The Board of Directors takes great pleasure to present the 99^th
Annual Report on the business and operations of Dhanlaxmi Bank
Limited (“the Bank”), together with the audited accounts for the
financial year ended March 31, 2026. The Report highlights the
performance and achievements of the Bank during the year
along with the new initiatives undertaken by the Bank.

Performance Highlights

The Bank's performance Highlights for the financial year ended
March 31,2026 are as follows:

Bank's Geographical Spread & Expansion Programme

> The Bank has 264 branches as on 31^st March, 2026 spread
across 1 4 States and 2 Union Territories. During the financial
year, Bank opened branches in Sulthan Bathery in Wayanad
District, Kerala and Dindigul and Thiruporur in Tamil Nadu.

> Out of 264 branches, 20 branches are in rural category, 114 in
Semi Urban, 72 in Urban and 58 in Metropolitan Category

> The Bank had 285 ATMs/CRMs as on March 31,2026

> The Reserve Bank of India, vide Letter No. CO.DOR.RAUG. No.
S6450/22-03-049/2025-2026 Dated November 19, 2025,
approved the Bank's request for reinstatement of general
permission for opening, shifting, merger, conversion, and
closure of banking outlets.

Total Business

Total business of the Bank improved by 19.67% to reach '33771.57
Crore as on 31.03.2026, from ?28219.11 Crore as on 31.03.2025.

Deposits

Deposits recorded a growth of 16.42%, reaching '18,642.88
Crore as of March 31, 2026, compared to '16,013.45 Crore as
of March 31,2025. Current Account and Savings Account (CASA)
deposits recorded a growth of 15.78%, reaching '5,380 Crore
as of March 31, 2026, compared to '4,647 Crore as of March
31, 2025. The CASA-to-total deposits ratio stood at 28.86% as of
March 31,2026

Gross advances stood at '15128.69 Crore as of March 31,2026,
compared to '12205.66 Crore as of March 31,2025, registering
a growth of 23.95%.

The CD ratio as of March 31,2026, was 81.15%

Profitability

The total income (Interest Income Non-Interest Income) as of
March 31 , 2026 was '1 793.87 Crore, compared to '1489.08
Crore as of March 31,2025, registering a growth of 20.47%. Interest
income increased by 21.34% year-on-year, reaching '1601.48
Crore as of March 31, 2026, compared to '1319.88 Crore as
of March 31, 2025. Similarly, non-interest income increased by
13.71% year-on-year, reaching '192.39 Crore as of March 31,
2026, compared to '169.20 Crore as of March 31,2025.

Changes in interest rates have impacted the Net Interest Income
(NII) of the Bank, which has increased by 28.77% on a year-over¬
year (YoY) basis. Interest expenses have increased by 17.04% YoY
to '979.15 Crore as of March 31,2026, from '836.59 Crore as of
March 31, 2025. Operating expenses also increased by '41.05
Crore, to '598.44 Crore as on March 31,2026 from '557.39 Crore
as on March 31,2025.

Cost to Income Ratio as on March 31,2026 was 73.45% against
85.42% as on March 31,2025.

Operating profit during the year was '216.28 Crore as against
'95.10 Crore during the previous year. The Bank declared a net
Profit of '102.75 Crore during the year under report and for the
previous year, the Bank had declared a net profit of '66.64 Crore.

Capital and Reserves

Bank's Paid-up capital and reserves was '1473.92 Crore as on

31.03.2026. The capital adequacy ratio as per Basel III was
18.92% with Core CRAR of 16.11%.

Capital Market Activities During FY 2025-26

Pursuant to the approval accorded by the shareholders of the Bank
at the Extraordinary General Meeting (EGM) held on March 18,
2025, the Bank successfully issued and allotted 150 redeemable,
non-convertible unsecured debentures (Basel III compliant Tier II
Bonds) (ISIN: INE680A08099) aggregating to '150 Crore on private
placement basis during April 2025. The proceeds of the issue are
being utilized to augment the Bank's Tier II Capital, strengthen
overall capital adequacy, and enhance long-term resources to
support business growth.

The Board places on record its sincere appreciation to the
shareholders and stakeholders for their continued trust in the Bank
and participation in this capital-raising exercise. The Board also
extends its gratitude to the Merchant Bankers, Legal Counsels,
Trustees to the Bond Issue, Registrar and Transfer Agents, Bankers
to the Issue, and the Bank's Central Statutory Auditors for their
valuable support in the successful completion of the issue. The
Bank acknowledges with thanks the guidance and cooperation
extended by the Regulators and the Stock Exchanges. The details
of the issue of bonds are included in the Report on Corporate
Governance forming part of the Directors' Report.

Dividend

The Board of Directors of the Bank has not recommended any
dividend for the financial year 2025 - 2026.

Non - Performing Assets

Gross NPA and Net NPA percentage stood at 1.89% and 0.51%
respectively as on 31.03.2026 against 2.98% and 0.99% as on
31.03.2025.

The provision coverage ratio (PCR) as on 31.03.2026 was 92.46%
which was 88.84% in the previous year.

Vision & Mission

Our Vision: “Banking on Relationships forever”.

Our Mission: To Become a Strong and Innovative Bank with Integrity
and Social Responsibility to Maximize Customer Satisfaction as
well as that of the Employees, Shareholders and the Society,

Customer Service

The Bank accords high importance to the quality of customer
service rendered across its branches / offices. The Bank initiated
a series of measures during the year through deployment
of technology and significantly enhancing service quality, A
well-defined and full-fledged Customer Grievance Redressal
Mechanism has been put in place in the Bank.

The Customer Service Committees comprising of Bank personnel
as well as our constituents monitor the implementation of customer
service measures periodically. Customer Service Committee of
the Board has been formed at the apex level and committees
at branches for monitoring service quality and bringing about
improvements in this area on an ongoing basis. The Bank has a
dedicated Customer grievance redressal division at corporate
office Thrissur and customer service 24 x 7 Phone Banking Call
Centre at Chennai to cater to customer needs across the country.
In the financial year 2025-26, the Bank registered 12483
complaints, as against 13538 complaints in 2024-25.

Compliance with Rights of Persons with Disabilities Act, 2016

The Bank is committed to providing accessible and inclusive
banking services to Persons with Disabilities (PwDs), in accordance
with the Rights of Persons with Disabilities Act, 2016 and guidelines
issued by the Reserve Bank of India (RBI) and the Securities and
Exchange Board of India (SEBI).

Key initiatives undertaken include:

• Provision of ramps and other accessibility features at branches
for easy access

• Designated service counters and priority assistance for PwDs

• Staff assistance for availing banking services and conducting
transactions

• Implementation of website accessibility features in line with
WCAG 2.1 Level AA standards

• Availability of accessibility tools on the Bank's corporate
website to enable customized browsing

The Bank periodically reviews its facilities and services to ensure
equitable, dignified, and convenient access to banking for all
stakeholders.

The following important products and services / initiatives were
introduced during the period for the benefit of the customers:

1. Introduced new deposit products, ”FCNR(B) Premium Deposit”

2. Implemented TAB based application to facilitate Account
Opening, Re-KYC and customer service requests

3. Integrated UPI with the GSTN (PAYTAX) application to enhance
customer convenience

4. Automation of the Retail Loan processing through
implementation of Loan Origination System

5. Automated PMJJBY and PMSBY renewals to ensure seamless
policy continuity, enhance operational efficiency and
improve customer experience

6. Migrated the public domain to 'dhan.bank.in' in line with the
regulatory requirement to adopt a secure and compliant
'.bank.in' domain for enhanced trust, authentication, and
protection against phishing and other cyber threats

7. Enabled ECS-based collection of Recurring Deposits to ensure
automated payments and improve customer convenience

8. Introduced SMS-based blocking of Retail Internet Banking
and Mobile Banking services to enhance customer security
and enable swift response to potential fraud

9. Upgraded all branches to 'B' category in Core System
to enable pan-branch forex transactions and enhance
customer access to forex services

10. Real-time fraud monitoring of digital channels strengthened
to enhance customer security

1 1 . Enabled end-to-end online Re-KYC through Retail Internet
Banking to enhance customer convenience

12. Enabled UPI onboarding and transactions for customers with
international mobile numbers, enhancing global accessibility
and digital payment adoption

13. Enabled Digital KYC for differently abled persons promoting
inclusive banking and enhancing customer onboarding
experience

14. Digitized ATM withdrawal dispute handling via Mobile Banking,
reducing manual intervention and enabling faster resolution
and tracking

15. Enabled UPI services for Dhanam Genius and Dhanam
Yuvak customers upon attaining 18 years, ensuring seamless
transition to full digital banking capabilities

16. Launched 'ASHRAYA' application to streamline and digitize
death claim settlement processes

17. Enabled online modification of communication address via
Retail Internet Banking and Mobile Banking, empowering
customers with secure and convenient self-service option

18. Digitized the credit card closure process in RIB & MB,
minimizing manual intervention and improving turnaround
time

19. Enabled delegated payment functionality (UPI Circle) in UPI

20. Strengthened the UPI ecosystem by introducing exclusive
UPI IDs with the ‘@validdlb' handle for SEBI-registered
intermediaries to collect funds from the investors through UPI

21. Enabled net banking registration using credit card details-
simplifying the onboarding process and improving customer
convenience

22. Strengthened dispute handling of digital transactions through
UDIR in Retail Internet Banking and Mobile Banking, minimizing
manual intervention and enhancing resolution efficiency

23. The Bank has partnered with Arppan Online, a leading service
provider for temple solutions for bill generation and collections
and is integrated with different mode of payments like Cards,
UPI and Cash

24. The Bank has entered into a tie-up with M/s. Atyati Technologies
as a Corporate Business Correspondent under the Financial
Inclusion initiative

Listing on Stock Exchanges

The Equity shares of the Bank are listed on BSE Ltd. and the National

Stock Exchange of India Ltd. The Bank confirms that it has paid the

listing fees to the Stock Exchanges for the financial year 2026-27.

Green Initiatives in Corporate Governance

The Bank supports and pursues the 'Green Initiative' of the Ministry
of Corporate Affairs. All the documents including the notice and
explanatory statement of Annual General Meeting, Audited
Financial Statements, Directors' Report and Auditors' Report are
being sent electronically to all shareholders who have registered
their e-mail addresses with their Depository Participants or with the
Bank / Registrar & Transfer Agents. Shareholders holding shares in
electronic form are requested to update their e mail addresses
in their respective DP accounts. Shareholders holding shares in
physical form are requested to update their e mail addresses
with Bank's Registrar and Transfer Agents by a written request for
enabling the Bank to ensure electronic dispatch of the aforesaid
documents. A letter providing the web-link, including the exact
path, where the complete details of the Annual Report are
available is also being sent to those shareholder(s) who have not
so registered their e-mail addresses.

Directors

The composition of the Board of Directors of the Bank is in
accordance with the provisions of the Companies Act, 2013,
Securities and Exchange Board of India (Listing Obligations
and Disclosure Requirements) Regulations, 2015, the Banking
Regulation Act, 1 949, guidelines issued by the Reserve Bank of
India (“RBI”) and the best practices of Corporate Governance.
As on March 31 , 2026, the Board of Directors of the Bank had
1 0 Directors comprising of the Chairman, Managing Director &
CEO, Executive Director, 4 non-executive Independent Directors,
one non-executive non independent Director and 2 Additional
Directors appointed by the Reserve Bank of India under Section
36AB of the Banking Regulation Act, 1949. Our Chairman is also
an Independent Non-Executive Director.

All the Directors have rich experience and specialized knowledge
in various sectors like banking, risk management, agriculture &
rural economy, small scale industry, information technology,
economics, accountancy, etc. The remuneration / sitting fees
paid to the Directors during the year are disclosed in the Report
on Corporate Governance.

There were 5 independent Directors on the Board of the Bank
as on March 31 , 2026. Declarations have been taken from all
the Independent Directors as required under the Companies
Act, 2013, the Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations 2015 and
the guidelines issued by RBI.

In the opinion of the Board, the Independent Directors possess
the requisite expertise and experience and are persons of high
integrity and repute. They fulfil the conditions specified in the Act
and the Rules made thereunder and are independent of the
Management.

There are no changes in any of the above information from March

31,2026 to the date of this Report, except for the following:

1. In the Meeting of the Board of Directors of the Bank held on

29.07.2026, Sri Rajan T.K was appointed as Additional Director
(Non-Executive Independent) of the Bank w.e.f. July 29, 2026.
His term of appointment as Non-Executive Independent
Director will be for five years w.e.f. July 29, 2026, subject to the
approval of the Shareholders of the Bank in the Annual General
Meeting to be held on Wednesday, September 23, 2026. Sri
Rajan T.K will be representing “Information Technology” as
required under Section 10(2)(a) of the Banking Regulation Act,
1949.

2. In the Meeting of the Board of Directors of the Bank held on

07.08.2026, Sri T.V Rao was appointed as Additional Director
(Non-Executive Independent) of the Bank w.e.f. September 01,
2026. His term of appointment as Non-Executive Independent
Director will be for three years w.e.f. September 01, 2026,
subject to the approval of the Shareholders of the Bank in
the Annual General Meeting to be held on Wednesday,
September 23, 2026. Sri T.V Rao will be representing “Payment&
Settlement Systems” as required under Section 10(2)(a) of the
Banking Regulation Act, 1949.

Detailed profiles of all the Board Members are available on the

Bank's website at https://www.dhan.bank.in/board-of-directors/.

Changes in the Board during the year 2025-2026

1. Sri Ashutosh Khajuria was appointed as Director (Non-Executive
Independent) on the Board of the Bank w.e.f March 22, 2025
and his appointment as Independent Director for a period of 5
years w.e.f March 22, 2025 was approved by the Shareholders
of the Bank vide postal ballot on June 16, 2025.

2. Dr. Jineesh Nath C.K was re-appointed as Non-Independent
Non-Executive Director, liable to retire by rotation, at the Annual
General Meeting of the Bank held on September 29,2025.

3. Sri C. Nageswara Rao, General Manager, Reserve Bank of
India was appointed by Reserve Bank of India as Additional
Director on the Board of the Bank in accordance with the
provisions of Section 36AB (1) of the Banking Regulation Act,
1949 from November 18, 2023 to November 17, 2025. RBI
has further extended the term of office of Sri C. Nageswara
Rao for a further period of two years from November 1 8,
2025 to November 17, 2027 or till further orders, whichever
is earlier.

4. Reserve Bank of India has appointed Ms. Sujatha J, General
Manager, Reserve Bank of India as Additional Director on the
Board of the Bank in accordance with the provisions of Section
36AB (1) of the Banking Regulation Act, 1949, in place of Sri
D K Kashyap, for a period of two years from November 19,
2025 to November 18, 2027 or till further orders, whichever
is earlier.

Changes in Directors during the year 2026-27 till the date of
the report

1. In the Meeting of the Board of Directors of the Bank held on

29.07.2026, Sri Rajan T.K was appointed as Additional Director
(Non-Executive Independent) of the Bank w.e.f. July 29, 2026.
His term of appointment as Non-Executive Independent
Director will be for five years w.e.f. July 29, 2026, subject to
the approval of the Shareholders of the Bank in the Annual
General Meeting to be held on Wednesday, September 23,
2026.

2. In the Meeting of the Board of Directors of the Bank held on

07.08.2026, Sri T.V Rao was appointed as Additional Director
(Non-Executive Independent) of the Bank w.e.f. September 01,
2026. His term of appointment as Non-Executive Independent
Director will be for three years w.e.f. September 01, 2026,
subject to the approval of the Shareholders of the Bank in
the Annual General Meeting to be held on Wednesday,
September 23, 2026.

Composition of Audit Committee

As on March 31 , 2026, the Bank had a 5-member Audit
Committee of the Board (including 2 RBI Additional Directors).
All the five members of the Committee were non-executive
Directors. Ms. Vardhini Kalyanaraman is the Chairperson of the
Committee. The other Members of the Committee are Sri G.
Rajagopalan Nair, Dr. Jineesh Nath C.K, Sri C. Nageswara Rao and
Ms. Sujatha J. The composition as well as the terms of reference
of the Committee are in accordance with the provisions of the
Companies Act, 2013, the Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations
2015, the Banking Regulation Act, 1949 and the guidelines issued
by Reserve Bank of India.

Declaration By Independent Directors

The Bank has duly obtained necessary declarations from each
independent Director under Section 149(7) of the Companies Act,
2013 that he/she meets the criteria of independence as laid down
in Section 149(6) of the Companies Act, 2013 and Regulation
1 6 of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015. The Bank has also obtained the 'Fit & Proper'
declarations from all Directors as prescribed under the guidelines
issued by Reserve Bank of India. Pursuant to the notification of
the Ministry of Corporate Affairs dated October 22, 2019, an
online data bank for the independent directors (“Data Bank”) has
been rolled out by the Indian Institute of Corporate Affairs. All the
Independent Directors of the Bank have registered themselves in
the Data Bank.

Policy on appointment and remuneration of Directors

The Nomination & Remuneration Committee of the Board
recommends the appointment / reappointment / continuation
of the Directors to the Board after conducting due diligence of

the Directors on the basis of the “fit& proper” criteria prescribed
under the guidelines issued by Reserve Bank of India along with
the provisions of the Companies Act, 2013, the Securities and
Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015 and the Nomination Policy
approved by the Board. The Board will take the appropriate action
based on the recommendations of the Committee.

The criteria for determining qualifications, positive attributes and
independence of Directors to be appointed / re-appointed or for
continuation of Directors include, inter-alia, the following:

• Ensuring that the appointment / re-appointment / continuation
is in conformity with the provisions of the Banking Regulation
Act, 1949, RBI guidelines, Companies Act, 2013 and the
Securities and Exchange Board of India (Listing Obligations
and Disclosure Requirements) Regulations, 2015

• Ensuring that the criteria for independence of Directors as
stated in the Companies Act, 2013 and the Securities and
Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015 is complied with, in case of
independent Directors

• Ensuring that the person does not attract any disqualification
as per the provisions of the Banking Regulation Act, 1949, RBI
guidelines, the Companies Act, 2013 and the Securities and
Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015;

• Special knowledge or practical experience in various fields
as enumerated in Section 10A(2)(a) of the Banking Regulation
Act, 1949 or any other field which may be useful to the Bank;

• Professional knowledge and experience;

• Experience in the field of banking / finance sectors;

• Interest in NBFCs and other entities;

• Relatives connected with the Bank;

• Fund and non-fund facilities availed from the Bank;

• Defaults, if any, by the Director or interested entities with respect
to the credit facilities availed from any Bank;

• Professional achievements relevant to the office of Directorship;

• Prosecution, if any, pending or commenced or resulting in
conviction in the past against the director and / or against any
of the interested entities for violation of economic laws and
regulations;

• Criminal prosecution, if any, pending or commenced or
resulting in conviction in the past against the Director;

• Any other factors as the Nomination & Remuneration
Committee may think fit for the purpose of considering the
appointment / re-appointment / continuation as Director

The Bank has a Board approved Compensation Policy which deals
with the compensation & benefits of the Employees of the Bank.

The objectives of the Compensation Policy of the Bank inter-alia
includes, to provide a fair and persistent basis for motivating,
inspiring and rewarding the employees appropriately, according

to their jobs/role size, performance, accomplishments,
contribution, skill, aptitude and competence to implement
standards on sound compensation practices and incentives and
to provide effective governance of compensation payable to the
employees, alignment of compensation with prudent risk taking
and effective supervisory oversight. The disclosure requirement of
the remuneration is separately provided in “Disclosure under Basel
III norms.”

The Board considers the recommendations of the Nomination
& Remuneration Committee and approves the remuneration,
with or without modifications, subject to regulatory approvals.
The remuneration payable to MD & CEO / Whole-time Directors
is subject to prior approval of the Reserve Bank of India (RBI).
Therefore, the remuneration or any revision in remuneration to MD
& CEO / Whole-time Directors is payable only after receipt of the
approval from RBI.

The non-executive Directors are paid sitting fees for attending
each meeting of the Board of Directors or any Committee thereof
as approved by the Board, within the permissible limits prescribed
under the Companies Act, 2013, the Securities and Exchange
Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015 and other regulatory guidelines, as amended
from time to time. The Board while recommending any change
in the sitting fees considers various factors like size and complexity
of organization, comparison with the peer banks and regulatory
guidelines as applicable. Apart from sitting fees, the Bank does
not pay any other remuneration to the non-executive Directors.

The total remuneration paid to MD & CEO, Executive Director
and non-executive Directors for the financial year 2025-26 is
included in the Report on Corporate Governance forming part of
this Report.

The Remuneration Policy of the Bank is hosted on the website
of the Bank https://www.dhan.bank.in/pdf/Nomination-and-
Remuneration-Policy-8.0.pdf.

Board Level Performance Evaluation

Pursuant to the provisions of the Companies Act, 2013 and the
Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015, the performance
evaluation of the Board as a whole, the individual Directors
and various Committees of the Board are undertaken annually.
The evaluation of the individual Directors is being done in the
absence of the Director being evaluated. A separate meeting
of independent Directors, held once a year, evaluates the
performance of non-independent Directors, Chairman and
the Board as a whole. The criteria for performance evaluation
of Directors, Board and its Committees include, inter-alia, the
following:

• Attendance at Board and various Committee meetings;

• Participation and contribution in Board and Committee
meetings;

• Composition of the Board and its diversity;

• Roles of various Committees of the Board;

• Compliance and understanding of regulatory requirements;

• Contribution to effective corporate governance and
transparency in the Bank's operations;

• Updation of Knowledge and familiarization programmes
conducted for Directors;

• Appropriateness of decisions made by the Board and its
Committees;

• Quality, quantity and timeliness of flow of information to the
Board;

• Understanding by individual Directors for their roles and
responsibilities as Director;

• Contributions towards the performance and strategies of the
Bank;

• Conduct of Meetings;

• Professionalism in the Board and Committees

Number of Board Meetings

A total of 14 Board Meetings were held during the year. The
Board meetings were held in accordance with the regulatory
requirements. The details of the meetings held are provided in
the Corporate Governance Report that forms part of this Report.

Changes in Key Managerial Personnel (KMP)

During the Financial Year 2025-26, there were no changes in the
Key Managerial Personnel (KMP).

Subsequent to the close of the financial year, Mr. Krishnakumar K
has taken charge as the Chief Financial Officer of the Bank from
Ms. Kavitha T.A with effect from July 10, 2026.

Except for the above, there are no other changes in the Key
Managerial Personnel (KMP).

Particulars of employees

The Bank continues to uphold its commitment to building a
dynamic and diverse workforce. The total number of employees
of the Bank as at the closure of the financial year ended March
31,2026 was 1856, of which:

• Number of male employees: 1076

• Number of female employees: 780

• Number of transgender employees: 0

The Bank has no employee whose particulars are required to be
given in terms of Section 197 of the Companies Act, 2013 read
with Rule 5 (2) of Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014.

The ratio of the remuneration of each Director to the median
employees' remuneration and other details in terms of Section
197 (12) of the Companies Act, 2013 read with Rule 5(1) of the
Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 are annexed to this report.

Number of cases filed, if any, and their disposal under Section 22
of the Sexual Harassment of Women at workplace (Prevention,
Prohibition and Redressal) Act, 2013

The relevant information is included in the Report on Corporate
Governance forming part of the Directors' Report.

Maternity Benefit provided by the Bank under Maternity Benefit
Act, 1961

The Bank declares that it has duly complied with the provisions
of the Maternity Benefit Act, 1961. All eligible women employees
have been extended the statutory benefits prescribed under
the Act, including paid maternity leave, continuity of salary and
service during the leave period, and post-maternity support as
applicable. The Bank remains committed to fostering an inclusive
and supportive work environment that upholds the rights and
welfare of its women employees in accordance with applicable
laws.

Statutory Central Auditors and the Auditors' Report

The shareholders had at the 98th Annual General Meeting of
the Bank held on September 29, 2025, appointed M/s. Sagar &
Associates, Chartered Accountants, Hyderabad (FRN-003510S)
and M/s. Abraham & Jose, Chartered Accountants, Thrissur (FRN-
000010S) for the financial year 2025-26 for their third year and
second year respectively to hold office as the Joint Statutory
Central Auditors of the Bank from the period commencing
from the conclusion of the 98th Annual General Meeting to the
conclusion of the 99th Annual General Meeting of the Bank.

M/s Sagar & Associates, Chartered Accountants, Hyderabad, will
be completing their third year of engagement by conclusion
of the 99th Annual General Meeting scheduled to be held on
Wednesday, September 23, 2026 and therefore, shall not
continue as the Joint Statutory Central Auditors of the Bank in
accordance with the guidelines issued by Reserve Bank of India.
The Reserve Bank of India vide. Letter No CO. DOS.RPD. No.
S3063/08.08.005/2026-27 dated July 23, 2026 has approved
appointment of M/s. Abraham & Jose, Chartered Accountants
(FRN 000010S) and M/s. G. Natesan & Co., Chartered Accountants
(FRN 002424S), Chennai as the Joint Statutory Central Auditors of
the Bank for the financial year 2026-27, for their third year and
first year respectively. Accordingly, the Board of Directors of
the Bank has placed the proposal for the appointment of M/s.
Abraham & Jose, Chartered Accountants and M/s. G. Natesan
& Co., Chartered Accountants, Chennai as the Joint Statutory
Central Auditors of the Bank for the financial year 2026-27, for
their third year and first year respectively, to the Shareholders for
their approval at the 99th Annual General Meeting of the Bank
scheduled to be held on Wednesday, September 23, 2026.

A total fee of ' 50 Lakhs (Rupees Fifty Lakh only) plus applicable
taxes was paid to the Statutory Central Auditors M/s. Sagar &
Associates and M/s. Abraham & Jose for Audit, Certification,
Quarterly Review and Tax Audit for the FY 2025-26. The travelling

and out- of pocket expenses related to the audit/review were
additionally reimbursed on actual basis.

There is no qualification or adverse remark in the Auditors' Report
for the financial year 2025-26.

Secretarial Auditors and Secretarial Audit Report

Subject to the approval of Shareholders, the Board of Directors of
the Bank has appointed Sri M. Vasudevan as the Secretarial Auditor
of the Bank for a term of 5 years i.e., from the financial year 2025¬
26 to the financial year 2029-30, based on the recommendation
of the Audit Committee of the Board. The Bank has provided all
assistance and facilities to the Secretarial Auditor for conducting
their audit. The report of the Secretarial Auditor is annexed to this
report. The Secretarial Audit Report for the financial year 2025-26
does not contain any qualification, reservation, adverse remark or
disclaimer of opinion.

Annual Return

Pursuant to Section 92 (3) of the Companies Act, 2013 and Section
134 (3) (a), the Annual Return is hosted on the Bank's website at
https://www.dhan.bank.in/pdf/15-Annual%20Return.pdf

Related Party Transactions

The Bank has adopted the “Policy on Materiality of Related Party
Transactions and Dealing with Related Party Transactions” in
accordance with the provisions of the Companies Act, 2013 and
the Securities and Exchange Board of India (Listing Obligations
and Disclosure Requirements) Regulations, 2015. The Policy is
hosted on the website of the Bank at https://www.dhan.bank.in/
pdf/Policy-Materiality-Related-Party-Transactions-Dealing-Related-
Party-T ransactions-8.0.pdf.

During the financial year, the Bank did not enter into any related
party transactions with its Directors or Key Managerial Personnel
or their Relatives that would potentially conflict with and/ or
adversely affect the interests of the Bank. In accordance with
the circular issued by Reserve Bank of India on “Disclosure in
Financial Statements - 'Notes to Accounts' dated July1, 2015 -
Para 4.5 Accounting Standard 18 - Related Party Disclosures”,
the remuneration paid to Managing Director & CEO and the
Executive Director alone qualifies for classification as Related
Party Transaction, for which the Bank has taken due approvals
of the Reserve Bank of India and the Shareholders of the Bank.
However, in accordance with the provisions of Regulation 23 (9) of
SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015, the remuneration paid to Managing Director & CEO and
the Executive Director does not fall within the purview of Related
Party Transactions. Further, there was no related party transaction
for which Form AOC-2 was applicable.

Risk Management Policy Framework

The Bank has a comprehensive policy framework which
contains separate policies for identification, measurement and

management of all material risks including but not limited to credit,
market, operational, liquidity and other Pillar-II risks. The Bank has
put in place integrated risk management policies which ensure
independence of the risk governance structure. The required
standard operating procedures also follows the Policies to ensure
that all the parameters are well covered while implementing the
approved policies. The details of risk management practices are
provided in Management Discussion and Analysis Report annexed
to the Director's Report.

Compliance With Capital Adequacy Framework

In compliance with regulatory guidelines on Pillar I of Basel III norms,
the Bank has computed capital charge for credit risk as per the
Standardized Approach, for market risk as per the Standardized
Duration Method and for operational risk as per the Basic Indicator
Approach. To address Pillar II risk, the Bank has implemented ICAAP
(Internal Capital Adequacy Assessment Process), to integrate
capital planning with budgetary planning and to capture residual
risks which are not addressed in Pillar I, like credit concentration
risk, interest rate risk in the banking book, liquidity risk, earnings risk,
strategic risk, reputation risk, pension obligation risk etc. The Bank
has adopted a common framework for additional disclosures
under Pillar III for adhering to the market discipline norms of Basel
III guidelines. This requires the Bank to disclose its risk exposures, risk
assessment processes and its capital adequacy to the market in
a consistent and comprehensive manner.

Adequacy of Internal Financial Controls related to Financial
Statements

The Bank has laid down a system of internal financial controls with
reference to its financial statements. The integrity and reliability of
the internal control systems are achieved through clear policies
and procedures, process automation, training and development
of employees, and an organisation structure that segregates
responsibilities. These controls are reviewed and tested by the
internal audit team to ensure the accuracy and completeness of
the accounting records and the preparation of reliable financial
statements. The internal financial controls of the Bank with respect
to the financial statements are adequate and are operating
effectively.

Particulars Regarding Conservation of Energy, Technology
Absorption and Foreign Exchange Earnings and Outgo (as
required under Section 134 (3)(m) of the Companies Act, 2013
Read with Rule (8)(3) of The Companies (Accounts) Rules, 2014)

To reduce its carbon footprint and enhance resource efficiency,
the Bank has undertaken various energy conservation initiatives at
its premises. The Bank's Mattancherry Branch is currently operating
on solar energy, The Bank is also in the process of installing solar
power systems at Corporate Office and other Bank-owned
premises. Further, energy-efficient equipment is being deployed
across branches and administrative offices to optimize power
consumption.

The Bank continues to leverage information technology extensively
to deliver quality services to its customers. It remains committed
to digital transformation, with ongoing investments in analytics
and paperless technologies aimed at enhancing operational
efficiency and improving both internal and customer-facing
processes.

In addition, the Bank actively supports the country's export efforts
through its trade finance operations, thereby contributing to
foreign exchange earnings.

Investor Education and Protection Fund

The Bank transferred the entire pending unclaimed dividend
amount to the Investor Education and Protection Fund (IEPF)
during the financial year 2018-19. There was no amount of
dividend pending to be transferred to the fund in the financial
year 2025-26.

In terms of Section 124 (6) of the Companies Act, 2013 read with
Investor Education and Protection Fund Authority (Accounting,
Audit, Transfer and Refund) Rules, 2016, as amended from time
to time, it may be noted that if the dividends have been unpaid
or unclaimed for seven consecutive years or more the underlying
shares shall be transferred to the IEPF Demat Account maintained
with depositories. Upon transfer of such shares to IEPF account, all
benefits (eg. bonus, split, etc.), if any, accruing on such shares shall
also be credited to the IEPF Demat Account and the voting rights
on such shares shall remain frozen till the rightful owner claims
the shares. The members/claimants whose shares, unclaimed
dividend etc. have been transferred to IEPF may claim the shares
or apply for refund by making an application to IEPF Authority as
per the procedure prescribed in the IEPF Rules.

Maintenance of Cost Records

Being a Banking Company, the Bank is not required to maintain
cost records as per sub-section (1) of Section 148 of the
Companies Act, 2013.

Subsidiary Companies

The Bank does not have any subsidiary companies.

Compliance to Secretarial Standards

The relevant Secretarial Standards issued by the Institute of
Company Secretaries of India (ICSI) related to the Board Meetings
and General Meetings have been complied with by the Bank.

Confirmation with respect to Insolvency and Bankruptcy Code,
2016

As per section 3(7) of The Insolvency and Bankruptcy Code,
2016, “Corporate person” does not include any financial service
provider, but under section 3(17) of IBC,” Bank “is treated as
“Financial Service Provider”. However as per the said section,
normal creditors cannot directly trigger action against the Bank
under IBC, but prior permission/consent and approval is required

from the Financial Regulator, RBI. There is no application or
proceeding against the Bank under Insolvency and Bankruptcy
Code, 2016 during the financial year under review, Bank also had
not filed any IBC cases directly against any corporate defaulter or
against the personal guarantor to the Corporate Debtor during the
financial year 2025-26.

Disclosures relating to deposits as required under the provisions
of the Companies Act, 2013 & the Rules thereunder

Being a Banking Company, the disclosures relating to deposits
as required under Rule 8(5)(v) & (vi) of the Companies (Accounts)
Rules, 2014, read with Sections 73 and 74 of the Act, are not
applicable to the Bank.

Details in respect of frauds reported by auditors

The Statutory Auditors have not reported any fraud under Section
143(12) of the Companies Act, 2013 during the financial year.

Particulars of Loans, Guarantees or Investments

Pursuant to Section 186 (11) of the Companies Act, 2013, the
provisions of section 186 of Companies Act, 2013, except
subsection (1), do not apply to a loan made, guarantee given or
security provided or investment made by a banking company in
the ordinary course of business.

Strictures and Penalties

During the year, BSE imposed a fine of ?75,000 plus applicable
GST and NSE imposed a fine of ?24,000 plus applicable GST for
delay in filing the halfyearly disclosure respectively with respect
to related party transactions and for delay in filing the statement
indicating the utilization of proceeds of nonconvertible securities.
Apart from the above, no other penalties or strictures were imposed
on the Bank by the Stock Exchanges, SEBI, or any other statutory
authorities on matters relating to the capital market. Further, there
were no significant or material orders passed by regulators, courts,
or tribunals impacting the going concern status of the Bank or its
future operations.

Management Discussion and Analysis Report

This has been dealt with in a separate section in the Annual Report.

Report on Corporate Governance

A separate report on Corporate Governance as required under
the Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015 and certificate from
Sri V, Suresh, Practicing Company Secretary certifying compliance
with the conditions of Corporate Governance are annexed to this
report.

Corporate Social Responsibility

In compliance with the provisions of Section 1 35 of the
Companies Act, 2013, the Bank has constituted a Corporate
Social Responsibility Committee of the Board and has formulated

a Corporate Social Responsibility Policy approved by the Board.
Due to losses incurred by the Bank from FY 2013 to 2018, in
compliance with the provision outlined in Section 198, these losses
were offset against profits in subsequent years. Consequently,
no profits were available under Section 1 98 of the Companies
Act, 2013 for Corporate Social Responsibility purposes. Therefore,
the Bank did not undertake any projects under Corporate Social
Responsibility for the financial year 2025-26.

Business Responsibility and Sustainability Report

The regulatory provisions relating to the Business Responsibility
and Sustainability Reporting are not applicable to the Bank for the
financial year ended March 31,2026.

Material Changes and Commitments affecting Financial
Position of the Bank

There are no material changes and commitments affecting the
financial position of the Bank which has occurred between the
end of the financial year, i.e, March 31, 2026 and the date of
Directors' Report, i.e, August 19, 2026.

Directors' Responsibility Statement

Pursuant to the provisions of Section 134 (5) of the Companies
Act, 2013 with respect to the Directors' Responsibility Statement, it
is hereby confirmed that:

(i) in the preparation of the annual accounts for the financial
year ended March 31, 2026, the applicable accounting
standards had been followed along with proper explanation
relating to material departures;

(ii) the Directors had selected such accounting policies and
applied them consistently and made judgments and
estimates that are reasonable and prudent so as to give a
true and fair view of the state of affairs of the Bank at the end
of the financial year 2025-26 and of the profit and loss of the
Bank for that period.;

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

(iv) the Directors had prepared the annual accounts for the
financial year ended March 31, 2026 on a going concern
basis;

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

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

Acknowledgements

The Board of Directors places on record its gratitude to the
Government of India, the governments of various States, the
Reserve Bank of India, the Securities and Exchange Board of India,
the Registrar of Companies, other regulatory bodies and the Stock
Exchanges, where the Bank's shares are listed, for their support
and guidance. The Board also places on record its gratitude to
the Bank's customers, shareholders, other stakeholders and well-
wishers for their valued patronage. The Board further places on
record its appreciation for the valuable services rendered by
the Joint Statutory Central Auditors and the Secretarial Auditor
of the Bank. The Board expresses its sincere appreciation for the
dedicated services rendered by officers and employees of the
Bank at all levels.

By Order of the Board
Sd/-

Place : Thrissur K.N Madhusoodanan

Date : August 19, 2026 Chairman