1. Regulatory Capital

1.1. Composition of Regulatory Capital

As per the Operating Guidelines for Payments Banks RBI/2016-17/80DBR.NBD.No.25/16.13.218/2016 -17 read with separate letter received by Payments Banks dated November 08, 2017, no separate charge is prescribed for market risk and operational risk. However, Bank, as a conservative approach, has provided Market Risk Capital (MRC) Charge on its overall investment portfolio and foreign currency assets, as on March 31, 2025.

1.2. Draw down from Reserves

The Bank has not undertaken any drawdown from reserves during the year ended March 31, 2025 and March 31, 2024.

2. Investments

The Banks accounting policy during the current year with respect to investments has been changed as a result of RBI Master Direction RBI/2023-24/ DOR.MRG.37/21.04.141/2023-24 on Classification, Valuation and Operation of Investment Portfolio of Commercial Banks. There is no impact on the profitability of the bank as a result of the aforesaid change.

2.3 Government Security Lending (GSL) transactions (in market value terms)

On December 27, 2023, the Reserve Bank of India (“RBI”) released the RBI (Government Securities Lending) Directions, 2023 (“Directions”) to enable lending and borrowing of government securities. The Bank has not undertaken any Government Security Lending (GSL) transactions during the current year and previous year. Accordingly, the disclosure requirements with respect to GSL transactions are not applicable.

* The Board of Directors at its meeting held on April 10, 2022 has approved a minority strategic investment in PaySprint Private Limited a “Fintech” company. The Board of Directors of PaySprint Private Limited has approved the allotment of 867 equity shares of face value of H10 each to the Bank at a premium of H28,801 per share, aggregating to the total investment of H2.50 Crore representing 7.98% of paid up share capital of PaySprint Private Limited. As per RBI Master Direction - RBI/ DOR/2023-24/104 DOR.MRG.36/21.04.141/2023-24 dated September 12, 2023, the Bank has made an irrevocable election to classify an equity instrument that is not held with the objective of trading (i.e., not held for any of the purposes listed in paragraph 4 of Annex I of the circular) under AFS. This has necessitated in a debit to AFS Reserve by H2.42 Crore valuing the investment in Financial Statements at H0.08 Crore.

2.6 Sale and transfer to / from HTM category:

As per the Operating guidelines for Payments Banks, Payment Banks are not permitted to classify any investment, other than those made out of their own funds, as Held to Maturity (HTM) category. Further the investments made out of their own funds shall not, in any case be, in assets or investments in respect of which the promoter / a promoter group entity is a direct or indirect obligor.

During the current and previous year, there has been no sale/ transfer from Held to HTM category.

2.7 Derivative contracts

The Bank has not undertaken any derivative transactions during the current year and the previous year. Accordingly, the disclosure requirements with respect to derivative contracts and risk exposure in derivatives are not applicable.

3. Asset quality

As per the Operating Guidelines of Payments Banks, Payments Banks are not permitted to lend to any person including their Directors. However, Payments Banks may lend to their own employees out of the Bank’s own funds, as per a Board approved policy outlining the caps on such loans.

In accordance with the Operating guidelines, as at March 31, 2025, the Bank had classified employee loan amounting to H0.17 Crore as advances (Previous Year H0.07 Crore). The Bank follows the process of recovering monthly installments due from respective employees while processing monthly salary.

Accordingly, the disclosure requirements with respect to Asset quality are not applicable.

6. Liquidity Coverage Ratio (LCR)

The provisions of Liquidity Coverage Ratio (LCR), as per the circular on Basel III Framework on Liquidity Standards - Liquidity Coverage Ratio (LCR), Liquidity Risk Monitoring Tools and LCR Disclosure Standards dated June 9, 2014 and as amended from time to time, are not applicable to the Payments Banks and hence no disclosures have been provided.

7. Net Stable Funding Ratio (NSFR)

The provisions of Net Stable Funding Ratio (NSFR), as per the circular on Basel III Framework on Liquidity Standards - Net Stable Funding Ratio (NSFR), are not applicable to the Payments Banks and hence no disclosures have been provided.

c. Risk category wise country exposure :

The Bank’s exposures are concentrated in India as at March 31, 2025 and March 31, 2024. Accordingly, the disclosure requirements with respect to category wise country risk exposure are not applicable.

d. Unsecured advances :

As per the Operating guidelines for Payments Banks, Payments Banks are not permitted to lend to any person, accordingly, the disclosure requirements with respect to unsecured advances is not applicable.

e. Factoring Exposures :

The Operating Guidelines defines the scope of activities for Payments Banks. Factoring Business is not within the defined scope of the Operating Guidelines issued by RBI. The Bank has not engaged in Factoring Business.

f. Intra-group exposures :

The Bank does not have any exposure (advances/investments) within the group.

g. Unhedged foreign currency exposure :

The Bank does not have any foreign currency exposure as at March 31, 2025 and March 31, 2024. Thus the disclosure is not applicable to Bank.

9. Disclosure of penalties

During the year ended March 31, 2025 and March 31, 2024, no penalty was imposed on the Bank by RBI under the provisions the (i) Banking Regulation Act, 1949, (ii) Payment and Settlement Systems Act, 2007 and (iii) Government Securities Act, 2006.

However, a penalty of H5 lakhs was imposed on the Bank by regulator FIU-IND during the year ended March 31, 2024 on account of failure of the Bank to evolve an effective internal mechanism to detect and report suspicious DMT transactions conducted via CBC mode. Consequently, the Bank has put in place monitoring mechanism for detection and reporting of suspicious DMT transactions carried out by Corporate Business Correspondent.

Gratuity

The Bank’s gratuity benefit scheme is a defined benefit plan. The Bank’s net obligation in respect of a defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognized past service costs and the fair value of any plan assets are deducted.

The calculation of the Bank’s obligation under the plan is performed quarterly by a qualified actuary using the projected unit credit method.

The following table sets out the status of the Gratuity Plan as required under Accounting Standard 15.

16. Capital Infusion

During the current year, the Bank allotted a total of 4,100 equity shares of face value H10/- each, to the employees who exercised their stock options in accordance to the Employee Stock Option Plan (ESOP) FY2024. (Previous Year: Nil)

17. Appropriation to / Withdrawal from Reserve

(i) Statutory Reserve:

The Bank has made an appropriation of H23.13 Crore (March 31, 2024: H21.56 Crore) out of profits for the year ended March 31, 2025 to Statutory Reserve pursuant to the requirements of Section 17 of the Banking Regulation Act, 1949 and RBI guidelines dated September 23, 2000.

(ii) Investment Fluctuation Reserve:

During the year ended March 31, 2025, the Bank has transferred an amount of H12.87 Crore (Previous year: H9.86 Crore) from Profit and Loss Account to Investment Fluctuation Reserve as per the RBI circular on “Prudential Norms for Classification, Valuation and Operation of Investments Portfolio by Banks - Spreading of MTM losses and creation of Investment Fluctuation Reserve (IFR)”

19. Letter of comfort

The Bank has not issued any letters of comfort during the year ending March 31, 2025 and March 31, 2024.

20. Provisioning coverage ratio

As per Operating Guidelines for Payments Banks, Payments Banks are not permitted to lend to any person including their Directors. Accordingly, the disclosure requirements with respect to provisioning coverage ratio are not applicable.

22.3 Concentration of Exposures

As per Operating Guidelines for Payments Banks, Payments Banks are not permitted to lend to any person including their Directors. As at March 31, 2025 and March 31, 2024, the Bank does not have any exposure and accordingly, the disclosure requirements with respect to Concentration of Exposures is not applicable.

22.4 Concentration of NPA’s

As per Operating Guidelines for Payments Banks, Payments Banks are not permitted to lend to any person including their Directors. As at March 31, 2025 and March 31, 2024, the Bank does not have any NPA’s and accordingly, the disclosure requirements with respect to Concentration of NPA’s is not applicable.

23. Sector wise Advances

As per the Operating guidelines for Payments Banks, Payments Banks are not permitted to lend to any person including their Directors. As at March 31, 2025 and March 31, 2024, the Bank has not provided any advances, accordingly the disclosure requirements with respect to sector wise Advances is not applicable.

24. Movement of NPA’s

As per the Operating guidelines for Payments Banks, Payments Banks are not permitted to lend to any person including their Directors. As at March 31, 2025 and March 31, 2024, the Bank does not have any NPA’s and accordingly, the disclosure requirements with respect to Movement of NPA’s is not applicable.

25. Overseas Assets, NPAs and Revenue

The Bank does not hold any overseas assets / NPA as at March 31, 2025 and March 31, 2024 and no overseas operations were undertaken during the year ended March 31, 2025 and March 31, 2024. Accordingly, the disclosure requirements with respect to Overseas Assets, NPAs and Revenue are not applicable.

26. Movement of Technical / Prudential Written off Accounts

The Bank has not written off any accounts for the year ended March 31, 2025 and March 31, 2024.

27. Divergence in asset classification and provisioning

As per the Operating guidelines for Payments Banks, Payments Banks are not permitted to lend to any person including their Directors. As at March 31, 2025 and as at March 31, 2024, the Bank does not have any NPA’s and accordingly, the disclosure requirements with respect to divergence in asset classification and provisioning are not applicable.

28. Disclosure of transfer of loan exposures

As per the Operating guidelines for Payments Banks, Payments Banks are not permitted to lend to any person including their Directors. As at March 31, 2025 and as at March 31, 2024, the Bank does not have any exposure and accordingly, the disclosure requirements with respect to Disclosure of transfer of loan exposures are not applicable.

29. Disclosure on Remuneration Qualitative Disclosure

A) Information relating to the composition and mandate of the Nomination & Remuneration Committee

Members of Nomination & Remuneration Committee are:

1. Mr. Rakesh Bhartia, Chairperson and Independent Director (appointed as Member w.e.f. December 9, 2022 and as Chairperson of the Committee w.e.f. July 24, 2023)

2. Mrs. Deena Asit Mehta, Member and Independent Director (appointed w.e.f. April 10, 2024)

3. Mr. Rajat Kumar Jain, Member and Independent Director (appointed w.e.f. May 11, 2022)

4. Mr. Prateek Roongta, Member and Nominee Director (appointed w.e.f. December 9, 2022)

B) Information relating to the design and structure of remuneration processes and the key features and objectives of remuneration policy

The Compensation Structure at the Bank is divided into two parts Fixed and Variable.

The compensation is broadly been divided in components like Basic Salary, HRA, Provident Fund, Leave Travel Allowance, Special Allowance and Earning Potential (Variable Pay).

Depending on grade title/role/performance one or more components may be included or excluded from the salary structure.

Variable Pay: The Variable Pay varies depending on employee’s performance and is subject to change as per the Bank’s performance and policies.

For variable payout the performance evaluation is determined through KPI based approach. KPIs cascade from the organizations / departments goals. These are defined at the beginning of the financial year. (The weightages against these parameters will vary according to Department and the Band of the employee).

Employees eligible under sales incentives are excluded from earning potential process and are covered through the Sales Incentives Plans.

Statutory Bonus: Some Section of Employees are also paid statutory bonus as per the Payment of Bonus Act (1965) as amended from time to time.

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

The Bank takes into account various types of risks in its remuneration processes. Along with keeping in mind the key parameters like Fixed and Variable Pay the focus is also on ensuring a high performance culture, role clarity, meritocracy, clarity on performance expectation and a robust mechanism are necessary ingredients in building a productive and motivated team that is aligned to organizations vision

While considering the fixed pay for revision, the Bank conducts salary review process wherein revisions in compensation are based on performance and internal pay parity study up to an extent is taken in consideration to ensure that employees are competitively positioned in terms of fixed pay.

Cascading of goals from the organizational level to individual levels, periodic monitoring of performance, frequent rewards, performance improvement plans and key talent programmes ensure that the risk due to attrition is mitigated as much as possible.

To protect current and future risks; for Material Risk Takers, the deferred portion of compensation is subject to Malus and Claw back arrangements which dovetails into prudent risk taking and a futuristic approach to decision making by them.

D) Description of the ways in which the bank’s seeks to link performance during a performance measurement period with levels of remuneration

The Bank follows a Philosophy of Pay for Performance and Promote for Potential. Evaluation process for each Band is followed.

The performance evaluation is determined through KPIs based approach. KPIs cascades from the organization’s / department’s goals. These are defined at the beginning of the financial year. These KPIs are a combination of following broad parameters (The weightages against these parameters will vary according to Department and the Band of the employee):

a) Financial

b) Process

c) Customer

d) Capability

Earning potential will be paid basis the individual and the Bank performance (performance bonus will vary band wise and on the performance of the Bank & the individual performance against set KPI).

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.

Employees of the Bank may be entitled to stock purchase / stock options scheme as per the Bank’s ESOP Scheme with the vesting period as recommended by RBI guidelines and incorporated in the compensation policy.

For those employees identified as Material Risk Takers, deferral arrangements will be a part of their variable compensation. For such employees, at least 60% of their total variable pay will be under deferral arrangements. The compensation of MRTs will also include a deferral of the cash variable as per the regulatory guidelines incorporated in the compensation policy.

Such Variable Compensation will also be subject to Malus and Clawbacks and will need employees to sign relevant declarations whenever necessary.

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 may be entitled to stock purchase / stock options scheme as per the Bank’s ESOP Scheme.

Cash bonus is a part of earning potential/Sales Incentive depending on employee’s and the Bank’s performance basis the KPIs set across the organization and is subject to change as per the Bank’s performance and policies.

Some Section of Employees are also eligible for statutory bonus as per the Payment of Bonus Act (1965) as amended from time to time.

30. Disclosure on remuneration to Non-Executive Directors

Remuneration by way of sitting fees to the Non-Executive Directors for attending meetings of the Board & its committees during the year ended March 31, 2025 amounted to H1.11 Crore (previous year: H1.10 Crore). Further, in accordance with RBI guidelines, remuneration to all Non-Executive Directors other than the Chairperson for the year ended March 31, 2025 amounted to H0.40 Crore (previous year: H0.40 Crore).

31. Disclosures relating to securitization

As per the Operating guidelines for Payments Banks, Payments Banks are not permitted to lend to any person including their Directors and hence there are no loans with the Bank which can be securitized. Accordingly, the disclosure requirements with respect to securitization are not applicable.

32. Credit default swaps

There is no credit default swap as on March 31, 2025 and as on March 31, 2024. Thus the disclosure is not applicable to the Bank.

33. Forward rate agreement/Interest rate swap

There is no Forward rate agreement/ Interest rate swap as on March 31, 2025 and as on March 31, 2024. Thus the disclosure is not applicable to the Bank.

37. Earnings per Equity Share (EPS)

Basic and diluted earnings per share are computed in accordance with Accounting Standard 20 - Earnings per Share.

Basic earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the net profit after tax by weighted average number of equity shares and dilutive potential equity shares outstanding during the year.

38. Contingent Liabilities

Description of nature of contingent liabilities is set out below:

i) Claims against the Bank not acknowledged as debts:

These represent claims filed against the Bank in the normal course of business relating to various legal cases currently

in progress.

ii) Liability for partly paid investments:

The Bank has made investment in Treasury Bills for maintaining the SLR requirement. Such Treasury Bills are fully paid and

therefore the Bank does not have any liability for partly paid investments

iii) Guarantees given on behalf of Constituents, Acceptances, Endorsement and other obligations:

There are Bank guarantees lien marked on fixed deposits amounting to H1.96 Crore.

iv) Other Contingent items :

(a) There are numerous interpretative issues relating to the Supreme Court (SC) judgment dated February 28, 2019, relating to components/allowances paid that need to be taken into account while computing an employer's contribution of provident fund under the EPF Act. The Bank has recorded a contingent liability of H3.68 Crore with respect to these matters.

(b) HDFC Bank Limited (Applicant) has filed a petition before the Debt Recovery Tribunal - II at Mumbai (“Debt Recovery Tribunal”) against Fino Payments Bank (in the erstwhile name of the Bank i.e. Fino Fintech Foundation) and Fino PayTech Limited on September 9, 2014. The Bank acted as a business correspondent to the Applicant for rendering banking services on the Applicant’s behalf, under the Memorandum of Understanding dated August 28, 2009, between the Applicant and Government of Haryana for implementation of scheme for electronic disbursement of various government entitlements. The Applicant has alleged certain irregularities by the Bank in its role as a business correspondent and has claimed that an amount of H1.86 Crore, including damages, is owed by the Bank to the Applicant. According to the DRT Filing Department the claim is not maintainable before DRT since the amount involved in the matter does not qualify as a Debt under the definition of “Debt” as per DRT regulations hence shall be out of the purview of DRT. The Bank has not recorded contingent liability in respect of the above litigation and objected the petition on the same ground and argued the matter in favour of the objection by the DRT filing Department.

(c) The Bank has direct tax and indirect tax litigations of earlier year’s wherein the Bank expects favourable judgments based on the merits of the case and past precedents. The Bank has disclosed the quantum of litigations in its financial statements under Schedule 12 (7)(a) forming part of financial statements under Income Tax & GST.

v) Contractual Obligations and Commitments

The following table sets forth a summary of our contractual obligations :

39. Litigations

A lien has been marked on a Bank account for H11.92 Crore by the CID in relation to an investigation of an incident reported by one of the undertakings of Karnataka Government. The Bank has filed an application before Hon’ble Court at Bengaluru on March 28, 2025 for removal of the lien so marked and expects the lien to be removed based on the merits of the case and legal opinion.

42. Deposits

As per the Operating Guidelines for Payments Banks, Payments Banks can accept only savings and current deposits. The aggregate limit per customer has been extended to H2,00,000 from April 07, 2021 by RBI as against the previous limit of H1,00,000. Payments Banks are permitted for making arrangements with any other Scheduled Commercial Bank / SFB (Small Finance Bank), for amounts in excess of the prescribed limits, to be swept into an account opened for the customer at that bank, with the prior written consent of the customer.

The above limit shall apply to customer deposits and not to any security / earnest money deposit the Bank may collect from any of its service providers in the ordinary course of business.

The Bank has made sweep out arrangements with Suryoday SFB in order to ensure adherence to RBI guidelines.

48. Social Security Code

The Code on Social Security 2020 (‘the Code’) relating to employee benefits, during the employment and post-employment, has received Presidential assent on September 28, 2020. The Code has been published in the Gazette of India. Further, the Ministry of Labour and Employment has released draft rules for the Code on November 13, 2020. The effective date from which the changes are applicable is yet to be notified and rules for quantifying the financial impact are not yet issued. The Bank will assess the impact of the Code and will give appropriate impact in the financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.

50. 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). However, currently the implementation of Ind AS for banks has been deferred by RBI till further notice pending the consideration of some recommended legislative amendments by the Government of India.

Further, Fino PayTech Limited, our parent company, prepares its financial statements in accordance with Ind AS and such statements include our financial statements prepared in accordance with Ind AS for the limited purpose of inclusion in the parent company’s consolidated financial statements. In view of the same, the Bank is in an advanced stage of preparedness for implementation of Ind AS, as and when these are made applicable to the banks.

51. Rule 11(e) of the Companies (Audit and Auditors) Rules, 2014

Fino Payments Bank Limited is engaged in providing various types of financial services such as current and savings accounts, remittances, business correspondent, mobile banking, bill payments and third party financial products distribution to the rural, poor, underserved and unserved classes to help them be economically self-reliant.

Other than the transactions described above, 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 persons or entities, 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 also not received any fund from any parties (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 Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

53. Disclosures regarding Priority Sector Lending Certificates (PSLCs)

As per Operating Guidelines for Payments Banks, Payments Banks are not permitted to lend to any person including their Directors. The Bank has not purchased or sold any PSLCs during the year ended March 31, 2025 and March 31, 2024 and accordingly, the disclosure requirements with respect to PSLC are not applicable.

54. Disclosure of facilities granted to Directors and their relatives

The Bank has not extended any fund or non-fund facilities to Directors, their relatives, companies or funds in which they are interested.

56. Application for transition into Small Finance Bank

The Bank has applied for a licence to seek approval from the RBI for transition into a Small Finance Bank via application dated December 11, 2023. The application has been submitted in accordance with the Guidelines for ‘on tap’ Licensing of Small Finance Banks in the Private Sector (‘Guidelines’) dated December 5, 2019.

57. The Board of Directors have not recommended any dividend for the financial year 2024-25.

58. There is no amount required to be transferred to Investor Education and Protection Fund by the Bank. (Previous year: Nil)

59. Figures of the previous year have been re-grouped to conform to the current year’s presentation.