
ratings.

Employees above defined grade are eligible for Employee Stock Options issued by the Bank as
determined by the Nomination and Remuneration Committee of the Bank. These options are granted
annually based on performance ratings and role of the individual. Junior employees in cases of consistent
exemplary performance are also granted options being part of High Achievers Club.

In very select instances, employees are offered options over a four year period, with a quarter of the
options vesting every year. The vesting of the options are dependent on continuity and performance of
the said individual.

A variable component may also be made available for specific employees as agreed and included as a
part of their respective compensation structure. Variable pay for MRTs have been explained in (e) earlier.
As on the reporting date, the Bank does not have any form of variable remuneration other than as stated
above. Thus, the various types of Variable Pay is aligned over both Short and Long term periods.

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

In January 2016, the Ministry of Corporate Affairs issued the roadmap for implementation of new Indian
Accounting Standards (Ind AS), converged with International Financial Reporting Standards (IFRS), for
scheduled commercial banks, insurance companies and non-banking financial companies (NBFCs). On
Oct 7, 2025, the Reserve Bank of India (RBI) issued Draft directions titled ::Draft Reserve Bank of India
(Scheduled Commercial Banks & All India Financial Institutions - Asset Classification, Provisioning and Income
Recognition) Directions, 2025. Subsequently, on April 27, 2026, the RBI finalized guidelines introducing a
forward-looking Expected Credit Loss (ECL) framework for asset classification, effective April 1, 2027.

However, Small Finance Banks are currently excluded from the applicability of these directions. currently the
implementation of Ind AS for Small finance banks has been deferred by RBI till further notice pending the
consideration of some recommended legislative amendments by the Government of India. The Bank is in an
advanced stage of preparedness for implementation of Ind AS, as and when these are made applicable to
the Small Finance banks.

As required by the RBI guidelines, the accounts of the Bank are converted into Ind AS pro-forma format
and submitted to the RBI at periodic intervals. The Bank carries out the Expected Loss provisioning using
Probability of default (PD) and Loss given Default (LGD) by considering historical data for the purpose of
IND AS pro-forma reporting and product pricing. The Bank has put in a place a comprehensive Expected
Credit Loss Framework.

h) Payment of DICGC Insurance Premium

The Bank has paid the deposit insurance premium, as applicable, to DICGC within the prescribed regulatory
timelines during the Current year and Previous year.

involve the exchange of currencies at a predetermined price on a future date. The notional principal of
such contracts is disclosed here. These contracts are classified under the Banking Book and Trading
book and the accounting treatment of these contracts is carried out in accordance with the board
approved accounting policy.

iv. Other items for which the Bank is contingently liable:

These include:

a) Capital commitments

b) Amount transferred to the RBI under the Depositor Education and Awareness Fund (DEAF)

c) Investment purchases pending settlement

d) Credit enhancements provided by the Bank towards securitisation

m) Dues to Micro and Small Enterprises

Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified
on the basis of information collected by the Management. Based on the information available with the Bank,
there are no overdue amounts payable to Micro and Small Enterprises as defined under the Micro, Small and
Medium Enterprises Development Act, 2006 as at the Balance Sheet date. Further, the Bank has not paid
any interest to any Micro and Small Enterprises during the current and previous year.

r) Portfolio-level information on the use of funds raised from green deposits :

The Bank has not accepted green deposits during the current financial year (Previous year : Nil)

15 EMPLOYEE BENEFITS (AS 15)Defined Contribution Plan
Provident Fund and NPS

The Bank makes Provident Fund contributions and NPS contributions to State administered fund for qualifying
employees. The Bank is required to contribute a specified percentage of the payroll costs to the Fund. The
Bank has recognised ' 89.57 Crore (Previous Year ' 74.18 Crore) towards Provident Fund contributions and
NPS contributions in the Profit and Loss Account. The contributions payable to the fund by the Bank is at rates
specified in the rules of the scheme.

Defined Benefit Plans
Gratuity

The Bank has a funded gratuity scheme for its employees and the Gratuity liability has been made based on the
actuarial valuation done as at the year end. The details of actuarial valuation as provided by the Independent
Actuary is as follows:

n) Details of Single Borrower Limit / Group Borrower Limit exceeded by the bank.

During the year, the Bank has not exceeded the prudential credit exposure limit as prescribed by the Reserve
Bank of India in respect of Single Borrower and Group Borrowers. (Previous year: Nil).

o) Letters of Comfort

The Bank has not issued any letters of comfort during the year.(Previous year: Nil).

p) 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 party identified by or on behalf of the bank (Ultimate Beneficiaries). The Bank has not
received any fund from any party(ies) (Funding Party) with the understanding that the Bank shall whether,
directly or indirectly lend or invest in other persons or entities identified by or on behalf of the bank (:Ultimate
Beneficiaries:) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

16 DISCLOSURES- ACCOUNTING STANDARDS
Segment Reporting (AS 17)

The business of the Bank is divided into three segments: Treasury, Wholesale Banking and Retail Banking
business. These segments have been identified and reported taking into account the target customer profile,
the nature of products and services, the different risks and returns, and the guidelines prescribed by RBI.
Also, refer Schedule 173.15.

21 EMPLOYEES STOCK OPTION SCHEME
a) ESFB ESOP 2019

During the year ended 31st March 2020, the bank established a employee stock option scheme titled ESFB
Employees Stock Option Scheme, 2019 (ESFB ESOP 2019) effective from November 22, 2019. Under the
plan, the Bank was authorized to issue upto 11,00,00,000 options (including 33,487,873 options under Grant
1 issued as a replacement option for the Scheme under the Holding Company) to eligible employees of the
Bank and the erstwhile Holding Company. Each option entitles for apply and allotment of one fully paid
share on payment of exercise price during the exercise period.

As on March 31, 2026, 3,08,53,018 (previous year 2,77,90,401) (net of forfeitures and cancellation) options
were outstanding, which were granted at various exercise prices. The following are the outstanding options
as on March 31, 2026.

Volatility

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 annualized standard deviation of
the continuously compounded rates of return on the stock over a period of time.

c) Dividend Yield

Expected dividend yield has been calculated based on the dividend declared for 1 financial year prior to the date
of grant. The dividend yield has been derived by dividing the dividend per share by the market price per share
on the date of grant.