XVIII. Provisions, Contingent Liabilities and Contingent 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 Bank or a present obligation that is not
recognized because it is not probable that an outflow of resources will be required to settle the obligation. The Bank creates
a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and
a reliable estimate can be made of the amount of the obligation. No provision is recognized, and a disclosure of contingent
liability is made when there is:
i. a possible obligation arising from a past event, the existence of which will be confirmed by occurrence or non-occurrence
of one or more uncertain future events not within the control of the Bank; or
ii. a present obligation arising from a past event which is not recognized because:
• it is not probable that an outflow of resources will be required to settle the obligation; or
• a reliable estimate of the amount of the obligation cannot be made. The Bank does not expect the outcome of these
contingencies to have a materially adverse effect on its financial results.
Provisions are determined based on management estimate required to settle the obligation at the balance sheet date,
supplemented by experience of similar transactions. These are reviewed at each balance sheet date and adjusted to reflect
the current management estimates. If a favourable Judgement/ Order is already there in respect of disputed items of taxation,
no provisions or disclosures would be made in the books, in respect of such matters. The Bank does not create provision for the
cases pending at first appellate authority and where there are no adverse judgements decided on such disputed matters by
the High Court/Supreme Court/ Income Tax Appellate Tribunal/ or other such Appellate Authorities.
Contingent assets are not recognized in the financial statements. However, contingent assets are assessed continually and if it is
virtually certain that an inflow of economic benefits will arise, the asset and related income are recognized in the period in which
the change occurs.
XIX. Share Issue Expenses
Share issue expenses will be adjusted from the Share Premium Account in accordance with Section 52 of the Companies Act,
2013.
XX. Corporate Social Responsibility
Expenditure incurred towards Corporate Social Responsibility, in accordance with Companies Act, 2013 will be recognized in the
Profit and Loss Account.
XXI. Priority Sector Lending Certificates (PSLC)
The fee paid for purchase of the PSLC would be treated as an 'Expense' and the fee received for the sale of PSLCs would be
treated as 'Miscellaneous Income'.
XXII. Cash and cash equivalents:
Cash and cash equivalents include Cash in hand, Balances with RBI, and Balances with Other Banks/ institutions and money at
call and short notice (including the effect of changes in exchange rates on cash and cash equivalents in foreign currency).
XXIII. Credit Card reward points
The Bank runs a loyalty program which seeks to recognise and reward customers based on their relationship with the Bank.
Under the program, eligible customers are granted loyalty points redeemable in future, subject to certain conditions. The Bank
estimates the probable redemption of such loyalty/reward on a quarterly, Provision for such costs is recognised in the Profit and
Loss account and liabilities on the outstanding reward points as at the Balance Sheet date is included in 'Others' under Schedule
5 - Other liabilities and provisions.
The following disclosures to the financial statements are made in compliance to the RBI Directions on Financial Statements: Presentation
and Disclosures issued vide circular No RBI/DOR/2025-26/167 DOR.ACC.REC. No.86/21.04.018/2025-26 dated 28th November 2025.
Amount in notes forming part of the financial statements for the year ended March 31, 2026 are denominated in Rupees Crore to
conform to extant Reserve Bank of India (RBI) guidelines except, where stated otherwise.
1. Capital1.1 Capital Infusion
During the year ended March, 31,2026 there was no infusion of capital. The Bank, vide its Letter of Offer dated December 19, 2024,
offered upto 14,16,86,767 equity shares of face value of '10 each at a price of '21.00 per equity share (including a premium of
'11.00 per equity share) for an amount aggregating to '297.54 Crore on a rights basis to the eligible equity shareholders of the bank
in the ratio of 14 rights equity shares for every 25 fully paid-up equity shares held by the eligible equity shareholders of the Bank on
the record date, i.e., on December 27, 2024. The issue was fully subscribed and Bank has allotted 14,16,86,767 equity shares on
February 4,2025. Accordingly, share capital increased by '141.69 Crore in the Previous Year and share premium increased by
' 150.60 Crore in the Previous Year.
1.2 Regulatory Capital
The Bank is subject to the Basel-III Capital Regulations stipulated by RBI which are based on the framework of the Basel Committee on
Banking Supervision, effective from April 1,2013. Bank has to comply with the regulatory limits and minima as prescribed under Basel
III capital regulations, on an ongoing basis. As per the guidelines, the Bank is required to maintain a minimum Capital to Risk Weighted
Assets Ratio (CRAR) of 9% (11.5% including Capital Conservation Buffer [CCB]), with minimum Common Equity Tier I (CET1) of 5.5%
(8% including CCB). These guidelines on Basel III have been fully implemented. The minimum CRAR required to be maintained by
the Bank as on 31st March 2026 is 11.50%.
1.3 Reserves and Surplus
Statutory Reserve
During the year ended March 31,2026, the Bank had appropriated ' 25.69 Crore (previous year: ' 16.66 Crore) out of profits for the
year ended March 31,2026 to the Statutory Reserve in terms of section 17 of the Banking Regulation Act, 1949 and RBI guidelines.
Revaluation Reserve
During the financial year ended March 31,2026, the Bank revalued its land and premises and the increase in the net book value on
revaluation of ' 7.10 Crore (previous year Nil) is credited to revaluation reserve. An amount equivalent to additional depreciation on
the revalued portion of the assets of ' 0.95 Crore (previous year ' 0.73 Crore) was transferred from Revaluation Reserve to Revenue
Reserve.
Capital Reserve
In the case of equity instruments designated under AFS at the time of initial recognition, any gain or loss on sale of such investments
shall be transferred from AFS Reserve to the Capital Reserve. During the year an amount of ' 2.03 Crore (previous year ' 0.64 Crore)
(net of taxes) was transferred to Capital Reserve on sale of such Equity instruments. Profit on sale of investments amounting to ' 3.63
Crore (previous year: Nil) in the Held to Maturity category was credited to the Profit and Loss Account and thereafter appropriated to
capital reserve (net of taxes and the amount required to be transferred to Statutory Reserves).
Investment Fluctuation Reserve (IFR)
IFR is created with an amount not less than lower of net profit on sale of investments during the year or net profit for the year less
mandatory appropriations until the amount of IFR is at least 2 percent of the AFS and FVTPL portfolio (including HFT), on a continuing
basis. During the year, Bank has transferred ' 2.83 Crore (previous year Nil) to Investment Fluctuation Reserve Account.
AFS Reserve
The valuation gains and losses across all performing investments, irrespective of classification (i.e., Government securities, Other
approved securities, Bonds and Debentures, etc.), held under AFS shall be aggregated and net appreciation or depreciation shall
be directly credited or debited to AFS reserve without routing through the Profit & Loss Account. The Bank has transferred the loss on
account of transitional adjustment due to fair valuation of equity instruments amounting to ' 13.38 Crore in the previous year. During
the year the Bank has transferred the loss of ' 30.00 Crore (previous year ' 9.17 Crore) (net of taxes) to AFS Reserve account.
Revenue Reserve:
An amount of ' 0.95 Crore (previous year ' 0.73 Crore) was credited to revenue reserves, being depreciation on the revalued
assets. During the year 2024-2025, in compliance with RBI's Master Direction on classification, Valuation and Operation of Investment
Portfolio of commercial Banks (Directions) 2023 dated 12th September 2023, the investments of the Bank have been reclassified,
wherever required and valued in accordance with the above-mentioned RBI direction. Consequent to this, transitional adjustment on
account of such reclassification of securities was credited to General Reserve to the extent of ' 44.91 Crore, which includes reversal
of provision for depreciation of ' 13.74 Crore, amortization of discount on HTM securities of ' 2.66 Crore (net of taxes) and transfer
of investment reserve of ' 28.51 Crore. Since the Bank had complied with minimum regulatory requirements of IFR, the balance in
Investment Reserve Account as of April, 1,2024 amounting to ' 28.51 Crore was also transferred to General Reserve.
Draw down from reserves
The Bank has not undertaken any drawdown from reserves during the year ended March 31,2026 and March 31,2025, except:
1. An amount of ' 0.95 Crore (previous year ' 0.73 Crore) was drawn from revaluation reserves and credited to revenue reserves,
being depreciation on the revalued assets.
2. I n FY 2024-25, Bank had adjusted the share issue expenses of ' 5.25 Crore, incurred for the equity share capital raised through
the Rights Issue during the year ended March 31, 2025, against the share premium account in terms of Section 52 of the
Companies Act, 2013 and Reserve Bank of India (Financial Statements - Presentation and Disclosures) Directions dated August
30, 2021 as amended.
ii) Qualitative Disclosure
The Bank measures and monitors the LCR in line with the Reserve Bank of India's circular dated November 28, 2025 on “Reserve
Bank of India (Commercial Banks - Asset Liability Management) Directions, Chapter V- Liquidity Coverage Ratio (LCR)”. The LCR
guidelines aim to ensure that a bank maintains an adequate level of unencumbered High Quality Liquid Assets (HQLAs) that
can be converted into cash to meet its liquidity needs for a 30-calendar day time horizon under a significantly severe liquidity
stress scenario. At a minimum, the stock of liquid assets should enable the bank to survive until day 30 of the stress scenario, by
which time it is assumed that appropriate corrective actions can be taken. Banks are required to maintain HQLA of a minimum
of 100% of its Net Cash Outflows. The adequacy in the LCR maintenance is an outcome of a conscious strategy of the Bank
towards complying with LCR mandate ahead of the stipulated timelines. The maintenance of LCR, both on end of period and
on an average basis, has been on account of multiple factors viz, increases in excess SLR, existing eligibility in corporate bond
investments, increase in retail deposits and increase in non-callable deposits. Unweighted values are calculated as outstanding
balances maturing or callable within 30 days (for inflows and outflows) except where otherwise mentioned in the circular and
LCR template. Weighted values are calculated after the application of respective haircuts (for HQLA) or inflow and outflow rates
(for inflows and outflows). Board of Directors of the Bank has empowered ALCO (Senior Management Executive Committee) to
monitor and strategize the Balance Sheet profile of the Bank. The Bank has been maintaining HQLA primarily in the form of SLR
investments over and above mandatory requirement; Certificate of Deposits issued by Banks with rating A1 and above apart
from regulatory dispensation allowed in the form of borrowing limit available through Marginal Standing Facility (MSF) and Facility
to Avail Liquidity for Liquidity Coverage Ratio (FALLCR). Average LCR for the Quarter ended March 31,2026 is 119.88% (Quarter
ended March 31,2025: 159.58%), which is comfortably above RBI prescribed minimum requirement of 100%.
ii) Qualitative Disclosure
The Net Stable Funding Ratio (NSFR) is one of Basel Committee's key reforms to promote a more resilient banking sector. The
NSFR will require banks to maintain a stable funding profile in relation to the composition of their assets and off-balance sheet
activities. A sustainable funding structure is intended to reduce the likelihood that disruptions to a bank's regular sources of
funding will erode its liquidity position in a way that would increase the risk of its failure and potentially lead to broader systemic
stress. The NSFR limits overreliance on short-term wholesale funding, encourages better assessment of funding risk across all on-
and off-balance sheet items, and promotes funding stability, The Bank is required to maintain the NSFR on an ongoing basis on
a standalone Bank level and on a Group level. The minimum NSFR requirement set out in the RBI guideline for the standalone
Bank and for Group effective October 1,2021 is 100%. The Bank has complied with the regulatory requirements with respect to
NSFR as of 31 March 2026.
e) Disclosure of Divergence in the Asset Classification and Provisioning
In terms of RBI guidelines, banks are required to disclose the divergences in asset classification and provisioning consequent to RBI's
annual supervisory process in their notes to accounts to the financial statements. The disclosure is required if either or both of the
following conditions are satisfied: (i) the additional provisioning for NPAs assessed by RBI as part of its supervisory process exceeds 5%
of the reported profit before provisions and contingencies for the reference period and (ii) the additional Gross NPAs identified by RBI
as part of its supervisory process exceed 5% of the reported incremental Gross NPAs for the reference period ended 31 March, 2025
and 31 March, 2024.
Based on the above, no disclosure on divergence in asset classification and provisioning for NPAs is required with respect to RBI's
annual supervisory process for the year ended 31 March, 2025 and 31 March, 2024. RBI annual supervision process is not completed
for the FY 2025-26 and hence no disclosure is made in this regard.
i) Fraud Accounts
RBI vide DoS. CO. FMG. No. S332/23.04.001/2022-23 dtd.13th January, 2023 has advised all member Banks to report all the Digital
Payment related Financial Fraud incidents to RBI through FMR, which includes the instances where either the credentials have been
compromised by customers themselves, or no loss has been caused to the Bank. In compliance of the above, Bank has started
reporting all cyber fraud incidents to RBI through FMR, from 1st January 2023 onwards. As per RBI Master Directions on Fraud Risk
Management, all payment related frauds need not be reported to RBI through FMR application and payment related fraud if
concluded as fraud committed on bank, only need to be reported to RBI through FMR application.
(v) Factoring Exposures: Nil
(vi) Intra-Group Exposures: Bank does not have any group entities giving rise to any Intra-Group Exposures.
(vii) Unhedged Foreig(n Currency Exposure
The Bank has a policy on managing credit risk arising out of foreign currency exposure of its borrowers. In line with the policy,
assessment of unhedged foreign currency exposure is a part of assessment of borrowers and is undertaken while proposing limits or
at the review stage. The Bank has fixed a maximum limit on unhedged position on borrowers, while sanctioning limits for all clients.
The unhedged portion of foreign currency credit exposure of large corporate/SMEs are monitored and reviewed on a monthly basis.
7. DERIVATIVES
(i) Details of derivative portfolio: NIL as on 31.03.2026 (Previous Year -NIL)
(ii) Forward rate agreement/ Interest rate swap: The Bank has not entered into Forward Rate Agreement and Interest Rate Swap
during FY 2025-26 (previous year: NIL).
(iii) Exchange traded Interest Rate Derivatives: NIL as on 31.03.2026 (previous year- NIL)
(iv) Disclosures on risk exposure in Derivatives
(a) Qualitative disclosures:
Structure and Organization for Management of risk in derivatives trading: Operations in the Treasury are segregated into three
functional areas, namely Front office, Mid office and Back-office, equipped with necessary infrastructure and trained officers,
whose responsibilities are well defined. The Bank enters into plain vanilla forward forex contracts only to backup / cover customer
transactions as also for proprietary trading purpose. The Bank also enter in to foreign exchange swaps with other banks for
hedging own balance sheet items like FCNR/ EEFC etc. The Treasury Management Policy of the Bank clearly lays down the scope
of usages, approval process as also the limits like the open position limits, deal size limits and stop loss limits for trading. The Mid
Office is handled by Risk Management Department. Daily report is generated by Risk Management Department for appraisal of
the risk profile to the senior management for Asset and Liability management.
> Scope and nature of risk measurement, risk reporting and risk monitoring systems: Outstanding forward contracts are
monitored by Risk Management Department against the limits (Counterparty, Stop Loss, Open Position, VaR, Aggregate
Gap) fixed by the Board and approved by RBI (wherever applicable) and exceeding, if any, are reported to the appropriate
authority / Board for ratification.
1. Policies for hedging and / or mitigating and strategies and processes for monitoring the continuing effectiveness of hedges
/ mitigants: The Bank's policy lays down that the transactions with the corporate clients are to be undertaken only after
the inherent credit exposures are quantified and approved for customer appropriateness and suitability and necessary
documents like ISDA agreements etc. are duly executed. The Bank adopts Current Exposure Method for monitoring the
credit exposures. While sanctioning the limits, the competent authority stipulates condition of obtaining collaterals / margin
as deemed appropriate. The derivative limits are reviewed periodically along with other credit limits.
2. Accounting policy for recording the hedge and non-hedge transactions, recognition of Income premiums and discounts,
valuation of outstanding contracts, provisioning, collateral and credit risk mitigation: Valuation of outstanding forward
contracts are done as per FEDAI guidelines in force. Marked to market profit & loss are taken to Profit & Loss account. MTM
profit & loss calculated as per Current Exposure method are taken into account while sanctioning forward contract limits to
customers and collaterals / cash margins are prescribed for credit and market risks. The Bank undertakes foreign exchange
forward contracts for its customers and hedges them with other banks. The credit exposure on account of forward contracts
is also considered while arriving at the total exposure of each customer / borrower and counter party banker. The Bank also
deals with other banks in proprietary trading duly adhering to risk limits permitted by RBI, set in the policy and is monitored
by mid office. The Marked to Market values are monitored on daily basis for foreign exchange forward contracts. The credit
equivalent is computed under current exposure method. The operations are conducted in terms of the policy guidelines
issued by Reserve Bank of India from time to time and as approved by the Board of the Bank.
e) Credit Default Swaps
The Bank has not entered into Credit Default Swaps during FY 2025-26 (previous year: NIL outstanding).
f) OIS (Overnight Index Swap) position
The Bank has not entered into OIS (Overnight Index Swap) during FY 2025-26 (previous year: NIL outstanding).
g) Un-hedged / uncovered foreign currency exposure of the Bank
The Bank's foreign currency exposures as at March 31, 2026 that are not hedged/ covered by either derivative instruments or
otherwise are within the Net Overnight Open Position limit (NOOP) and the Aggregate Gap limit, as approved by the Board. NOOP
limit is ' 25.00 Crore and actual position as on March 31,2026 was ' 3.25 Crore. AGL limit is USD 80 Million and actual position
as on March 31,2026 was USD 16.00 Million.
h) Currency Futures
The Bank does not deal in exchange traded currency futures during the current and previous financial years.
8. Securitization Transactions
The Bank has not undertaken any securitization transactions during the year ended March 31,2026 and March 31,2025.
9. Off-balance sheet SPVs sponsored
There are no SPVs sponsored by the Bank as at March 31,2026 and March 31,2025.
4. Ms. Vardhini Kalyanaraman
5. Dr. Jineesh Nath C.K
6. Sri Ashutosh Khajuria
Terms of Reference
1. Recommending to the Board for its consideration and approval on the size and composition of the Board taking into
account the available and needed diversity and balance in terms of experience, knowledge, skills and judgment of the
Directors;
2. Reviewing, from time to time, possible candidates for current and potential Board vacancies, including Directors who are to
retire and are eligible for re-appointment or re-election and other persons who may be recommended by the Chairman or
the MD&CEO or other Directors, shareholders or others;
3. Recommending to the Board, candidates for election (including reelection) or appointment (including reappointment) to
the Board;
4. Carrying out evaluation of every Director's performance;
5. Deciding on the matter of whether to extent or continue the term of appointment of the independent director, on the basis
of the report of performance evaluation of independent directors;
6. Identifying persons who are qualified to became directors and who may be appointed in senior management in
accordance with the criteria laid down, recommend to the Board their appointment and removal; formulation of the criteria
for determining qualifications, positive attributes and Independence of a Director;
7. Devising a policy on diversity of Board of Directors;
8. Recommending to the Board a policy relating to the remuneration for the Directors, key managerial personnel and other
employees;
9. Formulating and determining the Bank's policies on remuneration packages payable to the Directors and key managerial
personnel including performance/achievement bonus perquisites, retirals, sitting fees;
10. Considering grant of Stock Options to employees;
11. Reviewing the composition of the existing Committees of the Board;
12. Formulation of criteria for performance evaluation of independent directors and the Board;
13. Validation of “fit and proper” status of all Directors on the Board of the Bank in terms of the guidelines issued by the RBI or
other regulatory authorities;
14. Developing and recommending to the Board the Corporate Governance guidelines applicable to the Bank for incorporating
best practices from time to time
b) Information relating to the design and structure of remuneration processes and the key features and objectives of
remuneration policy.
In compliance with standards of corporate governance as well as regulatory reforms put forth by Reserve Bank of India, Bank
has in place 'Compensation Policy of Whole time Directors (WTD), Chief Executive Officers, Material Risk Takers (MRTs) and Control
Function Staff.
For employees who do not fall under the purview of above, we also have a 'Compensation Policy' clearly defining the
compensation design in line with banking industry benchmarks, under two streams of employment viz. IBA and CTC.
c) Description of the ways in which current and future risks are taken into account in the remuneration processes. It should
include the nature and type of the key measures used to take account of these risks.
Based on the Financial Stability Board (FSB) principles for sound compensation practices which also formed a part of regulatory
reforms circulated by RBI vide DOR. Appt. BC. No.23/ 29.67.001/2019-20 dated 04.11.2019, effective alignment of compensation
with prudent risk taking while ensuring that compensation covers all types of risks including difficult to measure risks is already
envisaged in 'Compensation Policy of WTDs, Chief Executive Officers, MRTs and Control Function Staff'.
The Policy also touches upon the sensitivity of payout schedule to the time horizon of risks.
In order to analyze the long-term consequences viz-a-viz risk appetite, our policy objective is to align regulatory guidelines with
prevailing trends / practices in the industry to achieve a balanced scenario wherein
1. compensation is adjusted for all types of risks
2. compensation outcomes are symmetric with risk outcomes
3. compensation payouts are sensitive to the time horizon of risks and
4. mix of cash, equity and other forms of compensation are consistent with risk alignment.
Regarding the employees who are not covered under 'Compensation Policy of WTDs, Chief Executive Officers, MRTs and Control
Function Staff', the payout falls under either IBA or CTC pattern.
The former is periodically revised by bi-partite settlements/ joint notes while the latter is linked to bank's performance and the
individual's performance, complying with the statutory guidelines and the yardsticks approved by competent authorities.
d) Description of the ways in which the bank seeks to link performance during a performance measurement period with levels
of remuneration.
Compensation structure for the personnel covered under 'Compensation Policy of WTDs, Chief Executive Officers, MRTs and
Control Function Staff' is a mix of fixed pay and variable pay with the latter proportionate to the responsibility/ seniority,
Bank will device scoring model with specific parameters in tandem with the rules and authorities handled by the respective
positions, The Board will review and finalize the score for each senior management position based on the audited figures of the
previous financial year,
For employees coming under IBA pattern, the compensation shall be revised once in five years as decided by the bi-partite
settlements/ joint notes, subject to granting of bank's mandate,
Under CTC pattern the increments shall be linked to bank's performance based on year-on-year yardsticks fixed by the Bank,
e) A discussion of the bank's policy on deferral and vesting of variable remuneration and a discussion of the bank's policy and
criteria for adjusting deferred remuneration before vesting and after vesting.
Norms for grant of share linked instruments shall be in conformity with the provisions of Securities & Exchange Board of India (Share
Based Employee Benefits) Regulations, 2014, Share linked instruments shall be fair valued on the date of grant by the bank using
Black-Scholes Model,
Deferral of Variable Pay
In adherence to FSB implementation standards, a minimum of 60% of total Variable Pay shall be under deferral arrangement
with further guidelines on cash component as follows:
1) I f cash component is part of Variable Pay, at least 50% of the cash bonus shall be under deferral arrangement,
2) If cash component of Variable Pay is under ' 0,25 Crore, deferral payment for cash portion would not be necessary,
Period of Deferral Arrangement
Deferral Period shall be fixed as three years applicable to both cash and non-cash components of the Variable Pay, In order
to ensure a proper assessment of risks before the application of ex-post adjustments, following guidelines shall be ensured for
vesting,
1) Deferred portion of Variable Pay shall be spread out on a pro-rata basis, i,e,, not more than 33,33% of the total deferred
Variable Pay shall vest at the end of first year, Further, not more than 33,33% of total deferred Variable Pay shall vest at the
end of second year,
2) The first such vesting shall not be before one year from the commencement of the deferral period,
Retention Period
There shall be a Retention Period (Lock-in period) of one year for Share-linked instruments forming part of Variable Pay, during
which they cannot be sold or accessed,
f) Description of the different forms of variable remuneration (i.e., cash and types of share-linked instruments) that the bank
utilizes and the rationale for using these different forms.
Variable pay shall consist of cash/ non-cash compensation by way of share linked instruments assessed on the basis of adequately
measured performance of individual/ business unit,
Limits on Variable Pay:
1) Total Variable Pay, inclusive of cash and non-cash components for all positions other than Whole Time Directors and MD &
CEO shall be 100% of the Fixed Pay (i,e,, 50% of total remuneration),
2) For WTDs and MD & CEO, total Variable Pay shall not be less than 100% (i,e,, 50% of total remuneration) and shall be limited
to a maximum of 300% of the Fixed Pay,
3) If Variable Pay is up to 200% of Fixed Pay, a minimum of 50% of such variable pay shall be in the form of non-cash
instruments,
4) If Variable Pay is over and above 200% of Fixed Pay, a minimum of 67% of such variable pay shall be in the form of non-cash
instruments,
5) I f grant of share-linked instruments is barred by statute or regulation, Variable Pay would be capped at 150% of the Fixed
Pay with a lower base of 50%,
f. Implementation of IFRS converged Indian Accounting Standards (Ind AS)
RBI vide its directions on “Financial Statements: Presentation and Disclosures, 2025” and amendment thereto, notified that as the
legislative amendments are under consideration of the Government of India, therefore, implementation of Indian Accounting
Standards (Ind AS) for banks has been deferred till further notice. As per RBI directions, Proforma Ind AS financial statements are
prepared on a half yearly basis and submitted to RBI.
RBI directions on “Classification, Valuation and Operation of Investment Portfolio” of commercial banks bring the classification
and accounting of investments closer to Ind AS and the Bank has implemented these directions w.e.f. 1st April, 2024. In respect
of classification, provisioning and income recognition for loans & advances and other financial assets, directions were issued by
RBI on 27th April, 2026, Under these directions, ECL allowance shall be computed by adopting the forward-looking provisioning
approach and in line with the regulatory requirements, Bank is taking the necessary steps to implement these directions w.e.f.
1st April, 2027.
h. Disclosure of Letter of Comforts (Loc s) issued by the Bank
The Bank has not issued any Letter of Comforts during the year ended March 31,2026 and March 31,2025. RBI vide Circular No.
RBI/2017-18/139 A.P (DIR Series) Circular No.20 dated March 13, 2018 has discontinued issuance of Letters of Undertaking (LoUs)
and Letters of Comforts (LoCs).
i. Portfolio-level information on the use of funds raised from green deposits:
Bank has not raised any green deposits during the year 2025-26.
j . Details of Single Counterparty Limit / Limit for Group of Connected Counterparties exceeded by the Bank
RBI has prescribed limits linked to bank's eligible capital base in respect of exposure to single counter party and group of
connected counter parties. During the year ended March 31,2026 and March 31,2025, the Bank was within the limits prescribed
by the RBI.
15. DISCLOSURE AS PER ACCOUNTING STANDARDS (AS)
a) Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies (AS 5)
There are no changes in the Significant Accounting Policies adopted during the year ended 31st March 2026 as compared to
those followed in the previous financial year ended 31st March 2025.
b) Employee Benefits (AS 15)
A. Defined Contribution Plan
1) Provident Fund: Employees, who have not opted for pension plan are eligible to get benefits from provident fund,
which is a defined contribution plan. Aggregate contributions along with interest thereon are paid on retirement, death,
incapacitation or termination of employment. Both the employee and the Bank contribute a specified percentage
of the salary to the Dhanlaxmi Bank Employees' Provident Fund. The Bank has no obligation other than the monthly
contribution. The Bank recognized '1.21 Crore (Previous Year: '0.98 Crore) for provident fund contribution in the Profit
and Loss Account.
2) New Pension Scheme: As per the industry level settlement dated April 27, 2010, employees who joined the services
of the Bank on or after April 1, 2010 are not eligible for the existing pension scheme whereas they will be eligible for
Defined Contributory Pension Scheme (DCPS) in line with the New Pension Scheme introduced for employees of Central
Government. Towards DCPS, employee shall contribute 10% of their pay components and Dearness Allowance thereon
and the Bank will also make a contribution of 14%. There is no separate Provident Fund for employees joining on or after
April 1,2010. The Bank recognized '11.17 Crores (Previous Year: '11.10 Crore) for DCPS contribution in the Profit and Loss
Account.
B. Defined Benefit Plan
The employee benefits on account of pension, gratuity and leave have been ascertained on actuarial valuation in
accordance with Accounting Standard - 15 prescribed under section 133 of the Companies Act, 2013. The summarized
position of various defined benefits recognized in the profit and loss account and balance sheet along with the funded
status are as under:
d) Dues to Micro, Small and Medium Enterprises
There have been no reported cases of delayed payments of the principal amount or interest due thereon to Micro, Small and
Medium Enterprises.
e) Provision for Long Term Contracts
The Bank has a process whereby periodically all long-term contracts (including derivative contracts) are assessed for material
foreseeable losses. At the year end, the Bank has reviewed and recorded adequate provision as required under any law /
accounting standards for material foreseeable losses on such long-term contracts (including derivative contracts), if any, in the
books of account and disclosed the same under the relevant notes in the financial statements.
f) Investor Education and Protection Fund
There was no pending amount to be transferred to the Investor Education and Protection Fund by the Bank in the FY 2025-26.
g) Inter-Bank Participation Certificates with Risk Sharing
There was no purchase or sale of Inter Bank Participation Certificate with risk sharing by bank during year ended March 31,2026
and March 31,2025.
ii) Revaluation Reserve
a) Revaluation of Properties
The revaluation of the immovable properties of the bank is done every three years as per the policy of the Bank.
The last revaluation was done in the FY 2022-23. During the year 2025-2026, the appreciation of ' 7.10 Crore in the
value of land and buildings consequent upon revaluation by approved valuers was credited to Revaluation Reserve.
Accordingly, the balance as on 31st March 2026 (net of amount transferred to General Reserve) stands at ' 164.79
Crore (Previous Year ' 158.64 Crore).
j) Inter Office Accounts:
I nter Office Accounts between branches, controlling offices, Corporate Office etc., are being reconciled on an ongoing basis
and there is no material effect on the profit and loss account of the current year.
i) Corporate Social Responsibility (CSR)
Due to losses incurred by the Bank from FY 2013 to 2018, in compliance with the provision outlined in Section 198, these losses
were offset against profits in subsequent years. Consequently, no profits were available under Section 198 of the Companies
Act, for Corporate Social Responsibility purposes. Therefore, the Bank did not undertake any projects under Corporate Social
Responsibility for the financial year 2025-26 and 2024-25.
17. Comparative Figures
Previous year figures have been re-grouped/ re-classified wherever considered necessary to conform to current year's classification.
18. Disclosure as to Rule 11(e) of the Companies (Audit and Auditors) Rules, 2014
No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of
funds) by the Bank to or in any other person(s) or entity(s), including foreign entities (“Intermediaries”) with the understanding, whether
recorded in writing or otherwise, that the intermediary shall lend or invest in party identified by or on behalf of the Bank (“Ultimate
Beneficiaries”). The Bank has not received any fund from any party(s) (Funding Party) with the understanding that the Bank shall
whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Bank (“Ultimate Beneficiaries”)
or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
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