Fino Payments Bank Ltd. के निदेशक की रिपोर्ट

Mar 31, 2025

Your Directors take pleasure in presenting the 9^th (Ninth) Annual Report of Fino Payments Bank Limited (“Bank”) covering business and operations together with the Audited Financial Statements for the Financial Year ended March 31, 2025.

FINANCIAL HIGHLIGHTS

The financial highlights for the year under review are presented below:

(H in Crore)
Particulars	2024-25	2023-24
Balance Sheet:
Sa"ings Bank Deposits	1,908.0 1	1
Current Ac ¦ ¦ ¦unt Deposits	31.42	14.76
Total Assets/ Liabilities	4,205.93	3,419.11
Total Income	1,847.10	1,478.38
Less: Expenses	1,615.99	1,287.49
Profit /(Loss) before Interest, Depreciation and Tax	231.11
Less: Depreciation	62.15	53.45
Less: Finance Charges	60.61	51.14
Profit /(Loss) before Tax and prior period items	108.35	86.30
Profit /(Loss) before Tax	1"8 i	86
Taxes		0.08
Net Profit /(Loss) after Tax	92 3	86 22
Other Comprehensive Income	-	-
Balance of Profit /(Loss) carried forward to next year	92.53	86.22
Appropriations
1 ransler to Statut -ry Reserve	23.13
Transfer to Investment Reserve	12.87	9.8.3

BUSINESS OPERATIONS AND STATE OF AFFAIRS OF THE BANK

The brief details on business operations during the financial year

ended March 31, 2025 and state of affairs of the Bank as on March

31, 2025 are given below:

1. Throughput grew by a whopping 29% year-on-year basis in FY2024-25.

2. The Bank processed 337.9 Crore transactions in FY2024-25, a 60% growth compared to the previous year.

3. Digital throughput grew exponentially by 70% to touch nearly 49% of overall throughput in FY2024-25 at H2,25,482 Crore.

4. The Bank opened approx. 0.33 Crore current and savings accounts of customers in FY2024-25, of which 96.07% were subscription based accounts.

5. The Bank delivered a robust ROE of 15.4% in FY2024-25.

6. Merchant network went up by 9%, the Bank’s physical outreach reached to 0.19 Crore banking points in FY2024-25.

The total revenue of the Bank was H1847.1 Crore for the year ended March 31, 2025 as compared to H1,478.4 Crore in previous financial year. The Bank’s profit after tax stood at H92.5 Crore for the year ended March 31, 2025 as compared to H86.2 Crore in previous financial year.

Your Bank is a public limited company and has a license from the Reserve Bank of India (“RBI”) to carry on business of Payments Bank in India. The Bank became a Scheduled Bank with effect from January 01, 2021 vide Notification dated January 01, 2021 published in the Government of India Gazette and continues to comply with all the applicable regulations and guidelines prescribed by RBI from time to time.

The detailed operational performance of the Bank during the year has been discussed in the Management Discussion and Analysis Report which forms an integral part of this Annual Report.

CHANGE IN NATURE OF BUSINESS

During the year under review, there has been no change in the nature of business of the Bank.

The Bank believes that it has the relevant expertise, technology and team to cater to additional dimensions of the Banking sector and contribute further towards the Government led initiatives of financial inclusion. You are aware that the Bank had, in the previous financial year, filed an application for transition into a Small Finance Bank (“SFB”) with the RBI. The approval of RBI is awaited.

TRANSFER TO RESERVES

The Bank has appropriated H23.13 Crore to statutory reserves and H12.87 Crore to Investment Fluctuation Reserve for the financial year ended March 31, 2025.

DIVIDEND

In accordance with Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (“SEBI Listing Regulations”), the Bank has formulated a Dividend Distribution Policy, which ensures a fair balance between rewarding its shareholders and retaining enough capital for the Bank’s future growth and expansion plan. The Dividend Distribution Policy is available on the Bank’s website at https://web4.finobank.com/investors/ corporate-governance#code-policies.

Your Bank is in its growing stage and with a view to conserve capital to support its future growth, your Directors do not recommend any dividend for the financial year ended March 31, 2025.

CAPITAL STRUCTURE

During the year under review, there has been no change in the authorised share capital of the Bank. The authorised share capital of the Bank stood at H90,00,00,000/- (Rupees Ninety Crore only) divided into 9,00,00,000 (Nine Crore) Equity Shares of face value of H10/- (Rupees Ten Only) each.

The issued, subscribed and paid up share capital of the Bank as on March 31, 2025 was H83,21,84,020/- (Rupees Eighty Three Crore Twenty One Lakh Eighty Four Thousand and Twenty Only) comprising of 8,32,18,402 (Eight Crore Thirty Two Lakh Eighteen Thousand Four Hundred and Two) Equity Shares of face value of H10/- (Rupees Ten Only) each.

This includes 4,100 (Four Thousand and One Hundred) fully paid-up Equity Shares of H10/- (Rupees Ten only) each allotted by the Bank during the year under review to eligible employees pursuant to the exercise of stock options under Fino Payments Bank Limited-Employee Stock Option Policy-2023.

Your Bank has not issued any Equity Shares with differential voting rights.

CAPITAL ADEQUACY RATIO

Your Bank is well capitalised and has a strong capital adequacy ratio. As on March 31, 2025, the Capital to Risk Assets Ratio (“CRAR”) of your Bank was 80.45% which is well above the minimum regulatory requirement of 15% CRAR prescribed by the RBI.

Out of the above, Tier I capital adequacy ratio stood at 73.87% and Tier II capital adequacy ratio stood at 6.58%.

MATERIAL CHANGES AND COMMITMENTS

Apart from the details given in this Report, there were no material changes or commitments affecting the financial position of the Bank which have occurred between the end of the financial year

i.e. March 31, 2025 and up to the date of this Report.

TRANSFER TO INVESTORS EDUCATION AND PROTECTION FUND

During the year under review, the Bank was not required to transfer any fund or Equity shares to the Investor Education and Protection Fund as per the provisions of Section 125 of the Companies Act, 2013 (“Act”) read with applicable rules framed thereunder, as amended from time to time.

EMPLOYEES STOCK OPTION SCHEMES

The Bank has formulated and implemented Fino Payments Bank Limited - Employees Stock Option Policy, 2020 (“ESOP 2020”) and Fino Payments Bank Limited - Employees Stock Option Policy, 2023 (“ESOP 2023”) with a view to attract, retain, incentivize and motivate employees of the Bank by way of rewarding their performance and promoting their increased participation in the overall corporate growth and profitability. The ESOP 2020 has been amended from time to time in view of regulatory changes/ business requirements. None of these amendments were prejudicial to the interest of the employees.

During the year under review, the Board of Directors of Fino Payments Bank Limited at its meeting held on December 18, 2024, approved the adoption of Fino Payments Bank Limited -Employee Stock Option Policy, 2024 (“ESOP 2024”).

The shareholders through Postal Ballot on February 15, 2025 approved the ESOP 2024. The key objectives of the ESOP 2024 are to reward the employees for their past association and performance as well as to motivate them to contribute to the growth and profitability of the Bank.

The Nomination and Remuneration Committee (“NRC”) which also acts as a Compensation Committee of the Board is entrusted with the responsibility of implementation and administration of the ESOP policies of the Bank.

The details and disclosures as required under Regulation 14 of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (“SBEB & SE Regulations”) and circulars issued thereunder, have been uploaded on the Bank’s website at www.finobank.com under the ‘Investors’ section. The Equity Shares issued and allotted under

ESOP 2020, ESOP 2023 and ESOP 2024 shall rank pari-passu with the existing equity shares of the Bank.

Further, disclosure as per the ‘Guidance Note on Accounting for Employee Share-based Payments’ issued by the Institute of Chartered Accountants of India, are disclosed in the Notes to the Financial Statements of the Bank for the financial year ended March 31, 2025, which forms an integral part of this Annual Report.

ESOP 2020, ESOP 2023 and ESOP 2024 are in compliance with the SBEB & SE Regulations. A certificate from the Secretarial Auditor of the Bank that the ESOP Schemes of the Bank have been implemented in accordance with the SBEB & SE Regulations and in accordance with the resolutions passed by the shareholders of the Bank, shall be placed before the members at the 9^th Annual General Meeting (“AGM”) of the Bank.

UTILIZATION OF NET PROCEEDS FROM THE INITIAL PUBLIC OFFER (“IPO”)

The net proceeds from the IPO of the Bank in November 2021 were utilised towards the objects stated in the Red Herring Prospectus dated October 22, 2021 i.e. towards augmenting its Tier - I capital base to meet its future capital requirements. Further, the proceeds from the Fresh Issue were also used towards meeting the expenses in relation to the IPO. The Bank on a quarterly basis affirms that there is no deviation in utilisation of the issue proceeds from the objects stated in offer documents and submits the same to Stock Exchanges in compliance with the SEBI Listing Regulations.

The Bank would require additional capital for expanding its operations and modernization of its banking technology platform and keeping sufficient capital to meet the regulatory and compliance requirements to operate as a Payments Bank. Further, in the event of the Bank obtaining a SFB licence, additional funds would be required in the current financial year to support additional activities as an SFB. This future need for capital is expected to be met through internal accruals.

HOLDING, SUBSIDIARY & ASSOCIATE COMPANIES

The Bank does not have any subsidiary, joint venture or associate Company. The details of Holding Company are given below:

Name of the Company	Whether incorporated/ acquired/ converted	Year of incorporation	Status
Fino PayTech Limited	Incorporated	2006	Public Limited Company

ANNUAL RETURN

In accordance with the provision of Section 92 (3) of the Act, the Annual Return in the prescribed form MGT-7 is uploaded on Bank’s website at https://web4.finobank.com/investors/ financials#annual-report.

CREDIT RATING The details of credit rating as on March 31, 2025 along with its outlook are given hereunder:
Rating	Outlook	Rating Agency	Comments
Long Term: [ICRA] BBB	Stable	ICRA Limited	Instruments with this rating are considered to have moderate degree of safety regarding timely servicing of financial obligations.
Short Term: [ICRA] A2	Stable	ICRA Limited	Instruments with this rating are considered to have strong degree of safety regarding timely payment of financial obligations.

ICRA Ratings Limited has re-affirmed credit rating of [ICRA] BBB (Stable) and [ICRA] A2 , for long-term and short-term overdraft facilities of the Bank, respectively vide its press-release dated May 22, 2025.

DEPOSITS

Being a banking company, the disclosures relating to deposits as required in accordance with Sections 73 and 74 of the Act read with Companies (Accounts) Rules, 2014 and other applicable provisions of the Act are not applicable to the Bank.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

As on March 31, 2025, the composition of the Board was in compliance with the provisions of the Act, the SEBI Listing Regulations and the Guidelines for Licensing of “Payments Banks” dated November 27, 2014 and Circular on Corporate Governance in Banks - Appointment of Directors and Constitution of Committees of the Board dated April 26, 2021 issued by the RBI and the Articles of Association of the Bank.

The Board of the Bank is duly constituted with an optimum combination of Executive and Non-Executive Directors including Independent Directors and Women Directors. The changes in the composition of the Board that took place during the period under review were carried out in compliance with the provisions of the Act, SEBI Listing Regulations and applicable RBI Regulations/ Guidelines.

In terms of the requirement of the SEBI Listing Regulations and Banking Regulation Act, 1949, the Board has identified core skills, expertise and competencies of the Directors in the context of the Bank’s businesses for effective functioning. The list of key skills, expertise and core competencies of the Board of Directors is detailed in the Corporate Governance Report.

In the opinion of the Board, all the directors possess the requisite qualifications, experience and expertise and hold high standards of integrity.

In terms of SEBI Listing Regulations, the Bank has received Certificate from M/s. DM & Associates Company Secretaries LLP, Practicing Company Secretaries, the Secretarial Auditors of the Bank, that none of the Directors on the Board of the Bank have been debarred or disqualified from being appointed or continuing as a Director of any Company by the Securities and Exchange Board of India/ Ministry of Corporate Affairs or any such other statutory authority. The said certificate is annexed to the Corporate Governance Report forming part of this Annual Report.

Appointment/re-appointment of Directors made during the FY2024-25 and till the date of this report.

Based on the recommendation of the NRC, the Board and the shareholders approved the following appointments/ reappointment during FY2024-25 and till the date of this report:

1. Shareholders approved the appointment of Mrs. Anita Sudhir Pai (DIN: 07651059) as an Independent Director of the Bank for a period of five consecutive years with effect from January 11, 2024 up to January 10, 2029 (both days inclusive) vide special resolution passed through postal ballot on April 07, 2024.

2. Shareholders approved the appointment of Mrs. Neeta Mukerji (DIN: 00056010) as an Independent Director of the Bank for a period of five consecutive years with effect from March 05, 2024 up to March 04, 2029 (both days inclusive) vide special resolution passed through postal ballot on May 25, 2024.

3. Mrs. Deena Asit Mehta (DIN: 00168992) was re-appointed as an Independent Director of the Bank, for the second term of three consecutive years with effect from March 19, 2025 up to March 18, 2028 (both days inclusive) vide special resolution passed through postal ballot on May 18, 2025.

Re-appointment of Independent Director and Parttime Chairperson

The NRC and Board at its meetings held on July 29, 2025 and July 30, 2025 respectively recommended the re-appointment of Mr. Rajat Kumar Jain (DIN: 00046053) as an Independent Director for a second term of three years to hold office from November 02, 2025 to November 01, 2028 (both days inclusive), not liable to retire by rotation, subject to members'' approval. The reappointment of Mr. Rajat Kumar Jain as an Independent Director is being put up for your approval at the ensuing AGM.

The profile and particulars of experience, attributes, skills of Mr. Rajat Kumar Jain together with his other directorships and committee memberships in terms of Regulation 36 of SEBI Listing Regulations and Secretarial Standard on General Meetings (“SS-2”) issued by the Institute of Company Secretaries of India forms part of the Notice of the 9^th AGM.

The NRC and Board have also recommended Mr. Jain''s appointment as Part-time Chairperson of the Bank, subject the approval of RBI.

Re-appointment of Director retiring by rotation

In accordance with the provisions of Section 152 of the Act and the Articles of Association of the Bank, Mr. Rishi Gupta (DIN:01433190), Managing Director & CEO of the Bank retires by rotation at the ensuing AGM and being eligible, has offered himself for re-appointment. The re-appointment of Mr. Rishi Gupta is being put up for your approval at the ensuing AGM.

The profile and particulars of experience, attributes, skills of Mr. Rishi Gupta together with his other directorships and committee memberships in terms of Regulation 36 of SEBI Listing Regulations and SS-2 issued by the Institute of Company Secretaries of India forms part of the Notice of the 9^th AGM.

Declaration of Independence

All Independent Directors (“IDs”) of the Bank have submitted a declaration that each of them meets the criteria of independence as provided in Section 149(6) of the Act read with Rules framed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations. There has been no change in the circumstances affecting their status as IDs of the Bank. In the opinion of the Board, the IDs possess the requisite integrity, experience, expertise and proficiency required under all applicable laws and the policies of the Bank.

All IDs of the Bank have complied and affirmed to abide by Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended, with respect to enrolling their name in the online databank of independent directors maintained by Indian Institute of Corporate Affairs (“IICA”) and qualifying the online proficiency self-assessment test, as applicable.

Key Managerial Personnel and changes therein

As of March 31, 2025 following were the ‘Key Managerial Personnel’ pursuant to the provisions of Section 203 of the Act:

Mr. Rishi Gupta

Managing Director & CEO

Mr. Ketan Merchant

Chief Financial Officer

Mr. Basavraj Loni

Company Secretary & Compliance Officer

Mr. Basavraj Loni resigned from the services of the Bank with effect from May 31, 2025.

POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

The appointment of Directors and Key Managerial Personnel is in accordance with the provisions of the Companies Act, 2013, SEBI Listing Regulations, Banking Regulation Act, 1949 and RBI guidelines on appointment/re-appointment of Directors.

In accordance with the provisions of Section 178(3) of the Act read with rules made thereunder, SEBI Listing Regulations and applicable RBI guidelines dated November 04, 2019 on Compensation of Whole-Time Directors/ Chief Executive Officers/ Material Risk Takers and Control Function staff, the Board of Directors has formulated and adopted a comprehensive Compensation Policy which inter-alia covers criteria for remuneration of its Directors, Key Managerial Personnel, Material Risk Takers and Senior Management Personnel of the Bank.

The proposals for appointment/re-appointment of Directors are submitted to the NRC along with requisite documents/ disclosures received in the prescribed format from proposed candidates as Director. The NRC carries out the fit and proper assessment after ascertaining the veracity of documents submitted, experience and qualifications required for the post and if deems fit, recommends the profile of the proposed candidate for appointment to the Board for its approval.

The terms of reference of the NRC are available on the website of the Bank at https://web4.finobank.com/investors/corporate-governance#code-policies.

The NRC and the Board ensures that the remuneration to be paid to the proposed appointee is in accordance with the Compensation Policy of the Bank and applicable RBI guidelines issued in this regard. During FY2024-25, the Board reviewed the Compensation Policy, which regulates the appointment and remuneration of Directors, Key Managerial Personnel, Material Risk Takers and Senior Management Personnel of the Bank.

Remuneration of Directors, Key Managerial Personnel, Material Risk Takers and Senior Management Personnel are reviewed by the NRC and approved by the Board in accordance with the applicable laws. The Compensation Policy of the Bank is available on the Bank’s website at https://web4.finobank.com/ investors/corporate-governance#code-policies.

MEETINGS OF THE BOARD AND COMMITTEES

In compliance with the statutory requirements, the Board has eight mandatory Committees viz. Audit Committee, Nomination & Remuneration Committee, Corporate Social Responsibility and Environmental, Social, and Governance Committee, Risk & Asset Liability Management Committee, Stakeholders Relationship Committee, IT Strategy Committee, Customer Service Committee and Special Committee of Board on Fraud Monitoring. The Bank also has three operating/ special purpose Committees for better administration viz. Committee of Directors (Operations), Strategic Investment Committee and Business & Corporate Restructuring Committee.

The Board met 07 (seven) times during the year and the details of meeting dates, attendance etc. are given in the Corporate Governance Report.

All the recommendations made by all Board Committees were accepted by the Board. A detailed update on the composition, governance and terms of reference of Board Committees, attendance of Directors at Board and Committee meetings held during FY2024-25 is provided in the Corporate Governance Report forming part of this Annual Report.

BOARD PERFORMANCE EVALUATION

In accordance with the provisions of the Act and SEBI Listing Regulations, the annual Performance Evaluation of the Board, its Committees, Part-time Chairperson, Managing Director & CEO and individual Directors has been carried out for the year under review. The performance evaluation was carried out internally through circulation of questionnaires covering various aspects of the performance of the Board and its Committees, including composition, roles and responsibilities, Board processes, quality and flow of information etc. The responses received to the questionnaires were discussed at the Independent Directors meeting held on May 27, 2025, NRC and Board meetings held on May 29, 2025 and performance of Board as a whole including its Committees and individual Directors was found to be satisfactory. The areas for improvement were also discussed for implementation.

The policy on the Board’s Evaluation framework is made available on the Bank’s website at https://web4.finobank.com/ investors/corporate-governance#code-policies.

SUCCESSION PLANNING

Pursuant to the recommendation of NRC, the Board has framed a Policy on Succession Planning at the Board and Senior Management levels. The Policy is periodically reviewed by the NRC and the Board. The Board composition and the desired skill sets/ areas of expertise at the Board level are continuously reviewed and vacancies, if any, are reviewed in advance through a systematic due diligence process.

Succession planning at Senior Management levels, including business and assurance functions, is continuously reviewed to ensure continuity and depth of leadership at one level below the Managing Director & CEO. Successors are identified prior to the position being vacant to ensure a smooth and seamless transition. In the event of any unexpected occurrence in respect of any member in the senior management team, the next person as per the organisation chart and hierarchy shall take interim charge of the position subject to the approval of the NRC, pending a regular appointment in terms of the succession plan. The Policy on Succession Planning is made available on the Bank’s website at https://web4.finobank.com/investors/ corporate-governance#code-policies.

FAMILIARISATION PROGRAMME

In accordance with Regulation 25(7) of the Listing Regulations and RBI guidelines, various training programmes were organized for the Board Members, which inter-alia covered topics related to corporate governance, generative artificial intelligence & risk management and overview of the fintech functions.

The details of familiarization programme for Independent Directors is available on the Bank’s website at https://web4. finobank.com/investors/corporate-governance#code-policies.

DIRECTOR’S RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(3)(c) of the Act, it is hereby confirmed that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b. the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as on March 31, 2025 and of the profit of the Bank for that period;

c. the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

d. the Directors have prepared the annual accounts on a going concern basis;

e. the Directors have laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and

f. the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

INTERNAL CONTROLS AND THEIR ADEQUACY

The Bank has an Internal Control System commensurate with the size, scale and complexity of its operations. Internal Audit Control System ensures that the regular internal audits are conducted at both the branches and other functional areas. The findings are then taken up by the Audit Committee along with management response for suitable action. The Bank has an adequate and effective Internal Audit System, covering on a continuous basis, the entire gamut of operations and services spanning all locations, business and functions. The Audit Committee monitors the Internal Audit System at regular intervals and directs necessary steps to further improve the Internal Control System.

AUDITORS

Statutory Central Auditors and their Report

M/s. A P Sanzgiri & Co, Chartered Accountants (ICAI Firm Registration Number: 116293W) the Statutory Central Auditors of the Bank have conducted Statutory Audit of the Financial Statements of the Bank for the year ended March 31, 2025. The Notes referred in the Auditors’ Report are self-explanatory. The Auditors’ Report forms an integral part of this Annual Report. There are no qualifications or reservations or adverse remark or disclaimers given by the Statutory Central Auditors.

The total fees paid to the Statutory Central Auditors of the Bank for the financial year ended March 31, 2025 is disclosed in Note No. 55 to Financial Statements for the financial year ended March 31, 2025 forming part of this Annual Report.

The tenure of M/s. A P Sanzgiri & Co, Statutory Central Auditors expires at the ensuing AGM of the Bank.

As recommended by the Audit Committee, the Board has proposed the appointment of M/s. Bilimoria Mehta & Co., Chartered Accountants (FRN 101490W) as the Statutory Central Auditors of the Bank for a tenure of three years to hold office from the conclusion of 9^th(ninth) Annual General Meeting (“AGM”) until the conclusion of the 12^th (twelfth) AGM of the Bank. Their appointment has been approved by RBI on June 13, 2025 and is being put up for your approval at the ensuing AGM.

M/s. Bilimoria Mehta & Co., have confirmed that they satisfy the independence criteria and other eligibility norms required under the applicable laws and the Code of Ethics issued by the Institute of Chartered Accountants of India.

Secretarial Auditors and their Report

In compliance with the provisions of Section 204 of the Act and the rules framed thereunder, M/s. DM & Associates Company Secretaries LLP, the Secretarial Auditors of the Bank, conducted the Secretarial Audit for the financial year ended March 31, 2025. There were no qualifications made by the Secretarial Auditors in their Report. The Secretarial Audit Report for FY2024-25 is annexed as Annexure-1 to this Report.

Pursuant to Regulation 24A of the Listing Regulations read with Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Bank based on recommendation of the Audit Committee proposed the appointment of M/s. Alwyn Jay & Co., Company Secretaries (Firm Registration No.: P2010MH021500) as the Secretarial Auditors of the Bank for a term of 5 (five) consecutive years, commencing from FY2025-26 till FY2029-30, subject to approval of members. Accordingly, a resolution seeking your approval for the appointment of M/s. Alwyn Jay & Co. as Secretarial Auditors is being put up in the Notice of the 9^th AGM. M/s. Alwyn Jay & Co., have confirmed their eligibility under Section 204 of the Act and the rules framed thereunder and Regulation 24A of the SEBI Listing Regulations for appointment as Secretarial Auditors of the Bank. As required under the SEBI Listing Regulations, the Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of The Institute of Company Secretaries of India.

Cost Auditor

The provisions for maintenance of cost records as specified by the Central Government under Section 148(1) of the Act are not applicable to the Bank.

Internal Auditor

As per the provisions of Section 138 of the Act read with Rule 13 of the Companies (Accounts) Rules, 2014, the Internal Auditors report was presented to the Audit Committee on a quarterly basis. The scope, functioning, periodicity and methodology for conducting the Internal Audit have been formulated under the applicable RBI guidelines and in consultation with the Audit Committee.

REPORTING OF FRAUDS

There was no instance of fraud during the year under review, which required the Statutory Auditors to report to the Audit Committee and / or Board under Section 143(12) of Companies Act, 2013 and Rules framed thereunder.

Further, during the year under review, the Statutory Auditors of the Bank have not reported any instance of fraud committed in the Bank by its officers or its employees.

LOANS, GUARANTEES AND INVESTMENTS

The particulars of investments made by the Bank are disclosed in Note no. 2 of notes forming part of financial statements.

During the year under review, no loans or guarantees were given or security provided on any loans or guarantees and hence, no disclosure is required to be made thereon.

RELATED PARTY TRANSACTIONS

All the Related Party Transactions (“RPTs”) that were entered into during the financial year were on arm’s length basis and were in the ordinary course of business. Prior omnibus/specific approvals for transactions were also obtained from the Audit Committee for the RPTs which are repetitive in nature as well as for the normal banking transactions which cannot be foreseen. A statement giving details of all RPTs entered pursuant to the omnibus approval granted is placed before the Audit Committee for their review on a quarterly basis.

The Bank has not entered into any material financial or commercial transactions with any related parties as per AS-18 and the SEBI Listing Regulations that may have potential conflict with the interest of the Bank at large.

In terms of Regulation 23(9) of the SEBI Listing Regulations, the Bank submits the disclosure of RPTs in the prescribed format on a half yearly basis to the Stock Exchanges and updates its website accordingly.

There were no material transactions with related parties, which were not in the ordinary course of the business nor were there any transactions which were not on arm’s length basis. Hence, pursuant to Section 134(3)(h) of the Act, read with Rule 8(2) of the Companies (Accounts) Rules, 2014, there are no RPTs to be reported under Section 188(1) of the Act. Hence, e-Form AOC-2 is not applicable to the Bank.

Pursuant to the provisions of the Act and the Rules made thereunder and SEBI Listing Regulations, the Bank has in place a Board approved policy on related party transactions. The said policy is also uploaded on the Bank’s website at https://web4. finobank.com/investors/corporate-governance#code-policies.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO

Your Bank remains steadfast in its commitment to sustainable growth, energy efficiency, and technological innovation. By integrating cutting-edge digital solutions with eco-conscious practices, the Bank continues to enhance operational

efficiency, reduce environmental impact, and deliver superior customer experiences.

A. Energy Conservation Initiatives

In line with global sustainability goals, the Bank has

implemented several measures to optimize energy

consumption across its operations:

i. Payments Bank

¦ Green Infrastructure: Migrated to energy-efficient servers with capability of cloud-based solutioning, reducing on-premise data centre dependency and lowering carbon footprint.

¦ Paperless Banking: Expanded digital on-boarding (e-KYC, Video KYC) and electronic documentation. Paperless banking is the core, on which entire banking solutioning is being built up.

¦ Smart Branch Operations: Now electricity and water consumption monitoring system is in place though it is at nascent stage at all our offices to keep this under check.

¦ Core Business Model: Allows the small entrepreneurs and shop owners to enable their outlets to offer basic neighbourhood banking. These banking correspondents spread across 97% of India''s pincodes serve the masses in their neighbourhood, allowing them to save on travel, time and fuel.

B. Technology Absorption & Innovation

The Bank has aggressively embraced digital transformation,

ensuring seamless adoption of emerging technologies.

1. The Bank’s R&D focus remains on scalability, security, and customer-centric innovation:

¦ API Banking & Fintech Partnerships

¦ Generative AI, Data Science & Analytics

¦ Deployed predictive analytics for hyper-personalized customer offers, risk models to identify mule accounts and fraudulent transactions.

¦ Enabled Machine Learning (ML) and Artificial Intelligence (AI) libraries on our Big Data Hadoop platform that allows our data scientists to work with higher number of model parameters. This in turn has improved the robustness of the deployed ML models and also reduced the time to go-live.

¦ Our pioneering efforts towards deploying ML models to detect anomalous transaction patterns helped identify mule accounts with high accuracy across 70 transaction parameters. This in turn helped minimize fraud risk.

¦ Automation & Efficiency:-Scaled Robotic Process Automation (RPA) for back-office operations (account verification, payment verification etc).

¦ Workflow engine for automation reconciliation process.

¦ STP process with security enablement for automation and data security.

2. Digital & Self-Service Channels:

¦ Cash Bazar 2.0: The on-demand cash platform is being upgraded with real time liquidity tracking of rural markets to locate merchants with ease for B2C and B2B.

¦ Mobile Banking Suite: Biometric login and an enhanced platform with additional features for inclusive banking.

3. Cyber security & Future readiness:

¦ Next-Gen SOC (Security Operations Center): 24/7 threat monitoring with AI-driven anomaly detection.

¦ Disaster Recovery (DR): Achieved 99.99% uptime with multi-cloud redundancy and biannual DR drills.

¦ Implementation of various perimeter security, End point security and Forensic mechanism for monitoring and review mechanisms.

C. Future Roadmap

1. AI-First Strategy: Expanding generative AI for:

¦ Customer Service

¦ Accurate Predictive Analysis

¦ FRM and AML

¦ Security Ops

¦ CRM Platform for Channel, Product and Call Centre

¦ Reconciliation

¦ Data Management

2. ESG Strategy:

Our purpose is to drive financial inclusion while fostering trust, sustainability, and community empowerment. Guided by our vision and mission, we strive to balance profitability with long-term environmental and social impact. Through innovative, customer-centric, and digitally enabled banking solutions, we promote equity, enhance financial accessibility, and contribute to a more sustainable and inclusive future for all.

As we progress on executing our ESG strategy with ethical governance, measurable targets and stakeholder engagement, the objective will be to boost operational stability, enhance business performance and build trust among stakeholders. Commitment to financial inclusion, responsible growth and value creation remain at the core of our ESG strategy.

D. Foreign Exchange Earnings and Outgo

During the year under review, there were no foreign exchange earnings, however, there was foreign exchange outgo of H0.74 Crore.

By harmonizing technology absorption, energy conservation, corporate governance and strategic innovation, the Bank is poised to lead the next wave of sustainable, digital-first banking.

RISK MANAGEMENT

The Bank being a Payments Bank is required to largely follow/ implement directives issued by RBI for scheduled commercial banks in addition to those forming part of the operating guidelines for Payments Banks. Accordingly, the Bank has adopted risk management processes to identify, assess, monitor, manage and mitigate risks in its day-to-day activities/functions through the effective use of processes, information and technology.

The risk management process is monitored under the various Risk Management Policies and the delegation matrix as approved by the Board. The Board is supported by Board Committees, the management team, and Board delegated executive level Committees as part of the risk governance framework. The Board has an oversight of the management’s efforts to balance growth and prudent risk management, while creating value for stakeholders.

Pursuant to RBI Regulations, the Bank has constituted a Risk & Asset Liability Management (“RALM”) Committee of the Board and as mandated by the regulatory provisions, the Bank has appointed a Chief Risk Officer, who administers the risks associated key verticals through dedicated divisions i.e. Market Risk, Operational Risk, Fraud Risk and other Risks under the aegis of the Board approved risk management policies and in accordance with the approval and responsibility delegation matrix.

The details of the RALM Committee are disclosed in the Corporate Governance Report forming part of this Annual Report and the terms of reference are available on the Bank''s website at https:// web4.finobank.com/investors/corporate-governance#code-policies.

The risk management framework within the Bank is a layered structure and broadly consists of the following aspects for effective risk management across the Bank:

(a) Operational Risk Management

The Bank is exposed to significant operational risk viz. risks arising due to use of technology, introduction of new products/services, processes, channels like mobile, internet banking, cash handling, etc. The Bank’s operational risk management policies provide guidance on operational risk management issues and serves as a one-point reference and creates awareness amongst all employees within the Bank. The policies set out the broad parameters for identification

of various operational risks that the Bank is exposed to on an ongoing basis and to put in place systems and procedures to mitigate such risks.

For the effective management of operational risks, the Bank has constituted an Operational Risk Management Committee (“ORMC”), an Executive Committee that supports the RALM Committee. The main functions of the ORMC are to monitor and ensure appropriateness of operational risk management and recommend suitable control measures for mitigating the same besides monitoring them.

For the effective management of fraud risk, the Bank has constituted a Fraud Risk Management Committee (“FRMC”), an Executive Committee that supports the Special Committee of the Board for Fraud Monitoring and Audit Committee. The main functions of the FRMC are to monitor and ensure appropriateness of fraud risk management and recommend suitable control measures for mitigating the same besides monitoring them.

The Bank also outsources certain functions / activities to third parties subject to compliance with RBI guidelines. These functions/activities and associated issues are being overseen by the Outsourcing Committee, an Executive Committee that supports the RALM Committee.

(b) Market Risk, Liquidity and Asset Liability Management

The Bank is significantly exposed to market risk, i.e. possibility of loss caused by changes in the market variables in addition to liquidity and mismatches in asset liability. Your Bank has put in place a Board approved Market Risk Management, Asset Liability Management (ALCO) & Investment policies aligned with RBI regulations and operating guidelines governing Payments Banks and two Executive level Committees, viz. Investment and Market Risk Committee and ALCO that support the RALM Committee in dealing with the day-to-day risk matters, associated issues/ concerns, if any, in a comprehensive manner.

(c) IT Risk Management

The Bank has put in place adequate perimeter level security protection devices, internal data protection solutions and a 24x7 monitored Security Operations Centre (“SOC”). Various security solutions such as threat monitoring and subscription to other global solutions are put in place to monitor and act on any critical alerts. However, cyber threats are evolving and various types of attacks are executed such as ‘Zero Day’ and many new variants of malware attacks. Any of the new variant attacks may impact the network or data protection. To mitigate such risks on the technology stack, adequate security crisis management processes are in place as per regulatory requirements and internal processes. Further, the Bank has a pool of technical resources which faces the risk of attrition. To mitigate this risk, the Bank has a set of hiring and training process with multiple technology streams.

The Bank has put industry standard perimeter technologies, end point protection mechanism and forensic tools to strengthen the security posture and monitoring mechanism.

For the effective management of IT Risk, the Bank has constituted Information System and Security Committee (“ISSC”) as an Executive Committee that supports the IT Strategy Committee dealing with the day-today affairs, associated issues/concerns, if any, in a comprehensive manner.

(d) Reputation Risk Management

Your Bank has identified Reputation Risk as one of the material risks which is periodically monitored in terms of its sources and risk level.

(e) Compliance Risk Management

Compliance risk is the risk of failure (or perceived failure) by the Bank to comply with applicable laws, regulations, guidelines and standards, leading to damage to the reputation of the Bank, legal or regulatory sanctions, or financial loss. The Bank has a Compliance Policy to ensure the highest standards of compliance. A dedicated team of subject matter experts work to ensure active compliance risk management and monitoring. The team also advises on regulatory matters. The focus is on identifying and reducing risk by rigorously testing products and putting in place robust internal policies. Internal policies are reviewed and updated periodically as per agreed frequency or based on market actions or regulatory guidelines/actions.

For the effective management of Compliance Risk, the Bank has constituted Committee of Executives (“COE”) an Executive Committee that supports the Audit Committee dealing with the day-to-day compliance risks, associated issues/concerns, if any, in a comprehensive manner.

CORPORATE SOCIAL RESPONSIBILITY

The Bank has in place a Corporate Social Responsibility (“CSR”) policy and constituted CSR and ESG Committee in accordance with the provisions of Section 135 of the Act read with rules framed thereunder and Schedule VII to the Act. The CSR policy outlines the Bank’s philosophy to play a positive role in the community at large and consider the environmental and social impact of business decisions in which it operates. The CSR Policy is available on Bank’s website at https://web4.finobank.com/ investors/corporate-governance#code-policies.

The key areas identified by the Bank include eradicating hunger, promoting health care, primary education and skill development.

In terms of the provisions of the Act, for FY2024-25, the Bank has spent H1.30 Crore (including the set off of the excess amount spent by the Bank in the previous financial year) based on its commitment to CSR programmes.

The Annual Report on CSR activities as prescribed under the Act and rules framed thereunder is annexed as Annexure - 2 to this Report.

The details of the CSR Committee are disclosed in the Corporate Governance Report forming part of this Annual Report and its terms of reference are available on the Bank’s website at https://web4.finobank.com/investors/ corporate-governance#code-policies.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Bank has formulated and adopted a Policy on Prevention of Sexual Harassment of Women at workplace. The Bank has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. No complaints were pending with the Internal Complaints Committee for more than ninety days. The information as required pursuant to Rule 8 of Companies (Accounts) Rules, 2014 relating to complaints received, redressed and pending during FY2024-25 forms part of the Corporate Governance Report.

Further, your Bank is in compliance with the provisions of the Maternity Benefit Act, 1961.

VIGIL MECHANISM / WHISTLE BLOWER

The Bank has implemented a Whistle Blower Policy in compliance with the provisions of the Act and SEBI Listing Regulations. Pursuant to this policy, the Whistle Blowers can raise concerns relating to reportable matters (as defined in the policy) such as breach of Fino Payments Bank’s Code of Conduct, employee misconduct, fraud, illegal unethical imprudent behaviour, leakage of Unpublished Price Sensitive Information, corruption, safety and misappropriation or misuse of Bank’s funds/ assets etc. The Whistle Blower Policy is available on the Bank’s website at https://web4.finobank.com/investors/corporate-governance#code-policies.

Further, the mechanism adopted by the Bank encourages the Whistle Blower to report genuine concerns or grievances and provides for adequate safeguards against victimization of Whistle Blower to those who avail such mechanism and also provides for direct access to the Chairperson of the Audit Committee.

The Audit Committee reviews the functioning of the Vigil Mechanism from time to time. The report of Whistle Blower complaints is placed before the Audit Committee on a quarterly basis. None of the Whistle Blowers has been denied access to the Audit Committee.

The Bank was in receipt of 1 Whistle blower compliant during the year under review and the same was investigated thoroughly. The case was closed after taking appropriate action. There was no complaint pending as on March 31, 2025.

CORPORATE GOVERNANCE

The Bank’s activities are carried out in accordance with the good Corporate Governance practices and the Bank is constantly striving to make them better with time. The Bank believes that governance framework and good practices helps in creating right culture and in turn enhances long-term sustainable value for all its stakeholders. The Bank adheres to the Corporate Governance requirements set out by the Securities and Exchange Board of India (“SEBI”)/ Ministry of Corporate Affairs (“MCA”)/RBI. The Corporate Governance Report for financial year 2024-25 along with a certificate issued by M/s. DM & Associates Company

Secretaries LLP, confirming the compliance to applicable requirements related to Corporate Governance as stipulated under the SEBI Listing Regulations is annexed to the Corporate Governance Report which forms part of this Annual Report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

In terms of Regulation 34(2)(f) of the SEBI Listing Regulations, as amended the Business Responsibility and Sustainability Report describing the initiatives taken by the Bank from an Environmental, Social and Governance perspective is presented in a separate section which forms a part of this Annual Report.

DISCLOSURE OF AGREEMENTS BINDING THE BANK

In terms of Regulation 30A(2) of the SEBI Listing Regulations, agreements specified in clause 5A of paragraph A of Part A of Schedule III of SEBI Listing Regulations, along with its salient features, are available at the website of the Bank at www. finobank.com.

COMPLIANCE WITH SECRETARIAL STANDARDS

During the year under review, the Bank has complied with the applicable Secretarial Standards on meetings of the Board of Directors (SS-1) and Secretarial Standard on General Meetings (SS-2) issued by the Institute of Company Secretaries of India.

STATUS OF IND AS IMPLEMENTATION

As per RBI circular RBI/2015-16/315 DBR.BP.BC. No.76/21.07.001/2015-16 dated February 11, 2016,

Implementation of Indian Accounting Standards (“Ind AS”), Banks are advised that scheduled commercial banks (excluding RRBs) shall follow the Indian Accounting Standards as notified under the Companies (Indian Accounting Standards) Rules, 2015, subject to any guidelines or directions issued by the RBI in this regard. Banks in India currently prepare their financial statements as per the guidelines issued by RBI, the Accounting Standards notified under Section 133 of the Act and generally accepted accounting principles in India (“Indian GAAP”). In January 2016, the MCA issued the roadmap for implementation of new Ind AS, which was based on convergence with the International Financial Reporting Standards (IFRS) for scheduled commercial banks, insurance companies and non-banking financial companies (NBFCs). In March 2019, RBI deferred the implementation of Ind AS for banks till further notice as the recommended legislative amendments were under consideration of the Government of India. The Bank had undertaken preliminary diagnostic analysis of the differences between Indian GAAP and Ind AS and shall proceed for ensuring the compliance as per applicable requirements and directions in this regard.

PARTICULARS OF EMPLOYEES

The information in terms of Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure -3 to the Board’s Report.

Further, the statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended, forms part of this Annual Report; however, in terms of section 136(1) of the Act, the Annual Report is being sent without this Annexure. This Annexure is available for inspection and any member interested in obtaining a copy of the statement may write to the Secretarial Department of the Bank at [email protected].

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report for the year under review, as stipulated under Regulation 34 of the SEBI Listing Regulations is presented in a separate section and forms part of this Annual Report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNALS

During the year under review, no material orders have been passed by the Regulators/Courts/Tribunals which would impact the going concern status of the Bank and its future operations.

The Bank has not made any application under the Insolvency and Bankruptcy Code, 2016 and no proceeding is pending under the said Code.

Further, no one time settlement was done with any Bank/ Financial Institution with respect to loans taken by the Bank, hence disclosure on the difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking such loans is not applicable.

ACKNOWLEDGEMENT AND APPRECIATION

The Board of Directors of your Bank would like to place on record their gratitude for the guidance and co-operation received from the Reserve Bank of India and other regulatory bodies and thank all the stakeholders of the Bank including its investors, customers, merchants, bankers, shareholders, vendors, registrars and all other valued partners for their continued support.

The Board would like to express its appreciation for the sincere and dedicated efforts put in by all the employees of the Bank, exhibiting strong professionalism, teamwork and initiative and look forward to their continued contribution in building this Bank into a great institution.

---

Mar 31, 2024

Your Board of Directors are pleased to present the Eighth (8^th) Annual Report of Fino Payments Bank Limited (“Bank”) covering business and operations together with the Audited Financial Statements for the financial year ended March 31, 2024.

FINANCIAL HIGHLIGHTS

The financial highlights for the year under review are presented below:

(H in Crore)

Particulars	2023-24	2022-23
Balance Sheet:
Savings Bank Deposits	1,397.78	911.58
Current Account Deposits	14.76	5.56
Total Assets/ Liabilities	3,419.11	2,466.40
Total Income	1,478.38	1,229.91
Less: Expenses	1,287.49	1,093.83
Profit /(Loss) before Interest, Depreciation and Tax	190.89	136.08
Less: Depreciation	53.45	41.85
Less: Finance Charges	51.14	29.15
Profit /(Loss) before Tax and prior period items	86.30	65.08
Profit /(Loss) before Tax	86.30	65.08
Taxes	0.08	-
Net Profit /(Loss) after Tax	86.22	65.08
Other Comprehensive Income	-	-
Balance of Profit /(Loss) carried forward to next year	86.22	65.08
Appropriations
Transfer to Statutory Reserve	21.56	16.27
Transfer to Investment Reserve	9.86	23.90

BUSINESS OPERATIONS AND STATE OF AFFAIRS OF THE BANK

The brief details of the business operations and state of affairs of the

Bank during financial year ended March 31, 2024 are given below:

1. Throughput grew by a whopping 40.58% year-on-year basis in FY24.

2. The Bank processed 211.03 Crore transactions in FY24, a 74.85% growth compared to the previous year (Almost 1% of those who walk-in to transact eventually commence a relationship with the Bank).

3. Digital throughput grew exponentially by 170.75% to touch nearly 36.98% of overall throughput in FY24 at H1,32,575.90 Crore.

4. The Bank opened approx. 0.32 Crore current and savings accounts of customers in FY24, of which 98.62% were subscription based accounts.

5. The Bank delivered a robust ROE of 14.74% in FY 24.

6. Merchant network went up by 28.20%, the Bank’s physical outreach reached to 0.18 Crore banking points in FY 24.

Further, the total revenue of the Bank was H1,478.38 Crore for the year ended March 31, 2024 as compared to H1,229.91 Crore in previous financial year. The Bank’s Profit after tax stood at H86.22 Crore for the year ended March 31, 2024 as compared to H65.08 Crore in previous financial year.

Your Bank is a public limited company and is registered with Reserve Bank of India (“RBI”) to carry on the business of Payments Bank in India. The Bank became the Scheduled Bank with effect from January 01, 2021 vide Notification DoR.NBD. No.2138/16.03.005/2020-21 dated January 01, 2021 and published in the Gazette of India (Part III - Section 4) dated February 13 -February 19, 2021 and continues to comply with all the applicable regulations prescribed by RBI, from time to time.

A detailed operational performance of the Bank during the year has been discussed in the Management Discussion and Analysis Report which forms an integral part of this Annual Report.

CHANGE IN NATURE OF BUSINESS

During the year under review, there has been no change in nature of business of the Bank.

However, the Board at its meeting held on July 28, 2023 approved the proposal for transition of the Bank into a Small Finance Bank (“SFB”) subject to fulfilling all the necessary requirements and obtaining the necessary statutory / regulatory approvals.

Accordingly, the Bank has filed an application for transition into SFB with the RBI. Approval of RBI is awaited.

The Bank believes that it has the expertise, technology and team to cater to additional dimensions of the banking sector and contribute further towards the Government led initiatives of financial inclusion.

CREDIT RATING

The details of credit rating as on March 31, 2024 along with its outlook are given hereunder:

Rating	Outlook	Rating Agency	Comments
Long Term: [ICRA] BBB	Stable	ICRA Limited	Instruments with this rating are considered to have moderate degree of safety regarding timely servicing of financial obligations.
Short Term: [ICRA] A2	Stable	ICRA Limited	Instruments with this rating are considered to have strong degree of safety regarding timely payment of financial obligations.

ICRA Limited has re-affirmed credit rating of [ICRA] BBB (Stable) and [ICRA] A2 , for Long-term and short-term overdraft facilities of the Bank, respectively, vide its press-release dated April 30, 2024.

DIVIDEND

In accordance with Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (“SEBI Listing Regulations”), the Bank has formulated a Dividend Distribution Policy, which ensures a fair balance between rewarding its Members and retaining enough capital for the Bank’s future growth and expansion plan. The Dividend Distribution Policy is available on the Bank’s website at https://web4.finobank.com/investors/corporate-governance#code-policies

The Bank is in growing stage and on account of brought forward losses of previous years of H191.96 Crore and keeping in view of required funds to support its future growth, your Directors do not recommend any dividend for the financial year ended March 31, 2024.

TRANSFER TO RESERVES

The Bank has appropriated H21.56 Crore towards Statutory Reserves for the financial year ended March 31, 2024.

CAPITAL STRUCTURE

During the year under review, the authorised share capital of the Bank was increased from H85,00,00,000/- (Rupees Eighty Five Crore Only) divided into 8,50,00,000 (Eight Crore and Fifty Lakhs)

Equity Shares of face value of H10/- (Rupees Ten Only) each to H90,00,00,000/- (Rupees Ninety Crore only) divided into 9,00,00,000 (Nine Crore) Equity Shares of face value of H10/- (Rupees Ten Only) each by creation of additional 50,00,000 (Fifty Lakhs) Equity Shares having face value of H10/- (Rupees Ten Only) each aggregating to H5,00,00,000 (Rupees Five Crore only) ranking pari-passu with the existing equity shares of the Bank.

During the year under review, the Bank has not raised any capital, therefore the issued, subscribed and paid up share capital of the Bank as on March 31, 2024 was H83,21,43,020/- (Rupees Eighty Three Crore Twenty One Lakhs Forty Three Thousand Twenty Only) comprising of 8,32,14,302 (Eight Crore Thirty Two Lakh Fourteen Thousand Three Hundred and Two) Equity Shares of face value of H10/- (Rupees Ten Only) each.

CAPITAL ADEQUACY RATIO

Your Bank has a strong capital adequacy ratio. As on March 31, 2024, the Capital to Risk Assets Ratio (“CRAR”) of your Bank was 74.50% which is well above the minimum requirement of 15% CRAR prescribed by the RBI.

Out of the above, Tier I capital adequacy ratio stood at 70.05% and Tier II capital adequacy ratio stood at 4.45%.

STRATEGIC INITIATIVES DURING THE YEAR UNDER REVIEW AND TILL THE DATE OF THIS REPORT

i. ACQUISITION OF 7.98% STAKE IN PAYSPRINT PRIVATE LIMITED

Pursuant to the approval of the Board and the Share Subscription and Shareholders’ Agreement executed by the Bank with PaySprint Private Limited (“PaySprint”) to acquire upto 12.19% equity shares of PaySprint in two tranches, the Bank has invested H2.5 Crore representing 7.98% of paid up capital of PaySprint i.e. first tranche of the proposed investment. The second tranche of remaining investment upto H1.5 Crore representing 4.21% of paid up capital of PaySprint is subject to RBI approval, as applicable, and at the sole discretion of the Bank.

The investment is in continuation to several in-house initiatives by the Bank that are already underway towards building a digital ecosystem for its customers as part of its Fino 2.0 journey. This investment will further strengthen your Bank product portfolio into Application Programming Interface (API) for business-to-business (B2B) integration. The Bank intends to develop API stacks in the following sectors: 1) Financial 2) Banking 3) Payment 4) Collection 5) Insurance 6) Lending 7) Investment 8) Travel 9) Verification and 10) Health Care API stacks.

ii. PROPOSAL FOR GROUP CORPORATE RESTRUCTURING

The Bank had received a letter dated July 28, 2023 from Fino PayTech Limited (“FPL”), the Holding Company of the Bank, regarding a group corporate restructuring proposal. In view of the said letter, your Board has constituted Business & Corporate Restructuring Committee (“BCRC”) to explore the

possibility of group corporate restructuring and evaluate the implications and other considerations of the same.

The corporate restructuring proposal, as and when approved by the Board, remains subject to approvals and consents as may be required from the regulators, statutory bodies and relevant stakeholders under applicable law.

UTILIZATION OF NET PROCEEDS FROM THE FRESH ISSUE IN INITIAL PUBLIC OFFER (“IPO”)

The net proceeds from the fresh issue in the IPO were utilised towards the objects stated in the Red Herring Prospectus dated October 22, 2021 i.e. towards augmenting its Tier - I capital base to meet its future capital requirements. Further, the proceeds from the Fresh Issue were also used towards meeting the expenses in relation to the IPO. The Bank on a quarterly basis affirms that there is no deviation in utilisation of the issue proceeds from the object stated in offer documents and submits to Stock Exchanges in compliance with the SEBI Listing Regulations.

The Bank would require additional Tier-I capital for penetration of business/ services in uncovered/ sparsely covered areas, modernization to technology (banking) platform to handle business in line with large volumes on account of growing business development of customer oriented banking/ financial products, activities to generate awareness of Bank’s products and services among targeted population and country, keeping sufficient capital meeting the regulatory/ compliance requirements to operate as a Payments Bank. This future need for capital will be met through internal accruals as well as proceeds of the issue.

EMPLOYEES STOCK OPTION SCHEMES (“ESOS”)

The Bank has formulated and implemented Fino Payments Bank Limited - Employees Stock Option Policy, 2020 (“ESOP 2020”) and Fino Payments Bank Limited - Employees Stock Option Policy, 2023 (“ESOP 2023”) with a view to attract, retain, incentivize and motivate employees of the Bank by way of rewarding their performance and promoting their increased participation in the overall corporate growth and profitability. The ESOP 2020 has been amended from time to time in view of regulatory changes/ business requirements. None of these amendments were prejudicial to the interest of the employees.

The Nomination and Remuneration Committee which also acts as a Compensation Committee (“NRC”) of the Board is entrusted with the responsibility of implementation and administration of the ESOP 2020 and ESOP 2023.

The details and disclosures as required under Regulation 14 of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (“SBEB & SE Regulations”) and circulars issued thereunder, have been uploaded on the Bank’s website at www.finobank.com under the ‘Investors’ section. The Equity Shares, if issued, under ESOP 2020 and ESOP 2023 shall rank pari-passu with the existing equity shares of the Bank.

Further, disclosure as per the ‘Guidance Note on Accounting for Employee Share-based Payments’ issued by the Institute of Chartered Accountants of India, are disclosed in the Notes to the

Financial Statements of the Bank for the financial year ended March 31, 2024, which forms integral part of this Annual Report.

The ESOP 2020 and ESOP 2023 are in compliance with the SBEB & SE Regulations. A certificate from the Secretarial Auditor of the Bank that the ESOP 2020 and ESOP 2023 have been implemented in accordance with the SBEB & SE Regulations and in accordance with the resolutions passed by the members of the Bank, shall be placed at the 8^th Annual General Meeting (“AGM”) of the Bank.

MATERIAL CHANGES AND COMMITMENTS

Apart from the details given in this Report, there were no material changes or commitments affecting the financial position of the Bank which have occurred between the end of the financial year i.e. March 31, 2024 and up to the date of this Report.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

During the year under review, the Bank was not required to transfer any fund or Equity shares to the Investor Education and Protection Fund as per the provisions of Section 125 of the Companies Act, 2013 (“Act”) read with applicable rules framed thereunder, as amended from time to time.

DEPOSITS

Being a banking company, the disclosures relating to deposits as required in accordance with Sections 73 and 74 of the Act read with Companies (Accounts) Rules, 2014 and other applicable provisions of the Act are not applicable to the Bank.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

As on March 31, 2024, the composition of the Board was in compliance with the provisions of the Act, the SEBI Listing Regulations and the Guidelines for Licensing of “Payments Banks” dated November 27, 2014 issued by the RBI and the Articles of Association of the Bank.

During the year under review, the Bank as a matter of good governance practice has reconstituted its Board Committees to align with the RBI Circular No. RBI/2021- 22/24DOR.GOV. REC.8/29.67.001/2021-22 dated April 26, 2021 on Corporate Governance in Banks - Appointment of Directors and Constitution of Committees of the Board.

The Board of the Bank is duly constituted with an optimum combination of Executive and Non-Executive Directors including Independent Directors and Women Directors. The changes in the composition of the Board that took place during the period under review were carried out in compliance with the provisions of the Act, SEBI Listing Regulations and applicable RBI Regulations.

In terms of the requirement of the SEBI Listing Regulations, the Board has identified core skills, expertise and competencies of the Directors in the context of the Bank’s businesses for effective functioning. The list of key skills, expertise and core competencies of the Board of Directors is detailed in the Corporate Governance Report.

In the opinion of the Board, all the directors as well as the directors appointed / re-appointed during the year possess the requisite qualifications, experience and expertise and hold high standards of integrity.

In terms of SEBI Listing Regulations, the Bank has received Certificate from M/s. DM & Associates Company Secretaries LLP, Practicing Company Secretaries, the Secretarial Auditor of the Bank that none of the Directors on the Board of the Bank have been debarred or disqualified from being appointed or continuing as a Director of any Company by the Securities and Exchange Board of India/ Ministry of Corporate Affairs or any such other statutory authority. The said certificate is enclosed as Annexure - A to the Corporate Governance Report.

Appointment/re-appointment of Directors made during financial year 2023-24 and till the date of this report

Based on the recommendation of the NRC, the Board and the shareholders (as applicable), approved the following appointment/ re-appointment during FY 2023-24 and till the date of this report:

1. Mr. Pankaj Kumar (DIN: 07245781) was appointed by the Board as a Non-Executive Nominee Director with effect from April 11, 2023, not liable to retire by rotation, subject to approval of Members. The Members approved the appointment of Mr. Pankaj Kumar as a Non-Executive Nominee Director of the Bank with effect from April 11, 2023, not liable to retire by rotation, through postal ballot by passing an ordinary resolution.

2. Mr. Rajat Kumar Jain (DIN: 00046053), Independent Director was appointed as the Part-time Chairperson of the Bank subject to the approval of RBI. Further, RBI vide its letter dated November 24, 2023 has approved the appointment of Mr. Rajat Kumar Jain as a Part-Time Chairperson of the Bank w.e.f. November 24, 2023 till November 01, 2025.

3. Mrs. Anita Sudhir Pai (DIN: 07651059) was appointed by the Board as an Additional Director in the capacity of Independent Director with effect from January 11, 2024. The Members approved the appointment of Mrs. Anita Sudhir Pai as an Independent Director of the Bank for a term of five consecutive years commencing from January 11, 2024 up to January 10, 2029 (both days inclusive) through postal ballot by passing a special resolution.

4. Mrs. Neeta Mukerji (DIN: 00056010) was appointed by the Board as an Additional Director in the capacity of Independent Director with effect from March 05, 2024. The Members approved the appointment of Mrs. Neeta Mukerji as an Independent Director of the Bank for a term of five consecutive years commencing from March 05, 2024 up to March 04, 2029 (both days inclusive) through postal ballot by passing a special resolution.

Re-appointment of Director retiring by rotation

In accordance with the provisions of Section 152 of the Act and the Articles of Association of the Bank, Mr. Rishi Gupta (DIN:01433190), Managing Director & CEO of the Bank retires by rotation at the ensuing AGM and being eligible, has offered himself for re-appointment. The resolution seeking the re-appointment of

Mr. Rishi Gupta forms part of the Notice convening the ensuing 8^th AGM.

The profile and particulars of experience, attributes, skills of Mr. Rishi Gupta together with his other directorships and committee memberships in terms of Regulation 36 of SEBI Listing Regulations and Secretarial Standard on General Meetings (“SS-2”) issued by the Institute of Company Secretaries of India have been disclosed in the annexure to the Notice of the AGM.

Cessation of Directors during the financial year 2023-24 and till the date of this report

Mr. Prakash Kulathu Iyer was appointed as an Independent Director of the Bank for a period of five years with effect from June 01, 2022. Mr. Prakash Kulathu Iyer resigned as an Independent Director of the Bank w.e.f. June 30, 2023.

Mr. Suresh Kumar Jain was appointed as an Independent Director of the Bank for a period of five years with effect from January 16, 2019. Mr. Suresh Kumar Jain ceased to be Independent Director of the Bank w.e.f. January 15, 2024 upon completion of his tenure.

The Board placed on record its appreciation for the valuable services and support provided by Mr. Prakash Kulathu Iyer and Mr. Suresh Kumar Jain during their tenure as Independent Directors of the Bank.

Key Managerial Personnel

As on the date of this report, the following officials of the Bank are the ‘Key Managerial Personnel’ pursuant to the provisions of Section 203 of the Act:

Mr. Rishi Gupta

Managing Director & CEO

Mr. Ketan Merchant

Chief Financial Officer

Mr. Basavraj Loni

Company Secretary & Compliance Officer

During the year under review, there has been no change in the Directors and Key Managerial Personnel of the Bank other than those disclosed above.

Declaration of Independence

All Independent Directors (“IDs”) of the Bank have submitted a declaration that each of them meets the criteria of independence as provided in Section 149(6) of the Act read with Rules framed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations. There has been no change in the circumstances affecting their status as IDs of the Bank. In the opinion of the Board, the IDs possess the requisite integrity, experience, expertise and proficiency required under all applicable laws and the policies of the Bank.

All IDs of the Bank have complied and affirmed to abide by Rule 6 (Creation and Maintenance of Databank of Persons Offering to become Independent Directors) of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended, with respect to enrolling their name in the online databank of independent directors maintained by Indian Institute of Corporate Affairs

(“IICA”) and qualifying the online proficiency self-assessment test, as applicable.

POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of Section 178(3) of the Act read with rules made thereunder, SEBI Listing Regulations and applicable RBI guidelines, the Board of Directors has formulated and adopted a comprehensive Compensation Policy which inter-alia covers criteria for appointment and remuneration of its Directors, Key Managerial Personnel, Material Risk Takers, Senior Management Personnel and other Employees of the Bank.

The proposals for appointment of Directors are submitted to the NRC along with requisite documents/disclosures received in the prescribed format from proposed candidates as Director. The NRC carries out the fit and proper assessment after ascertaining the veracity of documents submitted, experience and qualifications required for the post and if deems fit, recommend the profile of proposed candidate for appointment to Board for its approval. The NRC and the Board ensures that the remuneration to be paid to the proposed appointee is in accordance with the compensation policy of the Bank and applicable RBI guidelines issued in this regard. During the financial year 2023-24, the Board reviewed the Compensation Policy, which regulates the appointment and remuneration of Directors, Key Managerial Personnel, Material Risk Takers, Senior Management Personnel and other employees of the Bank. The terms of reference of the NRC, objectives of Compensation Policy including other details have been detailed in Corporate Governance Report annexed to the Board’s Report.

Remuneration of Directors, Key Managerial Personnel, Material Risk Takers and Senior Management Personnel are reviewed by the NRC and approved by the Board in accordance with the applicable laws. The Compensation Policy of the Bank is available on the Bank’s website at https://web4. finobank.com/investors/corporate-governance#code-policies

BOARD PERFORMANCE EVALUATION

In accordance with the provisions of the Act, SEBI Listing Regulations and RBI guidelines, the Annual Performance Evaluation of the Board, its Committees, Part-time Chairperson, Managing Director & CEO and each Director has been carried out for the year under review. The details of evaluation process of the Board, its Committees, Part-time Chairperson, Managing Director & CEO and individual Directors have been disclosed in the Corporate Governance Report forming part of this Annual Report.

The policy on the Board’s Evaluation framework is made available on the Bank’s website at https://web4.finobank.com/investors/ corporate-governance#code-policies

SUCCESSION PLANNING

Pursuant to the recommendation of NRC, the Board has framed a Policy on Succession Planning at the Board and Senior Management levels. The Policy is periodically reviewed by the NRC and the Board. The Board composition and the desired skill sets/ areas of expertise at the Board level are continuously reviewed and vacancies, if any, are reviewed in advance through a systematic due diligence process.

Succession planning at Senior Management levels, including business and assurance functions, is continuously reviewed to ensure continuity and depth of leadership at two levels below the Managing Director & CEO. Successors are identified prior to the Senior Management positions falling vacant, to ensure a smooth and seamless transition. In event of any unexpected occurrence in respect of any member in the senior management team, the next person as per the organisation chart and hierarchy shall take interim charge of the position subject to the approval of the NRC, pending a regular appointment in terms of the succession plan. The Policy on Succession Planning is made available on the Bank’s website at https://web4.finobank.com/investors/corporate-governance#code-policies

FAMILIARISATION PROGRAMME

The details about Familiarisation Programme carried out by the Bank have been disclosed in the Corporate Governance Report forming part of this Annual Report.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(3)(c) of the Act, it is hereby confirmed that:

a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b. the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as on March 31, 2024 and of the profit of the Bank for that period;

c. the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

d. the Directors had prepared the annual accounts on a going concern basis;

e. the Directors had laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and

f. the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

CODE OF CONDUCT FOR DIRECTORS INCLUDING INDEPENDENT DIRECTORS AND SENIOR MANAGEMENT PERSONNEL

The Board of the Bank has adopted a Code of Conduct for the Directors and Senior Management Personnel (“SMPs”) of the Bank in compliance of Regulation 17(5) of the SEBI Listing Regulations which sets forth the guiding principles for orderly and fair conduct by Board and SMPs.

For the financial year 2023-24, all the Board members and SMPs have affirmed the compliance with the Code and a declaration to this

effect signed by the Managing Director & CEO forms part of Corporate Governance Report annexed to the Board’s Report forming part of this Annual Report. The Code of Conduct for Directors and SMPs is disclosed on the Bank’s website at https://web4.finobank.com/ investors/corporate-governance#code-policies

MEETINGS OF THE BOARD AND COMMITTEES

In compliance with the statutory requirements, the Bank has seven mandatory Committees viz. Audit Committee, Nomination & Remuneration Committee, Corporate Social Responsibility Committee, Risk & Asset Liability Management Committee, Stakeholders Relationship Committee, IT Strategy Committee and Customer Service Committee. The Bank also has three operating/ special purpose committees for better administration viz. Committee of Directors (Operations), Strategic Investment Committee and Business & Corporate Restructuring Committee.

All the recommendations made by all Board Committees, including the Audit Committee, were accepted by the Board.

A detailed update on the composition, governance and terms of reference of Board committees, attendance of Directors at Board and Committee meetings held during financial year 2023-24 is provided in the Corporate Governance Report annexed to the Board’s Report forming part of this Annual Report.

AUDITORS

Statutory Central Auditors and their Report

M/s. A P Sanzgiri & Co, Chartered Accountants (ICAI Firm Registration Number: 116293W) the Statutory Central Auditors of the Bank have conducted Statutory Audit of the Financial Statements of the Bank for financial year ended March 31, 2024. The Notes referred in the Auditors’ Report are self-explanatory.

There are no qualifications or reservations or adverse remark or disclaimers given by Statutory Central Auditors. The Auditors’ Report forms an integral part of this Annual Report. The total fees paid to the Statutory Central Auditors of the Bank for the financial year ended March 31, 2024 is disclosed in the Note No. 60 to Financial Statements for the financial year ended March 31, 2024 forming part of this Annual Report.

M/s. A P Sanzgiri & Co, Chartered Accountants were re-appointed as the Statutory Central Auditors in the 7^th AGM for a period of two (2) years until the conclusion of the 9^th AGM of the Bank to be held in the year 2025, subject to the approval of the RBI on annual basis. Accordingly, RBI vide its letter dated July 19, 2024 has approved the re-appointment of M/s. A P Sanzgiri & Co., Chartered Accountants as the Statutory Central Auditors of the Bank for FY 2024-25.

The Statutory Central Auditors have confirmed that they satisfy the independence criteria and other eligibility norms required under the applicable laws and the Code of Ethics issued by the Institute of Chartered Accountants of India.

Secretarial Auditors and their Report

In compliance with the provisions of Section 204 of the Act and the rules framed thereunder, M/s. DM & Associates Company Secretaries LLP, the Secretarial Auditors of the Bank undertook the Secretarial

Audit for the financial year ended March 31, 2024. There were no qualifications made by the Secretarial Auditors in their Report.

The Secretarial Audit Report for financial year 2023-24 is annexed as Annexure-I to the Board’s Report.

Cost Auditor

During the year under review, the provisions for maintenance of cost records as specified by the Central Government under Section 148(1) of the Act are not applicable to the Bank and the Bank was not required to appoint Cost Auditor.

Internal Auditor

As per the provisions of Section 138 of the Act read with Rule 13 of the Companies (Accounts) Rules, 2014, the Internal Auditors presented their report to the Audit Committee on a quarterly basis. The scope, functioning, periodicity and methodology for conducting the Internal Audit have been formulated in consultation with the Audit Committee.

REPORTING OF FRAUDS

During the year under review, M/s. A P Sanzgiri & Co., Statutory Central Auditors of the Bank, has reported the details of fraud under Section 143(12) of the Act, wherein it was mentioned that there are 21 complaints received amounting to H25.27 Crore of which individually there were 7 cases which were over H1 Crore each aggregating to H20.94 Crore. The Statutory Central Auditors have reported the same to the Central Government under Section 143(12) of the Act read with circular no. NF-25013/2/2023 dated June 26, 2023 issued by National Financial Reporting Authority, Government of India (“NFRA”).

Further, during the year under review, the Secretarial Auditors of the Bank has not reported any instances of fraud committed in the Bank by its officers or its employees.

INTERNAL CONTROLS AND THEIR ADEQUACY

The Bank has an Internal Control System commensurate with the size, scale and complexity of its operations. Internal Audit Control System ensures that the regular internal audits are conducted at both the branches and other functional areas. The findings are then taken up by the Audit Committee along with management response for suitable action. The Bank has an adequate and effective Internal Audit System, covering on a continuous basis, the entire gamut of operations and services spanning all locations, business and functions. The Audit Committee monitors the Internal Audit System at regular intervals and directs necessary steps to further improve the Internal Control System.

LOANS, GUARANTEES AND INVESTMENTS

The particulars of investments made by the Bank are disclosed in Note No. 2 of notes to account.

There were no loan made, guarantee given or security provided and hence, no disclosure was required to be made herein this regard.

RELATED PARTY TRANSACTIONS

All the Related Party Transactions (“RPTs”) that were entered into during the financial year were on an arm’s length basis and were in

ordinary course of business. Transactions entered into by the Bank with related parties in the normal course of its business were placed before the Audit Committee of the Board (“ACB”). Prior omnibus/ specific approval were also obtained from the ACB for the RPTs which are repetitive in nature as well as for the normal banking transactions which cannot be foreseen. A statement giving details of all RPTs, entered pursuant to the omnibus approval so granted, was placed before the ACB for its review on a quarterly basis.

The Bank has not entered into any material financial or commercial transactions with any related parties as per AS-18 and the SEBI Listing Regulations that may have potential conflict with the interest of the Bank at large.

In terms of Regulation 23(9) of the SEBI Listing Regulations, the Bank submits the disclosure of RPTs in a prescribed format, on a half yearly basis to the Stock Exchanges and updated its website accordingly.

There were no material transactions with related parties, which were not in the ordinary course of the business nor were there any transactions which were not on an arm’s length basis. Hence, pursuant to Section 134(3)(h) of the Act, read with Rule 8(2) of the Companies (Accounts) Rules, 2014, there are no RPTs to be reported under Section 188(1) of the Act. Hence, Form AOC-2 is not applicable to the Bank.

Pursuant to the provisions of the Act and the Rules made thereunder, SEBI Listing Regulations, the Bank has in place a Board approved policy on related party transactions.

The said policy is also uploaded on the Bank’s website at https:// web4.finobank.com/investors/corporate-governance#code-policies

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO

Your Bank is committed to maintain a balance between growth and optimal utilisation of resources. Your Bank is also focused towards undertaking initiatives for absorption of technology with conservation of energy.

A. Research & Development

During the year under review, the Bank had conducted various in-house development activities in the following areas. The focus was mainly on creating generic plug & play interfaces for various transactions so that these can not only be consumed by Bank, but also can be extended to its Partners and Merchants.

i. Payments Bank

a. Teller / Merchant Application

Added value to existing applications by adding new products and enhancing existing products on Web Teller and Feet on Street. Also enabled the same for Merchant on Web and Mobile.

b. API Banking & Integrations

Considering large flow of payment services clients, the Bank has developed white label approach for on-boarding payment services clients. With this approach, plugging-in new payment services client has been

easy and faster. The Bank has also created Application Programming Interface (“API”) and Software Development Kit for Aadhar Enabled Payment Services (“AEPS”)/Micro ATM/Domestic Money Transfer/Cash Management Services transactions. These API’s are used by Bank’s Partners to integrate and initiate transactions from their own platform.

c. Extending Current Account & Saving Account

i. Implementation of subscription base products

ii. The Bank is implementing VKYC base merchant/ customer on-boarding.

iii. CASA , this is an auto sweep extended account in Partner bank.

d. Analytics

After rollout of SAS, the Bank has now extended the same to profiling customer as well as merchants. This will enhance product offering to customer and performance of merchants. The Bank endeavors to enhance it further for cross sell.

e. Other systems implemented

The Bank is implementing Gyankosh (Knowledge Management System), drop chatbot, Inventory system & Customer Relationship Management.

The Bank’s system has integrated with ClaverTap to extend its communication with merchant and customer.

Rewards points and re-admission system for merchant.

RPA - Automation implemented for Cash-In and account data verification unit activity.

ii. Self-Channels

With Digital focus, the Bank is working on implementing self-channels to enhance user experience and convenience.

a. Cash Bazar

Considering a cash demand and shortage in the field, the Bank has implemented “On-Demand” cash platform for rural area.

b. Multilingual

To increase usability, the Bank has upgraded Fino-pay platform with “Hindi” support. Going ahead it can be extended to other regional languages.

iii. Application Security

The Bank has further enhanced security for applications so as to reduce frauds implemented below security patches to applications:

> Strengthening security of applications

> Implementing EMV certification on all acquiring devices so as to support chip-based transactions.

> Dynamic key implementation

> Secured Socket Layer pinning

B. Future Readiness

Considering future load of transactions, the Bank is continuously taking steps to improve scaling capacity of its applications. Below approach is followed to achieve the same:

> Benchmarking existing application capacity by doing load testing.

> Reducing transaction hops to implement straight through transaction processing for high throughput transactions.

> Segregating critical transactions from non-financial ones so as to create a control, based on priority of transactions.

> Enhancing process so as to reduce TAT on transactions like 15-minute account activation.

i. Security

> Implementation of a 24 x 7 Security Operations Center (SOC)

> DLP (Data Leak Prevention) system deployed.

> MDM (Mobile Device Management) systems deployed for Mobile devices security.

ii. Production systems

Periodic reviews of Servers, Storage and Networks and implement the required augmentation of capacities (CPU, Memory, Storage).

Network optimizations were carried out to strengthen security and performance.

Server consolidation was done for optimization and better management. Half yearly IT DR Drills completed successfully.

C. Technology absorption

a. All Bank applications are primarily using CBS (Core Banking system) provided by “FIS” (FIS Payments and Solutions India Private Limited).

b. For digital signing of documents, the Bank is using digital signing system.

c. DMS (Document Management Server) workflows are implemented using robotic process automation.

The aforesaid Technologies have been absorbed by the Bank to the extent possible.

D. Foreign Exchange Earnings and Outgo

During the year under review, there were no foreign exchange earnings, however, there was foreign exchange outgo of H0.97 Crore.

RISK MANAGEMENT

The Bank being a Payments Bank is required to largely follow/ implement directives issued by RBI for scheduled commercial banks in addition to those forming part of the operating guidelines meant for Payments Banks. Accordingly, the Bank has adopted risk management process to identify, assess, monitor and manage risks

in its day-to-day activities/functions through the effective use of processes, information and technology.

The Risk Management Process is monitored under Risk Management Policies and the delegation matrix as approved by the Board. The Board is supported by the management team, Board committees and Board delegated executive level committees as part of the risk governance framework. The Board has an oversight of the management’s efforts to balance growth and prudent risk management, while creating value for stakeholders.

Pursuant to RBI Regulations, the Bank has constituted a Risk & Asset Liability Management (“RALM”) Committee of the Board and as mandated by the regulatory provisions, the Bank has appointed Chief Risk Officer, who administers the risk associated key verticals through dedicated divisions i.e., Market Risk, Operational Risk, Fraud Risk and other Risks under the aegis of the Board approved risk management policies and in accordance with the approval and responsibility delegation matrix.

The details of the RALM Committee and its terms of reference are disclosed in the Corporate Governance Report annexed to the Board’s Report.

The risk management framework within the Bank is a layered structure and broadly consists of the following aspects for effective risk management across the Bank:

(a) Operational Risk Management

Your Bank is exposed to significant operational risk (for instance, risks arising due to use of technology, introduction of new products/services, processes, channels like mobile, internet banking, cash handling, etc.). Bank’s operational risk management policies provide guidance on operational risk management issues and serves as a one-point reference and creates awareness among all employees within the Bank. The policies set out the broad parameters for identification of various operational risks that the Bank is exposed to, on an ongoing basis and to put in place systems and procedures to mitigate such risks.

For the effective management of operational risk, the Bank has constituted Operational Risk Management Committee (“ORMC”) an Executive Committee that supports the RALM Committee. The main functions of the ORMC are to monitor and ensure appropriateness of operational risk management and recommend suitable control measures for mitigating the same besides monitoring thereof.

Your Bank also outsources certain functions / activities to third parties subject to compliance with RBI guidelines. These functions/activities and associated issues are being overseen by the Outsourcing Committee, an Executive Committee that supports the RALM Committee.

(b) Market Risk, Liquidity and Asset Liability Management

Your Bank is significantly exposed to Market risk, i.e. possibility of loss caused by changes in the market variables in addition to liquidity and mismatches in asset liability. Your Bank has put in place a Board approved Market Risk Management, ALCO & Investment policies aligned with RBI regulations and

operating guidelines governing Payments Banks and Executive level Committees, viz. Investment and Market Risk Committee and ALCO, that supports the RALM Committee in dealing with the day-to-day affairs, associated issues/concerns, if any, in a comprehensive manner.

(c) IT Risk Management

The Bank has put in place an adequate perimeter level security protection devices, internal data protection solutions, 24x7 monitored Security Operations Centre (“SOC”). Various security solutions such as threat monitoring and subscription to other global solutions are put in place to monitor and act on any critical alerts. However, cyber threats are evolving and various types of attacks are executed such as ‘Zero Day’ and many new variants of malware attacks. Any of the new variant attacks may impact the network or data protection. To mitigate such risks on the technology stack, adequate security crisis management processes are in place as per regulatory requirements and internal processes. Further, the Bank has pool of technical resources, which is prone to attrition. To mitigate that the Bank has set of hiring and training process with multiple technology streams.

For the effective management of IT Risk, the Bank has constituted Information Security Risk Committee (“ISRC”) as an Executive Committee that supports the IT Strategy Committee dealing with the day-to-day affairs, associated issues/concerns, if any, in a comprehensive manner.

(d) Reputation Risk Management

Your Bank as part of Internal Capital Adequacy Assessment Process under Pillar 2 of Base-l, has identified Reputation Risk as one of the Pillar 2 risks and evaluated it in terms of its sources, risk level and mitigation in place.

(e) Compliance Risk Management

The compliance risk is the risk of failure (or perceived failure) by the Bank to comply with applicable laws, regulations, guidelines and standards, leading to damage to the reputation of the Bank, legal or regulatory sanctions, or financial loss. Your Bank has a Compliance Policy to ensure the highest standards of compliance. A dedicated team of subject matter experts works to ensure active compliance risk management and monitoring. The team also advises on regulatory matters. The focus is on identifying and reducing risk by rigorously testing products and putting in place robust internal policies. Internal policies are reviewed and updated periodically as per agreed frequency or based on market actions or regulatory guidelines/actions.

For the effective management of Compliance Risk, the Bank has constituted Committee of Executive (“COE”) as an Executive Committee that supports the Audit Committee dealing with the day-to-day affairs, associated issues/concerns, if any, in a comprehensive manner.

The Bank has in place a Corporate Social Responsibility (“CSR”) policy and constituted CSR Committee in accordance with the provisions of Section 135 of the Act read with rules framed thereunder and Schedule VII to the Act. The CSR policy outlines the Bank’s philosophy to play a positive role in the community at large and consider the environmental and social impact of business decisions in which it operates.

The key areas identified by the Bank include eradicating hunger, promoting health care, promoting primary education, skill development and protection of the environment.

In terms of the provisions of the Act, for financial year 2023-24, the Bank has spent H0.88 Crore (including the set off of the excess amount spent by the Bank in the previous financial year) based on its commitment to CSR programs.

The Annual Report on CSR activities as prescribed under the Act and rules framed thereunder is annexed as Annexure - II to the Board’s Report.

The details of the CSR Committee and its terms of reference are disclosed in the Corporate Governance Report annexed to the Board’s Report forming part of this Annual Report.

The CSR Policy is available on Bank’s website at https://web4. finobank.com/investors/corporate-governance#code-policies

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Bank has formulated and adopted a Policy on Prevention of Sexual Harassment of Women at workplace. The Bank has complied with the provisions relating to the constitution of Internal Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The information relating to complaints received and redressed during financial year 2023-24 is provided in the Report on Corporate Governance, forming part of this Annual Report.

HOLDING, SUBSIDIARY & ASSOCIATE COMPANIES

The Bank does not have any subsidiary, joint venture or associate Company. The details of Holding Company are given below:

Name of the Company	Whether incorporated/ acquired/ converted	Year of incorporation	Status
Fino PayTech Limited	Incorporated	2006	Public Limited Company

ANNUAL RETURN

In accordance with the provision of Section 92(3) of the Act, the Annual Return in the prescribed Form MGT-7 is uploaded on Bank’s website at https://web4.finobank.com/investors/ financials#annual-report

The Bank’s activities are carried out in accordance with the good Corporate Governance practices and the Bank is constantly striving to make them better with time. The Bank believes that Governance framework and good practices helps in creating right culture and in turn enhances long-term sustainable value for all its stakeholders. The Bank adheres to the Corporate Governance requirements set out by the Securities and Exchange Board of India (“SEBI”)/ Ministry of Corporate Affairs (“MCA”)/RBI. The Corporate Governance Report for financial year 2023-24 along with a certificate issued by M/s. DM & Associates Company Secretaries LLP, confirming the compliance to applicable requirements related to Corporate Governance as stipulated under the SEBI Listing Regulations is annexed to the Board’s Report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

In terms of Regulation 34(2)(f) of the SEBI Listing Regulations, as amended the Business Responsibility and Sustainability Report describing the initiatives taken by the Bank from an Environmental, Social and Governance perspective is presented in a separate section which forms an integral part of this Report.

DISCLOSURE OF AGREEMENTS BINDING THE BANK

In terms of Regulation 30A(2) of the SEBI Listing Regulations, agreements specified in clause 5A of paragraph A of Part A of Schedule III of SEBI Listing Regulations, along with its salient features, are available at the website of the Bank at www.finobank. com.

COMPLIANCE WITH SECRETARIAL STANDARDS

During the year under review, the Bank has complied with the applicable Secretarial Standard on meetings of the Board of Directors (SS-1) and Secretarial Standard on General Meetings (SS-2) issued by the Institute of Company Secretaries of India.

STATUS OF IND AS IMPLEMENTATION

As per RBI circular RBI/2015-16/315 DBR.BP.BC.

No.76/21.07.001/2015-16 dated February 11, 2016, Implementation of Indian Accounting Standards (“Ind AS”), Banks are advised that scheduled commercial banks (excluding RRBs) shall follow the Indian Accounting Standards as notified under the Companies (Indian Accounting Standards) Rules, 2015, subject to any guideline or direction issued by the RBI in this regard. Banks in India currently prepare their financial statements as per the guidelines issued by RBI, the Accounting Standards notified under Section 133 of the Act and generally accepted accounting principles in India (“Indian GAAP”). In January 2016, the MCA issued the roadmap for implementation of new Ind AS, which were based on convergence with the International Financial Reporting Standards (IFRS), for

scheduled commercial banks, insurance companies and nonbanking financial companies (NBFCs). In March 2019, RBI deferred the implementation of Ind AS for banks till further notice as the recommended legislative amendments were under consideration of Government of India. The Bank had undertaken preliminary diagnostic analysis of the GAAP differences between Indian GAAP vis-a-vis Ind AS and shall proceed for ensuring the compliance as per applicable requirements and directions in this regard.

PARTICULARS OF EMPLOYEES

The information in terms of Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure - III to the Board’s Report.

Further, the statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended, forms part of this Annual Report and will be made available to any Member on request as prescribed therein. The aforesaid statement is available for inspection and any Member interested in obtaining a copy of the statement may write to the Company Secretary of the Bank at [email protected]

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report for the year under review, as stipulated under Regulation 34 of the SEBI Listing Regulations is presented in a separate section which forms an integral part of this Report.

VIGIL MECHANISM / WHISTLE BLOWER

The Bank has implemented a Whistle Blower Policy in compliance with the provisions of the Act and SEBI Listing Regulations. Pursuant to this policy, the Whistle Blowers can raise concerns relating to reportable matters (as defined in the policy) such as breach of Fino Payments Bank’s Code of Conduct, employee misconduct, fraud, illegal unethical imprudent behaviour, leakage of Unpublished Price Sensitive Information, corruption, safety and misappropriation or misuse of Bank’s funds/ assets etc.

Further, the mechanism adopted by the Bank encourages the Whistle Blower to report genuine concerns or grievances and provides for adequate safeguards against victimization of Whistle Blower to those who avail such mechanism and also provides for direct access to the Chairperson of the Audit Committee.

The Audit Committee reviews the functioning of the Vigil Mechanism from time to time. None of the Whistle Blowers has been denied access to the Audit Committee. The Whistle Blower Policy is available on the Bank’s website at https://web4.finobank. com/investors/corporate-governance#code-policies.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNALS

During the year under review, no material orders have been passed by the Regulators/Courts/Tribunals which would impact the going concern status of the Bank and its future operations.

The Bank has not made any application under the Insolvency and Bankruptcy Code, 2016 and no proceeding is pending under the said Code.

Further, no one time settlement was done with any Bank/ Financial Institution with respect to loans taken by the Bank, hence disclosure on the difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking such loans is not applicable.

ACKNOWLEDGEMENT AND APPRECIATION

The Board of Directors of your Bank would like to place on record its sincere gratitude for the guidance and co-operation received from the RBI, MCA, SEBI, Stock Exchanges, Registrar and Transfer Agent, Depositories and other statutory and regulatory authorities and thank all the stakeholders of the Bank including its investors, customers, merchants, bankers, shareholders, vendors, registrars and all other valued partners for their continued support.

The Board would like to express its appreciation for the sincere and dedicated efforts put in by all the employees of the Bank, exhibiting strong professionalism, teamwork and initiatives, to reinforce its customer centric reputation and look forward to their continued contribution in building this Bank into a great institution.

For and on behalf of the Board of Directors

Rajat Kumar Jain Rishi Gupta

Date : July 31, 2024 Part - Time Chairperson & Independent Director Managing Director & CEO

Place : Navi Mumbai DIN: 00046053 DIN: 01433190

---

Mar 31, 2023

BOARD''S REPORT

Dear Members,

Your Board of Directors are pleased to present the Seventh (7^th) Annual Report of Fino Payments Bank Limited ("Bank") together with the
Audited Financial Statements for the Financial Year ended March 31, 2023.

FINANCIAL HIGHLIGHTS

The financial highlights for the year under review are presented below:

Particulars	2022-23	2021-22
Balance Sheet:
Savings Bank Deposits	91,158	49,762
Current Account Deposits	556	505
Total Assets/ Liabilities	2,46,640	1,68,000
Total Income	1,22,991	1,00,885
Less: Expenses	1,09,383	92,447
Profit /(Loss) before Interest, Depreciation and Tax	13,608	8,438
Less: Depreciation	4,185	3,545
Less: Finance Charges	2,915	619
Profit /(Loss) before Tax and prior period items	6,508	4,274
Profit /(Loss) before Tax	6,508	4,274
Taxes	-	-
Net Profit /(Loss) after Tax	6,508	4,274
Other Comprehensive Income	-	-
Balance of Profit /(Loss) carried forward to next year	6,508	4,274
Appropriations
Transfer to Statutory Reserve	1,627	1,069
Transfer to Investment Reserve	2,390	11

BUSINESS OPERATIONS AND STATE OF AFFAIRS OF
THE BANK

The brief details on the business operation and state of affairs of
the Bank during financial year ended March 31, 2023 are given
below:

1. Throughput grew by a whopping 36% year-on-year basis in
FY23.

2. The Bank processed 120cr transactions in FY23, a 79%
growth compared to the previous year (Almost 1% of those

who walk-in to transact, eventually commenced a relationship
with the Bank).

3. Digital throughput grew exponentially by 166% to touch
nearly 19% of overall throughput in FY23 at H48,965 Cr.

4. The Bank opened approx. 29.7 Lakh current and savings
accounts of customers in FY23, of which 82% were subscription
based accounts.

5. The Bank delivered a robust ROE of 12.8% in FY23.

6. Distribution activity on critical KPIs was pivotal in delivering

sales performance. The Business Enablement Teams played a
big role in driving these KPIs, namely:

a. Active Merchant ratio up by 31% on AEPS.

b. Active Merchant ratio up by 20% on CMS and Micro ATMs.

c. Active Merchant ratio up by 9% on DMT.

7. Merchant network went up by 34%, the Bank''s physical
outreach reached to 13 Lakh banking points in FY 23.

Further, the net revenue of the Bank was H1,229.9 Cr for the
financial year ended March 31,2023 as compared to H1,008.9 Cr in
previous financial year. The Bank''s Profit after tax stood at H65.1 Cr

for the financial year ended March 31,2023 as compared to H42.7
Cr in previous financial year.

Your Bank is a public limited company and is registered with Reserve
Bank of India ("RBI") to carry on the business of Payments Bank
in India. A detailed Operational performance of the Bank during
the year has been comprehensively discussed in the Management
Discussion and Analysis Report which forms an integral part of this
Annual Report.

CHANGE IN NATURE OF BUSINESS

During the year under review, there has been no change in nature
of business of the Bank.

SCHEDULED BANK LICENSE

The Bank became the Scheduled Bank with effect from January
01, 2021 vide Notification DoR.NBD.No.2138/16.03.005/2020-
21 dated January 01, 2021 and published in the Gazette of India

(Part III - Section 4) dated February 13 - February 19, 2021 and
continues to comply with all the applicable regulations prescribed
by the RBI, from time to time.

CREDIT RATING

The details of credit rating as on March 31, 2023 along with its

outlook are given here under:

Rating	Outlook	Rating Agency	Comments
Long Term: [ICRA] BBB	Stable	ICRA Limited	Instruments with this rating are considered to have moderate degree of safety regarding timely servicing of financial obligations.
Short Term: [ICRA] A2	Stable	ICRA Limited	Instruments with this rating are considered to have strong degree of safety regarding timely payment of financial obligations.

DIVIDEND

The Bank is in a growing stage and keeping in view of required funds
to support its future growth, your Directors do not recommend any

dividend for the financial year ended March 31,2023.

In accordance with Regulation 43A of the Securities and Exchange
Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015, as amended ("SEBI Listing Regulations"), the
Bank has formulated a Dividend Distribution Policy, which ensures a
fair balance between rewarding its Members and retaining enough
capitalfortheBank''sfuturegrowthandexpansionplan.TheDividend
Distribution Policy is available on the Bank''s website at https://
www.finobank.com/uploads/pages/corporate-governance/
1661757567_dividenddistributionpolicy.pdf

TRANSFER TO RESERVES

During the year under review, the Bank has appropriated H16.27
Cr towards Statutory Reserves for the financial year ended March
31, 2023.

CAPITAL STRUCTURE & FUND RAISING

During the year under review, there has been no change in
the authorised share capital of the Bank. During the year under
review, the Bank has not raised any capital, therefore the issued,
subscribed and paid up share capital of the Bank as on March 31,
2023 was H83,21,43,020 (Rupees Eighty Three Crores Twenty One
Lakh Forty Three Thousand Twenty Only) comprising of 8,32,14,302
(Eight Crores Thirty Two Lakh Fourteen Thousand Three Hundred
and Two) Equity Shares of face value of H10/- (Rupees Ten Only)
each.

STRATEGIC INITIATIVES DURING THE YEAR UNDER
REVIEW AND TILL THE DATE OF THIS REPORT

i. ACQUISITION OF 7.98% STAKE IN PAYSPRINT
PRIVATE LIMITED

Your Board at its meeting held on April 10, 2022 which
continued till April 1 1, 2022 had approved the proposal to
invest upto 12.19% i.e. H4 Cr by way of subscription to equity
shares of PaySprint Private Limited ("PaySprint") in two
tranches.

The Bank executed Share Subscription and Shareholders''
Agreement with PaySprint on September 20, 2022 to acquire
upto 12.19% equity shares of PaySprint in two tranches
i.e. first tranche of the proposed investment upto H2.5 Cr
representing 7.98% of paid up capital of PaySprint and
remaining investment upto H1.5 Cr representing 4.21% of paid
up capital of PaySprint, subject to RBI approval, as applicable,
at the sole discretion of the Bank.

Consequently, the Board of Directors of PaySprint has approved

the allotment of 867 equity shares for total consideration of
H2,49,79,137, representing 7.98% of paid up share capital of
PaySprint.

The investment is in continuation to several in-house

initiatives by the Bank that are already underway towards
building a digital ecosystem for its customers as part of its
Fino 2.0 journey. This investment will further strengthen
your Bank''s product portfolio into Application Programming
Interface (API) for business-to-business integration (B2B). The
Bank has and intends to develop API stacks in the following
sectors: 1) Financial 2) Banking 3) Payment 4) Collection 5)
Insurance 6) Lending 7) Investment 8) Travel 9) Verification
and 10) Health Care API stacks.

UTILIZATION OF NET PROCEEDS FROM THE FRESH
ISSUE IN IPO

The net proceeds from the fresh issue in the IPO were utilised
towards the objects stated in the Red Herring Prospectus dated
October 22, 2021 i.e. towards augmenting its Tier - 1 capital base
to meet its future capital requirements. Further, the proceeds from
the Fresh Issue was also used towards meeting the expenses in
relation to the Offer. The Bank on quarterly basis affirming no
deviation in utilisation of the issue proceeds from the object stated
in offer documents and submits to Stock Exchanges in compliance
with the SEBI Listing Regulations.

The Bank would require additional Tier-I capital for penetration
of business/ services in uncovered/ sparsely covered areas,
modernization to technology (banking) platform to handle
business in line with large volumes on account of growing business
development of customer oriented banking/ financial products,
activities to generate awareness of bank''s products and services
among targeted population and country, keeping sufficient capital
meeting the regulatory/ compliance requirements to operate as
a Payments Bank. This future need for capital will be met through
internal accruals as well as proceeds of the issue.

EMPLOYEES STOCK OPTION SCHEMES ("ESOS")

The Bank has formulated and implemented Fino Payments Bank

Limited - Employees Stock Option Policy, 2020 ("ESOP 2020")
with a view to attract, retain, incentivize and motivate employees
of the Bank by way of rewarding their performance and motivate
them to contribute to the overall corporate growth and profitability.
The ESOP 2020 has been amended from time to time in view of
regulatory changes/ business requirements. None of these
amendments were prejudicial to the interest of the employees.

The Nomination and Remuneration Committee which also acts as a

Compensation Committee ("NRC") of the Board is entrusted with
the responsibility of implementation and administration of the

ESOP 2020.

The details and disclosures as required under Regulation 14
of the Securities and Exchange Board of India (Share Based
Employee Benefits and Sweat Equity) Regulations, 2021
("SEBI (SBEB and SE)") and circulars issued thereunder, have
been uploaded on the Bank''s website at www.finobank.com under
the ''Investors'' section. The Equity Shares issued under ESOP 2020
shall rank pari passu with the existing equity shares of the Bank.

Further, disclosure as per the ''Guidance Note on Accounting
for Employee Share-based Payments'' issued by the Institute of
Chartered Accountants of India, are disclosed in the Notes to the
Financial Statements of the Bank for the financial year ended
March 31, 2023, which forms integral part of this Annual Report.

The ESOP 2020 is in compliance with the SEBI (SBEB and SE)
Regulations, 2021. A certificate from the Secretarial Auditor of the
Bank that the ESOP 2020 has been implemented in accordance
with SEBI (SBEB and SE) Regulations 2021 and in accordance
with the resolutions passed by the members of the Bank, shall be
placed at the 7^th AGM of the Bank.

CAPITAL ADEQUACY RATIO

Your Bank has strong capital adequacy ratio. As on March 31,2023,
the Capital to Risk Assets Ratio (CRAR) of your Bank was 86.05%

which is well above the minimum requirement of 15% CRAR
prescribed by the Reserve Bank of India.

Out of the above, Tier I capital adequacy ratio stood at 82.12% and
Tier II capital adequacy ratio stood at 3.93%.

MATERIAL CHANGES AND COMMITMENTS

Apart from the details given in this Report, there were no material
changes or commitments affecting the financial position of the
Bank which have occurred between the end of the financial year

i.e. March 31, 2023 and up to the date of this Report.

TRANSFER TO INVESTORS EDUCATION AND
PROTECTION FUND

During the year under review, the Bank was not required to transfer
any fund or Equity shares to the Investor Education and Protection

Fund as per the provisions of Section 125 of the Act read with
applicable rules framed thereunder, as amended from time to time.

DEPOSITS

Being a banking company, the disclosures relating to deposits as
required in accordance to Sections 73 and 74 of the Companies
Act, 2013 ("Act") read with Companies (Accounts) Rules, 2014
and other applicable provisions of the Act are not applicable to the
Bank.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

As on March 31, 2023, the composition of the Board was in
compliance with the provisions of the Act, the SEBI Listing
Regulations and the Guidelines for Licensing of "Payments Banks"
dated November 27, 2014 issued by the Reserve Bank of India and
the Articles of Association of the Bank.

During the year under review, the Bank as a matter of good
governance practice has reconstituted its Board Committees to
align with the Reserve Bank of India ("RBI") Circular No. RBI/2021-
22/24DOR.GOV.REC.8/29.67.001/2021-22 dated April 26, 2021
on Corporate Governance in Banks - Appointment of Directors and
Constitution of Committees of the Board though, the aforesaid
circular is not yet applicable on Payments Bank.

The Board of the Bank is duly constituted with an optimum
combination of Executive Director, Non-Executive Directors
including Independent Directors and Women Director. The changes
in the composition of the Board that took place during the period
under review were carried out in compliance with the provisions of
the Act, SEBI Listing Regulations and RBI Regulations.

In terms of the requirement of the Listing Regulations, the Board
has identified core skills, expertise and competencies of the
Directors in the context of the Company''s businesses for effective
functioning. The list of key skills, expertise and core competencies
of the Board of Directors is detailed in the Corporate Governance
Report.

In the opinion of the Board, all the directors, as well as the directors
appointed / re-appointed during the year possess the requisite
qualifications, experience and expertise and hold high standards
of integrity.

In terms of SEBI Listing Regulations, the Bank has received
Certificate from M/s. DM & Associates Company Secretaries LLP,
Practicing Company Secretaries, the Secretarial Auditor of the
Bank that none of the Directors on the Board of the Bank have
been debarred or disqualified from being appointed or continuing
as a Director of any Company by the Securities and Exchange Board
of India/ Ministry of Corporate Affairs or any such other statutory
authority.

Appointment/re-appointment of Directors made during
FY 2022-23 and till the date of this report.

Based on the recommendation of the Nomination and
Remuneration Committee ("NRC"), the Board approved the
appointment/re-appointment of the following Directors, during
FY 2022-23 and till the date of this report:

1. Mr. Prakash Kulathu Iyer (DIN:00529591) was appointed
by the Board as an Additional Director in the capacity of
Independent Director with effect from June 01, 2022. The

Members also approved the appointment of Mr. Prakash
Kulathu Iyer as an Independent Director of the Bank for a term
of five consecutive years commencing from June 01, 2022 up
to May 31,2027 (both days inclusive) through postal ballot by
passing a special resolution.

2. Mr. Rakesh Bhartia (DIN:00877865) was appointed by the
Board as an Additional Director in the capacity of Independent

Director with effect from July 27, 2022. The Members at the
6^th AGM approved the appointment of Mr. Rakesh Bhartia
as an Independent Director of the Bank for a term of five
consecutive years commencing from July 27, 2022 up to July
26, 2027 (both days inclusive) by passing a special resolution.

3. Mr. Rishi Gupta (DIN:01433190), Managing Director & CEO of
the Bank was re-appointed by the Members at the 6^th AGM
for a period of three consecutive years with effect from May
02, 2023 up to May 01, 2026 (both days inclusive), subject
to approval of the RBI, by passing an ordinary resolution.
The RBI vide its letter dated April 28, 2023 approved the re¬
appointment of Mr. Rishi Gupta as the Managing Director &
CEO of the Bank for the period of three consecutive years w.e.f
May 02, 2023.

4. Mr. Prateek Roongta (DIN: 00622797) was appointed by the
Board as a Non-Executive Nominee Director with effect from
October 31, 2022, not liable to retire by rotation, subject
to approval of Members. The Members also approved the
appointment of Mr. Prateek Roongta as a Non-Executive
Nominee Director of the Bank commencing from October 31,
2022, not liable to retire by rotation, through postal ballot by
passing an ordinary resolution.

5. Mr. Pankaj Kumar (DIN: 07245781) was appointed by the
Board as a Non-Executive Nominee Director with effect from
April 1 1, 2023, not liable to retire by rotation, subject to
approval of Members of the Bank. The Bank shall initiate the

process for seeking approval for Members on his appointment.

Re-appointment of Directors retiring by rotation

In accordance with the provisions of Section 152 of the Act
and the Articles of Association of the Bank, Mr. Rishi Gupta

(DIN:01433190), Managing Director & CEO of the Bank retires by
rotation at the ensuing AGM and being eligible, has offered himself
for re-appointment. The resolution seeking the re-appointment of
Mr. Rishi Gupta forms part of the Notice convening the ensuing 7^th
Annual General Meeting.

The profile and particulars of experience, attributes, skills of
Mr. Rishi Gupta together with his other directorships and committee
memberships in terms of regulation 36 of SEBI Listing Regulations

and Secretarial Standard on General Meetings ("SS-2") issued by
the Institute of Company Secretaries of India have been disclosed
in the annexure to the Notice of the Annual General Meeting.

Cessation of Directors during the FY 2022-23

Mr. Mahendra Kumar Chouhan was appointed as an Independent
Director of the Bank for a period of five years with effect from May
02, 2017 and as a Part-time Chairman of the Bank for a period
of three years with effect from May 18, 2020. Mr. Mahendra
Kumar Chouhan ceased to be Independent Director and Part-time

Chairman of the Bank w.e.f. May 01, 2022 upon completion of his
tenure.

Dr. Punita Kumar-Sinha was appointed as an Independent Director
of the Bank for a period of five years with effect from May 02,
2017. Dr. Punita Kumar-Sinha ceased to be Independent Director
of the Bank w.e.f. May 01,2022 upon completion of her tenure.

Mr. Ravi Subbaiah Pagadala and Mr. Avijit Saha tendered their
respective resignations and ceased to be Non-Executive Nominee
Directors of the Bank with effect from November 02, 2022 and
March 02, 2023, respectively.

The Board placed on record its appreciation for the valuable
services and support provided by Mr. Mahendra Kumar Chouhan,
Dr. Punita Kumar-Sinha, Mr. Ravi Subbaiah Pagadala and Mr. Avijit
Saha during their tenure as Directors of the Bank.

During the year under review, there has been no change in the
Directors and Key Managerial Personnel of the Bank other than
those disclosed above.

DIRECTOR''S RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(3)(c) of the Act, it
is hereby confirmed that:

a. in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper
explanation relating to material departures;

b. the Directors had selected such accounting policies and
applied them consistently and made judgments and estimates
that are reasonable and prudent so as to give a true and fair
view of the state of affairs of the Bank as on March 31, 2023
and of the profit of the Bank for that period;

c. the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance
with the provisions of the Act, for safeguarding the assets of
the Bank and for preventing and detecting fraud and other
irregularities;

d. the Directors had prepared the annual accounts on a going
concern basis;

e. the Directors had laid down internal financial controls to be
followed by the Bank and that such internal financial controls

are adequate and were operating effectively; and

f. the Directors had devised proper systems to ensure
compliance with the provisions of all applicable laws and that
such systems were adequate and operating effectively.

DECLARATION BY INDEPENDENT DIRECTORS

All the Independent Directors ("IDs") of the Bank have submitted
declarations that each of them meets the criteria of independence
as provided in Section 149(6) of the Act along with Rules
framed thereunder and Regulation 16(1)(b) of the SEBI Listing
Regulations. There has been no change in the circumstances
affecting their status as IDs of the Bank. In the opinion of the Board,
the IDs possess the requisite integrity, experience, expertise and
proficiency required under all applicable laws and the policies of
the Bank.

All the IDs of the Bank have complied and affirmed to abide by Rule

6 (Creation and Maintenance of Databank of Persons Offering to
become Independent Directors) of the Companies (Appointment
and Qualification of Directors) Rules, 2014, as amended, and have
also declared their enrollment in the databank of Independent
Directors maintained by Indian Institute of Corporate Affairs
("IICA").

CODE OF CONDUCT FOR DIRECTORS INCLUDING
INDEPENDENT DIRECTORS AND SENIOR
MANAGEMENT PERSONNEL

The Board of the Bank has adopted a Code of Conduct for the

Directors and Senior Management Personnel ("SMPs") of the Bank
in compliance of Regulation 17(5) of the SEBI Listing Regulations
which sets forth the guiding principles for orderly and fair conduct

by Board and SMPs.

For the financial year 2022-23, all the Board members and SMPs
have affirmed the compliance with the Code and a declaration
to this effect signed by the Managing Director & CEO forms part
of Corporate Governance Report annexed to the Board''s Report
forming part of this Annual Report. The Bank''s Code of Conduct for
Directors and SMPs is disclosed on the Bank''s website at https://
www.finobank.com/uploads/pages/corporate-governance/166
1755215_9cocbodsrmanagmentn.pdf

NUMBER OF MEETINGS OF THE BOARD, ATTENDANCE,
MEETINGS AND CONSTITUTION OF VARIOUS COMMITTEES

During the year under review, eight Board meetings were held. The
intervening gap between the said meetings were in compliance
with the provisions of Act, relevant rules made thereunder,
Secretarial Standard-I issued by Institute of Company Secretaries
of India and provisions of SEBI Listing Regulations. The dates of
Board meetings and details of attendance of each Director and
constitution of various Committees of the Board are disclosed
separately in the Corporate Governance Report annexed to the
Board''s Report forming part of this Annual Report.

POLICY ON APPOINTMENT AND REMUNERATION OF
DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of Section 178(3) of the Act
read with rules made thereunder and RBI guidelines, the Board
of Directors has formulated and adopted a comprehensive
Compensation Policy which inter-alia covers criteria for

appointment and remuneration of its Directors, Key Managerial
Personnel, Senior Management Personnel and other Employees of
the Bank.

The proposals for appointment of Directors are submitted to the

Nomination and Remuneration Committee ("NRC") along with
requisite documents/disclosures received in the prescribed
format from proposed candidates as Director. The NRC carries
out the fit and proper assessment after ascertaining the veracity
of documents submitted, experience and qualifications required
for the post and if deems fit, recommend the profile of proposed
candidate for appointment to Board for its approval. The NRC and
the Board ensures that the remuneration to be paid to the proposed
appointee is in accordance with the compensation policy of the
Bank and RBI guidelines issued in this regard. During the financial

year 2022-23, the Board reviewed the Compensation Policy,
which regulates the appointment and remuneration of Directors,
Key Managerial Personnel, Senior Management Personnel and
other employees of the Bank. The terms of reference of the NRC,
objectives of Compensation Policy including other details have
been detailed in Corporate Governance Report annexed to the
Board''s Report.

The Compensation Policy of the Bank is available on the Bank''s

website at https://www.finobank.com/uploads/pages/corporate
-governance/1661755335_18nrccompensationpolicye.pdf.

BOARD PERFORMANCE EVALUATION

In accordance with the provision of the Act, SEBI Listing Regulations
and RBI guidelines, the Annual Performance Evaluation of the

Board, its Committees and each Director has been carried out
for the year under review. The details of evaluation process of
the Board, its Committees and individual Directors have been
disclosed in the Corporate Governance Report forming part of this

Annual Report.

The policy on the Board''s Evaluation framework is made

available on the Bank''s website at https://www.finobank.
com/uploads/pages/corporate-governance/1662443304_
BoardPerformanceEvaluationPolicy.pdf

SUCCESSION PLANNING

Pursuant to the recommendation of Nomination and Remuneration
Committee ("NRC") the Board has framed a Policy on Succession

Planning at the Board and Senior Management levels. The Policy
is periodically reviewed by the NRC and the Board. The Board
composition and the desired skill sets/ areas of expertise at the
Board level are continuously reviewed and vacancies, if any, are
reviewed in advance through a systematic due diligence process.

Succession planning at Senior Management levels, including
business and assurance functions, is continuously reviewed to
ensure continuity and depth of leadership at two levels below the
Managing Director & CEO. Successors are identified prior to the
Senior Management positions falling vacant, to ensure a smooth
and seamless transition. The Policy on Succession Planning is
made available on the Bank''s website at https://www.finobank.
com/uploads/pages/corporate-governance/16618691 50_
SuccessionPlanningPolicyN.pdf.

FAMILIARISATION PROGRAMME

The details about Familiarisation Programme carried out by the

Bank have been disclosed in the Corporate Governance Report
forming part of this Annual Report

STATUTORY CENTRAL AUDITORS AND THEIR REPORT

M/s. A P Sanzgiri & Co, Chartered Accountants (ICAI Firm
Registration Number: 116293W) the Statutory Central Auditors
of the Bank have conducted Statutory Audit of the Financial

Statements of the Bank for financial year ended March 31, 2023.
The Notes referred in the Auditors'' Report are self-explanatory.

There are no qualifications or reservations or adverse remark or
disclaimers given by Statutory Central Auditors. The Auditors''
Report forms an integral part of this Annual Report. The total fees

paid to the Statutory Central Auditors of the Bank for the financial

year ended March 31, 2023 is disclosed in the Note No. 60 to
Financial Statements for the financial year ended March 31, 2023
forming part of this Annual Report.

M/s. A P Sanzgiri & Co, Chartered Accountants were appointed as
the Statutory Central Auditors in the 6^th Annual General Meeting
("AGM") for a period of one year, until the conclusion of the 7^th
AGM of the Bank. It is proposed to re-appoint M/s A P Sanzgiri &
Co, Chartered Accountants as Statutory Auditors of the Bank for the
period of 2 years commencing from the conclusion of the 7^th AGM
until the conclusion of the 9^th AGM that would be held in 2025,
subject to the approval of the RBI on annual basis.

The Statutory Auditors have confirmed that they satisfy the

independence criteria required under the Act and the Code of
Ethics issued by the Institute of Chartered Accountants of India.

Approval of the Members is being sought for the re-appointment
of M/s. A P Sanzgiri & Co, as Statutory Central Auditors of the Bank

at the ensuing 7^th AGM.

SECRETARIAL AUDITORS AND THEIR REPORT

In compliance with the provisions of Section 204 of the Act and
the rules framed thereunder, M/s. DM & Associates Company
Secretaries LLP, the Secretarial Auditors ("Secretarial Auditors")
of the Bank undertook the Secretarial Audit for the financial year

ended March 31,2023. There were no observations, qualifications
or adverse remark made by the Secretarial Auditors in their Report.

The Secretarial Audit Report for financial year 2022-23 is annexed
as Annexure-I to the Board''s Report.

COST AUDITORS

During the year under review, the provisions for maintenance of
cost records as specified by the Central Government under section
148(1) of the Act are not applicable to the Bank and the Bank was
not required to appoint Cost Auditor.

LOANS, GUARANTEES AND INVESTMENTS

The particulars of investments made by the Bank are disclosed in

Note no. 2.5 of notes to account.

There was no loan made, guarantee given or security provided or
and hence, no disclosure was required to be made in this regard.

RELATED PARTY TRANSACTIONS

All the Related Party Transactions ("RPTs") that were entered
into during the financial year were on an arm''s length basis and

were in ordinary course of business. Transactions entered into by
the Bank with related parties in the normal course of its business
were placed before the Audit Committee of the Board ("ACB").
Prior omnibus/specific approval for normal banking transactions
were also obtained from the ACB for the RPTs which are repetitive
in nature as well as for the normal banking transactions which
cannot be foreseen. A statement giving details of all RPTs, entered
pursuant to the omnibus approval so granted, was placed before
the ACB for their review on a quarterly basis.

The Bank has not entered into any material financial or commercial

transactions with any related parties as per AS-18 and the SEBI
Listing Regulations that may have potential conflict with the

interest of the Bank at large.

In terms of Regulation 23(9) of the SEBI Listing Regulations, the
Bank submits the disclosure of RPTs in a prescribed format, as
specified under relevant Accounting Standards, on half yearly

basis to the Stock Exchanges and update its website accordingly.

There were no transactions entered into individually or taken
together with the previous transactions during the financial year
with related parties, which were not in the normal / ordinary
course of the business of the Bank, nor were there any transactions
with related parties or others, which were not on an arm''s length
basis. Hence, pursuant to Section 134(3)(h) of the Act, read with
Rule 8(2) of the Companies (Accounts) Rules, 2014, there are no
RPTs to be reported under Section 188(1) of the Act. Hence, Form
AOC-2 is not applicable to the Bank.

Pursuant to the provisions of the Act and the Rules made
thereunder, SEBI Listing Regulations, the Bank has in place a Board

approved policy on related party transactions.

The said policy is also uploaded on the Bank''s website at
https://www.finobank.com/uploads/pages/corporate-
governance/1661757749_RPTPolicyRevised.pdf.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION
& FOREIGN EXCHANGE EARNINGS AND OUTGO

Your Bank is committed for maintaining a balance between growth
and optimal utilisation of resources. Your Bank is also focused

towards undertaking initiatives for absorption of technology with
conservation of energy.

A. Research & Development

During the year under review, the Bank had conducted various
in-house development activities in the following areas. Focus
was mainly on creating generic plug & play interfaces for
various transactions so that these can not only be consumed

by Bank, but also can be extended to its Partners and
Merchants.

i. Payments Bank

a. Teller / Merchant Application

Added value to existing applications by adding new
products and enhancing existing products on Web
Teller and Feet on Street. Also enabled the same for
Merchant on Web and Mobile.

b. API Banking & Integrations

Considering large flow of payment services clients,
the Bank has developed white label approach
for on-boarding payment services clients. With
this approach, plugging-in new payment services
client has been easy and faster now. The Bank has
also created Application Programming Interface
and Software Development Kit for Aadhar Enabled
Payment Services ("AEPS")/Micro ATM/Domestic

Money Transfer/Cash Management Services
transactions. These API''s are used by Banks different
Partners to integrate and initiate transactions from
their own platform.

c. Extending Current Account Saving Account

i. Implementation of subscription base products

ii. The Bank is implementing VKYC base merchant/
customer on-boarding.

iii. CASA , this is an auto sweep extended account
in Partner bank.

d. Analytics

After rollout of SAS, the Bank has now extended the
same to profiling customer as well as merchants.
This will enhance product offering to customer and
performance of merchants. The Bank endeavors to
enhance it further for cross sell.

e. Other systems implemented

The Bank is implementing Gyankosh (Knowledge
Management System), Chatbot, Inventory system &
Customer Relationship Management.

The Bank''s system has integrated with CleverTap
to extend its communication with merchant and
customer.

Rewards points and re-admission system for
merchant.

RPA-Automation implemented for Cash-In and

account Data Verification Unit activity.

ii. Self-Channels

With digital focus the Bank is working on implementing

self-channels to enhance user experience and
convenience.

a. Cash Bazar

Considering a cash demand and shortage in the
field, the Bank has implemented "On-Demand" cash
platform for rural area.

b. Multilingual

To increase usability, the Bank has upgraded Fino-
Pay platform with "Hindi" support. Going ahead it

can be extended to other regional languages.

iii. Application Security

The Bank has further enhanced security for applications
so as to reduce frauds. Implemented below security
patches to applications.

¦ Strengthening security of applications.

¦ Implementing EMV certification on all acquiring

devices so as to support chip based transactions.

¦ Dynamic key implementation.

¦ Secured Socket Layer pinning.

B. Future Readiness

Considering future load of transactions, the Bank is
continuously taking steps to improve scaling capacity of its
applications. Below approach is followed to achieve the same:

¦ Benchmarking existing application capacity by doing
load testing.

¦ Reducing transaction hops to implement straight through
transaction processing for HIGH throughput transactions.

¦ Segregating critical transactions from non-financial ones
so as to create a control based on priority of transactions.

¦ Enhancing process so as to reduce TAT on transactions
like 15-minute account activation.

1. Security

¦ Implementation of a 24X7 Security Operations

Center (SOC).

¦ DLP (Data Leak Prevention) system deployed.

¦ MDM (Mobile Device Management) systems
deployed for Mobile devices security.

2. Production systems

Periodic reviews of Servers, Storage and Networks and
implement the required augmentation of capacities
(CPU, Memory, Storage).

Network optimizations were carried out to strengthen
security and performance.

Server consolidation was done for optimization and

better management. Half yearly IT DR Drills completed
successfully.

C. Technology absorption

a. All Payments Bank applications are primarily using CBS
(Core Banking system) provided by "FIS" (FIS Payments
and Solutions India Private Limited).

b. For digital signing of documents, the Bank is using digital
signing system.

c. DMS (Document Management Server) workflows are
implemented using robotic process automation.

The aforesaid Technologies have been absorbed by the
Bank to the extent possible.

D. Foreign Exchange Earnings and Outgo

During the year under review, there was no foreign exchange
earnings, however, there was foreign exchange outgo of
H47.37 Lakhs.

RISK MANAGEMENT

Your Bank being a Payments Bank is required to largely follow/

implement directives issued by RBI for scheduled commercial
banks in addition to those forming part of the operating guidelines
meant for Payments Banks. Accordingly, the Bank has adopted risk

management process to identify, assess, monitor and manage risks

in its day to day activities/functions through the effective use of

processes, information and technology.

The Risk Management Process is monitored under Risk
Management Policies and the delegation matrix as approved by
the Board. The Board is supported by management team, Board

Committees and Board Delegated Executive Level Committees
as part of the Risk Governance Framework. The Board has an
oversight of the management''s efforts to balance growth and
prudent risk management, while creating value for stakeholders.

Pursuant to RBI Regulations, the Bank has constituted a Risk and

Asset Liability Management Committee of the Board ("RALM") and
as mandated by the regulatory provisions, the Bank has appointed
Chief Risk Officer, who administers the risk associated key verticals
through dedicated divisions i.e., Market Risk, Operational Risk,
Fraud Risk and other Risks under the aegis of the Board approved
risk management policies and in accordance with the approval and
responsibility delegation matrix.

The details of the RALM Committee and its terms of reference are
disclosed in the Corporate Governance Report annexed to the
Board''s Report.

The risk management framework within the Bank is a layered
structure and broadly consists of the following aspects for effective
risk management across the Bank:

(a) Operational Risk Management

Your Bank is exposed to significant operational risk (for
instance, risks arising due to use of technology, introduction

of new products/services, processes, channels like mobile,
internet banking, cash handling, etc.). Bank''s operational
risk management policies provide guidance on operational
risk management issues and serves as a one-point reference
and creates awareness among all employees within the Bank.
The policies set out the broad parameters for identification of
various operational risks that the Bank is exposed to, on an on¬
going basis and also to put in place systems and procedures to
mitigate such risks.

For the effective management of operational risk, the Bank
has constituted Operational Risk Management Committee
("ORMC") an Executive Committee that supports the RALM.
The main functions of the ORMC are to monitor and ensure
appropriateness of operational risk management and
recommend suitable control measures for mitigating the same
besides monitoring thereof.

Your Bank also outsources certain functions / activities to
third-parties subject to compliance with RBI guidelines. These
functions/activities and associated issues are being overseen
by the Outsourcing Committee, an Executive Committee that

supports the RALM.

(b) Market Risk, Liquidity and Asset Liability Management

Your Bank is significantly exposed to Market risk, i.e. possibility

of loss caused by changes in the market variables in addition
to liquidity and mismatches in asset liability. Your Bank has

put in place a Board approved Market Risk Management,
ALCO & Investment policies aligned with RBI regulations
and operating guidelines governing Payments Banks and

Executive level Committees, viz. Investment and Market Risk
Committee and ALCO, that supports the RALM in dealing with

the day to day affairs, associated issues/concerns, if any, in a
comprehensive manner.

(c) IT Risk Management

The Bank has put adequate perimeter level security protection
devices, internal data protection solutions, 24X7 monitored

Security Operations Centre (SOC). Various security solutions
such as threat monitoring and subscription to other global
solutions are put in place to monitor and act on any critical
alerts. However the cyber threats are evolving and various
types of attacks are executed such as ''Zero Day'' and many
new variants of malware attacks. Any of the new variant
attack may impact the network or data protection. To mitigate
such risks on the technology stack, adequate security crisis
management processes are in place as per regulatory
requirements and internal processes. Further, the Bank has
pool of technical resources, which is prone to attrition. To
mitigate that the Bank has set of hiring and training process
with multiple technology streams.

(d) Reputation Risk Management

Your Bank, as part of Internal Capital Adequacy Assessment
Process under Pillar 2 of Basel-1 has identified Reputation
Risk as one of the Pillar 2 risks and evaluated it in terms of its
sources, risk level and mitigation in place.

(e) Compliance Risk Management

The compliance risk is the risk of failure (or perceived failure)
by the Bank to comply with applicable laws, regulations,
guidelines and standards, leading to damage to the reputation
of the Bank, legal or regulatory sanctions, or financial loss.
Your Bank has a Compliance Policy to ensure the highest
standards of compliance. A dedicated team of subject matter
experts works to ensure active compliance risk management
and monitoring. The team also provides advisory services on
regulatory matters. The focus is on identifying and reducing
risk by rigorously testing products and also putting in place
robust internal policies. Internal policies are reviewed and
updated periodically as per agreed frequency or based on
market actions or regulatory guidelines/actions.

CORPORATE SOCIAL RESPONSIBILITY

The Bank has in place a Corporate Social Responsibility ("CSR")

policy and constituted CSR Committee in accordance with the
provisions of Section 135 of the Act read with rules framed
thereunder and Schedule VII to the Act. The CSR policy outlines the
Bank''s philosophy to play a positive role in the community at large
and consider the environmental and social impact of business
decisions in which it operates.

The key areas identified by the Bank includes eradicating hunger,
poverty and malnutrition, promoting health care including
preventive health care and sanitation including contribution to
the Swach Bharat Kosh set-up by the Central Government for the
promotion of sanitation and making available safe drinking water,
promoting education, including special education and employment
enhancing vocation skills especially among children, women,

elderly, the differently abled, and livelihood enhancement projects
and ensuring environmental sustainability, ecological balance,
protection of flora and fauna, conservation of natural resources
and maintaining quality of soil, air and water.

In terms of the provisions of the Act, for FY 2022-23, the Bank has
spent H25.2 Lakhs based on its commitment to CSR programs.

The Annual Report on CSR activities as prescribed under the Act
and rules framed thereunder is annexed as Annexure - II to the
Board''s Report.

The details of the CSR Committee and its terms of reference are
disclosed in the Corporate Governance Report annexed to the
Board''s Report forming part of this Annual Report.

The CSR Policy is made available on Bank''s website at
https://www.finobank.com/uploads/pages/corporate-
governance/1661756940_csrpolicy.pdf

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF
WOMEN AT WORKPLACE (PREVENTION, PROHIBITION
AND REDRESSAL) ACT, 2013

The Bank has formulated and adopted a Policy on Prevention

of Sexual Harassment of Women at workplace. The Bank has
complied with the provisions relating to the constitution of Internal

Committee under the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013. The information
relating to complaints received and redressed during Financial
Year 2022-23 is provided in the Report on Corporate Governance,
forming part of this Annual Report.

SUBSIDIARY & ASSOCIATE COMPANIES

The Bank does not have any subsidiary, joint venture or associate

Company. The details of Holding Company are given below:

Sr. No.	Name of the Company	Whether incorporated/ acquired/ converted	Year of incorporation	Status
1.	Fino PayTech	Incorporated	2006	Public
	Limited			Limited
				Company

ANNUAL RETURN

In accordance with the provision of Section 92 (3) of the Act, the
Annual Return in the prescribed form MGT-7 is uploaded on Bank''s

website www.finobank.com.

CORPORATE GOVERNANCE

The Bank''s activities are carried out in accordance with good
Corporate Governance practices and the Bank is constantly striving
to make them better with time. The Bank believes that Governance
framework and good practices helps in creating right culture and in
turn enhances long-term sustainable value for all its stakeholders.
Bank adheres to the Corporate Governance requirements set
out by the SEBI/MCA/RBI. The Corporate Governance Report for
financial year 2022-23 along with a certificate issued by M/s. DM
& Associates Company Secretaries LLP, confirming the compliance
to applicable requirements related to Corporate Governance as

stipulated under the SEBI Listing Regulations is annexed to the
Board''s Report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY
REPORT

In terms of Regulation 34(2)(f) of the SEBI Listing Regulations, as
amended the Business Responsibility and Sustainability Report
describing the initiatives taken by the Bank from an Environmental,

Social and Governance is presented in a separate section which
forms an integral part of this Report.

COMPLIANCE WITH SECRETARIAL STANDARDS

During the year under review, the Bank has complied with the
applicable Secretarial Standard on meetings of the Board of
Directors (SS-1) and Secretarial Standard on General Meetings
(SS-2) issued by the Institute of Company Secretaries of India.

STATUS OF IND AS IMPLEMENTATION

As per RBI circular RBI/2015-16/315 DBR.BPBC.
No.76/21.07.001/2015-16 dated February 11, 2016,

Implementation of Indian Accounting Standards (Ind AS), Banks
are advised that scheduled commercial banks (excluding RRBs)
shall follow the Indian Accounting Standards as notified under the
Companies (Indian Accounting Standards) Rules, 2015, subject to
any guideline or direction issued by the Reserve Bank in this regard.
Banks in India currently prepare their financial statements as per
the guidelines issued by RBI, the Accounting Standards notified
under section 133 of the Act and generally accepted accounting
principles in India (Indian GAAP). In January 2016, the Ministry
of Corporate Affairs issued the roadmap for implementation of
new Indian Accounting Standards (Ind AS), which were based on
convergence with the International Financial Reporting Standards
(IFRS), for scheduled commercial banks, insurance companies
and non-banking financial companies (NBFCs). In March 2019,
RBI deferred the implementation of Ind AS for banks till further
notice as the recommended legislative amendments were under
consideration of Government of India. The Bank had undertaken
preliminary diagnostic analysis of the GAAP differences between
Indian GAAP vis a vis Ind AS and shall proceed for ensuring the
compliance as per applicable requirements and directions in this
regard.

PARTICULARS OF EMPLOYEES

The information in terms of Section 197(12) of the Act read with
Rule 5(1) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 is annexed as Annexure - III
to the Board''s Report.

Further, the statement containing particulars of employees as

required under Section 197(12) of the Act read with Rule 5(2)
and 5(3) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 as amended, forms part of
this Annual Report and will be made available to any Member on
request as prescribed therein. The aforesaid statement is available
for inspection and any Member interested in obtaining a copy of
the statement may write to the Company Secretary of the Bank at
[email protected].

KEY MANAGERIAL PERSONNEL

As on the date of this report, the following officials of the Bank

are the ''Key Managerial Personnel'' pursuant to the provisions of
Section 203 of the Act:

Mr. Rishi Gupta

Managing Director & CEO

Mr. Ketan Merchant

Chief Financial Officer

Mr. Basavraj Loni

Company Secretary and Compliance Officer - Head Legal

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report for the year

under review, as stipulated under Regulation 34 of the SEBI Listing
Regulations is presented in a separate section which forms an
integral part of this Report.

VIGIL MECHANISM/WHISTLE BLOWER

The Bank has implemented a Whistle Blower Policy in compliance
with the provisions of the Act and SEBI Listing Regulations.
Pursuant to this policy, the Whistle Blowers can raise concerns
relating to reportable matters (as defined in the policy) such
as breach of Fino Payments Bank''s Code of Conduct, employee
misconduct, fraud, illegal unethical imprudent behaviour, leakage
of Unpublished Price Sensitive Information, corruption, safety and
misappropriation or misuse of Bank funds/ assets etc.

Further, the mechanism adopted by the Bank encourages the
Whistle Blower to report genuine concerns or grievances and
provides for adequate safeguards against victimization of Whistle
Blower to those who avail such mechanism and also provides for
direct access to the Chairman of the Audit Committee.

The Audit Committee reviews the functioning of the Vigil
Mechanism from time to time. None of the Whistle Blowers has
been denied access to the Audit Committee. The Whistle Blower
Policy is available on the Bank''s website at https://www.
finobank.com/uploads/pages/corporate-governance/1661755
269_10vigilanceandwhistleblowerpolicye.pdf

REPORTING OF FRAUDS

During year under review, pursuant to Section 143(12) of the Act,
neither the Statutory Central Auditors nor the Secretarial Auditor
of the Bank has reported any instances of frauds committed in the

Bank by its officers or its employees.

INTERNAL AUDITOR

As per the provisions of Section 138 of the Act read with Rule 13
of the Companies (Accounts) Rules, 2014, the Internal Auditors
presented their report to the Audit Committee on a quarterly
basis. The scope, functioning, periodicity and methodology for
conducting the Internal Audit have been formulated in consultation
with the Audit Committee.

INTERNAL CONTROLS AND THEIR ADEQUACY

The Bank has an Internal Control System commensurate with the
size, scale and complexity of its operations. Internal Audit Control
System ensures that the regular internal audits are conducted at
both the branches and other functional areas. The findings are then
taken up by Audit Committee along with management response for
suitable action. The Bank has an adequate and effective Internal
Audit System, covering on a continuous basis, the entire gamut
of operations and services spanning all locations, business and
functions. The Audit Committee monitors the Internal Audit System
on regular intervals and directs necessary steps to further improve
the Internal Control system.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY
REGULATORS OR COURTS OR TRIBUNALS

During the year under review, no material orders have been passed
by the Regulators/Courts/Tribunals which would impact the going
concern status of the Bank and its future operations.

The Bank has not made any application under the Insolvency and
Bankruptcy Code, 2016 and no proceeding is pending under the

said Code.

Further, no one time settlement was done with any Bank/
Financial Institution with respect to loans taken by the Bank, hence
disclosure on the difference between amount of the valuation
done at the time of one time settlement and the valuation done
while taking such loans is not applicable.

ACKNOWLEDGEMENT AND APPRECIATION

The Board of Directors of your Bank would like to place on record its

sincere gratitude for the guidance and co-operation received from
the Reserve Bank of India, Ministry of Corporate Affairs, Securities
Exchange Board of India, Stock Exchanges, Depositories and other
statutory and regulatory authorities and thank all the stakeholders
of the Bank including its investors, customers, merchants,
partners, bankers, shareholders, vendors, Registrars and all other
valued partners for their continued support. The Board would like
to express its appreciation for the sincere and dedicated efforts put
in by all the employees of the Bank at all levels during the year and
look forward to their continued contribution in building this Bank
into a great institution.

For and on behalf of the Board of Directors

Deena Asit Mehta Rishi Gupta

Date : May 02, 2023 Independent Director Managing Director & CEO

Place : Navi Mumbai DIN: 00168992 DIN: 01433190