Significant accounting policies

2.1 Basis of preparation of financial statements

The financial statements have been prepared and presented under historical cost convention and accrual basis of
accounting, unless otherwise stated, and in accordance with the generally accepted accounting principles in India
(Indian GAAP) and conform to the statutory requirements, circulars, regulations and guidelines issued by Reserve
Bank of India (RB!) from time to time to the extent they have an impact on the financial statements and current
practices prevailing in India. The financial statements have been prepared to comply in all material aspects with
the Accounting Standards ("AS") notified under Section 133 of the Companies Act, 2013, read with Rule 7 of the
Companies (Accounts) Rules, 2014 to the extent applicable. The Company follows the prudential norms for
income recognition, asset classification and provisioning as prescribed by the RBI for Non-deposit taking Non¬
Banking Finance Companies (NBFC-ND).

2.2 Use of estimates

The preparation of financial statements in conformity with the GAAP requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses during the reporting period, reported
balance of assets and liabilities and disclosure of contingent liabilities as at the date of financial statements.
Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively
in current and future periods.

2.3 Revenue recognition:

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and
the revenue can be reliably measured.

I. Interest income is recognized in the statement of profit and loss on an accrual basis. In case of Non Performing Assets (NPA)
interest income is recognised upon realisation as per the RBI Guidelines, Interest accrued and not realised before the
classification of the asset as an NPA is reversed in the month in which the loan is classified as NPA.
ii. Upfront /processing fees are recovered and recognised at the time of disbursement of loan / receipt,
ill. interest income on other deposits are recognised on a time proportion basis. Income from dividend is recognized
in the statement of profit and loss when the right to receive is established,
iv. Profit / Loss on disposal of an investment is recognised at the time of such sale / redemption and is computed
based on weighted average cost

j.4 Tangible fixed assets, intangible fixed assets and intangible fixed assets under development

Fixed assets are stated at cost less accumulated depreciation and impairment losses, if any. The cost of fixed assets includes
non-refundable taxes, duties, freight and other incidental expenses incurred directly related to the acquisition and
installation of the asset. Subsequent expenditure on fixed assets after their purchase / completion is capitalized, only if such

expenditure results in an increase in the fiiture benefits from such asset beyond its previously assessed standard of
performance.

The cost of intangible fixed assets not ready for the intended use at each balance sheet date is disclosed as intangible fixed
assets under development.

2.5 Impairment

The Company determines periodically whether there is any indication of impairment of the carrying amount of its assets.
The recoverable amount (higher of net selling price and value in use) is determined for an individual asset, unless the asset
does not generate cash inflow that are largely independent of those from other assets or group of assets. The recoverable
amounts of such asset are estimated, if any indication exists and impairment loss is recognized wherever the canying
amount of the asset exceeds its recoverable amount. Where it is not possible to estimate the recoverable amount of an
individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

2.6 Depreciation and Amortizalion:

Depreciation on tangible fixed assets is provided on pro-rata basis (i.e. from the date on which the asset is ready to use) on written
down value method. Depreciation on fixed assets is provided over the useful lives of the asset, as estimated by the management
based on mtemal technical assessment. If the management’s estimate of the useful life of a fixed asset at the time of acquisition of
the asset or of the remaining useful life on a subsequent review is shorter than that envisaged, depreciation is provided at a higher
rate based on the management’s estimate of the useful life / remaining useful life. Pursuant to this policy, the estimated useful life
of assets are as follows:

2.7 Borrowing costs

Borrowing costs include interest and ancillary costs that the Company incurs in connection with the borrowings. Costs in
connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged
to the Statement of Profit and Loss at the time of availment of the loan.

2.8 Loan origination costs

Brokerage, commission and other costs paid at the time of acquisition of loans are charged to the Statement of Profit and
Loss,

2.9 Earnings ^Der share:

Basic earnings per share is computed and disclosed using the weighted average number of common shares outstanding
during the year. Diluted earnings per share is computed and disclosed using the weighted average number of common and
dilutive common equivalent shares outstanding during the year, except when the results would be anti-dilutive.

2.10 Income taxes

• Income-tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income-tax law)
and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income
for the period). Income-tax expense is recognized in statement of profit and loss except that tax expense relating to items
recognized directly in reserves is also recognized in those reserves.

• Current tax is measured at the amount expected to be paid to (recovered from) the taxation authorities, using the applicable
tax rates and tax laws. Deferred tax is recognized in respect of timing differences between taxable income and accounting
income i.e. differences that originate in one period and are capable of reversal in one or more subsequent periods. The
deterred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates and
tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognized only
to the extent there is reasonable certainty that the assets can be realized in future; however, where there is unabsorbed
depreciation or earned forward loss under taxation laws, deferred tax assets are recognized only if there is a virtual
certainty supported by convincing evidence that sufficient future taxable income will be available against which such
deferred tax assets can be realized. Deferred tax assets are reviewed as at each balance sheet date and written down or
written-up to reflect the amount that is reasonably/virtually certain (as the case may be) to be realized.