Ujjivan Small Finance Bank Ltd. के निदेशक की रिपोर्ट

Mar 31, 2025

On behalf of the Board of Directors (the "Board") of Ujjivan Small Finance Bank Limited (the "Bank or Ujjivan"), it is our immense pleasure to
present the 9 th Annual Report of the Bank along with the Audited Financial Statements and Auditor''s Report thereon for the FY 2024-25.

OVERVIEW AND STATE OF AFFAIRS OF THE BANK

The Bank has emerged as a transformative financial institution, firmly committed to its objective of advancing financial inclusion and
serving the unserved and underserved with a primary focus on semi-urban and urban areas. Since its inception, Ujjivan has envisioned a
future driven by inclusive and equitable financial system and has built a solid foundation in inclusive banking where financial inclusion is
universal. To continue with its mission, the Bank aspires to evolve into a Universal Bank to broaden its impact, diversify its offerings, and
align its capabilities with the evolving needs of the communities it has served and India''s growing financial ecosystem.

The FY 2024-25 has been a difficult year for entities that had a higher share of micro loans due to implementation of MFIN Guardrails
1 (Jul''24) that triggered immediate stress in the MFI Portfolio. However, Ujjivan performed exceptionally well when compared to the
industry and its peers.

Further, Provision Coverage Ratio of the Bank remains well above Regulatory minimum at 78%.

Highlights oF achievements during FY 2024-25 were:

i. Disbursement: '' 23,464 Crores; growth of 0.3% Y-o-Y with highest ever disbursement in a quarter achieved in Q4''7,440 Crores with
11% YoY growth.

ii. OSP has grown from '' 29,779 Crores in FY24 to '' 32,122 Crores in FY25, growing 8% Y-o-Y

iii. Secured book grown from '' 8,990 Crores to '' 13,988 Crores i.e. share of secured book in gross loan book has increased from 30% to

44%

iv. Deposits: Total deposits at '' 37,630 Crores is up 20% Y-o-Y; Total deposit accretion during the year was at '' 6,168 Crores.

v. CASA reached '' 9,612 Crores, up 15% Y-oY; CASA% stands at 25.5% as at end of FY25.

vi. CD Ratio is at 85.4% (including IBPC/Securitisation).

vii. Asset Quality: GNPA/NNPA at 2.2% / 0.5% as on Mar''25; PCR at 78% as on Mar''25

viii. Capital adequacy comfortable at 23.1% with Tier I at 21.38%

ix. Microbanking cashless collections: reached 40% in Q4; among the best in industry.

x. Net profit for the FY 2024-25 is '' 726 Crores, showing resilience during a year which was largely impacted by uncertainties in

microfinance business and tight banking liquidity environment.

Additionally, the Bank applied for voluntary transition to Universal Bank in February 2025. Further, Bank received AD-1 licence approval
from RBI in October 24 and is in process of setting up the products and requisite technology upgrades, SWIFT membership is underway,
opening of Nostro Accounts are being carried out and system are being upgraded.

Technology and Digital Platforms:

• Hello Ujjivan launched in FY 2022-23 is India''s 1st Voice-Visual-Vernacular App available for MicroBanking Customers and is available
in 11 Languages (including English) with Chatbot facility that helps conduct basic financial & non-financial banking transactions and
enables digital loan acknowledgement for Repeat customers

• DigiMitra launched in FY 2023-24, is a dedicated support service aimed at helping customers navigate any technical issues they may
encounter while accessing digital products and services.

• CRM and Customer Deduplication systems have been upgraded, resulting in refined user interfaces and data reliability. A pilot for
the CRM mobile application has been deployed enabling mobile user engagement

• In digital banking front, Bank has introduced several customer-centric innovations such as digital Fixed Deposit & Savings, which have
been highly appreciated for their convenience and accessibility.

• On data analytics, the Bank has adopted state of the art "BI tool" (Both Web and Mobility channels) with interactive dashboards to
empower its employees at every level to adopt data driven proactive decision and boost their productivity.

Human Capital:

• Increase in staff count field staff 15,827 from 15,857; others 8,547 from 6,709

• Extensive training programmes being conducted to enhance knowledge and productivity

Major Awards & Accolades:

• Dun and Bradstreet Awards - India''s Leading Small Finance Bank

• BT Best Bank Awards - India''s Best Small Finance Bank - 2nd time in a Row

• IBA Technology Conference 2024 - Best IT Risk Management

The Bank''s Board comprised of 9 directors as at the end of FY 2024-25, with the Managing Director & CEO and Whole time Director being
the Executive Director, 7 Independent Directors including 4 Women Independent Directors.

FINANCIAL PERFORMANCE
Summary oF Financial PerFormance

Particulars	FY 2023-24	FY 2024-25
Revenue from Operations	3,409.45	3,636.27
Other Income	786.75	846.2
Less: Operational Expenses	997.63	1,159.03
Personnel Expenses	1,183.18	1,499.49
ProFit/loss before Depreciation, Finance Costs, Exceptional items, Provisions and Tax Expense	2,015.39	1,823.95
Less: Depreciation/ Amortisation/ Impairment	98.28	134.72
Profit /loss before Finance Costs, Exceptional items, Provisions and Tax Expense	1,917.11	1,689.23
Less: Finance Costs	214.95	747.7
Profit /loss before Provisions, Exceptional items and Tax Expense	1,702.16	941.53
Less: Provisions & Contingencies	(0.01)	(0.04)
Add/(less): Exceptional items	0	0
Profit /loss before Tax Expense	1,702.17	941.57
Less: Tax Expense (Current & Deferred)	420.67	215.47
Profit /loss for the year (1)	1,281.50	726.10
Total Comprehensive Income/loss (2)	0	0
Total (1 2)	1,281.50	726.10
Balance of profit /loss for earlier years	947.00	1818.40
Less: Transfer to Debenture Redemption Reserve	0	0
Less: Transfer to Statutory Reserves	320.38	181.53
Less: Transfer to investment Fluctuation Reserve	4.38	7.10
Less: Transfer to Capital Reserves	0	12.10
Less: Dividend paid on Equity Shares	68.34	290.07
Less: Dividend paid on Preference Shares	0	0
Less: Dividend Distribution Tax	0	0
Less: Investment Reserve Account	0	0
Less: Transfer to Special Reserve U/S 36 (1)(viii) Income tax Act 1961	17.00	21.00
Balance carried forward	1,818.40	2,032.70

Key Ratios: (Comparative ratios are annualised)

Particulars	FY 2023-24	FY 2024-25
Interest income as a percentage to working funds	15.38%	14.65%
Non-interest income as a percentage to working funds	2.13%	1.95%
Operating profit as a percentage to working funds	5.20%	3.89%
Business (deposits plus gross advances) per employee (? in thousands)	25,989	24,275
Profit per employee (? in thousands)	633.82	309.37
EPS (Basic) (?)	6.65	6.65
EPS (Diluted) (?)	6.54	6.54

TRANSFER TO RESERVES

A. Statutory Reserve

The Bank has made an appropriation of ? 181.53 Crores to the statutory reserve for the year ended March 31,2025 out of profits,
pursuant to the requirements of section 17 of the Banking Regulation Act, 1949 and RBI guidelines dated September 23, 2000.
Investment Fluctuation Reserve ("IFR")

During the year ended March 31,2025, the Bank has made an appropriation of ? 7.10 Crores to IFR from the profit and loss account
so as to reach the figure of 2% of its HFT and AFS Investment portfolio.

DIVIDEND

The Bank has formulated and implemented a Dividend Distribution Policy pursuant to Regulation 43A of the Securities and Exchange
Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations”) and RBI Requirements
with an objective to appropriately reward shareholders through dividends for reposing their confidence in the Bank while retaining the
capital required for supporting future business growth. The said Policy is available on the website of the Bank at www.uiiivansfb.in/
corporate-governance-policies.

To conserve capital for future growth, the Directors have not recommended any dividend for the FY 2024-25. Dividend for the FY 2023-24
of '' 290.07 Crores (before TDS) was paid out to the equity shareholders in August 2024.

CHANGE IN THE NATURE OF BUSINESS

There was no change in the nature of business of the Bank during FY 2024-25.

MATERIAL CHANGES AND COMMITMENTS

No material changes and commitments have occurred after the closure of the FY 2024-25 till the date of this report, which might have
affected the financial position of the Bank.

REVISION OF FINANCIAL STATEMENT OR THE DIRECTORS'' REPORT

The Bank has not revised its financial statements or the directors'' report in respect of any of the three preceding financial years either
voluntarily or pursuant to the order of any judicial authority.

GENERAL INFORMATION

Detailed overview of the banking industry and important changes therein, external environment and economic outlook have been elaborated in
the Management and Discussion Analysis Report which forms part of the Annual Report of the Bank for the FY 2024-25.

CAPITAL AND DEBT STRUCTURE

A. CHANGES IN CAPITAL STRUCTURE

With the Scheme of Amalgamation between Ujjivan Financial Services Limited (UFSL) and Ujjivan Small Finance Bank Limited (USFB/
Bank) being effective from the appointed date being April 01,2023, the authorised share capital of the Bank increased as a result of
transfer of '' 1,250,000,000 authorised capital from UFSL to the Bank. Further the authorised preference share capital '' 2,000,000,000
of the Bank has also been added to the authorised equity share capital, accordingly as on date the authorised share capital of the
Bank is '' 26,250,000,000 divided into 2,625,000,000 equity shares of '' 10/- each.

Following are details of increase in the paid-up capital during the FY 2024-25:

Sr	Particulars	Amount (in '')
1	Paid-up Capital at the beginning of the Financial Year (post merger)*	19,314,285,090
3	Equity Shares allotted under the ESOP Scheme 2019 during the FY 2024-25	35,751,340
4	Paid-up Capital at the end of the Financial Year	19,350,036,430

*Note: Pursuant to the effect of the Scheme of amalgamation, 1,440,036,800 equity shares and 200,000,000preference shares of the
Bank held by UFSL are extinguished. Consequent to the aforesaid, the paid-up equity capital of the Bank is revised to '' 19,314,285,090.

B. ISSUE OF EQUITY SHARES OR OTHER CONVERTIBLE SECURITIES

During the FY 2024-25, following equity shares were issued and allotted:

Sr	Particulars oF Equity Shares allotted under the ESOP Scheme 2019 allotted on following dates:	No. of shares	Total Nominal Price (in '')	Total Issue Price including premium (in '')
1	April 04, 2024	366,608	3,666,080.00	9,732,337.75
2	June 11,2024	773,567	7,735,670.00	21,649,024.95
3	July 09, 2024	1,266,134	12,661,340.00	39,754,382.40
4	August 08, 2024	154,454	1,544,540.00	3,986,078.75
5	September 09, 2024	194,971	1,949,710.00	5,430,521.72
6	October 09, 2024	277,670	2,776,700.00	7,627,718.45
7	November 06, 2024	63,899	638,990.00	1,892,311.60
8	December 12, 2024	17,893	178,930.00	400,800.65
9	January 08, 2025	21,297	212,970.00	507,660.40
10	February 08, 2025	219,702	2,197,020.00	4,681,166.65
11	March 12, 2025	218,939	2,189,390.00	5,324,394.10
TOTAL		3,575,134	35,751,340	100,986,397.42

C. ISSUE OF EQUITY SHARES WITH DIFFERENTIAL RIGHTS AND/OR SWEAT EQUITY SHARES

During the FY 2024-25, the Bank has neither issued any equity shares with differential rights nor any sweat equity shares.

D. EMPLOYEE STOCK OPTIONS/ SHARE BASED EMPLOYEE BENEFIT SCHEMES

The Bank has formulated and implemented ESOP 2019 Scheme and ESPS 2019 Scheme to reward the employees of the Bank, and
employees of its present or future subsidiary(ies) and/or holding company(ies), for their association and performance as well as to
motivate them to contribute to the growth and profitability of the Bank.

ESOP 2019 Scheme:

The Bank, pursuant to the resolutions passed by the Board on January 22, 2019 and by the Members on March 29, 2019, adopted
the ESOP 2019 Scheme. The Bank in its 4th Annual General Meeting held on September 02, 2020 has ratified the ESOP 2019 Scheme
as required under the SEBI (Share Based Employee Benefits) Regulations, 2014. The Bank may grant an aggregate number of up to
144,000,000 stock options under the ESOP 2019 Scheme. Upon exercise and payment of the exercise price, the option holder will be
entitled for allotment of one equity share per stock option. Accordingly, the number of equity shares that may be issued under the
ESOP 2019 Scheme shall not exceed 144,000,000 equity shares of face value ''10 each.

The ESOP 2019 Scheme is effective from March 29, 2019. The objectives of ESOP 2019 Scheme are, among others, to attract and
retain employees with stock options as a compensation tool. Through ESOP 2019 Scheme, the Bank offers an opportunity of sharing
the value created with those employees who have contributed or are expected to contribute to the growth and development of the
Bank.

The ESOP 2019 Scheme has been framed and implemented in compliance with provisions of the SEBI (Share Based Employee
Benefits) Regulations, 2014, now SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, Companies Act, 2013
and rules made thereunder and relevant guidance notes and accounting standards.

During the year, the NRC revised the ESOP Scheme 2019 of the Bank in accordance with Regulation 7(2) of the SEBI (Share Based
Employee Benefits and Sweat Equity) Regulations, 2021, that permits a Company to vary the terms of the schemes to meet any
regulatory requirement without seeking shareholders'' approval by special resolution. The below para in the ESOP Scheme 2019
under clause 8.2(b) Table Sr. 3 was added to ensure ESOP Scheme 2019 is in line with the RBI guidelines:

"However, in case of options granted to MRTs, the options will get vested to the MRTs as per the vesting schedule without any
acceleration in case of their retirement to ensure the compliance of all applicable RBI guidelines."

# MRTs: Material Risk Takers

During the FY 2024-25, following grants have been made to the eligible employees with the approval of the Nomination and
Remuneration Committee of the Bank:

Sr. No	Date of grant	Number of options	Price (?)
1.	May 13, 2024	2,848,007*	33.20
2.	May 13, 2024	69,742	51.80
3.	August 16, 2024	66,375	41.92
4.	August 23, 2024	1,099,211	43.78
5.	March 24, 2025	3,040,164	34.30
Total		7,123,499	-

*As stated in the Scheme of Amalgamation of Ujjivan Financial Services Limited (Transferor Company) and the Bank (Transferee
Company), with respect to the stock options granted to eligible employees by the Transferor Company under its ESOP scheme
which remains unexercised upon coming into effect of this Scheme, the Bank has granted 2,848,007 stock options to such eligible
employees of Transferor Company taking into account the share exchange ratio and on the same terms and conditions.

As on March 31,2025, 156,133,275 stock options have been granted by the Bank under ESOP 2019 Scheme to eligible employees of
the Bank. Following are the details of ESOP 2019 as on March 31,2025:

Particulars	Details
Options granted and valid at the beginning of the year (A)	102,648,472
Options granted during the year (B)	7,123,499
Options vested during the year	16,860,977
Options exercised during the year (C)	3,272,353
The total number of shares arising as a result of exercise of options	3,575,134
Options forfeited / lapsed during the year (D)	9,937,213

Particulars	Details
Variation in terms of options	None
Money realised by exercise of options (?)	100,986,397
Total number of options in force = (A) (B) - (C) - (D)	96,562,405
Details oF options granted during the year to:
Key Managerial Personnel	Mr. Sadananda Balakrishna Kamath, CFO was granted 2,872,400 options at a price of '' 34.33 per option
Any other employee who received a grant in any one year of options amounting to 5% or more of the options granted during the year	Nil
Identified employees who were granted options during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Bank at the time of grant	Nil

*3,66,608 options exercised in the month of March 2024 was allotted on April 04, 2024.

62,304 options exercised in the month of March 2025 was allotted on April 17, 2025.

The disclosures as required under Regulation 14 of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021
read with Circular CIR/CFD/POLICY CELL/2/2015 dated June 16, 2015 issued by SEBI are available on the website of the Bank at
www.uiiivansfb.in.

ESPS 2019 Scheme:

The Bank, pursuant to the resolutions passed by the Board on July 30, 2019 and by the Members on August 03, 2019, adopted the
ESPS 2019 Scheme. The ESPS 2019 Scheme has been framed and implemented in compliance with provisions of the SEBI (Share Based
Employee Benefits) Regulations, 2014 now, SEBI (Share Based Employee Benefits & Sweat Equity) Regulations 2021, Companies Act,
2013 and rules made thereunder and relevant guidance notes and accounting standards.

The objective of the ESPS 2019 Scheme is inter-alia to reward the eligible employees of the Bank and its Holding Company for their
association and performance as well as to motivate them to contribute to the growth and profitability of the Bank.

Pursuant to the ESPS 2019 Scheme, the Board is authorised to issue up to 72,001,840 fully paid up equity shares of the face value of
'' 10 each with pari-passu voting rights, to the eligible employees (as defined under the ESPS 2019 Scheme), in accordance with the
terms and conditions as may be decided by the Nomination and Remuneration Committee of the Bank.

The Nomination and Remuneration Committee has been entrusted with the responsibility of administering the ESPS 2019 Scheme.
No ESPS was granted or exercised during the FY 2024-25.

The disclosures as required under Regulation 14 of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021
read with Circular CIR/CFD/POLICY CELL/2/2015 dated June 16, 2015 issued by the SEBI are available on the website of the Bank at
www.uiiivansfb.in.

Further as per Regulation 13 of the SEBI (Share Based Employee Benefit and Sweat Equity) Regulations, 2021, the Board of Directors
have obtained the certificate from the Secretarial Auditor of the Bank, K Jayachandran, certifying that the schemes have been
implemented in accordance with these regulations and in accordance with the resolution of the Bank in the general meeting. The
same has been enclosed as "Annexure - 1" to this report.

E. ISSUE OF DEBENTURES, BONDS OR ANY NON-CONVERTIBLE SECURITIES OR WARRANTS

During the FY 2024-25, the Bank has not issued any debentures, bonds or any non-convertible securities or warrants. However, the
Bank has duly carried out monthly interest payments on the Non-Convertible Debentures (NCDs) having a face value of '' 100,000
(Indian Rupees One Lakh) aggregating to '' 3,000,000,000, issued during the FY 2022-23 as per the terms of the said issue.

DILUTION OF PROMOTER''S SHAREHOLDING AND REVERSE MERGER

The Hon''ble NCLT, Bengaluru Bench vide its order dated April 19, 2024 had sanctioned the Scheme of Amalgamation ("Scheme”) between
Ujjivan Financial Services Limited (erstwhile Promoter of the Bank) and the Bank and their respective shareholders and creditors under
Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 and the rules made thereunder.

As per the instructions of the NCLT, the NCLT order copy was filed with the ROC office, Bengaluru, by both the parties on April 30, 2024
and the promoter entity was dissolved without winding up from the even date and the promoter entity was dissolved without winding
up. Further all the eligible Shareholders of the Promoter entity was allotted 1,412,702,033 equity shares of the Bank as per the Share
Exchange Ratio of 10:116 as stated in the Scheme and the Bank was in receipt of the final listing and trading approval from NSE & BSE
on May 17 and 19, 2024 respectively. Also, the Bank through its Trustee i.e., M/s. Catalyst Trusteeship Limited disposed the fractional
entitlements of shares of the eligible shareholders of the Promoter entity at the price given below on June 10, 2024 and the net sale
proceeds was distributed after applicable deductions to the eligible shareholders of Promoter entity in proportion to their fractional
entitlements on June 15, 2024.

Number oF Shares sold	Aggregate Share	Gross proceeds	Deductions	Net Proceeds
	Price (in '')	(in '')	(in '')	(in '')
17,945		1''-897,250	HymfflUy2.142.s4	fflfflllBli3895,107.16

APPLICATION TO RBI FOR UNIVERSAL BANKING LICENSE

Based on the Board approval dated January 23, 2025, the Bank had submitted the formal application to the Reserve Bank of India ("RBI”)
for obtaining the Universal Banking License as per the RBI Guidelines for ''on tap'' Licensing of Universal Banks in the Private Sector dated
August 01,2016 read with RBI circular on Voluntary transition of Small Finance Banks to Universal Banks dated April 26, 2024.

CAPITAL ADEQUACY

The Bank is subject to the Basel II Capital Adequacy guidelines (NCAF) as stipulated by RBI. The Capital to Risk Assets Ratio (CRAR) of the
Bank is calculated as per the Standardised Approach (SA) for Credit Risk.

CRAR of the Bank is calculated on the basis of RBI NCAF guidelines. The CRAR of the Bank as at March 31,2025 using Risk Weighted Assets
for credit risk related exposures only, as required under the operating guidelines of RBI for Small Finance Banks, was 23.10% against a
minimum requirement of 15% and Tier I capital ratio was 21,38% against the minimum requirement of 7.5%.

CREDIT RATING

Credit ratings assigned to Long Term Bank Facilities, Subordinated Non-Convertible Debentures and Certificate of Deposit Programme of
the Bank as on March 31,2025 with details of changes as on date:

Instrument Name	Name of Credit Rating Agency	Amount ('' In Crores)	Rating	Date of Credit Rating	Revision in the Credit Rating during the FY 2024-25
Certificate of Deposit Programme	CRISIL Ratings Limited	2,500.00	CRISIL A1	16-02-2023	None; last reaffirmed on February 16, 2023
Long Term Bank Facilities	CARE Ratings Limited	500.00	CARE AA-; Stable	26-03-2025	Rating reaffirmed on March 26, 2025
Subordinated Non-Convertible Debentures	CARE Ratings Limited	500.00	CARE AA-; Stable	26-03-2025	Rating reaffirmed on March 26, 2025
Fixed Deposit	CARE Ratings Limited	10,000.00	CARE AA-; Stable	26-03-2025	Rating reaffirmed on March 26, 2025

TRANSFER OF UNPAID AND UNCLAIMED AMOUNT TO INVESTOR EDUCATION AND PROTECTION FUND

In terms of Section 124 & 125 of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting,
Audit, Transfer and Refund) Rules, 2016 as amended from time to time, the dividend that remains unpaid or unclaimed for a period of
seven consecutive years from the date of transfer, are required to be transferred to the Investor Education and Protection Fund (IEPF).
As on March 31, 2025, the unclaimed dividend declared by Ujjivan Financial Services Limited (merged with Ujjivan Small Finance Bank
Limited) and Bank for the below years are as under:

Sr.	Financial Year	Dividend Type	Unclaimed Dividend (in '')
1	FY 2017-18	Final (UFSL)	143,090.00
2	FY 2018-19	Interim (UFSL)	221,734.10
3	FY 2018-19	Final (UFSL)	71,163.45
4	FY 2019-20	Final (UFSL)	149,829.30
5	FY 2022-23	Interim (UFSL)	421,608.00
6	FY 2022-23	Interim (Bank)	632,974.35
7	FY 2022-23	Final (Bank)	424,850.57
8	FY 2023-24	Interim (UFSL)	324,474.50
9	FY 2023-24	Final (Bank)	3,080,286.00

During the FY 2024-25, unclaimed dividend of '' 156,920 for the FY 2016-17 for UFSL and 400 equity shares of UFSL that remained
unclaimed were transferred to Investor Education and Protection Fund (IEPF).

BOARD AND KEY MANAGERIAL PERSONNEL

Following changes took place in the Board Composition during the FY 2024-25:

Sr.	Name of the Director	Type of change	Effective Date	Remarks
1.	Ms. Carol Kripanayana Furtado (DIN: 07587305)	Appointment	May 01,2024	Appointment as the Whole-Time Director of the Bank.
2.	Ms. Mona Kachhwaha (DIN: 01856801)	Appointment	May 18, 2024	Appointment as an Independent Director of the Bank for the term of 5 (five) years.
3.	Mr. Ittira Davis (DIN: 06442816)	Early Retirement	June 30, 2024	Early retirement from the position of Managing Director & Chief Executive Officer of the Bank.
4.	Mr. Sanjeev Nautiyal (DIN: 08075972)	Appointment	July 01,2024	Appointment as the Managing Director & Chief Executive Officer of the Bank.
5.	Mr. Banavar Anantharamaiah Prabhakar (DIN: 02101808)	Re-appointment	August 20, 2024	Re-appointment as an Independent Director of the Bank for the second term of maximum 5 (five) years.
6.	Mr. Ravichandran Venkataraman (DIN: 02064557)	Re-appointment	August 20, 2024	Re-appointment as an Independent Director of the Bank for the second term of 5 (five) years.
7.	Mr. Samit Kumar Ghosh (DIN: 00185369)	Retirement	November 30, 2024	Retirement on attaining age of 75 years from the position of Non¬ Executive, Non-Independent Director of the Bank.

The brief profiles of the Directors are available on the website of the Bank at https://www.uiiivansfb.in/board-of-director.

KEY MANAGERIAL PERSONNEL

As on March 31,2025, pursuant to Section 203 of the Companies Act, 2013, Mr. Sanjeev Nautiyal, Managing Director and CEO, Ms. Carol
Furtado, Whole-Time Director, Mr. SB Kamath, Chief Financial Officer and Mr. Sanjeev Barnwal, Company Secretary and Compliance Officer
are the Key Managerial Personnel ("KMP") of the Bank.

Following were the changes in the Key Managerial Personnel during the FY 2024-25:

Sr	Name	Position	Effective Date	Remarks
1.	Ms. Carol Kripanayana Furtado	WTD	May 01,2024	Appointment as the WTD and KMP of the Bank
2.	Mr. Ittira Davis	MD & CEO	June 30, 2024	Early retirement from the position of MD & CEO and KMP of the Bank.
3.	Mr. Sanjeev Nautiyal	MD & CEO	July 01,2024	Appointment as the MD & CEO and KMP of the Bank.
4.	Mr. MD Ramesh Murthy	CFO	October 07, 2024	Early retirement from the position of CFO of the Bank.
5.	Mr. SB Kamath	CFO	December 05, 2024	Appointment as the CFO of the Bank.

The brief profiles of the Key Managerial Personnel are available on the website of the Bank at https://www.uiiivansfb.in/management-
team.

DECLARATION BY INDEPENDENT DIRECTORS AND STATEMENT ON COMPLIANCE OF CODE OF CONDUCT

The Bank has received declarations from all its Independent Directors confirming that they meet the criteria of independence as prescribed
under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI Listing Regulations and that they have complied with the
code of conduct for independent directors as prescribed under Schedule IV of the Companies Act, 2013.

Further, pursuant to Regulation 25(8) of the SEBI Listing Regulations, the Independent Directors of the Bank have also confirmed that
they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, to impair or impact their ability to
discharge their duties with an objective of independent judgment and without any external influence.

In the opinion of the Board, all the Independent Directors meet the criteria with regards to integrity, expertise and experience (including
proficiency*) as required under applicable laws.

*All Independent Directors of the Bank have registered themselves in the data bank as specified under Section 150 of the Companies
Act, 2013 read with Rule 6 of Companies (Appointment and Qualifications of Directors) Rules, 2014. Few Independent Directors have
qualified the prescribed proficiency test. The Independent Directors (not exempted under the Companies (Appointment and Qualification
of Directors) Fifth Amendment Rules, 2020 as notified on December 18, 2020) are committed to qualify the online proficiency self¬
assessment as required under aforesaid Rule within the prescribed timeline.

The Bank has also received from its directors, a statement that they have complied with the Code of Conduct for Directors and Senior
Management of the Bank.

DIRECTOR E-KYC

MCA vide its amendments to the Companies (Appointment and Qualification of Directors) Rules, 2014, had mandated registration of KYC
of all Directors. All the Directors of the Bank have complied with said requirement in FY 2024-25.

DIRECTORS AND OFFICERS LIABILITY INSURANCE POLICY

The Bank has a Directors and Officers Liability Insurance Policy which protects Directors and Officers of the Bank for any breach of
fiduciary duty.

NUMBER OF MEETINGS OF THE BOARD

The Board met 10 (Ten) times during the FY 2024-25. The meetings of the Board of Directors were convened in accordance with applicable
laws and standards and the intervening gap between the said meetings was not exceeding 120 days. The details of Board Meetings are
available in the Corporate Governance Report which forms part of the Annual Report of the Bank for the FY 2024-25.

BOARD COMMITTEES

The Bank believes that the Board Committees are pillars of good corporate governance. In pursuit of the highest standard of corporate
governance and to comply with the provisions of the Companies Act, 2013, SEBI Listing Regulations and RBI guidelines, the Bank has
constituted various statutory and regulatory Board Level Committees. Further, in order to improve the Board effectiveness, efficiency
and faster decision making, the Bank has also constituted a few non-statutory and non-regulatory Board Level Committees for better
governance and supervision.

As on March 31,2025, the Bank had 11 (Eleven) Board Committees and their applicability under below mentioned statutes are as follows:

Sr. No.	Board Committee	Companies Act, 2013	SEBI Listing Regulations	RBI Requirements
1.	Audit Committee	Yes	Yes	Yes
2.	Risk Management Committee	No	Yes	Yes
3.	Nomination and Remuneration Committee	Yes	Yes	Yes
4.	Stakeholders Relationship Committee	Yes	Yes	No
5.	IT Strategy Committee	No	No	Yes
6.	Customer Service Committee	No	No	Yes
7.	Fraud Committee (Special Committee of Board for Monitoring High Value Frauds)	No	No	Yes
8.	Review Committee of Willful defaulters	No	No	Yes
9.	Corporate Social Responsibility & Sustainability Committee	Yes	No	No
10.	Committee of Directors*	No	No	No
11

*The Board has changed nomenclature of Committee of Directors to Credit Committee of Board w.e.f. April 01, 2025.

The details of composition, number of meetings held and date thereof and terms of reference of the above Committees are available in
the Corporate Governance Report which forms part of the Annual Report of the Bank for the FY 2024-25.

RECOMMENDATIONS OF AUDIT COMMITTEE

During the FY 2024-25, there was no incidence, where the Board has not accepted any recommendations of the Audit Committee.
BOARD EVALUATION

The Board has carried out an annual evaluation of its own performance, the performance of Board Committees and Individual Directors
pursuant to the provisions of Section 178 read with Schedule IV of Companies Act, 2013, Regulation 19 of the SEBI Listing Regulations
and applicable RBI guidelines.

The performance evaluation was carried out by the Nomination and Remuneration Committee and by the Board in their meetings held
on March 24, 2025.

The approved evaluation formats and criteria are in line with the SEBI Guidance Note on Evaluation dated January 05, 2017.

The Nomination and Remuneration Committee has laid down comprehensive parameters for evaluation, a few of which are listed below:

I. The Board: Composition, structure, meetings, functions, management and professional development, ethics and compliance among
others.

II. The Committees: Mandate & Composition, effectiveness, structure, meetings, independence of the committee, contribution to
decision making of the Board, among others.

III. Individual directors (including Chairperson, Independent Directors and Non-Independent Directors): Leadership, Commitment,
Contribution, Experience, Expertise, Independence, Integrity, Attendance, Responsibility, Flow of Information among others.

The performance of the Board and Board Committees was evaluated after seeking inputs from all the directors.

The Board and the Nomination and Remuneration Committee reviewed the performance of the Individual Directors on the basis of the approved
criteria for evaluation. In addition, the Chairman and Managing Director & CEO were also evaluated on the key aspects of their roles.
Performance evaluation of Directors was done by the Nomination and Remuneration Committee and entire Board, excluding the Director
being evaluated. The Committee evaluated the performance of Directors and noted that:

i. The Directors had requisite competency, qualification, commitment and integrity.

ii. The Directors had long term vision, industry knowledge and expertise and were wholly committed and provided ethical leadership
to the Bank.

iii. The Directors had the ability to function as a team.

iv. Further, the Directors were regular in attending meetings and contributed effectively during the discussions.

v. There was no apparent conflict of interest and that they expressed their opinion freely.

Further, performance of Non-Independent Directors, the performance of the Board as a whole, the performance of the Chairman and quality,
quantity and timeliness of the flow of information between the Bank''s Management and its Board were also evaluated.

REMUNERATION OF DIRECTORS AND EMPLOYEES

The remuneration being paid to the MD & CEO and Whole Time Director are in conformity with the RBI approval.

The remuneration of Non-Executive Directors was paid only by way of sitting fees which is within the limit prescribed under Section
197(5) of the Companies Act, 2013 and RBI Guidelines on Review of Fixed Remuneration granted to Non-Executive Directors (NEDs) dated
February 09, 2024.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule
5(1), (2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this Report as
Annexure-2. In terms of Section 136(1) of the Companies Act, 2013, the annual report and the financial statements are being sent to the
Members excluding the disclosures in terms of Rule 5(2) and (3) as mentioned above. The same is available for inspection and any Member
interested in obtaining a copy of the Annexure may write to the Company Secretary of the Bank at [email protected]

REMUNERATION RECEIVED BY THE MANAGING DIRECTOR/WHOLE-TIME DIRECTOR FROM HOLDING OR SUBSIDIARY COMPANY

During the FY 2024-25, the MD & CEO has not received any remuneration or commission from the erstwhile Promoter i.e., Ujjivan Financial
Services Limited.

The Bank had no subsidiary company during the FY 2024-25.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

Complying with Regulation 25(7) of SEBI Listing Regulations and RBI guidelines, no introductory familiarisation programmes were
conducted during the FY 2024-25 as there were no new Independent Directors appointed on the Board during this period. However, the
Bank has conducted various training programmes for its Directors including the Independent Directors during the FY 2024-25.

The details of such programmes are available on the website of the Bank at https://www.uiiivansfb.in/corporate-governance-policies

DIRECTORS'' RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls established and maintained by the Bank, work performed by the internal, statutory
and secretarial auditors, reviews performed by the Management and the relevant Board Committees, the Board, in concurrence with the
Audit Committee, is of the opinion that the Bank''s internal financial controls were adequate and effective as on March 31,2025.

Pursuant to Section 134 (5) of the Companies Act, 2013, the Board, to the best of its knowledge, hereby confirms and states 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) they 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 at the end of the financial year and of the profit and
loss of the Bank for that period;

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

(d) they have prepared the annual accounts on a going concern basis;

(e) they 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) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were
adequate and operating effectively.

NOMINATION AND REMUNERATION POLICY

The Bank pursuant to the provisions of Section 178(3) of the Companies Act, 2013, Regulation 19 of SEBI Listing Regulations and RBI
Requirements has formulated and adopted a Nomination and Remuneration Policy on directors'' appointment and remuneration and the
criteria for determining qualification, positive attributes and independence of directors, which is available on the website of the Bank at
www.uiiivansfb.in/corporate-governance-policies.

Leadership Development and Succession Planning:

Alongside the ongoing Leadership Development Programme EDGE that aims to identify high performers and assess their potential and
suitability for leadership roles at Ujjivan, the Bank is also building a robust leadership pipeline through high-potential talent identification,
succession planning at both management and Board level, and experiential learning opportunities. As part of this initiative, the Bank
continues to undertake an extensive exercise to identify gaps in successors for critical positions and actively addresses the gaps by
leveraging market mapping and targeted talent acquisition to ensure readiness for future transitions under the direct guidance of the
Nomination and Remuneration Committee of the Bank.

RISK MANAGEMENT

The Risk Management Committee ("RMC") of the Board comprises of experienced directors from diverse backgrounds who bring in the
best risk management practices to the Bank. The RMC presently comprises of 7 (seven) directors out of which 5 (five) are Independent
Directors.

The RMC fulfils its roles and duties through various management level risk committees. Risk-specific management level committees
have also been constituted such as the Credit Risk Management Committee (CRMC), Operational Risk Management Committee (ORMC),
Asset Liability and Market Risk Committee (ALCO), Enterprise Risk Management Committee (ERMC), Information Security Committee and
Business Continuity Management Committee. These committees are entrusted with the task to identify, measure, mitigate and monitor
various risks on a day-to-day basis. There is also a National Controls and Compliance Committee (NCCC) comprising of control function
heads which meets at regular intervals to deliberate on common risks identified across the Bank.

The frequency, members and the quorum required for these management level committees are furnished in the respective risk policies
and the charter. These committees meet at regular intervals to assess and monitor the levels of risk pertaining to market, credit and
operations. In the last FY, the number of meetings, both at Board committee level and at Management level, far exceeded the required
minimum, to review and address issues and risks that emerged in a changing environment.

The Bank has identified the following risks as Pillar I risks, in line with the RBI NCAF guidelines:

• Credit Risk

• Operational Risk

• Market Risk

In addition to the above-mentioned Pillar-I risks, the Bank also monitors the following second order or derived risks (Pillar II Risks) using
specialised methodologies. The Bank has onboarded specialised personnel for monitoring the same and a comprehensive analysis is
undertaken under its Internal Capital Adequacy and Assessment Process (ICAAP).

• Liquidity Risk

• Interest Rate Risk in Banking Book

• Concentration Risk

• Outsourcing Risk

• Strategic Risk

• Reputational Risk

• Underestimation of credit risk

• Compliance risk

• People Risk

• IT and Information Security risks

• Emerging Risks such as Climate Risk, ESG risk, Model risk and Fintech risks.

The Bank''s Risk Management Framework is based on a clear understanding of the above risks, disciplined risk assessment and measurement
procedures and continuous monitoring. The policies and procedures established for this purpose are continuously benchmarked with
international best practises. The Bank has oversight on all the risks through regular monitoring of Key Risk Indicators and benchmarks/
tolerance/appetite against each type of risk.

Further, the Board reviews the Risk Management Framework of the Bank and verifies adherence to various risk parameters and compliances
at least at quarterly intervals or more frequently if the situation so warrants. The RMC provides a recommendation to approve risk-related
policies, including the quarterly/half-yearly/annual review reports of major risks.

From a governance perspective, the Bank has in place an effective risk management policy(s) which is duly approved by the Board, that
highlights the functions, implementation and role of the Risk Management Committee of the Board and the Board of Directors.

In compliance to the Pillar-III requirements, the Bank has in place a Board approved policy on Disclosures that addresses its approach for
determining what disclosures it will make and the internal controls over the disclosure process.

WHISTLE BLOWER POLICY / VIGIL MECHANISM

The Bank''s Whistle Blower Policy allows employees, directors, other stakeholders of the Bank such as customers, NGOs, the Group (if any),
Joint Ventures (if any), Suppliers, Contractors, NGOs and members of the public to report matters such as genuine grievances, corruption,
fraud, misconduct, and instances of leakage of unpublished price sensitive information, misappropriation of assets and non-compliance of
code of conduct of the Bank or any other unethical practises.

Utmost protection has been accorded to the whistle blowers and their identities are kept confidential.

The Policy also further provides an adequate safeguard against victimisation to the Whistle Blower and enables them to raise concerns
and also provides an option of direct access to the Chairperson of the Audit Committee.

Name and Address oF the Whistle and Ethics Officer
Ms. Chandralekha Chaudhuri
Ujjivan Small Finance Bank Ltd.

Grape Garden, No. 27, 3rd A Cross, 18th Main, 6th Block, Bangalore - 560095, Karnataka
Email- [email protected]

Protected disclosures against the Whistle and Ethics Officer need to be addressed to the Managing Director and CEO of the Bank and the
protected disclosure against the Managing Director and CEO of the Bank are required to be addressed to the Chairperson of the Audit
Committee.

Name and Address of MD & CEO of the Bank

Mr. Sanjeev Nautiyal

Ujjivan Small Finance Bank Limited

Grape Garden, No. 27, 3rd "A" Cross, 18th Main,

6th Block, Koramangala, Bengaluru - 560095,

Karnataka

Email: [email protected]

Name and Address of the Chairperson of the Audit Committee

Ms. Sudha Suresh,

C1, Farvella Apartments, 92/1 Lavelle Road 3rd Cross, Bangalore - 560001
Email: [email protected]

During the FY 2024-25, no one has been denied access to the Chairperson of the Audit Committee.

The Whistle Blower Policy is available on the website of the Bank at www.uiiivansfb.in/corporate-governance-policies

The confidentiality of those reporting violations is strictly maintained and they are not subjected to any discriminatory practice.

The status of the whistle blower complaints received and resolved by the Bank:

Particulars for FY 2024-25	Number of Complaints
Number of Whistle Blower Complaint at the beginning	0
Number of Whistle Blower Complaint received during the year	22
Number of Whistle Blower Complaint resolved during the year	20
Number of Whistle Blower Complaint at the end	21

Because of the inherent limitations of internal financial controls, including the possibility of collusion or improper management override
of controls, material mis-statements in financial reporting due to error or fraud may occur and may not be detected. Also, evaluation
of the internal financial controls is subject to the risk that the internal financial control may become inadequate because of changes in
conditions or that the compliance with the policies or procedures may deteriorate.

The Bank has, in all material respects, an adequate internal financial controls system which was considerably enhanced during the FY
2024-25 and such internal financial controls were operating effectively based on the internal control criteria established by the Bank
considering the essential components of internal control stated in the guidance note on audit of internal control over financial reporting
issued by the Institute of Chartered Accountants of India.

NO FRAUDS REPORTED BY THE AUDITORS

During the FY 2024-25, neither the Statutory Auditors nor the Secretarial Auditor has reported to the Audit Committee/Board or Central
Government any instances of material fraud in the Bank by its officers or employees under Section 143(12) of the Companies Act, 2013.

DISCLOSURES RELATING TO SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

A. REPORT ON PERFORMANCE AND FINANCIAL POSITION OF THE SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

There were no Subsidiary Company, Associate Company and Joint Venture of the Bank during the FY 2024-25.

B. COMPANIES WHICH HAVE BECOME OR CEASED TO BE SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

No company became or ceased to be Subsidiary Company, Associate Company and Joint Venture of the Bank during FY 2024-25.

DEPOSITS

The Chapter V of the Companies Act, 2013 does not apply to the Bank. During the FY 2024-25, the Bank has accepted deposits from
the public in the ordinary course of its banking business. The details of the deposits are enumerated in the Financial Statement for the
FY 2024-25.

Being a banking company, the disclosures required as per Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, 2014, read with Section 73
and 74 of the Companies Act, 2013 are not applicable to the Bank.

PARTICULARS OF LOANS, GUARANTEES AND/OR INVESTMENTS

The provisions of Section 186 of Companies Act, 2013 except sub-section (1) do not apply to a loan made, guarantee given or security
provided by a banking company in the ordinary course of business.

RELATED PARTY TRANSACTIONS AND CONTRACTS/ARRANGEMENTS

There was no materially significant related party transaction entered between the Bank and its related parties, except for those disclosed
in the financial statement.

All the contracts/arrangements/transactions entered by the Bank with the related parties during the FY 2024-25 were on arm''s length
basis; accordingly, the disclosure of particulars of contracts/ arrangements entered into by the Bank with related parties referred to in
sub-section (1) of section 188 of the Companies Act, 2013 in Form AOC-2 is not applicable.

The Bank has formulated a Policy on ''Materiality of Related Party Transactions'' which forms part of the Policy on dealing with ''Related
Party Transactions'' is available on the website of the Bank at www.uiiivansfb.in/corporate-governance-policies.

CORPORATE SOCIAL RESPONSIBILITY ("CSR")

The Bank has a duly constituted CSR Committee with 5 (Five) Directors out of which 4 (Four) are Independent Directors. The details of the
changes in the composition of the CSR Committee during the FY 2024-25 have been provided in the Corporate Governance Report which
forms part of the Annual Report for the FY 2024-25.

The Bank has formulated its CSR policy pursuant to Section 135(4) of the Companies Act, 2013 and the Companies (Corporate Social
Responsibility Policy) Rules, 2014, as amended, in accordance with the approach and direction given by the Board of the Bank, taking into
account the recommendations of its CSR Committee, and including guiding principles for selection, implementation and monitoring of
activities as well as formulation of the annual action plan.

The said Policy is available on the website of the Bank at www.uiiivansfb.in/corporate-governance-policies.

The detailed Annual Report on the CSR activities for the FY 2024-25 is annexed to this Report as Annexure-3.

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

A. CONSERVATION OF ENERGY

Ujjivan has been actively pursuing various initiatives aimed at achieving its goal of reducing power consumption by 20% by 2030. The
Sanchaya Programme, a sincere effort towards Energy conservation has been relaunched in Q3 FY 2024-25 at corporate and regional
offices to reduce energy usage. Through this initiative, the Bank has saved 7% of electricity in Q3 from that of the previous year''s
consumption in units. In addition, the Bank closely monitors the usage of desktops and laptops, ensuring that they are switched
off when not in use. The use of LED lighting continues as part of our ongoing efforts to improve energy efficiency. During the
FY 2024-25, the Bank also renovated its corporate main building, diligently incorporating sustainability practises throughout the
process. Through installation of energy efficient appliances like Sensor-based lighting, VRV AC systems, HVAC Timing & temperature
control systems etc, close monitoring of the usage and imparting consistent awareness on mindful consumption among employees
and staff members have enabled us to save about 30% in our renovated corporate Main block from that of last FY.

B. TECHNOLOGY ABSORPTION

In FY 2024-25, Ujjivan Small Finance Bank scaled up its RPA efforts significantly, achieving a 40% increase in the number of new
processes automated (from 15 to 21) compared to the previous year. The Bank also enhanced 6 existing RPA processes, maintaining
its momentum in process optimisation.

These initiatives resulted in a 72.5% rise in man-hours saved, with over 88,000 hours freed up during the year, and a 70.7% increase
in cost savings, crossing the ?14 Crores mark. Departments such as Operations, Micro Banking, Vigilance, Finance, Credit, IT, Risk, and
HR continued to leverage RPA to drive scale and efficiency.

Current year we have focused on driving projects under three KPIs

• Operational Efficiency

Processes involving high volumes and repetitive actions were automated to improve turnaround time and reduce manual
dependencies. This includes automation of user ID generation across critical applications, and backend reconciliation work for
a fintech partner—leading to faster execution and significant reduction in staff effort.

• Compliance & Control

Regulatory-focused processes were automated to ensure timely, consistent execution and adherence to guidelines. A daily
compliance task in Treasury—mandated by RBI—was fully automated, improving accuracy and audit readiness. Additionally,
cheque clearing operations were automated with increased frequency, aligning with regulatory expectations and reducing the
risk of delay or error.

• Accuracy & Reliability

Manual, error-prone reporting and communication tasks were digitised to ensure consistency. Training compliance reports,
previously created manually by L&D, are now generated automatically with mapped data inputs. Email reminders for
performance appraisals and goal-setting activities were also automated to ensure timely action and higher process completion
rates.

These achievements underscore the Bank''s strategic focus on digital transformation through intelligent automation, delivering
tangible business value year over year.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

During the FY 2024-25, 682 transactions (Inward & Outward) were processed adding up to USD 58.23 Lakh during the period. It
resulted in an exchange income of '' 61.06 Lakhs for the Bank. Total Foreign Exchange Outward was USD 54.37 Lakh during the
FY 2024-25.

SIGNIFICANT AND MATERIAL ORDERS BY THE REGULATORS OR COURTS OR TRIBUNALS

During the FY 2024-25, there were no significant and material orders passed by the regulators or courts or tribunals impacting the going
concern status of the Bank and its operations in future.

However, basis the receipt of the Shareholders approval of the Bank and Ujjivan Financial Services Limited (erstwhile Promoter) on the
Scheme of Amalgamation between the erstwhile Promoter and Bank, a second motion petition was filed with the Hon''ble NCLT, Bengaluru
Bench for final sanction of the Scheme. Further, the Hon''ble NCLT, Bengaluru Bench granted its final sanction vide its order dated April 19,
2024 sanctioning the Scheme of Amalgamation between the erstwhile Promoter and the Bank.

AUDITORS

A. STATUTORY AUDITORS

Pursuant to the receipt of the RBI approval vide its letter dated April 15, 2024, the Members of the Bank, in the 8th Annual General
Meeting held on July 26, 2024, appointed M/s. Deloitte Haskins & Sells, Chartered Accountants (FRN 117365W) and M/s Abarna &
Ananthan, Chartered Accountants (FRN 000003S) as the Joint Statutory Auditors of the Bank for a period of 3 (three) consecutive
financial years until the conclusion of 11th (Eleventh) AGM of the Bank to be held in the Financial Year 2027-28, subject to approval of
the RBI on an annual basis, pursuant to the RBI Guidelines for Appointment of Statutory Central Auditors (SCAs)/ Statutory Auditors
(SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs).

The policy of the Bank on "Appointment of Statutory Auditors" is available on the website of the Bank at www.uiiivansfb.in/
corporate-oovernance-Dolicies

Report oF the Statutory Auditors

The Statutory Audit of the Bank for the FY 2024-25 was conducted jointly by M/s Deloitte Haskins & Sells, Chartered Accountants
(FRN 117365W) and M/s Abarna & Ananthan, Chartered Accountants (FRN 000003S).

The Auditor''s Report on the financial Statements of the Bank for the FY 2024-25 does not contain any qualification, reservation or
adverse remark. The Auditor''s Report, enclosed with the financial statement, forms part of the Annual Report for the FY 2024-25.

SECRETARIAL AUDITOR

Mr. K. Jayachandran, Practicing Company Secretary (ACS No.: 11309 and Certificate of Practise No.: 4031) was appointed as the Secretarial
Auditor of the Bank in the meeting of the Board held on July 25, 2024 to conduct Secretarial Audit of the Bank for the FY 2024-25 as
required under Section 204 of the Companies Act, 2013 and the rules made thereunder and Regulation 24A of SEBI Listing Regulations.
The Bank provided all assistance and facilities to the Secretarial Auditor for conducting the audit.

The Secretarial Audit Report is annexed to this Report as Annexure - 4.

ANNUAL RETURN

In accordance with Section 134(3) and Section 92(3) of the Companies Act, 2013 and pursuant to Companies (Amendment) Act, 2017, a
copy of the Annual Return for the FY 2024-25 is available on the Bank''s website at www.uiiivansfb.in/annual-return

DESPATCH OF ANNUAL REPORT

Pursuant to the latest applicable circulars issued by the MCA and SEBI, in relation to ''Relaxation from compliance with certain provisions of
the SEBI Listing Regulations'' relaxing the requirement of dispatching physical copies of the Annual Report and the Notice convening the
AGM to Shareholders. Members who wish to have physical copy may write to the Company Secretary of the Bank at corporatesecretarial@
uiiivan.com or submit a written request to the Registered Office of the Bank. In accordance with the aforesaid circulars, the weblink of the
Annual Report and the Notice convening the AGM of the Bank is being sent in electronic mode only to members whose e-mail address is
registered with the Bank or the Depository Participant(s). Those members, whose email address is not registered with the Bank or with
their respective Depository Participant(s) and who wish to receive the Notice of the AGM and the Annual Report for the financial year
ended March 31, 2025, can get their email address registered by following the steps as detailed in the Notice convening the AGM. The
Annual Report of your Bank shall be available on the Bank''s website viz., https://www.uiiivansfb.in/annual-report

COMPLIANCE WITH SECRETARIAL STANDARDS

The Bank has complied with the provisions of Secretarial Standards specified by the Institute of Company Secretaries of India and notified
by the Ministry of Corporate Affairs under Section 118(10) of the Companies Act, 2013. The Bank has also complied with the provisions of
Secretarial Standard-4 on voluntary basis.

HUMAN RESOURCES

The Bank prioritises service mantra both internally and externally. While technology plays a pivotal role in the effort, its employees are
the catalyst of change and progress at the Bank. People practises are derived from the Bank''s core values; integrity, responsible, fairness,
respect, professionalism and teamwork. The Bank is driven to build better lives both for its customers and employees. This drive has
bestowed many accolades to the Bank.

Uyivan SFB has been recognised as one of India''s TOP 25 best places to work in the BFSI sector for 2025 as per the study conducted by
Great Place To Work® Institute

In FY 2024-25, the Uyivan SFB marked significant progress across key HR and employee engagement initiatives. A Trust Index score of
92 was achieved under the GPTW aspiration rankings, voluntary attrition rates improved with an overall reduction of 3.72% compared to

FY 2023-24 (FY-19.42%) and voluntary Infant attrition control rate was reduced from 6.26% from FY 2023-24 to 4.22% for the
FY 2024-25. Staffing was efficiently managed, closing the year at 95% of the budgeted headcount. Employee satisfaction remained
strong, with a score of 86 on the Amber and HR processing salaries and benefits with 99.99% accuracy and 100% on-time and operational
efficiency was further enhanced by reducing the FFS TAT time by 1.24 days from (FY-10.62 days).

A total of 53 HR digitisation projects were successfully implemented, collectively saving 7,960 man-hours. Learning and development
initiatives reached new industry benchmarks, with employees averaging 38.9 learning hours the highest in the industry with 42,120
employees receiving training.

Talent development saw a career growth with 9% of the employee in the organisation through the Internal Job Posting (IJP) route and
non IJP growth and 107 high-potential employees were identified under the EDGE programme. Additionally, physical engagement efforts
such as branch visits and town halls were reduced in the frequency of branch representative meetings from quarterly to semi-annual, with
Advent of the Amber feedback mechanism.

CORPORATE GOVERNANCE AND BUSINESS RESPONSIBILITY REPORT

The Bank recognises its role as a corporate citizen and endeavours to adopt the best practises and the highest standards of Corporate
Governance through transparency in business, ethics and accountability to its shareholders, customers, government, regulators and all
other stakeholders. The Bank''s activities are carried out following good corporate practises and the Bank is constantly striving to make
them better and adopt the best practises.

The Bank believes that timely reporting, transparent accounting policies and a strong Independent Board go a long way in preserving
shareholders'' trust and maximising long-term corporate value.

In pursuing the mission "to provide financial services to the unserved and underserved customers as a responsible mass market bank
focused on building a sustainable tomorrow", the Bank has been balancing its dual objectives of "social" and "financial goals since its
inception. "Responsible financing", "ethical values" and "transparency" in all its dealings with its customers, lenders, investors and
employees have been the cornerstone of its operations. Transparency in the decision-making process has been providing comfort to all
stakeholders, particularly the customers, lenders and investors.

The Report on Corporate Governance for FY 2024-25 as per Regulation 34(3) read with Schedule V of the SEBI Listing Regulations forms
part of the Annual Report for FY 2024-25. The disclosure as required under Section II of Part II of Schedule V of the Companies Act, 2013
have been provided under the heading of Remuneration of Directors in the aforesaid Corporate Governance Report.

A Business Responsibility and Sustainability Report containing the requisite details as per Regulation 34 (2) of the SEBI Listing Regulations
forms part of the Annual Report for the FY 2024-25 and is also disclosed on the Bank''s website at www.uiiivansfb.in.

Further, as a responsible bank, Ujjivan believes in creating a sustainable environment and making a positive social impact. The Bank
understands the importance of integrating environmental, social, and governance (ESG) factors into its operations and decision-making
processes. Thus, the Bank disclosed its maiden voluntary report to disclose its sustainability performance which is a testament to
transparency and accountability for FY 2022-23. The report for the FY 2024-25 will be published shortly and the same will be made
available at the website of the Bank at https://www.uiiivansfb.in/sustainabilitv-initiatives.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Regulation 34 and Schedule V of SEBI Listing Regulations, the Management Discussion and Analysis Report forms part
of the Annual Report for the FY 2024-25.

DISCLOSURE UNDER SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND
REDRESSAL) ACT, 2013

The Bank has a strict Prevention of Sexual Harassment ("POSH") Policy in accordance with the statutory requirements of the Sexual
Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. This Policy applies to all categories of employees
of the Organisation, including permanent employees, permanent management, workmen, temporary employees, trainees (interns),
consultants, advisers, ad hoc employees, daily wage earners, probationers, apprentices, contract employees, etc., at its workplace or
visits to partner organisations. This Policy recognises the right of privacy of every individual and will strive to protect the privacy of the
individuals involved and ensure that the complainant and the respondent are treated fairly. The Policy ensures that the career interest of
the parties involved in any proceedings under this Policy will not be adversely affected merely on account of the complaint made to the
Internal Committee or any evidence provided in connection with any enquiry; however strict action will be taken against the Respondent
if proven guilty post the enquiry process.

The status on the complaints received and resolved by Internal Committee during the FY 2024-25:

Number of Complaints	Number of Complaints Resolved	Number of Complaints Pending for Resolution
16	12	4

Composition oF Internal Committees

The Bank has constituted Internal Committees (IC) in each of the regions For all administrative units/branches/regional offices of the
Bank. All complaints of Sexual Harassment at the Workplace are enquired into by the IC having jurisdiction over the establishment where
the Respondent is posted. The IC forwards a report of its findings to the Employer for action. Each Regional IC consists of the following
members:

• Presiding Officer: who shall be a woman employed at a senior level in the region.

• Secretary: who shall be the Regional HR Manager.

• 2 Members: From amongst Employees in the region, preferably committed to the cause of women/having legal knowledge/
experience in social work.

• 1 Independent Member: Nominated from amongst NGOs/associations committed to the cause of women or a person familiar with
the issues relating to Sexual Harassment.

Other Members: Additional members may be co-opted, if required, from amongst Employees working in senior positions in the region,
especially from business, operations and control functions

Functions oF IC

The Committee is expected to conduct a fair, prompt and impartial process of investigating all the complaints it receives. During a redressal
process, the Complaints Committee/s are required to assure confidentiality, non-retaliation and recommend interim measures as needed
to conduct a fair enquiry.

POLICIES

To ensure better corporate governance, adherence to various laws and regulations as applicable to the Bank and better management of
the organisation as a whole, the Bank has formulated various policies including the policies mentioned below. These policies are available
on the Bank''s website at www.uiiivansfb.in/corporate-governance-policies.

A brief description of below mentioned policies/code have been given in Annexure-5 of this Report.

1. Policy for Determination of Materiality of Event/Information for Disclosures

2. Code of Conduct for Prevention of Insider Trading and Code of Fair Disclosure and Conduct

3. Corporate Social Responsibility Policy

4. Nomination and Remuneration Policy

5. Policy on Board Diversity

6. Policy on Code of Conduct

7. Related Party Transactions Policy

8. Dividend Distribution Policy

9. Familiarisation Programme

10. Policy on Archival of Documents

11. Record Retention Policy

12. Whistle Blower Policy

13. Terms and Conditions of Appointment of Independent Directors

14. Policy on Appointment of Statutory Auditors

CORPORATE GOVERNANCE COMPLIANCE CERTIFICATE

The Bank has obtained a certificate from K. Jayachandran, Practicing Company Secretary, certifying that the Bank has complied with the
conditions of the Corporate Governance as stipulated in Regulations 17 to 27 and clauses (b) to (i) of Regulation 46 (2) and other applicable
regulations of Chapter IV pertaining to Corporate Governance and paragraphs C, D and E of Schedule V of the SEBI Listing Regulations
for the FY 2024-25.

The certificate is annexed to this Report as Annexure-6.

KEY INITIATIVES WITH RESPECT TO STAKEHOLDER RELATIONSHIP, CUSTOMER RELATIONSHIP, ENVIRONMENT, SUSTAINABILITY,
HEALTH AND SAFETY

While key initiatives on customer relationship and health and safety have been detailed below. Information on initiatives concerning
stakeholders'' relationship, environment and sustainability, have been elaborated in the Business Responsibility and Sustainability Report
of the Bank which forms part of the Annual Report for the FY 2024-25.

We prioritise exceptional customer service and unwavering commitment to deliver outstanding experiences. We strive to be a customer¬
centric organisation by continuously evolving to meet the changing needs of our customers. This is achieved by nurturing our people,
refining our processes, and leveraging technology, all guided by customer feedback and market insights. To operationalise this
commitment, we''ve established a dedicated Service Quality department. This team plays a vital role in enhancing customer experience
across business verticals, maintaining rigorous service standards, efficiently addressing customer grievances and ensuring compliance
with regulatory guidelines on customer service and protection. This department is instrumental in driving our customer-centric vision,
ensuring that every interaction with our bank is seamless and satisfying.

To provide seamless and convenient banking experience, the Bank has launched new alternate/digital channels for customer servicing.
These include launch of WhatsApp Banking, Chat Banking, Video Banking in addition to existing channels such as Phone Banking, Internet
and Mobile Banking. Since alternate and digital channels provide convenience to customers as they can avail service at their comfort
24/7 without visiting our branches, the Bank has promoted alternate/digital channels through various customer awareness initiatives
and marketing. As a result, usage of alternate/digital channels for fulfilment of service request, queries, complaints and feedback has
improved to 49% in FY 2024-25 compared to 44% in FY 2023-24.

Continuous Improvements in Customer Service Standards: Our relentless focus on delivering superior service standards has enabled us
to maintain high levels of quality and consistency across all our offerings. To drive this commitment, we''ve established and refined a
comprehensive Service Index programme that encompasses both external and internal customer service. This programme applies to each
business vertical and key support functions, incorporating key parameters that impact customer service delivery and satisfaction.

Over the past 7 years, our Service Index programme has evolved to become a unique best practise in the industry. A robust governance
structure supports our customer service commitment, with clear targets for improving service index scores at both functional and bank¬
wide levels. These targets are integral to our performance management framework, with key performance metrics tied to the MD &
CEO, business/function heads, frontline managers, sales and service staff. This structured approach ensures accountability and drives
continuous improvement in customer service across the organisation.

The various cross-functional initiatives at people, process and technology level have helped in achieving substantial improvements in Bank
Level Service Index to highest ever score of 93 points (out of 100) in March 2025 from 89 in March 2024 and 85 in March 2023.

The number of complaints in FY 2024-25 had decreased by 21% compared to FY 2023-24 and 14% compared to FY 2022-23.

Resolution of customer service requests within standard turn-around-time has improved to 95% in FY 2024-25 from 94% in FY 2023-24
and 90% in FY 2022-23.

The resolution of customer complaints within standard turn-around time has improved to 99% in FY 2024-25 from 98% in FY 2023-24 and
96% in FY 2022-23.

Aajeevan Services - An Approach to Life Events Based Banking Services

We understand that life events, whether joyful or saddening, require empathy, support, and assurance. To address this need, we''ve
implemented "Aajeevan," a unique life-events-based banking programme that provides personalised services to help customers navigate
life''s milestones with ease.

Aajeevan offers a range of services, including: nomination facilities, joint accounts, settlement of claims for deceased account holders,
settlement of insurance claims, priority and doorstep services for senior citizens and specially abled customers, special services like adding
mandate holders or power of attorney.

This programme is built on empathy and compassion, aiming to provide financial well-being while fostering long-term relationships with
our customers. We''ve also focused on simplifying processes and training our staff to deliver efficient and empathetic service.

To ensure successful implementation, we''ve conducted a specially designed one-day workshop on Aajeevan services year on year. For
FY 2024-25, we have conducted training for 934 customer-facing and sales staffs in 46 batches. This training emphasises empathy and
efficiency, enabling our staff to provide exceptional support to our customers during life''s significant events.

Over the years, the promotion of Aajeevan services has helped in improvement of resolution of Aajeevan service requests to 99% in
FY 2024-25 and FY 2023-24 from 94% in FY 2022-23.

New initiatives undertaken to provide seamless customer service and safety of digital transactions:

The customers can make PFMS (Public Financial Fund Management System) payments from BNB platform for transacting of the funds
received through subsidy.

Additional security has been added to BNB through Captcha Login to protect the customers from spam & password decryption.

One stop solution for corporate clients has been provided by enabling the service of Direct Tax payment in Business Net Banking platform.
Development of Pre-filled Service Request Form for Policy Refunds in Finacle Application to reduce the errors at branches while filling
the Premium refund form.

The trainings on Secured Assets Servicing were completed for the shortlisted branch staffs, successfully covered 236 employees in 14 batches.
Customer Connect and Awareness:

• As an ongoing customer awareness programmes, the Bank has launched various customer awareness campaigns such as;

• Installation of antivirus software

• Avoid unsecured network

• Verify if the message is official

• A significant increase in spam calls were reported across the country for updating KYC through fraudulent APK files from unknown
source. To address this concern and ensure our customers are aware of such incidents, a customer awareness campaign was
conducted through SMS and emailers on safety measures while using digital channels including not to share banking credentials
over suspicious links.

Bank has been conducting a monthly customer service committee as "Let''s Connect" which provide a vital platform for customers to
share feedback, voice grievances and suggest improvements in banking services. 78,358 customers from various product segment
had participated in these meetings across our branches in FY 2024-25. Feedbacks received during these meetings were reviewed and
implemented as necessary. During these meetings, the customers were also educated on key customer service aspects such as reporting
and awareness on unauthorised transcations, awareness on Aadhar Enabled Payment Services (AePS), Positive Pay System (PPS), Form
15G/H, Key features of WhatsApp and Video Banking.

Facilitating accessibility to digital payment systems For Customers with Disabilities

The Bank provides doorstep banking services for differently abled customers, including the visually impaired, and senior citizens, covering
both financial and non-financial services. Financial services include cash delivery, cash pick up, DD delivery and cheque pick up, while non¬
financial services include mobile/e-mail update, KYC update, e-mail statement registration, Form 15G/H submission and also customers can
avail upto four doorstep banking services per month. Priority services are also offered at branches for these customers and information
regarding the availability of priority services is displayed at branches.

Health and Safety

The Bank considers Health and Safety of its employees very important and various initiatives have been taken with this objection over the
years. Following are a few highlights of the same:

• Fire extinguishers are in place as per the defined protocols in all the offices & branches across PAN India with half yearly fire drill
conducted only in RO and HO. The same is carried out only in regional offices and the awareness is created among the branch
employees. To ascertain adequacy and quality of the safety measures, an audit has been conducted by third party every quarter.

• Towards providing better work environment to the employees and customers, all the URCs are installed with Air conditioners & preventive
maintenance of all the electric equipment''s across branches conducted periodically - 95% of the URCs are equipped with ACs.

• For the specially-abled customers & employees, 29 ramps have been constructed across PAN India branches. - 125 ramps are available
across the country.

• Deep cleaning & Pest control services were rendered at the branches that were older than 5 years. - Deep cleaning & Pest control
services are being done once in a quarter.

Considering the health of the employees, 20 branches in the North have been installed with RO water purifiers for drinking water - It is
30 branches.

Cash-settled Stock Appreciation Rights Agreement (CSARs)

During the year, with the prior approval of the RBI, the NRC of the Bank through its resolution passed on January 13, 2025 granted
23,09,415 CSARs to Mr. Ittira Davis, former MD & CEO of the Ujjivan bank towards the non-cash portion of the approved variable pay for
the FY 2023-24; details of the CSAR granted are given below:

Sr No.	Particulars	Details
1	Non-Cash Variable Pay	'' 20,100,000
2	No. of CSARs	2,309,415
3	Base Price per CSAR	'' 35.49 (FMV as on Jan 10, 2025)
4	Appreciation to be settled in cash	Market Price as on date of Vesting less Base Price
5	Payout Period	90 days from the date of Vesting of CSARs

CSAR Vesting schedule

Dates of Vesting	Percentage of Vesting	No. of CSARs to be vested
Jan 10, 2026	20% of CSARs granted	461,883
Jan 10, 2027	20% of CSARs granted	461,883
Jan 10, 2028	30% of CSARs granted	692,825
Jan 10, 2029	30% of CSARs granted	692,824

Employees Safety Measures

As an employee first organisation, Ujjivan conducts annual health check-up for all its employees once in two years. This annual health
check-up is followed up by the Partner by providing free consultation on the reports and also advising employees with high-risk reports.
To support its employees, Ujjivan also has a facility of 24x7 "Doctor on Call" teleconsultation This facility has been made available for
employees and their dependents to consult doctors during emergencies. While the services were available for physical ailments.

Apart from that the QRT (Quick Response Team) which was activated during the start of the pandemic still monitors the environment &
health related concerns across regions and issues guidelines to employees as and when required.

OTHER DISCLOSURES

A. The Bank is not required to maintain cost records as specified by the Central Government under sub-section (1) of Section 148 of the
Companies Act, 2013.

B. Disclosure as required under Rule 8(5)(xi) and 8(5)(xii) of the Companies (Accounts) Rules, 2014 does not apply to the Bank for
FY 2024-25.

C. None of the directors of the Bank are disqualified as per provisions of Section 164(2) of the Companies Act, 2013. The directors
have made necessary disclosures, as required under various provisions of the Companies Act, 2013, SEBI Listing Regulations and RBI
guidelines.

ACKNOWLEDGEMENT

We place on record our gratitude to our employees at all levels who have contributed to the growth and sustained success of the Bank
through their dedication, hard work, cooperation and support.

We would like to thank all our customers, vendors, bankers, investors, auditors, media and other business associates for their continued
support and encouragement during the year.

We also thank the Government of India; the Government of Karnataka; the Ministry of Commerce and Industry; the Ministry of Finance,
Ministry of Corporate Affairs; the Securities and Exchange Board of India, the Stock Exchanges, the Central Board of Indirect Taxes and
Customs; the RBI; the Central Board of Direct Taxes and all other government agencies for their support during the FY 2024-25 and look
forward to their continued support in future.

For and on behalf of the Board of Directors

Sd/- Sd/-

B A Prabhakar Sanjeev Nautiyal

Part-Time Chairman and Independent Director MD & CEO

DIN:02101808 DIN:08075972

Date: April 30, 2025
Place: Bengaluru

1

The investigation got completed in the two cases during April''2025.

ADEQUACY OF INTERNAL FINANCIAL CONTROL

The Bank has laid down certain guidelines, policies, processes and structures to enable the implementation of appropriate internal
financial controls across the Bank. These control processes enable and ensure orderly and efficient conduct of the Bank''s business,
including the safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records
and timely preparation of reliable financial information. There are control assessments for both the Bank''s critical operating processes
and IT applications, including ERP applications, wherein the transactions are approved and recorded. These controls are both manual and
automated. Review and control mechanisms are built in to ensure that such control systems are adequate and operating effectively.

---

Mar 31, 2024

On behalf of the Board of Directors (the "Board") of Ujjivan Small Finance Bank Limited (the "Bank or Ujjivan SFB"), it is our immense pleasure to present the 8th Annual Report of the Bank along with the Audited Financial Statements and Auditor's Report thereon for the FY 2023-24.

OVERVIEW AND STATE OF AFFAIRS OF THE BANK

The Bank continued to progress in FY 2023-24 on the strong base laid in the previous fiscal. Bank focussed on improving book quality, build business volumes, customer acquisition and expand its geographical presence. Along with branch expansion, the Bank further developed on its digital offerings and strengthened its IT infrastructure making it more robust and proficient to effectively aid the growing business. Highlights of achievements during FY 2023-24 were:

i.    Disbursement:' 23,389 Crores for the FY 2023-24;

ii.    Deposits: Crossed ' 31,000 Crores milestone and closed the year with total deposits of ' 31,462 Crores. Total deposit accretion during the year was at ' 5,924 Crores

iii.    Asset Quality: GNPA/NNPA at 2.1%/0.3% as on March 2024; PCR at 87% as on March 2024

iv.    Microbanking cashless collections: 43% in Q4; among the highest in industry

v.    Launched a nation-wide brand campaign, a prominent step towards establishing Ujjivan SFB as a mass market bank

vi.    Introduced digital TD & SA to provide seamless experience to our customers and help us to serve beyond brick-and-mortar branches

vii.    Net profit for the FY 2023-24 is ' 1,281 Crores, continuing the strong profitability trend picked up in last quarter.

Additionally, the Bank believes a robust IT infrastructure holds a competitive advantage and is greatly beneficial for serving its customers. Bank continued its investments in fortifying its digital landscape. These investment span across business aspects from technology and digital platforms to new products and verticals to human capital to infrastructure.

Technology and Digital Platforms:

•    Hello Ujjivan launched in FY 2022-23 has now crossed 7.8 Lakhs downloads as on March 2024 aiding in paperless disbursements, digital repayments and reducing TAT;

•    DigiMitra launched in FY 2023-24, a dedicated support service aimed at helping customers navigate any technical issues they may encounter while accessing digital products and services

•    CRM and Customer Deduplication systems have been upgraded, resulting in refined user interfaces and data reliability. A pilot for the CRM mobile application has been deployed enabling mobile user engagement

•    In digital banking front, Bank has introduced several customer-centric innovations such as digital Fixed Deposit & Savings, which have been highly appreciated for their convenience and accessibility

•    During the year, the Bank's IT facilitated launch of 11 new applications across business verticals with requisite environments created across various application stacks; Around 450+ projects and enhancements went live during the year covering regulatory, new product lines, services for revenue generation, enhancing customer experience, improving operational efficiency and cost savings

•    On data analytics, the Bank has adopted state of the art "BI tool" (Both Web and Mobility channels) with interactive dashboards to empower its employees at every level to adopt data driven proactive decision and boost their productivity

New Products & verticals:

•    Introduced Semi-formal LAP & working capital facilities during the year to expand MSME product suite

•    In vehicle finance introduced Trade advance facility for our dealers

•    Introduced value added liability products, like Maxima CA & SA to augment our liability product offering and gain market share; Focussed to improve our digital offerings reintroduced Digital TD and Digital SA

•    Launched 3-in-1 Demat Trading Services through strategic partnership

•    Upgraded APY by revamping back-end process has helped in improved business flow

Human Capital:

•    Increase in staff count: field staff 15,857 from 13,077; others 6,709 from 4,793

•    Extensive training programmes being conducted to enhance knowledge and productivity

Infrastructure:

•    Banking outlets: Expanding our physical presence adding 123 branches in FY 2023-24 with banking outlets reaching 752 as of March 2024

•    Retail Asset Centres: Opened 15 new retail asset centres taking total count 18 as on March 2024 to optimise processes and improve efficiency

•    Other premises: expanded our other regional and corporate offices to accommodate growing scale

This year's strong performance was led by increased business growth across verticals. Under our microfinance segment - Micro Group Loans/ Individual Loans gross loan book grew 13%/ 53% vs March 2022 with disbursement up 3%/41% as against FY 2022-23; disbursement growth in this segment was led by increased focus on Individual Loans as customers graduated from Micro group loans to Individual loans and customer acquisition. Housing segment continues to make newer highs growing by 45% vs March 2023 reaching ' 4,924 Crores gross loan book as on March 2024. Affordable Housing disbursements grew strong by 64% vs FY 2022-23 owing to strong demand in the segment and increased efficiency due to retail asset centres aiding in faster processing and quicker disbursals. During the year, MSME business put its renewed business strategy into action the verticals LAP business scaled up with Prime LAP and Elite LAP variants. Systems and processes were revamped. All these deemed to have a positive impact on various critical metrics like Productivity, Turn-Around Time and First-Time-Right (FTR). Additionally, new strategic partnerships were entered with fintechs to lend towards supply chain finance. In FY 2024-25 this business is expected to deliver strong growth. Our Institutional lending business grew 53% YoY to ' 1,731 Crores of gross loan book as of March 31, 2024 driven by 67% jump in disbursement vs FY 2022-23. Further the newer lines of businesses like Vehicle Finance and Gold Loan have seen decent traction in last few months of FY 2023-24. This is expected to scale up substantially in FY 2024-25. Overall, the secured book contribution has improved in-line with Banks Strategy, to 30.2% of the total gross loan book vs 27.20% in FY 2022-23 During FY 2023-24, Bank's deposit book grew by 23% to ' 31,462 Crores crossing the bench mark of ' 31,000 Crores. CASA grew by 24% y-o-y, closing at 26.5% of the total deposit book as of March 31, 2024. This year we undertook multiple initiatives to achieve this growth like:-

a) Undertook our first nationwide brand campaign

b)    Launched value added products to cater to customer demand

c)    Entered into partnership for 3-in-1 Demat Trading Services accounts

d)    launched digital TD & digital SA providing seamless onboarding experience

All these efforts combine have helped us achieve this in FY 2023-24, We will be building on this base in FY 2024-25. Margins: During the year the Bank continued to have benefits from repricing of assets which helped us improve yield, and consequently our NIMs which was under pressure due to rising CoF. The repricing benefit will continue in H1FY25 supporting our margins. CoF however will remain elevated until interest rate cycle turns. With asset quality remaining strong the bank expects to sustain its margins in FY 2024-25.

Collection strategy: The bank continues to have strong and dynamic collection team which played a critical role in containing credit cost and ensured timely recovery of default loans. Our dedicated collections team employs strategic collection methodologies to mitigate credit risk and minimise delinquencies. The collections efforts would continue to be augmented with the intensified legal actions across various products. The fruit of Bank's efforts in last FYs are bearing fruit in the form of significant improvement in all the credit parameters. The Bank aims to proactively onboard quality borrowers and manage repayments that were well-tested during FY 2023-24 and the bank continues to monitor the portfolio quality with a focus on innovation, leveraging technology and customercentric approach. The bank is well poised for the next level of banking growth in the aspiring middle-income segment. The Bank's Board comprised of 8 directors as at the end of FY 2023-24, with the MD & CEO being the Executive Director, 6 Independent Directors including 3 Women Independent Directors and 1 Non-Executive NonIndependent Director.

FINANCIAL PERFORMANCE Summary of Financial Performance

(' in Crores)
Particulars	FY 2023-24	FY 2022-23
Revenue from Operations Other Income Less: Operational Expenses	3,409.45 786.75 997.63	2,697.90 589.19 791.53
Personnel Expenses	1,183.18	920.25
Profit/loss before Depreciation, Finance Costs, Exceptional items, Provisions and Tax Expense	2,252.40	1,727.20
Less: Depreciation/ Amortisation/ Impairment	98.29	90.28
Profit /loss before Finance Costs, Exceptional items, Provisions and Tax	2,154.11	1,636.92
Expense	Â	Â
Less: Finance Costs	237	151.89
Profit /loss before Provisions, Exceptional items and Tax Expense	1,917.11	1,485.03
Less: Provisions & Contingencies	214.94	17.79
Add/(less): Exceptional items	0	0
Profit /loss before Tax Expense	1,702.17	1,467.24
Less: Tax Expense (Current & Deferred)	420.67	367.32
Profit /loss for the year (1)	1,281.50	1,099.92
Total Comprehensive Income/loss (2)	0	0
Total (1+2)	1,281.50	1,099.92
Balance of profit /loss for earlier years	506.87	(72.35)
Less: Transfer to Debenture Redemption Reserve	0	0
Less: Transfer to Statutory Reserves	463.66	274.98
Less: Transfer to investment Fluctuation Reserve	4.37	46.79
Less: Transfer to Capital Reserves	0	0
Less: Dividend paid on Equity Shares	68.34	146.59
Less: Dividend paid on Preference Shares	0	22.00
Less: Dividend Distribution Tax	0	0
Less: Investment Reserve Account	0	0.34
Less: Transfer to Special Reserve U/S 36 (1)(viii) Income tax Act 1961	17	30.00
Balance carried forward	1,378.27	506.87
Key Ratios: (Comparative ratios are annualised)
Particulars	FY 2023-24	FY 2022-23
Interest income as a percentage to working funds	15.38%	15.28%
Non-interest income as a percentage to working funds	2.13%	2.16%
Operating profit as a percentage to working funds Business (deposits plus gross advances) per employee (? in thousands) Profit per employee (? in thousands) EPS (Basic) (?)	5.20% 25,989 633.82 6.65	5.45% 23,906 632.78 5.82
EPS (Diluted) (?)	6.54	5.81

TRANSFER TO RESERVESA.    Statutory Reserve

The Bank has made an appropriation of ? 320.37 Crores to the statutory reserve for the year ended March 31, 2024 out of profits, to the Statutory Reserve, pursuant to the requirements of section 17 of the Banking Regulation Act, 1949 and RBI guidelines dated September 23, 2000. Also, the Bank has taken over the Statutory Reserves of ? 143.28 Crores in pursuant to the scheme of amalgamation as sanctioned by the National Company Law Tribunal.

B.    Investment Fluctuation Reserve ("IFR")

During the year ended March 31, 2024, the Bank has made an appropriation of ' 4.37 Crores to IFR from the profit and loss account so as to reach the figure of 2% of its HFT and AFS Investment portfolio.

DIVIDEND

The Bank has formulated and implemented a Dividend Distribution Policy pursuant to Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") and RBI Requirements with an objective to appropriately reward shareholders through dividends for reposing their confidence in the Bank while retaining the capital required for supporting future business growth. The said Policy is available on the website of the Bank at www.uiiivansfb.in/corporate-governance-policies.

Equity Dividend

During the FY 2023-24, the final dividend of ' 97.74 Crores (before TDS) pertaining to FY 2022-23 was paid out to the equity shareholders on August 09, 2023.

For the FY 2023-24, the Board of Directors in its meeting held on May 18, 2024 has recommended a Final Dividend of 15% i.e. ' 1.5 per equity share, which on approval of the shareholders in the 8th AGM will be distributed in the FY 2024-25 within the stipulated time limit.

CHANGE IN THE NATURE OF BUSINESS

There was no change in the nature of business of the Bank during FY 2023-24.

MATERIAL CHANGES AND COMMITMENTS

No material changes and commitments have occurred after the closure of the FY 2023-24 till the date of this report, which might have affected the financial position of the Bank.

REVISION OF FINANCIAL STATEMENT OR THE DIRECTORS' REPORT

The Bank has not revised its financial statements or the directors' report in respect of any of the three preceding financial years either voluntarily or pursuant to the order of any judicial authority.

GENERAL INFORMATION

Detailed overview of the banking industry and important changes therein, external environment and economic outlook have been elaborated in the Management and Discussion Analysis Report which forms part of the Annual Report of the Bank for the FY 2023-24.

CAPITAL AND DEBT STRUCTURE

A. CHANGES IN CAPITAL STRUCTURE

With the Scheme of Amalgamation between Ujjivan Financial Services Limited (UFSL) and Ujjivan Small Finance Bank (Ujjivan SFB/ Bank) being effective from the appointed date April 01, 2023, the authorised share capital of the Bank increased as a result of transfer of ' 1,250,000,000 authorised capital from UFSL to the Bank. Further the authorised preference share capital ' 2,000,000,000 of the Bank has also been added to the authorised equity share capital, accordingly as on date the authorised share capital of the Bank is ' 26,250,000,000 divided into 2,625,000,000 equity shares of ' 10/- each.

Following are details of increase in the paid-up capital during the Financial Year 2023-24:
Sr	Particulars	Amount (in ')
1	Paid-up Capital at the beginning of the Financial Year	21,547,066,250
2	Equity Shares allotted under the ESOP Scheme 2019 during the FY 2023-24	40,566,510
3	Paid-up Capital at the end of the Financial Year (Pre-merger)	21,587,632,760
4	Paid-up Capital at the end of the Financial Year (Post-merger)*	19,314,285,090

*Note: Pursuant to the effect of the Scheme of amalgamation, 1,440,036,800 equity shares and200,000,000preference shares of the Bank held by UFSL are extinguished. Consequent to the aforesaid, the paid-up equity capital of the Bank is revised to ' 19,314,285,090.

During the FY 2023-24, following equity shares were issued and allotted:

B. ISSUE OF EQUITY SHARES OR OTHER CONVERTIBLE SECURITIES

Sr	Particulars of Equity Shares allotted under the ESOP Scheme 2019 allotted on following dates:	No. of shares	Total Nominal Price (in ')	Total Issue Price including premium (in ')
1	April 12, 2023	21,974	219,740	412,844.25
2	May 08, 2023	22,332	223,320	445,523.40
3	June 09, 2023	25,444	254,440	515,539.15
4	July 03, 2023	79,285	792,850	1,852,891.60
5	August 04, 2023	195,990	1,959,900	5,598,565.35
6	September 15, 2023	539,651	5,396,510	16,148,840.95
7	October 09, 2023	283,989	2,839,890	8,293,461.45
8	November 16, 2023	364,321	3,643,210	11,522,327.25
9	December 12, 2023	303,243	3,032,430	9,313,374.49
10	January 09, 2024	366,450	3,664,500	11,160,328.20
11	February 09, 2024	1,019,002	10,190,020	25,936,742.65
12	March 12, 2024	834,970	8,349,700	22,342,167.15
TOTAL		4,056,651	40,566,510	113,542,605.89

C.    ISSUE OF EQUITY SHARES WITH DIFFERENTIAL RIGHTS AND/OR SWEAT EQUITY SHARES

During the FY 2023-24, the Bank has neither issued any equity shares with differential rights nor any sweat equity shares.

D.    EMPLOYEE STOCK OPTIONS/ SHARE BASED EMPLOYEE BENEFIT SCHEMES

The Bank has formulated and implemented ESOP 2019 Scheme and ESPS 2019 Scheme to reward the employees of the Bank, and employees of its present or future subsidiary(ies) and/or holding company(ies), for their association and performance as well as to motivate them to contribute to the growth and profitability of the Bank.

ESOP 2019 Scheme:

The Bank, pursuant to the resolutions passed by the Board on January 22, 2019 and by the Members on March 29, 2019, adopted the ESOP 2019 Scheme. The Bank in its 4th Annual General Meeting held on September 02, 2020 has ratified the ESOP 2019 Scheme as required under the SEBI (Share Based Employee Benefits) Regulations, 2014. The Bank may grant an aggregate number of up to 144,000,000 stock options under the ESOP 2019 Scheme. Upon exercise and payment of the exercise price, the option holder will be entitled for allotment of one

equity share per stock option. Accordingly, the number of equity shares that may be issued under the ESOP 2019 Scheme shall not exceed 144,000,000 equity shares of face value ' 10 each.

The ESOP 2019 Scheme is effective from March 29, 2019. The objectives of ESOP 2019 Scheme are, among others, to attract and retain employees with stock options as a compensation tool. Through ESOP 2019 Scheme, the Bank offers an opportunity of sharing the value created with those employees who have contributed or are expected to contribute to the growth and development of the Bank.

The ESOP 2019 Scheme has been framed and implemented in compliance with provisions of the SEBI (Share Based Employee Benefits) Regulations, 2014, now SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, Companies Act, 2013 and rules made thereunder and relevant guidance notes and accounting standards.

As on March 31,2024, 149,009,776 stock options have been granted by the Bank under ESOP 2019 Scheme to eligible employees of the Bank and its Holding Company.

During the FY 2023-24, following grants have been made to the eligible employees with the approval of the Nomination and Remuneration Committee of the Bank:

During the FY 2023-24, following grants have been made to the eligible employees with the approval of the Nomination and Remuneration Committee of the Bank:
Sr. No	Date of grant	Number of options	Price (?)
1.	October 09, 2023	28,013,164	48.50
2.	October 27, 2023	1,024,751	51.46
Total		29,037,915	-
No change has been made in the ESOP 2019 Scheme during the FY 2023-24 and following are the details of ESOP 2019 as on March 31, 2024:
Particulars		Details
Options granted and outstanding at the beginning of the year (A) Options granted during the year (B) Options vested during the year Options exercised during the year (C) The total number of shares arising as a result of exercise of options		119,971,861 29,037,915 10,447,702 4,401,954 4,056,651
Options forfeited / lapsed during the year (D)		10,658,473
Variation in terms of options		None
Money realised by exercise of options		122,780,079.27
Total number of options in force = (A) + (B) - (C) - (D)		133,949,349
Details of options granted during the year to:
Key Managerial Personnel		Mr. Ittira Davis, MD & CEO- 1,024,751 options granted at a price of ' 51.46 per option Mr. Sanjeev Barnwal, Company Secretary -135,838 options granted at a price of ' 48.50 per option

Particulars	Details
Any other employee who received a grant in any one year of options amounting to 5% or more of the options granted during the year	Nil
Identified employees who were granted options during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Bank at the time of grant	Nil
*21,974 options exercised in the month of March 2023 have been allotted on April 12, 2023. 366,608 options exercised in the month of March 2024 have been allotted on April 04, 2024.

The disclosures as required under Regulation 14 of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 read with Circular CIR/CFD/ POLICY CELL/2/2015 dated June 16, 2015 issued by SEBI are available on the website of the Bank at www.uiiivansFb.in.

ESPS 2019 Scheme:

The Bank, pursuant to the resolutions passed by the Board on July 30, 2019 and by the Members on August 03, 2019, adopted the ESPS 2019 Scheme. The ESPS 2019 Scheme has been Framed and implemented in compliance with provisions of the SEBI (Share Based Employee Benefits) Regulations, 2014 now, SEBI (Share Based Employee Benefits & Sweat Equity) Regulations 2021, Companies Act, 2013 and rules made thereunder and relevant guidance notes and accounting standards.

The objective of the ESPS 2019 Scheme is inter-alia to reward the eligible employees oF the Bank and its erstwhile Holding Company For their association and performance as well as to motivate them to contribute to the growth and profitability of the Bank.

Pursuant to the ESPS 2019 Scheme, the Board is authorised to issue up to 72,001,840 Fully paid up equity shares of the Face value of ' 10 each with pari-passu voting rights, to the eligible employees (as defined under the ESPS 2019 Scheme), in accordance with the terms and conditions as may be decided by the Nomination and Remuneration Committee of the Bank.

The ESPS 2019 Scheme was implemented under two schemes, viz. Upfront Scheme and Monthly Scheme. Under the Upfront Scheme, the employees made upfront payments to purchase the equity shares and equity shares were allotted to them while under the Monthly Scheme, the employees opened a monthly recurring deposit account and the equity shares were allotted to such employees at the end of the 12 months.

The Nomination and Remuneration Committee has been entrusted with the responsibility of administering the ESPS 2019 Scheme. As of March 31,2024, 14,075,166 shares were allotted at ' 35 per share (including premium of ' 25 per share) pursuant to the exercise of options under ESPS 2019 Scheme. However, no ESPS was granted or exercised during the FY 2023-24.

The disclosures as required under Regulation 14 of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 read with Circular CIR/CFD/ POLICY CELL/2/2015 dated June 16, 2015 issued by the SEBI are available on the website of the Bank at www.uiiivansFb.in.

Further as per Regulation 13 of the SEBI (Share Based Employee Benefit and Sweat Equity) Regulations, 2021, the Board of Directors have obtained the certificate from the Secretarial Auditor of the Bank, K Jayachandran, certifying that the schemes have been implemented in accordance with these regulations and in accordance with the resolution of the Bank in the general meeting. The same has been enclosed as "Annexure - 1" to this report.

E. ISSUE OF DEBENTURES, BONDS OR ANY NON-CONVERTIBLE SECURITIES OR WARRANTS

During the FY 2023-24, the Bank has not issued any debentures, bonds or any non-convertible securities or warrants. However, the Bank has duly carried out monthly interest payments on the NonConvertible Debentures (NCDs) having a Face value of ' 100,000 (Indian Rupees One Lakh) aggregating to ' 3,000,000,000, issued during the FY 2022-23 as per the terms of the said issue.

DILUTION OF PROMOTER'S SHAREHOLDING AND REVERSE MERGER

Pursuant to the Guidelines For licensing of "Small Finance Banks" in the private sector issued by RBI on November 27, 2014 ("SFB Licensing Guidelines"), the Promoter of the Bank i.e. Ujjivan Financial Services Limited (UFSL) was required to reduce its shareholding in the Bank to 40% of the paid-up Equity Share capital of the Bank within a period of five years from the date of commencement of business operations by the Bank i.e. by January 31, 2022 and thereafter required to reduce its shareholding in the Bank to 30% and 26% of its paid-up Equity Share capital within a period of 10 years and 12 years, respectively, From the date of commencement of the business operations.

RBI vide its letter dated July 09, 2021 permitted the Bank to apply For the amalgamation of holding company with small finance bank, in terms of provisions of Master Direction on Amalgamation of Private Sector Banks, Directions, 2016 dated April 21,2016, Three (3) months prior to completing five years from the date of commencement of business of small finance bank.

Further, recommendations of the Internal Working Group to Review Extant Ownership Guidelines and Corporate Structure for Indian Private Sector Banks, dated October 20, 2020 and November 20, 2020 that, no intermediate sub-targets between five to 15 years may be required and that promoters may submit a dilution schedule which may be examined and approved by the RBI, were accepted by RBI without any modification vide its circular dated November 26, 2021.

Accordingly, the Bank initiated necessary steps for the reverse merger of Ujjivan Financial Services Limited with the Bank in accordance with applicable laws and guidelines. Merger of the Promoter entity with the Bank will suffice the requirement of promoter shareholding dilution.

The Board of the Bank in its meeting held on October 14, 2022, considered and approved a Scheme of Amalgamation ("Scheme") between Ujjivan Financial Services Limited (UFSL, promoter of the Bank) and the Bank and their respective shareholders and creditors under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 and the rules made thereunder. The following table highlights the trajectory of the said Reverse Merger process:

Sr	Process	Date
1.	Approval of the Scheme of Amalgamation by the Board of Directors of Ujjivan SFB and UFSL	October 14, 2022
2.	Filing of the Scheme and applications with the Stock Exchanges	October 19, 2022
3.	Filing of the Scheme with the RBI for its No-Objection Certificate	October 19, 2022
4.	Receipt of No-Objection Certificate from RBI	February 01, 2023
5.	Receipt of No-Observation Letters from the Stock Exchanges	March 09, 2023
6.	Filing of Joint Application with the Hon'ble National Company Law Tribunal, Bengaluru Bench (NCLT)	March 29, 2023
7.	Receipt of the order from the Hon'ble NCLT to convene meetings of equity shareholders of both, UFSL & Ujjivan SFB for approval of the said scheme.	September 11, 2023
8.	Meeting of the equity shareholders of both, UFSL & Ujjivan SFB where the scheme was duly approved with requisite majority.	November 03, 2023
9.	Filing of Joint Petition with the Hon'ble NCLT post receipt of approval of the shareholders of both the Companies	November 10, 2023
10.	Receipt of the order pertaining to listing of the matter of the said scheme for hearing with the Hon'ble NCLT on January 30, 2024.	December 15, 2023
11.	Adjournment of the case by the Hon'ble NCLT to February 29, 2024.	January 30, 2024
12.	Reservation of the order for pronouncement by the Hon'ble NCLT.	February 29, 2024
13.	Receipt of final NCLT Sanction	April 19, 2024
14.	Filing of Forms INC-28 by both the Companies making the Scheme effective	April 30, 2024
15.	Allotment of 1,412,702,033 equity shares of the Bank to the eligible shareholders of UFSL as per the Share Exchange Ratio of 10:116	May 06, 2024
16.	Receipt on Listing approval for the aforesaid allotment	May 17, 2024
17.	Receipt of Trading approval for the aforesaid allotment	May 28, 2024

CAPITAL ADEQUACY

The Bank is subject to the Basel II Capital Adequacy guidelines (NCAF) as stipulated by RBI. The Capital to Risk Assets Ratio (CRAR) of the Bank is calculated as per the Standardised Approach (SA) for Credit Risk.

CRAR of the Bank is calculated on the basis of RBI NCAF guidelines. The CRAR of the Bank as at March 31, 2024 using Risk Weighted Assets for credit risk related exposures only, as required under the operating guidelines of RBI for Small Finance Banks, was 24.69% against a minimum requirement of 15% and Tier I capital ratio was 22.68% against the minimum requirement of 7.5%.

CREDIT RATING

Credit ratings assigned to Long Term Bank Facilities, Subordinated Non-Convertible Debentures and Certificate of Deposit Programme of the Bank as on March 31,2024 with details of changes as on date:

Instrument Name	Name of Credit Rating Agency	Amount (' In Crores)	Rating	Date of Credit Rating	Revision in the Credit Rating
Certificate of Deposit Programme	CRISIL Ratings Limited	2,500.00	CRISIL A1 +	February 26, 2018	Reaffirmed on February 16, 2023
Long Term Bank Facilities	CARE Ratings Limited	500.00	CARE AA-; Stable	September 06, 2017	•    August 03, 2023 Rating reaffirmed and outlook changed from "stable" to "positive" •    December 28, 2023 Rating upgraded from CARE A+; Positive to CARE AA-; Stable •    May 23, 2024 Rating reaffirmed
Subordinated Non-Convertible Debentures	CARE Ratings Limited	500.00	CARE AA-; Stable	November 24, 2022	*    August 03, 2023 Rating reaffirmed and outlook changed from "stable" to "positive" *    December 28, 2023 Rating upgraded from CARE A+; Positive to CARE AA-; Stable *    May 23, 2024 Rating reaffirmed
Fixed Deposit	CARE Ratings	10,000.00	CARE AA-; Stable	May 23, 2024	Rating assigned

TRANSFER OF UNPAID AND UNCLAIMED AMOUNT TO INVESTOR EDUCATION AND PROTECTION FUND

In terms of Section 124 & 125 of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 as amended from time to time, the dividend that remains unpaid or unclaimed for a period of seven consecutive years from the date of transfer, are required to be transferred to the Investor Education and Protection Fund (IEPF).

As on March 31, 2024, the unclaimed dividend declared by Ujjivan Financial Services Limited (merged with Ujjivan Small Finance Bank Limited) for the below years is as under:

Sr.	Financial Year	Dividend Type	Unclaimed Dividend (in ')
1.	FY 2016-17	Final	156,920
2.	FY 2017-18	Final	143,215
3.	FY 2018-19	Interim	221,776.05
4.	FY 2018-19	Final	71,163.45
5.	FY 2019-20	Final	149,906.3
6.	FY 2022-23	Interim	421,858
7.	FY 2023-24	Interim	334,005.50

During the FY 2023-24 unclaimed dividend of' 40,189 for the FY 2015-16, towards 2,634 equity shares of UFSL has been transferred to Investor Education and Protection Fund (IEPF) Authority. Subsequent to the merger, 30,551 shares of the Bank in lieu of the aforesaid 2,634 shares of UFSL (as per the share exchange ratio) have been transferred to IEPF.

BOARD AND KEY MANAGERIAL PERSONNEL

Following changes took place in the Board Composition during the FY 2023-24:

Sr.	Name of the Director	Type of change	Effective Date		Remarks
1	Mr. P N Raghunath (Nominee Director - RBI) DIN: 09428287	Cessation	May 29, 2023		The Reserve Bank of India (RBI) vide its letter dated November 29, 2021, had appointed Mr. P.N. Raghunath, then General Manager, RBI, Bengaluru, Regional Office as an Additional Director on the Board of the Bank for a period of 2 (Two) years with effect from November 29, 2021 to November 28, 2023 or till further orders, whichever is earlier. Further the RBI vide its letter dated, May 29, 2023 withdrew the nomination of Mr. P N Raghunath with immediate effect.
2.	Mr. Satyaki Rastogi (Nominee Director - SIDBI) DIN:02189494	Cessation	July 17, 2023		The Small Industries Development Bank of India (SIDBI) vide its letter dated, July 17, 2023 withdrew the nomination of their nominee director, Mr. Satyaki Rastogi with immediate effect.
3.	Ms. Raini Mishra (Independent Director) DIN: 08386001	Re appointment	December 16, 2023		Re-appointment as an Independent Director for the second term of 5 (five) years.
4.	Mr. Rajesh Jogi (Independent Director) DIN: 03341036	Re appointment	March 25, 2024		Re-appointment as an Independent Director for the second term of 5 (five) years.
Note: During the current FY, following appointments have taken place in the Board:
Sr	Name			Position		Effective Date
1.	Mr. Sanjeev Nautiyal			MD & CEO		July 01, 2024
2.	Ms. Carol Kripanayana Furtado			Whole-Time Director		May 01, 2024
3.	Ms. Mona Kachhwaha			Independent Director		May 18, 2024
The Board in its meeting held on May 18,2024 has also accepted early retirement request from Mr. Ittira Davis from his position of MD & CEO, w.e.f. June 30,2024 due to personal reasons.

The brief profiles of the Directors are available on the website of the Bank at https://www.uiiivansfb.in/board-of-director.

KEY MANAGERIAL PERSONNEL

As on March 31, 2024, pursuant to Section 203 of the Companies Act, 2013, Mr. Ittira Davis, Managing Director and CEO, Mr. M D Ramesh Murthy, Chief Financial Officer and Mr. Sanjeev Barnwal, Company Secretary and Compliance Officer are the Key Managerial Personnel ("KMP") of the Bank.

There were no changes in the Key Managerial Personnel during the FY 2023-24.

The brief profiles of the Key Managerial Personnel are available on the website of the Bank at https://www. uiiivansfb.in/management-team.

Further, basis the recommendation of the Board of the Bank at their meeting held on January 11, 2024, the RBI, in terms of section 35B of the Banking Regulation Act, 1949, vide its letter dated March 21, 2024, approved the appointment of Ms. Carol Kripanayana Furtado (DIN: 07587305) as a Whole-Time Director (WTD) of the Bank for

a period of 3 (three) years with effect from May 01, 2024. Accordingly, Ms. Carol has assumed the office as a KMP w.e.f. from May 01, 2024 as well.

Furthermore, basis the recommendation of the Board of the Bank, the RBI, in terms of section 35B of the Banking Regulation Act, 1949, vide its letter dated April 15, 2024, approved the appointment of Mr. Sanjeev Nautiyal (DIN: 08075972) as the MD & CEO of the Bank for a period of 3 (three) years with effect from July 01, 2024. The Board on recommendation of the NRC approved the aforesaid appointment on May 18, 2024. Accordingly, Mr. Sanjeev shall assume the office as a KMP w.e.f. from July 01, 2024 as well.

The Board in the same meeting has also accepted the early retirement request of Mr. Ittira Davis from the position of MD & CEO w.e.f. June 30, 2024.

DECLARATION BY INDEPENDENT DIRECTORS AND STATEMENT ON COMPLIANCE OF CODE OF CONDUCT

The Bank has received declarations from all its Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149(6) of the

Companies Act, 2013 and Regulation 16(1)(b) of SEBI Listing Regulations and that they have complied with the code of conduct for independent directors as prescribed under Schedule IV of the Companies Act, 2013.

Further, pursuant to Regulation 25(8) of the SEBI Listing Regulations, the Independent Directors of the Bank have also confirmed that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, to impair or impact their ability to discharge their duties with an objective of independent judgment and without any external influence.

In the opinion of the Board, all the Independent Directors meet the criteria with regards to integrity, expertise and experience (including proficiency¹) as required under applicable laws.

*All Independent Directors of the Bank have registered themselves in the data bank as specified under Section 150 of the Companies Act, 2013 read with Rule 6 of Companies (Appointment and Qualifications of Directors) Rules, 2014. Few Independent Directors have qualified the prescribed proficiency test. The Independent Directors (not exempted under the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2020 as notified on December 18, 2020) are committed to qualify the online proficiency self-assessment as required under aforesaid Rule within the prescribed timeline.

The Bank has also received from its directors, a statement that they have complied with the Code of Conduct for Directors and Senior Management of the Bank.

DIRECTOR E-KYC

MCA has vide amendments to the Companies (Appointment and Qualification of Directors) Rules, 2014, mandated

registration of KYC of all Directors. All the Directors of the Bank have complied with said requirement in FY 2023-24.

DIRECTORS AND OFFICERS LIABILITY INSURANCE POLICY

The Bank has a Directors and Officers Liability Insurance Policy which protects Directors and Officers of the Bank for any breach of fiduciary duty.

NUMBER OF MEETINGS OF THE BOARD

The Board met 09 (Nine) times during the FY 2023-24. The meetings of the Board of Directors were convened in accordance with applicable laws and standards and the intervening gap between the said meetings was not exceeding 120 days. The details of Board Meetings are available in the Corporate Governance Report which forms a part of the Annual Report of the Bank for the FY 2023-24.

BOARD COMMITTEES

The Bank believes that the Board Committees are pillars of good corporate governance. In pursuit of the highest standard of corporate governance and to comply with the provisions of the Companies Act, 2013, SEBI Listing Regulations and RBI guidelines, the Bank has constituted various statutory and regulatory Board Level Committees. Further, in order to improve the Board effectiveness, efficiency and faster decision making, the Bank has also constituted a few non-statutory and non-regulatory Board Level Committees for better governance and supervision.

As on March 31, 2024, the Bank had 12 (Twelve) Board Committees which are given below:				Â
Sr.	Financial Year	Companies Act, 2013	SEBI Listing Regulations	RBI Requirements
1.	Audit Committee	Yes	Yes	Yes
2.	Risk Management Committee	No	Yes	Yes
3.	Nomination and Remuneration Committee	Yes	Yes	Yes
4.	Stakeholders Relationship Committee	Yes	Yes	No
5.	IT Strategy Committee	No	No	Yes
6.	Customer Service Committee	No	No	Yes
7.	Fraud Committee (Special Committee of Board for Monitoring High Value Frauds)	No	No	Yes
8.	Review Committee of Willful defaulters	No	No	Yes
9.	Corporate Social Responsibility Committee1	Yes	No	No
10.	Committee of Directors	No	No	No
11.	Business Strategy Committee	No	No	No
12.	Merger and Placement Committee (earlier Promoter Shareholding Dilution Committee)2	No	No	No

The details of composition, number of meetings held and date thereof and terms of reference of the above Committees are available in the Corporate Governance Report which forms a part of the Annual Report of the Bank for the FY 2023-24.

RECOMMENDATIONS OF AUDIT COMMITTEE

During the FY 2023-24, there was no incidence, where the Board has not accepted any recommendations of the Audit Committee.

BOARD EVALUATION

The Board has carried out an annual evaluation of its own performance, the performance of Board Committees and Individual Directors pursuant to the provisions of Section 178 read with Schedule IV of Companies Act, 2013, Regulation 19 of the SEBI Listing Regulations and applicable RBI guidelines.

The performance evaluation was carried out by the Nomination and Remuneration Committee and by the Board in their meetings held on March 23, 2024.

The approved evaluation formats and criteria are in line with the SEBI Guidance Note on Evaluation dated January 05, 2017.

The Nomination and Remuneration Committee has laid down comprehensive parameters for evaluation, a few of which are listed below:

I.    The Board: Composition, structure, meetings, functions, management and professional development, ethics and compliance among others.

II.    The Committees: Mandate & Composition, effectiveness, structure, meetings, independence of the committee, contribution to decision making of the Board, among others.

III.    Individual directors (including Chairperson, Independent Directors and Non-Independent Directors): Leadership, Commitment, Contribution, Experience, Expertise, Independence, Integrity, Attendance, Responsibility, Flow of Information among others.

The performance of the Board and Board Committees was evaluated after seeking inputs from all the directors.

The Board and the Nomination and Remuneration Committee reviewed the performance of the Individual Directors on the basis of the approved criteria for evaluation. In addition, the Chairman and Managing Director & CEO were also evaluated on the key aspects of their roles.

Performance evaluation of Directors was done by the Nomination and Remuneration Committee and entire Board, excluding the Director being evaluated. The Committee evaluated the performance of Directors and noted that:

i.    The Directors had requisite competency, qualification, commitment and integrity.

ii.    The Directors had long term vision, industry knowledge and expertise and were wholly committed and provided ethical leadership to the Bank.

iii.    The Directors had the ability to function as a team.

iv.    Further, the Directors were regular in attending meetings and contributed effectively during the discussions.

v.    There was no apparent conflict of interest and that they expressed their opinion freely.

Further, performance of Non-Independent Directors, the performance of the Board as a whole, the performance of the Chairman and quality, quantity and timeliness of the flow of information between the Bank's Management and its Board were also evaluated.

REMUNERATION OF DIRECTORS AND EMPLOYEES

The remuneration being paid to the MD & CEO is in conformity with the RBI approval.

The remuneration of Non-Executive Directors was paid only by way of sitting fees which is within the limit prescribed under Section 197(5) of the Companies Act, 2013 and RBI Guidelines on Review of Fixed Remuneration granted to Non-Executive Directors (NEDs) dated February 09, 2024. Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1), (2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this Report as Annexure-2. In terms of Section 136(1) of the Companies Act, 2013, the annual report and the financial statements are being sent to the Members excluding the disclosures in terms of Rule 5(2) and (3) as mentioned above. The same is available for inspection and any Member interested in obtaining a copy of the Annexure may write to the Company Secretary of the Bank at [email protected]

REMUNERATION RECEIVED BY THE MANAGING DIRECTOR/WHOLE-TIME DIRECTOR FROM HOLDING OR SUBSIDIARY COMPANY

During the FY 2023-24, the MD & CEO, has not received any remuneration or commission from Ujjivan Financial Services Limited, Holding Company of the Bank.

The Bank had no subsidiary Company during the FY 2023-24.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

Complying with Regulation 25(7) of SEBI Listing Regulations and RBI guidelines, no introductory familiarisation programmes were conducted during the FY 2023-24 as there were no new Independent Directors

appointed on the Board during this period. However, the Bank has conducted various training programmes for its Directors including the Independent Directors during the FY 2023-24.

The details of such programmes are available on the website of the Bank at https://www.uiiivansfb.in/ corporate-governance-policies

DIRECTORS' RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls established and maintained by the Bank, work performed by the internal, statutory and secretarial auditors, reviews performed by the Management and the relevant Board Committees, the Board, in concurrence with the Audit Committee, is of the opinion that the Bank's internal financial controls were adequate and effective as on March 31, 2024.

Pursuant to Section 134 (5) of the Companies Act, 2013, the Board, to the best of its knowledge, hereby confirms and states 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)    they have selected such accounting policies and applied them consistently and made iudgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit and loss of the Bank for that period;

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

(d)    they have prepared the annual accounts on a going concern basis;

(e)    they 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)    they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

NOMINATION AND REMUNERATION POLICY

The Bank pursuant to the provisions of Section 178(3) of the Companies Act, 2013, Regulation 19 of SEBI Listing Regulations and RBI Requirements has formulated and adopted a Nomination and Remuneration Policy on directors' appointment and remuneration and the criteria for determining qualification, positive attributes

and independence of directors, which is available on the website of the Bank at www.uiiivansfb.in/corporate-governance-policies.

RISK MANAGEMENT

The Risk Management Committee ("RMC") of the Board comprises of experienced directors from diverse backgrounds who bring in the best risk management practices to the Bank. The RMC presently comprises of 6 (six) directors out of which 4 (four) are Independent Directors.

The RMC fulfils its roles and duties through various management level risk committees. Risk-specific management level committees have also been constituted such as the Credit Risk Management Committee (CRMC), Operational Risk Management Committee (ORMC), Asset Liability and Market Risk Committee (ALCO), Enterprise Risk Management Committee (ERMC), Information Security Committee and Business Continuity Management Committee. These committees are entrusted with the task to identify, measure, mitigate and monitor various risks on a day to day basis. There is also a National Controls and Compliance Committee (NCCC) comprising of control function heads which meets at monthly intervals to deliberate on common risks identified across the Bank. The frequency, members and the quorum required for these management level committees are furnished in the respective risk policies and the charter. These committees meet at regular intervals to assess and monitor the levels of risk pertaining to market, credit and operations. In the last FY, the number of meetings, both at Board committee level and at Management level, far exceeded the required minimum, to review and address issues and risks that emerged in a changing environment.

The Bank has identified the following risks as Pillar I risks, in line with the RBI NCAF guidelines:

•    Credit Risk

•    Operational Risk

•    Market Risk

In addition to the above-mentioned Pillar-I risks, the Bank also monitors the following second order or derived risks (Pillar II Risks) using specialised methodologies. The Bank has onboarded specialised personnel for monitoring the same and a comprehensive analysis is undertaken under its Internal Capital Adequacy and Assessment Process (ICAAP).

•    Liquidity Risk

•    Interest Rate Risk in Banking Book

•    Concentration Risk

•    Outsourcing Risk

•    Strategic Risk

•    Reputational Risk

•    Underestimation of credit risk

•    Compliance risk

•    People Risk

•    IT and Information Security risks

•    Emerging Risks such as Climate Risk, ESG risk, Model risk and Fintech risks.

The Bank's Risk Management Framework is based on a clear understanding of the above risks, disciplined risk assessment and measurement procedures and continuous monitoring. The policies and procedures established for this purpose are continuously benchmarked with international best practices. The Bank has oversight on all the risks through regular monitoring of Key Risk Indicators and benchmarks/tolerance/appetite against each type of risk.

Further, the Board reviews the Risk Management Framework of the Bank and verifies adherence to various risk parameters and compliances at least at quarterly intervals or more frequently if the situation so warrants. The RMC provides a recommendation to approve risk-related policies, including the quarterly/half-yearly/annual review reports of major risks.

From a governance perspective, the Bank has in place an effective risk management policy(s) which is duly approved by the Board, that highlights the functions, implementation and role of the Risk Management Committee of the Board and the Board of Directors. The Chief Risk Officer of the Bank is the highest ranking person overseeing the Risk Management function of the Bank and reports to the MD & CEO with direct dotted line reporting to the Risk Management Committee of the Board.

In compliance to the Pillar-III requirements, the Bank has in place a Board approved policy on Disclosures that addresses its approach for determining what disclosures it will make and the internal controls over the disclosure process.

WHISTLE BLOWER POLICY/VIGIL MECHANISM

The Bank's Whistle Blower Policy allows employees, directors, other stakeholders of the Bank such as customers, NGOs, the Group (if any), Joint Ventures (if any), Suppliers, Contractors, NGOs and members of the public to report matters such as genuine grievances, corruption, fraud, misconduct, and instances of leakage of unpublished price sensitive information, misappropriation of assets and non-compliance of code of conduct of the Bank or any other unethical practices.

Utmost protection has been accorded to the whistle blowers and their identities are kept confidential.

The Policy also further provides an adequate safeguard against victimisation to the Whistle Blower and enables them to raise concerns and also provides an option of direct access to the Chairperson of the Audit Committee.

Name and Address of the Whistle and Ethics Officer Ms. Chandralekha Chaudhuri

Ujjivan Small Finance Bank Limited

Grape Garden, No. 27, 3rd A Cross, 18th Main, 6th Block,

Bangalore - 560095, Karnataka

Email- [email protected]

Protected disclosures against the Whistle and Ethics

Officer need to be addressed to the Managing Director

and CEO of the Bank and the protected disclosure against

the Managing Director and CEO of the Bank are required to

be addressed to the Chairperson of the Audit Committee.

Name and Address of MD & CEO of the Bank

Mr. Ittira Davis

Ujjivan Small Finance Bank Limited

Grape Garden, No. 27, 3rd "A" Cross, 18th Main,

6th Block, Koramangala, Bengaluru - 560095,

Karnataka

Email: [email protected]

Name and Address of the Chairperson of the Audit Committee

Ms. Sudha Suresh,

C1, Farvella Apartments, 92/1 Lavelle Road 3rd Cross,

Bangalore - 560001

Email: [email protected]

During the FY 2023-24, no one has been denied access to the Chairperson of the Audit Committee.

The Whistle Blower Policy is available on the website of the Bank at www.ujjivansfb.in/corporate-governance-policies

The confidentiality of those reporting violations is strictly maintained and they are not subjected to any discriminatory practice.

The status of the whistle blower complaints received and resolved by the Bank:

Particulars for FY 2023-24	Number of Complaints
Number of Whistle Blower Complaint at the beginning	1
Number of Whistle Blower Complaint received during the year	15
Number of Whistle Blower Complaint resolved during the year	16
Number of Whistle Blower Complaint at the end	0

ADEQUACY OF INTERNAL FINANCIAL CONTROL

The Bank has laid down certain guidelines, policies, processes and structures to enable the implementation of appropriate internal financial controls across the Bank.

These control processes enable and ensure orderly and efficient conduct of the Bank's business, including the safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information. There are control assessments for both the Bank's critical operating processes and IT applications, including ERP applications, wherein the transactions are approved and recorded. These controls are both manual and automated. Review and control mechanisms are built in to ensure that such control systems are adequate and operating effectively.

Because of the inherent limitations of internal financial controls, including the possibility of collusion or improper management override of controls, material misstatements in financial reporting due to error or fraud may occur and may not be detected. Also, evaluation of the internal financial controls is subject to the risk that the internal financial control may become inadequate because of changes in conditions or that the compliance with the policies or procedures may deteriorate.

The Bank has, in all material respects, an adequate internal financial controls system which was considerably enhanced during the FY 2023-24 and such internal financial controls were operating effectively based on the internal control criteria established by the Bank considering the essential components of internal control stated in the guidance note on audit of internal control over financial reporting issued by the Institute of Chartered Accountants of India.

FRAUDS REPORTED BY THE AUDITORS

During the FY 2023-24, neither the Statutory Auditors nor the Secretarial Auditor has reported to the Audit Committee/Board or Central Government any instances of material fraud in the Bank by its officers or employees under Section 143(12) of the Companies Act, 2013. However, the Bank identified and intimated the Statutory Auditors about the instance of high value fraud (in excess of ' 1 Crore) through misuse of office GL sundry accounts at Peenya Branch. This matter was also duly reviewed by the Special Committee for Monitoring High Value Frauds, Risk Management Committee and Audit Committee.

The Statutory Auditors sought queries/information on the aforesaid case and detailed management response was duly submitted to them, further necessary regulatory reporting to RBI has also been done by the Bank.

DISCLOSURES RELATING TO    SUBSIDIARIES,ASSOCIATES AND JOINT VENTURESA. REPORT ON PERFORMANCE AND FINANCIAL POSITION OF THE SUBSIDIARIES, ASSOCIATES ANDJOINT VENTURES

There were no Subsidiary Company, Associate Company and Joint Venture of the Bank during the FY 2023-24.

B. COMPANIES WHICH HAVE BECOME OR CEASED TO BE SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

No Company became or ceased to be Subsidiary Company, Associate Company and Joint Venture of the Bank during FY 2023-24.

DEPOSITS

The Chapter V of the Companies Act, 2013 does not apply to the Bank. During the FY 2023-24, the Bank has accepted deposits from the public in the ordinary course of its banking business. The details of the deposits are enumerated in the Financial Statement for the FY 2023-24. Being a banking company, the disclosures required as per Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, 2014, read with Section 73 and 74 of the Companies Act, 2013 are not applicable to the Bank.

PARTICULARS OF LOANS, GUARANTEES AND/OR INVESTMENTS

The provisions of Section 186 of Companies Act, 2013 except sub-section (1) do not apply to a loan made, guarantee given or security provided by a banking company in the ordinary course of business.

RELATED PARTY TRANSACTIONS AND CONTRACTS/ ARRANGEMENTS

There was no materially significant related party transaction entered between the Bank and its related parties, except for those disclosed in the financial statement.

All the contracts/arrangements/transactions entered by the Bank with the related parties during the FY 2023-24 were on arm's length basis; accordingly, the disclosure of particulars of contracts/ arrangements entered into by the Bank with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 in Form AOC-2 is not applicable.

The Bank has formulated a Policy on 'Materiality of Related Party Transactions' which forms part of the Policy on dealing with 'Related Party Transactions' is available on the website of the Bank at www.uiiivansfb.in/corporate-governance-policies.

CORPORATE SOCIAL RESPONSIBILITY ("CSR")

As per Section 135 (1) of the Companies Act, 2013 "Every company having net worth of rupees five hundred Crores or more, or turnover of rupees one thousand Crores or

more or a net profit of rupees five Crores or more during the immediately preceding financial year shall constitute a CSR Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director".

Pursuant to the above, as on March 31,2024 the Bank had duly constituted CSR Committee with 5 (Five) Directors out of which 4 (Four) are Independent Directors. The details of the changes in the composition of the CSR Committee during the FY 2023-24 have been provided in the Corporate Governance Report which forms part of the Annual Report for the FY 2023-24.

The Bank has formulated CSR policy pursuant to Section 135(4) of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, in accordance with the approach and direction given by the Board of the Bank, taking into account the recommendations of its CSR Committee, and including guiding principles for selection, implementation and monitoring of activities as well as formulation of the annual action plan.

The said Policy is available on the website of the Bank at www.uiiivansFb.in/corporate-qovernance-policies.

The detailed Annual Report on the CSR activities for the FY 2023-24 is annexed to this Report as Annexure-3.

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

A.    CONSERVATION OF ENERGY

With our foray into ESG initiatives, the bank has made deliberate efforts and implemented sufficient measures to gauge and reduce energy consumption. Alongside fostering continual awareness among employees about the importance of energy conservation through email campaigns, ESG training, and posters, the bank has replaced conventional bulbs with energy-efficient LEDs, upgraded outdated appliances, and integrated 5-star rated appliances into new infrastructure wherever feasible. Furthermore, in pursuit of introducing alternative energy solutions, the bank has installed solar panel in a URC branch and 2 more branches are underway.

B.    TECHNOLOGY ABSORPTION

In FY 2023-24, we have automated 15 new processes and enhanced 6 existing processes. The results have been remarkable- increased efficiency, reduced errors and significant time and cost saving.

With the help of RPA, we have saved ' 8.2 Crores cost and 51000+ Man hours. Operations, Micro Banking, Vigilance, Finance, Credit, IT, Risk, HR departments are actively using RPA to increase operational efficiency and reduce operating cost.

Below are few critical projects done which have significant impact.

1)    RPA implementation of UPI lite reconciliation has been successfully achieved from the day one of the product launch, addressing data storage challenges and enhancing operational efficiency seamlessly.

2)    RPA implementation for TDS computation significantly enhanced accuracy in tax calculation while managing vast customer data effortlessly.

3)    Creation of ID's across different applications using RPA has significantly reduced manual efforts and ensures ID's are created without any delay.

4)    RPA automation of sending mails to FIO's saves manual efforts and enables FIO to focus on acquiring more business opportunities.

5)    Agent model reconciliation automation is extended for Fintech partner "Paynearby" reduced efforts employed manually.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

During the FY 2023-24, 314 transactions (Inward & Outward) were processed adding up to USD44.53 Lakhs during the period. It resulted in an exchange income of ' 29.48 Lakhs for the Bank. Total Foreign Exchange Outward was USD 40.30 Lakhs during the FY 2023-24.

SIGNIFICANT AND MATERIAL ORDERS BY THE REGULATORS OR COURTS OR TRIBUNALS

During the FY 2023-24, there were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status of the Bank and its operations in future.

However, basis the joint petition filed by the Bank and UFSL with the Hon'ble NCLT, Bengaluru Bench on March 29, 2023, for Scheme of Amalgamation, the Hon'ble NCLT vide its order dated September 08, 2023 directed to both the companies to convene general meetings for shareholders' approval on the Scheme. Accordingly, the Extra-Ordinary General Meetings by both the companies were held on November 03, 2023 and the Scheme was approved by requisite maiority in both the meetings. Basis the said approval a second motion petition was filed with the Hon'ble NCLT for final sanction of the Scheme. Further, the Hon'ble NCLT, Bengaluru Bench granted its final sanction vide its order dated April 19, 2024.

AUDITORSA. STATUTORY AUDITORS

The Members of the Bank, in the 5th Annual General Meeting held on September 27, 2021, appointed M/s. Mukund M Chitale & Co., Chartered Accountants (FRN 106655W) and M/s. B. K. Ramadhyani & Co. LLP,

Chartered Accountants (FRN 002878S/ S200021), as the Joint Statutory Auditors of the Bank for a period of 3 (three) consecutive financial years until the conclusion of 8th AGM of the Bank to be held in the FY 2024-25, subject to approval of RBI on an annual basis, pursuant to the RBI Guidelines for Appointment of Statutory Central Auditors (SCAs)/ Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs).

The policy of the Bank on "Appointment of Statutory Auditors" is available on the website of the Bank at www.uiiivansFb.in/corporate-governance-policies Further, as the term of the Joint Statutory Auditors shall conclude in the upcoming 8th Annual General Meeting of the Bank, the Board of Directors of the Bank had shortlisted four Chartered Accountants Firms and the Bank had made an application to RBI for the appointment of Joint Statutory Auditors.

RBI, vide its letter dated April 12, 2024 approved the appointment of M/s Deloitte Haskins & Sells, Chartered Accountants (FRN 117365W) and M/s Abarna & Ananthan, Chartered Accountants (FRN 000003S) as the Joint Statutory Auditors of the Bank for the FY 2024-25 for their first year. Basis the said approval the Board in its meeting held on May 18, 2024 has approved the aforesaid appointment, furthermore, the said appointment is being placed for approval of members in the ensuing 8th Annual General Meeting of the Bank (please refer item no.3 of the AGM Notice, for further details).

Report of the Statutory Auditors

The Statutory Audit of the Bank for the FY 2023-24 was conducted jointly by M/s. Mukund M Chitale & Co., Chartered Accountants and M/s. B. K. Ramadhyani & Co. LLP, Chartered Accountants. The Auditor's Report on the financial Statements of the Bank for the FY 2023-24 does not contain any qualification, reservation or adverse remark. The Auditor's Report, enclosed with the financial statement, forms part of the Annual Report for the FY 2023-24.

SECRETARIAL AUDITOR

Mr. K. Jayachandran, Practicing Company Secretary (ACS No.: 11309 and Certificate of Practice No.: 4031) was appointed as the Secretarial Auditor of the Bank in the meeting of the Board held on July 27, 2023 to conduct Secretarial Audit of the Bank for the FY 2023-24 as required under Section 204 of the Companies Act, 2013 and the rules made thereunder and Regulation 24A of SEBI Listing Regulations. The Bank provided all assistance and facilities to the Secretarial Auditor for conducting the audit.

The Secretarial Audit Report is annexed to this Report as Annexure - 4.

ANNUAL RETURN

In accordance with Section 134(3) and Section 92(3) of the Companies Act, 2013 and pursuant to Companies (Amendment) Act, 2017, a copy of the Annual Return for the FY 2023-24 is available on the Bank's website at www.uiiivansfb.in/annual-return

DESPATCH OF ANNUAL REPORT

Pursuant to the latest applicable circulars issued by the MCA and SEBI, in relation to 'Relaxation from compliance with certain provisions of the SEBI Listing Regulations' relaxing the requirement of dispatching physical copies of the Annual Report and the Notice convening the AGM to Shareholders. Members who wish to have physical copy may write to the Company Secretary of the Bank at [email protected] or submit a written request to the Registered Office of the Bank. In accordance with the aforesaid circulars, the weblink of the Annual Report and the Notice convening the AGM of the Bank is being sent in electronic mode only to members whose e-mail address is registered with the Bank or the Depository Participant(s). Those members, whose email address is not registered with the Bank or with their respective Depository Participant(s) and who wish to receive the Notice of the AGM and the Annual Report for the financial year ended March 31, 2024, can get their email address registered by following the steps as detailed in the Notice convening the AGM. The Annual Report of your Bank shall be available on the Bank's website viz., https://www.uiiivansfb.in/annual-report

COMPLIANCE WITH SECRETARIAL STANDARDS

The Bank has complied with the provisions of Secretarial Standards specified by the Institute of Company Secretaries of India and notified by the Ministry of Corporate Affairs under Section 118(10) of the Companies Act, 2013. The Bank has also complied with the provisions of Secretarial Standard-4 on voluntary basis.

HUMAN RESOURCES

The Bank prioritises service mantra both internally and externally. While technology plays a pivotal role in the effort, its employees are the catalyst of change and progress at the Bank. People practices are derived from the Bank's core values; integrity, responsible, fairness, respect, professionalism and teamwork. The Bank is driven to build better lives both for its customers and employees. This drive has bestowed many accolades to the Bank. Ujjivan SFB has been recognised as one of India's TOP 25 best places to work in the BFSI sector for 2024 as per the study conducted by Great Place To Work® Institute In the calendar year 2023 the bank was placed in the 45 th Rank within the TOP 100 Great Place to Work in India as per the study conducted by Great Place To Work®

Institute. The bank in FY 2023-24 continued to focus on the employee engagement activities like employee family day engagements, milestones celebrations, branch representative meetings, chai pe charcha (corporate employee connect) and town halls, has kept the employees positively motivated. Additionally, to ensure real time employee feedback and identifying high risk employees, an AI chatbot called Amber that was launched in February 2023 has been well received across the organisation with an engagement score of 85% as on March 31, 2024. Wellbeing of employees has been another important area for the Bank, where physical and emotional wellness of employees were emphasised. Annual health checkups at branch levels for staff and discounted rates for checkups for their families that was initiated in FY 2022-23 was completed with 100% branch coverage in FY 2023-24. The annual health check-ups were also followed up by partner organisations to telephonically connect and inform the employees on high risk matters and provide medical advice. The launch of "Emotional Wellness Advisors" a confidential connect for emotional wellness related concerns that was addressed by professional guidance to employees and their families in FY 2022-23 also saw a considerable engagement in FY 2023-24 as confirmed by our partner Connect & Heal.

CORPORATE GOVERNANCE AND BUSINESS RESPONSBILITY AND SUSTAINABILITY REPORT

The Bank recognises its role as a corporate citizen and endeavours to adopt the best practices and the highest standards of Corporate Governance through transparency in business, ethics and accountability to its shareholders, customers, government, regulators and all other stakeholders. The Bank's activities are carried out following good corporate practices and the Bank is constantly striving to make them better and adopt the best practices.

The Bank believes that timely reporting, transparent accounting policies and a strong Independent Board go a long way in preserving shareholders' trust and maximising long-term corporate value.

In pursuing the mission "to provide financial services to the unserved and underserved customers as a responsible mass market bank focussed on building a sustainable tomorrow", the Bank has been balancing its dual objectives of "social" and "financial goals since its inception. "Responsible financing", "ethical values" and "transparency" in all its dealings with its customers, lenders, investors and employees have been the cornerstone of its operations. Transparency in the decision-making process has been providing comfort to all stakeholders, particularly the customers, lenders and investors.

The Report on Corporate Governance for FY 2023-24 as per Regulation 34(3) read with Schedule V of the SEBI

Listing Regulations forms part of the Annual Report for FY 2023-24. The disclosure as required under Section II of Part II of Schedule V of the Companies Act, 2013 have been provided under the heading of Remuneration of Directors in the aforesaid Corporate Governance Report.

A Business Responsibility and Sustainability Report containing the requisite details as per Regulation 34 (2) of the SEBI Listing Regulations forms part of the Annual Report for the FY 2023-24 and is also disclosed on the Bank's website at www.uiiivansfb.in.

Further, as a responsible bank, Ujjivan SFB believes in creating a sustainable environment and making a positive social impact. The Bank understands the importance of integrating environmental, social, and governance (ESG) factors into its operations and decision-making processes. Thus, the bank disclosed its maiden voluntary report to disclose its sustainability performance which is a testament to transparency and accountability for FY 2022-23. The report for the FY 2023-24 will be published shortly and the same will be made available at the website of the Bank at https://www.uiiivansfb.in/sustainability-initiatives.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Regulation 34 and Schedule V of SEBI Listing Regulations, the Management Discussion and Analysis Report forms part of the Annual Report for the FY 2023-24.

DISCLOSURE UNDER SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN    AT WORKPLACE

(PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Bank has a strict Prevention of Sexual Harassment ("POSH") Policy in accordance with the statutory requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. This Policy applies to all categories of employees of the Organisation, including permanent employees, permanent management, workmen, temporary employees, trainees (interns), consultants, advisers, ad hoc employees, daily wage earners, probationers, apprentices, contract employees, etc., at its workplace or visits to partner organisations. This Policy recognises the right of privacy of every individual and will strive to protect the privacy of the individuals involved and ensure that the complainant and the respondent are treated fairly. The Policy ensures that the career interest of the parties involved in any proceedings under this Policy will not be adversely affected merely on account of the complaint made to the Internal Committee or any evidence provided in connection with any enquiry; however strict action will be taken against the Respondent if proven guilty post the enquiry process.

The Status on the Complaints received and resolved by Internal Committee during the FY 2023-24:
Number of	Number of	Number of
Complaints	Complaints	Complaints Pending
Â	Resolved	for Resolution
14	12	2

Composition of Internal Committees

Bank has constituted Internal Committees (IC) in each of the regions For all administrative units/branches/regional offices of the Bank. All complaints of Sexual Harassment at the Workplace are enquired into by the IC having jurisdiction over the establishment where the Respondent is posted. The IC forwards a report of its findings to the Employer for action. Each Regional IC consists of the following members:

•    Presiding Officer: who shall be a woman employed at a senior level in the region.

•    Secretary: who shall be the Regional HR Manager.

•    2 Members: From amongst Employees in the region, preferably committed to the cause of women/having legal knowledge/experience in social work.

•    1 Independent Member: Nominated from amongst NGOs/associations committed to the cause of women or a person familiar with the issues relating to Sexual Harassment.

Other Members: Additional members may be coopted, if required, from amongst Employees working in senior positions in the region, especially from business, operations and control functions

Functions of IC

The Committee is expected to conduct a fair, prompt and impartial process of investigating all the complaints it receives. During a redressal process, the Complaints Committee/s are required to assure confidentiality, nonretaliation and recommend interim measures as needed to conduct a fair enquiry.

POLICIES

To ensure better corporate governance, adherence to various laws and regulations as applicable to the Bank and better management of the organisation as a whole, the Bank has formulated various policies including the policies mentioned below. These policies are available on the Bank's website at www.ujjivansfb.in/corporate-governance-policies.

A brief description of below mentioned policies/code have been given in Annexure-5 of this Report.

1.    Policy for Determination of Materiality of Event/ Information for Disclosures

2.    Code of Conduct for Prevention of Insider Trading and Code of Fair Disclosure and Conduct

3.    Corporate Social Responsibility Policy

4.    Nomination and Remuneration Policy

5.    Policy on Board Diversity

6.    Policy on Code of Conduct

7.    Related Party Transactions Policy

8.    Dividend Distribution Policy

9.    Familiarisation Programme

10.    Policy on Archival of Documents

11.    Record Retention Policy

12.    Whistle Blower Policy

13.    Terms and Conditions of Appointment of Independent Directors

14.    Policy on Appointment of Statutory Auditors

CORPORATE GOVERNANCE COMPLIANCE CERTIFICATE

The Bank has obtained a certificate from K. Jayachandran, Practicing Company Secretary, certifying that the Bank has complied with the conditions of the Corporate Governance as stipulated in Regulations 17 to 27 and clauses (b) to (i) of Regulation 46 (2) and other applicable regulations of Chapter IV pertaining to Corporate Governance and paragraphs C, D and E of Schedule V of the SEBI Listing Regulations for the FY 2023-24.

The certificate is annexed to this Report as Annexure-6.

KEY INITIATIVES WITH RESPECT TO STAKEHOLDER RELATIONSHIP, CUSTOMER RELATIONSHIP, ENVIRONMENT, SUSTAINABILITY, HEALTH AND SAFETY

While key initiatives on customer relationship and health and safety have been detailed below. Information on initiatives concerning stakeholders' relationship, environment and sustainability, have been elaborated in the Business Responsibility and Sustainability Report of the Bank which forms part of the Annual Report for the FY 2023-24.

We believe that excellence in customer service has paramount importance, the Bank's commitment to delivering exceptional customer experience remains unwavering. We believe in responding to every evolving need of the customers to make ourselves a most customer centric organisation, by continuously nurturing our people, process and technology basis customer feedback and competitive landscape. To put this intent into practice, the Bank has established a dedicated Service Quality department which has been instrumental in enhancing customer experience, addressing grievances efficiently, maintaining rigorous service standards and ensuring customer service compliance.

Improved Customer Service Standards: The focus on delivering superior service standards for our customers has enabled us to maintain high level of quality and consistency

across all offerings. The Bank has demarcated, established and re-defined the Service Index, both for external and internal customer service i.e., for each business verticals and key support functions. The Service Index programme incorporates key parameters which impacts customer service delivery standards and customer satisfaction. The programme has advanced over last 6 years and unique in the industry. A strong governance structure for customer service has been established which includes a commitment to targets for improving Service Index scores by each function and at Bank level. These targets form part of key performance metrics for MD & CEO, Heads of Business/ functions, frontline managers, sales and service staffs.

•    The various cross-functional initiatives at people, process and technology level have helped in achieving substantial improvements in Bank Level Service Index, from 66 points in March 2022 (out of a 100 points scale) to 85 points in March 2023 and to 89 points in March 2024.

•    The number of complaints in FY 2023-24 had decreased by 14% when compared to previous FY

2022- 23.

•    Resolution of customer service requests within standard turn-around-time has improved from 88% in FY 2021-22 to 90% in FY 2022-23 and to 94% in FY

2023- 24.

•    The resolution of customer complaints within standard turn-around time has improved from 90% in FY 2021-22 to 96% in FY 2022-23 and to 98% in FY 2023-24.

Aajeevan Services - A life events-based banking services with Empathy: Ujjivan SFB believes the customer needs empathy, handholding and assurance the most when they come across various life events, be it good or bad. A specially designed and unique programme, in the banking industry, called "Aajeevan" was implemented since the inception of the Bank. These are life events based banking services, enabling customers navigate good and bad events of life with ease. Services include nomination facilities, joint accounts, settlement of claims of deceased account holders, settlement of insurance claims, priority & doorstep services to senior citizens and specially abled customers, use of special services like adding mandate holder or power of attorney etc. The programme provides financial well-being with empathy and compassion, and thus building a long term-relationship with our customers. This is also a programme around simplifying processes and staff training, by keeping empathy and efficiency as focal points. A specially designed one-day workshop on Aajeevan Services was conducted for customer handling staffs and sales staffs. A total of 1,521 staffs were trained in 72 batches during the year.

•    Over the years, the promotion of Aajeevan services has helped in improvement of resolution of Aajeevan service requests from 86% in the FY 2021-22 to 94%

in FY 2022-23 and to 99% in the FY 2023-24.

•    Deposits opened with nomination has improved from 82% in FY 2021-22 to 92% in FY 2022-23 and to 94% in FY 2023-24.

•    The claims of deposits pertaining to deceased account holders were settled at 100% within standard turnaround-time.

New initiatives undertaken to provide seamless customer service and safety of digital transactions:

•    Launch of UPI Lite to enable user friendly, low value transactions faster and real time with minimum technical declines.

•    New Customers can be on boarded Digitally to open a Savings & Fixed Deposit Account without any restrictions and fulfil their KYC online through Video KYC.

•    Existing customers can open Digital Savings and Fixed Deposit Account seamlessly through the Digital Platform and also fund their FDs from Non Ujjivan SFB bank accounts.

•    Educational Videos about Digital products were uploaded on social media platforms like YouTube in English & other regional languages to help customers understand the process in simple / easy steps.

•    DigiKaksha initiative was launched during Q4 FY 2023-24, to foster digital learning and empowerment within Ujjivan SFB to enable staff assist and handhold customers in using digital channels better.

•    The IB, MB & Hello Ujjivan platforms were modified to redirect to Customer Grievance Redressal mechanism on Ujjivan SFB website, to enable customers to easily access and understand the Customer Grievance Redressal mechanism.

•    Same day disbursements were introduced, to reduce turnaround time for disbursement of individual and group loans under micro lending programme.

•    The limits for financial transactions to be provided through doorstep services to senior citizens has been increased to ' 25,000 per request from ' 5,000. Further, to popularise the same, SMSs were broadcasted to the senior citizen customers of the Bank.

•    Enabled auto triggering of SMS to customer at 4 Stages to collect the mortgage documents after closure of the loan.

•    Fraudulent Transaction reporting option is now implemented on BNB, this will help customers in prompt reporting of such transactions without searching for customer care contact points.

•    Successfully piloted Video Banking platform as a service delivery channel, to be launched for all customers in FY 2024-25.

•    Success of 'DigiMitra' initiative at Ujjivan SFB Phone Banking:

o The DigiMitra programme launched in August 2023 has proven very successful in handling all customer service requests and complaints related to digital channels like Internet Banking, Mobile Banking, Business Net-banking, UPI services and other digital channels of the bank. o This has delivered a better digital experience to customers, by enabling proactive connect with the customer before, after the issue is raised and resolved with a quality resolution of their issues related to digital channels. o The team not only resolves the customers' issues but also educate the customer and the Internal Bank employees wherever required. o The DigiMitra Team handles end-to-end resolution of technical issues, by liaising with internal departments, to ensure timely and complete resolution for customers. o 6,029 cases are handled by DigiMitra team during the year.

Customer awareness:

•    A significant increase in spam calls were reported across the country for paying EMI and receiving a gift voucher delivered to their doorstep. To address this concern and ensure our customers beware of such incidents, A customer awareness campaign was conducted through SMSs to 30 Lakh customers.

•    As a continuous learning from day-to-day practical situations through "Service Quality Friday School" campaign, the branches receive a training content as snippets, and the Branch Managers delivers the training to staffs on same day for efficient customer service/ handling customer requests and complaints/ life events related services and case studies.

•    As per directives from Indian Cyber Crime Coordination Centre (I4C), in the field of Cyber Hygiene and Promoting 1930 as well as National Cybercrime Reporting Portal (NCRP), an awareness campaign was conducted to customers through various channels.

o Safe banking tips on OTP fraud - in all languages. o Safer internet day - on browser security and Safe Tips on UPI security.

o Display of Cyber security helpline number on bank's website.

Health and Safety

The Bank considers Health and Safety of its employees very important and various initiatives have been taken with this objection over the years. Following are a few highlights of the same:

•    Fire extinguishers are in place as per the defined protocols in all the offices & branches across PAN India with half yearly fire drill conducted only in RO and HO. The same is carried out only in regional offices and the awareness is created among the branch employees To ascertain adequacy and quality of the safety measures, an audit has been conducted by third party every quarter.

•    Towards providing better work environment to the employees and customers, all the URCs are installed with Air conditioners & preventive maintenance of all the electric equipment's across branches conducted periodically - 95% of the URCs are equipped with ACs.

•    For the specially-abled customers & employees, 29 ramps have been constructed across PAN India branches. - 125 ramps are available across the country.

•    Deep cleaning & Pest control services were rendered at the branches that were older than 5 years. - Deep cleaning & Pest control services are being done once in a quarter.

Considering the health of the employees, 20+ branches in the North have been installed with RO water purifiers for drinking water - It is 30+ branches.

Employees Safety Measures

As an employee first organisation, Ujjivan SFB conducts annual health check-up for all its employees once in two years. This annual health check-up is followed up by the Partner by providing free consultation on the reports and also advising employees with high risk reports.

To support its employees, Ujjivan SFB also has a facility of 24x7 "Doctor on Call" teleconsultation This facility has been made available for employees and their dependents to consult doctors during emergencies. While the services were available for physical ailments. In FY 2023-24, Ujjivan SFB also launched of the emotional wellness programme, where employees and their family members could tele-consult specialists with "emotional wellness' expertise to get help where required.

Apart from that the QRT (Quick Response Team) which was activated during the start of the pandemic still monitors the environment & health related concerns across regions and issues guidelines to employees as and when required.

OTHER DISCLOSURES

A.    The Bank is not required to maintain cost records as specified by the Central Government under subsection (1) of Section 148 of the Companies Act, 2013.

B.    Disclosure as required under Rule 8(5)(xi) and 8(5)(xii) of the Companies (Accounts) Rules, 2014 does not apply to the Bank for FY 2023-24.

C. None of the directors of the Bank are disqualified as per provisions of Section 164(2) of the Companies Act, 2013. The directors have made necessary disclosures, as required under various provisions of the Companies Act, 2013, SEBI Listing Regulations and RBI guidelines.

ACKNOWLEDGEMENT

We place on record our gratitude to our employees at all levels who have contributed to the growth and sustained success of the Bank through their dedication, hard work, cooperation and support.

We would like to thank all our customers, vendors, bankers, investors, auditors, media and other business associates

for their continued support and encouragement during the year.

We also thank the Government of India, the Government of Karnataka and Delhi, the Ministry of Commerce and Industry, the Ministry of Finance, Ministry of Corporate Affairs, the Securities and Exchange Board of India, Hon'ble NCLT, Bengaluru Bench and Registrar of Companies, Bengaluru, the Stock Exchanges, the Central Board of Indirect Taxes and Customs, the RBI, the Central Board of Direct Taxes and all other government agencies for their support during the FY 2023-24 and look forward to their continued support in future.

1

The Corporate Social Responsibility Committee has been renamed as the CSR & Sustainability Committee w.e.f. April 01,2024 in order to bring the ESG related facets under the purview of the said Board Committee.

2

On accomplishment of the Reverse Merger, this Committee was dissolved w.e.f. May 18, 2024.

---

Mar 31, 2023

On behalf of the Board of Directors (the "Board") of Ujjivan Small Finance Bank Limited (the "Bank or Ujjivan"), it is our immense pleasure to present the 7th Annual Report of the Bank along with the Audited Financial Statements and Auditor''s Report thereon for the FY 2022-23.

OVERVIEW AND STATE OF AFFAIRS OF THE BANK

FY 2022-23 started on a strong note as the Bank had turnaround under the two "100-Day" plan successfully achieving the set objectives of (a) increasing business volumes, (b) improving asset-quality, and (c) stabilising team - senior/ mid-management. During the year, the Bank further built on to the strong platform created last year and was able to create several milestones across all parameters:

i. Disbursement: '' 20,037 Crores for the FY 202223 crossing '' 20,000 Crores milestone; Q4 disbursements were at '' 6,001 Crores crossing the '' 6,000 Crores mark in a quarter

ii. Deposits: Crossed '' 25,000 Crores milestone and closed the year with total deposits of '' 25,538 Crores. Total deposit accretion during the year was at '' 7,230 Crores

iii. Asset Quality: Credit provisioning of only '' 18 Crores i.e. 0.08% of monthly average gross loan book

iv. Microbanking cashless collections: 29% in Q4; highest in the industry

v. Launched an unique mobile banking app "Hello Ujjivan" which is voice, vernacular and video based. The app targets to increase digital penetration in the non-tech savvy customer segment.

vi. Net profit for the FY 2022-23 reached the '' 1,100 Crores mark- making Ujjivan the second most-profitable Small Finance Bank in the country as well as second most-profitable MFI player in the country.

During the year, the Bank continued to invest in creating a formidable platform to become a leading mass-market bank serving the underserved and unserved. These investment span across business aspects from technology and digital platforms to new products and verticals to human capital to infrastructure.

Technology and Digital Platforms:

• Hello Ujjivan already has 97,000 downloads, services like repeat loans will be offered in future with this

• Upgraded CRM Next to offer features and enhance customer experience

• Implementation of Tableau at various levels for better decision making

• Video KYC went live, helping us onboard new customer

New Products & verticals:

• Micro-Lap to cater MSME small ticket size customer and graduate our micro borrowers

• Pilot of Gold Loan started to serve the needs of the customer and gain their wallet share

• Two-Wheeler loan getting ready for upscale with all systems in place

• Launched QR-code sound box to help us own customer transaction and deepen relationship

• Expanding our offering on fee-based products like Bank Guarantee, locker facilities, NPS etc

Human Capital:

• Increase in staff count: field staff 13,077 from 12,541; others 4,793 from 4,354

• Extensive training programmes being conducted to enhance knowledge and productivity

Infrastructure:

• Banking outlets: Restarted expanding our physical presence with banking outlets reaching 629 as of Mar''23

• Asset Centers: started opening asset centre to optimise processes and improve efficiency

• Other premises: expanded our other regional and corporate offices to accommodate growing scale

The strong performance was led by overall growth in business volumes across verticals. MicroBanking gross loan book grew 41% vs Mar''22 with disbursement up 51% as against FY 2021-22; majority of growth in disbursement was driven by customer acquisition (up 172% during the year). Customer growth highlights the fact that the Bank has been future-ready to take advantage of the changing. This growth was despite the changes in the regulatory framework towards the beginning of second-half which led to some initial technical glitches in fetching bureau data on household income/ debt. Housing segment made new highs as it crossed '' 3,000 Crores gross loan book early during the year. Disbursements grew 31% vs FY 2021-22 and gross loan was up 24% vs. Mar''22. During the year, the Bank made a new strategy for the MSME business and started focusing on building a balanced portfolio of shortterm and long-term products. The business is currently in transition phase and will show good turnaround in the coming year. Our Institutional lending business grew 32% YoY to '' 1,128 Crores of gross loan book as of 31st Mar''23 driven by 28% jump in disbursement vs FY 2021-22. During FY 2022-23, Bank''s deposit book recorded 40%

y-o-y growth driven by new retail customers. 12.9 Lac new retail deposit customers were on-boarded during the year. CASA grew by 35% y-o-y, closing at 26.4% of the total deposit book as of March 31, 2023. The Bank continues to invest in growing granular retail deposits and has been investing in various technology, digital platforms as well as human capital and infrastructure to enhance capabilities.

Collection strategy: Over last few quarters the Bank has been very diligent on collection strategy. The dynamic strategy is a mix of digital and physical infra. The physical infra is further a mix of in-house and off-roll manpower as well as multiple collection agencies. The Bank has been taking legal action to push hard bucket collections. The efforts have been continuously yielding results in form of collections sustaining at pre-COVID levels now and every credit parameter showing consistent improvement month on month. Cash-less collections in micro lending business reached close to 30% towards the end of the year, making Ujjivan a clear industry leader in this aspect. During the year the Bank took two interest rate hikes in the Micro lending business and also increased yields in secured business products as the REPO rates hardened during the course of the year. This, along with reducing non-performing assets, have pushed up the yields and helped the net interest margin in rising interest rate market.

The Bank''s Board comprised of 10 directors as at the end of FY 2022-23, with the MD & CEO being the Executive Director, 6 Independent Directors including 3 Women Independent Directors, 1 Non-Executive Non-Independent Director and 2 Nominee Directors.

FINANCIAL PERFORMANCE Summary of Financial Performance

(? in Crores)
Particulars		FY 2022-23H	FY 2021-22
Revenue from Operations		2,697.90	1,773.59
Other Income		589.19	359.89
Less: Operational Expenses		791.53	603.34
Personnel Expenses		920.25	812.60
Profit/loss before Depreciation, Finance Costs, Exceptional items, Provisions and Tax expense		1575.31	717.54
Less: Depreciation/ Amortisation/ Impairment		90.28	80.44
Profit /loss before Finance costs, exceptional items, Provisions and Tax expense		1,485.03	637.10
Less: Finance Costs		0	0
Profit /loss before Provisions, exceptional items and Tax expense		1,485.03	637.10
Less: Provisions & Contingencies		17.79	1,187.46
Add/(less): Exceptional items		0	0
Profit /loss before Tax expense		1,467.24	-550.36
Less: Tax Expense (Current & Deferred)		367.32	-135.77
Profit /loss for the year (1)		1099.92	-414.59
Total comprehensive income/loss (2)		0	0
Total (1 2)		1099.92	-414.59
Balance of profit /loss for earlier years		-72.35	343.62
Less: Transfer to Debenture Redemption Reserve		0	0
Less: Transfer to Statutory Reserves		274.98	0
Less: Transfer to investment Fluctuation Reserve		46.79	0
Less: Transfer to Capital Reserves		0	1.40
Less: Dividend paid on Equity Shares		146.59	0
Less: Dividend paid on Preference Shares		22.00	0
Less: Dividend Distribution Tax		0	0
Less: Investment Reserve Account		0.34	0
Less: Transfer to Special Reserve U/S 36 (1)(viii) Income tax Act 1961		30.00	0
Balance carried forward		506.87	72.35
Key Ratios: (Comparative ratios are annualised)
Particulars		FY 2022-23H	FY 2021-22
Interest income as a percentage to working funds		15.28%	13.81%
Non-interest income as a percentage to working funds		2.16%	1.54%
Operating profit as a percentage to working funds Business (deposits plus gross advances) per employee (? in thousands)		5.45% 23,906	2.90% 18,099
Profit per employee (? in thousands)		632.78	(252.63)
EPS (Basic) (?)		5.82	(2.40)
EPS (Diluted) (?)		5.81	(2.40)

TRANSFER To RESERvESA. Statutory Reserve

The Bank has made an appropriation of '' 27,49,804 (''000) to the statutory reserve for the year ended March 31, 2023 out of profits, to the Statutory Reserve, pursuant to the requirements of section 17 of the Banking Regulation Act, 1949 and RBI guidelines dated September 23, 2000.

B. investment Fluctuation Reserve ("iFR")

During the year ended March 31, 2023, the Bank has made an appropriation of '' 4,67,852 ( ''000) to IFR from

the profit and loss account so as to reach to the figure of 2% of its HFT and AFS Investment portfolio.

dividend

The Bank has formulated and implemented a Dividend Distribution Policy pursuant to Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") and RBI Requirements with an objective to appropriately reward shareholders through dividends for reposing their confidence in the

Bank while retaining the capital required for supporting future business growth. The said Policy is available on the website of the Bank at www.uiiivansfb.in/corporate-governance-policies.

A. Equity Dividend

In accordance with its Dividend Distribution Policy, the Board of Directors of the Bank in its meeting held on February 21, 2023 has declared an interim dividend of '' 0.75 (7.5%) per equity share for the FY 2022-23. The record date for the purpose of determining the members eligible to receive the interim dividend was fixed as March 01, 2023 and the interim dividend amount of '' 146.59 Crores (before TDS) was distributed to the equity shareholders on March 08, 2023.

Further, the Board of Directors in its meeting held on May 11, 2023 has recommended a final equity dividend at the rate of '' 0.50 per share (5%) for the FY 2022-23. The final dividend will be subject to the approval by the members of the Bank at its ensuing 7th Annual General Meeting ("AGM").

B. Preference Dividend

In accordance with the term sheet executed for the issuance of perpetual non-cumulative preference shares, the Board of Directors of the Bank in its meeting held on February 21, 2023 had declared an interim preference dividend of Rs 0.55 (5.5%) per preference share which was paid to the preference shareholder on March 06, 2023. Further, the Board in its meeting held on May 11, 2023, has approved the balance preference dividend of '' 0.55 (5.5%) for the FY 2022-23 which was paid to the preference shareholder on May 16, 2023.

The aforesaid equity dividend and preference dividend translates to a dividend pay-out ratio of 24.21% for the FY22-23.

CHANGE IN THE NATURE OF BUSINESS

There was no change in the nature of business of the Bank during FY 2022-23.

MATERIAL Changes And CoMMITMENTS

No material changes and commitments have occurred after the closure of the FY 2022-23 till the date of this report, which might have affected the financial position of the Bank.

revision of financial statement or the directors'' report

The Bank has not revised its financial statements or the directors'' report in respect of any of the three preceding financial years either voluntarily or pursuant to the order of any judicial authority.

GENERAL INFoRMATioN

Detailed overview of the banking industry and important changes therein, external environment and economic outlook have been elaborated in the Management and Discussion Analysis Report which forms part of the Annual Report of the Bank for the FY 2022-23.

CAPITAL AND Debt STRUCTUREA. CHANGES IN CAPITAL STRUCTURE

There were no changes in the Authorised Capital of the Bank during the FY 2022-23. As on March 31, 2023, the Authorised Capital of the Bank comprises of the following:

• 2,30,00,00,000 Equity Shares of '' 10 each

aggregating to '' 2,300 Crores

• 20,00,00,000 11% Preference Shares (perpetual, non-convertible, noncumulative) of '' 10 each

aggregating to '' 200 Crores

Following are details of increase in the paid-up capital during the Financial Year 2022-23:
Sr	Particulars				Amount (in '')
1	Paid-up Capital at the beginning of the Financial Year				19,28,31,42,050
2 3 4	Equity Shares issued and allotted by way of Qualified Institutions Placement (QIP) on September 15, 2022 Equity Shares allotted under the ESOP Scheme 2019 Paid-up Capital at the end of the Financial Year				2,26,19,04,760 20,19,440 21,54,70,66,250
B. ISSUE oF EQUITY SHARES oR oTHER CoNvERTIBLE SECURITIES During the FY 2022-23, following equity shares were issued and allotted:
Sr	Particulars	No. of shares	Total Nominal Price (in '')	Total Issue Price including premium (in '')
1.	Equity Shares issued and allotted by way of Qualified Institutions Placement (QIP) on September 15, 2022	22,61,90,476	2,26,19,04,760	4,74,99,99,996.00
2.	Equity Shares allotted under the ESOP Scheme 2019 on February 09, 2023	87,814	8,78,140	17,51,889.30
3.	Equity Shares allotted under the ESOP Scheme 2019 on March 14, 2023	1,14,130	11,41,300	22,65,496.80

Qualified institutions Placement

The Bank in order to meet the requirement of Minimum Public Shareholding as per the Regulation 38 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Rule 19(2) of the Securities Contracts (Regulation) Rules, 1957 and other applicable circulars, sought shareholders'' approval via Notice of Postal Ballot dated February 21, 2022 "to consider and approve raising of funds and issuance of securities upto '' 600 Crores through Qualified Institutions Placement basis or through any other permissible mode, in one or more tranches". The aforesaid resolution was approved by the shareholders on March 26, 2022.

Basis the aforesaid approval, the Board of the Bank on September 15, 2022, approved the allotment of 22,61,90,476 Equity Shares of face value '' 10 each to eligible qualified institutional buyers at the issue price of '' 21 per Equity Share (including a premium of '' 11 per Equity Share) aggregating to '' 4,74,99,99,996 (Rupees Four Hundred Seventy-Four Crores Ninety Nine Lakhs Ninety Nine Thousands Nine Hundred Ninety Six only). Resultant to the aforesaid allotment the promoter shareholding in the Bank was brought down from 83.32% to 73.68%. As on March 31, 2023, the promoter shareholding in the Bank is 73.67%.

C. iSSUE OF EQUiTY SHARES WiTH DiFFERENTiAL RiGHTS AND/oR SWEAT EQUiTY SHARES

During the FY 2022-23, the Bank has neither issued any equity shares with differential rights nor any sweat equity shares.

D. employee stock oPTioNS/ SHARE BASED EMPLOYEE BENEFIT SCHEMES

The Bank has formulated and implemented ESOP 2019 Scheme and ESPS 2019 Scheme to reward the employees of the Bank, and employees of its present or future subsidiary(ies) and/or holding

company(ies), for their association and performance as well as to motivate them to contribute to the growth and profitability of the Bank.

ESOP 2019 Scheme:

The Bank, pursuant to the resolutions passed by the Board on January 22, 2019 and by the Members on March 29, 2019, adopted the ESOP 2019 Scheme. The Bank in its 4th Annual General Meeting held on September 02, 2020 has ratified the ESOP 2019 Scheme as required under the SEBI (Share Based Employee Benefits) Regulations, 2014. The Bank may grant an aggregate number of up to 14,40,00,000 stock options under the ESOP 2019 Scheme. Upon exercise and payment of the exercise price, the option holder will be entitled for allotment of one equity share per stock option. Accordingly, the number of equity shares that may be issued under the ESOP 2019 Scheme shall not exceed 14,40,00,000 equity shares of face value '' 10 each.

The ESOP 2019 Scheme is effective from March 29, 2019. The objectives of ESOP 2019 Scheme are, among others, to attract and retain employees with stock options as a compensation tool. Through ESOP 2019 Scheme, the Bank offers an opportunity of sharing the value created with those employees who have contributed or are expected to contribute to the growth and development of the Bank.

The ESOP 2019 Scheme has been framed and implemented in compliance with provisions of the SEBI (Share Based Employee Benefits) Regulations, 2014, now SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, Companies Act, 2013 and rules made thereunder and relevant guidance notes and accounting standards.

As on March 31, 2023, 11,99,71,861 stock options have been granted by the Bank under ESOP 2019 Scheme to eligible employees of the Bank and its Holding Company.

During the FY 2022-23, following grants have been made to the eligible employees with the approval of the Nomination and Remuneration Committee of the Bank:
Sr. No	Date of grant	number of options	Price (?)
1.	June 08, 2022	80,685	16.70
2.	November 18, 2022	5,02,481	26.39
3.	January 27, 2023	4,73,93,431	27.5
4.	February 20, 2023	2,52,496	27.4
Total		4,82,29,093	-
No change has been made in the ESOP 2019 Scheme during the FY 2022-23 and following are the details of ESOP 2019 as on March 31, 2023:
Particulars		Details
Options granted and outstanding at the beginning of the year (A)		5,44,95,333
Options granted during the year (B)		4,82,29,093
Options vested during the year		83,02,994
Options exercised during the year (C)		2,23,918

Particulars	Details
The total number of shares arising as a result of exercise of options	2,01,944*
Options forfeited / lapsed during the year (D) Variation in terms of options Money realised by exercise of options Total number of options in force = (A) (B) - (C) - (D)	1,38,29,524 Note: All the lapsed options are being added back to the ESOP pool None 4,526,550.98 88,670,984
Details of options granted during the year to:
Key Managerial Personnel*	1. Mr. Ittira Davis - MD & CEO - 2,21,970 options granted on November 18, 2022 2. Mr. Ramesh Murthy - CFO - 79,724 options granted on November 18, 2022 3. Mr. Sanjeev Barnwal - CS - 2,20,171 options granted on January 27, 2023
Any other employee who received a grant in any one year of options amounting to 5% or more of the options granted during the year	Nil
Identified employees who were granted options during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Bank at the time of grant	Nil
*21,974 options exercised in the month of March 2023 have been allotted on April 12, 2023.

The disclosures as required under Regulation 14 of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 read with Circular CIR/CFD/POLICY CELL/2/2015 dated June 16, 2015 issued by SEBI are available on the website of the Bank at www.uiiivansfb.in.

ESPS 2019 Scheme:

The Bank, pursuant to the resolutions passed by the Board on July 30, 2019 and by the Members on August 03, 2019, adopted the ESPS 2019 Scheme. The ESPS 2019 Scheme has been framed and implemented in compliance with provisions of the SEBI (Share Based Employee Benefits) Regulations, 2014 now, SEBI (Share Based Employee Benefits & Sweat Equity) Regulations 2021, Companies Act, 2013 and rules made thereunder and relevant guidance notes and accounting standards.

The objective of the ESPS 2019 Scheme is inter-alia to reward the eligible employees of the Bank and its Holding Company for their association and performance as well as to motivate them to contribute to the growth and profitability of the Bank.

Pursuant to the ESPS 2019 Scheme, the Board is authorised to issue up to 7,20,01,840 fully paid up equity shares of the face value of '' 10 each with pari-passu voting rights, to the eligible employees (as defined under the ESPS 2019 Scheme), in accordance with the terms and conditions as may be decided by the Nomination and Remuneration Committee of the Bank.

The ESPS 2019 Scheme was implemented under two schemes, viz. Upfront Scheme and Monthly Scheme. Under the Upfront Scheme, the employees made upfront payments to purchase the equity shares and equity shares were allotted to them while under the Monthly Scheme, the employees opened a monthly recurring deposit account and the equity shares were allotted to such employees at the end of the 12 months.

The Nomination and Remuneration Committee has been entrusted with the responsibility of administering the ESPS 2019 Scheme. As of March 31,2023, 1,40,75,166 shares were allotted at '' 35 per share (including premium of '' 25 per share) pursuant to the exercise of options under ESPS 2019 Scheme. However, no ESPS was granted or exercised during the FY 2022-23.

The disclosures as required under Regulation 14 of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 read with Circular CIR/CFD/POLICY CELL/2/2015 dated June 16, 2015 issued by the SEBI are available on the website of the Bank at www.uiiivansfb.in.

Further as per Regulation 13 of the SEBI (Share Based Employee Benefit and Sweat Equity) Regulations, 2021, the Board of Directors have obtained the certificate from the Secretarial Auditor of the Bank, K Jayachandran, certifying that the schemes have been implemented in accordance with these regulations and in accordance with the resolution of the Bank in the general meeting. The same has been enclosed as “Annexure - 6" to this report.

E. ISSUE OF DEBENTURES, BONDS OR ANY NON-CONVERTiBLE SECURiTiES OR WARRANTS

During the FY 2022-23, the Bank, pursuant to a resolution passed by its Board on June 08, 2022 considered and approved the proposal for raising funds by way of issuance of non-convertible debt securities upto '' 1,500 Crores (Rupees One thousand Five Hundred Crores) on a private placement basis, in

one or more tranches, within a period of 1 (one) year from the date of seeking shareholders'' approval, in compliance with all applicable directions and regulations of the Reserve Bank of India, SEBI, other governmental authorities, and any other person, as may be required/applicable. The Bank through its postal ballot notice dated June 08, 2022 sought the shareholders'' approval for aforesaid issue and the resolution was approved on July 12, 2022.

Pursuant to the aforesaid approval, the Bank made following allotments of Non-Convertible Debentures (NCDs) having a face value of '' 1,00,000 (Indian Rupees One Lakh), during the FY 2022-23:
Sr	Date of Allotment	No. of Securities Allotted	Aggregate Amount (in '')
1.	August 26, 2022	22,500	225,00,00,000
2.	September 09, 2022	7,500	75,00,00,000
TOTAL		30,000	300,00,00,000
Further, following are the details of the NCDs issued and allotted:
Sr	Particulars	Details
1.	Type of Securities	Subordinated, rated, unlisted, unsecured, transferable, redeemable, fully paid up, nonconvertible debentures.
2.	Type of issuance	Private Placement
3.	Face Value	'' 1,00,000 each
4.	Date of Maturity	April 26, 2028 ("Final Redemption Date")
5.	Coupon/Interest Offered	11.95% (eleven decimal nine five percent) per annum ("Interest Rate")
6.	Schedule of payment of Coupon/Interest	Monthly
7.	Schedule of Payment of Principal Amount	Bullet payment, on the Final Redemption Date
8.	Credit Rating	Care Ratings Limited - CARE A ; Stable (Single A Plus; Outlook: Stable)
9.	Capital Classification	Tier II Capital in accordance with the Reserve Bank of India''s circular on "Master Circular -Prudential Guidelines on Capital Adequacy and Market Discipline-New Capital Adequacy Framework (NCAF)" dated July 01, 2015

DILUTION OF PROMOTER''S SHAREHOLDING AND REVERSE Merger

Pursuant to the Guidelines for licensing of "Small Finance Banks" in the private sector issued by RBI on November 27, 2014 ("SFB Licensing Guidelines"), the Promoter of the Bank i.e. Ujjivan Financial Services Limited (UFSL) was required to reduce its shareholding in the Bank to 40% of the paid-up Equity Share capital of the Bank within a period of five years from the date of commencement of business operations by the Bank i.e. by January 31, 2022 and thereafter required to reduce its shareholding in the Bank to 30% and 26% of its paid-up Equity Share capital within a period of 10 years and 12 years, respectively, from the date of commencement of the business operations. RBI vide its letter dated July 09, 2021 permitted the Bank to apply for the amalgamation of holding company with small finance bank, in terms of provisions of Master Direction on Amalgamation of Private Sector Banks, Directions, 2016 dated April 21, 2016, Three (3) months prior to completing five years from the date of commencement of business of small finance bank. Further, recommendations of the Internal Working Group to Review Extant Ownership Guidelines and Corporate

Structure for Indian Private Sector Banks, dated October 20, 2020 and November 20, 2020 that, no intermediate sub-targets between five to 15 years may be required and that promoters may submit a dilution schedule which may be examined and approved by the RBI, were accepted by RBI without any modification vide its circular dated November 26, 2021.

Accordingly, the Bank initiated necessary steps for the reverse merger of Ujjivan Financial Services Limited with the Bank in accordance with applicable laws and guidelines. Merger of the Promoter entity with the Bank will suffice the requirement of promoter shareholding dilution.

The Board of the Bank in its meeting held on October 14, 2022, considered and approved a Scheme of Amalgamation ("Scheme") between Ujjivan Financial Services Limited (UFSL, promoter of the Bank) and the Bank and their respective shareholders and creditors under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 and the rules made thereunder. The following table highlights the progress made in the Reverse Merger process during the financial year:

The Bank now awaits the directions / orders from the Hon''ble NCLT on the next course of action including holding of meetings of various stakeholders.

CAPITAL ADEQUACY

The Bank is subject to the Basel II Capital Adequacy guidelines (NCAF) as stipulated by RBI. The Capital to Risk Assets Ratio (CRAR) of the Bank is calculated as per the Standardised Approach (SA) for Credit Risk.

CRAR of the Bank is calculated on the basis of RBI NCAF guidelines. The CRAR of the Bank as at March 31,2023 using Risk Weighted Assets for credit risk related exposures only, as required under the operating guidelines of RBI for Small Finance Banks, was 25.81% against a minimum requirement of 15% and Tier I capital ratio was 22.68% against the minimum requirement of 7.5% . The Bank''s leverage ratio was 11.11% as against the minimum requirement of 4.5%.

TRANSFER OF UNPAID AND UNCLAIMED AMOUNT TO INVESTOR EDUCATION AND PROTECTION FUND

In terms of Section 124 & 125 of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 as amended from time to time, the dividend that remains unpaid or unclaimed for a period of seven consecutive years from the date of transfer, are required to be transferred to the Investor Education and Protection Fund (IEPF).

Being the 6th Financial Year, there were no amounts due for transfer to IEPF.

DECLARATION BY INDEPENDENT DIRECTORS AND STATEMENT ON COMPLIANCE OF CODE OF CONDUCT

The Bank has received declarations from all its Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)

(b) of SEBI Listing Regulations and that they have complied with the code of conduct for independent directors as prescribed under Schedule IV of the Companies Act, 2013. Further, pursuant to Regulation 25(8) of the SEBI Listing Regulations, the Independent Directors of the Bank have also confirmed that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, to impair or impact their ability to discharge their duties with an objective of independent judgment and without any external influence.

In the opinion of the Board, all the Independent Directors meet the criteria with regards to integrity, expertise and experience (including proficiency*) as required under applicable laws.

*All Independent Directors of the Bank have registered themselves in the data bank as specified under Section 150 of the Companies Act, 2013 read with Rule 6 of Companies (Appointment and Qualifications of Directors) Rules, 2014. Few Independent Directors have qualified the prescribed proficiency test. The Independent Directors (not exempted under the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2020 as notified on

December 18, 2020) are committed to qualify the online proficiency self-assessment as required under aforesaid Rule within the prescribed timeline.

The Bank has also received from its directors, a statement that they have complied with the Code of Conduct for Directors and Senior Management of the Bank.

NUMBER OF MEETINGS OF THE BOARD

The Board met 09 (Nine) times during the FY 2022-23. The meetings of the Board of Directors were convened in accordance with applicable laws and standards and the intervening gap between the said meetings was not exceeding 120 days. The details of Board Meetings are available in the Corporate Governance Report which forms a part of the Annual Report of the Bank for the FY 2022-23.

BOARD COMMITTEES

The Bank believes that the Board Committees are pillars of good corporate governance. In pursuit of the highest standard of corporate governance and to comply with the provisions of the Companies Act, 2013, SEBI Listing Regulations and RBI guidelines, the Bank has constituted various statutory and regulatory Board Level Committees. Further, in order to improve the Board effectiveness, efficiency and faster decision making, the Bank has also constituted a few non-statutory and non-regulatory Board Level Committees for better governance and supervision.

RECOMMENDATIONS OF AUDIT COMMITTEE

During the FY 2022-23, there was no incidence, where the Board has not accepted any recommendations of the Audit Committee.

BOARD EVALUATION

The Board has carried out an annual evaluation of its own performance, the performance of Board Committees and Individual Directors pursuant to the provisions of Section 178 read with Schedule IV of Companies Act, 2013, Regulation 19 of the SEBI Listing Regulations and applicable RBI guidelines.

The performance evaluation was carried out by the Nomination and Remuneration Committee and by the Board in their meetings held on February 20, 2023 and February 21, 2023 respectively.

The approved evaluation formats and criteria are in line with the SEBI Guidance Note on Evaluation dated January 05, 2017.

The Nomination and Remuneration Committee has laid down comprehensive parameters for evaluation, a few of which are listed below:

I. The Board: Composition, structure, meetings, functions, management and professional development, ethics and compliance among others.

II. The Committees: Mandate & Composition, effectiveness, structure, meetings, independence of the committee, contribution to decision making of the Board, among others.

III. Individual directors (including Chairperson, Independent Directors and Non-Independent Directors): Leadership, Commitment, Contribution, Experience, Expertise, Independence, Integrity, Attendance, Responsibility, Flow of Information among others.

The performance of the Board and Board Committees was evaluated after seeking inputs from all the directors. The Board and the Nomination and Remuneration Committee reviewed the performance of the Individual Directors on the basis of the approved criteria for evaluation. In addition, the Chairman and Managing Director & CEO were also evaluated on the key aspects of their roles.

Performance evaluation of Directors was done by the Nomination and Remuneration Committee and entire Board, excluding the Director being evaluated. The Committee evaluated the performance of Directors and noted that:

i. The Directors had requisite competency, qualification, commitment and integrity.

ii. The Directors had long term vision, industry knowledge and expertise and were wholly committed and provided ethical leadership to the Bank.

iii. The Directors had the ability to function as a team.

iv. Further, the Directors were regular in attending meetings and contributed effectively during the discussions.

v. There was no apparent conflict of interest and that they expressed their opinion freely.

Further, performance of Non-Independent Directors, the performance of the Board as a whole, the performance of the Chairman and quality, quantity and timeliness of the flow of information between the Bank''s Management and its Board were also evaluated.

remuneration of directors and employees

The remuneration being paid to the MD & CEO is in conformity with the RBI approval.

The remuneration of Non-Executive Directors was paid only by way of sitting fees which is within the limit prescribed under Section 197(5) of the Companies Act, 2013.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1), (2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this Report as Annexure-1. In terms of Section 136(1) of the Companies Act, 2013, the annual report and the financial statements are being sent to the Members excluding the disclosures in terms of Rule 5(2) and (3) as mentioned above. The same is available for inspection and any Member interested in obtaining a copy of the Annexure may write to the Company Secretary of the Bank.

remuneration received by the managing

DiRECTOR/WHOLE-TiME DiRECTOR FROM HOLDiNG

or subsidiary company

During the FY 2022-23, the MD & CEO, has not received any remuneration or commission from Ujjivan Financial Services Limited, Holding Company of the Bank. Bank had no subsidiary Company during the FY 2022-23.

familiarisation programme for independent directors

Complying with Regulation 25(7) of SEBI Listing Regulations and RBI guidelines, Familiarisation Programmes were conducted during the FY 2022-23 to give an overview and introduction to the Independent Directors about the Bank''s business and operations. Under this programme, newly appointed independent directors are appraised with the organisation structure, operational overview, financial overview, board matters and procedures, key risk issues and its mitigation strategy, among others.

Further, all the newly appointed Board Members undergo a face to face induction schedule where the Bank''s Management Team provides insights about the affairs of their function and of the Bank as a whole.

The details of such programme are available on the website of the Bank at https://www.uiiivansfb.in/ corporate-governance-policies

directors'' responsibility statement

Based on the framework of internal financial controls established and maintained by the Bank, work performed by the internal, statutory and secretarial auditors, reviews performed by the Management and the relevant Board Committees, the Board, in concurrence with the Audit Committee, is of the opinion that the Bank''s internal financial controls were adequate and effective as on March 31, 2023.

Pursuant to Section 134 (5) of the Companies Act, 2013, the Board, to the best of its knowledge, hereby confirms and states 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) they 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 at the end of the financial year and of the profit and loss of the Bank for that period;

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

(d) they have prepared the annual accounts on a going concern basis;

(e) they 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) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

SHAREHOLDING OF DIRECTORS AND KMPS

Following is the shareholding of the Directors and KMPs in the shares of the Bank as on March 31,2023:

- Mr. Ittira Davis (MD & CEO) holds 2,00,000 equity shares

- Mr. Samit Ghosh (Non-Executive Non-Independent Director) holds 35,47,143 equity shares

- Mr. Sanjeev Barnwal (Company Secretary) holds 14,000 equity shares

NOMINATION AND REMUNERATION POLICY

The Bank pursuant to the provisions of Section 178(3) of the Companies Act, 2013, Regulation 19 of SEBI Listing Regulations and RBI Requirements has formulated and adopted a Nomination and Remuneration Policy on directors'' appointment and remuneration and the criteria for determining qualification, positive attributes and independence of directors, which is available on the website of the Bank at www.uiiivansfb.in/corporate-governance-policies.

RISK MANAGEMENT

The Risk Management Committee ("RMC") of the Board comprises of experienced directors from diverse

backgrounds who bring in the best risk management practices to the Bank. The RMC presently comprises of 6 (Directors) directors of which 4 (four) are Independent Directors.

The RMC fulfils its roles and duties through various management level risk committees. Risk-specific management level committees have also been constituted such as the Credit Risk Management Committee (CRMC), Operational Risk Management Committee (ORMC), Asset Liability Committee (ALCO), which also oversees Market Risk management and Risk Management Committee (RMC- Mgmt. Level). These committees are entrusted with the task to identify, measure, mitigate and monitor various risks on a day to day basis.

The frequency, members and the quorum required for these management level committees are furnished in the governance document on management committees. These committees meet at regular intervals to assess and monitor the levels of risk pertaining to all facets of banking operations.

The Bank has identified the following risks as Pillar I risks, in line with the RBI NCAF guidelines:

• Credit Risk

• Operational Risk

• Market Risk

In addition to the above-mentioned Pillar-I risks, the Bank also monitors the following second order or derived risks (Pillar II Risks) using specialised methodologies. The Bank has onboarded specialised personnel for monitoring the same and a comprehensive analysis is undertaken under its Internal Capital Adequacy and Assessment Process (ICAAP).

• Liquidity Risk

• Concentration Risk

• Interest Rate Risk in Banking Book

• Underestimation of Credit Risk

• Strategic Risk

• Reputational Risk

• Compliance Risk

• Outsourcing Risk

• People Risk

• Group Risk

• Securitisation risks

• I nformation technology and Information Security risk (including Cyber Security)

• Fintech risk

• Climate Risk

• Environment, Social and Governance (ESG) risks The Bank''s Risk Management Framework is based on a clear understanding of the above risks, disciplined

risk assessment and measurement procedures and continuous monitoring. For the emerging risks in the areas of climate risk and ESG compliance, the Bank has constituted a research-based approach culminating into policy advocacy. The policies and procedures established for this purpose are continuously benchmarked with international best practices. The Bank has oversight on all the risks through regular monitoring of Key Risk Indicators, thematic reviews, root cause analysis and tolerance/appetite statements against major risks. Further, the Board reviews the Risk Management Framework of the Bank and verifies adherence to various risk parameters and compliances at least at quarterly intervals or more frequently if the situation so warrants. The RMC endorses risk related reports/findings and provides a recommendation to approve risk-related policies, including the quarterly/half-yearly/annual review reports of major risks.

From governance perspective, the Bank has in place an effective risk management policy(s) that highlights the functions, implementation and role of the Risk Management Committee of the Board and the Board of Directors.

In compliance to the Pillar-III requirements of BCBS/ RBI, the Bank has in place a Board approved policy on Disclosures that addresses its approach for determining what disclosures it will make and the internal controls over the disclosure process. The Bank is currently in the process of enhancing the scope of coverage in compliance to requirements stated by Task Force for Climate Related Disclosures (TCFD framework).

WHiSTLE BLOWER POLiCY/ViGiL MECHANiSM

The Bank''s Whistle Blower Policy allows employees, directors, other stakeholders of the Bank such as customers, NGOs, the Group (if any), Joint Ventures (if any), Suppliers, Contractors, NGOs and members of the public to report matters such as genuine grievances, corruption, fraud, misconduct, and instances of leakage of unpublished price sensitive information, misappropriation of assets and non-compliance of code of conduct of the Bank or any other unethical practices.

Utmost protection has been accorded to the whistle blowers and their identities are kept confidential.

The Policy also further provides an adequate safeguard against victimisation to the Whistle Blower and enables them to raise concerns and also provides an option of direct access to the Chairperson of the Audit Committee. Name and Address of the Whistle and Ethics Officer Ms. Chandralekha Chaudhuri Ujjivan Small Finance Bank Limited Grape Garden, No. 27, 3rd A Cross, 18th Main, 6th Block, Bangalore - 560095, Karnataka

Email- [email protected] Protected disclosures against the Whistle and Ethics Officer need to be addressed to the Managing Director and CEO of the Bank and the protected disclosure against the Managing Director and CEO of the Bank are required to be addressed to the Chairperson of the Audit Committee.

Name and Address of MD & CEO of the Bank

Mr. Ittira Davis

Ujjivan Small Finance Bank Limited

Grape Garden, No. 27, 3rd "A" Cross, 18th Main,

6th Block, Koramangala, Bengaluru - 560095,

Karnataka

Email: [email protected]

name and Address of the Chairperson of the Audit Committee

Mr. Rajesh Kumar Jogi

701, Dheeraj Devika, Hill Road, Bandra West,

Mumbai- 400050, Maharashtra Email: [email protected]

During the FY 2022-23, no one has been denied access to the Chairperson of the Audit Committee.

The Whistle Blower Policy is available on the website of the Bank at www.umvansfb.in/corporate-governance-policies

The confidentiality of those reporting violations is strictly maintained and they are not subjected to any discriminatory practice.

The status of the whistle blower complaints received and resolved by the Bank:

Particulars	Number of Complaints
Number of Whistle Blower Complaint at the beginning of the FY 2022-23	0
Number of Whistle Blower Complaint received during the FY 2022-23	16
Number of Whistle Blower Complaint resolved during the FY 2022-23	15
Number of Whistle Blower Complaint at the end of the FY 2022-23	01

adequacy of internal control

The Bank has laid down certain guidelines, policies, processes and structures to enable the implementation of appropriate internal financial controls across the Bank. These control processes enable and ensure orderly and efficient conduct of the Bank''s business, including the safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information. There are control assessments for both the Bank''s critical operating processes and IT applications, including ERP applications, wherein the transactions are

approved and recorded. These controls are both manual and automated. Review and control mechanisms are built in to ensure that such control systems are adequate and operating effectively.

The Bank is cognizant of inherent limitations in internal financial controls, in that the scope of coverage is vast and continuously evolving including the possibility of collusion or improper management override of controls, material mis-statements in financial reporting due to error or fraud may occur and may not be detected. Also, evaluation of the internal financial controls is subject to the risk that the internal financial control may become inadequate because of changes in conditions or that the compliance with the policies or procedures may deteriorate. To that effect, the Bank has put in place a robust Risk Acceptance policy where residual risks are deliberated for acceptance.

The Bank has, in all material respects, an adequate internal financial controls system and such internal financial controls were operating effectively based on the internal control criteria established by the Bank considering the essential components of internal controls stated in the guidance note on audit of internal control over financial reporting issued by the Institute of Chartered Accountants of India.

FRAUDS REPORTED BY THE AUDITORS

During the FY 2022-23, neither the Statutory Auditors nor the Secretarial Auditor has reported to the Audit Committee/Board or Central Government any instances of material fraud in the Bank by its officers or employees under Section 143(12) of the Companies Act, 2013.

DISCLOSURES RELATING TO SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

A. REPORT On Performance And Financial POSITION OF THE SUBSIDIARIES, ASSOCIATES AND JOINT vENTURES

There were no Subsidiary Company, Associate Company and Joint Venture of the Bank during the FY 2022-23.

B. COMPANiES WHiCH HAVE BECOME OR CEASED TO BE SUBSIDIARIES, ASSOCIATES AND JOINT vENTURES

No Company became or ceased to be Subsidiary Company, Associate Company and Joint Venture of the Bank during FY 2022-23.

DEPOSITS

The Chapter V of the Companies Act, 2013 does not apply to the Bank. During the FY 2022-23, the Bank has accepted deposits from the public in the ordinary course of its banking business. The details of the deposits are enumerated in the Financial Statement for FY 2022-23.

Being a banking company, the disclosures required as per Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, 2014, read with Section 73 and 74 of the Companies Act, 2013 are not applicable to the Bank.

PARTiCULARS OF LOANS, GUARANTEES AND/OR INvESTMENTS

The provisions of Section 186 of Companies Act, 2013 except sub-section (1) do not apply to a loan made, guarantee given or security provided by a banking company in the ordinary course of business.

related PARTY TRANSACTiONS AND CONTRACTS/ ARRANGEMENTS

There was no materially significant related party transaction entered between the Bank and its related parties, except for those disclosed in the financial statement.

All the contracts/arrangements/transactions entered by the Bank with the related parties during the FY 2022-23 were on arm''s length basis; accordingly, the disclosure of particulars of contracts/ arrangements entered into by the Bank with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 in Form AOC-2 is not applicable.

The Bank has formulated a Policy on ''Materiality of Related Party Transactions'' which forms part of the Policy on dealing with ''Related Party Transactions'' is available on the website of the Bank at www.uiiivansfb.in/corporate-governance-policies.

CORPORATE SOCiAL RESPONSiBiLiTY ("CSR")

As per Section 135 (1) of the Companies Act, 2013 "Every company having net worth of rupees five hundred Crores or more, or turnover of rupees one thousand Crores or more or a net profit of rupees five Crores or more during the immediately preceding financial year shall constitute a CSR Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director".

Pursuant to the above, as on March 31,2023 the Bank had duly constituted CSR Committee with 5 (Five) Directors out of which 4 (Four) are Independent Directors. The details of the changes in the composition of the CSR Committee during the FY 2022-23 have been provided in the Corporate Governance Report which forms part of the Annual Report for the FY 2022-23.

The Bank has formulated CSR policy pursuant to Section 135(4) of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, in accordance with the approach and direction given by the Board of the Bank, taking into account the recommendations of its CSR Committee, and including guiding principles for selection, implementation and monitoring of activities as well as formulation of the

annual action plan.

The said Policy is available on the website of the Bank at

www.uiiivansFb.in/corporate-qovernance-policies.

The detailed Annual Report on the CSR activities For the

FY 2022-23 is annexed to this Report as Annexure-2.

CONSERVATION OF ENERGY, TECHNOLOGYABSORPTiON, FOREiGN EXCHANGE EARNiNGS ANDOUTGOA. CONSERVATION OF ENERGY

The programme of Sanchaya was themed around Use energy wisely. Under this programme, the Bank took up some practical ways to make smart changes around the workplace, everyone in the Bank was involved in this energy saving initiative making the workplace more energy efficient and sustainable. Under this initiative, as a pilot run, we have come up with a URC branch which uses Solar power to operate its generator. The average diesel consumption in the similar URC branches has been 10-15 litres per month. With this new initiative in place, we have saved about 120-180 litres of Fuel in this FY.

B. TECHNOLOGY ABSORPTION1) Robotic Process Automation ("RPA") in reconciliation of UPI and IMPS transactions:

For the FY 2022-23, RPA For the reconciliation of UPI and IMPS transactions have been huge cost savers, savings more than 6 Crores in outsourcing cost for the Bank. This is 2X of what was saved in the last Financial Year.

This year, the bank has developed, tested & deployed 22 projects, increasing the presence of RPA across various departments of the Bank like Operations, Service Quality, MicroBanking, IT, HR etc...,

• Salary Processing at the Bank has been automated by RPA, becoming an integral part of crediting salaries for over 17000 Employees.

• Prefilled AOF process potentially frees 30 Full Time Employees worth of effort, on a month on month basis for the bank, from routine operational activities, allowing employees to focus more on client and customer interaction, relationship management and other such activities where humans excel at.

• One of our projects to automate the Agent Model Reconciliation, for collection agents depositing collection amount at FinTech Partner Spice Money has significantly helped in improving collections and reducing effort employed manually.

C. FOREiGN EXCHANGE EARNiNGS AND OUTGO

During the FY 2022-23, 304 transactions (Inward & Outward) were processed adding up to USD 23.43 Lakh during the period. It resulted in an exchange income of '' 22.29 Lakhs for the Bank. Total Foreign Exchange Outward was USD 17.82 Lakh during the FY 2022-23.

SIGNIFICANT AND MATERIAL ORDERS BY THE REGULATORS OR COURTS OR TRIBUNALS

During the FY 2022-23, there were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status of the Bank and its operations in future.

AUDITORSA. STATUTORY AUDITORS

The Members of the Bank, in the 5th Annual General Meeting held on September 27, 2021, appointed M/s. Mukund M Chitale & Co., Chartered Accountants (FRN 106655W) and M/s. B. K. Ramadhyani & Co. LLP, Chartered Accountants (FRN 002878S/ S200021), as the Joint Statutory Auditors of the Bank for a period of 3 (three) consecutive financial years until the conclusion of 8th AGM of the Bank to be held in the FY 2024-25, subject to approval of RBI on an annual basis, pursuant to the RBI Guidelines for Appointment of Statutory Central Auditors (SCAs)/ Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs). Further, the Joint Statutory Auditors had given their consent letter and other eligibility certificates for FY 2022-23 and the RBI vide their letter dated August 24, 2022 has approved the continuation of the Joint Statutory Auditors for the FY 2022-23 for the second year.

The policy of the Bank on "Appointment of Statutory Auditors" is available on the website of the Bank at www.uiiivansFb.in/corporate-qovernance-policies

Report of the Statutory Auditors

The Statutory Audit of the Bank for the FY 2022-23 was conductedjointly by M/s. Mukund M Chitale & Co., Chartered Accountants and M/s. B. K. Ramadhyani & Co. LLP, Chartered Accountants. The Auditor''s Report on the financial Statements of the Bank for the FY 2022-23 does not contain any qualification, reservation or adverse remark. The Auditor''s Report, enclosed with the financial statement, forms part of the Annual Report for the FY 2022-23.

SECRETARIAL AUDITOR

Mr. K. Jayachandran, Practicing Company Secretary (ACS No.: 11309 and Certificate of Practice No.: 4031) was appointed as the Secretarial Auditor of the Bank in the meeting of the Board held on June 08, 2022 to conduct

Secretarial Audit of the Bank for the FY 2022-23 as required under Section 204 of the Companies Act, 2013 and the rules made thereunder and Regulation 24A of SEBI Listing Regulations. The Bank provided all assistance and facilities to the Secretarial Auditor for conducting the audit.

The Secretarial Audit Report is annexed to this Report as Annexure - 3.

ANNUAL RETURN

In accordance with Section 134(3) and Section 92(3) of the Companies Act, 2013 and pursuant to Companies (Amendment) Act, 2017, a copy of the Annual Return for the FY 2022-23 is available on the Bank''s website at www. uiiivansfb.in/annual-return

COMPLiANCE WiTH SECRETARiAL STANDARDS

The Bank has complied with the provisions of Secretarial Standards specified by the Institute of Company Secretaries of India and notified by the Ministry of Corporate Affairs under Section 118(10) of the Companies Act, 2013. The Bank has also complied with the provisions of Secretarial Standard-4 on voluntary basis.

HUMAN RESOURCES

The Bank prioritises service mantra both internally and externally. While technology plays a pivotal role in the effort, its employees are the catalyst of change and progress at the Bank. People practices are derived from the Bank''s core values; integrity, responsible, fairness, respect, professionalism and teamwork. The Bank is driven to build better lives both for its customers and employees. This drive has bestowed many accolades to the Bank.

Ujjivan SFB has been recognised as one of india''s TOP 25 best places to work in the BFSI sector for 2023 as per

the study conducted by Great Place To Work® Institute After a year (FY21-22) where the Bank was certified but did not Rank in the Great Place to Work (Overall category), in the FY 22-23, the Trust Index score for the Bank, has improved from 85 to 92 for FY 22-23.The initiatives taken up by the Bank in terms of increments to employees, RLSP (Retention Linked Special Pay) specially after the FY21-22 results, subsidised loans for employees, revision of Grades and Bands for all employees in line with the market and several employee engagement initiatives like employee family engagements, milestones celebrations, branch representative meetings, chai pe charcha (corporate employee connect) and townhalls, has positively motivated the employees. Additionally, to ensure real time employee feedback and identifying high risk employees, an AI chatbot called Amber was launched across the organisation.

Wellbeing of employees has been another important area for the Bank, where physical and emotional wellness of employees were emphasised. Annual health checkups at

branch levels for staff and discounted rates for checkups for their families was carried out. The annual health check-ups were also followed up by partner organisations to telephonically connect and inform the employees on high risk matters and provide medical advice. The launch of "Emotional Wellness Advisors" for the employees was another wellness initiative which was highly lauded by the employees.

corporate governance and business RESPoNSIBILITY REPoRT

The Bank recognises its role as a corporate citizen and endeavours to adopt the best practices and the highest standards of Corporate Governance through transparency in business, ethics and accountability to its shareholders, customers, government, regulators and all other stakeholders. The Bank''s activities are carried out following good corporate practices and the Bank is constantly striving to make them better and adopt the best practices.

The Bank believes that timely reporting, transparent accounting policies and a strong Independent Board go a long way in preserving shareholders'' trust and maximising long-term corporate value.

In pursuing the mission of becoming "The best institution to provide financial services to the unserved and underserved customers and transform to a bank serving the mass market", the Bank has been balancing its dual objectives of "social" and "financial goals since its inception. "Responsible financing", "ethical values" and "transparency" in all its dealings with its customers, lenders, investors and employees have been the cornerstone of its operations. Transparency in the decision-making process has been providing comfort to all stakeholders, particularly the customers, lenders and investors.

The Report on Corporate Governance for FY 2022-23 as per Regulation 34(3) read with Schedule V of the SEBI Listing Regulations forms part of the Annual Report for FY 2022-23. The disclosure as required under Section II of Part II of Schedule V of the Companies Act, 2013 have been provided under the heading of Remuneration of Directors in the aforesaid Corporate Governance Report.

A Business Responsibility and Sustainability Report containing the requisite details as per Regulation 34 (2) of the SEBI Listing Regulations forms part of the Annual Report for the FY 2022-23 and is also disclosed on the Bank''s website at www.uiiivansfb.in.

Further the Bank is in process of publishing a voluntary report on Environmental Social Governance (ESG) which will be available on the Bank''s website at www.uiiivansfb. in.

management discussion and analysis report

As required under Regulation 34 and Schedule V of SEBI

Listing Regulations, the Management Discussion and Analysis Report forms part of the Annual Report for the FY 2022-23.

DiSCLOSURE UNDER SECTiON 22 OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTiON, PROHiBiTiON AND REDRESSAL) ACT, 2013

The Bank has a strict Prevention of Sexual Harassment ("POSH") Policy in accordance with the statutory requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. This Policy applies to all categories of employees of the Organisation, including permanent employees, permanent management, workmen, temporary employees, trainees (interns), consultants, advisers, ad hoc employees, daily wage earners, probationers, apprentices, contract employees, etc., at its workplace or visits to partner organisations. This Policy recognises the right of privacy of every individual and will strive to protect the privacy of the individuals involved and ensure that the complainant and the respondent are treated fairly. The Policy ensures that the career interest of the parties involved in any proceedings under this Policy will not be adversely affected merely on account of the complaint made to the Internal Committee or any evidence provided in connection with any enquiry; however strict action will be taken against the Respondent if proven guilty post the enquiry process.

The Status on the Complaints received and resolved by Internal Committee during the FY 2022-23:

Number of Com-	Number of Com-	Number of Com-
plaints	plaints Resolved	plaints Pending for Resolution
7	7	0

Composition of Internal Committees

Bank has constituted Internal Committees (IC) in each of the regions for all administrative units/branches/ regional offices of the Bank. All complaints of Sexual Harassment at the Workplace are enquired into by the IC having jurisdiction over the establishment where the Respondent is posted. The IC forwards a report of its findings to the Employer for action. Each Regional IC consists of the following members:

• Presiding Officer: who shall be a woman employed at a senior level in the region.

• Secretary: who shall be the Regional HR Manager.

• 2 Members: From amongst Employees in the region, preferably committed to the cause of women/having legal knowledge/experience in social work.

• 1 Independent Member: Nominated from amongst NGOs/associations committed to the cause of women or a person familiar with the issues relating to Sexual Harassment.

Other Members: Additional members may be coopted, if required, from amongst Employees working in senior positions in the region, especially from business, operations and control functions

Functions of IC

The Committee is expected to conduct a fair, prompt and impartial process of investigating all the complaints it receives. During a redressal process, the Complaints Committee/s are required to assure confidentiality, nonretaliation and recommend interim measures as needed to conduct a fair enquiry.

policies

To ensure better corporate governance, adherence to various laws and regulations as applicable to the Bank and better management of the organisation as a whole, the Bank has formulated various policies including the policies mentioned below. These policies are available on the Bank''s website at www.uiiivansfb.in/corporate-governance-policies.

A brief description of below mentioned policies/code have been given in Annexure-4 of this Report.

1. Policy for Determination of Materiality of Event/ Information for Disclosures

2. Code of Conduct for Prevention of Insider Trading and Code of Fair Disclosure and Conduct

3. Corporate Social Responsibility Policy

4. Nomination and Remuneration Policy

5. Policy on Board Diversity

6. Policy on Code of Conduct

7. Related Party Transactions Policy

8. Dividend Distribution Policy

9. Familiarisation Programme

10. Policy on Archival of Documents

11. Record Retention and Maintenance Policy

12. Whistle Blower Policy

13. Terms and Conditions of Appointment of Independent Directors

corporate governance compliance certificate

The Bank has obtained a certificate from K. Jayachandran, Practicing Company Secretary, certifying that the Bank has complied with the conditions of the Corporate Governance as stipulated in Regulations 17 to 27 and clauses (b) to (i) of Regulation 46 (2) and other applicable regulations of Chapter IV pertaining to Corporate Governance and paragraphs C, D and E of Schedule V of the SEBI Listing Regulations for the FY 2022-23.

The certificate is annexed to this Report as Annexure-5.

KEY INITIATIVES WITH RESPECT TO STAKEHOLDER RELATIONSHIP, CUSTOMER RELATIONSHIP, ENVIRONMENT, SUSTAINABILITY, HEALTH AND SAFETY

While key initiatives on customer relationship and health and safety have been detailed below. Information on initiatives concerning stakeholders'' relationship, environment and sustainability, have been elaborated in the Business Responsibility and Sustainability Report of the Bank which forms part of the Annual Report for the FY 2022-23.

Customers Relationship

Ujjivan Small Finance Bank, believes in ''Customer First'' approach, as part of its core values whereby the Bank strives to deliver exceptional service to our customers, by embedding service culture in our People, Process and Policy enabled by Technology. To put the intent into practice, the Bank has established a dedicated Service Quality department to channelise the programmes around customer experience management, quality assurance, customer care and grievances resolution, and customer service compliance.

During FY 2022-23, the Bank has undertaken several initiatives to improve customer service standards, and to strengthen customer awareness, internal processes on providing timely and satisfactory resolution for customer queries, requests and complaints. Key outcomes of our Service Quality initiatives are listed below.

Improved Customer Service Standards: The Bank has defined and implemented Service Index for each business and support functions over past 5 years, to measure and improve level of service standards for external and internal customers. The standards are set for monitoring services across customer acquisition, account servicing and problem resolution stages. The Board has set the goals for improving Service Index at each business level as well as at Bank level.

• Bank level Customer Service Index has improved from 66 points in Mar''22 to 85 points in Mar''23, the highest jump seen in a Financial Year.

• Faster resolution of customer service requests and complaints were also a key focus area; resolution of customer service requests within standard TurnAround-Time has improved from 86% to 90% and customer complaint resolution has improved from 88% to 96%

New initiatives undertaken to provide seamless customer service and safety of digital transactions:

• Contactless debit cards were introduced. These cards are issued on the RuPay platform & provide a fast and convenient way to pay for every day purchases by simply tapping Ujjivan Contactless debit card on a POS machine.

• All our cards are enabled for the tokenisation, in order to facilitate the merchant''s website or mobile application to tokenise card details such as card number, CVV & expiry details.

• Ujjivan customers shopping online can now make payments through Net Banking via Bill desk & Razor pay Payment gateways, thus provided another mode of payment in addition to existing Debit Card & UPI options. This facility has been enabled across 8 Million merchant websites.

• QR codes were provided to merchants enabling them accepting payments through UPI.

• Multifactor Authentication (MFA) to enable

registration and reset MPIN/password through

Aadhaar validation in Internet/Mobile Banking

(IBMB)channel made live. This enables customers to activate IBMB channel without depending on debit card for authentication.

• Enabled Interoperable Card-less Cash Withdrawals (ICCW) facility. USFB is 7th Bank and first among SFBs to implement ICCW as issuer bank. Now Ujjivan customers can use this facility in other bank ATMs which have enabled ICCW using the UPI facility.

• A feature was enabled for customers using Mobile and Personal Net Banking to report any fraudulent transaction on the app itself.

• Now, customers can use a single access to view/ transact from all the linked accounts such as joint accounts, individual and corporate accounts. This helps customers have access to all their accounts under one platform.

• Launched India''s first Voice-Vernacular-Visual application, called "Hello Ujjivan", in eight regional languages for the benefit of customers with low literacy and prefer to use app in local language.

• Video KYC feature was enabled during the year which shall help customers to open deposits through digital platform and complete their KYC without visiting branches.

Customer awareness:

As a part of our continued efforts towards ensuring

customer awareness and education, the following

initiatives were taken:

• As per RBI directive, Launched Nation-wide intensive customer awareness programme on cyber fraud and grievance redressal mechanisms of Bank/ RBI.

• 583 branches displayed posters on safe digital practices in both Hindi and English

• Displayed internal grievance matrix, Integrated Ombudsman scheme & safe digital practices on branch TVs

• 11 townhalls conducted as Ujjivan being torch bearer Bank in North region - 120 participants/ general public participated in each townhall

• Awareness created in 81 schools in Karnataka on safe digital banking practices and prevention from frauds

• Launched "Service Quality Friday School" campaign for educating branch staff on efficient customer service/ handling customer requests and complaints/ life events related services and case studies.

Special attention to life-events based banking services:

The Bank has been successfully running a campaign designed as "Aajeevan", a life events-based banking services, which includes hassle free and empathetic services towards nomination facility, joint accounts, settlement of claims of deceased account holders, settlements of insurance claims, priority services to senior citizens and specially-abled customers. Due to the focussed efforts, 94% of service requests were resolved within specified timelines during the year, improved from 86% compared to previous year.

Health and Safety

The Bank considers Health and Safety of its employees very important and various initiatives have been taken with this objection over the years. Following are a few highlights of the same:

• Fire extinguishers are in place as per the defined protocols in all the offices & branches across PAN India with quarterly fire drill conducted across PAN India. To ascertain adequacy and quality of the safety measures, an audit has been conducted by third party every quarter.

• Towards providing better work environment to the employees and customers, all the URCs are installed with Air conditioners & preventive maintenance of all the electric equipments across branches conducted periodically

• Considering the health of the employees, 20 branches in the North have been installed with RO water purifiers for drinking water

• For the specially-abled customers & employees, 29 ramps have been constructed across PAN India branches.

• Doctor on call facility for the employees across Regional & corporate offices.

• Deep cleaning & Pest control services were rendered at the branches that were older than 5 years.

• Replaced about 1600 chairs to ergonomic-friendly chairs.

Employees Safety Measures

As an employee first organisation, Ujjivan conducts annual health check-up for all its employees once in two years. This annual health check-up is followed up by the Partner by providing free consultation on the reports and also advising employees with high risk reports.

To support its employees, Ujjivan also has a facility of 24x7 "Doctor on Call" teleconsultation This facility has been made available for employees and their dependents to consult doctors during emergencies. While the services were available for physical ailments. In FY22-23, Ujjivan also launched of the emotional wellness programme, where employees and their family members could tele-consult specialists with "emotional wellness'' expertise to get help where required.

Apart from that the QRT (Quick Response Team) which was activated during the start of the pandemic still monitors the environment & health related concerns across regions and issues guidelines to employees as and when required.

other disclosures

A. The Bank is not required to maintain cost records as specified by the Central Government under subsection (1) of Section 148 of the Companies Act, 2013.

B. Disclosure as required under Rule 8(5)(xi) and 8(5) (xii) of the Companies (Accounts) Rules, 2014 does not apply to the Bank for FY 2022-23.

C. None of the directors of the Bank are disqualified as per provisions of Section 164(2) of the Companies Act, 2013. The directors have made necessary disclosures, as required under various provisions of the Companies Act, 2013, SEBI Listing Regulations and RBI guidelines.

ACKNOWLEDGEMENT

We place on record our gratitude to our employees at all levels who have contributed to the growth and sustained success of the Bank through their dedication, hard work, cooperation and support.

We would like to thank all our customers, vendors, bankers, investors, auditors, media and other business associates for their continued support and encouragement during the year.

We also thank the Government of India; the Government of Karnataka and Delhi; the Ministry of Commerce and Industry; the Ministry of Finance, Ministry of Corporate Affairs; the Securities and Exchange Board of India, the Stock Exchanges, the Central Board of Indirect Taxes and Customs; the RBI; the Central Board of Direct Taxes and all other government agencies for their support during the FY 2022-23 and look forward to their continued support in future.

---

Mar 31, 2022

On behalf of the Board of Directors (the "Board") of Ujjivan Small Finance Bank Limited (the "Bank or Ujjivan"), it is our immense pleasure to present the 6^th Annual Report of the Bank along with the Audited Financial Statements and Auditor''s Report thereon for the FY 2021-22.

OVERVIEW AND STATE OF AFFAIRS OF THE BANK

During the FY 2021-22, even though Ujjivan had a difficult start, it witnessed a remarkable turnaround and a promising close. Beginning of the year was muted as the momentum built towards close of FY 2020-21 was thwarted by outbreak of Covid 2.O which followed a cycle of lower business and collections, rising NPAs and provisioning leading to reduced profitability. Also, it led to destabilizing Bank''s human resource across all levels -field, mid-level and leadership as well as Board. However, Ujjivan has a strong core and is resilient. Beginning with strengthening of Board, we brought in a stability to the entire team and attracted good talent across all functions and verticals. Also, we implemented recovery plan - what we call "100-day plan" to focus on business growth and improving asset quality.

In second half of FY 2021-22, the Bank rebound from the initial setback in the business in H1 due to COVID lockdown and delivered record high business volumes. With the opening up of markets gradually from Q1, volumes picked up across asset and deposit businesses surpassing pre-COVID normal by Q3. The Bank closed the financial year on a high note, with the last quarter showing tremendous growth across businesses. In the first half of the year, the Bank took a cautious approach towards microfinance lending in select pockets and increased focus on collections post lockdown. The Bank also took a measured approach

towards its MSE lending in certain stressed segments and has shifted its focus towards lending to semi-formal and formal segment for better portfolio quality. Bank maintained a cautious stance in its Institutional lending business, lending to high rated entities, while maintaining portfolio NIM. Business volumes under the MSE and Affordable Housing vertical saw steady ramp up with improved approval rates, despite restricted segments and stringent credit policy. Bank''s assets under management (AUM) registered a 20% Y-o-Y growth in FY 2021-22 over that in the Previous Year. Despite slowdown in business momentum in the first half on account of the pandemic, the Bank witnessed significant Y-o-Y growth in all verticals: Micro Banking (13.6%), Affordable Housing (33%) and MSE (33%).

During FY 2021-22, Bank''s deposit book recorded 39% y-o-y growth driven by new retail customers. 2.7 Lac new retail deposit customers were on-boarded during the year. CASA grew by 85% y-o-y, closing at 27% of the total deposit book as of March 31, 2022 against 21% in March 2021.

Collection strategy: Our foremost objective under our 100-day plans was to improve collection efficiency. This was done through (a) strengthening collection team by adding off-role staff and agencies, (b) focusing on digital collection, (c) expanding our reach through tie-ups with fintechs and payment bank, (d) data analytics driven prediction models based on Early Warning Triggers and geo-special analysis aiding in better collections, (e) expediting legal process on secured book. We are very pleased with the results and the increased collection efficiency. This has yielded in improvement in our asset quality parameters.

The Bank remains focused on financial inclusion and serving the aspiring middle class. During the year, we continued to expand our product and services suite to become more relevant to our customers:

• ECLGS loans: Launched in Jul''21 with ticket size of ''5,000 to ''12,000. Total disbursement during the year was at ''68 Crore.

• Launched Ujjivan pay QR solution for merchants in February. This offers our customers to use the seamless payment solution and transact more through their Ujjivan account.

• Our Agri business launched Poultry product in towards end-Q4 FY22. We are also looking to launch Fishery product.

• Micro LAP product was launched in Jan''22 to cater to small borrowers. Currently the product is available in select branches; we target to scale up in FY 2022-23.

• We launched Credit Guarantee Trust for MSE scheme (Term Loan, Overdraft and Cash credit facility) and disbursed more than ''100 Crore under the scheme during the year.

• We launched Platina FD for long-term investors; noncallable retail FDs with slightly higher return as against base rates for same tenor.

The Bank operated its premises with strictest safety standards in line with the SLBC and local guidelines, limiting staff turn out and offering work from home for backend staff. Quick Response Team (QRT) was constituted to monitor the situation on ground and provide guidelines during the pandemic to all our employees and offices. We maintained a strong connect with our customers and staff during the pandemic.

The Bank stayed committed to its Corporate Social Responsibility (CSR) initiatives and spent ''4.3 Crore during the year on several impactful activities focused on pandemic relief activities, disaster and flood relief, promoting education and livelihood support. On 7^th Sep''21, we launched an initiative to focus on vaccination drives for customers and their families and promoted mass vaccination through the branches under our “Sanjeevani Kavach" program - around 80,000 beneficiaries have

been vaccinated under the program. Some of the other key initiatives were:

• Covid relief activity

- ? 3.02 Crore spent in response to the pandemic outbreak

- Direct distribution of 18,359 general support medical equipment, 214 life-saving equipment, timely supply of medicine towards fight against black fungus and supported in supplying mild COVID symptom medication

• Disaster Relief

- 8000 people benefitted through the disaster relief

- During the Yass cyclone, the Jaynagar (WB) was very severely affected - we helped the public with dry ration and basic hygiene supplies.

- The rains in West Bengal caused a heavy flood in Tamluk and Panskura, overflowing of Rupnarayan river and few lake fisheries devastated the lives of several under-privileged families. We worked with WB Govt. agencies providing the beneficiaries with dry ration and flood relief materials.

• Community Development

- 4 Civil infrastructures were built-renovated across India. Functional garbage van provided to Mapusa municipality.

- 3 partnerships established with skill development NGOs to provide skill training and placement support to 50 unemployed youths in Bhubaneshwar, providing employability training to 100 differently abled persons in Mumbai & Jamshedpur and 50 women will be empowered in making bags with jute and banana waste which is environment friendly in Purnea (Bihar).

- 18 desktops given to a school in a marginalized community at Harihara and 40 wheel chairs provided to differently abled people in Bengaluru.

HIGHLIGHTS OF THE FINANCIAL YEAR:

• Overall PAR stands a 9.6% against 14.9% in March, 2021.

• NNPA at 0.6% against 2.9% in March 2021

• Cost of funds of the Bank reduced from 7.1% at the end of March 2021 to 6.2% in March, 2022.

• The Deposit book stood at ''18,292 Crores. CASA stood at ''4,993 Crore. Retail book stood at ''9,921 Crore and Institutional book at ''8,366 Crores. Certificate of deposits stood at ''756 Crore

• Cost to Income Ratio increased to 71.7% from 60.6% in FY21 on account of rationalization of costs, cutting down of non-essentials, cost saving initiatives and process improvements

The Bank''s Board comprised of 9 directors as at the end

of FY 2021-22, with the MD & CEO being the Executive

Director, 4 Independent Directors including 1 Woman

Independent Director, 2 Non-Executive Non-Independent

Directors and 2 Nominee Directors.

FINANCIAL PERFORMANCE Summary of Financial Performance as per Rule 8(5) of The Companies (Accounts) Rules, 2014 ('' in Crores)
Particulars	FY 2021-22	FY 2020-21
Revenue from Operations	2,812.80	2806.07
Other Income	313.27	310.82
Less: Operational Expenses	603.34	404.49
Personnel Expenses	812.60	748.78
Profit/loss before Depreciation, Finance Costs, Exceptional items, Provisions and Tax Expense	1,710.14	1963.61
Less: Depreciation/ Amortisation/ Impairment	80.44	76.80
Profit /loss before Finance Costs, Exceptional items, Provisions and Tax Expense	1,629.69	1886.81
Less: Finance Costs	1,039.21	1077.51
Profit /loss before Provisions, Exceptional items and Tax Expense	590.49	809.30
Less: Provisions & Contingencies	1,140.85	799.10
Add/(less): Exceptional items	-	-
Profit /loss before Tax Expense	-550.36	10.20
Less: Tax Expense (Current & Deferred)	-135.77	1.90
Profit /loss for the year (1)	-414.59	8.30
Total Comprehensive Income/loss (2)	-	-
Total (1 2)	-414.59	8.30
Balance of profit /loss for earlier years	343.62	362.01
Less: Transfer to Debenture Redemption Reserve	-	-
Less: Transfer to Statutory Reserves	-	2.07
Less: Transfer to investment Fluctuation Reserve	-	5.28
Less: Transfer to Capital Reserves	1.38	19.33
Less: Dividend paid on Equity Shares	-	-
Less: Dividend paid on Preference Shares	-	-
Less: Dividend Distribution Tax	-	-
Balance carried forward	-72.35	343.63

Key Ratios: (Comparative ratios are annualised)
Particulars	FY 2021-22	FY 2020-21
Interest income as a percentage to working funds	13.81%	14.67%
Non-interest income as a percentage to working funds	1.54%	1.62%
Operating profit as a percentage to working funds	2.91%	4.23%
Business (deposits plus gross advances) per employee ('' in thousands)	18,099	13772
Profit per employee ('' in thousands)	-252.63	4.82
EPS (Basic) ('')	(2.40)	0.05
EPS (Diluted) (Rs.)	(2.40)	0.05

The Bank''s total customer base grew by 9.5% Y-o-Y to 64.8 lakh while Deposit customers increased by 11% to 62.1 lakh.

As of March 31, 2022, The Bank operated a network of 575 Banking Outlets, including 144 in Unbanked Rural Centre (URC) locations, complying with the RBI prescribed norm of 25% of the BOs to be situated in URCs and 492 ATMs including 54 Automated Cash Recyclers (ACR).

The Bank was adequately capitalized with a CRAR of 19% as of 31^st March 2022 and its funding position stayed comfortable throughout the year. The Bank took a prudent call to build sufficient liquidity buffer in the wake of the COVID-19 situation.

For the financial year ended March 31, 2022, Net loss is ''415 Crore against net profit of ''8 Crore in the previous financial year ended March 31, 2021. Pre-provision operating profit stands at ''590 Crore against ''801 Crore in FY21.

TRANSFER TO RESERVESA. Statutory Reserve

Since the Bank has not made any profit during the FY 202122, no fund has been transferred to statutory reserves as required under Section 17 of the Banking Regulation Act, 1949 and RBI circular dated September 23, 2000, as amended from time to time.

B. Investment Fluctuation Reserve (“IFR")

During the FY 2021-22 the Bank has not transferred any amount to IFR for the FY 2021-22 pursuant to the RBI notification RBI/2017-18/147 DBR.No.BP. BC.102/21.04.048/2017-18 dated April 02, 2018, as compared to ''5.28 Crores in FY 2020-21.

DIVIDEND

The Bank has formulated and implemented a Dividend Distribution Policy pursuant to Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") and RBI Requirements with an objective to appropriately reward shareholders through dividends for reposing their confidence in the Bank while retaining the capital required for supporting future business growth. The said Policy is available on the website of the Bank at www.uiiivansfb.in/corporate-governance-policies.

A. Equity Dividend

Due to lack of profitability during the FY 2021-22, the Board of the Bank has not proposed any dividend on the equity shares for the FY 2021-22.

B. Preference Dividend

During the FY 2021-22, no dividend was declared on the preference shares issued by the Bank.

CHANGE IN THE NATURE OF BUSINESS

There was no change in the nature of business of the Bank during FY 2021-22.

MATERIAL CHANGES AND COMMITMENTS

The Bank has pursuant to a resolution passed by its Board on June 08, 2022 considered and approved the proposal for raising of funds by way of issuance of non-convertible debt securities upto ''1,500 Crores (Rupees One thousand Five Hundred Crore) on a private placement basis, in one or more tranches, within a period of 1 (one) year from the date of seeking shareholders'' approval, in compliance with all applicable directions and regulations of the Reserve Bank of India, SEBI and other governmental authorities.

The Bank through its postal ballot notice dated June 08, 2022 has sought its shareholders'' approval on July 12, 2022. In addition, the Bank has taken its shareholders approval on March 26, 2022 (by way of a postal ballot) for a Qualified Institutions Placement (QIP) of upto ''600 crores and the Bank expects to complete the QIP this fiscal.

The capital ratios of the Bank comprising of Tier I and Tier II capital will be augmented on the successful completion of the QIP and Debt Issuance respectively.

No further material changes and commitments have occurred after the closure of the FY 2021-22 till the date of this report, which might have affected the financial position of the Bank.

REVISION OF FINANCIAL STATEMENT OR THE DIRECTORS'' REPORT

The Bank has not revised its financial statements or the directors'' report in respect of any of the three preceding financial years either voluntarily or pursuant to the order of any judicial authority.

GENERAL INFORMATION

Detailed overview of the banking industry and important changes therein, external environment and economic outlook have been elaborated in the Management and Discussion Analysis Report which forms part of the Annual Report of the Bank for the FY 2021-22.

CAPITAL AND DEBT STRUCTUREA. CHANGES IN CAPITAL STRUCTURE

There was no change in the Authorized, Subscribed and Paid-up Capital of the Bank during the FY 202122.

B. ISSUE OF EQUITY SHARES OR OTHER CONVERTIBLE SECURITIES

During the FY 2021-22, the Bank has made no allotments of equity shares.

C. ISSUE OF EQUITY SHARES WITH DIFFERENTIAL RIGHTS AND/OR SWEAT EQUITY SHARES

During the FY 2021-22, the Bank has neither issued any equity shares with differential rights nor any sweat equity shares.

D. EMPLOYEE STOCK OPTIONS/ SHARE BASED EMPLOYEE BENEFIT SCHEMES

The Bank has formulated and implemented ESOP 2019 Scheme and ESPS 2019 Scheme to reward the

Sr. No	Date of grant	Number of options	Price (?)
1.	August 23, 2021	1,99,949	19.70
2.	January 05, 2022	1,66,842	19.05
3.	January 08, 2022	3,01,57,303	19.95
4.	March 23, 2022	1,15,025	16.60
	Total	3,06,39,119	-
No change has been made in the ESOP 2019 Scheme during the FY 2021-22 and following are the details of ESOP 2019
as on March 31,2022:
Particulars		Details
Options granted		7,17,42,768
Options vested		97,14,703
Options exercised		61,967
The total number of shares arising as a result of exercise of options		61,967 (No options were exercised in FY 2021-22)
Options lapsed		1,71,85,468
		• Out of the above lapsed options, 59,91,126 lapsed
		options as of March 31,2021 got added back to the ESOP
		2019 Scheme pool. Further, 1,11,94,342 lapsed options
		as of March 31, 2022 got added back to the ESOP 2019
		Scheme pool.
Variation in terms of options		Nil
Money realised by exercise of options		-
Total number of options in force		5,44,95,333 options
Employee-wise detail of options granted to:
Key Managerial Personnel*		Nil
Any other employee who received a grant in any one year of options		Nil
amounting to 5% or more of the options granted during the year
Identified employees who were granted options		Nil
during any one year equal to or exceeding 1% of the issued capital
(excluding outstanding warrants and conversions) of the Bank at the
time of grant
* No options were granted to KMPs during the FY 2021-22

employees of the Bank, and employees of its present or future subsidiary(ies) and/or holding company(ies), for their association and performance as well as to motivate them to contribute to the growth and profitability of the Bank.

ESOP 2019 SCHEME:

The Bank, pursuant to the resolutions passed by the Board on January 22, 2019 and by the Members on March 29, 2019, adopted the ESOP 2019 Scheme. The Bank in its 4^th Annual General Meeting held on September 02, 2020 has ratified the ESOP 2019 Scheme as required under the SEBI (Share Based Employee Benefits) Regulations, 2014. The Bank may grant an aggregate number of up to 14,40,00,000 stock options under the ESOP 2019 Scheme. Upon exercise and payment of the exercise price, the option holder will be entitled for allotment of one equity share per stock option. Accordingly, the number of equity shares that may be issued under the ESOP 2019 Scheme shall not exceed 14,40,00,000 equity shares of face value ''10 each.

The ESOP 2019 Scheme is effective from March 29, 2019. The objectives of ESOP 2019 Scheme are, among others, to attract and retain employees with stock options as a compensation tool. Through ESOP 2019 Scheme, the Bank offers an opportunity of sharing the value created with those employees who have contributed or are expected to contribute to the growth and development of the Bank.

The ESOP 2019 Scheme has been framed and implemented in compliance with provisions of the SEBI (Share Based Employee Benefits) Regulations, 2014, Companies Act, 2013 and rules made thereunder and relevant guidance notes and accounting standards.

As on March 31, 2022, 7,17,42,768 stock options have been granted by the Bank under ESOP 2019 Scheme to eligible employees of the Bank and its Holding Company.

During the FY 2021-22, following grants have been made to the eligible employees with the approval of the Nomination and Remuneration Committee of the Bank:

The disclosures as required under Regulation 14 of the SEBI (Share Based Employee Benefit and Sweat Equity) Regulations, 2021 read with Circular CIR/CFD/POLICY CELL/2/2015 dated June 16, 2015 issued by SEBI are available on the website of the Bank at www.uiiivansfb.in.

ESPS 2019 Scheme:

The Bank, pursuant to the resolutions passed by the Board on July 30, 2019 and by the Members on August 03, 2019, adopted the ESPS 2019 Scheme. The ESPS 2019 Scheme has been framed and implemented in compliance with provisions of the SEBI (Share Based Employee Benefits) Regulations, 2014, Companies Act, 2013 and rules made thereunder and relevant guidance notes and accounting standards.

The objective of the ESPS 2019 Scheme is inter-alia to reward the eligible employees of the Bank and its Holding Company for their association and performance as well as to motivate them to contribute to the growth and profitability of the Bank.

Pursuant to the ESPS 2019 Scheme, the Board is authorized to issue up to 7,20,01,840 fully paid up equity shares of the face value of ''10 each with pari-passu voting rights, to the eligible employees (as defined under the ESPS 2019 Scheme), in accordance with the terms and conditions as may be decided by the Nomination and Remuneration Committee of the Bank.

The ESPS 2019 Scheme was implemented under two schemes, viz. Upfront Scheme and Monthly Scheme. Under the Upfront Scheme, the employees made upfront payments to purchase the equity shares and equity shares were allotted to them while under the Monthly Scheme, the employees opened a monthly recurring deposit account and the equity shares were allotted to such employees at the end of the 12 months.

The Nomination and Remuneration Committee has been entrusted with the responsibility of administering the ESPS 2019 Scheme. As of March 31, 2022, 1,40,75,166 shares were allotted at ''35 per share (including premium of ''25 per share) pursuant to the exercise of options under ESPS 2019 Scheme. However, no ESPS was granted or exercised during the FY 2021-22.

The disclosures as required under Regulation 14 of the SEBI (Share Based Employee Benefit and Sweat Equity) Regulations, 2021 read with Circular CIR/CFD/POLICY CELL/2/2015 dated June 16, 2015 issued by the SEBI are available on the website of the Bank at www.uiiivansfb.in.

Further as per Regulation 13 of the SEBI (Share Based Employee Benefit and Sweat Equity) Regulations, 2021, the Board of Directors have obtained the certificate from the Secretarial Auditor of the Bank, K Jayachandran, certifying that the schemes have been implemented in accordance with these regulations and in accordance with the resolution of the Bank in the general meeting. The same has been enclosed as "Annexure - 6" to this report.

E. ISSUE OF DEBENTURES, BONDS OR ANY NONCONVERTIBLE SECURITIES OR WARRANTS

During the FY 2021-22, the Bank has neither issued any debenture, bonds, non-convertible securities nor any warrants. However, the Bank pursuant to a resolution passed by its Board on June 08, 2022 has considered and approved the proposal for raising of funds by way of issuance of non-convertible debt securities upto ''1,500 Crores (Rupees One thousand Five Hundred Crore) on a private placement basis, in one or more tranches, within a period of 1 (one) year from the date of seeking shareholders'' approval, in compliance with all applicable directions and regulations of the Reserve Bank of India, SEBI, other governmental authorities, and any other person, as may be required/applicable. The Bank through its postal ballot notice dated June 08, 2022 has received its shareholders'' approval on July 12, 2022 and the Bank is in process to commence the offer and issue of NCDs against this approval.

DILUTION OF PROMOTER''S SHAREHOLDING AND REVERSE MERGER

In terms of the RBI In-Principle Approval, RBI Final Approval and Guidelines for licensing of "Small Finance Banks" in the private sector issued by RBI on November 27, 2014 ("SFB Licensing Guidelines"), the Bank was required to list its equity shares on the Stock Exchange within 3 (Three) years from the date of commencement of business, i.e., by January 31, 2020.

Bank''s equity shares got listed on Stock Exchanges on December 12, 2019 well within the prescribed timeline in accordance with SFB Licensing Guidelines.

Further, pursuant to the SFB Licensing Guidelines, Promoter of the Bank was required to reduce its shareholding in the Bank to 40% of the paid-up Equity Share capital of the Bank within a period of five years from the date of commencement of business operations by the Bank i.e. by January 31, 2022 and thereafter required to reduce its shareholding in the Bank to 30% and 26% of its paid-up Equity Share capital within a period of 10 years and 12 years, respectively, from the date of commencement of the business operations.

However, RBI vide its letter dated July 09, 2021 permitted the Bank to apply for the amalgamation of holding company with small finance bank, in terms of provisions of Master Direction on Amalgamation of Private Sector Banks, Directions, 2016 dated April 21, 2016, Three (3) months prior to completing five years from the date of commencement of business of small finance bank. Accordingly, the Bank has initiated necessary steps for the reverse merger of Ujjivan Financial Services Limited with the Bank in accordance with applicable laws and guidelines. Merger of the Promoter entity with the Bank will suffice the RBI Requirement of promoter shareholding dilution.

Therefore, the Board of the Bank at its meeting held on October 30, 2021 considered and approved a Scheme of Amalgamation ("Scheme") between Ujjivan Financial Services Limited (UFSL, promoter of the Bank) and the

inter alia accepted the recommendation on the Dilution Requirement without any modification subject to submission of a dilution schedule with the RBI. However, the proposed recommendations have not been notified as yet by the RBI by way of a separate notification.

Bank and their respective shareholders and creditors under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 and the rules made thereunder.

Accordingly, the Bank submitted an application to SEBI on November 01, 2021 seeking their approval / exemption on the following:

• To relax three-year minimum promoter lock in requirements in the Bank under Regulation 16(1)(a) of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 to the extent required to implement the Scheme of Amalgamation.

• For adopting proposed scheme of amalgamation as a method to achieve minimum public shareholding (MPS) by the Bank.

Subsequently, SEBI, vide its letter dated December 02, 2021 acceded to relax the three-year minimum promoter lock-in requirements in the Bank to the extent required to implement the Scheme soon after receiving final NCLT approval. However, SEBI advised the Bank to ensure compliance with MPS as prescribed by SEBI Circulars dated November 30, 2015 and February 22, 2018 and then proceed with the filing of the scheme documents with the exchanges.

During the period internal working group of the RBI, pursuant to the Recommendations of the Internal Working Group to Review Extant Ownership Guidelines and Corporate Structure for Indian Private Sector Banks dated October 20, 2020 and November 20, 2020, had recommended that no intermediate sub-targets between five to 15 years may be required and that promoters may submit a dilution schedule which may be examined and approved by the RBI. The progress in achieving the agreed milestones must be periodically reported by the banks and shall be monitored by the RBI. ("Dilution Requirement")

Pursuant to the circular issued by the RBI dated November 26, 2021 ("November 26 Circular"), the RBI

However, to ensure that the MPS compliance is met well before the due date i.e. by December 11, 2022 (within 3 years of listing of the Bank), the Board at its Meeting on February 05, 2022 evaluated various methods to achieve the MPS by reducing UFSL''s holding in the Bank from present 83.32% to 75% or lower. After deliberations, the Board approved the option to carry out a Qualified Institutions Placement ("QIP") in terms of the SEBI ICDR Regulations to the extent necessary to achieve the MPS norms, provided the total issue proceeds shall not exceed ''600 crores.

The Bank has obtained an approval from its Shareholders for the aforesaid QIP through a postal ballot and the Bank is in the process of completing its QIP during the FY 22-23.

CAPITAL ADEQUACY

The Bank is subject to the Basel II Capital Adequacy guidelines (NCAF) as stipulated by RBI. The Capital to Risk Assets Ratio (CRAR) of the Bank is calculated as per the Standardized Approach (SA) for Credit Risk.

CRAR of the Bank is calculated on the basis of RBI NCAF guidelines. The CRAR of the Bank as at March 31, 2022 using Risk Weighted Assets for credit risk related exposures only, as required under the operating guidelines of RBI for Small Finance Banks, was 18.99% against a minimum requirement of 15% and Tier I capital ratio was 17.70%, against the minimum requirement of 7.5% .

CREDIT RATING

Credit ratings assigned to Long Term Bank Facilities and Certificate of Deposit Programme of the Bank during the FY 2021-22:

Instrument Name	Name of Credit Rating Agency	Amount ('' In Crores)	Rating	Date of Credit Rating	Revision in the Credit Rating
Long Term Bank Facilities	CARE Ratings Limited	500.00	CARE A ; Stable	06-09-2017	Reaffirmed "CARE A ; Stable" on 28-032022
Certificate of Deposit Programme	CRISIL Ratings Limited	2500.00	CRISIL A1	26-02-2018	Reaffirmed "A1 " on 23-02-2022

TRANSFER OF UNPAID AND UNCLAIMED DIVIDEND AMOUNT TO INVESTOR EDUCATION AND PROTECTION FUND

In terms of Section 124 & 125 of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 as amended from time to time, the dividend that remains unpaid or unclaimed for a period of seven consecutive years from the date of transfer, are required to be transferred to the Investor Education and Protection Fund (IEPF).

Being the Fifth Financial Year, there was no amount due for transfer to IEPF. Further, as of March 31, 2022, there was no shareholder who has not encashed/claimed the dividend amount and there is no unclaimed dividend amount lying with the Bank.

DECLARATION BY INDEPENDENT DIRECTORS AND STATEMENT ON COMPLIANCE OF CODE OF CONDUCT

The Bank has received declarations from all its Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)

(b) of SEBI Listing Regulations and that they have complied with the code of conduct for independent directors as prescribed under Schedule IV of the Companies Act, 2013.

Further, pursuant to Regulation 25(8) of the SEBI Listing Regulations, the Independent Directors of the Bank have also confirmed that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, to impair or impact their ability to discharge their duties with an objective of independent judgment and without any external influence.

In the opinion of the Board, all the Independent Directors meet the criteria with regards to integrity, expertise and experience (including proficiency¹) as required under applicable laws.

Directors) Fifth Amendment Rules, 2020 as notified on December 18, 2020) are committed to qualify the online proficiency self-assessment as required under aforesaid Rule within the prescribed timeline.

The Bank has also received from its directors a statement that they have complied with the Code of Conduct for Directors and Senior Management of the Bank.

NUMBER OF MEETINGS OF THE BOARD

The Board met 11 (Eleven) times during the FY 2021-22. The meetings of the Board of Directors were convened in accordance with applicable laws and standards and the intervening gap between the said meetings was not exceeding 120 days. The details of Board Meetings are available in the Corporate Governance Report which forms part of the Annual Report of the Bank for the FY 2021-22.

BOARD COMMITTEES

The Bank believes that the Board Committees are pillars of good corporate governance. In pursuit of the highest standard of corporate governance and to comply with the provisions of the Companies Act, 2013, SEBI Listing Regulations and RBI guidelines, the Bank has constituted various statutory and regulatory Board Level Committees. Further, in order to improve the Board effectiveness, efficiency and faster decision making, the Bank has also constituted a few non-statutory and non-regulatory Board Level Committees.

Directors, the performance of the Board as a whole, the performance of the Chairman and quality, quantity and timeliness of the flow of information between the Bank''s Management and its Board were also evaluated.

REMUNERATION OF DIRECTORS AND EMPLOYEES

The remuneration being paid to the Managing Director and CEO is in conformity with the RBI approval.

The remuneration of non-executive directors was paid only by way of sitting fees which is within the limit prescribed under Section 197(5) of the Companies Act, 2013.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1), (2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this Report as "Annexure-1".

REMUNERATION RECEIVED BY THE MANAGING DIRECTOR/WHOLE-TIME DIRECTOR FROM HOLDING OR SUBSIDIARY COMPANY

During the FY 2021-22, the Managing Director and CEO, has not received any remuneration or commission from Ujjivan Financial Services Limited, Holding Company of the Bank. Bank had no subsidiary Company during the FY 2021-22.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

Complying with Regulation 25(7) of SEBI Listing Regulations and RBI guidelines, Familiarisation Programmes were conducted during the FY 2021-22 to give an overview and introduction to the Independent Directors about the Bank''s business and operations.

Under this programme, newly appointed independent directors are appraised with the organisation structure, operational overview, financial overview, board matters and procedures, key risk issues and its mitigation strategy, among others.

Further, all the newly appointed Board Members undergo a face to face induction schedule where the Bank''s Management Team provides insights about the affairs of their function and of the Bank as a whole.

The details of such programme are available on the website of the Bank at https://www.uiiivansfb.in/corporate-governance-policies

DIRECTORS'' RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls established and maintained by the Bank, work performed by the internal, statutory and secretarial auditors, reviews performed by the Management and the relevant Board Committees, the Board, in concurrence with the Audit Committee, is of the opinion that the Bank''s internal financial controls were adequate and effective as on March 31, 2022.

RECOMMENDATIONS OF AUDIT COMMITTEE

During the FY 2021-22, there was no incidence, where the Board has not accepted any recommendations of the Audit Committee.

BOARD EVALUATION

The Board has carried out an annual evaluation of its own performance, the performance of Board Committees and Individual Directors pursuant to the provisions of Section 178 read with Schedule IV of Companies Act, 2013, Regulation 19 of the SEBI Listing Regulations and applicable RBI guidelines.

The performance evaluation was carried out by the Nomination and Remuneration Committee and by the Board in their meetings held on March 23, 2022 and March 29, 2022 respectively.

The approved evaluation formats and criteria are in line with the SEBI Guidance Note on Evaluation dated January 05, 2017.

The Nomination and Remuneration Committee has laid down comprehensive parameters for evaluation, a few of which are listed below:

I. The Board: Composition, structure, meetings, functions, management and professional development, ethics and compliance among others.

II. The Committees: Mandate & Composition, effectiveness, structure, meetings, independence of the committee, contribution to decision making of the Board, among others.

III. Individual directors (including Chairperson, Independent Directors and Non-Independent

Directors): Leadership, Commitment, Contribution, Experience, Expertise, Independence, Integrity,

Attendance, Responsibility, Flow of Information among others.

The performances of the Board and Board Committees were evaluated after seeking inputs from all the directors.

The Board and the Nomination and Remuneration Committee reviewed the performance of the Individual Directors on the basis of the approved criteria for evaluation. In addition, the Chairman and Managing Director and CEO were also evaluated on the key aspects of their roles.

Performance evaluation of Directors was done by the Nomination and Remuneration Committee and entire Board, excluding the Director being evaluated. The Committee evaluated the performance of Directors and noted that:

i. The Directors had requisite competency, qualification, commitment and integrity.

ii. The Directors had long term vision, industry knowledge and expertise and were wholly committed and provided ethical leadership to the Bank.

iii. The Directors had the ability to function as a team.

iv. Further, the Directors were regular in attending meetings and contributed effectively during the discussions.

v. There was no apparent conflict of interest and that they expressed their opinion freely.

NRC during its annual evaluation suggested improvements on the induction program being undertaken by the Bank for new Directors and succession planning model of the Bank.

In a separate meeting of Independent Directors held on March 23, 2022, performance of Non-Independent

Pursuant to Section 134 (5) of the Companies Act, 2013, the Board, to the best of its knowledge, hereby confirms and states 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) they 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 at the end of the financial year and of the profit and loss of the Bank for that period;

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

(d) they have prepared the annual accounts on a going concern basis;

(e) they 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) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

NOMINATION AND REMUNERATION POLICY

The Bank pursuant to the provisions of Section 178(3) of the Companies Act, 2013, Regulation 19 of SEBI Listing Regulations and RBI Requirements has formulated and adopted a Nomination and Remuneration Policy on directors'' appointment and remuneration and the criteria for determining qualification, positive attributes and independence of directors, which is available on the website of the Bank at www.uiiivansfb.in/corporate-governance-policies.

RISK MANAGEMENT

The Risk Management Committee ("RMC") of the Board comprises of experienced directors from diverse backgrounds who bring in the best risk management practices to the Bank. The RMC presently comprises of 6 (Six) directors of which 4 (four) are Independent Directors.

The RMC fulfils its roles and duties through various management level risk committees. Risk-specific management level committees have also been constituted such as the Credit Risk Management Committee (CRMC), Operational Risk Management Committee (ORMC), Asset Liability and Market Risk Committee (ALCO) and Risk Management Committee (RMC- Mgmt. Level). These committees are entrusted with the task to identify measure, mitigate and monitor various risks on a day to day basis.

The status of the whistle blower complaints received and resolved by the Bank:
Particulars	Number of Complaints
Number of Whistle Blower Complaint at the beginning of the FY 2021-22	1
Number of Whistle Blower Complaint received during the FY 2021-22	11
Number of Whistle Blower Complaint resolved during the FY 2021-22	10
Number of Whistle Blower Complaint at the end of the FY 2021-22	2

ADEQUACY OF INTERNAL FINANCIAL CONTROL

The Bank has laid down certain guidelines, policies, processes and structures to enable the implementation of appropriate internal financial controls across the Bank. These control processes enable and ensure orderly and efficient conduct of the Bank''s business, including the safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information. There are control assessments for both the Bank''s critical operating processes and IT applications, including ERP applications, wherein the transactions are approved and recorded. These controls are both manual and automated. Review and control mechanisms are built in to ensure that such control systems are adequate and operating effectively.

Because of the inherent limitations of internal financial controls, including the possibility of collusion or improper management override of controls, material misstatements in financial reporting due to error or fraud may occur and may not be detected. Also, evaluation of the internal financial controls is subject to the risk that the internal financial control may become inadequate because of changes in conditions or that the compliance with the policies or procedures may deteriorate.

The Bank has, in all material respects, an adequate internal financial controls system which was considerably enhanced during the FY 2021-22 and such internal financial controls were operating effectively based on the internal control criteria established by the Bank considering the essential components of internal control stated in the guidance note on audit of internal control over financial reporting issued by the Institute of Chartered Accountants of India.

FRAUDS REPORTED BY THE AUDITORS

During the FY 2021-22, neither the statutory auditors nor the secretarial auditor has reported to the Audit Committee/Board or Central Government any instances of material fraud in the Bank by its officers or employees under Section 143(12) of the Companies Act, 2013.

DISCLOSURES RELATING TO SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

A. REPORT ON PERFORMANCE AND FINANCIAL POSITION OF THE SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

There were no Subsidiary Company, Associate Company and Joint Venture of the Bank during the FY 2021-??

The Frequency, members and the quorum required For these management level committees are Furnished in the respective risk policies. These committees meet at regular intervals to assess and monitor the levels of risk pertaining to market, credit and operations. In the last FY, the number of meetings, both at Board committee level and at Management level, far exceeded the required minimum, to review and address issues that emerged in a changing environment.

The Bank has identified the following risks as Pillar I risks, in line with the RBI NCAF guidelines:

• Credit Risk

• Operational Risk

• Market Risk

In addition to the above-mentioned Pillar-I risks, the Bank also monitors the following second order or derived risks (Pillar II Risks) using specialized methodologies. The Bank has onboarded specialized personnel for monitoring the same and a comprehensive analysis is undertaken under its Internal Capital Adequacy and Assessment Process (ICAAP).

• Liquidity Risk

• Information Security Risk

• IT Risk

• Outsourcing Risk

• Concentration Risk

• Compliance Risk

• Interest Rate Risk

• Reputational Risk

• Strategic Risk

• Securitization Risk

• Underestimation of Credit Risk

• People Risk

• Group Risk

• Fintech risks

The Bank''s Risk Management Framework is based on a clear understanding of the above risks, disciplined risk assessment and measurement procedures and continuous monitoring. The policies and procedures established for this purpose are continuously benchmarked with international best practices. The Bank has oversight on all the risks through regular monitoring of Key Risk Indicators and benchmarks/tolerance/appetite against each type of risk.

Further, the Board reviews the Risk Management Framework of the Bank and verifies adherence to various risk parameters and compliances at least at quarterly intervals or more frequently if the situation so warrants. The RMC provides a recommendation to approve risk-related policies, including the quarterly/half-yearly/annual review reports of major risks.

From governance perspective, the Bank has in place an effective risk management policy(s) that highlights the functions, implementation and role of the Risk Management Committee of the Board and the Board of Directors.

In compliance to the Pillar-III requirements, the Bank has in place a Board approved policy on Disclosures

that addresses its approach for determining what disclosures it will make and the internal controls over the disclosure process.

WHISTLE BLOWER POLICY/VIGIL MECHANISM

The Bank''s Whistle Blower Policy allows employees, directors, other stakeholders of the Bank such as customers, NGOs, the Group (if any), Joint Ventures (if any), Suppliers, Contractors and members of the public to report matters such as genuine grievances, corruption, fraud, misconduct, and instances of leakage of unpublished price sensitive information, misappropriation of assets and non-compliance of code of conduct of the Bank or any other unethical practices.

Utmost protection has been accorded to the whistle blowers and their identities are kept confidential.

The Policy also further provides an adequate safeguard against victimization to the Whistle Blower and enables them to raise concerns and also provides an option of direct access to the Chairperson of the Audit Committee.

Name and Address of the Whistle and Ethics Officer Ms. Chandralekha Chaudhuri

Ujjivan Small Finance Bank Ltd.

Grape Garden, No. 27, 3^rd A Cross, 18^th Main, 6^th Block,

Bangalore - 560095, Karnataka

Email- [email protected]

Protected disclosures against the Whistle and Ethics Officer need to be addressed to the Managing Director and CEO of the Bank and the protected disclosure against the Managing Director and CEO of the Bank are required to be addressed to the Chairman of the Audit Committee.

Name and Address of Managing Director and CEO of the BankMr. Ittira Davis

Ujjivan Small Finance Bank Limited

Grape Garden, No. 27, 3^rd "A" Cross, 18^th Main,

6^th Block, Koramangala, Bengaluru - 560095,

Karnataka

Email: [email protected]

Name and Address of the Chairperson of the AuditCommitteeMr. Rajesh Kumar Jogi

701, Dheeraj Devika, Hill Road, Bandra West,

Mumbai- 400050, Maharashtra Email: [email protected]

During the FY 2021-22, no one has been denied access to the Chairperson of the Audit Committee.

The Whistle Blower Policy is available on the website of the Bank at www.uNivansFb.in/corporate-governance-policies

The confidentiality of those reporting violations is strictly maintained and they are not subjected to any discriminatory practice.

B. COMPANIES WHICH HAVE BECOME OR CEASED TO BE SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

No Company became or ceased to be Subsidiary Company, Associate Company and Joint Venture of the Bank during FY 2021-22.

DEPOSITS

The Chapter V of the Companies Act, 2013 does not apply to the Bank. During the FY 2021-22, the Bank has accepted deposits from the public in the ordinary course of its banking business. The details of the deposits are enumerated in the Financial Statement for FY 2021-22.

Being a banking company, the disclosures required as per Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, 2014, read with Section 73 and 74 of the Companies Act, 2013 are not applicable to the Bank.

PARTICULARS OF LOANS, GUARANTEES AND/OR INVESTMENTS

The provisions of Section 186 of Companies Act, 2013 except sub-section (1) do not apply to a loan made, guarantee given or security provided by a banking company in the ordinary course of business.

RELATED PARTY TRANSACTIONS AND CONTRACTS/ARRANGEMENTS

There was no materially significant related party transaction entered between the Bank and its related parties, except for those disclosed in the financial statement.

All the contracts/arrangements/transactions entered by the Bank with the related parties during the FY 2021-22 were on arm''s length basis; accordingly, the disclosure of particulars of contracts/ arrangements entered into by the Bank with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 in Form AOC-2 is not applicable.

The Bank has formulated a Policy on ''Materiality of Related Party Transactions'' which forms part of the Policy on dealing with ''Related Party Transactions'' is available on the website of the Bank at www.uNivansfb.in/corporate-governance-policies.

CORPORATE SOCIAL RESPONSIBILITY ("CSR")

As per Section 135 (1) of the Companies Act, 2013 "Every company having net worth of rupees five hundred Crores or more, or turnover of rupees one thousand Crores or more or a net profit of rupees five Crores or more during the immediately preceding financial year shall constitute a CSR Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director".

Pursuant to the above, as on March 31, 2022 the Bank had duly constituted CSR Committee with 4 (Four) Directors out of which 2 (Two) are Independent Directors. The details of the changes in the composition of the CSR Committee during the FY 2021-22 have been provided in the Corporate Governance Report which forms part of the Annual Report for the FY 2021-22.

The Bank has automated 17 processes through RPA in the FY 21-22 out of which 9 processes are running daily. Unattended Robots has been introduced this year to obviate manual intervention. The superlative and profitable process is PAN linking with Aadhaar which is running round the clock via unattended bot.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

During the FY 2021-22, 185 transactions (Inward & Outward) were processed adding up to USD 14.50 Lakh during the period. It resulted in an exchange income of ''12.32 lakhs for the Bank. Total Foreign Exchange Outward was USD 13.92 Lakh during the FY 2021-22.

SIGNIFICANT AND MATERIAL ORDERS BY THE REGULATORS OR COURTS OR TRIBUNALS

During the FY 2021-22, there were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status of the Bank and its operations in future.

AUDITORS

A. STATUTORY AUDITORS

Background

The members of the Bank, in the 3^rd Annual General Meeting held on July 12, 2019, had appointed M/s. MSKA & Associates, Chartered Accountants (FRN: 105047W) as Statutory Auditors of the Bank for the period of 3 (Three) financial years until the conclusion of 6^th (Sixth) Annual General Meeting to be held in the FY 2022-23, subject to the annual approval of RBI. However, the Reserve Bank of India on April 27, 2021 issued Guidelines for Appointment of Statutory Central Auditors (SCAs)/ Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) ("RBI Guidelines") which mandated the entities, with asset size of ''15,000 Crore and above as at the end of the previous year, to appoint Two Chartered Accountants [Partnership firms/ Limited Liability Partnerships (LLPs)] as the Joint Statutory Auditors. Moreover, one audit firm can concurrently take up statutory audit of a maximum of four Commercial Banks. Further, the RBI Guidelines prescribe that in order to protect the independence of the auditors/audit firms, entities will have to appoint the SCAs/SAs for a continuous period of three years, subject to the firms satisfying the eligibility norms each year. Further, Commercial Banks (excluding RRBs) will be required to take prior approval of RBI for appointment/reappointment of SCAs/SAs, on an annual basis. In view of the above RBI Guidelines, the Bank adopted a Policy for Appointment of Statutory Auditors of the Bank (''Policy'').

In compliance with aforesaid RBI Guidelines and Policy of the Bank, M/s. MSKA & Associates, Chartered Accountants (FRN: 105047W) through their letter dated August 13, 2021 expressed their ineligibility to be re-appointed as Statutory Auditors of the Bank for the FY 2021-22 and hence concluded their tenure by resigning as statutory auditors of the Bank on the conclusion of 5^th AGM of the Bank on September 27, 2021.

The Bank has Formulated CSR policy pursuant to Section 135(4) of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, in accordance with the approach and direction given by the Board of the Bank, taking into account the recommendations of its CSR Committee, and including guiding principles for selection, implementation and monitoring of activities as well as formulation of the annual action plan.

The said Policy is available on the website of the Bank at www.uiiivansfb.in/corporate-govemance-policies.

The detailed Annual Report on the CSR activities for the FY 2021-22 is annexed to this Report as "Annexure-2".

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

A. CONSERVATION OF ENERGY

The program of Sanchaya was themed around Use energy wisely. Under this program, the Bank took up some practical ways to make smart changes around the workplace, everyone in the Bank was involved in this energy saving initiative making the workplace more energy efficient and sustainable. This initiative saved us about 6% YoY and 8% for the FY.

The Bank conducted an energy audit across 575 branches, checking the energy consumption and evaluate overall energy efficiency by doing energy audits.

B. TECHNOLOGY ABSORPTION1) Robotic Process Automation (“RPA”) in reconciliation of UPI and IMPS transactions:

The Bank has started using RPA for the reconciliation of UPI and IMPS transactions, thereby obviating the necessity for human intervention in the reconciliation process of UPI and IMPS transactions. Before the implementation of RPA, reconciliation used to be outsourced to a vendor; by introducing RPA, the Bank has brought the reconciliation process inhouse, eliminating the need for human intervention and saved ''3 Crores in outsourcing costs during the FY 2021-22.

2) Letters, Notices and Statements in PDF Format through E-mails and Bitly Links:

The Bank has started sending letters, notices and statements to customers through electronic mode in the FY 2021-22. The documents were sent in PDF format which was delivered either through email or through Bitly links sent via SMS. Further, the Bank stopped sending debit card PIN''s through paper mailers for a certain category of customers. All these initiatives reduced the consumption of paper drastically. These ''go green'' initiative has reduced the carbon footprint of the Bank and resulted in a saving of ''46.25 Lakhs during the FY 2021-22. During the last 4 months of FY 2021-22, 72% of the documents were sent through this route only.

Appointment of Joint Statutory Auditors

The Audit Committee and the Board of Directors of the Bank had shortlisted four Chartered Accountants Firms and the Bank had made an application to RBI for their appointment as the Joint Statutory Auditors for a continuous period of three years. The RBI, vide its letter dated July 20, 2021, approved the appointment of M/s. Mukund M Chitale & Co., Chartered Accountants (FRN 106655W) and M/s. B. K. Ramadhyani & Co. LLP, Chartered Accountants (FRN 002878S/ S200021), as the Joint Statutory Auditors of the Bank for the year 2021-22 for their first year subject to approval of RBI on an Annual basis. The shareholders'' approval was received for the said appointments at the 5^th AGM of the Bank held on September 27, 2021 for a period of three consecutive financial years until the conclusion 8^th AGM of the Bank.

Profile

M/s. Mukund M Chitale & Co., Chartered Accountants (FRN 106655W)

M/s. Mukund M Chitale & Co. is a firm of chartered accountants with professional standing of more than 47 years. It was established in 1973. The Firm is engaged in providing auditing, taxation and advisory services. It has experience in auditing listed companies, public sector undertakings, banks, insurance companies, mutual funds, private equity funds and other entities in the financial and nonfinancial sectors. The Firm has been awarded the Peer Review Certificate issued by The Institute of Chartered Accountants of India. It has offices in Mumbai and Pune and serves clients across India.

M/s. B. K. Ramadhyani & Co. LLP, Chartered Accountants (FRN 002878S/ S200021)

M/s. B. K. Ramadhyani and Co. LLP is a firm of chartered accountants with over 80 years of professional standing. The firm renders a range of services including assurance engagements, direct and indirect tax services, corporate law consultancy and support services for accounting, compliance and MIS functions. It services both Indian and multinational companies and has clients across several key business verticals like manufacturing, retail, technology, real estate, mining, hospitality, banking, insurance etc. It has extensive experience in the BFSI segment having carried out assurance engagements for several nationalized and private sector banks, insurance companies, stock exchange and other financial services companies. The Firm holds a valid peer review certificate issued by the Institute of Chartered Accountants of India.

Report of the Statutory Auditors

The Statutory Audit of the Bank for the FY 2021-22 was conducted jointly by M/s. Mukund M Chitale & Co. Chartered Accountants and M/s. B. K. Ramadhyani & Co. LLP, Chartered Accountants. The Auditor''s Report on the financial Statements of the Bank for

the FY 2021-22 does not contain any qualification, reservation or adverse remark. The Auditor''s Report, enclosed with the financial statement, forms part of the Annual Report for the FY 2021-22.

SECRETARIAL AUDITOR

Mr. K. Jayachandran, Practicing Company Secretary (ACS No.: 11309 and Certificate of Practice No.: 4031) was appointed as the Secretarial Auditor of the Bank in the meeting of the Board held on August 06, 2021 to conduct Secretarial Audit of the Bank for the FY 2021-22 as required under Section 204 of the Companies Act, 2013 and the rules made thereunder and Regulation 24A of SEBI Listing Regulations. The Bank provided all assistance and facilities to the Secretarial Auditor for conducting the audit.

The Secretarial Audit Report is annexed to this Report as "Annexure - 3".

ANNUAL RETURN

In accordance with Section 134(3) and Section 92(3) of the Companies Act, 2013 and pursuant to Companies (Amendment) Act, 2017, a copy of the Annual Return for the FY 2021-22 will be available on the Bank''s website at www.uiiivansfb.in/annual-return

COMPLIANCE WITH SECRETARIAL STANDARDS

The Bank has complied with the provisions of Secretarial Standards specified by the Institute of Company Secretaries of India and notified by the Ministry of Corporate Affairs under Section 118(10) of the Companies Act, 2013.

HUMAN RESOURCES

The Bank prioritises service mantra both internally and externally. While technology plays a pivotal role in the effort, its employees are the catalyst of change and progress at the Bank. People practices are derived from the Bank''s core values; integrity, responsible, fairness, respect, professionalism and teamwork. The Bank is driven to build better lives both for its customers and employees. This drive has bestowed many accolades to the Bank.

Bank was ranked No. 38 amongst India''s Best Companies to Work for 2020 as per the study conducted by Great Place To Work® Institute and Economic Times across 20 industries.

Due to Bank''s constant effort to create a better work environment for employees, it was recognized as a great employer year on year. Bank has always emphasized and walked the path of having an open and transparent culture between its leaders and employees. Being a diversified workforce with a presence in 24 states and union territories, it had various forums for leaders and employees to connect. This ensures that opinions from employees are heard and this makes them feel empowered. Though, the pandemic created uncertainty and many travel restrictions, Bank''s Leadership Team including Managing Director and CEO continued to connect with the employees virtually.

apprentices, contract employees, etc., at its workplace or visits to partner organisations. This Policy recognizes the right of privacy of every individual and will strive to protect the privacy of the individuals involved and ensure that the complainant and the respondent are treated fairly. The Policy ensures that the career interest of the parties involved in any proceedings under this Policy will not be adversely affected merely on account of the complaint made to the Internal Committee or any evidence provided in connection with any enquiry; however strict action will be taken against the Respondent if proven guilty post the enquiry process.

The Status on the Complaints received and resolved by Internal Committee during the FY 2021-22:

Number of Number of Complaints

_ | > Number of Complaints

Complaints Pending for Resolution

17 12 5

Composition of Internal Committees

Bank has constituted Internal Committees (IC) in each of the regions for all administrative units/branches/regional offices of the Bank. All complaints of Sexual Harassment at the Workplace are enquired into by the IC having jurisdiction over the establishment where the Respondent is posted. The IC forwards a report of its findings to the Employer for action. Each Regional IC consists of the following members:

• Presiding Officer: who shall be a woman employed at a senior level in the region.

• Secretary: who shall be the Regional HR Manager.

• 2 Members: From amongst Employees in the region, preferably committed to the cause of women/having legal knowledge/experience in social work.

• 1 Independent Member: Nominated from amongst NGOs/associations committed to the cause of women or a person familiar with the issues relating to Sexual Harassment.

• Other Members: Additional members may be co-opted, if required, from amongst Employees working in senior positions in the region, especially from business, operations and control functions.

Functions of IC

The Committee is expected to conduct a fair, prompt and impartial process of investigating all the complaints it receives. During a redressal process, the Complaints Committee/s are required to assure confidentiality, nonretaliation and recommend interim measures as needed to conduct a fair enquiry.

POLICIES

To ensure better corporate governance, adherence to various laws and regulations as applicable to the Bank and better management of the organization as a whole, the Bank has formulated various policies including the policies mentioned below. These policies are available on the Bank''s website at www.uiiivansfb.in/corporate-governance-policies.

CORPORATE GOVERNANCE AND BUSINESS RESPONSIBILITY REPORT

The Bank recognizes its role as a corporate citizen and endeavors to adopt the best practices and the highest standards of Corporate Governance through transparency in business, ethics and accountability to its shareholders, customers, government and all other stakeholders. The Bank''s activities are carried out following good corporate practices and the Bank is constantly striving to make them better and adopt the best practices.

The Bank believes that timely reporting, transparent accounting policies and a strong Independent Board go a long way in preserving shareholders'' trust and maximising long-term corporate value.

In pursuing the mission of becoming "The best institution to provide financial services to the un-served and underserved customers and transform to a bank serving the mass market", the Bank has been balancing its dual objectives of "social" and "financial goals since its inception. "Responsible financing", "ethical values" and "transparency" in all its dealings with its customers, lenders, investors and employees" have been the cornerstones of its operations. Transparency in the decision-making process has been providing comfort to all stakeholders, particularly the customers, lenders and investors.

The Report on Corporate Governance for FY 2021-22 as per Regulation 34(3) read with Schedule V of the SEBI Listing Regulations forms part of the Annual Report for FY 2021-22. The disclosure as required under Section II of Part II of Schedule V of the Companies Act, 2013 have been provided under the heading of Remuneration of Directors in the aforesaid Corporate Governance Report.

A Business Responsibility Report containing the requisite details as per Regulation 34 (2) of the SEBI Listing Regulations forms part of the Annual Report for the FY 2021-22 and is also disclosed on the Bank''s website at www.uiiivansfb.in.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Regulation 34 and Schedule V of SEBI Listing Regulations, the Management Discussion and Analysis Report forms part of the Annual Report for the FY 2021-22.

DISCLOSURE UNDER SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Bank has a strict Prevention of Sexual Harassment ("POSH") Policy in accordance with the statutory requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. This Policy applies to all categories of employees of the Organisation, including permanent employees, permanent management, workmen, temporary employees, trainees (interns), consultants, advisers, ad hoc employees, daily wage earners, probationers,

A brief description of below mentioned policies/code have been given in "Annexure-4" of this Report.

1. Policy for Determination of Materiality of Event/ Information for Disclosures

2. Code of Conduct for Prevention of Insider Trading and Code of Fair Disclosure and Conduct

3. Corporate Social Responsibility Policy

4. Nomination and Remuneration Policy

5. Policy on Board Diversity

6. Policy on Code of Conduct

7. Related Party Transactions Policy

8. Dividend Distribution Policy

9. Familiarization Programme

10. Policy on Archival of Documents

11. Record Retention Policy

12. Whistle Blower Policy

13. Terms and Conditions of Appointment of Independent Directors

CORPORATE GOVERNANCE COMPLIANCE CERTIFICATE

The Bank has obtained a certificate from K. Jayachandran, Practicing Company Secretary, certifying that the Bank has complied with the conditions of the Corporate Governance as stipulated in Regulations 17 to 27 and clauses (b) to (i) of Regulation 46 (2) and other applicable regulations of Chapter IV pertaining to Corporate Governance and paragraphs C, D and E of Schedule V of the SEBI Listing Regulations for the FY 2021-22.

The certificate is annexed to this Report as "Annexure-5".

KEY INITIATIVES WITH RESPECT TO STAKEHOLDER RELATIONSHIP, CUSTOMER RELATIONSHIP, ENVIRONMENT, SUSTAINABILITY, HEALTH AND SAFETY

While key initiatives on customer relationship and health and safety have been detailed below. Information on initiatives concerning stakeholders'' relationship, environment and sustainability, have been elaborated in the Business Responsibility Report of the Bank which forms part of the Annual Report for the FY 2021-22.

Customers Relationship

Service Quality objective of Ujjivan is to ''deliver exceptional service to our customers, by embedding service culture in our People, Process and Policy enabled by Technology''. To put the intent into practice, the Bank has established a dedicated Service Quality department to channelize the programs around customer experience management, quality assurance, customer care and grievances resolution, and customer service compliance.

During FY 2021-22, the Bank has undertaken several new initiatives to improve customer service and to strengthen internal processes on providing timely and satisfactory resolution for customer queries, requests and complaints. The Bank has also taken efforts to stay connected with customers during the pandemic and has implemented several digital initiatives to ensure uninterrupted banking services. Key customer service initiatives and highlights are listed below:

• Introduced additional service at Money Mitra points where AEPS acquirer transactions are enabled. Now, customers of other banks can access our Money Mitra points to carry out transactions. In order to protect customer''s privacy, customer account number and Aadhaar card numbers are masked in transaction receipt and application.

• Enabled Inn-app push notifications to customers through Mobile Banking platform, this facility reduces dependency on SMS service provider and the communication between bank and customer is more secure/instant.

• IMPS limit is increased to ''5 lakh per transactions from ''2 lakh.

• Implemented doorstep service through handheld device for mobile number updation. This is first-in-the-industry initiative wherein the customers can update their new mobile numbers using OTP based authentication at their doorstep. The facility will greatly help the customers of micro/rural banking as they no need to visit branch office for mobile number updation.

• While the customer acquisition and digital transaction volumes have grown multifold in last 3 years, the number of complaints in FY 2021-22 have reduced by 15% and 38% respectively when compared to FY 202021 and 2019-20.

• Introduced smart statement facility for 4 variants of Savings Account products.

• In the second half of the year, launched special campaign for collecting documents from nominees for settlement of insurance claims pertaining to deceased borrowers/their spouses. Under the campaign, branch staffwere trained and recognized for timely submission of documents. As a result, insurance claims settled have increased by 27% in second half of the year compared to claims settled in first half of the year.

• In light of the Covid pandemic, the Bank launched special campaign to train its branch staff on assisting the families of deceased customers in document collection and also fast-tracking the claim process. The staffs were motivated to give priority for these services through rewards and recognition program. The progress in insurance claim settlements has been reviewed by the senior management at cross-functional forums.

• Introduced Sim/Device binding facility for mobile banking users, this will protect customers from fraudulent access of accounts.

• Created awareness on importance of nomination through e-mailers to customers who have opened saving / deposit account in previous month, but have not opted for nomination. 67,000 customers were sent e-mailer who opened saving / deposit account during the year.

• The Ujjivan Pay QR code was launched on 10^th February 2022 and distributed to over 32,000 customers. The facility of QR code will help customers digitize their income without the hassle of traveling to bank to deposit cash proceeds of their business.

When customers go through certain life events, both the good and bad ones, their banking service needs are unique and complex which requires care and support that are empathetic, professional and efficient. The Bank has successfully running a campaign designed as "Aajeevan", a life events-based banking services, which includes hassle free and empathetic services towards nomination facility, joint accounts, settlement of claims of deceased account holders, settlements of insurance claims, priority services to senior citizens and specially-abled customers.

Health and Safety

Covid 19 Quick Response Team

Our Quick Response Team (QRT) which has been established starting first wave in Feb 2020, immediately came into action to protect our employees and their family members as soon as 3^rd wave striked. QRT consists of the central Covid task force led by National Leadership Team members, REC heads of respective regions and QRT command center which includes regional single points of contacts (RSPOCs) for co-ordinations and to keep monitoring the health status of our infected employees and provide them support as and when required.

Employees Safety Measures

QRT reviews the government guidelines and evolving situation at our branches and other offices, and released advisories to ensure compliance with applicable guidelines & adherence to local rules. Timely decisions on working with minimum team strength ensuring all Covid Appropriate Behavior at work places.

Additionally, "Doctor on Call" and "Doctor on Premise" services were extended to ease the process for employees to connect with doctors during emergencies.

QRT ensured that all our employees are fully vaccinated and help the employees to get free vaccination thru hospital tie-ups and by organizing local camps. Eventually, for safety of employees QRT mandated only fully vaccinated employees to work from across offices.

Customers Safety Measures

To protect our customers and to get them vaccinated, we launched vaccination drive for customers and their families; promoted mass vaccination through our Social Services Team and in coordination with branch teams under program named "Uiiivan Sanieevani Kavach". Our aim was to reach out to those customers and family''s members who are not yet vaccinated due to multiple constrains and later on help them with booster doses as well.

Additionally, to create vaccination awareness amongst our customers and ensure that they are safe and fully protected against Covid''19 pandemic and to encourage Covid vaccination amongst our micro banking clients, our management announced an additional loan amount of ''5,000 over and above the stipulated branch credit limit for group core loans subject to fulfillment of other credit criteria to vaccinated clients.

Monitoring the situation

While 3^rd wave may not be as severe as past ones, but the Quick Response Team is putting all the efforts to ensure that our employees, their family members and our customers are well protected.

OTHER DISCLOSURES

A. The Bank is not required to maintain cost records as specified by the Central Government under subsection (1) of Section 148 of the Companies Act, 2013.

B. Disclosure as required under Rule 8(5)(xi) and 8(5)(xii) of the Companies (Accounts) Rules, 2014 does not apply to the Bank for FY 2021-22.

C. None of the directors of the Bank are disqualified as per provisions of Section 164(2) of the Companies Act, 2013. The directors have made necessary disclosures, as required under various provisions of the Companies Act, 2013, SEBI Listing Regulations and RBI guidelines.

ACKNOWLEDGEMENT

We place on record our gratitude to our employees at all levels who have contributed to the growth and sustained success of the Bank through their dedication, hard work, cooperation and support.

We would like to thank all our customers, vendors, bankers, investors, auditors, media and other business associates for their continued support and encouragement during the year.

We also thank the Government of India; the Government of Karnataka and Delhi; the Ministry of Commerce and Industry; the Ministry of Finance, Ministry of Corporate Affairs; the Securities and Exchange Board of India, the Stock Exchanges, the Central Board of Indirect Taxes and Customs; the RBI; the Central Board of Direct Taxes and all other government agencies for their support during the FY 2021-22 and look forward to their continued support in future.

1

All Independent Directors of the Bank have registered themselves in the data bank as specified under Section 150 of the Companies Act, 2013 read with Rule 6 of Companies (Appointment and Qualifications of Directors) Rules, 2014. Few Independent Directors have qualified the prescribed proficiency test. The Independent Directors (not exempted under the Companies (Appointment and Qualification of