1. Material Accounting Policies:

1.1. Statement of compliance:

The financial statements have been prepared in accordance with the provisions of the Companies Act, 2013
and the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards)
Rules, 2015 (as amended from time to time) issued by Ministry of Corporate Affairs in exercise of the powers
conferred by section 133 of the Companies Act, 2013. In addition, applicable regulations of Reserve Bank of
India (RBI) and the guidance notes/announcements issued by the Institute of Chartered Accountants of India
(ICAI) are also applied along with compliance with other statutory promulgations.

1.2. Basis of preparation:

The financial statements have been prepared on the historical cost basis except for certain financial instruments
that are measured at fair values at the end of each reporting period.

Fair value measurements under Ind AS are categorised into Level 1, 2, or 3 based on the degree to which
the inputs to the fair value measurements are observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the
Company can access at reporting date

• Level 2 inputs are inputs, other than quoted prices included within level 1, that are observable for the
asset or liability, either directly or indirectly; and

• Level 3 inputs are unobservable inputs for the valuation of assets or liabilities

1.3. Presentation of financial statements:

The Balance Sheet, Statement of Changes in Equity for the year and the Statement of Profit and Loss are
prepared and presented in the format prescribed in the Division III to Schedule III to the Companies Act, 2013
("the Act") applicable for Non-Banking Finance Companies ("NBFC"). The Statement of Cash Flows has

been prepared and presented as per the requirements of Ind AS 7 "Statement of Cash Flows". The disclosure
requirements with respect to items in the Balance Sheet and Statement of Profit and Loss, as prescribed
in the Division III to Schedule III to the Act, are presented by way of notes forming part of the financial
statements along with the other notes required to be disclosed under the notified accounting Standards and
the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Amounts in the financial statements are presented in Indian Rupees in Crore rounded off to two decimal
places as permitted by Division III to Schedule III to the Act. Per share data are presented in Indian Rupee to
two decimal places.

1.4. Business Combination:

A Common control business combination, involving entities or business in which all of the combining entities
or businesses are ultimately controlled by the same party or parties both before and after the business
combination and where control is not transitory, is accounted for in accordance with Appendix C to Ind AS
103 "Business Combination".

The company accounts for Business combinations involving entities or businesses under common control are
accounted for using the pooling of interest method as follows:

• The assets and liabilities of the combining entities are reflected at their carrying amounts.

• No adjustments are made to reflect fair values, or recognize new assets or liabilities. Adjustments are
made only to harmonize Material accounting policies.

• The financial information in the financial statements in respect of prior period are restated as if the
business combination had occurred from the beginning of the preceding period in the financial statements,
irrespective of the actual date of the combination.

• The identity of the reserves are preserved and appear in the financial statements of the transferee in same
form in which they appeared in the financial statements of the transferor.

The difference, if any, between the amounts recorded as share capital issued plus any additional consideration
in the form of cash or other assets and the amount of share capital of the transferor is transferred to capital
reserve and is presented separately from other capital reserve with disclosure of its nature and purpose in the
notes.

1.5. Financial instruments:

Financial assets and financial liabilities are recognised in the Company's balance sheet when the Company
becomes a party to the contractual provisions of the instrument.

Recognised financial assets and financial liabilities are initially measured at fair value. Transaction costs that
are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than
financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on initial recognition.

A financial asset and a financial liability is offset and presented on net basis in the balance sheet when there
is a current legally enforceable right to set-off the recognised amounts and it is intended to either settle on
net basis or to realise the asset and settle the liability simultaneously.

(i) Equity Instruments

Investments in Subsidiaries, Associates and Joint Ventures are accounted at cost in accordance with Ind
AS 27 "Separate Financial Statements".

(a) I nvestment in preference shares of the subsidiary companies are treated as equity instruments
if the same are convertible into equity shares or are redeemable out of the proceeds of equity
instruments issued for the purpose of redemption of such investments. Investment in preference
shares not meeting the aforesaid conditions are classified as debt instruments at FVTPL.

(b) I nvestments in equity instruments issued by other than subsidiaries are classified as at FVTPL,
unless the related instruments are not held for trading and the Company irrevocably elects on
initial recognition to present subsequent changes in fair value in other comprehensive income

(ii) Financial assets

The Company assesses the classification and measurement of a financial asset based on the contractual
cash flow characteristics of the asset and the Company's business model for managing the asset.

For an asset to be classified and measured at amortised cost, its contractual terms should give rise to
cash flows that are solely payments of principal and interest on the principal outstanding (SPPI).

The Company has more than one business model for managing its financial instruments, assessed
at portfolio level, which reflects how the Company manages its financial assets in order to generate
cash flows. The Company's business models determine whether cash flows will result from collecting
contractual cash flows, selling financial assets or both.

The Company considers all relevant information available when making the business model assessment.
However, this assessment is performed on the basis of scenarios that the Company expects to occur
and not to occur, such as so-called 'worst case' or 'stress case' scenarios. The Company takes into
account all relevant evidence available such as:

• how the performance of the business model and the financial assets held within that business
model are evaluated and reported to the entity's key management personnel;

• the risks that affect the performance of the business model (and the financial assets held within
that business model) and, in particular, the way in which those risks are managed.

The Company reassess its business models each reporting period to determine whether the business
models have changed since the preceding period.

If the business model under which the Company holds financial assets changes, the financial assets
affected are reclassified. The classification and measurement requirements related to the new category
apply prospectively from the first day of the first reporting period following the change in business
model that results in the reclassification.

The Company considers sale of financial assets measured at amortised cost portfolio as consistent with
a business model whose objective is to hold financial assets in order to collect contractual cash flows if
these sales are

• due to an increase in the assets' credit risk or

• due to other reasons such as sales made to manage credit concentration risk (without an increase
in the assets' credit risk) and are infrequent (even if significant in value) or insignificant in value
both individually and in aggregate (even if frequent).

I n addition, the Company also considers sale of such financial assets as consistent with the objective
of holding financial assets in order to collect contractual cash flows if the sale is made close to the
maturity of the financial assets and the proceeds from sale approximate the collection of the remaining
contractual cash flows.

(a) Financial assets at amortised cost

Financial assets are subsequently measured at amortised cost using the effective interest rate (EIR)
as per Ind AS 109 'Financial Instruments' if these financial assets are held within a business model
whose objective is to hold these assets in order to collect contractual cash flows and the contractual
terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.

Trade Receivables are initially measured at their transaction price as defined in Ind AS 115.

(b) Financial assets at fair value through other comprehensive income (FVTOCI)

Financial assets are measured at fair value through other comprehensive income if these financial
assets are held within a business model whose objective is achieved by both collecting contractual
cash flows that give rise on specified dates to sole payments of principal and interest on the principal
amount outstanding and by selling financial assets.

(c) Financial assets at fair value through profit or loss (FVTPL)

Financial assets are measured at fair value through profit or loss unless it is measured at amortised
cost or at fair value through other comprehensive income on initial recognition. The transaction
costs directly attributable to the acquisition of financial assets and liabilities at fair value through
profit or loss are immediately recognised in profit or loss.

Investments in equity instruments are classified as FVTPL, unless the related instruments are not
held for trading and the Company irrevocably elects on initial recognition of financial asset on an
asset-by-asset basis to present subsequent changes in fair value in other comprehensive income.

(d) Debt instruments at amortised cost or at FVTOCI

For an asset to be classified and measured at FVTOCI, the asset is held within a business model
whose objective is achieved both by collecting contractual cash flows and selling financial assets;
and the contractual terms of instrument give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.

Debt instruments that are subsequently measured at amortised cost or at FVTOCI are subject to
impairment.

(e) De-recognition

A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar
financial assets) is primarily de-recognised when:

• The rights to receive cash flows from the asset have expired, or

• The Company has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
'pass-through' arrangement; and

• either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b)
the Company has neither transferred nor retained substantially all the risks and rewards of the
asset, but has transferred control of the asset.

The transferred asset and the associated liability are measured on a basis that reflects the rights and
obligations that the Company has retained.

(in) Financial liabilities

(a) Financial liabilities, including derivatives, which are designated for measurement at FVTPL are
subsequently measured at fair value. Financial guarantee contracts are subsequently measured at
the amount of impairment loss allowance or the amount recognised at inception net of cumulative
amortisation, whichever is higher.

All other financial liabilities including loans and borrowings are measured at amortised cost using
Effective Interest Rate (EIR) method as per Ind AS 109 'Financial Instruments'.

(b) A financial liability is derecognised when the related obligation expires or is discharged or cancelled.

1.6. Write off:

Loans and debt securities are written off when the Company has no reasonable expectations of recovering
the financial asset (either in its entirety or a portion of it). This is the case when the Company determines that
the borrower does not have assets or sources of income that could generate sufficient cash flows to repay
the amounts subject to the write-off. A write-off constitutes a derecognition event. The Company may apply
enforcement activities to financial assets written off. Recoveries resulting from the Company's enforcement
activities are recorded in statement of profit and loss.

1.7. Impairment:

The Company recognises loss allowances for Expected Credit Losses (ECLs) on the following financial
instruments that are not measured at FVTPL:

• Loans and advances to customers;

• Debt investment securities;

• Trade and other receivable;

• Lease receivables;

• Irrevocable loan commitments issued; and

• Financial guarantee contracts issued.

Credit-impaired financial assets

A financial asset is 'credit-impaired' when one or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have occurred. Credit-impaired financial assets are referred
to as Stage 3 assets. Evidence of credit-impairment includes observable data about the following events:

• significant financial difficulty of the borrower or issuer;

• a breach of contract such as a default or past due event;

• the lender of the borrower, for economic or contractual reasons relating to the borrower's financial
difficulty, having granted to the borrower a concession that the lender would not otherwise consider;

• the disappearance of an active market for a security because of financial difficulties; or

• the purchase of a financial asset at a deep discount that reflects the incurred credit losses.

It may not be possible to identify a single discrete event—instead, the combined effect of several events may
have caused financial assets to become credit-impaired. The Company assesses whether debt instruments
that are financial assets measured at amortised cost or FVTOCI are credit-impaired at each reporting date. To
assess if corporate debt instruments are credit impaired, the Company considers factors such as bond yields,
credit ratings and the ability of the borrower to raise funding.

A loan is considered credit-impaired when a concession is granted to the borrower due to a deterioration
in the borrower's financial condition, unless there is evidence that as a result of granting the concession the
risk of not receiving the contractual cash flows has reduced significantly and there are no other indicators of
impairment. For financial assets where concessions are contemplated but not granted the asset is deemed
credit impaired when there is observable evidence of credit-impairment including meeting the definition
of default. The definition of default (see below) includes unlikeliness to pay indicators and a back-stop if
amounts are overdue for more than 90 days. The 90-day criterion is applicable unless there is reasonable and
supportable information to demonstrate that a more lagging default criterion is more appropriate.

Definition of default

Critical to the determination of ECL is the definition of default. The definition of default is used in measuring
the amount of ECL and in the determination of whether the loss allowance is based on 12-month or lifetime
ECL, as default is a component of the probability of default (PD) which affects both the measurement of ECLs
and the identification of a significant increase in credit risk.

The Company considers the following as constituting an event of default:

• the borrower is past due more than 90 days on any material credit obligation to the Company; or

• the borrower is unlikely to pay its credit obligations to the Company in full.

The forbearance granted to borrowers in accordance with COVID 19 Regulatory Package notified by the
Reserve Bank of India (RBI) is excluded in determining the period of default (Days Past Due) in the assessment
of default.

When assessing if the borrower is unlikely to pay its credit obligation, the Company takes into account
both qualitative and quantitative indicators. The information assessed depends on the type of the asset,
for example in corporate lending a qualitative indicator used is the admittance of bankruptcy petition by
National Company Law Tribunal, which is not relevant for retail lending. Quantitative indicators, such as
overdue status and non-payment on another obligation of the same counterparty are key inputs in this
analysis.

The Company uses a variety of sources of information to assess default which are either developed internally
or obtained from external sources. The definition of default is applied consistently to all financial instruments
unless information becomes available that demonstrates that another default definition is more appropriate
for a particular financial asset.

With the exception of POCI financial assets (which are considered separately below), ECLs are required to be
measured through a loss allowance at an amount equal to:

• 12-month ECL, i.e. lifetime ECL that result from those default events on the financial instrument that
are possible within 12 months after the reporting date, (referred to as Stage 1); or

• full lifetime ECL, i.e. lifetime ECL that result from all possible default events over the life of the financial
instrument, (referred to as Stage 2 and Stage 3).

A loss allowance for full lifetime ECL is required for a financial instrument if the credit risk on that financial
instrument has increased significantly since initial recognition (and consequently to credit impaired financial
assets). For all other financial instruments, ECLs are measured at an amount equal to the 12-month ECL.

ECLs are a probability-weighted estimate of the present value of credit losses. These are measured as the
present value of the difference between the cash flows due to the Company under the contract and the cash
flows that the Company expects to receive arising from the weighting of multiple future economic scenarios,
discounted at the asset's EIR.

• for financial guarantee contracts, the ECL is the difference between the expected payments to reimburse
the holder of the guaranteed debt instrument less any amounts that the Company expects to receive
from the holder, the debtor or any other party.

The Company measures ECL on an individual basis, or on a collective basis for portfolios of loans that share
similar economic risk characteristics.

Significant increase in credit risk

The Company monitors all financial assets and financial guarantee contracts that are subject to the impairment
requirements to assess whether there has been a significant increase in credit risk since initial recognition.
If there has been a significant increase in credit risk the Company will measure the loss allowance based on
lifetime rather than 12-month ECL.

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition,
the Company compares the risk of a default occurring on the financial instrument at the reporting date
based on the remaining maturity of the instrument with the risk of a default occurring that was anticipated
for the remaining maturity at the current reporting date when the financial instrument was first recognised.
In making this assessment, the Company considers both quantitative and qualitative information that is
reasonable and supportable, including historical experience and forward-looking information that is available
without undue cost or effort, based on the Company's historical experience and expert credit assessment.

Given that a significant increase in credit risk since initial recognition is a relative measure, a given change, in
absolute terms, in the Probability of Default will be more significant for a financial instrument with a lower
initial PD than compared to a financial instrument with a higher PD.

Hitherto, in respect of the Company's corporate loan assets, the threshold for shifting to Stage 2 was being
rebutted using historical evidence from the Company's own portfolio to 60 days past due.

For the purpose of counting of day past due for the assessment of significant increase in credit risk, the
special dispensations to any class of assets in accordance with COVID19 Regulatory Package notified by the
Reserve Bank of India (RBI) has been applied by the company.

Purchased or originated credit-impaired (POCI) financial assets

POCI financial assets are treated differently because the asset is credit-impaired at initial recognition. For
these assets, the Company recognises all changes in lifetime ECL since initial recognition as a loss allowance
with any changes recognised in profit or loss. A favourable change for such assets creates an impairment
gain.

Simplified approach for trade and other receivables

The Company follows 'simplified approach' for recognition of impairment loss allowance on trade and other
receivables that do not contain a significant financing component.

1.8. Modification and derecognition of financial assets:

A modification of a financial asset occurs when the contractual terms governing the cash flows of a financial
asset are renegotiated or otherwise modified between initial recognition and maturity of the financial asset. A
modification affects the amount and/or timing of the contractual cash flows either immediately or at a future
date. In addition, the introduction or adjustment of existing covenants of an existing loan may constitute a
modification even if these new or adjusted covenants do not yet affect the cash flows immediately but may
affect the cash flows depending on whether the covenant is or is not met (e.g. a change to the increase in
the interest rate that arises when covenants are breached).

The Company renegotiates loans to customers in financial difficulty to maximise collection and minimise the
risk of default. A loan forbearance is granted in cases where although the borrower made all reasonable
efforts to pay under the original contractual terms, there is a high risk of default or default has already
happened and the borrower is expected to be able to meet the revised terms. The revised terms in most of
the cases include an extension of the maturity of the loan, changes to the timing of the cash flows of the
loan (principal and interest repayment), reduction in the amount of cash flows due (principal and interest
forgiveness) and amendments to covenants.

When a financial asset is modified the Company assesses whether this modification results in derecognition.
In accordance with the Company's policy a modification results in derecognition when it gives rise to
substantially different terms. To determine if the modified terms are substantially different from the original
contractual terms the Company considers the following:

• Qualitative factors, such as contractual cash flows after modification are no longer SPPI,

• Change in currency or change of counterparty,

• The extent of change in interest rates, maturity, covenants.

If these do not clearly indicate a substantial modification, then;

(a) In the case where the financial asset is derecognised the loss allowance for ECL is remeasured at the
date of derecognition to determine the net carrying amount of the asset at that date. The difference
between this revised carrying amount and the fair value of the new financial asset with the new terms
will lead to a gain or loss on derecognition. The new financial asset will have a loss allowance measured
based on 12-month ECL except in the rare occasions where the new loan is considered to be originated-
credit impaired. This applies only in the case where the fair value of the new loan is recognised at a
significant discount to its revised par amount because there remains a high risk of default which has
not been reduced by the modification. The Company monitors credit risk of modified financial assets by
evaluating qualitative and quantitative information, such as if the borrower is in past due status under
the new terms.

(b) When the contractual terms of a financial asset are modified and the modification does not result in
derecognition, the Company determines if the financial asset's credit risk has increased significantly
since initial recognition by comparing:

• the remaining lifetime PD estimated based on data at initial recognition and the original contractual
terms; with

• the remaining lifetime PD at the reporting date based on the modified terms.

For financial assets modified, where modification did not result in derecognition, the estimate of PD reflects the
Company's ability to collect the modified cash flows taking into account the Company's previous experience
of similar forbearance action, as well as various behavioural indicators, including the borrower's payment
performance against the modified contractual terms. If the credit risk remains significantly higher than what
was expected at initial recognition the loss allowance will continue to be measured at an amount equal to
lifetime ECL. The loss allowance on forborne loans will generally only be measured based on 12-month ECL
when there is evidence of the borrower's improved repayment behaviour following modification leading to
a reversal of the previous significant increase in credit risk.

Where a modification does not lead to derecognition the Company calculates the modification gain/loss
comparing the gross carrying amount before and after the modification (excluding the ECL allowance). Then
the Company measures ECL for the modified asset, where the expected cash flows arising from the modified
financial asset are included in calculating the expected cash shortfalls from the original asset.

The Company derecognises a financial asset only when the contractual rights to the asset's cash flows expire
(including expiry arising from a modification with substantially different terms), or when the financial asset
and substantially all the risks and rewards of ownership of the asset are transferred to another entity. If the
Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to
control the transferred asset, the Company recognises its retained interest in the asset and an associated
liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of
ownership of a transferred financial asset, the Company continues to recognise the financial asset and also
recognises a collateralised borrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and
the sum of the consideration received and receivable and the cumulative gain/loss that had been recognised
in OCI and accumulated in equity is recognised in profit or loss, with the exception of equity investment
designated as measured at FVTOCI, where the cumulative gain/loss previously recognised in OCI is not
subsequently reclassified to profit or loss.

On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option
to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the
financial asset between the part it continues to recognise under continuing involvement, and the part it
no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The
difference between the carrying amount allocated to the part that is no longer recognised and the sum of
the consideration received for the part no longer recognised and any cumulative gain/loss allocated to it that
had been recognised in OCI is recognised in profit or loss. A cumulative gain/loss that had been recognised in
OCI is allocated between the part that continues to be recognised and the part that is no longer recognised
on the basis of the relative fair values of those parts. This does not apply for equity investments designated as
measured at FVTOCI, as the cumulative gain/loss previously recognised in OCI is not subsequently reclassified
to profit or loss.

1.9. Presentation of allowance for ECL in the Balance Sheet:

Loss allowances for ECL are presented in the Balance Sheet for financial assets measured at amortised cost,
as a deduction from the gross carrying amount of the assets.

1.10. Assets acquired under settlement of claims:

Assets acquired under settlement of claims are initially recognised on acquisition of the assets based on
the fair value of the property, including cost of acquisition. Assets acquired under settlement of claims are
subsequently measured at the prevailing market price/fair valuation or acquisition cost, whichever is lower,
on periodic basis.

Any profit or loss arising on the sale of complete unit is recognised in Statement of Profit and Loss.

1.11. Derivative financial instruments:

The Company enters into swap contracts and other derivative financial instruments to hedge its exposure to
foreign exchange and interest rates. Hedges of foreign exchange risk on firm commitments are accounted as
cash flow hedges. The Company does not hold derivative financial instruments for speculative purpose.

Cash flow hedges: In case of transaction related hedges, the effective portion of changes in the fair value of
derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income
and accumulated in equity as 'Cash flow hedging reserve'. The gain or loss relating to the ineffective portion
is recognised immediately in profit or loss. Amounts previously recognised in other comprehensive income
and accumulated in equity relating to the effective portion are reclassified to profit or loss in the periods
when the hedged item affects profit or loss, in the same head as the hedged item. The effective portion
of the hedge is determined at the lower of the cumulative gain or loss on the hedging instrument from

inception of the hedge and the cumulative change in the fair value of the hedged item from the inception
of the hedge and the remaining gain or loss on the hedging instrument is treated as ineffective portion.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised,
or when it no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive
income and accumulated in equity at that time remains in equity and is recognised in profit or loss when
the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer
expected to occur, the gain or loss accumulated in equity is recognised immediately in profit or loss.

A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative
fair value is recognised as a financial liability.

Fair Value Hedge: Fair value hedges hedge the exposure to changes in the fair value of a recognised asset
or liability, or an identified portion of such an asset, liability, that is attributable to a particular risk and could
affect profit or loss.

For designated and qualifying fair value hedges, the cumulative change in the fair value of a hedging
derivative is recognised in the statement of profit and loss in Finance Costs. Meanwhile, the cumulative
change in the fair value of the hedged item attributable to the risk hedged is recorded as part of the carrying
value of the hedged item in the balance sheet and is also recognised in the statement of profit and loss in
Finance Cost.

The Company classifies a fair value hedge relationship when the hedged item (or group of items) is a distinctively
identifiable asset or liability hedged by one or a few hedging instruments. The financial instruments hedged
for interest rate risk in a fair value hedge relationship are fixed rate debt issued and other borrowed funds. If
the hedging instrument expires or is sold, terminated or exercised, or where the hedge no longer meets the
criteria for hedge accounting, the hedge relationship is discontinued prospectively. If the relationship does
not meet hedge effectiveness criteria, the Company discontinues hedge accounting from the date on which
the qualifying criteria are no longer met. For hedged items recorded at amortised cost, the accumulated fair
value hedge adjustment to the carrying amount of the hedged item on termination of the hedge accounting
relationship is amortised over the remaining term of the original hedge using the recalculated EIR method
by recalculating the EIR at the date when the amortisation begins. If the hedged item is derecognised, the
unamortised fair value adjustment is recognised immediately in the statement of profit and loss.

1.12. Revenue recognition:

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company
and the revenue can be reliably measured and there exists reasonable certainty of its recovery.

(i) Interest and dividend income

Interest income is recognised in the statement of Profit and Loss using effective interest rate (EIR) as per
Ind AS 109 'Financial Instruments' on all financial assets subsequently measured under amortised cost or
fair value through other comprehensive income (FVTOCI) except for those classified as held for trading.

The calculation of the EIR includes all fees paid or received between parties to the contract that are
incremental and directly attributable to the specific lending arrangement, transaction costs, and all
other premiums or discounts. For financial assets at FVTPL transaction costs are recognised in profit or
loss at initial recognition.

The interest income is calculated by applying the EIR to the gross carrying amount of non-credit impaired
financial assets (i.e. at the amortised cost of the financial asset before adjusting for any expected credit
loss allowance). For credit-impaired financial assets the interest income is calculated by applying the

EIR to the amortised cost of the credit-impaired financial assets (i.e. the gross carrying amount less the
allowance for expected credit losses (ECLs)). For financial assets originated or purchased credit-impaired
(POCI) the EIR reflects the ECLs in determining the future cash flows expected to be received from the
financial asset.

Interest on delayed payments by customers are treated to accrue only on realisation, due to uncertainty
of realisation and are accounted accordingly. Dividend income is recognised when the Company's right
to receive dividend is established by the reporting date and no significant uncertainty as to collectability
exists.

(ii) Revenue from operations other than interest income

The Company recognises revenue from contracts with customers (other than financial assets to which
Ind AS 109 'Financial instruments' is applicable) based on a comprehensive assessment model as set out
in Ind AS 115 'Revenue from contracts with customers'.

Fees and commission income:

Fee and commission income and expense include fees other than those that are an integral part of EIR
and is recognised only on satisfactory completion of performance obligation.

The fees included in the statement of profit and loss, include among other things, fees charged for
servicing a loan, non-utilisation fees relating to loan commitments when it is unlikely that these will
result in a specific lending arrangement and loan advisory fees.

Bounce charges levied on customers for non-payment of instalment on the contractual date is recognised
on realisation.

Distribution income on distribution of insurance/other products are earned by distribution of services and
products of other entities under distribution arrangements. The income is recognised on distribution on
behalf of other entities subject to there being reasonable certainty of its recovery. Fees and commission
expenses with regards to services are accounted for as the services are received.

(iii) Net gain on fair value change:

Any differences between the fair values of the financial assets classified as fair value through the profit
or loss, held by the Company on the balance sheet date is recognised as an unrealised gain/loss in
the statement of profit and loss. In cases there is a net gain in aggregate, the same is recognised in
"Net gains on fair value changes" under revenue from operations and if there is a net loss the same is
disclosed "Expenses", in the statement of profit and loss.

(iv) Income from financial instruments at FVTPL:

Income from financial instruments at FVTPL includes all gains and losses from changes in the fair value
of financial assets and financial liabilities at FVTPL except those that are held for trading. Interest income
on financial assets held at FVTPL, is recognised under "interest income on financial assets classified at
fair value through profit or loss".

(v) Other operational revenue:

Other operational revenue represents income earned from the activities incidental to the business and
is recognised when the right to receive the income is established as per the terms of the contract.
Guarantee fees is recognised on pro rata basis over the period of the guarantee.

1.13. Borrowing costs:

Borrowing costs include interest expense calculated using the effective interest rate method as per Ind AS
109 'Financial Instruments', finance charges in respect of assets acquired on finance lease and exchange
differences arising from foreign currency borrowings, to the extent they are regarded as an adjustment to
interest costs.

Borrowing costs net of any investment income from the temporary investment of related borrowings, that
are attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of
cost of such asset till such time the asset is ready for its intended use or sale. A qualifying asset is an asset that
necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing
costs are recognised in profit or loss in the period in which they are incurred.

1.14. Property, plant and equipment (PPE):

PPE including subsequent expenditure, if any, is recognised when it is probable that future economic benefits
associated with the item will flow to the Company and the cost of the item can be measured reliably. PPE is
stated at original cost net of tax/duty credits availed, if any, less accumulated depreciation and cumulative
impairment, if any. Cost includes all direct cost related to the acquisition of PPE and, for qualifying assets,
borrowing costs capitalised in accordance with the Company's accounting policy.

Land and buildings held for use are stated in the balance sheet at cost less accumulated impairment losses
and accumulated depreciation, respectively. Freehold land is not depreciated.

PPE not ready for the intended use on the date of the Balance Sheet are disclosed as "capital work-in¬
progress".

Depreciation

Depreciation is recognised using straight line method so as to write off the cost of the assets (other than
freehold land)) less their residual values over their useful lives specified in Schedule II to the Companies Act,
2013, or in case of assets where the useful life was determined by technical evaluation, over the useful life
so determined. Depreciation method is reviewed at each financial year end to reflect expected pattern of
consumption of the future economic benefits embodied in the asset. The estimated useful life and residual
values are also reviewed at each financial year end with the effect of any change in the estimates of useful
life/residual value is accounted on prospective basis.

Depreciation for additions to/deductions from, owned assets is calculated pro rata to the period of use.
Depreciation charge for impaired assets is adjusted in future periods in such a manner that the revised
carrying amount of the asset is allocated over its remaining useful life.

An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or
retirement of an item of property, plant and equipment is recognised in profit or loss.

1.15.Intangible assets:

Intangible assets are recognised when it is probable that the future economic benefits that are attributable to
the asset will flow to the enterprise and the cost of the asset can be measured reliably. Intangible assets are
stated at original cost net of tax/duty credits availed, if any, less accumulated amortisation and cumulative
impairment. Direct expenses and administrative and other general overhead expenses that are specifically
attributable to acquisition of intangible assets are allocated and capitalised as a part of the cost of the
intangible assets.

Subsequent expenditure related to an item of intangible asset are added to its gross value only if it increases
the future benefits of the existing asset, if it is probable that future economic benefit will flow to the
Company from that expenditure and cost can be measured reliably. Other repairs and maintenance costs are
expensed off as and when incurred.

Intangible assets not ready for the intended use on the date of Balance Sheet are disclosed as "Intangible
assets under development".

Amortisation

Intangible assets are amortised on straight line basis over the estimated useful life. The method of amortisation
and the remaining useful life are reviewed at the end of each accounting year with the effect of any changes
in the estimate being accounted for on a prospective basis.

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use
or disposal. Gains or losses arising from derecognition of an intangible asset are recognised in profit or loss
when the asset is derecognised.

1.16. Impairment of tangible and intangible assets other than goodwill:

As at the end of each accounting year, the Company reviews the carrying amounts of its PPE and intangible
assets to determine whether there is any indication that those assets have suffered an impairment loss.
If such indication exists, the PPE, and intangible assets are tested for impairment so as to determine the
impairment loss, if any. Goodwill and the intangible assets with indefinite life are tested for impairment each
year.

Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount.
Recoverable amount is determined:

(i) in the case of an individual asset, at the higher of the net selling price and the value in use; and

(ii) in the case of a cash generating unit (the smallest identifiable Company of assets that generates
independent cash flows), at the higher of the cash generating unit's net selling price and the value in
use.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset for which
the estimates of future cash flows have not been adjusted.

If recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount,
such deficit is recognised immediately in the Statement of Profit and Loss as impairment loss and the carrying
amount of the asset (or cash generating unit) is reduced to its recoverable amount. For this purpose, the
impairment loss recognised in respect of a cash generating unit is allocated first to reduce the carrying
amount of any goodwill allocated to such cash generating unit and then to reduce the carrying amount of
the other assets of the cash generating unit on a pro-rata basis.

When an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit),
except for allocated goodwill, is increased to the revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that would have been determined had no
impairment loss is recognised for the asset (or cash generating unit) in prior years. A reversal of an impairment
loss (other than impairment loss allocated to goodwill) is recognised immediately in the Statement of Profit
and Loss.

1.17.Employee benefits:

(i) Short term employee benefits:

Employee benefits falling due wholly within twelve months of rendering the service are classified
as short term employee benefits and are expensed in the period in which the employee renders the
related service. Liabilities recognised in respect of short-term employee benefits are measured at the
undiscounted amount of the benefits expected to be paid in exchange for the related service.

(ii) Post-employment benefits:

(a) Defined contribution plans: The Company's superannuation scheme, state governed provident fund
scheme, employee state insurance scheme and employee pension scheme are defined contribution
plans. The contribution paid/payable under the schemes is recognised during the period in which
the employee renders the related service.

(b) Defined benefit plans: The employees' gratuity fund schemes and employee provident fund
schemes managed by board of trustees established by the Company, the post-retirement medical
care plan and the Parent Company pension plan represent defined benefit plans. The present value
of the obligation under defined benefit plans is determined based on actuarial valuation using the
Projected Unit Credit Method.

The obligation is measured at the present value of the estimated future cash flows using a discount rate
based on the market yield on government securities of a maturity period equivalent to the weighted
average maturity profile of the defined benefit obligations at the Balance Sheet date.

Remeasurement, comprising actuarial gains and losses, the return on plan assets (excluding amounts
included in net interest on the net defined benefit liability or asset) and any change in the effect of asset
ceiling (if applicable) is recognised in other comprehensive income and is reflected in retained earnings
and the same is not eligible to be reclassified to profit or loss.

Defined benefit costs comprising current service cost, past service cost and gains or losses on settlements
are recognised in the Statement of Profit and Loss as employee benefit expenses. Interest cost implicit
in defined benefit employee cost is recognised in the Statement of Profit and Loss under finance cost.
Gains or losses on settlement of any defined benefit plan are recognised when the settlement occurs.
Past service cost is recognised as expense at the earlier of the plan amendment or curtailment and when
the Company recognises related restructuring costs or termination benefits.

In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the
defined benefit plans to recognise the obligation on a net basis.

(iii) Long term employee benefits:

The obligation recognised in respect of long term benefits such as long term compensated absences is
measured at present value of estimated future cash flows expected to be made by the Company and is
recognised in a similar manner as in the case of defined benefit plans vide (ii) (b) above.

(iv) Termination benefits:

Termination benefits such as compensation under employee separation schemes are recognised as
expense when the Company's offer of the termination benefit is accepted or when the Company
recognises the related restructuring costs whichever is earlier.

1.18. Leases:

a. The Company as a lessee, recognises the right-of-use asset and lease liability at the lease commencement
date. Initially the right-of-use asset is measured at cost which comprises the initial amount of the lease
liability adjusted for any lease payments, less any lease incentives received made at or before the
commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and
remove the underlying asset or to restore the underlying asset or the site on which it is located.

The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the Company's incremental borrowing rate. It is remeasured
when there is a change in future lease payments arising from a change in an index or rate, or a change
in the estimate of the amount expected to be payable under a residual value guarantee, or a change in
the assessment of whether it will exercise a purchase, extension or termination option. When the lease
liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the
right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has
been reduced to zero. The right-of-use asset is measured by applying cost model i.e. right-of-use asset
at cost less accumulated depreciation /impairment losses.

The right-of-use assets are depreciated from the date of commencement of the lease on a straight-line
basis over the shorter of the lease term and the useful life of the underlying asset. Carrying amount of
lease liability is increased by interest on lease liability and reduced by lease payments made.

Lease payments associated with following leases are recognised as expense on straight-line basis:

• Low value leases; and

• Leases which are short-term.

b. The Company as a lessor, classifies leases as either operating lease or finance lease. A lease is classified
as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an
underlying asset. Initially asset held under finance lease is recognised in balance sheet and presented
as a receivable at an amount equal to the net investment in the lease. Finance income is recognised
over the lease term, based on a pattern reflecting a constant periodic rate of return on Company's
net investment in the lease. A lease which is not classified as a finance lease is an operating lease.
Accordingly, the Company recognises lease payments as income on a straight-line basis in case of assets
given on operating leases. The Company presents underlying assets subject to operating lease in its
balance sheet under the respective class of asset.

1.19. Cash and cash equivalents:

Cash and cash equivalents include cash on hand and other short term highly liquid investments with original
maturities of upto three months that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value.

1.20. Securities premium account:

(i) Securities premium includes:

• The difference between the face value of the equity shares and the consideration received in respect of
shares issued pursuant to Stock Option Scheme.

• The fair value of the stock options which are treated as expense, if any, in respect of shares allotted
pursuant to Stock Options Scheme.

(ii) The issue expenses of securities which qualify as equity instruments are written off against securities
premium account.

1.21.Share-based payment arrangements:

The stock options granted to employees pursuant to the Company's Stock Options Schemes, are measured
at the fair value of the options at the grant date. The fair value of the options is treated as discount and
accounted as employee compensation cost over the vesting period on a straight-line basis. The amount
recognised as expense in each year is arrived at based on the number of grants expected to vest. If a grant
lapses after the vesting period, the cumulative discount recognised as expense in respect of such grant is
transferred to the general reserve within equity.

1.22. Accounting and reporting of information for Operating Segments:

Operating segments are those components of the business whose operating results are regularly reviewed by
the chief operating decision making body in the Company to make decisions for performance assessment and
resource allocation. The reporting of segment information is the same as provided to the management for
the purpose of the performance assessment and resource allocation to the segments. Segment accounting
policies are in line with the accounting policies of the Company.

1.23. Foreign currencies:

(i) The functional currency and presentation currency of the Company is Indian Rupee. Functional currency of
the Company and foreign operations has been determined based on the primary economic environment
in which the Company and its foreign operations operate considering the currency in which funds are
generated, spent and retained.

(ii) Transactions in currencies other than the Company's functional currency are recorded on initial recognition
using the exchange rate at the transaction date. At each Balance Sheet date, foreign currency monetary
items are reported at the prevailing closing spot rate. Non-monetary items that are measured in terms
of historical cost in foreign currency are not retranslated.

Exchange differences that arise on settlement of monetary items or on reporting of monetary items at
each Balance Sheet date at the closing spot rate are recognised in the Statement of Profit and Loss in
the period in which they arise.

(iii) Financial statements of foreign operations whose functional currency is different than Indian Rupees are
translated into Indian Rupees as follows:

A. assets and liabilities for each Balance Sheet presented are translated at the closing rate at the date
of that Balance Sheet;

B. income and expenses for each income statement are translated at average exchange rates; and

C. all resulting exchange differences are recognised in other comprehensive income and accumulated
in equity as foreign currency translation reserve for subsequent reclassification to profit or loss on
disposal of such foreign operations.

1.24. Taxation:

Current Tax:

Tax on income for the current period is determined on the basis of taxable income (or on the basis of book
profits wherever minimum alternate tax is applicable) and tax credits computed in accordance with the
provisions of the Income Tax Act 1961, and based on the expected outcome of assessments/appeals.

Deferred Tax:

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in
the Company's financial statements and the corresponding tax bases used in computation of taxable profit
and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets are generally recognised for all taxable temporary differences to the extent that is probable
that taxable profits will be available against which those deductible temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to
the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of
the asset to be recovered.

Deferred tax assets relating to unabsorbed depreciation/business losses/losses under the head "capital gains"
are recognised and carried forward to the extent of available taxable temporary differences or where there is
convincing other evidence that sufficient future taxable income will be available against which such deferred
tax assets can be realised. Deferred tax assets in respect of unutilised tax credits are recognised to the extent
it is probable of such unutilised tax credits will get realised.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from
the manner in which the Company expects, at the end of reporting period, to recover or settle the carrying
amount of its assets and liabilities.

Transaction or event which is recognised outside profit or loss, either in other comprehensive income or in
equity, is recorded along with the tax as applicable.