3.7 Provisions

Provisions are recognised when the Company has a
present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of the
amount of the obligation.

3.8 Contingent liabilities and assets

A contingent liability is a possible obligation that arises
from past events whose existence will be confirmed by the
occurrence or non-occurrence of one or more uncertain
future events beyond the control of the Company or a
present obligation that is not recognised because it is not
probable that an outflow of resources will be required to
settle the obligation. A contingent liability also arises in
extremely rare cases where there is a liability that cannot
be recognised because it cannot be measured reliably.
The Company does not recognise a contingent liability but
discloses its existence in the financial statements.

Contingent assets are not recognised. A contingent
asset is disclosed, where an inflow of economic
benefits is probable.

3.9 Employee benefits

The Company provides short term employee benefits i.e.
expected to be settled wholly before twelve months after
the end of the annual reporting period (such as salaries,
wages, bonus etc), defined benefit plan (gratuity),
retirement benefits (such as provident fund) and other
employee benefits including employee stock options and
other long term employee benefits.

3.9.1Defined contribution plan

Retirement benefits in the form of provident fund
and superannuation are defined contribution
schemes. The Company has no obligation, other
than the contribution payable to the respective
funds. The Company recognises contribution
payable to the respective funds as expenditure,
when an employee renders the related service.

3.9.2Defined benefit plan

Gratuity liability is a defined benefit obligation and
is provided for on the basis of an actuarial valuation
on projected unit credit method made at the end of
each year. Gains or losses through remeasurements
of net benefit liabilities/ assets are recognised
with corresponding charge/credit to the retained
earnings through other comprehensive income in
the period in which they occur.

3.9.3Other long term employee benefits

The Company treats accumulated leave expected to
be carried forward beyond twelve months as long¬
term employee benefit for measurement purposes.
Such long-term compensated absences are
provided for based on the actuarial valuation using
the projected unit credit method at the end of each
financial year. The Company presents the leave as a
current liability in the balance sheet, to the extent
it does not have an unconditional right to defer its
settlement for 12 months after the reporting date.

Accumulated leave, which is expected to be utilized
within the next 12 months, is treated as short-term
employee benefit. The Company measures the
expected cost of such absences as the additional
amount that it expects to pay as a result of the unused
entitlement that has accumulated at the reporting date.

3.9.4Share based payments

Equity-settled share based payments to employees
are measured at the fair value of the equity
instruments at the grant date. Details regarding the
determination of the fair value of equity-settled share
based payments transactions are set out in Note 38.

The cost of equity-settled transactions is measured
using the fair value method and recognised, together
with a corresponding increase in the "Share options
outstanding account" in reserves. The cumulative
expense recognised for equity-settled transactions at
each reporting date until the vesting date reflects the
extent to which the vesting period has expired and
the Company's best estimate of the number of equity
instruments that will ultimately vest. The expense or
credit recognised in the statement of profit and loss
for the year represents the movement in cumulative
expense recognised as at the beginning and end of that
year and is recognised in employee benefits expense.

3.10 Taxes

3.10.1 Current income tax

Current income tax assets and liabilities are
measured at the amount expected to be recovered

from or paid to the taxation authorities in
accordance with Income tax Act, 1961. The tax rates
and tax laws used to compute the amount are those
that are enacted or substantively enacted, at the
reporting date. Current income tax relating to items
recognised outside the statement of profit or loss is
recognised outside the statement of profit or loss
(either in other comprehensive income or in equity).

3.10.2 Deferred tax

Deferred tax is provided using the balance sheet
approach on temporary differences between the
tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes at the
reporting date. Deferred tax assets are recognised
for all deductible temporary differences, the carry
forward of unused tax credits and any unused tax
losses. Deferred tax assets are recognised to the
extent that it is probable that taxable profit will be
available against which the deductible temporary
differences, the carry forward of unused tax credits
and unused tax losses can be utilised.

The carrying amount of deferred tax assets is
reviewed at each reporting date and reduced
to the extent that it is no longer probable that
sufficient taxable profit will be available to allow
all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are re-assessed
at each reporting date and are recognised to the
extent that it has become probable that future
taxable profits will allow the deferred tax asset
to be recovered. Deferred tax assets and liabilities
are measured at the tax rates that are expected to
apply in the year when the asset is realised or the
liability is settled, based on tax rates (and tax laws)
that have been enacted or substantively enacted at
the reporting date.

Deferred tax relating to items recognised outside
the statement of profit or loss is recognised outside
the statement of profit or loss (either in other
comprehensive income or in equity).

Deferred tax assets and deferred tax liabilities are
offset if a legally enforceable right exists to set off
current tax assets against current tax liabilities and
the deferred taxes relate to the same taxable entity
and the same taxation authority.

3.11 Earning per share

Basic earnings per share is calculated by dividing the
net profit or loss for the year attributable to equity
shareholders by the weighted average number of equity
shares outstanding during the period. Partly paid equity
shares are treated as a fraction of an equity share

to the extent that they are entitled to participate in
dividends relative to a fully paid equity share during the
reporting year.

For the purpose of computing diluted earnings per
share, the net profit or loss for the year attributable to
equity shareholders and the weighted average number
of shares outstanding during the period are adjusted for
the effects of all dilutive potential equity shares.

3.12 Segment information

The Company operates in a single business segment i.e.
lending to members, having similar risks and returns
for the purpose of Ind AS 108 on 'Operating Segments'.
The Company operates in a single geographical
segment i.e. domestic.

3.13 Financial instruments

A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity.

3.13.1 Business Model Assessment

Classification and measurement of financial assets
depends on the results of business model and the
solely payments of principal and interest ("SPPI") test.
The Company determines the business model at a
level that reflects how groups of financial assets are
managed together to achieve a particular business
objective. This assessment includes judgement
reflecting all relevant evidence including how the
performance of the assets is evaluated and their
performance is measured, the risks that affect
the performance of the assets and how these are
managed and how the managers of the assets are
compensated. The Company monitors financial
assets measured at amortised cost. Monitoring is
part of the Company's continuous assessment of
whether the business model for which the remaining
financial assets are held continues to be appropriate
and if it is not appropriate whether there has been
a change in business model and so a prospective
change to the classification of those assets.

3.13.2 Financial Assets

Financial asset of the Company consists
predominantly loan assets, liquidity maintained by
Company during the course of business in the form
of Cash and bank balances, investments and other
receivables such as receivable from assignment of
portfolio, security deposits etc.

3.13.2.1 Initial recognition and measurement

Financial assets are initially recognised on the
trade date, i.e., the date that the Company

becomes a party to the contractual provisions
of the instrument. The classification of financial
instruments at initial recognition depends
on their purpose and characteristics and
the management's intention when acquiring
them. All financial assets (not measured
subsequently at fair value through profit or
loss) are recognised initially at fair value plus
transaction costs that are attributable to the
acquisition of the financial asset.

3.13.2.2 Classification and Subsequent measurement

For purposes of subsequent measurement,
financial assets are classified in three
categories:

- at amortised cost

- at fair value through other comprehensive
income (FVTOCI)

- Investments in debt instruments and
equity instruments at fair value through
profit or loss (FVTPL)

3.13.2.3 Loans at amortised costs

Loans are measured at the amortised cost if
both the following conditions are met:

(a) Such loan is held within a business model
whose objective is to hold assets for
collecting contractual cash flows, and

(b) Contractual terms of the asset give rise
on specified dates to cash flows that
are solely payments of principal and
interest (SPPI) on the principal amount
outstanding. After initial measurement,
such financial assets are subsequently
measured at amortised cost using the
effective interest rate (EIR) method
less impairment. Amortised cost is
calculated by taking into account fees
(such as processing fee) or costs that
are an integral part of the EIR. The EIR
amortisation is included in interest
income in the statement of profit or
loss. The losses arising from impairment
are recognised in the statement of
profit and loss.

3.13.2.4 Loans at fair value through other
comprehensive income (FVTOCI)

Loans are classified as at the FVTOCI if both of
the following criteria are met:

- The objective of the business model

is achieved both by collecting

contractual cash flows and selling the

financial assets, and

- The asset's contractual cash flows
represent SPPI.

Loans included within the FVTOCI category are
measured initially as well as at each reporting
date at fair value. Fair value movements
are recognized in the other comprehensive
income (OCI). However, the Company

recognizes interest income, impairment losses
& reversals and foreign exchange gain or loss
in the statement of profit and loss. On de¬
recognition of the asset, cumulative gain or
loss previously recognised in OCI is reclassified
from the equity to the statement of profit and
loss. Interest earned whilst holding FVTOCI
debt instrument is recognised as interest
income using the EIR method.

3.13.2.5 Investment in debt instruments and
equity instruments at fair value through
profit or loss (FVTPL)

FVTPL is a residual category for debt
instruments. Any debt instrument, which
does not meet the criteria for categorization
as amortized cost or as FVTOCI, is classified
as FVTPL. Debt instruments included within
the FVTPL category are measured at fair value
with all changes recognized in the statement
of profit and loss.

3.13.2.6 Cash and cash equivalents

Cash and cash equivalents, comprise cash in
hand, cash at bank and short-term investments
with an original maturity of three months or
less, that are readily convertible to cash with
an insignificant risk of changes in value.

3.13.2.7 Investments

Investments in equity instruments and liquid
mutual fund 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
(FVTOCI). All other investments are classified
and measured as FVTPL only.

Investments in Government securities are
measured at the amortised cost if both the
following conditions are met:

(a) Such Government securities is held
within a business model whose objective
is to hold assets for collecting contractual
cash flows, and

(b) Contractual terms of the asset give
rise on specified dates to cash flows
that are solely payments of principal
and interest (SPPI) on the principal
amount outstanding.

3.13.3 Financial Liabilities

3.13.3.1 Initial recognition and measurement

The Company recognises all financial liabilities
initially at fair value adjusted for transaction
costs that are directly attributable to the issue
of financial liabilities except in the case of
financial liabilities recorded at FVTPL where
the transaction costs are charged to Statement
of Profit and Loss. Generally, the transaction
price is treated as fair value unless there are
circumstances which prove to the contrary
in which case, the difference, if material, is
charged to Statement of Profit and Loss.

Subsequent measurement

The Company subsequently measures all
financial liabilities at amortised cost using the
EIR method, except for derivative contracts
which are measured at FVTPL and accounted
for by applying the hedge accounting
requirements under Ind AS 109.

3.13.3.2 Borrowings

After initial recognition, interest-bearing loans
and borrowings are subsequently measured
at amortised cost using the EIR method. The
EIR amortisation is included as finance costs in
the statement of profit and loss.

3.13.4 Reclassification of financial assets and
liabilities

The Company does not reclassify its financial
assets subsequent to their initial recognition, apart
from the exceptional circumstances in which the
Company acquires, disposes of, or terminates
a business line.

3.13.5 De-recognition of financial assets and liabilities

3.13.5.1 De-recognition of financial assets

A financial asset (or, where applicable, a
part of a financial asset or part of a group
of similar financial assets) is de-recognised
when the rights to receive cash flows from the

financial asset have expired. The Company
also de-recognises the financial asset if it has
transferred the financial asset and the transfer
qualifies for de-recognition.

The Company has transferred the financial
asset if, and only if, either:

- It has transferred its contractual rights to
receive cash flows from the financial asset

Or

- It retains the rights to the cash flows,
but has assumed an obligation to pay
the received cash flows in full without
material delay to a third party under a
'pass-through' arrangement.

Pass-through arrangements are transactions
whereby the Company retains the contractual
rights to receive the cash flows of a financial
asset (the 'original asset'), but assumes a
contractual obligation to pay those cash
flows to one or more entities (the 'eventual
recipients'), when all of the following three
conditions are met:

- The Company has no obligation to pay
amounts to the eventual recipients unless
it has collected equivalent amounts from
the original asset, excluding short-term
advances with the right to full recovery
of the amount lent plus accrued interest
at market rates.

- The Company cannot sell or pledge the
original asset other than as security to
the eventual recipients.

- The Company has to remit any cash
flows it collects on behalf of the eventual
recipients without material delay.

In addition, the Company is not entitled
to reinvest such cash flows, except for
investments in cash or cash equivalents
including interest earned, during the period
between the collection date and the date
of required remittance to the eventual
recipients. A transfer only qualifies for de¬
recognition if either:

- The Company has transferred substantially
all the risks and rewards of the asset

- The Company has neither transferred nor
retained substantially all the risks and
rewards of the asset, but has transferred
control of the asset.

The Company considers control to be
transferred if and only if, the transferee has the
practical ability to sell the asset in its entirety to
an unrelated third party and is able to exercise
that ability unilaterally and without imposing
additional restrictions on the transfer. When
the Company has neither transferred nor
retained substantially all the risks and rewards
and has retained control of the asset, the asset
continues to be recognised only to the extent
of the Company's continuing involvement, in
which case, the Company also recognises an
associated liability. The transferred asset and
the associated liability are measured on a
basis that reflects the rights and obligations
that the Company has retained.

On derecognition of a financial asset in its
entirety, the difference between: (a) the
carrying amount (measured at the date of
derecognition) and (b) the consideration
received (including any new asset obtained
less any new liability assumed) is recognised in
the statement of profit or loss.

3.13.5.2 De-recognition of financial liabilities

Financial liability is de-recognised when the
obligation under the liability is discharged,
cancelled or expires. Where an existing
financial liability is replaced by another from
the same lender on substantially different
terms or the terms of an existing liability are
substantially modified, such an exchange or
modification is treated as a de-recognition of
the original liability and the recognition of a
new liability. The difference in the respective
carrying amounts is recognised in the
statement of profit and loss.

3.14 Impairment of financial assets

3.14.1 Overview of the Expected Credit Loss (ECL)
allowance principles

The Company is recording the allowance for
expected credit losses for all loans at amortised
cost and FVTOCI and other debt financial assets
not held at FVTPL.

The ECL allowance is based on the credit losses
expected to arise over the life of the asset (the
lifetime expected credit loss or LTECL), unless there

has been no significant increase in credit risk since
origination, in which case, the allowance is based
on the 12 months' expected credit loss (12mECL).
The Company's policies for determining if there
has been a significant increase in credit risk are set
out in Note 41.

The 12mECL is the portion of LTECLs that represent
the ECLs that result from default events on a
financial instrument that are possible within the 12
months after the reporting date.

Both LTECLs and 12mECLs are calculated on a
collective basis for identified homogenous pool
of loans. The Company's policy for grouping
financial assets measured on a collective basis is
explained in Note 41.

Accordingly, the Company groups its loans into
Stage 1, Stage 2, Stage 3, as described below:

Stage 1: When loans are first recognised, the
Company recognises an allowance based on
12mECLs. Stage 1 loans also include facilities where
the credit risk has improved and the loan has been
reclassified from Stage 2 or Stage 3.

Stage 2: When a loan has shown a significant
increase in credit risk since origination, the
Company records an allowance for the LTECLs.

Stage 3: Loans considered credit-impaired (as
outlined in Note 41). The Company records an
allowance for the LTECLs.

For financial assets for which the Company has
no reasonable expectations of recovering either
the entire outstanding amount, or a proportion
thereof, the gross carrying amount of the financial
asset is reduced. This is considered as a (partial) de¬
recognition of the financial asset.

3.14.2 The calculation of ECL

The Company calculates ECLs based on a probability-
weighted scenarios and historical data to measure
the expected cash shortfalls. A cash shortfall is the
difference between the cash flows that are due to
an entity in accordance with the contract and the
cash flows that the entity expects to receive.

ECL consists of three key components: Probability
of Default (PD), Exposure at Default (EAD) and
Loss given default (LGD). ECL is calculated by
multiplying them. Refer Note 41 for explanation of
the relevant terms.

The maximum period for which the credit
losses are determined is the expected life of a
financial instrument.

The mechanics of the ECL method are
summarised below:

Stage 1: The 12mECL is calculated as the portion
of LTECLs that represent the ECLs that result
from default events on a financial instrument
that are possible within the 12 months after
the reporting date. The Company calculates the
12mECL allowance based on the expectation of a
default occurring in the 12 months following the
reporting date. These expected 12-month default
probabilities are applied to an EAD and multiplied
by the expected LGD.

Stage 2: When a loan has shown a significant
increase in credit risk since origination, the
Company records an allowance for the LTECLs. The
mechanics are similar to those explained above,
but PDs and LGDs are estimated over the lifetime of
the instrument.

Stage 3: For loans considered credit-impaired, the
Company recognizes the lifetime expected credit
losses for these loans. The method is similar to that
for Stage 2 assets, with the PD set at 100%.

3.15 Write-offs

Financial assets are written off when the Company has
no reasonable expectation of recovery or expected
recovery is not significant basis experience. If the
amount to be written off is greater than the accumulated
loss allowance, the difference is first treated as an
addition to the allowance that is then applied against the
gross carrying amount. Any subsequent recoveries are
credited to the statement of profit and loss.

3.16 Fair value measurement

The Company measures certain financial instruments
at fair value at each balance sheet date using valuation
techniques. Fair value is the price that would be
received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at
the measurement date. The fair value measurement is
based on the presumption that the transaction to sell
the asset or transfer the liability takes place either:

- In the principal market for the asset or liability, or

- In the absence of a principal market, in the most
advantageous market for the asset or liability.

The principal or the most advantageous market must be
accessible by the Company.

The Company uses valuation techniques that are
appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximising the
use of relevant observable inputs and minimising the
use of unobservable inputs.

All assets and liabilities for which fair value is measured
are categorised with fair value hierarchy into Level I, Level
II and Level III 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 as follows:

• Level 1 - Quoted prices (unadjusted) in active
markets for identical assets or liabilities that the
Company can access at the measurement date;

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

• Level 3 - Unobservable inputs for the asset or liability.

3.17 Foreign currency

Company enters to foreign currency transactions
during the course of business predominantly relating
to borrowing (availement/repayment of borrowing) and
payment of fee/charges towards services/products such
as license costs, maintenance charges etc.

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

3.17.2 Foreign currency monetary items are reported
using the exchange rate prevailing at the
close of the period.

3.17.3 Exchange differences arising on the settlement
of monetary items or on the restatement of
Company's monetary items at rates different
from those at which they were initially recorded
during the period, or reported in previous financial
statements, are recognised as income or as an
expenses in the period in which they arise.

3.18 Hedge accounting

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

At the inception of the hedge relationship, the entity
documents the relationship between the hedging
instrument and the hedged item, along with its risk
management objectives and its strategy for undertaking
various hedge transactions. Furthermore, at the
inception of the hedge and on an ongoing basis, the
Company documents whether the hedging instrument is
highly effective in offsetting changes in cash flows of the
hedged item attributable to the hedged risk.

Cash flow hedge

A cash flow hedge is a hedge of the exposure to variability
in cash flows that is attributable to a particular risk
associated with a recognised asset or liability and could
affect profit or loss.

Here, 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
'hedging reserve'.

The ineffective portion of the gain or loss on the hedging
instrument is recognised immediately in the Statement
of Profit and 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.

3.19 Leases (where the Company is the lessee)

Company's lease assets primarily consists of equipments
for information technology infrastructure/ servers and
immovable properties for operating as branches.

Short term leases not covered under Ind AS 116 are
classified as operating lease. Lease payments during
the year are charged to statement of profit and loss.
Future minimum rentals payable under non-cancellable
operating leases.

The Company as a lessee

The Company assesses whether a contract contains a
lease, at inception of a contract. A contract is, or contains,
a lease if the contract conveys the right to control the use
of an identified asset for a period of time in exchange
for consideration.

To assess whether a contract conveys the right to
control the use of an identified asset, the Company
assesses whether:

(i) the contract involves the use of an identified asset;

(ii) the Company has substantially all of the economic
benefits from use of the asset through the period of the
lease; and (iii) the Company has the right to direct the
use of the asset.

On the date of commencement of the lease, the
Company recognises a right-of-use asset ("ROU") and a
corresponding lease liability for all lease arrangements in
which it is a lessee, except for leases with a term of twelve
months or less (short-term leases) and low value leases.
For these short-term and low value leases, the Company
recognizes the lease payments as an operating expense
on a straight-line basis over the term of the lease.

Certain lease arrangements includes the options to
extend or terminate the lease before the end of the
lease term. ROU assets and lease liabilities includes
these options when it is reasonably certain that they
will be exercised. The right-of-use assets are initially
recognized at cost, which comprises the initial amount of
the lease liability adjusted for any lease payments made
at or prior to the commencement date of the lease plus
any initial direct costs less any lease incentives. They
are subsequently measured at cost less accumulated
depreciation and impairment losses.

Right-of-use assets are depreciated from the
commencement date on a straight-line basis over
the shorter of the lease term and useful life of the
underlying asset.

The lease liability is initially measured at amortized cost at
the present value of the future lease payments. The lease

payments are discounted using the interest rate implicit
in the lease or, if not readily determinable, using the
incremental borrowing rates in the country of domicile
of these leases. Lease liabilities are remeasured with a
corresponding adjustment to the related right of use
asset if the Company changes its assessment if whether
it will exercise an extension or a termination option.

3.20 Recent Accounting pronouncements

3.20.1 Key New and amended standards adopted by
the Company

a) Lack of exchangeability - Amendments to
Ind AS 21

MCA via notification dated 7 May 2025,
announced amendments to Ind AS 21, The
Effects of Changes in Foreign Exchange
Rates, to specify how an entity should assess
whether a currency is exchangeable and how it
should determine a spot exchange rate when
exchangeability is lacking. The amendments
also require disclosure of information that
enables users of its financial statements
to understand how the currency not being
exchangeable into the other currency affects,
or is expected to affect, the entity's financial
performance, financial position and cash flows.

b) Classification of Liabilities as Current or
Non-current and Non-current Liabilities with
Covenants - Amendments to Ind AS 1

MCA via notification dated 13 August 2025
announced amendments to Ind AS 1,
Presentation of Financial Statements, which
elaborate on guidance set out in Ind AS 1 by:

• clarifying that the right to defer settlement
of a liability for at least 12 months after
the reporting period; a) must have
substance, and b) must exist at the end of
the reporting period;

• stating that management's expectations
around whether the settlement of a
liability would be deferred or not, does not
impact the classification of the liability;

• including requirements for liabilities
that can be settled using an entity's own
instruments; and

• stating that at the reporting date, the
entity does not consider covenants that
will need to be complied with in the future
when considering the classification of the
debt as current or non-current

In addition, an entity is required to disclose
when a liability arising from a loan agreement
is classified as non-current and the entity's
right to defer settlement is contingent
on compliance with future covenants
within twelve months.

c) Supplier Finance Arrangements -
Amendments to Ind AS 7 and Ind AS 107

MCA via notification dated 13 August 2025
announced amendments to Ind AS 7, Statement
of Cash Flows and Ind AS 107, Financial
Instruments: Disclosures which introduced
disclosure requirements with the objective to
enable users of financial statements to assess
how supplier finance arrangements affect an
entity's liabilities, cashflows and exposure to
liquidity risk.

d) International Tax Reform - Pillar Two Model
Rules - Amendments to Ind AS 12

MCA via notification dated 13 August 2025
announced amendments to Ind AS 12, Income
Taxes, which includes:

• a temporary exception to the recognition
and disclosure of deferred taxes arising
from the implementation of the Pillar
Two model rules; and

• additional disclosure requirements
targeted at a reporting entity's exposure
to income taxes in periods in which the
Pillar Two Model legislation is enacted or
substantively enacted but not yet in effect.

The amendments do not have a material
impact on the Financial Statements.

3.20.2 Key Amendments applicable from next
Financial year

Classification of Liabilities as Current or Non¬
current and Non-current Liabilities with Covenants
- Amendments to Ind AS 1

Paragraph 74 of Ind AS 1 currently effective for the
year ended 31 March 2026 requires the entity not to
classify the liability as current, if there is a breach of a
material covenant of a long-term loan arrangement
on or before the end of the reporting period with the
effect that the liability becomes payable on demand
on the reporting date, however, the lender agreed,
after the reporting period and before the approval
of the financial statements for issue, not to demand
payment as a consequence of the breach.

MCA vide notification dated 13 August 2025, has
introduced amendment under Paragraph 74 of Ind
AS 1 which requires the entity to classify the liability
as current under the aforementioned situation
because, at the end of the reporting period, it does
not have the right to defer its settlement for at least
twelve months after that date. Such amendment has
been made effective for annual reporting periods
beginning on or after 01 April 2026 retrospectively
in accordance with Ind AS 8.

This amendment is not expected to have a material
impact on the Financial Statements.

Note:

(1) The term loans are secured by unsecured microfinance loans to the extent of minimum 100% of outstanding. Further
in respect of borrowings (including debentures) drawn during quarter 4 of financial year 2025-26 aggregating to
H 2,474.59 crore (drawn during last quarter of previous year H 680.00 crore, subsequently assigned), the Company is
in the process of assigning the book debts in due course as per the sanction terms. The borrowings have not been
guarenteed by directors or others.

(2) Term loans availed during the year were applied for the purposes for which the loans were obtained, other than
temporary deployment pending application.

3) The Company has availed working capital facility in excess of H 5 Crores secured against the asset during the
current financial year. However, no statements are required to be furnished to the lender on a periodic basis as
per the agreement.

14.1 Delay in repayment

There were no delay in payment of principal and interest as at March 31, 2026 and March 31, 2025. (refer Note 43 (x) for

covenant breach.)

20 Other equity* (Contd..)

Nature and purpose of reserve

20.1 Securities premium

Securities premium is used to record the premium on issue of shares. The reserve can be utilised in accordance with the
provisions of the Companies Act, 2013.

20.2 Capital reserve

During the year ended March 31, 2018, the Company pursuant to the scheme of amalgamation, acquired MV Microfin
Private Limited with effect from April 1,2017. As per the accounting treatment of the scheme of amalgamation approved by
the Honourable High Court of Karnataka, the differential amount between the carrying value of investments and net assets
acquired from the transferor companies has been accounted as Capital reserve.

20.3 Statutory reserve (As required by Sec 45-IC of Reserve Bank of India Act, 1934)

Statutory reserve represents the accumulation of amount transferred from surplus for the year based on the fixed
percentage of profit for the year, as per section 45-IC of Reserve Bank of India Act 1934.

20.4 Share options outstanding account

The share option outstanding account is used to recognise the grant date fair value of option issued to employees under
employee stock option scheme.

20.5 Retained earnings

Retained earnings are the profits that the Company has earned till date, less any transfers to statutory reserve, general
reserve or any other such other appropriations to specific reserves. Remeasurement, comprising of actuarial gains and
losses and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are
recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the
period in which they occur. Remeasurements are not reclassified to the statement of profit and loss in subsequent periods.

20.6 Other comprehensive income
Effective portion of Cash Flow Hedge

For designated and qualifying cash flow hedges, the effective portion of the cumulative gain or loss on the hedging
instrument is initially recognised directly in OCI within equity (cash flow hedge reserve). When the hedged cash flow affects
the statement of profit and loss, the effective portion of the gain or loss on the hedging instrument is recorded in the
corresponding income or expense line of the statement of profit and loss.

31 Employee benefits

A. Defined benefit plan

The Company provides for the gratuity, a defined benefit retirement plan covering qualifying employees. Employees
who are in continous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on
retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days
salary multiplied by the number of years of service. The Company has funded gratuity plan and makes contibutions to
Gratuity scheme administered by the insurance company through its Gratuity Fund.

B. Defined contribution plan

The Company makes Provident fund and Employee State Insurance Scheme contributions which are defined
contribution plans for qualifying employees. Under the schemes, the Company is required to contribute a specified
percentage of the basic salary to fund the benefits. The contributions payable to these plans by the Company are
administered by the Government. The obligation of the Company is limited to the amount contributed and it has no
further contractual nor any constructive obligation.The Company recognised H 46.24 crore (March 31, 2025 : H 40.40
crore) for Provident fund contributions and H 9.73 crore (March 31,2025 : H 9.24 crore) for Employee State Insurance
Scheme contributions in the Statement of Profit and Loss.

31.8 Through its defined benefit plans the Company is exposed to a number of risks, the most significant of which are detailed below:
Demographic risks

This is the risk of volatility of results due to unexpected nature of decrements that include mortality attrition, disability
and retirement. The effects of this decrement on the defined benefit obligations depend upon the combination of salary
increase, discount rate, and vesting criteria and therefore not very straight forward.

Change in bond yields

A decrease in government bond yields will increase plan liabilities, although this is expected to be partially offset by an
increase in the value of the plan's investment in debt instruments.

Inflation risk

The present value of some of the defined benefit plan obligations are calculated with reference to the future salaries of plan
participants. As such, an increase in the salary of the plan participants will increase the plan's liability.

Life expectancy

The present value of defined benefit plan obligation is calculated by reference to the best estimate of the mortality of plan
participants, both during and after the employment. An increase in the life expectancy of the plan participants will increase
the plan's liability.

40 Financial instruments - fair values
Accounting classification and fair values:

Carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy,
are presented below. It does not include the fair value information for financial assets and financial liabilities not measured
at fair value if the carrying amount is a reasonable approximation of fair value.

Fair value hierarchy

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e., as prices) or indirectly (i.e., derived from prices).

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

Note: The carrying amounts of cash and cash equivalents, bank balances other than cash and cash equivalents, other
financial assets and payables are considered to be the same as their fair values, due to their short-term nature.

There were no transfers between Level 3 and Level 1 / Level 2 during the current year.

Valuation methodologies of financial instruments not measured at fair value

Below are the methodologies and assumptions used to determine fair values for the above financial instruments which
are not recorded and measured at fair value in the Company's financial Statements. These fair values were calculated for
disclosure purposes only. The below methodologies and assumptions relate only to the instruments in the above tables.

Derivative financial instruments

Foreign exchange contracts include foreign exchange forward and swap contracts and interest rate swaps. These
instruments are valued by either observable foreign exchange rates, observable or calculated forward points and option
valuation models.

Investments in mutual funds/ equity instruments

Investment in units of mutual funds are measured based on their published Net Asset Value (NAV), taking into account
redemption and/ or other restrictions. Such instruments are generally Level 1. Equity instruments in non-listed entities
are initially recognised at transaction price and re-measured (to the extent information is available) and valued on a case-
bycase and classified as Level-3. Quoted equity instruments on recognised stock exchanges are valued at Level-1 hierarchy
being the unadjusted quoted price as the reporting date.

Loans (measured at amortised cost)

Fair values of Loans measured at amortised cost have been measured based on a discounted cash flow model of the
contractual cash flows of solely payment of principal and interest. The significant unobservable input is the discount rate,
determined using the recent lending rate of the Company.

Financial liabilities measured at amortised cost

The fair value of fixed rate borrowings is determined by discounting expected future contractual cash flows using current
market interest rate being charged for new borrowings. The fair value of floating rate borrowing is deemed to equal its
carrying value.

41 Risk Management

41.1 Introduction and risk profile

CreditAccess Grameen Limited is one of the leading
microfinance institutions in India focused on providing
financial support to women from low income
households engaged in economic activity with limited
access to financial services. The Company predominantly
offers collateral free loans to women from low income
households, willing to borrow in a group and agreeable
to take joint liability. The wide range of lending products
address the critical needs of customers throughout
their lifecycle and include income generation, home
improvement, children's education, sanitation and
personal emergency loans. With a view to diversifying the
product profile, the company has introduced individual
loans for matured group lending customers. These
loans are offered to customers having requirement
of larger loans to expand an existing business in their
individual capacity.

The major risks for the company are credit, operational,
market, business environment, political, regulatory,
concentration, expansion and liquidity. As a matter of
policy, these risks are assessed and steps as appropriate,
are taken to mitigate the same.

41.1.a Risk management structure

The Board of Directors are responsible for the overall
risk management approach and for approving the
risk management strategies and principles.The Risk
Management framework approved by the Board has
laid down the governance structure supporting the
identification, assessment, monitoring, reporting
and mitigation of risk throughout the Company. The
objective of the risk management platform is to make
a conscious effort in developing risk culture within
the organisation and having appropriate systems
and tools for timely identification, measurement
and reporting of risks for managing them.

The Board has a Risk Management committee
which is responsible for monitoring the overall risk
process within the Company and reports to the
Board of Directors.

The Risk Management guidelines are implemented
through the established organisational structure
of the Risk Department. Overall risk monitoring is
overseen by the Chief Risk Officer (CRO) through
the Management-Level Risk Committee, which
comprises the MD & CEO, COO, CRO, CFO, CTO, and
CCO. At the Board level, the status and progress
of the risk management system are reviewed on a
quarterly basis through the Audit Committee, the

Risk Management Committee, and the Expected
Credit Loss (ECL) Committee.

Individual departments are responsible for
implementing the risk management framework,
policies, systems, and methodologies as approved
by the Board. The assignment of risk-related
responsibilities rests with the respective Heads
of Departments, working in coordination with
the CRO. While each department focuses on its
specific area of operation, the Risk Management
Unit functions across the organisation, drawing
on relevant information from all departments
to ensure the effective management of risks in
line with the framework approved by the Board.
The Unit works closely with, and reports to, the
Risk Management Committee to ensure that
procedures remain consistent with the overall risk
management framework.

Heads of Departments are accountable to a
Management Level Risk Committee (MLRC)
comprising of MD, CEO, CFO, COO, CTO and
CRO. The departmental heads will report for the
implementation of above mentioned guideline
within their respective areas of responsibility. The
department heads are also accountable to the
MLRC for identification, assessment, aggregation,
reporting and monitoring of the risk related to their
respective domain.

The Company's policy is that risk management
processes throughout the Company are audited by
the Internal Audit function, which examines both
the adequacy of the procedures and the Company's
compliance with the procedures. Internal Audit
discusses the results of all assessments with
management, and reports its findings and
recommendations to the Audit Committee.

41.1.b Risk mitigation and risk culture

Risk assessments are conducted for all business
activities. The assessments are to address potential
risks and to comply with relevant legal and
regulatory requirements. Risk assessments are
performed by competent personnel from individual
departments and risk management department
including, where appropriate, expertise from
outside the Company. Procedures are established
to update risk assessments at appropriate intervals
and to review these assessments regularly. Based
on the Risk Control and Self Assessment (RCSA),
the Company formulates its Risk Management
Strategy / Risk Management plan on annual basis.
The strategy will broadly entail choosing among

the various options for risk mitigation for each
identified risk. The risk mitigation is planned using
the following key strategies:

Risk Avoidance: By not performing an activity that
could carry risk. Avoidance may seem the answer to
all risks, but avoiding risks also means losing out on
the potential gain that accepting (retaining) the risk
may have allowed.

Risk Transfer: Mitigation by having another party
to accept the risk, either partial or total, typically by
contract or by hedging.

Risk Reduction: Employing methods/solutions that
reduce the severity of the loss.

Risk Retention: Accepting the loss when it occurs.
Risk retention is a viable strategy for small risks
where the cost of insuring against the risk would be
greater over time than the total losses sustained. All
risks that are not avoided or transferred are retained
by default. This includes risks that are so large or
catastrophic that they either cannot be insured
against or the premiums would be infeasible.

41.1.c Risk measurement and reporting systems

The Heads of all Departments, in coordination with
the Risk Management Department, are responsible
for identifying risks within their respective
departments or business activities through the Risk
and Control Self-Assessment (RCSA) exercise, which
is conducted at regular intervals.

Following a cost-benefit assessment, certain risks
may be accepted where mitigation is considered
either impractical or unwarranted.

Given that the risk exposure of any business may
evolve over time in response to a continuously
changing environment, the Risk Register is updated
on a regular basis to reflect such changes.

All strategies relating to the management of
major risks are monitored by the CRO and the
Management-Level Risk Committee (MLRC).

The Management-Level Risk Committee meets once
a month. The Committee specifically monitors major
risks while also overseeing other risks faced by the
Company more broadly. It takes an integrated view
of the risks confronting the entity and oversees the
implementation of directives issued by the Risk
Management Committee, along with actionable
items arising from the risk management framework.

Accordingly, the Management Level Risk Committee
reviews the following aspects of business specifically
from a risk indicator perspective and suitably record
the deliberations during the monthly meeting.

- Review of business growth and portfolio quality.

- Discuss and review the reported details of Key
Risk Threshold breaches (KRI's), consequent
actions taken and review of operational loss
events, if any.

- Review of process compliances
across organisation.

- Review of HR management, training and
employee attrition.

- Review of new initiatives and product/policy/
process changes.

- Discuss and review performance of IT systems.

- Review, where necessary, policies that have
a bearing on the operational & credit risk
management and recommend amendments.

- Discuss and recommend suitable controls/
mitigations for managing operational & credit
risk and assure that adequate resources are
being assigned to mitigate the risks.

- Review analysis of frauds, potential
losses, non-compliance, breaches etc. and
determine corrective measures to prevent
their recurrences.

- Understand changes and threats, concur on
areas of high priority and possible actions for
managing/mitigating the same.

41.1.d Risk Management Strategies
Excessive risk concentrations

Concentrations arise when a number of
counterparties are engaged in similar business
activities, or activities in the same geographical
region, or have similar economic features that would
cause their ability to meet contractual obligations
to be similarly affected by changes in economic,
political or other conditions. Concentrations
indicate the relative sensitivity of the Company's
performance to developments affecting a particular
industry or geographical location.

The following management strategies and policies
are adopted by the Company to manage the
various key risks.

Credit risk

Credit risk is the risk of financial loss to the
Company if the counterparty to a financial
instrument, whether a customer or otherwise,
fails to meet its contractual obligations towards
the Company. Credit risk is the core business risk
of the Company. The Company therefore has high
appetite for this risk but low tolerance and the
governance structures including the internal control
systems are particularly designed to manage and
mitigate this risk. The Company is mainly exposed
to credit risk from loans to customers (including
loans transferred to SPVs under securitization
agreements, excluding loans sold under assignment
presented as off-balance sheet assets).

The credit risk may arise due to, over borrowing
by customers or over lending by other financial
institutions competitors, gaps in joint-liability
collateral and repayment issues due to external
factors such as political, community influence,
macroeconomic factors, regulatory changes and
natural disasters (storm, earthquakes, fires, floods)
and intentional default by customers.

To address credit risk, the Company has established
stringent credit policies governing customer
selection. The creditworthiness of customers is
assessed through robust underwriting practices,
including credit investigation supported by credit
history checks and field-level credit verification.
Complex decisions involving sanctions and
rejections are supported by a Business Rule Engine,
which integrates data from multiple sources.
Rejection analyses are conducted on a regular basis.

In addition, the Company conducts a rigorous
evaluation when selecting new geographies for branch
expansion. This evaluation takes into account factors
such as portfolio-at-risk and over-indebtedness levels
in the proposed area or region, the potential for
micro-lending, and socio-economic considerations,
including the risk of local unrest or natural disasters.

Credit risk is managed through continuous
monitoring of borrower performance against
scheduled amortisation dues. The Company ensures
rigorous operational control through a combination
of field supervision — covering branch, area, and
regional staff, as well as the business support team
— and management review. Additional oversight on
operational processes is provided by the Field Risk
Team and the Internal Audit Team. At the Head Office,
management closely monitors credit risk through
system-generated reports, including Portfolio-at-Risk

(PAR) status and movement, portfolio concentration
analysis, vintage analysis, and flow-rate analysis,
together with Key Risk Indicators (KRIs). These KRIs
incorporate proactive threshold limits (acceptable,
watch, and breach), which are developed by the Heads
of Departments in consultation with the CRO and
reviewed at the Management-Level Risk Committee
(MLRC) and the Board-Level Risk Committee.

Some of the main strategies to mitigate
credit risk are:

1. Maintain stringent customer enrolment process,

2. Undertake systematic customer awareness
activities/ programs,

3. Reduce geographical concentration ofportfolio,

4. Maximum loan exposure to member as
determined from time to time,

5. Modify product characteristics if needed (e.g.,
longer maturity for group clients in case the
loan is above a certain threshold),

6. Carry out due diligence of new employees and
adequate training at induction,

7. Decrease field staff turnover,

8. Supporting technologies: credit bureau checks,
GPS tagging and KYC checks.

The exposure to credit risk is influenced mainly
by the individual characteristics of each customer.
However, management also considers the
demographics of the Company's customer base,
including the default risk of the country in which the
customers are located, as these factors may have
an influence on the credit risk.

41.2 Impairment assessment

The references below show where the Company's
impairment assessment and measurement approach is
set out in this report. It should be read in conjunction
with the summary of significant accounting policies.

41.2.a Definition of default, significant increase in
credit risk and stage assessment

For the measurement of ECL, Ind AS 109
distinguishes between three impairment stages. All
loans need to be allocated to one of these stages,
depending on the increase in credit risk since initial
recognition (i.e. disbursement date):

Stage 1: includes loans for which the credit risk at
the reporting date is in line with the credit risk at
initial recognition (i.e. disbursement date).

Stage 2: includes loans for which the credit risk at
reporting date is significantly higher than at the
risk at the initial recognition (Significant Increase in
Credit Risk i.e. SICR).

Stage 3: includes default loans. A loan is considered
as default at the earlier of (i) the Company considers
that the obligor is unlikely to pay its credit obligations
to the Company in full, without recourse by the
Company to actions such as realizing collateral (if
held); or (ii) the obligor is past due more than 90 days
on any material credit obligation to the Company.

An assessment of whether credit risk has increased
significantly since initial recognition is performed at
each reporting date by considering the change in
the risk of default occurring over the remaining life
of the financial instrument.

(i) Staging classification of Joint Liability Group
(JLG) loans of Company

Unlike banks which have more of monthly
repayments, the Company offers products with
primarily weekly/biweekly repayment frequency,
whereby 15 and above Days past due ('DPD')
means minimum 2 missed instalments from the
borrower, and accordingly, the Company has
identified the following stage classification to be
the most appropriate for such products :

Stage 1: 0 to 15 DPD.

Stage 2: 16 to 60 DPD (SICR).

Stage 3: above 60 DPD (Default).

(ii) Self Help groups (SHG)

The Company has identified the following
stage classification to be the most appropriate
for its loans as these loans are mainly on
monthly repayment basis:

Stage 1: 0 to 30 DPD.

Stage 2: 31 to 60 DPD (SICR).

Stage 3: Above 60 DPD (Default).

(iii) Staging classification of Individual Loans of
the Company (including secured Loans)

With respect to the one of the Unsecured
Individual Loan products, which is largely
similar in nature and risk characteristics to JLG
loans, the staging classification methodology
followed by the Company is aligned with that
applicable to the JLG portfolio. Accordingly, the
criteria for identification and classification of
exposures into various stages are substantially
consistent with those followed for JLG loans.

For all other individual products, the Company
has identified the following stage classification
to be the most appropriate for these loans :

Stage 1: 0 to 30 DPD.

Stage 2: 31 to 90 DPD (SICR).

Stage 3: Above 90 DPD (Default).

41.2. b Probability of Default ('PD')

(i) Group lending (Including SHG)

PD describes the probability of a loan to
eventually falling into Stage 3. PD %age is
calculated for each loan account separately
and is determined by using available
historical observations.

PD for stage 1: is derived as %age of loan
outstanding in stage 1 moving into stage 3 in
12-months' time.

PD for stage 2: is derived as %age of loan
outstanding in stage 2 moving into stage 3 in the
maximum lifetime of the loans under observation.

PD for stage 3: is derived as 100% in line with
accounting standard

(ii) Individual Loans

With respect to the one of the Unsecured
Individual Loan products, which is largely similar in
nature and risk characteristics to JLG loans, the PD
is aligned with that applicable to the JLG portfolio.

With respect to all other Individual loans
portfolio with relatively fewer accounts,
performance history of matured vintage loan
is not available in adequate number to build PD
or LGD model. The ECL estimation for Individual
loans portfolio is carried out using a method
which is based on management judgement.

41.2. c Exposure at default (EAD)

Exposure at default (EAD) is the sum of outstanding
principal and the interest amount accrued but not
received on each loan as at reporting date.

41.2. d Loss given default (LGD)

LGD is the opposite of recovery rate. LGD = 1 -
(Recovery rate). LGD is calculated based on past
observations of Stage 3 loans.

(i) Group lending loans (Including SHG)

LGD is computed as below:

The Company determines its expectation
of lifetime loss by estimating recoveries
towards its loan through analysis of historical
information. The Company determines its
recovery rates by analysing the recovery
trends over different periods of time after
a loan has defaulted. LGD is the difference
between the exposure at default (EAD) and
discounted recovery amount ; this is expressed
as percentage of EAD.

(ii) Individual loans

Individual loans is a portfolio with relatively
fewer accounts. Performance history of
matured vintage loan is not available in
adequate number to build PD or LGD model.
The ECL estimation for Individual loans
portfolio is carried out using a method which
is based on management judgement.

41.2. e Grouping financial assets measured on a
collective basis

The Company recognises that Individual Loans
(IL) exhibit risk characteristics distinct from those
of Group Loans and, accordingly, are treated as a
separate category for the purpose of determining
the impairment allowance. Further distinctions
in risk characteristics exist among the various
products within the IL portfolio; each such product
is therefore assessed individually for impairment
allowance purposes.

41.2. f The Company's Loan book consists of a large
number of customers spread over diverse
geographical area, hence the Company is not
exposed to concentration risk with respect to any
particular customer.

41.2. g Analysis of inputs to the ECL model under
multiple economic scenarios

ECL sensitivity to forward economic conditions
and management overlay

Expected Credit Loss (ECL) recognised on the
Company's loan portfolio reflects the effect of a
range of possible economic outcomes, calculated
on a probability-weighted basis, in accordance with
the requirements of Ind AS 109. The measurement
of ECL involves significant judgement, including the
formulation of forward-looking economic scenarios
and the assignment of probability weights to each.
The methodology incorporates a scenario-based

framework for PD and LGD computation, supported
by a macroeconomic regression model that drives
scenario weighting. The ECL model and its inputs
are recalibrated periodically using incremental data
and recent information.

Methodology

The Company evaluates macroeconomic factors and
tests their correlations with past observed default
rates witnessed in its loan portfolio to identify
variables that are both statistically acceptable and
have a clear economic rationale in the context of
the Company's borrower profile and business
model. Selected variables are incorporated into
a regression model that generates a Predicted
PD, which in turn informs the probability
weights assigned to each economic scenario.
During the current year, the Company evaluated
a range of macro factors including real GDP
growth rate, unemployment rate, industrial
production index, consumer price index, real
private consumption, import prices, industry-
level microfinance borrower indebtedness, and
real agricultural value-added, among others.
Two variables were found to meet both the
statistical and economic criteria: the year-on-year
change in industry-level Average Borrower Principal
Outstanding, and the year-on-year change in Import
Prices in US dollar terms.

Average Borrower Principal Outstanding captures
trends in industry-wide microfinance indebtedness.
Rising indebtedness across the sector compresses
the repayment capacity of borrowers and elevates
over-indebtedness risk, making this variable a
direct leading indicator of credit stress in the
segments in which the Company operates.
Import Prices, measured as year-on-year movement
in the US dollar import price index, serve as a proxy
for broader inflationary conditions. In a rising
import price environment, domestic price levels
tend to rise in tandem, improving the incomes
of the Company's borrowers — predominantly
engaged in agri-allied activities. Cost-side
pressures are, in part, cushioned by government
interventions including input subsidies, minimum
support prices, and administered pricing, limiting
their pass-through to rural households. As a result,
elevated import prices tend to be associated
with improved borrower cash flows and lower
default rates, giving rise to a negative relationship
between import price inflation and observed PD.

Together, these variables are used in the regression
model to generate the Predicted PD that drives
scenario probability weights in the ECL computation.

41.3 Capital

The Company actively manages its capital base to cover
risks inherent to its business and meet the capital
adequacy requirement of RBI. The adequacy of the
Company's capital is monitored using, among other
measures, the regulations issued by RBI.

Capital management

The Company's objectives when managing capital are to

• safeguard their ability to continue as a going
concern, so that they can continue to provide
returns for shareholders and benefits for other
stakeholders, and

• Maintain an optimal capital structure to reduce the
cost of capital.

The Company manages its capital structure and makes
adjustments to it according to changes in economic
conditions and the risk characteristics of its activities.
In order to maintain or adjust the capital structure, the
Company may adjust the amount of dividend payment
to shareholders, return capital to shareholders or issue
capital securities.

Planning

The Company's assessment of capital requirement is
aligned to its planned growth which forms part of an
annual operating plan which is approved by the Board
and also a long range strategy. These growth plans are
aligned to assessment of risks- which include credit,
operational, liquidity and interest rate.

The Company monitors its capital to risk-weighted
assets ratio (CRAR) on a monthly basis through its Assets
Liability Management Committee (ALCO).

The Company endeavours to maintain its CRAR higher
than the mandated regulatory norm of 15%. Accordingly,
increase in capital is planned well in advance to ensure
adequate funding for its growth.

41.4 Liquidity risk and funding management

Liquidity risk arises due to the unavailability of adequate
amount of funds at an appropriate cost and tenure. The
Company may face an asset-liability mismatch caused
by a difference in the maturity profile of its assets and

liabilities. This risk may arise from the unexpected
increase in the cost of funding an asset portfolio at
the appropriate maturity and the risk of being unable
to liquidate a position in a timely manner and at a
reasonable price. We monitor liquidity risk through our
Asset Liability Management Committee. Monitoring
liquidity risk involves categorizing all assets and liabilities
into different maturity profiles and evaluating them for
any mismatches in any particular maturities, particularly
in the short-term. We actively monitor our liquidity
position to ensure that we can meet all borrower and
lender-related funding requirements.

There are Liquidity Risk mitigation measures put in place
which helps in maintaining the following:

Diversified funding resources:

The Company's treasury department secures funds from
multiple sources, including banks, financial institutions
and capital markets and is responsible for diversifying
our capital sources, managing interest rate risks and
maintaining strong relationships with banks, financial
institutions, mutual funds, insurance companies, other
domestic and foreign financial institutions and rating
agencies. The Company continuously seek to diversify
its sources of funding to facilitate flexibility in meeting
our funding requirements. Due to the composition
of the loan portfolio, which also qualifies for priority
sector lending, it also engages in securitization and
assignment transactions.

Asset Liability Management (ALM) can be termed as
a risk management technique designed to earn an
adequate return while maintaining a comfortable
surplus of assets over liabilities. ALM, among other
functions, is also concerned with risk management
and provides a comprehensive as well as dynamic
framework for measuring, monitoring and managing

liquidity and interest rate risks. ALM is an integral
part of the financial management process of the
Company. It is concerned with strategic balance sheet
management, involving risks caused by changes in the
interest rates and the liquidity position of Company.
It involves assessment of various types of risks and
altering the asset-liability portfolio in a dynamic way in
order to manage risks.

ALM committee constitutes of Board of Directors
who would review the tolerance limits for liquidity/
interest rate risks and would recommend to Board of
Directors for its approval from time to time. As per the
directions of the Board, the ALM statements would be
reported to the ALM committee on quarterly basis for
necessary guidance.

The scope of ALM function can be described as follows:

i. Funding and Capital Management,

ii. Liquidity risk management,

iii. Interest Rate risk management,

iv. Forecasting and analyzing 'What if scenario' and
preparation of contingency plans.

Capital guidelines ensure the maintenance and
independent management of prudent capital levels for
Company to preserve the safety and soundness of the
Company, to support desired balance sheet growth and
the realization of new business; and to provide a cushion
against unexpected losses.

41.5.5 Hedging Policy

The Company's Hedging Policy only allows for effective hedging relationships to be considered as hedges as per the
relevant Ind AS. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic
prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and
hedging instrument. The Company enters into hedge relationship where the critical terms of the hedging instrument
match with the terms of the hedged item, and so a quantative and qualitative assessment of effectiveness is performed.

In respect of Interest rate swaps, there is an economic relationship between the hedged item and the hedging
instrument as the terms of the Interest Rate swap contract match that of the foreign currency borrowing (notional
amount, interest repayment date etc.). The Company has established a hedge ratio of 1:1 for the hedging relationships
as the underlying risk of the interest rate swap are identical to the hedged risk components.

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 under the heading cash flow hedging reserve within
equity. The gain or loss relating to the ineffective portion is recognised immediately in the statement of profit and loss,
and is included in the '(Gain) / Loss in Fair Value of Derivatives' line item.

43 Disclosures pursuant to relevant paragraphs of the 'Master Direction - Reserve Bank of India (Non¬
Banking Financial Companies- Financial statements: Presentation and Disclosures) Directions,
2025 (RBI/DOR/2025-26/359 DOR.ACC.REC.NO.278/21.4.018/2025-26 dated November 28, 2025
including amendments from time to time)

Disclosure for all the NBFCs;

a. The Company did not extend any loans against gold and silver collateral during the current year as well as in
the previous year.

b. The Company did not provide any project loans during the current year as well as in the previous year.

c. The Company did not provide any non-fund based (NFB) credit facilities during the current as well as previous year.

d. The Company does not enter into any co-lending arrangements (CLAs) with any other entities either during the current
or previous financial year(s).

43 Disclosures pursuant to relevant paragraphs of the 'Master Direction - Reserve Bank of India (Non¬
Banking Financial Companies- Financial statements: Presentation and Disclosures) Directions,
2025 (RBI/DOR/2025-26/359 DOR.ACC.REC.NO.278/21.4.018/2025-26 dated November 28, 2025
including amendments from time to time) (Contd..)

^AA Principal collection made from the pool. However during the year, the Company entered into replenishment PTC transaction, whereby
collections received from customers are replenished through the addition of eligible loan assets to the pool. Pending such addition, the
collections are temporarily held in a separate account. Accordingly, collections from the said pool exclude amounts that are required to be
reinvested through the addition of loan assets.

# Principal outstanding of the pool as at the year end.

## % of NPA / Stage 3 to total advances for group loans pertaining to previous year
### Represents equity tranche.

#### Represents overcollateralisation.

Note:-

1. The above transactions do not fulfill the test of de-recognition under Ind AS-109 and are considered as On-
Balance Sheet items in books of account.

2. Company has securitised only microfinance loans.

1. During the Current and previous year, no advances have been restructured under CDR mechanism or Under SME
Debt Restructuring Mechanism.

2. As per Company's policy, Company assesses the performace of resturcutred loans for 12 months (6 months in
previous year). Wherever the loan becomes performing, the same is upgraded to standard category. If it does not
perform, the same would be considered as 'Default'/ Stage 3 loans as per Ind-AS.

3. The outstanding amount and number of borrowers as at March 31,2026 and March 31,2025 is after considering
recoveries during the period.

4. Particulars of resolution plan and restructuring- The Company's Resolution Plan / Restructuring framework is
primarily intended for customers who may face temporary repayment stress due to external factors such as
drought, crop failure, medical emergencies, or disruption in local economic activity, which may temporarily impact
their cash flows. Before offering any restructuring support, the Company undertakes a detailed assessment of the
customer's profile, revised income streams, and repayment capacity to ensure the sustainability of the proposed
structure. Under the resolution plan, eligible existing loans may be consolidated into a revised loan facility with
an extended tenure, resulting in a reduced EMI burden and improved repayment affordability. Additionally,
incremental funding may also be provided, wherever considered appropriate, to address immediate liquidity
constraints and support restoration of the customer's income-generating capacity.

k. Loans to directors, senior officers and relatives of directors

There were no loans given to Directors, Senior Officers and Relatives of Directors during the year ended March 31,
2026 and March 31,2025.

l. Currency futures

The Company did not undertake any currency future transaction during the current and previous year.

(ii) Top 20 large deposits (amount in H Crore and % of total deposits) - Not applicable. The Company being a
Systemically Important Non-Deposit taking Non-Banking Financial Company (NBFC-MFI) registered with Reserve
Bank of India does not accept/ hold any public deposits.

(iii) Top 10 borrowings (amount in H Crore and % of total borrowings)

As at March 31, 2026

43 Disclosures pursuant to relevant paragraphs of the 'Master Direction - Reserve Bank of India (Non¬
Banking Financial Companies- Financial statements: Presentation and Disclosures) Directions,
2025 (RBI/DOR/2025-26/359 DOR.ACC.REC.NO.278/21.4.018/2025-26 dated November 28, 2025
including amendments from time to time) (Contd..)

5. "Other Short Term Liabilities" represents all short term financial and non-financial liabilities excluding
Commercial Papers and NCDs (with original maturity of less than 1 year).

n. Credit Default Swaps ('CDS')

The Company did not enter into any Credit Default Swaps (CDS) transactions during the current year and previous year.

(vi) Institutional set-up for liquidity risk management

The Company's Board of Directors has the overall responsibility of management of liquidity risk. The Board
decides the strategic policies and procedures of the Company to manage liquidity risk in accordance with the risk
tolerance/limits decided by it.

The Company also has a Risk Management Committee, which is a sub-committee of the Board and is responsible
for evaluating the overall risk faced by the Company including liquidity risk.

Asset Liability Management Committee (ALCO) of the Company is responsible ensuring adherence to the risk
tolerance/limits as well as implementing the liquidity risk management strategy of the Company.

Chief Risk Officer shall be part of the process of identification, measurement and mitigation of liquidity risks.

The ALM support group consist of CFO and Head-Treasury who shall be responsible for analysing, monitoring and
reporting the liquidity profile to the ALCO.

*Notes

1. A Significant counterparty" is defined as a single counterparty or group of connected or affiliated
counterparties accounting in aggregate for more than 1% of the NBFC-NDSI’s, NBFC-Ds total liabilities and
10% for other non-deposit taking NBFCs.

2. A "significant instrument/product" is defined as a single instrument/product of group of similar instruments/
products which in aggregate amount to more than 1% of the NBFC-NDSI’s, NBFC-Ds total liabilities and 10%
for other non-deposit taking NBFCs.

3. Total Liabilities has been computed as sum of all liabilities (Balance Sheet figure) less Equities and
Reserves/Surplus.

4. "Public funds"" shall include funds raised either directly or indirectly through public deposits, commercial
paper, debentures, inter-corporate deposits and bank finance but excludes funds raised by issue of
instruments compulsorily convertible into equity shares within a period not exceeding 10 years from the
date of issue as defined in Regulatory Framework for Core Investment Companies issued vide Notification
No. DNBS (PD) CC.No. 206/03.10.001/2010-11 dated January 5, 2011.

43 Disclosures pursuant to relevant paragraphs of the 'Master Direction - Reserve Bank of India (Non¬
Banking Financial Companies- Financial statements: Presentation and Disclosures) Directions,
2025 (RBI/DOR/2025-26/359 DOR.ACC.REC.NO.278/21.4.018/2025-26 dated November 28, 2025
including amendments from time to time) (Contd..)

Nature and terms of the swaps:

Company hedges its exposure to foreign currency and interest rate with respect to external commercial borrowing
('ECB') using CCIRS ('Cross currency interest rate swaps'), LTFX (Long term foreign exchange) and IRS (interest rate
swaps). Company has used cashflow hedge accounting methodology for accounting purposes.

(II) Exchange Traded Interest Rate (IR) Derivatives:

The Company has not traded in Interest Rate Derivative during the financial year ended March 31,2026 (March
31,2025: NIL).

(III) Disclosures on Risk Exposure in Derivatives

The Company has a Liquidity Risk Management Policy approved by the Board of Directors of the Company. This
policy provides the framework for managing various risks including interest rate risk and currency risk. The policy
provides for use of derivative instruments in managing the risks.

The Company has sourced External Commercial Borrowing in foreign currency. The same has been hedged as
required by RBI.

Qualitative Disclosure

The Company does not actively seek to profit from buying or selling of derivatives. The derivative transactions
are undertaken only to the extent that it is required to hedge against foreign currency exposure. The Company
has bought cross currency swaps and similar other swaps to protect it against loss arising out of foreign currency
fluctuations. For the said purpose, the Company engages in over the counter (OTC) derivative transaction with
highly rated banks in order to minimize counter party risks.

43 Disclosures pursuant to relevant paragraphs of the 'Master Direction - Reserve Bank of India (Non¬
Banking Financial Companies- Financial statements: Presentation and Disclosures) Directions,
2025 (RBI/DOR/2025-26/359 DOR.ACC.REC.NO.278/21.4.018/2025-26 dated November 28, 2025
including amendments from time to time) (Contd..)

u. Details of Financing of Parent Company Products

The Company was not involved in the financing of Parent Company products.

v. Details of Single Borrower Limit (SGL) / Group Borrower Limit (GBL) exceeded by the NBFC

The Company has not exceeded the prudential exposure limits for Single Borrower Limit (SGL) / Group Borrower Limit
(GBL) during the year.

w. Unsecured Advances

The Company has not given any Loans and advances against intangible securities during the year.

x. Breach of covenant
March 31, 2026

During the year ended March 31, 2026, the Company was not in compliance with certain covenants related to some
of its borrowings. The Company has obtained waivers for these covenant breaches from the respective lenders on or
before March 31,2026.

43 Disclosures pursuant to relevant paragraphs of the 'Master Direction - Reserve Bank of India (Non¬
Banking Financial Companies- Financial statements: Presentation and Disclosures) Directions,
2025 (RBI/DOR/2025-26/359 DOR.ACC.REC.NO.278/21.4.018/2025-26 dated November 28, 2025
including amendments from time to time) (Contd..)

ad. Net Profit or Loss for the period, prior period items and changes in accounting policy

The Company does not have any adjustment related to prior period items and changes in accounting policy during the
current and previous financial year.

ae. Revenue recognition

The Company has not postponed any revenue recognition during the current and previous financial year.

44 Operating segments

There is no separate reportable segment as per Ind AS 108 on 'Operating Segments' in respect of the Company. The
Company operates in single segment only. There are no operations outside India and hence there is no external revenue or
assets which require disclosure. No revenue from transactions with a single external customer amounted to 10% or more
of the Company's total revenue for the year ended March 31,2026 and March 31,2025.

45 Goodwill impairment testing

Goodwill is subject to review for impairment annually or more frequently if events or circumstances indicate that it is
necessary. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows
from continuing use that are largely independent of the cash inflows from other assets or groups of assets is considered as
a cash generating unit. Goodwill does not generate cash flows independent of other assets of the overall business and its
fair value cannot be separately estimated. Therefore, it has been tested at a Cash generating Unit level ("level comprising all
assets of the business including goodwill"). Goodwill carried as at the balance sheet date represents goodwill acquired in a

45 Goodwill impairment testing (Contd..)

business combination of the Company with Madura Microfinance Ltd ('MMFL') and since both are in similar businesses, on
merger of MMFL, the Company as a whole has been treated as one Cash Generating Unit (CGU) representing lowest level at
which the goodwill is monitored for internal management purposes and the business of erstwhile MMFL and the Company
are not treated as two distinct operating segments by the company. In view of this, Company as a whole is valued as one
CGU for the purpose of assessing the impairment of goodwill. Based on the assessment no impairment was identified in
FY 2025-26 (FY 2024-25: Nil)

The carrying amount of goodwill as at March 31,2026 is H 375.68 crores (March 31,2025: H 375.68 crores).

The recoverable amount of each CGU has been calculated based on its value in use, estimated as the present value of
projected future cash flows. Following key assumptions have been considered by the Management while performing
Impairment testing;

47 (Contd..)

The Company has preserved the audit trail / edit logs for the applicable period in accordance with the statutory record
retention requirements, except for audit trail / edit logs at the database level for the matters identified above, where such
logs were not maintained due to non-enablement of the audit trail / edit log functionality during the year.

47 On November 21,2025, the Government of India has notified the four Labour Codes - the Code on Wages, 2019, the Industrial
Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code,
2020 - consolidating 29 existing labour laws. The Ministry of Labour & Employment published draft Central Rules and FAQs
to enable assessment of the financial impact due to changes in regulations. The Company has assessed and disclosed the
incremental impact of these changes on the basis of best information available and consistent with the guidance provided
by the Institute of Chartered Accountants of India. The incremental impact consisting of gratuity of H 13.53 crore and long¬
term compensated absences of H 4.80 crore primarily arises due to change in wage definition. The Company continues to
monitor the finalisation of Central / State Rules and clarifications from the Government on other aspects of the Labour
Code and would provide appropriate accounting effect on the basis of such developments as needed.

The projections cover a period of five years, as the Company believes this to be the most appropriate timescale over which
to review and consider annual performances before applying a terminal value multiple to the final year cash flows. The
growth rates used to estimate cash flows for the first five years are based on past performance, and on the Company's five-
year strategic plan.

Weighted Average Cost of Capital % (WACC) for the Company = Risk free return (Market risk premium x Beta). The Company
has performed sensitivity analysis and has concluded that there are no reasonably possible changes to key assumptions
that would cause the carrying amount of a CGU to exceed its recoverable amount.

46 The Ministry of Corporate Affairs (MCA) has amended Rule 3 of the Companies (Accounts) Rules, 2014 requiring companies
which uses accounting software for maintaining its books of account, shall use only such accounting software which has
a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of
account along with the date when such changes were made and ensuring that the audit trail cannot be disabled and such
audit trail is preserved by the company as per the statutory requirements for record retention.

The accounting software used for maintaining accounting records, the loan management system, and the loan origination
system employed by the Company have had the audit trail feature enabled at the application level, and this functionality
has been operational throughout the year.

With respect to the loan origination system used for maintaining group loan origination records, the audit trail / edit log
feature was not enabled in entirety at the database level during the year.

In respect of the accounting software used for maintaining books of account, loan origination system used for maintaining
individual loan origination records, and loan management system, the audit trail / edit log feature was enabled at the
database level throughout the year, except for certain user accounts for which the audit trail / edit log feature was not
enabled. Certain such user accounts are in the nature of service accounts used solely for software integration purposes.

The audit trail / edit log functionality, wherever enabled, has operated effectively during the year. Further, direct access
to the databases of the above systems is restricted to database administrators only for the limited purpose of system
maintenance. Such access is subject to access and monitoring controls, including logging and monitoring of administrator
activities through privileged access management tools.

The Company has put in controls to ensure that the audit trail feature is not tampered and there are no instances of such
feature being tampered during the year.

49 Other Disclosures (Contd..)

(vi) Other than the transactions that are carried out as part of Company's normal lending business:

A) The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any
other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries)
with the understanding (whether recorded in writing or otherwise) that the Intermediary shall -

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on
behalf of the Company (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries;

B) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding
Party) with the understanding (whether recorded in writing or otherwise) that the company shall -

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on
behalf of the Funding Party (Ultimate Beneficiaries)

or

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(vii) The Company has not traded or invested in Crypto currency or Virtual Currency during the current financial year
and previous year.

(viii) There are no transactions which have not been recorded in the books of accounts and has been surrendered or
disclosed as income during the year in the tax assessments under the Income Tax Act, 1961. Also, there are no
previously unrecorded income and related assets.

(ix) Other litigation:

Income Tax Department was issued a demand notice dated March 18, 2024 for H 46.02 crores pertaining to AY 2022¬
23 has been received from Income Tax department. The Company had submitted modified return giving effect to the
merger with Madura Micro Finance limited ('MMFL'). This was on retrospective basis with effect from April 01, 2020.
Merger was approved by the NCLT order dated February 7, 2023. While scrutiny proceedings were carried out based
on pre-merger original return, order was passed based on the post-merger modified return without considering the
additional deductions claimed by MMFL. In view of this, Company was filed a rectification under section 154 of Income
Tax Act and also filed an appeal.

The assessment order or demand was concluded or raised without giving an opportunity of being heard. Accordingly,
as the demand was calculated based on factually incorrect data. Further, the Company has submitted necessary
supporting evidences for the notice issued under section 250 of IT Act (hearing of the matter).

Subsequently, on December 24, 2025, the Company received a favourable order from the National Faceless Assessment
Centre ('NFAC'), pursuant to which the aforesaid demand of H 46.02 crores was deleted in its entirety. However, the
Income Tax department has preferred an appeal before the Income Tax Appellate Tribunal ('ITAT') against the said
NFAC order, and the matter is currently pending adjudication before the ITAT.

With respect to both the above, as per Company's assessment, the probability of the liability devolving on the Company
is remote. Accordingly, the same is neither been provided for nor been considered as contingent liability.