Ujjivan Small Finance Bank Ltd. के अकाउंट के लिये नोट

Mar 31, 2025

3.13 PROVISIONS AND CONTINGENCIES

A provision is recognised when there is a present obligation as a result of past events and it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions
are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance
sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

A disclosure of contingent liability is made when there is:

i) a possible obligation arising from a past event, the existence of which will be confirmed by occurrence or non-occurrence
of one or more uncertain future events not within the control of the Bank; or

ii) a present obligation arising from a past event which is not recognised as it is not probable that an outflow of resources
will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.

Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is
remote, no provision or disclosure is made.

A contingent liability also arises where there is a liability that cannot be recognised because it cannot be measured
reliably. The Bank does not recognise a contingent liability but discloses its existence in the financial statements.
Contingent assets are neither recognised nor disclosed in the financial statements.

3.14 CASH AND CASH EQUIVALENTS

Cash and Cash Equivalents includes cash in hand (including balance in ATM), balances with RBI, balances with other Banks and
money at call and short notice. Cash and Cash Equivalents for the purpose of Cash Flow Statement comprises of Cash at Bank
and in hand and short term Investments with an original maturity of less than three months.

3.15 CASH FLOW STATEMENTS

Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of
a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or
expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of
the Bank are segregated.

3.16 PROPOSED DIVIDEND

Dividend proposed/declared after the balance sheet date is accounted in the books of the Bank in the year in which the
dividend is declared.

As per revised Accounting Standard 4 ''Contingencies and Events occurring after the Balance sheet date'' as notified by the
Ministry of Corporate Affairs through amendments to Companies (Accounting Standards) Amendment Rules, 2016, dated
March 30, 2016 the Bank will not appropriate the proposed dividend from the Profit and Loss account and the same will be
recognised in the year of actual payment post shareholder''s approval.

3.17 TRANSACTIONS INVOLVING FOREIGN EXCHANGE

All transactions in foreign currency are recognised at the exchange rate prevailing on the date of the transaction.

Initial recognition

Transactions in foreign currencies entered into by the Bank are accounted at the exchange rates prevailing on the date of the
transaction or at rates that closely approximate the rate at the date of the transaction.

Measurement at the Balance Sheet date

Foreign currency monetary items, if any, of the Bank, outstanding at the balance sheet date are restated at the rates prevailing
at the year-end as notified by Foreign Exchange Dealers Association of India(''FEDAI''). Non-monetary items of the Bank are
carried at historical cost.

Contingent liabilities on account of foreign exchange contracts, currency future contracts, guarantees, letters of credit,
acceptances and endorsements are reported at closing rates of exchange notified by FEDAI as at the Balance Sheet date.

Treatment oF Exchange differences

Exchange differences arising on settlement/restatement of foreign currency monetary assets and liabilities of the Bank are
recognised as income or expense in the Profit and Loss Account.

3.18 CORPORATE SOCIAL RESPONSIBILTY

Expenditure towards CSR, in accordance with section 135 of the Act are recognised in the profit and loss account.

3.19 SHARE ISSUE EXPENSES

Share issue expenses are adjusted from Securities Premium Account as permitted by Section 52 of the Act.

1 CAPITAL

1.1 Capital Infusion

During the year ended March 31, 2025, the Bank allotted 3,575,134 equity shares pursuant to the exercise of stock options under
the approved Employee Stock Option Plan (ESOP) 2019. Further, the Bank has granted 4,275,492 fresh stock options to its eligible
employees. Refer note 18(27) for further details.

During the year ended March 31,2024, the eUFSL allotted 106,564 equity shares pursuant to the exercise of stock options under the
approved Employee Stock Option Plan (ESOP) 2015 which are equivalent to 1,236,142 shares of Ujjivan Small Finance Bank having
nominal value of '' 10 per share.

1.2 Capital Adequacy Ratio

The Bank computes its Capital Adequacy Ratio as per New Capital Adequacy Framework- BASEL-II and Operating Guidelines for Small
Finance Banks (issued by RBI on October 06, 2016) and Basel III Capital regulations.

Under the New Capital Adequacy Framework and Operating Guidelines for Small Finance Banks issued on October 06, 2016, the
Bank has to maintain a Minimum Total Capital of 15% of the Credit Risk Weighted Assets (Credit RWA) on an on-going basis. Out of
the Minimum Total Capital, at least 7.5% shall be from Minimum Tier I Capital of which Common Equity Tier I capital shall be 6% and
1.50% from additional Tier I capital and remaining Tier II Capital shall be 7.5%. Further as per RBI''s directions given in the circular
DBR.NBD.No. 4502/16.13.218/2017-18, dated November 08, 2017, no separate risk charge has been calculated for Market Risk and
Operational Risk for capital ratios.

Note:

V

(a) The Tier 1 capital for the previous year includes Share Capital pending allotment as detailed in Note 18(30).

(b) The RWA for the previous year includes the risk weighted assets taken over from eUFSL vide scheme of amalgamation as
detailed in Note 18(30).

1.3 Reserves and Surplus

i

Statutory Reserve |

The Bank has made an appropriation of '' 181.53 (Previous Year: '' 320.37) to the statutory reserve for the year ended March 31,2025
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.

Capital Reserve

The Bank made an appropriation of '' 12.10 (Previous Year: Nil) from the Profit and Loss Account to the Capital Reserve during the
year ended March 31,2025 on account of profit on sale of HTM.

General Reserve

The Bank has created a reserve of '' 3.93/ 3.02 (net of taxes) on transition to the new framework on Classification, valuation and operation
of Investment Portfolio of Commercial Banks as per the RBI Master Direction DOR/2023-24/104 DOR.MRG.36/21.04.141/2023-24
dated September 12, 2023 (Previous Year- '' Nil).

Investment Fluctuation Reserve (IFR)

In accordance with RBI guidelines, Banks are required to create an IFR equivalent to 2% of their HFT andAFS Investment portfolios, within
a period of three years starting fiscal 2019. Accordingly, during the year ended March 31,2025, the Bank has made an appropriation of
'' 7.10 (Previous year- '' 4.37) to IFR from the profit and loss account so as to reach to the figure of 2% of its HFT and AFS Investment
portfolio.

Investment Reserve Account (IRA)

In accordance with RBI Master Direction DOR/2023-24/104 DOR.MRG.36/21.04.141/2023-24 dated September 12,

2023 on Classification, valuation and operation of Investment Portfolio of Commercial Banks, the Bank has transferred
'' 0.34 of IRA to General Reserve, after meeting the minimum regulatory requirement of IFR.

Share Premium

During the FY 2024-25 there was an addition of '' 10.20 in the share premium ( Previous year- '' 17.71). During the previous year, the
Bank has taken over the securities premium account pertaining to UFSL(erstwhile holding company) amounting to '' 1,108.21 and
adjusted '' 1,290.92 from the share premium during the year ended March 31,2024 in terms of the said Scheme as detailed in Note
18(30) of financial statements. The same has resulted in net deduction from share premium of '' 182.71. Further, the Bank based
on a legal opinion, adjusted the stamp duty payable amounting to '' 25.00 in the said share premium account as per the relevant
provisions of the Companies Act, 2013.

Drawdown From Reserves

The Bank has not made a drawdown from the share premium during the year ended March 31,2025 and March 31,2024, other than
the adjustment made pursuant to the merger (Refer note 18(30)).

b) Liquidity Coverage Ratio (LCR)

The Bank adheres to RBI guidelines on Liquidity Coverage Ratio given in "Basel III Framework on Liquidity Standards - Liquidity
Coverage Ratio (LCR), Liquidity Risk Monitoring Tools and the LCR Disclosure Standards" and "Operating Guidelines for Small
Finance Banks".

(A) Qualitative disclosure around LCR

LCR is the ratio of unencumbered High Quality Liquid Assets (HQLA) to Net Cash Outflows over the next 30 calendar
days. The liquidity management is centralised with treasury with active interactions between the Bank''s Business Units.
LCR measures the Bank''s ability to manage and survive under combined idiosyncratic and market-wide liquidity stress
condition that would result in accelerated withdrawal of deposits from retail as well wholesale depositors, partial loss
of secured funding, increase in collateral requirements, unscheduled draw down of unused credit lines, etc. These stress
conditions are captured as a part of the Net Cash Outflows. HQLA of the Bank consist of cash, unencumbered excess SLR,
a portion of statutory SLR as allowed under the guidelines and cash balance with RBI in excess of statutory cash reserve
requirements.

The Board of Directors has the overall responsibility for management of liquidity risk. The Board at overall level decides
the liquidity risk tolerance/limits and accordingly decides the strategy, policies and procedures of the Bank for managing
liquidity risk. The Board has constituted Risk Management Committee (RMC), which reports to the Board, and consisting
of MD & CEO, Chairman of the Board and other independent directors. The Committee is responsible for evaluating the
overall risks faced by the Bank including liquidity risk. The potential interaction of liquidity risk with other risks is included
in the risks addressed by the Risk Management Committee.

Asset Liability Committee (ALCO) of the Bank is the primary governing body for Liquidity Risk Management. Treasury is
entrusted with the responsibility of liquidity management within the Bank under the guidance of the ALCO. ALM Risk unit
independently measures, monitors & reports Liquidity Risk as per the Regulatory and internal guidelines.

LCR aims to ensure that the Bank has an adequate stock of unencumbered HQLA to meet its liquidity needs for a 30
calendar day liquidity stress scenario. As mentioned in the "Operating Guidelines for Small Finance Banks", the Bank has
to maintain the prescribed level of LCR of 100% effective from January 01,2021.

(c) Net Stable Funding Ratio as on March 31, 2025
i) Qualitative Disclosure

Ujjivan Small Finance Bank, as per the RBI guideline on Net Stable Funding Ratio (NSFR) dated May 17, 2018, is required to
maintain the NSFR on an ongoing basis. The minimum NSFR requirement set out in the RBI guideline is 100%.

NSFR is defined as the amount of available stable funding relative to the amount of required stable funding. "Available Stable
Funding" (ASF) is defined as the portion of capital and liabilities expected to be reliable over the time horizon considered by
the NSFR, which extends to one year. The amount of stable funding required ("Required Stable Funding") (RSF) of a specific
institution is a function of the liquidity characteristics and residual maturities of the various assets held by that institution as
well as those of its off-balance sheet (OBS) exposures.

Available Stable Funding -

An increase in available stable funding will impact the NSFR positively. The Bank shall aim for higher available stable funding,
which in the form of deposits, and will increase the long-term funding of the Bank. The Bank has been focusing on retail
deposits albeit reducing reliance on bulk deposits.

Required Stable Funding-

An increase in required stable funding will impact the NSFR negatively. The required stable funding of the Bank is increasing as
it is building loan portfolio between unsecured and secured loans across various products.

The RBI, vide its Master Direction dated September 12, 2023 issued revised norms for the classification, valuation and operation
of the investment portfolio of banks, which became applicable from April 01, 2024. While hitherto the investment portfolio was
classified under the Held To Maturity (HTM) , Available For Sale (AFS) and Held For Trading (HFT) categories, the revised norms bring
in a principle-based classification of investment portfolio and a symmetric treatment of fair value gains and losses. In accordance
with the revised norms and the Bank''s Board approved policy, the Bank has classified its investment portfolio as on April 01,2024,
under the categories of Held To Maturity (HTM) , Available For Sale (AFS), Fair Value Through Profit and Loss (FVTPL) and Held For
Trading (HFT) as a sub category of FVTPL, and from that date, measures and values the investment portfolio under the revised
framework. On transition to the framework on April 01, 2024, the Bank has recognised a net gain of '' 3.59 ('' 2.68 - net of tax) as
General Reserve in accordance with the said norms. The impact of the revised framework for the previous period (FY 2023-24) is not
ascertainable and as such the profit or loss from the investments, included in other income for the year ended March 31,2025 is not
comparable with that of the previous period/s. Any circular/ direction issued by RBI is implemented prospectively when it becomes
applicable, unless specifically required otherwise/ for retrospective application under those circulars / directions.

c) Sale and transfer of securities to/ From HTM Category

During the current and previous year, the value of sales, with the approval of Board of Directors permitted to be undertaken by
banks at the beginning of the accounting year, has not exceeded 5% of the book value of investments held in HTM category at the
beginning of the year. In line with RBI guidelines, specific disclosure on book value/market value and provisions if any, relating to
such transfer is not required to be made.

SCHEDULE 18
7 DERIVATIVES

a) Derivatives/ Exchange Traded Interest Derivatives/Forward rate agreement/Interest rate swap/ Risk Exposure In
Derivatives

The Bank has not entered into any derivative instruments for trading /Forward rate agreement/Interest rate swap/ speculative
purposes either in Foreign Exchange or domestic treasury operations. The Bank does not have any Forward Rate Agreement or
Interest rate swaps.

b) Credit default Swaps

The Bank has not entered into any credit default swap transactions during the current and previous year.

12 DISCLOSURE OF PENALTIES IMPOSED BY RBI
Year ended March 31, 2025

During the FY 24-25, RBI vide an order dated February 14, 2025 imposed a monetary penalty of '' 0.07 on the Bank for non-compliance
with certain directions issued by RBI on ''Loans and Advances - Statutory and Other Restrictions''. This penalty was imposed in exercise
of powers conferred on RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949.
There was no other regulatory/operational penalty levied by RBI under the provisions of the (i) Banking Regulations Act 1949, (ii)
Payment and Settlement Act, 2007 and (iii) Government Securities Act, 2006 (for bouncing of SGL) as per the Master Direction on
Financial Statements - Presentation and Disclosures dated August 30, 2021

Year ended March 31, 2024

During the FY 23-24, RBI has not levied any penalty under the provisions of the (i) Banking Regulations Act 1949, (ii) Payment
and Settlement Act, 2007 and (iii) Government Securities Act, 2006 (for bouncing of SGL) as per the Master Direction on Financial
Statements - Presentation and Disclosures dated August 30, 2021.

During the FY 23-24, RBI levied an operational penalty of '' 0.02 for downtime in ATMs for more than 10 hours in a month, due to
cash-out in such ATMs.

13 DISCLOSURES ON REMUNERATION:

13.1 Qualitative Disclosures

(A) Information relating to the composition and mandate of the Remuneration Committee.

Bank has constituted a Nomination and Remuneration Committee (NRC). The NRC comprises of five members where four
are Independent Directors and one Non-Executive, Non-Independent Director. Mandate of the Nomination and Remuneration
Committee is to oversee the framing, review and implementation of the Bank''s Compensation Policy and Nomination &
Remuneration Policy for Whole Time Director/Chief Executive Officer/ Material Risk Takers and Control Function staff for
ensuring effective alignment between remuneration and risks. The Committee also ensures that level and composition of
remuneration is reasonable and sufficient, relationship of remuneration to performance is clear and meets appropriate
performance benchmarks. The Nomination and Remuneration Committee reviews Compensation policy and Nomination &
Remuneration Policy of the Bank with a view to attract, retain and motivate employees.

(B) Information relating to the design and structure of remuneration processes and the key features and objectives of Com¬
pensation Policy and Nomination & Remuneration Policy

The Compensation Policy and Nomination & Remuneration Policy has been laid out keeping the following perspectives into
considerations:

(a) Our Compensation principles should support us in achieving our mission of providing a full range of financial services to
the economically active poor of India who are not adequately served (unserved and underserved) by financial institutions.
Therein, this policy should support us to attract and retain talent and skills required to further the organisations purpose
and ideology.

(b) The pay structure and amounts confirms and shall always conform to applicable Income Tax and other similar statutes.

(c) All practices of the Bank shall comply with applicable labour laws.

(d) The pay structure should be standardised for a level of employees.

(e) Elements eligible for tax exemption may be introduced at appropriate levels to enable employees take applicable tax
breaks. Amounts related to certain benefits may undergo change due to change in grade/ roles/ function/ state/ region
in the organisation.

(f) The compensation structure shall be easy to understand for all levels of employees.

(g) The compensation policy is designed to promote meritocracy in the organisation i.e. other things being equal, performers
in a given role are expected to earn more than his/her peer group.

(h) The directors are paid sitting fees as approved by the Board for attending the Board and Board Committee
Meetings.

(C) Description oF the ways in which current and Future risks are taken into account in the remuneration processes. It should
include the nature and type of the key measures used to take account of these risks.

(a) Structurally, the Control Functions such as Credit, Risk and Vigilance are independent of the business Functions and each
other, thereby ensuring independent oversight From various aspects on the business Functions.

(b) The Bank is in the process of comprehensively measuring and reviewing material risks to which Bank is exposed to under
IGAAP. The Bank also complies with Basel II requirements.

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

(a) The compensation policy is designed to promote meritocracy in the organisation i.e. other things being equal, performers
in a given role are expected to earn more than his/her peer group.

(b) The Bank shall, from time to time, benchmark its compensation against identified market participants to define its pay
structure and pay levels.

(c) The merit increments will be finalised and approved by the NHRC year on year, basis organisation''s budgets and
accomplishments as well as market reality.

(d) The Bank believes in paying its employees in an equitable and fair manner basis the incumbent''s Role, Personal Profile
(Education/Experience etc.) as well as Performance on the Job.

(e) Employees rated "Below Expectations" shall not be provided any increments, unless statutorily required.

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

The performance bonus pay-out shall be Annual. Discretion is typically applied related to staggered pay-out in case large pay¬
outs, particularly for functions like Credit and Risk. Bonus is to be prorated for employees who have worked for part of the
year at the Bank.

The Bank believes in the philosophy of collective ownership by its employees. Thus, Employee Stock Options of the eUFSL are
distributed amongst employees basis their criticality and performance.

Typically, all Stock option schemes at the Bank vest in a staggered manner. Besides the statutory requirement of grant and 1
year vesting, the total set of options vest in various tranches for up to a period of 3 years.

Malus/ Clawback: In the event of negative contributions of the individual towards the achievements of the Banks objectives in
any year, the deferred compensation should be subjected to Malus/Clawback arrangements. Similar provisions shall apply in
case the individual is found guilty of any major non-compliance or misconduct issues.

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

Variable Compensation at the Bank has the following distinct forms:

1. Statutory Bonus

2. Performance Pay:

a. Performance Bonus

b. Monthly Variable Pay

3. Rewards & Recognition

The policy has been laid out keeping the following perspectives into considerations:

The Variable pay structure and amounts shall always conform to applicable Income Tax statutes, Labour Laws, Regulatory
Requirements, any other applicable statutes and prevalent market practice.

It is designed to promote meritocracy in the organisation i.e. other things being equal, performers in a given role are expected
to earn more than his/her peer group.

Statutory Bonus: Statutory Bonus in India is paid as per Payment of Bonus Act, 1965.

Performance Bonus: All employees who are not a part of any Monthly Variable Pay but part of the year end performance
review will be covered under the Performance Bonus Plan of the Bank. However, the actual pay-out of performance bonus shall
be paid only to employees who have met our performance criteria.

Sales Awards: Employees in the Sales function, directly responsible for revenue generation shall be covered under the Sales
Award Scheme if meeting the criteria of the respective scheme. Typically some of the entry level roles and up to two levels of
supervision thereof shall be covered by sales awards.

Rewards & Recognition: The Bank shall design schemes and practices from time to time to celebrate employees / departmental/
organisational success. These celebrations may include offering tokens of appreciation to employees as defined in specific
schemes. Fairness of application and transparency of communication shall be the hallmark of all such schemes. These will be
subject to income tax laws, as applicable. Examples of such schemes may include: Long Service Awards (currently at one, three,
five, ten and Fifteen yrs. of completion of service with the Bank), Portfolio Improvement Reward Scheme; Functional R&R
Schemes; Organisational Rewards Schemes such as: Service Champion; Process Excellence; Customer Connect Awards; Above
and Beyond; Recognition programme for Liabilities Branches for Retail Deposits; Recognition programme for Asset growth in
Branches. The EDGE (Executive Development for Growth and Excellence) programme is aimed at identifying high performers
and assessing their potential for future leadership roles at the Bank. A mix of behavioural assessments, blended training &
development journey and IDPs are deployed to make the identified individuals (EDGE selects) ready for future leadership roles.

Nature oF CSR activities :-

Children education, Sustainable village development, waste management, liveable city projects, community school infrastructure,
Skill training for rural youth, flood rehabilitation, sustainable development initiatives, Health care support.

Pursuant to Section 135(5) & 135(6) of Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules,
2014(Amended), Bank has transferred '' 3.52 Crores to the "Unspent CSR Account" as on March 31,2025 (March 31,2024 : '' 0.98
Crores) towards the Ongoing projects approved by the CSR Committee.

Refer note 18(23) for the related parties involved in activities relating to Corporate Social Responsibility.

! PORTFOLIO-LEVEL INFORMATION ON THE USE OF FUNDS RAISED FROM GREEN DEPOSITS

In reference to the RBI Notification No: DOR.SFG.REC.10/30.01.021/2023-24 dated April 11, 2023 with respect to the disclosure
related to acceptance of green deposits, the Bank has not raised any funds from green deposits in the current year.

22 SEGMENT REPORTING

In accordance with the guidelines issued by RBI & AS-17, the Bank has adopted Segment Reporting as under:

A) Treasury:

The Treasury Segment primarily consists of net interest earnings from the Bank''s Investment portfolio, money market
borrowing and lending, gains or losses on Investment operations and income from sale of PSLC.

B) Retail Banking:

The Retail Banking Segment serves retail customers through a branch network and other delivery channels. Retail Banking
includes lending to and deposits from retail customers and identified earnings and expenses of the segment. This segment
raises deposits from customers and provides loans and other services to customers. Revenues of the retail banking segment
are derived from interest earned on retail loans, processing fees earned and other related incomes. Expenses of this segment
primarily comprise interest expense on deposits & Borrowings, infrastructure and premises expenses for operating the branch
network and other delivery channels, personnel costs, other direct overheads and allocated expenses.

As per the RBI Circular DOR.AUT.REC.12/22.01.001/2022-23 dated April 07, 2022, for the purpose of disclosure under Accounting
Standard 17, Segment reporting, ''Digital Banking'' has been identified as a sub-segment under Retail Banking by Reserve Bank
of India (RBI). However, as the proposed Digital Banking Unit (DBU) of the Bank has not yet commenced operations and having
regard to the discussions of the DBU Working Group formed by Indian Banks'' Association (IBA) (which included representatives
of banks and RBI), held on July 14, 2022, reporting of Digital Banking as a separate sub-segment of Retail Banking Segment will
be implemented by the Bank based on the decision of the DBU Working Group.

C) Corporate/ Whole Sale Banking:

The Wholesale Banking Segment provides loans to Corporates and Financial Institutions. Revenues of the wholesale banking
segment consist of interest earned on loans made to customers. The principal expenses of the segment consist of interest
expense on funds borrowed from external sources and other internal segments, premises expenses, personnel costs, other
direct overheads and allocated expenses of delivery channels, specialist product groups, processing units and support groups.

28 The Bank received a notice on March 16, 2021, regarding non-remittance of statutory Provident Fund (PF) dues on the applicable
wage components from February 2017 until March 2019 amounting to '' 22.70. Bank has filed the initial responses to the PF
Commissioner and contented that said notice does not have a stand based on definition of basic wages under EPF Act, 1952 and
various case laws. However, due to COVID 19 pandemic, the hearing has been adjourned until further notice.

The Bank has made a provision during the FY 2021-22 for an amount of '' 22.70 as a matter of prudence, which was treated as
contingent liability for the FY 2020-21.

The Regional Provident Fund Commissioner (RPFC)-II, Bengaluru, in an inquiry held against the Bank under Section 7A of the Employees''
Provident Fund and Miscellaneous Provisions Act, 1952, passed an Order dated 09-08-2021 against the Bank, directing the Bank to
remit provident fund contribution of '' 22.70 on various allowances paid by the Bank to its employees during the period between
February 2017 and March 2019. Against the said Order of the RPFC-II, the Bank preferred an appeal before the Central Government
Industrial Tribunal (CGIT) in Appeal No. 43/2021. Since position of Presiding Officer in the CGIT was vacant, the Bank filed a writ
petition before the Hon''ble High Court of Karnataka in W.P. No. 16635/2021. The Hon''ble High Court has disposed of the matter on
13/07/2022 holding that there would be stay on depositing the award amount (i.e., 22.70) till finality of the appeal pending before CGIT.
This case is pending before CGIT Bengaluru; the last date of hearing was 10 March 2025 and the next date of hearing is fixed on 17
June 2025 for "Arguments on main Appeal".

*The amount equity dividend paid tor the previous year includes '' 42.60 paid by erstwhile Ujjivan Financial Services Limited, merged
pursuant to the scheme of Amalgamation as detailed in Note.18(30).

30 The Board of Directors of the Bank and erstwhile Ujjivan Financial Services Limited (UFSL) in their respective meetings held on
October 14, 2022, had approved a scheme of amalgamation of UFSL with the Bank in terms of Sections 230 to 232 of the Companies
Act, 2013 and other applicable laws including rules and regulations (Scheme). The Scheme was approved by the shareholders at the
National Company Law Tribunal("NCLT'') convened meeting of the equity shareholders of the Bank held on November 03, 2023. The
NCLT, in accordance with Section 230 to 232 of the Companies Act, 2013 and rules thereunder, vide its order dated April 19, 2024,
sanctioned the Scheme. Upon receipt of all approvals, the Bank filed form INC 28 (Intimation to ROC) with ROC on April 30, 2024 and
accordingly, in terms of provisions of the Scheme, the ''Effective Date'' of the Scheme was April 30, 2024. The Appointed Date under
the said Scheme as approved by the NCLT was April 01,2023.

The amalgamation was accounted under the "pooling of interest" method as prescribed in AS-14 "Accounting for Amalgamation".
The outstanding balance between the UFSL and the Bank were eliminated as on April 1, 2023. All assets and liabilities of UFSL
were recognised by the Bank at the carrying amounts as on that date except for the adjustments to bring about the uniformity in
accounting policies as required under AS-14. The relevant Committee of the Board of the Bank vide its resolution dated May 06,
2024, approved the allotment of 1,412,702,033 fully paid equity shares of ''10/- each of Bank to the eligible shareholders of the
erstwhile UFSL, who were holding equity shares of UFSL as on the Record date i.e., May 03, 2024, as per the share exchange ratio
determined in the aforesaid Scheme i.e. 116 equity shares of the face value of '' 10/- each of Bank for every 10 equity shares of UFSL.
The difference between fresh equity shares to be allotted as aforementioned and share capital of UFSL was adjusted in the Share
Premium Account, as per the terms of the Scheme.

of eUFSL was approved by the Merger & Placement Committee of the Board of the Bank vide its resolution dated May 06, 2024,
and the same was intimated to the Exchange on the same day. The allotment was intimated to the Registrar of Companies on
May 15, 2024, by submission of PAS 3 return. The corporate action regarding crediting shares to Demat account of shareholders of
eUFSL was completed.

31 The Bank, as part of its normal banking business, grants loans and advances, makes investments, provides guarantees, to and accepts
deposits and borrowings from its customers and borrowing from entities. These transactions are part of Bank''s normal banking
business, which is conducted ensuring adherence to all regulatory requirements and banks internal policies as applicable.

Other than the transactions described above, no funds have been advanced or loaned or invested (either from borrowed funds or
securities premium or any other sources or kind of funds) by the Bank to or in any other persons or entities, including foreign entities
("Intermediaries”) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in
party identified by or on behalf of the Bank (Ultimate Beneficiaries). The Bank has not received any fund from any parties (Funding
Party) with the understanding that the Bank shall whether, directly or indirectly lend or invest in other persons or entities identified
by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate
Beneficiaries.

32 COMPARATIVE FIGURES

Figures of the previous year have been regrouped/ reclassified wherever necessary to confirm to the current year''s
presentation.

Signature to Notes on Accounts

For and on behalf of Board of Directors of

Ujjivan Small Finance Bank Limited

Sanjeev Nautiyal B A Prabhakar Sudha Suresh Sanjeev Barnwal

DIN: 08075972 DIN: 02101808 DIN: 06480567 Company Secretary

Managing Director & CEO Independent Director Independent Director

S Balakrishna Kamath

Chief Financial Officer

Bengaluru
April 30, 2025

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Mar 31, 2024

1 CAPITAL1.1 Capital Infusion

During the year ended March 31, 2024, the Bank allotted 40,56,651 equity shares pursuant to the exercise of stock options under the approved Employee Stock Option Plan (ESOP) 2019. Further, the bank has granted 2,90,37,915 Fresh stock options to its eligible employees. Refer note 18(33) For further details.

During the year ended March 31, 2024, the eUFSL allotted 1,06,564 equity shares pursuant to the exercise of stock options under the approved Employee Stock Option Plan (ESOP) 2015 which are equivalent to 12,36,142 shares of Ujjivan Small Finance Bank having nominal value of '' 10 per share.

1.2 Capital Adequacy Ratio

The Bank computes its Capital Adequacy Ratio as per New Capital Adequacy Framework- BASEL-II and Operating Guidelines for Small Finance Banks (issued by RBI on October 06, 2016) and Basel III Capital regulations Under the New Capital Adequacy Framework and Operating Guidelines for Small Finance Banks issued on October 06, 2016, the Bank has to maintain a Minimum Total Capital of 15% of the Credit Risk Weighted Assets (Credit RWA) on an on-going basis. Out of the Minimum Total Capital, at least 7.5% shall be from Minimum Tier I Capital of which Common Equity Tier I capital shall be 6% and 1.50% from additional Tier I capital and remaining Tier II Capital shall be 7.5%. Further as per RBI''s directions given in the circular DBR.NBD.No. 4502/16.13.218/2017-18, dated November 08, 2017, no separate risk charge has been calculated for Market Risk and Operational Risk for capital ratios.

1A Reserves and Surplus Statutory Reserve

The Bank has made an appropriation of '' 32,03,727 (Previous Year: '' 27,49,804) 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. The Bank has taken over the Statutory Reserves of '' 14,32,831 in pursuant to the scheme of amalgamation as detailed in Note 18(41).

Capital Reserve

The Bank not made any appropriation From the Profit and Loss Account to the Capital Reserve during the year ended March 31, 2024 as well as for the previous year ended March 31, 2023.

Investment Fluctuation Reserve (IFR)

In accordance with RBI guidelines, Banks are required to create an IFR equivalent to 2% of their HFT and AFS Investment portfolios, within a period of three years starting fiscal 2019. Accordingly, during the year ended March 31, 2024, the Bank has made an appropriation of '' 43,737 ( Previous Year: 467,852)to IFR from the profit and loss account so as to reach to the figure of 2% of its HFT and AFS Investment portfolio.

Investment Reserve Account (IRA)

In accordance with RBI guidelines, Banks are required to create IRA to the extent of provisions created on account of depreciation in the ''AFS'' or ''HFT'' categories are found to be in excess of the required amount in any year, the excess shall be credited to the Profit & Loss Account and an equivalent amount (net of taxes, if any and net of transfer to Statutory Reserves as applicable to such excess provision) shall be appropriated to an Investment Reserve Account (IRA) in Schedule 2 - "Reserves & Surplus" under the head "Revenue and Other Reserves". During the Financial Year 2023-24, the Bank has written back '' Nil (Previous Year: 3,404 ) and transferred to IRA.

Share Premium

The Bank has taken over the securities premium account pertaining to UFSL(erstwhile holding company) amounting to '' 11,082,054 and adjusted '' 12,909,174 from the share premium during the year ended March 31,2024 in terms of the said Scheme as detailed in Note number 18(41) of financial statements. The same has resulted in net deduction from share premium of '' 1,827,120. Further, the bank based on a legal opinion, adjusted the stamp duty payable amounting to '' 250,000 in the said share premium account as per the relevant provisions of the Companies Act, 2013 (previous year ended March 31, 2023 the bank had adjusted the share issue expenses of '' 93,899 against the Share premium account).

Drawdown from Reserves

The Bank has not made a drawdown from the share premium during the year ended March 31, 2024 and March 31, 2023. For adjustment pursuant to the merger, please refer note. 18(41).

2.5 Non-Performing Non-SLR Investments

The Bank does not have any Non-Performing Non-SLR Investments as at March 31,2024 and March 31, 2023.

2.6 Sale and transfer of securities to/ from HTM Category

During the current and previous year, the value of sales and transfers of securities to / from HTM category excluding one time transfer of securities to / from HTM category with the approval of Board of Directors permitted to be undertaken by banks at the beginning of the accounting year, has not exceeded 5% of the book value of investments held in HTM category at the beginning of the year. Hence, specific disclosure on book value/market value and provisions if any, relating to such transfer is not required to be made.

3 DERIVATIVES/ EXCHANGE TRADED INTEREST DERIVATIVES/ RISK EXPOSURE IN DERIVATIVES

The Bank has not entered into any derivative instruments for trading / speculative purposes either in Foreign Exchange or domestic treasury operations. The Bank does not have any Forward Rate Agreement or Interest rate swaps.

4.3 Unsecured advances

The Bank has not extended any project advances where the collateral is an intangible asset such as a charge over rights, licenses, authorisations, etc. The Advances as at March 31, 2024 of '' 205,969,232 (PY. '' 144,854,546) disclosed in Schedule 9B (iii) are without any primary or collateral security.

4.4 Divergence in Asset Classification and Provisioning for NPAs

"RBI vide its circular DBR.BP.BC.No.63/21.04.018/2016-17 dated April 18, 2017 and Notification dated April 01, 2019, has directed banks shall make suitable disclosures, if either or both of the Following conditions are satisfied:

a) the additional provisioning for NPAs assessed by RBI exceeds 10% of the reported profit before provisions and contingencies for the reference period, and

b) the additional Gross NPAs identified by RBI exceed 15 per cent of the published incremental Gross NPAs for the reference period."

Based on the above, there was no reportable divergence in asset classification and provisioning for NPAs for the years ended March 31, 2024 and March 31, 2023.

4.5 a) Details of Financial Assets sold to Securitisation Company (SC) / Reconstruction Company (RC) for Asset

Reconstruction

The details of Securitisation to a special purpose vehicle is furnished in Schedule 18 (36). b) Details of Book Value of Investment in Security Receipts

During the current and previous year, the Bank has not made Investment in Security Receipts.

4.6 Details of NPA Purchase/Sold

During the current and previous year, there has been no purchase/ sale of non-performing financial assets from/ to other banks.

4.7 Intra-Group Exposure

During the current and previous year, the Bank does not have any Intra Group Exposure.

4.8 Disclosures Resolution of Stressed Assets

There were no accounts that have been restructured under prudential framework on resolution of stressed assets as per the circular no. RBI/2018-19/203 DBR.No.BP.BC.45/21.04.048/2018-19 dated June 07, 2019 during the year ended March 31, 2024. (March 31, 2023: Nil).

1) Working funds represent average of total assets as reported to RBI in Form X under Section 27 of the Banking Regulation Act, 1949 during the Year and assets of eUFSL.

2) Returns on assets are computed with reference to average working funds.

3) Business is defined as total of average of gross advances and deposits (net of inter-bank deposits and Certificate of Deposits).

4) Operating profit is net profit for the Year before provisions and contingencies and profit / (loss) on sale of building and other assets (net).

4) Classification of assets and liabilities under the different maturity buckets is based on the same estimates and assumptions as used by the Bank for compiling the return submitted to the RBI.

5) RBI vide its circular dated March 27, 2020 on ''COVID-19 Regulatory Package'' permitted the Bank to grant a moratorium of three months on payment of all instalments falling due between March 1,2020 and May 31,2020. The Bank in line with the said circular has offered moratorium on the respective maturity buckets presented above. The Bank estimates that considerable portion of the cash flows impacted by the moratorium will be received within 1-3 years from the balance sheet date and the same has been factored in the above disclosure.

11.3 Details of Single Borrower Limit (SBL) / Group Borrower Limit (GBL) exceeded by the Bank:

During the current and previous year there are no instances of SBL/GBL limit exceeding the sanctioned limit or outstanding whichever is higher.

12 DISCLOSURE OF PENALTIES IMPOSED BY RBI Year ended March 31, 2024

During the FY 2023-24, RBI has not levied any penalty under the provisions of the (i) Banking Regulations Act 1949, (ii) Payment and Settlement Act, 2007 and (iii) Government Securities Act, 2006 (for bouncing of SGL) as per the Master Direction on Financial Statements - Presentation and Disclosures dated August 30, 2021. During the FY 2023-24, RBI levied an operational penalty of '' 240 for downtime in ATMs for more than 10 hours in a month, due to cash-out in such ATMs.

Year ended March 31, 2023

During the FY 2022-23, RBI has not levied any penalty under the provisions of the (i) Banking Regulations Act 1949, (ii) Payment and Settlement Act, 2007 and (iii) Government Securities Act, 2006 (for bouncing of SGL) as per the Master Direction on Financial Statements - Presentation and Disclosures dated August 30, 2021. During the FY 2023-24, RBI levied an operational penalty of '' 1780 for downtime in ATMs for more than 10 hours in a month, due to cash-out in such ATMs.

13 OVERSEAS ASSETS, NPAS AND REVENUE

The Bank does not have any overseas branches and hence the disclosure regarding overseas assets, NPAs and revenue is not applicable.

18 BANCASSURANCE BUSINESS

Commission income For the year ended March 31, 2024 includes fees of ''1,113,670 (Previous Year: '' 435,917) in respect of insurance business.

19. LIQUIDITY COVERAGE RATIO (LCR)

The Bank adheres to RBI guidelines on Liquidity Coverage Ratio given in "Basel III Framework on Liquidity Standards - Liquidity Coverage Ratio (LCR), Liquidity Risk Monitoring Tools and the LCR Disclosure Standards" and "Operating Guidelines for Small Finance Banks".

19. (A) Qualitative disclosure around LCR

LCR is the ratio of unencumbered High Quality Liquid Assets (HQLA) to Net Cash Outflows over the next 30 calendar days. The liquidity management is centralised with treasury with active interactions between the Bank''s Business Units .LCR measures the Bank''s ability to manage and survive under combined idiosyncratic and market-wide liquidity stress condition that would result in accelerated withdrawal of deposits from retail as well wholesale depositors, partial loss of secured funding, increase in collateral requirements, unscheduled draw down of unused credit lines, etc. These stress conditions are captured as a part of the Net Cash Outflows. HQLA of the Bank consist of cash, unencumbered excess SLR, a portion of statutory SLR as allowed under the guidelines and cash balance with RBI in excess of statutory cash reserve requirements. Asset Liability Committee (ALCO) of the Bank is the primary governing body for Liquidity Risk Management. Treasury is entrusted with the responsibility of liquidity management within the Bank under the guidance of the ALCO. ALM Risk unit independently measures, monitors & reports Liquidity Risk as per the Regulatory and internal guidelines.

(a) The estimates of Future salary increases, considered in actuarial valuation, takes into account, inflation, seniority, promotions and other relevant factors, such as demand and supply in the employment market.

(b) During the current and previous year the Bank does not have unamortised gratuity and pension liability.

(c) Discount rate is based on the prevailing market yields of Indian Government Bonds as on the Balance Sheet date for the estimated term of the obligation.

(d) The Code on Wages, 2019 ("Code") and other connected legislations enacted by the Government of India envisages payment of wages (as defined) which is not less than 50% of all monthly remuneration paid to employees (as defined). The effective date of these legislations and the rules relevant thereto have not yet been notified by the Government of India. The current wages as a percentage to the remuneration for certain employees as per Company''s salary structure is less than that envisaged in these legislations. As and when the legislations are notified, there may be an increase in the accrued gratuity liability of the employees of the Company. This possible additional liability has currently not been quantified.

22 SEGMENT REPORTING

In accordance with the guidelines issued by RBI & AS-17, the Bank has adopted Segment Reporting as under:

A) Treasury :

The Treasury Segment primarily consists of net interest earnings from the Bank''s Investment portfolio, money market borrowing and lending, gains or losses on Investment operations and income from sale of PSLC.

B) Retail Banking:

The Retail Banking Segment serves retail customers through a branch network and other delivery channels. Retail Banking includes lending to and deposits from retail customers and identified earnings and expenses of the segment. This segment raises deposits from customers and provides loans and other services to customers. Revenues of the retail banking segment are derived from interest earned on retail loans, processing fees earned and other related incomes. Expenses of this segment primarily comprise interest expense on deposits & Borrowings, infrastructure and premises expenses for operating the branch network and other delivery channels, personnel costs, other direct overheads and allocated expenses.

As per the RBI Circular DOR.AUT.REC.12/22.01.001/2022-23 dated April 07, 2022, for the purpose of disclosure under Accounting Standard 17, Segment reporting, ''Digital Banking'' has been identified as a sub-segment under Retail Banking by Reserve Bank of India (RBI). However, as the proposed Digital Banking Unit (DBU) of the Bank has not yet commenced operations and having regard to the discussions of the DBU Working Group formed by Indian Banks'' Association (IBA) (which included representatives of banks and RBI), held on July 14, 2022, reporting of Digital Banking as a separate sub-segment of Retail Banking Segment will be implemented by the Bank based on the decision of the DBU Working Group.

C) Corporate/ Whole Sale Banking:

The Wholesale Banking Segment provides loans to Corporates and Financial Institutions. Revenues of the wholesale banking segment consist of interest earned on loans made to customers. The principal expenses of the segment consist of interest expense on funds borrowed from external sources and other internal segments, premises expenses, personnel costs, other direct overheads and allocated expenses of delivery channels, specialist product groups, processing units and support groups.

Tax paid in advance / tax deducted at source (net of provisions), Deferred Tax Assets and others which cannot be allocated to any segments, have been classified as unallocated assets.

Part B: Geographic Segment

The Bank operations are predominantly confirmed within one geographical segment (India) and accordingly, this is considered as the only secondary segment.

26.9 Provision for Long term contracts

The Bank has a process whereby periodically all long term contract are assessed For material Foreseeable losses. At the year end, the Bank has reviewed and ensured that no provision is required under any law / accounting standards on such long term contracts as on March 31, 2024 and March 31, 2023.

26.10 Credit default Swaps

The Bank has not entered into any credit default swap transactions during the current and previous year.

26.11 Credit card and debit card reward points

The Bank does not have credit card products, hence reward points are not applicable. Also, the Bank does not provide any reward points on debit card.

26.12 Off balance sheet SPVs sponsored

There are no off-balance sheet SPVs sponsored by the bank as at March 31, 2024, and at March 31,2023. Refer note 18(36) of the notes to accounts.

26.13 Details of factoring exposure

The factoring exposure of the Bank as at March 31,2024 and as at March 31, 2023 are Nil.

26.14 Country wise risk exposure

The Bank does not have any country wise Risk Exposure as at March 31, 2024 and as at March 31, 2023.

26.15 Unhedged foreign currency exposure

The Bank does not have any unhedged foreign country exposure as at March 31,2024 and as at March 31, 2023.

28 DISCLOSURES ON REMUNERATION:28.1 Qualitative Disclosures(A) Information relating to the composition and mandate of the Remuneration Committee.

Bank has constituted a Nomination and Remuneration Committee (NRC). The NRC comprises of five members where four are Independent Directors and one Non-Executive, Non-Independent Director. Mandate of the

Nomination and Remuneration Committee is to oversee the framing, review and implementation of the Bank''s Compensation Policy and Nomination & Remuneration Policy for Whole Time Director/Chief Executive Officer/ Material Risk Takers and Control Function staff for ensuring effective alignment between remuneration and risks. The Committee also ensures that level and composition of remuneration is reasonable and sufficient,

SCHEDULE 18

relationship of remuneration to performance is clear and meets appropriate performance benchmarks. The Nomination and Remuneration Committee reviews Compensation policy and Nomination & Remuneration Policy of the Bank with a view to attract, retain and motivate employees.

(B) Information relating to the design and structure of remuneration processes and the key features and objectives of Compensation Policy and Nomination & Remuneration Policy

The Compensation Policy and Nomination & Remuneration Policy has been laid out keeping the following perspectives into considerations:

(a) Our Compensation principles should support us in achieving our mission of providing a full range of financial services to the economically active poor of India who are not adequately served (unserved and underserved) by financial institutions. Therein, this policy should support us to attract and retain talent and skills required to further the organisations purpose and ideology.

(b) The pay structure and amounts confirms and shall always conform to applicable Income Tax and other similar statutes.

(c) All practices of the Bank shall comply with applicable labour laws.

(d) The pay structure should be standardised for a level of employees.

(e) Elements eligible for tax exemption may be introduced at appropriate levels to enable employees take applicable tax breaks. Amounts related to certain benefits may undergo change due to change in grade/ roles/ function/ state/ region in the organisation.

(f) The compensation structure shall be easy to understand for all levels of employees.

(g) The compensation policy is designed to promote meritocracy in the organisation

i.e. other things being equal, performers in a given role are expected to earn more than his/her peer group.

(h) The directors are paid sitting fees as approved by the Board for attending the Board and Board Committee Meetings.

(C) Description of the ways in which current and future risks are taken into account in the remuneration processes. It should include the nature and type of the key measures used to take account of these risks.

(a) Structurally, the Control functions such as Credit, Risk and Vigilance are independent of the business functions and each other, thereby ensuring independent oversight from various aspects on the business functions.

(b) The Bank is in the process of

comprehensively measuring and reviewing material risks to which Bank is exposed to under IGAAP. The Bank also complies with Basel II requirements.

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

(a) The compensation policy is designed to promote meritocracy in the organisation i.e. other things being equal, performers in a given role are expected to earn more than his/her peer group.

(b) The Bank shall, from time to time, benchmark its compensation against identified market participants to define its pay structure and pay levels.

(c) The merit increments will be finalised and approved by the NHRC year on year, basis organisation''s budgets and accomplishments as well as market reality.

(d) The Bank believes in paying its employees

in an equitable and fair manner basis the incumbent''s Role, Personal Profile (Education/Experience etc.) as well as Performance on the Job.

(e) Employees rated "Below Expectations" shall not be provided any increments, unless statutorily required.

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

The performance bonus pay-out shall be Annual. Discretion is typically applied related

to staggered pay-out in case large pay-outs, particularly for functions like Credit and Risk. Bonus is to be prorated for employees who have worked for part of the year at the Bank.

The Bank believes in the philosophy of collective ownership by its employees. Thus, Employee Stock Options of the eUFSL are distributed amongst employees basis their criticality and performance.

Typically, all Stock option schemes at the Bank vest in a staggered manner. Besides the statutory requirement of grant and 1 year vesting, the total set of options vest in various tranches for up to a period of 3 years.

Malus/ Clawback: In the event of negative contributions of the individual towards the achievements of the Banks objectives in any year, the deferred compensation should be subjected to Malus/Clawback arrangements. Similar provisions shall apply in case the individual is found guilty of any major non-compliance or misconduct issues.

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

Variable Compensation at the Bank has the following distinct forms:

1. Statutory Bonus

2. Performance Pay:

a. Performance Bonus

b. Monthly Variable Pay

3. Rewards & Recognition

The policy has been laid out keeping the following perspectives into considerations:

The Variable pay structure and amounts shall always conform to applicable Income Tax statutes, Labour Laws, Regulatory Requirements, any other applicable statutes and prevalent market practice.

It is designed to promote meritocracy in the organisation i.e. other things being equal, performers in a given role are expected to earn more than his/her peer group.

Statutory Bonus: Statutory Bonus in India is paid as per Payment of Bonus Act, 1965. Performance Bonus: All employees who are not a part of any Monthly Variable Pay but part of the year end performance review will be covered under the Performance Bonus Plan of the Bank. However, the actual pay-out of performance bonus shall be paid only to employees who have met our performance criteria.

Sales Awards: Employees in the Sales function, directly responsible for revenue generation shall be covered under the Sales Award Scheme if meeting the criteria of the respective scheme. Typically some of the entry level roles and up to two levels of supervision thereof shall be covered by sales awards.

Rewards & Recognition: The Bank shall design schemes and practices from time to time to celebrate employees / departmental / organisational success. These celebrations may include offering tokens of appreciation to employees as defined in specific schemes. Fairness of application and transparency of communication shall be the hallmark of all such schemes. These will be subject to income tax laws, as applicable. Examples of such schemes may include: Long Service Awards (currently at one, three, five, ten and Fifteen yrs. of completion of service with the Bank), Portfolio Improvement Reward Scheme; Functional R&R Schemes; Organisational Rewards Schemes such as: Service Champion; Process Excellence; Customer Connect Awards; Above and Beyond; Recognition program for Liabilities Branches for Retail Deposits; Recognition program for Asset growth in Branches. The EDGE (Executive Development for Growth and Excellence) programme is aimed at identifying high performers and assessing their potential for future leadership roles at the Bank. A mix of behavioural assessments, blended training & development journey and IDPs are deployed to make the identified individuals (EDGE selects) ready for future leadership roles.

30 The Micro, Small and Medium Enterprises Development Act, 2006 that came into Force From October 02, 2006, provides for certain disclosures in respect of Micro, Small and Medium enterprises.

The Bank does not have pending dues to MSME suppliers as on March 31, 2024.

31 CORPORATE SOCIAL RESPONSIBILITY

As per Sec 135 (1) of the Companies Act "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 Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director". Pursuant to this, Bank has duly constituted a Corporate Social Responsibility Committee.

Further, the section stipulates that the Company should spend, in every financial year, at least two per cent of the average net profits made during the three immediately preceding financial years and in pursuance of its Corporate Social Responsibility Policy.

of financial year in case of ongoing project and in other cases, transfer such unspent amount to a fund specified in Schedule VII within a period of 6 months from the end of financial year. Pursuant to this, for the financial year 2023-24, the Bank had transferred unspent CSR amount to a separate Bank Account. The Bank had unspent amount of '' 9,854 in Unspent CSR Account, for the financial year 2023-24. The aforementioned amount will be utilised/spent during the financial year 2024-25 towards the ongoing projects as approved by the CSR Committee. The amount of '' 53,379 includes '' 850 spent by the erstwhile Ujjivan Financial Services Private Limited merged with the Bank pursuant to the scheme of Amalgamation as detailed in Note 18(41).

33 SHARE-BASED PAYMENTS33 (A) Employee Share Option Plan(ESOP)33(A)(1) Details of the employee share option plan of the Bank

The Bank has share option scheme for employees (which includes the employees of the Holding Company) , being ESOP 2019.

Employee Stock Options (ESOPs): The ESOP 2019 is the scheme under which the Bank has issued options to the employees (which includes the employees of the Holding Company). The Bank has approved its ESOP Plan, 2019 in the Shareholders meeting held on March 29, 2019. During the yearended March 31, 2024, the Bank has granted 29,037,915 options under the ESOP 2019 to eligible employees . Also, during the year ended March 31, 2024, 4,423,928 options has been exercised and 10,658,473 options has been lapsed/cancelled. As on March 31, 2024 there are exercisable options of 25,297,478 which are vested and 77,350,994 options are yet to be vested.The lapsed / cancelled options are added back to the ESOP pool 2019 for future grants.

33(A)(2) Fair value of share options granted in the year

The weighted average Fair value of the share options granted during the FY 2022-23 is '' 18.56 ( PY-'' 7.80 ). Options were calculated using Black and Scholes Model. Vested ESOPs can be exercised within five years from their corresponding dates of vesting. ESOPs vested can be exercised between date of vesting and on or before option expiry date. The term of the option is assumed to be the sum of a) duration till vesting; and b) the midpoint of the remaining exercise period from date of vesting, in absence of historical exercise pattern. Volatility of comparable Banks have been considered for the purposes of valuation.

33 (A) (7) Pursuant to the Scheme of Amalgamation (refer note 18(41) for further details), with respect to the stock options granted to eligible employees by the Transferor Company under its ESOP scheme which remains unexercised for 247,118 ESOPs as at March 31, 2024, upon coming into effect of this Scheme, the Bank shall issue stock options to such eligible employees taking into account the share exchange ratio and on the same terms and conditions. Accordingly, the relevant Committee of the Bank on May 13, 2024, has granted 2,866,569 options to such eligible employees under its Bank ESOP Scheme 2019.

The grant price and exercise price of the aforesaid options will be '' 33.20 and last date of exercise is June 27, 2024 in accordance to the Scheme of Amalgamation. These options have been appropriately considered for the purpose of calculating diluted earnings per share of the Bank.

35 The Bank received a notice on March 16, 2021, regarding non-remittance of statutory Provident Fund (PF) dues on the applicable wage components from February 2017 until March 2019 amounting to '' 227,040 . Bank has filed the initial responses to the PF Commissioner and contented that said notice does not have a stand based on definition of basic wages under EPF Act, 1952 and various case laws. However, due to COVID 19 pandemic, the hearing has been adjourned until further notice.

The bank has made a provision during the FY 2021-22 for an amount of '' 227,040 as a matter of prudence, which was treated as contingent liability for the FY 2020-21.

The Regional Provident Fund Commissioner (RPFC)-II, Bengaluru, in an inquiry held against the Bank under Section 7A of the Employees'' Provident Fund and Miscellaneous Provisions Act, 1952, passed an Order dated 09-08-2021 against the Bank, directing the Bank to remit provident fund contribution of INR 227,040,185/- on various allowances paid by the Bank to its employees during the period between February 2017 and March 2019. Against the said Order of the RPFC-II, the Bank preferred an appeal before the Central Government Industrial Tribunal (CGIT). However, since the position of the Presiding Officer in the CGIT is vacant, the Bank filed a writ petition before the Hon''ble High Court of Karnataka. The Hon''ble High Court has disposed of the matter quoting that the Appeal was initially preferred before the CGIT and also said that there will be an order of stay on RPFC-II Order to remit the provident fund amount (i.e., '' 227,040,185) till the appeal pending before CGIT is disposed.

39 MARKETING AND DISTRIBUTION

There are no fees/remuneration received in respect of the marketing and distribution function( excluding bancassurance business) undertaken by the bank for current year and previous year.

40 In the normal course of business of banking, the Bank has borrowed funds from certain institutions in refinance of certain advances granted by it or for utilisation for granting advances by it. In like manner, the Bank has advanced monies to certain NBFCs for granting loans by them to their customers. Read with this, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Bank to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Bank (Ultimate Beneficiaries). The Bank has not received any fund from any party(s) (Funding Party) with the understanding that the Bank shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Bank ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

41 The Board of Directors of the Bank and erstwhile Ujjivan Financial Services Limited (UFSL) in their respective meetings held on October 14, 2022, have approved a scheme of amalgamation of UFSL with the Bank in terms of Sections 230 to 232 of the Companies Act, 2013 and other applicable laws including rules and regulations (Scheme). The Scheme was approved by the shareholders at the National Company Law Tribunal("NCLT") convened meeting of the equity shareholders of the Bank held on November 03, 2023. The NCLT, in accordance with Section 230 to 232 of the Companies Act, 2013 and rules thereunder, vide its order dated April 19, 2024, sanctioned the Scheme. Upon receipt of all approvals, the Bank filed form INC 28 (Intimation to ROC) with ROC on April 30, 2024 and accordingly, in terms of provisions of the Scheme, the ''Effective Date'' of the Scheme is April 30, 2024. The Appointed Date under the said Scheme as approved by the NCLT is April 01, 2023. The amalgamation has been accounted under the "pooling of interest" method as prescribed in AS-14 "Accounting for Amalgamation". The outstanding balance between the UFSL and the Bank were eliminated as on April 01, 2023. All assets and liabilities of UFSL have been recognised by the Bank at the carrying amounts as on that date except for the

adjustments to bring about the uniformity in accounting policies as required under AS-14. The relevant Committee of the Board of the Bank vide its resolution dated May 06, 2024, has approved the allotment of 1,412,702,033 fully paid equity shares of '' 10/- each of Bank to the eligible shareholders of the erstwhile UFSL, who were holding equity shares of UFSL as on the Record date i.e., May 03, 2024, as per the share exchange ratio determined in the aforesaid Scheme i.e. 116 equity shares of the face value of '' 10/- each of Bank for every 10 equity shares of UFSL. The difference between fresh equity shares to be allotted as aforementioned and share capital of UFSL has been adjusted in the Share Premium Account, as per the terms of the Scheme.

Pursuant to the effect of the Scheme, the Committee has also taken on record the extinguishment of 1,440,036,800 equity shares and 200,000,000 preference shares of the Bank held by eUFSL.

Consequent to the aforesaid extinguishment of UFSL shares in the Bank and issue of equity shares to the shareholders of UFSL, the paid-up equity capital of the Bank is revised from '' 195,913 Lakhs to '' 193,180 Lakhs as on the record date. Further, since the preference capital of '' 20,000 Lakhs stands extinguished, the issued capital of the Bank is reduced from '' 215,913 Lakhs to '' 193,180 Lakhs. Furthermore, the authorised share capital of the Bank is '' 262,500 Lakhs divided into 2,625,000,000 equity shares of '' 10/- each as per terms of the Scheme. As of March 31, 2024, 1,412,702,033 shares are pending allotment. The allotment of the said shares to the entitled shareholders of eUFSL was approved by the Merger & Placement Committee of the Board of the Bank vide its resolution dated May 06, 2024, and the same was intimated to the Exchange on the same day. The allotment has been intimated to the Registrar of Companies on May 15, 2024, by submission of PAS 3 return. The corporate action regarding crediting shares to Demat account of shareholders of eUFSL is in process.

43 IMPLEMENTATION OF IFRS CONVERGED INDIAN ACCOUNTING STANDARDS (IND AS)

Reserve Bank of India (RBI) through press release RBI/2018-2019/146 DBR.BP.BC.No.29/21.07.001/2018-19, dated March 22, 2019, updated all Scheduled Commercial Banks that legislative amendments recommended by the RBI are under consideration of the Government of India. Accordingly, RBI had decided to defer the implementation of Ind AS till further notice. Bank is gearing itself to bring the necessary systems in place to facilitate the Proforma submission to RBI. With respect to various instructions from Ministry of Corporate Affairs and Reserve Bank of India (RBI), the actions taken by the Bank are as follows:

1. Bank is in the process of Implementing changes required in existing IT architecture and other processes to enable smooth transition to Ind AS.

2. As directed by RBI, the Bank is submitting half yearly Proforma Ind AS financial statements to RBI within the stipulated timelines.

3. Training to the employees is imparted in phased manner

4. The Bank will continue its preparedness towards adoption of Ind AS as per the regulatory requirement, and liaise with RBI and Industry Bodies on various aspects pertaining to Ind AS implementation.

44 COMPARATIVE FIGURES

Figures of the previous year have been regrouped/ reclassified wherever necessary to confirm to the current year''s presentation. The financial information for the year ended March 31, 2024, include the operations of eUFSL for the period from April 01, 2023 to March 31, 2024 and hence not comparable with the corresponding periods of the previous year.

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Mar 31, 2023

1 Capital

1.1 Capital infusion

During the year ended March 31, 2023, the bank has raised equity capital of '' 475 Crores through Qualified Institutions Placement (QIP) by issuing 22,61,90,476 equity shares of '' 10/-each at premium of '' 11/-each. Further, the Bank allotted 2,01,944 equity shares pursuant to the exercise of stock options under the approved Employee Stock Option Plan (ESOP) 2019. During the year, the bank has granted 4,82,29,093 fresh stock options to its eligible employees. Refer note 18(33) for further details.

1.2 Capital Adequacy Ratio

The Bank computes its Capital Adequacy Ratio as per New Capital Adequacy Framework- BASEL-II and Operating Guidelines for Small Finance Banks (issued by RBI on October 06, 2016) and Basel III Capital regulations Under the New Capital Adequacy Framework and Operating Guidelines for Small Finance Banks issued on October 06, 2016, the Bank has to maintain a Minimum Total Capital of 15% of the Credit Risk Weighted Assets (Credit RWA) on an on-going basis. Out of the Minimum Total Capital, at least 7.5% shall be from Minimum Tier I Capital of which Common Equity Tier I capital shall be 6% and 1.50% from additional Tier I capital and remaining Tier II Capital shall be 7.5%. Further as per RBI''s directions given in the circular DBR.NBD.No. 4502/16.13.218/2017-18, dated November 8, 2017, no separate risk charge has been calculated for Market Risk and Operational Risk for capital ratios.

1A Reserves and Surplus Statutory Reserve

The Bank has made an appropriation of '' 27,49,804(''000) ( Previous Year: Nil) 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.

During the year ended March 31,2023 the Bank not made any appropriation From the Profit and Loss Account to the Capital Reserve. But for the previous year (2021-22) the amount transferred was ?13,856 (''000), being the profit From sale of Investments under HTM category, net of applicable taxes.

Investment Fluctuation Reserve (IFR)

In accordance with RBI guidelines, Banks are required to create an IFR equivalent to 2% of their HFT and AFS Investment portfolios, within a period of three years starting fiscal 2019. Accordingly, during the year ended March 31, 2023, the Bank has made an appropriation of '' 4,67,852( ''000) ( Previous Year: Nil )to IFR from the profit and loss account so as to reach to the figure of 2% of its HFT and AFS Investment portfolio.

Investment Reserve Account (IRA)

In accordance with RBI guidelines, Banks are required to create IRA to the extent of provisions created on account of depreciation in the ''AFS'' or ''HFT'' categories are found to be in excess of the required amount in any year, the excess shall be credited to the Profit & Loss Account and an equivalent amount (net of taxes, if any and net of transfer to Statutory Reserves as applicable to such excess provision) shall be appropriated to an Investment Reserve Account (IRA) in Schedule 2 - "Reserves & Surplus" under the head "Revenue and Other Reserves". During the Financial Year 2022-23, the Bank has written back ? 3,404 (''000) (Previous Year - NIL) and transferred to IRA

Draw down from reserves

Share Premium

The Bank has not made a drawdown from the share premium during the year ended March 31 2023 and March 31, 2022. However, the bank has adjusted the share issue expenses of ? 93,899 ( in 000''s) against the Share premium account.

2.5 Non-Performing Non-SLR Investments

The Bank does not have any Non-Performing Non-SLR Investments as at March 31,2023 and March 31, 2022.

2.6 Sale and transfer of securities to/ from HTM Category

During the current and previous year, the value of sales and transfers of securities to / from HTM category excluding one time transfer of securities to / from HTM category with the approval of Board of Directors permitted to be undertaken by banks at the beginning of the accounting year, has not exceeded 5% of the book value of investments held in HTM category at the beginning of the year. Hence, specific disclosure on book value/market value and provisions if any, relating to such transfer is not required to be made.

3 derivatives/ exchange traded interest derivatives/ risk exposure in derivatives

The Bank has not entered into any derivative instruments for trading / speculative purposes either in Foreign Exchange or domestic treasury operations. The Bank does not have any Forward Rate Agreement or Interest rate swaps.

4.3 Unsecured advances

The Bank has not extended any project advances where the collateral is an intangible asset such as a charge over rights, licenses, authorisations, etc. The Advances as at March 31, 2023 of ? 14,48,54,546(''000) (PY. ? 1,19,200,659 (''000)) disclosed in Schedule 9B (iii) are without any primary or collateral security.

4.4 Divergence in Asset Classification and Provisioning for NPAs

As part of Supervisory process through the mode of Annual Financial Inspection and consequent RBI AFI Report (Position as on March 2023), there is no financial divergence reported.

4.5 a) Details of Financial Assets sold to Securitisation Company (SC) / Reconstruction Company (RC) for Asset

Reconstruction

The details of Securitisation to a special purpose vehicle is furnished in Schedule 18 (37). b) details of Book Value of Investment in Security Receipts

During the current and previous year, the Bank has not made Investment in Security Receipts.

4.6 details of NPA Purchase/Sold

During the current and previous year, there has been no purchase/ sale of non-performing financial assets from/ to other banks.

4.7 Intra-Group Exposure

During the current and previous year, the Bank does not have any Intra Group Exposure.

4.8 Disclosures Resolution of Stressed Assets

There were no accounts that have been restructured under prudential framework on resolution of stressed assets as per the circular no. RBI/2018-19/203 DBR.No.BP.BC.45/21.04.048/2018-19 dated June 07, 2019 during the year ended March 31, 2023. (March 31, 2022: Nil).

1) Working funds represent average of total assets as reported to RBI in Form X under Section 27 of the Banking Regulation Act, 1949 during the Year.

2) Returns on assets are computed with reference to average working funds.

3) Business is defined as total of average of gross advances and deposits (net of inter-bank deposits and Certificate of Deposits).

4) Operating profit is net profit for the Year before provisions and contingencies and profit / (loss) on sale of building and other assets (net).

1) The bucketing structure has been revised based on RBI guideline dated March 23, 2016.

2) The Bank is following 30 day month convention for calculation of bucket sizes for ALM.

3) There are no Foreign Currency Assets or Liabilities with the Bank as at March 31, 2022

4) Classification of assets and liabilities under the different maturity buckets is based on the same estimates and assumptions as used by the Bank for compiling the return submitted to the RBI.

5) RBI vide its circular dated March 27, 2020 on ''COVID-19 Regulatory Package'' permitted the Bank to grant a moratorium of three months on payment of all instalments falling due between March 1, 2020 and May 31, 2020. The Bank in line with the said circular has offered moratorium on the respective maturity buckets presented above. The Bank estimates that considerable portion of the cash flows impacted by the moratorium will be received within 1-3 years from the balance sheet date and the same has been factored in the above disclosure.

12 DISCLOSURE OF PENALTiES iMPOSED BY RBi Year ended March 31, 2023

During the FY 2022-23, RBI has not levied any penalty under the provisions of the (i) Banking Regulations Act 1949, (ii) Payment and Settlement Act, 2007 and (iii) Government Securities Act, 2006 (for bouncing of SGL) as per the Master Direction on Financial Statements - Presentation and Disclosures dated August 30, 2021.

year ended March 31, 2022

During the FY 2021-22, RBI has imposed the following penalties on the bank under the provisions of the Government Securities Act 2006 (for bouncing of SGL) in terms of circular ref. IDMD.DOD.17/11.01.01 (B) 2010-11 dated July 14, 2010;

1) On July 8, 2021 Public Debt Office (PDO) RBI had levied a penalty of ? 1,00,000 for a shortage of balance of

security in a deal executed by the bank on July 01, 2021 . This was the first instance of SGL bouncing; and

2) On August 23, 2021 Public Debt Office (PDO) RBI had levied a penalty of ? 50,000 for a shortage of balance of

security in a deal executed by the bank on August 05, 2021. This was the second instance of SGL bouncing;

RBI has not levied any other penalties under the provisions of the Banking Regulations Act 1949 and Payment and Settlement Act, 2007 as per the Master Direction on Financial Statements - Presentation and Disclosures dated August 30, 2021.

19. LIQUIDITY COVERAGE RATIO (LCR)

The Bank adheres to RBI guidelines on Liquidity Coverage Ratio given in "Basel III Framework on Liquidity Standards - Liquidity Coverage Ratio (LCR), Liquidity Risk Monitoring Tools and the LCR Disclosure Standards" and "Operating Guidelines for Small Finance Banks".

LCR is the ratio of unencumbered High Quality Liquid Assets (HQLA) to Net Cash Outflows over the next 30 calendar days. LCR measures the Bank''s ability to manage and survive under combined idiosyncratic and market-wide liquidity stress condition that would result in accelerated withdrawal of deposits from retail as well wholesale depositors, partial loss of secured funding, increase in collateral requirements, unscheduled draw down of unused credit lines, etc. These stress conditions are captured as a part of the Net Cash Outflows. HQLA of the Bank consist of cash, unencumbered excess SLR, a portion of statutory SLR as allowed under the guidelines and cash balance with RBI in excess of statutory cash reserve requirements.

21 EMPLOYEE BENEFITS (AS-15) REVISED 21.1 Gratuity:

Gratuity is a defined benefits plan. The Bank has obtained qualifying insurance policies from Insurance Company. The following table summarises the components of net expenses recognised in the Profit and Loss Account and funded status and amounts recognised in the Balance Sheet on the basis of actuarial Valuation. Actuarial losses/ gains are recognised in the Profit and Loss Account in the year in which they arise.

22 SEGMENT REPORTiNG

In accordance with the guidelines issued by RBI & AS-17, the Bank has adopted Segment Reporting as under:

A) Treasury :

The Treasury Segment primarily consists of net interest earnings from the Bank''s Investment portfolio, money market borrowing and lending, gains or losses on Investment operations and income from sale of PSLC.

B) Retail Banking:

The Retail Banking Segment serves retail customers through a branch network and other delivery channels. Retail Banking includes lending to and deposits from retail customers and identified earnings and expenses of the segment. This segment raises deposits from customers and provides loans and other services to customers. Revenues of the retail banking segment are derived from interest earned on retail loans, processing fees earned and other related incomes. Expenses of this segment primarily comprise interest expense on deposits & Borrowings, infrastructure and premises expenses for operating the branch network and other delivery channels, personnel costs, other direct overheads and allocated expenses.

As per the RBI Circular DOR.AUT.REC.12/22.01.001/2022-23 dated April 07, 2022, for the purpose of disclosure under Accounting Standard 17, Segment reporting, ''Digital Banking'' has been identified as a sub-segment under Retail Banking by Reserve Bank of India (RBI). However, as the proposed Digital Banking Unit (DBU) of the Bank has not yet commenced operations and having regard to the discussions of the DBU Working Group formed by Indian Banks'' Association (IBA) (which included representatives of banks and RBI), held on July 14, 2022, reporting of Digital

Banking as a separate sub-segment of Retail Banking Segment will be implemented by the Bank based on the decision of the DBU Working Group.

C) Corporate/ Whole Sale Banking:

The Wholesale Banking Segment provides loans to Corporates and Financial Institutions. Revenues of the wholesale banking segment consist of interest earned on loans made to customers. The principal expenses of the segment consist of interest expense on funds borrowed from external sources and other internal segments, premises expenses, personnel costs, other direct overheads and allocated expenses of delivery channels, specialist product groups, processing units and support groups.

26.11 Credit default Swaps

The Bank has not entered into any credit default swap transactions during the current and previous year.

26.12 Credit card and debit card reward points

The Bank does not have credit card products, hence reward points are not applicable. Also, the Bank does not provide any reward points on debit card.

26.13 Off balance sheet SPVs sponsored

There are no off-balance sheet SPVs sponsored by the bank as at March 31, 2023, and at March 31,2022. Refer note 18(37) of the notes to accounts.

26.14 Details of factoring exposure

The factoring exposure of the Bank as at March 31, 2023 and as at March 31, 2022 are Nil.

26.15 country wise risk exposure

The Bank does not have any country wise Risk Exposure as at March 31, 2023 and as at March 31, 2022.

26.16 unhedged foreign currency exposure

The Bank does not have any unhedged foreign country exposure as at March 31,2023 and as at March 31, 2022.

27 DEFERRED TAX

In accordance with Accounting Standard -22 "Accounting for Taxes on Income", the Company has recognized deferred tax (asset)/Liability as detailed below:

28 DISCLOSURES ON REMUNERATiON:

28.1 Qualitative Disclosures

(A) Information relating to the composition and mandate of the Remuneration committee.

Bank has constituted a Nomination and Remuneration Committee (NRC). The NRC comprises of 5 (five) members, of which 4 (Four) members are Independent Directors. Mandate of the Nomination and Remuneration Committee is to oversee the framing, review and implementation of the Bank''s Compensation Policy and Nomination & Remuneration Policy for Whole Time Director/ Chief Executive Officer/ Material Risk Takers and Control Function staff for ensuring effective alignment between remuneration and risks. The Committee also ensures that level and composition of remuneration is reasonable and sufficient, relationship of remuneration to performance is clear and meets appropriate performance benchmarks. The Nomination and Remuneration Committee reviews Compensation policy and Nomination & Remuneration Policy of the Bank with a view to attract, retain and motivate employees.

(B) Information relating to the design and structure of remuneration processes and the key features and objectives of compensation policy and nomination & Remuneration policy

The Compensation Policy and Nomination & Remuneration Policy has been laid out keeping the following perspectives into considerations:

(a) Our Compensation principles should support us in achieving our mission of providing a full range of financial services to the economically active poor of India who are not adequately served (unserved and underserved) by financial institutions. Therein, this policy should support us to attract and retain talent and skills required to further the organizations purpose and ideology.

(b) The pay structure and amounts confirms and shall always conform to applicable Income Tax and other similar statutes.

(c) All practices of Ujjivan SFB shall comply with applicable labour laws.

(d) The pay structure should be standardised for a level of employees.

(e) Elements eligible for tax exemption may be introduced at appropriate levels to enable employees take applicable tax breaks. Amounts related to certain benefits may undergo change due to change in grade/ roles/ function/ state/ region in the organisation.

(f) The compensation structure shall be easy to understand for all levels of employees.

(g) The compensation policy is designed to promote meritocracy in the organisation

i.e. other things being equal, performers in a given role are expected to earn more than his/her peer group.

(h) The directors are paid sitting fees as approved by the Board for attending the Board and Board Committee Meetings.

(C) Description of the ways in which current and future risks are taken into account in the remuneration processes. it should include the nature and type of the key measures used to take account of these risks.

(a) Structurally, the Control functions such as Credit, Risk and Vigilance are independent of the business functions and each other, thereby ensuring independent oversight from various aspects on the business functions.

(b) The Bank is in the process of comprehensively measuring and reviewing material risks to which Bank is exposed to under IGAAP. The Bank also complies with Basel II requirements.

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

(a) The compensation policy is designed to promote meritocracy in the organisation i.e. other things being equal, performers in a given role are expected to earn more than his/her peer group.

(b) Ujjivan shall, from time to time, benchmark its compensation against identified market participants to define its pay structure and pay levels.

(c) The merit increments will be finalised and approved by the NHRC year on year, basis organization''s budgets and accomplishments as well as market reality.

(d) Ujjivan believes in paying its employees in an equitable and fair manner basis the incumbent''s Role, Personal Profile (Education/Experience etc.) as well as Performance on the Job.

(e) Employees rated "Below Expectations" shall not be provided any increments, unless statutorily required.

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

The performance bonus pay-out shall be Annual. Discretion is typically applied related

to staggered pay-out in case large pay-outs, particularly for functions like Credit and Risk. Bonus is to be prorated for employees who have worked for part of the year at Ujjivan. Ujjivan believes in the philosophy of collective ownership by its employees. Thus, Employee Stock Options of the Holding Company Ujjivan Financial Services Limited are distributed amongst employees basis their criticality and performance.

Typically, all Stock option schemes at Ujjivan vest in a staggered manner. Besides the statutory requirement of grant and 1 year vesting, the total set of options vest in various tranches for up to a period of 3 years.

Malus/ Clawback: In the event of negative contributions of the individual towards the achievements of the Banks objectives in any year, the deferred compensation should be subjected to Malus/Clawback arrangements. Similar provisions shall apply in case the individual is found guilty of any major noncompliance or misconduct issues.

(F) description of the different forms of variable remuneration (i.e. cash, shares, ESoPs and other forms) that the bank utilizes and the rationale for using these different forms.

Variable Compensation at Ujjivan has the following distinct forms:

1. Statutory Bonus

2. Performance Pay:

a. Performance Bonus

b. Monthly Variable Pay

3. Rewards & Recognition

The policy has been laid out keeping the following perspectives into considerations: The Variable pay structure and amounts shall always conform to applicable Income Tax statutes, Labour Laws, Regulatory Requirements, any other applicable statutes and prevalent market practice.

It is designed to promote meritocracy in the organisation i.e. other things being equal, performers in a given role are expected to earn more than his/her peer group.

Statutory Bonus: Statutory Bonus in India is paid as per Payment of Bonus Act, 1965.

Performance Bonus: All employees who are not a part of any Monthly Variable Pay but part of the year end performance review will be covered under the Performance Bonus Plan of Ujjivan Small Finance Bank. However, the actual pay-out of performance bonus shall be paid only to employees who have met our performance criteria.

Sales Awards: Employees in the Sales function, directly responsible for revenue generation shall be covered under the Sales Award Scheme if meeting the criteria of the respective scheme. Typically some of the entry level roles and up to two levels of supervision thereof shall be covered by sales awards.

Rewards & Recognition: Ujjivan shall design schemes and practices from time to time to celebrate employees /

departmental / organisational success. These celebrations may include offering tokens of appreciation to employees as defined in specific schemes. Fairness of application and transparency of communication shall be the hallmark of all such schemes. These will be subject to income tax laws, as applicable. Examples of such schemes may include: Long Service Awards (currently at one, three, five , ten and fifteen years of completion of service with Ujjivan), Portfolio Improvement Reward Scheme; Functional R&R Schemes; Organizational Rewards Schemes such as: Service Champion; Process Excellence; Customer Connect Awards; Above and Beyond; Recognition program for Liabilities Branches for Retail Deposits; Recognition program for Asset growth in Branches

30 The Micro, Small and Medium Enterprises Development Act, 2006 that came into Force From October 2, 2006, provides for certain disclosures in respect of Micro, Small and Medium enterprises.

The Bank does not have comprehensive data of the status of its vendors and service providers. Based on the limited data available, there were no dues to Micro, small and medium enterprises as at year ended March 31,2023 and for the year ended March 31,2022.

31 CORPORATE SOCiAL RESPONSiBiLiTY

As per Sec 135 (1) of the Companies Act "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 Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director". Pursuant to this, Bank has duly constituted a Corporate Social Responsibility Committee.

Further, the section stipulates that the company should spend, in every financial year, at least two per cent of the average net profits made during the three immediately preceding financial years and in pursuance of its Corporate Social Responsibility Policy.

33 (A) (1) Details of the employee share option plan of the Bank

The Bank has share option scheme for employees (which includes the employees of the Holding Company) , being ESOP 2019.

Employee Stock Options (ESOPs): The ESOP 2019 is the scheme under which the Bank has issued options to the employees (which includes the employees of the Holding Company). The Bank has approved its ESOP Plan, 2019 in the Shareholders meeting held on March 29, 2019. During the year, the Bank has granted 4,82,29,093 options under the ESOP 2019 to eligible employees during the year ended March 31, 2023. During the year ended March 31, 2023, 2,01,944 options has been exercised and 1,38,29,524 options are lapsed/cancelled. As on March 31, 2023 there are exercisable options of 1,48,71,749 which are vested and 7,38,21,209 are yet to be vested.

The weighted average Fair value of the share options granted during the FY 2022-23 is ?6.27 ( PY-?7.80 ). Options were calculated using Black and Scholes Model. Vested ESOPs can be exercised within five years from their corresponding dates of vesting. ESOPs vested can be exercised between date of vesting and on or before option expiry date. The term of the option is assumed to be the sum of a) duration till vesting; and b) the midpoint of the remaining exercise period from date of vesting, in absence of historical exercise pattern. Volatility of comparable Banks have been considered for the purposes of valuation.

33 (A) (7) ESOP arrangement with the Holding company (Ujjivan Financial Services Limited)

As per guidance note issued by Institute of Chartered Accountants of India (ICAI) on Share-based Payment , stock options have to be fair valued on the grant date and expense has to be recognised over the vesting period. The Bank has accordingly determined the cost of the employee share-based payments considering the fair value principles, recognised the share based payment expense for all the unvested options as on date for the period starting from the grant date. Total 36,689 options granted to Holding Company employees for which Bank has decided to cross charge the stock compensation expense through related party transaction.

34 The COVID-19 virus, a global pandemic that affected the world economy over the last two to three years. The extent to which any new wave of COVID-19 will impact the Bank''s results will depend on ongoing as well as future developments, including, among other things, any new information concerning the severity of the COVID-19 pandemic, and any action to contain its spread or mitigate its impact whether government-mandated or elected by the Bank.

36 The Bank received a notice on March 16, 2021, regarding non-remittance of statutory Provident Fund (PF) dues on the applicable wage components from February 2017 until March 2019 amounting to ? 227,040 (''000). Bank has filed the initial responses to the PF Commissioner and contented that said notice does not have a stand based on definition of basic wages under EPF Act, 1952 and various case laws. However, due to COVID 19 pandemic, the hearing has been adjourned until further notice.

The bank has made a provision during the FY 2021-22 for an amount of ? 227,040 ( ''000) as a matter of prudence, which was treated as contingent liability for the FY 2020-21.

The Regional Provident Fund Commissioner (RPFC)-II, Bengaluru, in an inquiry held against the Bank under Section 7A of the Employees'' Provident Fund and Miscellaneous Provisions Act, 1952, passed an Order dated 09-08-2021 against the Bank, directing the Bank to remit provident fund contribution of ? 22,70,40,185/- on various allowances paid by the Bank to its employees during the period between February 2017 and March 2019. Against the said Order of the RPFC-II, the Bank preferred an appeal before the Central Government Industrial Tribunal (CGIT). However, since the position of the Presiding Officer in the CGIT is vacant, the Bank filed a writ petition before the Hon''ble High Court of Karnataka. The Hon''ble High Court has disposed off the matter quoting that the Appeal was initially preferred before the CGIT and also said that there will be an order of stay on RPFC-II Order to remit the provident fund amount (i.e., ? 22,70,40,185) till the appeal pending before CGIT is disposed.

40 MARKETING AND DiSTRiBUTiON

There are no fees/remuneration received in respect of the marketing and distribution function( excluding bancassurance business) undertaken by the bank for current year and previous year.

41 In the normal course of business of banking, the Bank has borrowed funds from certain institutions in refinance of certain advances granted by it or for utilisation for granting advances by it. In like manner, the Bank has advanced monies to certain NBFCs for granting loans by them to their customers. Read with this, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Bank to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Bank (Ultimate Beneficiaries). The Bank has not received any fund from any party(s) (Funding Party) with the understanding that the Bank shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Bank ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

42 The Board of Directors of the Bank and UFSL in their respective meetings held on October 14, 2022 have approved a scheme of amalgamation of UFSL with the Bank in terms of Sections 230 to 232 of the Companies Act, 2013. In terms of the said scheme, UFSL will be amalgamated into and with the Bank and all its assets, liabilities, contracts, employees, licenses, records and approvals will be transferred to and will be deemed to have been transferred to and vested in the Bank, as a going concern, without any further act, instrument or deed, together with all its properties, assets, liabilities, rights, benefits and interest therein. All the Key Managerial Personnel, and other employees of UFSL who are in such employment as on the Effective Date shall become, and be deemed to have become, the staff and employees of the Bank, without any break or interruption in their services and on the same terms and conditions (and which are not less favourable than those) on which they are engaged by UFSL as on the Effective Date. All proceedings by or against UFSL shall continue by or against the Bank. The appointed date under the said Scheme is April 01, 2023 or such other date as may be approved by the NCLT. In consideration of the proposed merger, the Bank will allot to the shareholders of UFSL as on the Record Date (to be fixed by the Board of the Bank), 116 (One hundred and sixteen) equity shares of the face value of ? 10/- each of the Bank, credited as fully paid-up, for every 10 (ten) equity shares of the face value of ? 10/- each fully paid-up held by such shareholders of UFSL. The shares held by UFSL in the Bank shall stand extinguished on the amalgamation taking effect. The RBI vide its letter dated February 01, 2023, has conveyed its "no-objection" to the said proposal for voluntary amalgamation of UFSL with the Bank subject to NCLT and other regulatory approvals. Further, the Bank on March 09, 2023 has received the no-observation letters from the Stock Exchanges (NSE and BSE), basis which a joint application has been filed with the NCLT on March 29, 2023, by the Bank and UFSL. The Bank is now awaiting the directions / orders from the Hon''ble NCLT, Bengaluru Bench.

43 IMPLEMENTATION OF IFRS CONVERGED INDIAN ACCOUNTING STANDARDS (IND AS)

Reserve Bank of India (RBI) through press release RBI/2018-2019/146 DBR.BP.BC.No.29/21.07.001/2018-19, dated March 22, 2019, updated all Scheduled Commercial Banks that legislative amendments recommended by the RBI are under consideration of the Government of India. Accordingly, RBI had decided to defer the implementation of Ind AS till further notice. Bank is gearing itself to bring the necessary systems in place to facilitate the Proforma submission to RBI. With respect to various instructions from Ministry of Corporate Affairs and Reserve Bank of India (RBI), the actions taken by the Bank are as follows:

1. Bank is in the process of Implementing changes required in existing IT architecture and other processes to enable smooth transition to Ind AS.

2. As directed by RBI, the Bank is submitting half yearly Proforma Ind AS financial statements to RBI within the stipulated timelines.

3. Training to the employees is imparted in phased manner

4. The Bank is currently preparing Special Purpose Ind AS Financials for the Holding company i.e. UFSL, for the purpose of consolidation.

5. The Bank will continue its preparedness towards adoption of Ind AS as per the regulatory requirement, and liaise with RBI and Industry Bodies on various aspects pertaining to Ind AS implementation.

44 COMPARATiVE FiGURES

Figures of the previous year have been regrouped/ reclassified wherever necessary to confirm to the current year''s presentation.

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Mar 31, 2022

1 Capital1.1 Capital Infusion

During the year ended March 31, 2022, the Bank did not allot any equity shares pursuant to the exercise of options under the approved Employee Stock Option Plan (ESOP) 2019. However, it has granted Fresh options to employees to an aggregate extent of 3,06,39,119 shares of '' 10 each. Refer note 18(33) for further details.

1.2 Capital Adequacy Ratio

The Bank computes its Capital Adequacy Ratio as per New Capital Adequacy Framework- BASEL-II and Operating Guidelines for Small Finance Banks (issued by RBI on October 06, 2016)

Under New Capital Adequacy Framework and Operating Guidelines for Small Finance Bank issued on October 06, 2016, the Bank has to maintain a Minimum Total Capital of 15% of the Credit risk weighted assets (Credit RWA) on an on-going basis. Out of the Minimum Total Capital, at least 7.5% shall be from Minimum Tier I Capital of which common equity Tier I capital shall be 6% and 1.50% from additional Tier I capital and remaining Tier II Capital shall be 7.5%. Further as per RBI''s directions given in the circular DBR.NBD.No. 4502/16.13.218/2017-18, dated November 8, 2017, no separate risk charge has been calculated for Market Risk and Operational Risk for capital ratios.

1A Reserves and Surplus

Statutory Reserve

The Bank has not made any appropriation to the statutory reserve for the current year (2021-22), in view of the loss incurred during the year. But For the previous year (2020-21) the bank made an appropriation of '' 20,742 (''000) 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.

Capital Reserve

During the year ended March 31, 2022 the Bank appropriated '' 13,856 (''000) (PY: '' 193,271(''000), being the profit from sale of Investments under HTM category, net of applicable taxes only and transfer to statutory reserve, from the Profit and Loss Account to the Capital Reserve

Investment Fluctuation Reserve (IFR)

In accordance with RBI guidelines, Banks are required to create an IFR equivalent to 2% of their HFT and AFS invetsment portfolios, within a period of three years starting fiscal 2019. The balance held in IFR as at March 31, 2022 is more than 2% of the outstanding HFT and AFS portfolios as on that date. Accordingly, during the year ended March 31, 2022, the Bank has not made any appropriation to IFR from the profit and loss account. A sum of '' 52,829 (''000))was transfered to IFR account from Profit and Loss Account in the financial year 2020-21.

Draw down from reserves Share Premium

The Bank has not undertaken any drawdown from share premium during the year ended March 31, 2022 and March 31, 2021.

2.5 Non-Performing Non-SLR Investments

The Bank does not have any Non-Performing Non-SLR Investments as at March 31, 2022 and March 31, 2021.

2.6 Sale and transfer of securities to/ from HTM Category

During the current and previous year, the value of sales and transfers of securities to / from HTM category excluding one time transfer of securities to / from HTM category with the approval of Board of Directors permitted to be undertaken by banks at the beginning of the accounting year has not exceeded 5 per cent of the book value of investments held in HTM category at the beginning of the year. Hence, specific disclosure on book value/market value and provisions if any, relating to such transfer is not required to be made.

3 DERIVATIVES/ EXCHANGE TRADED INTEREST DERIVATIVES/ RISK EXPOSURE IN DERIVATIVES

The Bank has not entered into any derivative instruments for trading / speculative purposes either in Foreign Exchange or domestic treasury operations. The Bank does not have any Forward Rate Agreement or Interest rate swaps.

4.2 Technical or Prudential Write Offs:

Technical or prudential write-offs refer to the amount of non-performing assets which are outstanding in the product level systems, but have been written-off (fully or partially) at the financial ledger level. The financial accounting systems of the Bank are integrated and centralised at the Head Office and no books are maintained at the Branches.

4.3 Provisions on Standard Assets:

Bank has followed the prudential norms on income recognition, asset classification and provisions. The excess provisions over and above the same is as per the Board approved policy.

The provision on standard assets is included in ''Other Liabilities and Provisions - (iv) Standard asset-General Provisions'' in Schedule 5, and is not netted off from Advances.

4.4 Unsecured advances

The Bank has not extended any project advances where the collateral is an intangible asset such as a charge over rights, licenses, authorizations, etc. The Advances as at March 31, 2022 of '' 1,19,200,659(''000) (March 31, 2021 of '' 1,04,689,831 (''000)) disclosed in Schedule 9B (iii) are without any primary or collateral security.

4.5 Divergence in Asset Classification and Provisioning for NPAs

As part of Supervisory process through the mode of Annual Financial Inspection and consequent RBI AFI Report (Position as on March 2020), there is no financial divergence reported.

4.6 a) Details of Financial Assets sold to Securitisation Company (SC) / Reconstruction Company (RC)

for Asset Reconstruction

The details of securitisation to a special purpose vehicle is furnished in schedule. 18(38). b) Details of book value of investment in Security Receipts

During the current and previous year, the Bank has not made investment in Security Receipts.

4.7 Details of NPA Purchase/Sold

During the current and previous year, there has been no purchase/ sale of non-performing financial assets from/ to other banks.

4.8 Intra-Group Exposure

During the current and previous year, the Bank does not have any Intra Group Exposure.

4.9 Disclosures Resolution of Stressed Assets

There were no accounts that have been restructured under prudential framework on resolution of stressed assets as per the circular no. RBI/2018-19/203 DBR.No.BP.BC.45/21.04.048/2018-19 dated June 07, 2019 during the year ended March 31, 2022. (March 31, 2021: Nil). However, the Bank has restructured 4,14,930 accounts of borrowers with outstanding of '' 85,48,047 (in 000''s) on the date of restructuring, affected by COVID in accordance with extant RBI Restructuring Framework II norms.

Note:

1) The bucketing structure has been revised based on RBI guideline dated March 23, 2016.

2) The Bank is following 30 day month convention for calculation of bucket sizes for ALM.

3) There are no Foreign Currency Assets or Liabilities with the Bank as at March 31,2021

4) Classification of assets and liabilities under the different maturity buckets is based on the same estimates and assumptions as used by the Bank for compiling the return submitted to the RBI.

5) RBI vide its circular dated March 27, 2020 on ''COVID-19 Regulatory Package'' permitted the Bank to grant a moratorium of three months on payment of all instalments falling due between March 1, 2020 and May 31, 2020. The Bank in line with the said circular has offered moratorium on the respective maturity buckets presented above. The Bank estimates that considerable portion of the cash flows impacted by the moratorium will be received within 1-3 years from the balance sheet date and the same has been factored in the above disclosure.

11.3 Details of Single Borrower Limit (SBL) / Group Borrower Limit (GBL) exceeded by the Bank:

During the current and previous year there are no instances of SBL/GBL limit exceeding the sanctioned limit or outstanding whichever is higher.

12 DISCLOSURE OF PENALTIES IMPOSED BY RBI Year ended March 31, 2022

During the FY 2021-22, RBI has imposed the following penalties on the bank under the provisions of the Government Securities Act 2006 (for bouncing of SGL) in terms of circular ref. IDMD.DOD.17/11.01.01 (B) 2010-11 dated July 14, 2010;

1) On July 8, 2021 Public Debt Office (PDO) RBI had levied a penalty of '' 1,00,000 for a shortage of balance of security in a deal executed by the bank on July 01, 2021 . This was the first instance of SGL bouncing; and

2) On August 23, 2021 Public Debt Office (PDO) RBI had levied a penalty of '' 50,000 for a shortage of balance of security in a deal executed by the bank on August 05, 2021. This was the second instance of SGL bouncing.

RBI has not levied any other penalties under the provisions of the Banking Regulations Act 1949 and Payment and Settlement Act, 2007 as per the Master Direction on Financial Statements - Presentation and Disclosures dated August 30, 2021.

Year ended March 31, 2021

During the FY 2020-21, RBI has not imposed any penalty on the Bank.

18 BANCASSURANCE BUSINESS

Commission income For the year ended March 31,2022 includes fees of '' 2,64,065 (000''s) (previous year: '' 1,98,513 (000''s)) in respect of insurance business.

19. LIQUIDITY COVERAGE RATIO (LCR)

The Bank adheres to RBI guidelines on given in "Basel III Framework on Liquidity Standards - (LCR), Liquidity Risk Monitoring Tools and the LCR Disclosure Standards" and "Operating Guidelines for Small Finance Banks".

LCR is the ratio of unencumbered High Quality Liquid Assets (HQLA) to Net Cash Outflows over the next 30 calendar days. LCR measures the Bank''s ability to manage and survive under combined idiosyncratic and marketwide liquidity stress condition that would result in accelerated withdrawal of deposits from retail as well wholesale depositors, partial loss of secured funding, increase in collateral requirements, unscheduled draw down of unused credit lines, etc. These stress conditions are captured as a part of the Net Cash Outflows. HQLA of the Bank consist of cash, unencumbered excess SLR, a portion of statutory SLR as allowed under the guidelines and cash balance with RBI in excess of statutory cash reserve requirements.

21 EMPLOYEE BENEFITS (AS-15) REVISED 21.1 Gratuity:

Gratuity is a defined benefits plan. The Bank has obtained qualifying insurance policies from Insurance Company. The following table summarises the components of net expenses recognised in the Profit and Loss Account and funded status and amounts recognised in the Balance Sheet on the basis of actuarial Valuation. Actuarial losses/ gains are recognised in the Profit and Loss Account in the year in which they arise.

(a) The estimates of Future salary increases, considered in actuarial valuation, takes into account, inflation, seniority, promotions and other relevant Factors, such as demand and supply in the employment market.

(b) During the current and previous year the Bank does not have unamortised gratuity and pension liability.

(c) Discount rate is based on the prevailing market yields of Indian Government Bonds as on the Balance Sheet date For the estimated term oF the obligation.

(d) The Code on Wages, 2019 ("Code") and other connected legislations enacted by the Government of India envisages payment of wages (as defined) which is not less than 50% of all monthly remuneration paid to employees (as defined). The effective date of these legislations and the rules relevant thereto have not yet been notified by the Government of India. The current wages as a percentage to the remuneration for certain employees as per Company''s salary structure is less than that envisaged in these legislations. As and when the legislations are notified, there may be an increase in the accrued gratuity liability of the employees of the Company. This possible additional liability has currently not been quantified.

22 SEGMENT REPORTING

In accordance with the guidelines issued by RBI & AS-17, the Bank has adopted Segment Reporting as under:

A) Treasury :

The Treasury Segment primarily consists of net interest earnings from the Bank''s Investment portfolio, money market borrowing and lending, gains or losses on Investment operations and income from sale of PSLC.

B) Retail Banking:

The Retail Banking Segment serves retail customers through a branch network and other delivery channels. Retail Banking includes lending to and deposits from retail customers and identified earnings and expenses of the segment. This segment raises deposits from customers and provides loans and other services to customers. Revenues of the retail banking segment are derived from interest earned on retail loans, processing fees earned and other related incomes. Expenses of this segment primarily comprise interest expense on deposits & Borrowings, infrastructure and premises expenses for operating the branch network and other delivery channels, personnel costs, other direct overheads and allocated expenses.

C) Corporate/ Whole Sale Banking:

The Wholesale Banking Segment provides loans to Corporates and Financial Institutions. Revenues of the wholesale banking segment consist of interest earned on loans made to customers. The principal expenses of the segment consist of interest expense on funds borrowed from external sources and other internal segments, premises expenses, personnel costs, other direct overheads and allocated expenses of delivery channels, specialist product groups, processing units and support groups.

In accordance with paragraph 5 of AS - 18, the Bank has not disclosed certain transactions with relatives of Key Management Personnel as they are in the nature of banker-customer relationship. In like ,manner breakup of deposits accepted during the year,deposits outstanding at the end of the year and interest on deposits has not been furnished partywise in respect of KMP and enterprises in which relatives of KMP are members since they are in the nature of bank and customer transactions.

26.14 Details of factoring exposure

The factoring exposure of the Bank as at March 31, 2022 and as at March 31, 2021 is Nil.

26.15 Country wise risk exposure

The Bank does not have any country wise Risk Exposure as at March 31, 2022 and as at March 31, 2021.

26.16 Unhedged foreign currency exposure

The Bank does not have any unhedged foreign country exposure as at March 31, 2022 and as at March 31, 2021.

26.10 The Bank has a process whereby periodically all long term contract are assessed for material foreseeable losses. At the year end, the Bank has reviewed and ensured that no provision is required under any law / accounting standards on such long term contracts as on March 31, 2022 and March 31, 2021.

26.11 Credit default Swaps

The Bank has not entered into any credit default swap transactions during the current and previous year.

26.12 Credit card and debit card reward points

The Bank does not have credit card products, hence reward points are not applicable. Also, the Bank does not provide any reward points on debit card.

26.13 Off balance sheet SPVs sponsored

There are no off-balance sheet SPVs sponsored by the bank as at March 31, 2022, and at March 31, 2021. Refer note 18(38) of the notes to accounts.

28 DISCLOSURES ON REMUNERATION:28.1 Qualitative Disclosures

(A) Information relating to the composition and mandate of the Remuneration Committee.

Bank has constituted a Nomination and Remuneration Committee (NRC). The NRC comprises of five members out of which three are Independent Directors. Mandate of the Nomination and Remuneration Committee, inter-alia, is to oversee the framing, review and implementation of the Banks''s Compensation policy & Nomination & Remuneration Policy for Whole Time Director/Chief Executive Officers/Risk Takers, control function staff and other employees of the Bank for ensuring effective alignment between remuneration and risks. The Committee also ensures that level and composition of remuneration is reasonable and sufficient, relationship of remuneration

to performance is clear and meets appropriate performance benchmarks. The Nomination and Remuneration Committee reviews Compensation policy and Nomination & Remuneration Policy of the Bank with a view to attract, retain and motivate employees.

(B) Information relating to the design and structure of remuneration processes and the key features and objectives of Compensation Policy and Nomination & Remuneration Policy

The Compensation Policy and Nomination & Remuneration Policy has been laid out keeping the following perspectives into considerations:

(a) Our Compensation principles should support us in achieving our mission of providing a full range of financial services to the economically active poor of India who are not adequately served (unserved and underserved) by financial institutions. Therein, this policy should support us to attract and retain talent and skills required to further the organizations purpose and ideology.

(b) The pay structure and amounts confirms and shall always conform to applicable Income Tax and other similar statutes.

(c) All practices of Ujjivan SFB shall comply with applicable labour laws.

(d) The pay structure should be standardized for a level of employees.

(e) Elements eligible for tax exemption may be introduced at appropriate levels to enable employees take applicable tax breaks. Amounts related to certain benefits may undergo change due to change in grade/ roles/ function/ state/ region in the organization.

(f) The compensation structure shall be easy to understand for all levels of employees.

(g) The compensation policy is designed to promote meritocracy in the organization i.e. other things being equal, performers in a given role are expected to earn more than his/her peer group.

(h) The directors are paid sitting fees as approved by the Board for attending the Board and Board Committee Meetings.

(C) Description of the ways in which current and future risks are taken into account in the remuneration processes. It should include the nature and type of the key measures used to take account of these risks.

(a) Structurally, the Control functions such as Credit, Risk and Vigilance are independent of the business functions and each other, thereby ensuring independent oversight from various aspects on the business functions.

(b) The Bank is in the process of comprehensively measuring and reviewing material risks to which Bank is exposed to under IGAAP. The Bank also complies with Basel II requirements.

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

(a) The compensation policy is designed to promote meritocracy in the organization i.e. other things being equal, performers in a given role are expected to earn more than his/her peer group.

(b) Ujjivan shall, from time to time benchmark its compensation against identified market participants to define its pay structure and pay levels.

(c) The merit increments will be finalized and approved by the NHRC year on year, basis organization''s budgets and accomplishments as well as market reality.

(d) Ujjivan believes in paying its employees in an equitable and fair manner basis the incumbent''s Role, Personal Profile (Education/Experience etc.) as well as Performance on the Job.

(e) Employees rated "Below Expectations" shall not be provided any increments, unless statutorily required.

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

The performance bonus payout shall be Annual. Discretion is typically applied related to staggered payout in case large payouts, particularly for

functions like Credit and Risk. Bonus is to be prorated for employees who have worked for part of the year at Ujjivan.

Ujjivan believes in the philosophy of collective ownership by its employees. Thus, Employee Stock Options of the Holding Company Ujjivan Financial Services Ltd are distributed amongst employees basis their criticality and performance.

Typically, all Stock option schemes at Ujjivan vest in a staggered manner. Besides the statutory requirement of grant and 1 year vesting, the total set of options vest in various tranches for up to a period of 3 years.

Malus/ Clawback: In the event of negative contributions of the individual towards the achievements of the Banks objectives in any year, the deferred compensation should be subjected to Malus/Clawback arrangements. Similar provisions shall apply in case the individual is found guilty of any major non-compliance or misconduct issues.

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

Variable Compensation at Ujjivan has the following distinct forms:

1. Statutory Bonus

2. Performance Pay:

a. Performance Bonus

b. Monthly Variable Pay

3. Rewards & Recognition

The policy has been laid out keeping the following perspectives into considerations:

The Variable pay structure and amounts shall always conform to applicable Income Tax statutes, Labour Laws, Regulatory Requirements, any other applicable statutes and prevalent market practice.

It is designed to promote meritocracy in the organization i.e. other things being equal, performers in a given role are expected to earn more than his/her peer group.

Statutory Bonus: Statutory Bonus in India is paid as per Payment of Bonus Act, 1965.

Performance Bonus: All employees who are not a part of any Monthly Variable Pay but part of the year end performance review will be covered under the Performance Bonus Plan of Ujjivan Small Finance Bank. However, the actual payout of performance bonus shall be paid only to employees who have met our performance criteria.

Sales Awards: Employees in the Sales function, directly responsible for revenue generation shall be covered under the Sales Award Scheme if meeting the criteria of the respective scheme. Typically some of the entry level roles and up to two levels of supervision thereof shall be covered by sales awards.

Rewards & Recognition: Ujjivan shall design schemes and practices from time to time to celebrate employees / departmental / organizational success. These celebrations may include offering tokens of appreciation to employees as defined in specific schemes. Fairness of application and transparency of communication shall be the hallmark of all such schemes. These will be subject to income tax laws, as applicable. Examples of such schemes may include: Long Service Awards (currently at one, three, five , seven and ten yrs. of completion of service with Ujjivan), Portfolio Improvement Reward Scheme; Functional R&R Schemes; Organizational Rewards Schemes such as: Service Champion; Process Excellence; Customer Connect Awards; Above and Beyond; Recognition program for Liabilities Branches for Retail Deposits; Recognition program for Asset growth in Branches

2) Mrs. Rajni Anil Mishra was appointed as an Additional Director (Independent) w.e.f December 16, 2020 and was subsequently appointed as the Independent Director in the Annual General Meeting held on September 27, 2021.

3) Mr. Ittira Davis was appointed as an Additional Director (Non- Executive, Non-Independent) and Part-Time chairman (subject to approval of RBI) w.e.f. March 13, 2021 and resigned from the office of Additional Director (Non- Executive, Non-Independent)w.e.f. July 23, 2021. Mr. Ittira Davis appointed as MD and CEO w.e.f. January 14, 2022.

4) Mr. Rajesh Kumar Jogi was appointed as an Additional Director (Non-Executive, Non- Independent) w.e.f March 13, 2021 and his designation was recategorised from Additional Director (Non-Executive, NonIndependent) to Additional Director (Independent) w.e.f. August 25, 2021. He was subsequently appointed as the Independent Director in the Annual General Meeting held on September 27, 2021.

5) Mr. Harish Devarajan was appointed as an Additional Director (Independent) of the Bank w.e.f. March 13, 2021 and resigned w.e.f. August 12, 2021.

6) Mr. Umesh Bellur was appointed as an Additional Director (Independent) of the Bank w.e.f. March 13, 2021 and retired in the Annual General Meeting held on September 27, 2021.

7) Ms. Mona Kachhwaha resigned from the office of Non-Executive, Non-Independent Director w.e.f. August 10, 2021.

8) Mr. Banavar Anantharamaiah Prabhakar was appointed as an Additional Director (Independent) w.e.f. August 20, 2021 and was subsequently appointed as the Independent Director in the Annual General Meeting held on September 27, 2021 and as Part Time Chairman w.e.f. November 23, 2021.

9) Mr. Ravichandran Venkataraman was appointed as an Additional Director (Independent) w.e.f. August 20, 2021 and was subsequently appointed as the Independent Director in the Annual General Meeting held on September 27, 2021.

10) Mr. Samit Kumar Ghosh was appointed as an Additional Director (Non-Executive, Non-Independent) w.e.f. August 20, 2021 and was subsequently appointed as the Non Executive Director (Non-Independent) in the Annual General Meeting held on September 27, 2021.

11) Ms. Sudha Suresh was appointed as an Additional Director (Non-Executive, Non-Independent) w.e.f. August 20, 2021 and was subsequently appointed as the Non Executive Director (Non Independent) in the Annual General Meeting held on September 27, 2021 and was further recategorized as Independent Director w.e.f. April 01, 2022.

12) Mr. Satyaki Rastogi was appointed by SIDBI as a Nominee Director w.e.f. December 22, 2021.

13) Mr. P.N. Raghunath was appointed as an Additional Director by RBI w.e.f. Nov 29, 2021

30 The Micro, Small and Medium Enterprises Development Act, 2006 that came into force from October 2, 2006, provides for certain disclosures in respect of Micro, Small and Medium enterprises.

The Bank does not have comprehensive data of the status of its vendors and service providers. Based on the limited data available, there were no dues to Micro, small and medium enterprises as at year ended March 31,2022 and for the year ended March 31,2021.

31 CORPORATE SOCIAL RESPONSIBILITY

As per Sec 135 (1) of the Companies Act "Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during the immediately preceding financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director". Pursuant to this, Bank has duly constituted a Corporate Social Responsibility Committee.

Further, the section stipulates that the company should spend, in every financial year, at least two per cent of the average net profits made during the three immediately preceding financial years and in pursuance of its Corporate Social Responsibility Policy.

33 SHARE-BASED PAYMENTS

33(A) Employee Share Option Plan(ESOP)

33(A)(1) Details of the employee share option plan of the Bank

The Bank has share option scheme for employees (which includes the employees of the Holding Company) , being ESOP 2019.

Employee Stock Options (ESOPs): The ESOP 2019 is the scheme under which the Bank has issued options to the employees (which includes the employees of the Holding Company). The Bank has approved its ESOP Plan, 2019 in the Shareholders meeting held on March 29, 2019. During the year, the Bank has granted 3,06,39,119 options under the ESOP 2019 to eligible employees (which includes the employees of the Holding Company) during the year ended March 31, 2022. As on March 31, 2022, out of the 71,742,768 options granted, 61,967 options has been exercised and 17,185,468 options are lapsed/cancelled. Further, 97,14,703 options are vested and 44,780,630 are yet to be vested.

33(A)(7) ESOP arrangement with the Holding company (Ujjivan Financial Services Limited)

As per guidance note issued by ICAI on Share-based Payment , stock options have to be fair valued on the grant date and expense has to recognised over the vesting period. The Bank has accordingly determined the cost of the employee share-based payments considering the fair value principles, recognised the share based payment expense for all the unvested options as on date for the period starting from the grant date. Total 601,561 options granted to Holding Company employees for which Bank has decided to cross charge the stock compensation expense through related party transaction.

33(B) Employee Stock Purchase Scheme 2019 (ESPS):

The ESPS Scheme was approved by the Shareholders in the Extra-Ordinary General Meeting held on August 03,

2019. Under the ESPS 2019 scheme the employees of the Bank and of Ujjivan Financial Services Limited (UFSL) subscribed to 1,40,55,097 number of equity shares at a price of '' 35 per equity share. During the year ended March 31, 2021, the Bank allotted 29,069 equity shares under ESPS 2019 on November 07, 2020 at price of '' 35 per equity share.

34 Consequent to the outbreak of COVID-19 pandemic, the Indian government announced a lockdown in March

2020. Subsequently, the national lockdown was lifted by the government, but regional post COVID 19 restrictions continue to be implemented in areas with a significant number of COVID-19 cases. India had experienced a "second wave" of the COVID-19 pandemic in Apr-May 2021 following the discovery of mutual variant , leading to the re-imposition of regional lockdowns. These were gradually lifited as the Second wave subsided. The impact of COVID-19, including changes in customer behaviour and pandemic fears, as well as restrictions on business and individual activities, has led to significant volatility in global and Indian financial markets and a significant decrease in global and local economic activities. The disruptions following the outbreak, impacted loan originations and the efficiency in collection efforts resulting in increase in the number of customer defaults and consequently an increase in provisions there against.

India is emerging from the COVID-19 pandemic. The extent to which any new wave of COVID-19 will impact the Bank''s operations and financial results will depend on ongoing as well as future developments, including, among other things, any new information concerning the severity of the COVID-19 pandemic, and any action to contain its spread or mitigate its impact whether government- mandated or elected by the Bank.

36 REFUND / ADJUSTMENT OF ''INTEREST ON INTEREST''

In accordance with the instructions in the aforesaid RBI circular dated April 07, 2021, the Bank shall refund/ adjust ''interest on interest'' to all borrowers including those who had availed of working capital facilities during the moratorium period, irrespective of whether moratorium had been fully or partially availed, or not availed. Pursuant to these instructions, the methodology for calculation of the amount of such ''interest on interest'' has been circulated by the Indian Banks Association (''IBA''). Based on the methodology recommended by the IBA, the Bank has calculated the said amount to be refunded and accordingly reduced '' 3.50 lakhs from the interest income for the year ended March 31, 2021. The same has been paid during the year ended 31^st March 2022.

37 The Bank received a notice on March 16, 2021, regarding non-remittance of statutory Provident Fund (PF) dues on the applicable wage components from February 2017 until March 2019 amounting to '' 227,040 (''000). Bank has filed the initial responses to the PF Commissioner and contented that said notice does not have a stand based on definition of basic wages under EPF Act, 1952 and various case laws. However, due to ongoing pandemic the hearing has been adjourned until further notice.

The bank has made a provision during the FY 2021-22 for an amount of '' 227,040 (''000) as a matter of prudence, which was treated as contingent liability for the FY 2020-21.

41 MARKETING AND DISTRIBUTION

There is no fees/remuneration received in respect of the marketing and distribution function (exclude bancassurance business) undertaken by the bank for current year and previous year.

42 In the normal course of business of banking, the Bank has borrowed Funds From certain institutions in refinance of certain advances granted by it or for utilization for granting advances by it. In like manner, the Bank has advanced monies to certain NBFCs for granting loans by them to their customers. These are in addition to other banking business carried on by the Bank. Read with this, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Bank to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Bank (Ultimate Beneficiaries). The Bank has not received any fund from any party(s) (Funding Party) with the understanding that the Bank shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Bank ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries."

43 The Board of Directors of the Bank and UFSL have approved a scheme of amalgamation of the latter with the former in terms of Sections 230 to 232 of the Companies Act, 2013. In terms of the said scheme, UFSL will be amalgamated into and with the Bank and its assets, liabilities, contracts, employees, licenses, records and approvals will be transferred to and will be deemed to have been transferred to and vested in our Bank, as a going concern, without any further act, instrument or deed, together with all its properties, assets, liabilities, rights, benefits and interest therein. All the Key Managerial Personnel, and other employees of UFSL who are in such employment as on the Effective Date shall become, and be deemed to have become, the staff and employees of the Bank, without any break or interruption in their services and on the same terms and conditions (and which are not less favourable than those) on which they are engaged by UFSL as on the Effective Date. All proceedings by or against UFSL shall continue by or against the Bank. The appointed date under the said Scheme is February 01,2022 or such other date as may be approved by the NCLT. In consideration of the proposed merger, the Bank will allot 115 (One hundred and Fifteen) equity shares each of '' 10/- for every 10 equity shares of '' 10/- each held by its shareholders in UFSL. The shares held by UFSL in the Bank shall stand extinguished on the amalgamation taking effect. The Scheme is subject to the provisions of the Scheme document and receipt of the relevant regulatory and statutory approvals (including but not limited to NCLT) and in accordance with applicable law and the conditions prescribed by the SEBI and RBI.

44 IMPLEMENTATION OF IFRS CONVERGED INDIAN ACCOUNTING STANDARDS (IND AS)

Reserve Bank of India (RBI) through press release RBI/2018-2019/146 DBR.BP.BC.No.29/21.07.001/2018-19, dated March 22, 2019, updated all Scheduled Commercial Banks that legislative amendments recommended by the RBI are under consideration of the Government of India. Accordingly, RBI had decided to defer the implementation of Ind AS till further notice. Bank is gearing itself to bring the necessary systems in place to facilitate the Proforma

submission to RBI. With respect to various instructions from Ministry of Corporate Affairs and Reserve Bank of

India (RBI), the actions taken by the Bank are as follows:

1. Bank is in the process of Implementing changes required in existing IT architecture and other processes to enable smooth transition to Ind AS.

2. As directed by RBI, the Bank is submitting half yearly Proforma Ind AS financial statements to RBI within the stipulated timelines.

3. Training to the employees is imparted in phased manner

4. The Bank is currently preparing Special Purpose Ind AS Financials for the Holding company i.e. UFSL, for the purpose of consolidation.

5. The Bank will continue its preparedness towards adoption of Ind AS as per the regulatory requirement, and liaise with RBI and Industry Bodies on various aspects pertaining to Ind AS implementation.

45 COMPARATIVE FIGURES

Figures of the previous year have been regrouped/ reclassified wherever necessary to confirm to the current

year''s presentation.