18. Provisions, contingent liabilities and
contingent assets
Provisions are accounted for in respect of present
obligations arising out of past events where it
is probable that an outflow of resources will be
required to settle the obligation and the amounts
of which can be reliably estimated. Provisions are
determined on the basis of best estimate of the
outflow of economic benefits required to settle the
obligation at the Balance Sheet date. Where no
reliable estimate can be made, a disclosure is
made as contingent liability.
Contingent liabilities are disclosed in respect of;
a) possible obligations arising out of past events, but
their existence or otherwise would be confirmed
by the occurrence or non-occurrence of one or
more uncertain future events not wholly within
the control of the Company or
b) Present obligations that arise from past events,
where it is probable but not likely that an outflow
of resources embodying economic benefits will
be required to settle the obligations or a reliable
estimate of the amounts of the obligations
cannot be made.
Where there is a possible obligation or a present
obligation where the likelihood of outflow
of resources is remote, neither provision is
recognised nor disclosure is made.
Contingent assets are neither accounted for nor
disclosed.
19. Leases
A) Finance leases
Leases under which the lessee assumes
substantially all the risk and rewards of ownership
of the asset are classified as finance leases.
Such leased asset acquired are capitalised at
fair value of the asset or present value of the
minimum lease rental payments at the inception
of the lease, whichever is lower.
B) Operating leases
Leases where the lessor effectively retains
substantially all the risk and the benefits of
ownership over the lease term are classified as
operating leases. Leased rental payments under
operating leases including committed increase
in rentals are accounted for as an expense in the
revenue account, on a straight line basis, over the
non-cancellable lease period.
20. Taxation:
A) Direct tax
I) Provision for income tax
Provision for income tax is made in accordance
with the provisions of Section 44 of the Income
Tax Act, 1961 read with Rules contained in the First
Schedule and other relevant provisions of the
Income Tax Act, 1961 as applicable to a Company
carrying on life insurance business.
II) Deferred tax
In accordance with the provisions of the
Accounting Standard (as) 22, "Accounting
for Taxes on Income", with respect to the
carry forward of losses under the Income Tax
regulations, the deferred tax asset is recognised
only to the extent that there is a virtual certainty
supported by convincing evidence that future
taxable income will be available against which
the deferred tax asset can be realised.
B) Indirect tax
The Company claims credit of Goods and Services
Tax on input services, which is set off against
Goods and Services Tax on output services in
accordance with the Goods and Services Tax Law.
The reversal of input tax credit as per the Goods
and Services Tax law is considered in 'Schedule
3 - Operating expenses related to Insurance
business' under 'Goods and Services Tax (GST)'.
Unutilised credits, if any, are carried forward
under "Advances and other assets "for future set
off and are deferred for recognition to the extent
there is reasonable certainty that the assets can
be realised in future.
21. Earnings per share
In accordance with the requirement of Accounting
Standard (as) 20, "Earnings 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 year.
For the purpose of calculating 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. Potential equity shares are treated
as dilutive only if their conversion to equity shares
would decrease the net profit per share from
continuing ordinary operations.
22. Cash and cash equivalents
Cash and cash equivalents for the purposes of
Receipts and Payments Account comprise of
cash and cheques in hand, bank balances, fixed
deposits with original maturity of three months or
less, Reverse Repo, liquid mutual funds and highly
liquid investments that are readily convertible
into measurable amounts of cash and which are
subject to insignificant risk of change in value.
Receipts and Payments Account is prepared and
reported using the Direct Method in accordance
with Accounting Standard (AS) 3, "Cash Flow
Statements" as per requirements of Para 2.a i) of
the Master Circular.
AThe contingent liability denominated in foreign currency at the balance sheet date is disclosed by using the closing
rate.
#Statutory demands and liabilities in dispute, not provided for, relate to the show cause cum demand notices/
assessment orders/appellate orders received by the Company from the respective tax Authorities. The Company
has filed / in the process of filing appeals against the demand notices/assessment orders/appellate orders with the
appellate authorities/Courts and has been advised by the experts that the grounds of appeal are well supported in law
in view of which the Company does not expect any liability to arise in this regard.
During the year ended March 31, 2026, the Company had filed state wise appeals before the GST Appellate
Authorities contesting the issues raised in the orders received from the GST Adjudicating Authority
confirming the tax demand of ' 104,134 Lakh plus penalty at 100% and interest as applicable. These tax
demands relate to show cause cum demand notices raised by the Directorate General of GST Intelligence
(DGGI) on account of disputed input tax credit (ITC) availed and utilised by the Company in respect of
certain services. The Company has utilised ' 2,420 Lakh for payment of pre-deposit for appeals filing, out of
' 25,600 Lakh deposited under protest with the GST Authority in these matters, and filed a refund application
for the balance amount of ' 23,180 Lakh. Post passing of the order of refund of ' 2,000 Lakh, the Company
has filed an appeal for the balance amount of ' 21,180 Lakh against the said order. The Company continues
to disclose such amounts of tax demand (excluding interest and penalty) as contingent liabilities.
During the year ended March 31, 2026, the Company received assessment order under section 143(3) of
the Income-tax Act, 1961, for FY 2022-23. The addition/disallowance pertaining to certain expenses resulted
in tax demand of ' 1,557 Lakh excluding interest of ' 561 Lakh. The Company is in the process of filing an
appeal before the Commissioner of Income-tax (Appeals) contesting the addition/disallowances made in
the order and has disclosed the said tax demand amount as contingent Liability.
2. Pending litigations
The Company's pending litigations other than those arising in the ordinary course of insurance business
comprise of claims against the Company primarily on account of proceedings pending with Tax authorities
and Claims, under policies, not acknowledged as debts (net of reinsurance). The Company has reviewed all
its pending litigations and proceedings and has adequately provided for where provisions are required and
balance disclosed as the contingent liabilities as applicable, in note 1 of Schedule 16 (b). The Company does
not expect the outcome of these proceedings to have a material adverse effect on its financial statements
as at March 31, 2026.
3. Actuarial assumptions
The policyholders' actuarial liabilities are determined based on assumptions as to the future experience of
the policies. The principal assumptions are related to interest, expenses, mortality, morbidity, persistency
and additionally in the case of participating policies, bonuses and tax. The assumptions are based on
prudent estimates of the future experience and hence include margins for adverse deviations over and
above the best estimate assumptions. A brief of the assumptions used by the Appointed Actuary in actuarial
valuation are as below:
a) Interest rate assumptions:
The valuation rate of interest is determined based on the expected return on existing assets, current asset
mix and expected investment return on the future investment taking into consideration the asset classes
mix and expected future asset mix. The interest rates used for the valuation vary according to the type and
term of the product & status of policy and are presented in the table below.
b) Expense assumptions:
The expense assumptions are set on the basis of the expense analysis. These are fixed renewal expenses
(prescribed below as at March 31, 2026 and March 31, 2025 respectively), percentage of renewal premium
and investment expenses charged as a % of fund.
Claim expenses assumption is ' 191 per maturity/surrender/rider claim and ' 3,772 for death claim as
at March 31, 2026 (' 180 per maturity/surrender claim and ' 3,558 for death claim as at March 31, 2025).
The renewal and claim expenses are at an inflation rate of 4%p.a. to 6% p.a. (for the year ended March 31,
2025: 4%p.a. to 6% p.a).
c) Mortality assumptions:
Mortality assumptions are set in accordance with Clause 5(2) of Schedule I Part III(a) of the Insurance
Regulatory and Development Authority of India (Actuarial, Finance and Investment Functions of Insurers)
Regulations, 2024, in reference to the published Indian Assured Lives Mortality (2012-14) and are based on
the latest experience analysis of the business.
In the case of annuity benefits, mortality assumption is based on the Indian Individual Annuitant's Mortality
Table (2012-15).
d) Morbidity assumptions:
Morbidity assumptions are set in accordance with Clause 5(3) of Schedule I Part III(a) of the Insurance
Regulatory and Development Authority of India (Actuarial, Finance and Investment Functions of Insurers)
Regulations, 2024, in reference to the published CIBT 93 Table and are based on the latest experience
analysis of the business.
e) Persistency assumptions:
The persistency assumptions are also based on the most recent experience of the Company and vary
according to the premium frequency and type of the product.
f) Provision for free-look period:
If a policy which is in force as at the valuation date is subsequently cancelled in the free-look period, then
there could be a strain in the policyholder fund on account of the amount payable on free-look cancellation,
to the extent the amount is higher than reserves held for that policy. In order to avoid the future valuation
strain as a result of the free-look cancellations, reserves on account of the above are held. The free-look
reserve is calculated as total strain for all policies that are eligible for free-look cancellations at the valuation
date, multiplied by a factor, representing the expected assumptions for free-look cancellations.
g) Bonus rates:
The bonus rates for the participating business as required to be declared in the future is based on the
interest expected to be earned as per the valuation assumptions.
h) Tax:
The tax rate as applicable to insurance companies carrying on insurance business is 14.56% p.a. (for the
year ended March 31, 2025: 14.56% p.a.).
4. Employee benefits
A) Defined contribution plans:
During the year, the Company has recognised below amount in the Revenue Account under defined
contributions plans.
B) Defined benefit plans:
I. Gratuity:
a) General description of defined benefit plan
This is a funded defined benefit plan for qualifying employees under which the Company makes a
contribution to the HDFC Life Insurance Company Limited Employees Gratuity Trust (Trust). The plan
provides for a lump sum payment as determined in the manner specified under the Code of Social
Security 2020 (implemented by the Central Government from November 21, 2025) to the vested
employees either at retirement or on death while in employment or on termination of employment.
The benefit vests after five years of continuous service. Defined benefit obligations are actuarially
determined at each quarterly Balance Sheet date using the projected unit credit method as required
under Accounting Standard (as) 15 (Revised), "Employee benefits". Actuarial gains or losses are
recognised in the Revenue Account.
e) Actual return on plan assets of the Gratuity plan is a gain of ' 109 Lakh (Previous year ended March 31,
2025 gain of ' 1,142 Lakh).
f) The Company expects to fund ' 9,728 Lakh (Previous year ended March 31, 2025'2,459 Lakh) towards
the Company's Gratuity plan during FY 2026-27.
II. Basis used to determine the overall expected return:
Expected rate of return on investments of the Gratuity plan is determined based on the assessment made
by the Company (Trust) at the beginning of the year on the return expected on its existing portfolio, along
with the return on estimated incremental investments to be made during the year. Yield on the portfolio is
calculated based on suitable mark-up over benchmark Government Securities of similar maturities.
C) Gratuity for liaison office located at Dubai:
a) General description of defined plan
This is an unfunded defined benefit plan for the employees based out of the liaison office at Dubai
under the United Arab Emirates (UAE) labour laws and regulations. The plan provides for lumpsum
payment to vested employees who have rendered continuous service for more than a year in the
following manner:
i) If an employee has served for less than 1 year, he is not entitled to any gratuity;
ii) If an employee has served for more than 1 year but less than 5 years, he is entitled to gratuity pay
based on 21 days' salary for each year of service;
iii) If a worker has served more than 5 years, he is entitled to gratuity of 30 days' salary for each year
of service following the first five years.
In all cases, the total gratuity shall not exceed salary of two years.
b) The following tables set out the status of the Gratuity plan as at March 31, 2026:
The Company has recognised following amounts in the Balance Sheet:
5. I. Employee Stock Option Scheme (ESOS)
(i) The Company has granted options to employees under the ESOS 2005, ESOS 2010, ESOS 2011 and ESOS
2012 and ESOS (Trust) 2017 schemes. These schemes are administered by the HDFC Life Employees Stock
Option Trust. The Trust had subscribed to the capital of the Company and also acquired shares of the
Company from Housing Development Finance Corporation Limited, the holding Company then. The options
are granted to the employees from these tranches of shares. For all the grants, the mode of settlement is
through equity shares. All the grants have graded vesting. The exercise price of ESOS 2005 is based on the
holding cost of the shares in the books of the Trust and that of ESOS 2010, ESOS 2011 and ESOS 2012 is based
on the fair market value as determined by the Category I Merchant Banker registered with SEBI. The exercise
price, of the options granted under ESOS (Trust) 2017 is based on the market price of the shares of the
Company, as defined in the ESOS (Trust) 2017 scheme. There are no options outstanding or exercisable for
ESOS 2005, ESOS 2010, ESOS 2011 and ESOS 2012 as of March 31, 2026 and as of March 31, 2025.
(ii) The Company has also granted options to its employees under the ESOS 2014 scheme, ESOS 2015 scheme,
ESOS 2016 scheme, ESOS 2017, ESOS 2018, ESOS 2019, ESOS 2022, ESOS 2024 and ESOS 2025 schemes. The said
schemes are directly administered by the Company. For all the grants, the mode of settlement is through
equity shares. All the grants have graded vesting. The exercise price of ESOS 2014, ESOS 2015 and of ESOS 2016
schemes is based on the fair market value as determined by the Category I Merchant Banker registered
with SEBI. The exercise price, of the options granted under ESOS 2017, ESOS 2018, ESOS 2019, ESOS 2022, ESOS
2024 and ESOS 2025 is based on the market price of the shares of the Company, as defined in the respective
ESOS scheme. There are no options outstanding or exercisable for ESOS 2014, ESOS 2015 and ESOS 2016 as of
March 31, 2026 and as of March 31, 2025.
(iii) The Company follows the intrinsic value method of accounting for stock options granted to employees.
The intrinsic value of the options issued under the above referred schemes is 'Nil' as the exercise price of
the option is the same as fair value of the underlying share on the grant date and accordingly, no expenses
are recognised in the books. Had the Company followed the fair value method for valuing its options, the
charge to the Revenue Account/Profit & Loss Account for the year would have been aggregated to ' 3,527
Lakh (Previous year ended March 31, 2025 ' 5,205 Lakh) and the profit after tax would have been lower
by ' 2,240 Lakh (Previous year ended March 31, 2025'3,283 Lakh). Consequently, Company's basic and
diluted earnings per share would have been ' 8.76 and ' 8.74 respectively (Previous year: ' 8.22 and ' 8.22
respectively).
(iv) Exercise Period under the various ESOS:
The Company's shares were listed on National Stock Exchange of India Limited (NSE) and BSE Limited
(BSE) on November 17, 2017. Prior to listing, for all grants issued under the ESOS 2010, ESOS 2011, ESOS 2012,
ESOS 2014, ESOS 2015 and ESOS 2016 schemes, the vested options were required to be exercised by the
employees within five years from the date of vesting or the date of an Initial Public Offering (IPO) whichever
is later subject to the norms prescribed by the Nomination & Remuneration Committee. Post listing of the
Company's shares, vested options under all ESOS schemes except ESOS 2025 are required to be exercised by
the employees within five years from the date of vesting subject to the norms prescribed by the Nomination
& Remuneration Committee. In the case of ESOS 2025, vested options are required to be exercised by the
employees within four years from the date of vesting subject to the norms prescribed by the Nomination &
Remuneration Committee.
5. II. Performance Restricted Stock Units Scheme (PRSU)
The Company has granted units to its employees under the PRSU 2025 scheme. The PRSU 2025 scheme
provides for the grant of Restricted Stock Units (units) to acquire equity shares of the Company to the eligible
employees. The units granted shall vest as per their vesting schedule and may be exercised within a period
of four years from the date of vesting as per the norms prescribed by the Nomination and Remuneration
Committee.
The cost of PRSU is determined using the intrinsic value method. For the year ended March 31, 2026, an
amount of ' 1,085 Lakh (previous year: Nil) is recognised in the Revenue account and credited to 'Employee
Stock Outstanding Reserve' in Schedule 6 - Reserves and Surplus.
A summary of status of PRSU 2025 in terms of options granted, forfeited and exercised, outstanding and
exercisable along with the weighted average exercise price is as given below:
The weighted average remaining contractual life of the units outstanding as at March 31, 2026 is 5.71 years.
(Previous year ended March 31, 2025: NIL).
6. Managerial remuneration
The appointment and remuneration of managerial personnel is in accordance with the provisions of
Section 34A of the Insurance Act, 1938, as amended from time to time. The Company had submitted the
proposed year on year increase in the managerial remuneration for the whole-time executive directors for
FY 2025-26 to the Regulator.
While the Company awaits the approval from the Regulator, the proposed increase in remuneration for
FY 25-26, has been charged to the Shareholders' Profit and Loss Account and has not been paid to the
whole-time executive directors.
The managerial remuneration mentioned above does not include the perquisite value as per Income Tax Act,
1961 of employee stock options exercised and the actuarially valued employee benefits that are accounted
as per Accounting Standard (as) 15 (Revised), "Employee Benefits", that are determined on an overall
Company basis. Further, the managerial remuneration mentioned above includes provision for Variable
Performance Pay which is net of true up/true down of provisions of the earlier year. Managerial remuneration
in excess of the prescribed limits by IRDAI has been charged to the Shareholder's Profit and Loss Account.
Information required under the qualitative disclosures as per the Guidelines on Remuneration of Directors
and Key Managerial Persons of Insurers, prescribed by IRDAI have been furnished in the Directors' report
forming part of the annual report.
Information required under the Quantitative disclosures is disclosed in Annexure 1.
7. Remuneration paid to non-whole time independent directors ' 180 Lakh and expense for the year ' 270 Lakh
(Previous year ended March 31, 2025 paid ' 120 Lakh and expense ' 120 Lakh) is included under Schedule 3A
under the head "Directors Commission".
10. Leases
In accordance with the Accounting Standard (as) 19, "Leases", the following disclosures are made in respect
of operating leases:
a) The Company has hired motor vehicles on cancellable operating lease for a term of up to five years.
The Company has also taken furniture, generators, cloud services, networking equipment etc under
cancellable operating lease. In respect of these operating leases, the lease rentals debited under the
head "Rent, rates and taxes" in the Revenue Account are ' 66 Lakh (Previous year ended March 31, 2025:
' 104 Lakh).
The terms of the lease agreements do not contain any exceptional/restrictive covenants which will
have significant detrimental impact on the Company's financials nor are there any options given to the
Company to purchase the motor vehicles,furniture, generators, cloud services, networking equipment
etc. The agreements provide for pre-decided increase in lease rentals over the lease period and for
change in the rentals if the taxes leviable on such rentals are revised.
b) The Company has taken properties under operating lease. In respect of these operating leases, the
lease rentals debited to rent under the head "Rent, rates and taxes" in the Revenue Account are ' 13,975
Lakh (Previous year ended March 31, 2025: ' 11,378 Lakh).
The minimum future lease rentals payable under non-cancellable operating leases for specified
duration in respect of such leases amount to the following:
The lease arrangements contain provisions for renewal and escalation. The terms of the lease
agreements do not contain any exceptional/restrictive covenants which will have significant
detrimental impact on the Company's financials.
H. Provision for tax
During the year, the Company has made provision for taxation in accordance with the Income tax Act, 1961
and Rules and Regulations there under as applicable to the Company.
Unspent amount pertaining to 'other than ongoing projects' transferred to any fund included in Schedule VII
of the Companies Act 2013 is ' Nil (Previous year ended March 31, 2025 ' Nil)
Amounts of related party transactions pertaining to CSR related activities for the year ended March 31, 2026
is ' Nil (Previous year ended March 31, 2025 ' Nil)
14. Borrowings
During the year ended March 31, 2026, the company had exercised call option and redeemed in full, 6,000
unsecured, rated, listed, redeemable, fully paid-up, subordinated, non-convertible debentures (NCDs)
aggregating up to ' 60,000 Lakh on July 29, 2025. Also the Company had issued unsecured, subordinated,
fully-paid, rated, listed, redeemable non-convertible debentures (NCDs) in the nature of 'Subordinated
Debt' as per the IRDAI (Registration, Capital Structure, Transfer of Shares and Amalgamation of Insurers)
Regulations, 2024 amounting to ' 74,900 Lakh at a coupon rate of 7.63% per annum. The said NCDs were
allotted on December 15, 2025 and are redeemable at the end of 10 years from the date of allotment with a
call option to the Company to redeem the NCDs post the completion of 5 years from the date of allotment
and annually thereafter.
As on the reporting date i.e March 31, 2026, the Company has following instances of issuances of non¬
convertible debentures (NCDs) aggregating to ' 309,900 Lakh as per the below terms of borrowings:
15. Derivative contracts:
I n accordance with the IRDAI circular no. IRDA/F&I/INV/CIR/138/06/2014 dated June 11, 2014 ('the IRDAI
circular on Interest Rate Derivatives') and Master Circular on Actuarial, Finance and Investment Functions
of Insurers dated May 17, 2024 and amendments made thereto, allowed insurers to deal in rupee interest
rate derivatives, the Company has in place a derivative policy approved by Board which covers various
aspects that apply to the functioning of the derivative transactions undertaken to substantiate the hedge
strategy to mitigate the interest rate risk, thereby managing the volatility of returns from future fixed income
investments, due to variations in market interest rates.
a) The Company has during the year, as part of its Hedging strategy, entered into interest rate derivative
transactions to hedge the interest rate sensitivity for highly probable forecasted transactions as
permitted by the IRDAI circular on Interest Rate Derivatives.
Forward Rate Agreement (FRA) and Bond Forwards are derivative contracts are over-the-counter
(otc) transactions and Interest Rate Future (IRF) are exchange trade standard contracts, agreeing to
buy notional value of a debt security or Government Bond (GOI) at a specified future date, at a price
determined at the time of the contract with an objective to lock in the price of an interest bearing
security at a future date.
The Forward Rate Agreement (FRA) and Bond Forward contract are valued at the difference between
the market value of underlying bond at the spot reference yield taken from the SEBI approved rating
agency and present value of contracted forward price of underlying bond including present value of
intermediate coupon inflows from valuation date till FRA/Bond forward contract settlement date, at
applicable INR-OIS rate curve.
The Interest Rate Futures (IRF) are exchanged traded derivative instrument and valued at closing
settlement prices published by primary stock exchange.
An amount of ' (39,558) Lakh (Previous year ' 10,814 Lakh) was recognized in Revenue Account being
the portion of gain/(loss) determined basis the hedge accounting.
Amount that was removed from Hedge Reserve account during the year ended March 31, 2026 in
respect of forecast transaction for which hedge accounting had previously been used, but is no longer
expected to occur is ' Nil (Previous year ' Nil).
The cash flows from the hedges are expected to occur over the outstanding tenure of underlying policy
liabilities and will accordingly flow to the Revenue Account.
Qualitative Disclosures on risk exposure in Fixed Income Derivatives:
Overview of business and processes:
a) Fixed Income Derivative Hedging instruments:
Derivatives are financial instruments whose characteristics are derived from the underlying
assets, or from interest and exchange rates or indices. These include forward rate agreements,
bond forwards, interest rate swaps and interest rate futures.
The Company during the financial year has entered into permitted fixed income derivative
instrument to minimize exposure to fluctuations in interest rates on plan assets and liabilities.
This hedge is carried in accordance with its established policies, goals and applicable regulations.
The Company does not engage in derivative transactions for speculative purposes.
b) Derivative policy/process and Hedge effectiveness assessment:
The Company has well defined Board approved Derivative Policy and Process document setting out
the strategic objectives, regulatory and operational framework and risks associated with interest
rate derivatives along with having measurement, monitoring processes and controls thereof.
The accounting policy has been clearly laid out for ensuring a process of periodic effectiveness
assessment and accounting.
The Company has clearly identified roles and responsibilities to ensure independence and
accountability through the investment decision, trade execution, to settlement, accounting and
periodic reporting and audit of the Interest Rate Derivative exposures. The overall policy, risk
management framework for the Interest Rate Derivatives are monitored by the Risk Management
Committee.
c) Scope and nature of risk identification, risk measurement, and risk monitoring:
The Derivative and related Policies as approved by the Board sets appropriate market limits such
as sensitivity limits and value-at-risk limits for exposures in interest rate derivatives.
All financial risks of the derivative portfolio are measured and monitored on periodic basis.
Quantitative disclosure on risk exposure in Forward Rate Agreement
A hedge is deemed effective, if it has a high statistical correlation between the change in value of
the hedged item and the hedging instrument (FRA/Bond Forward/IRF). Gains or losses arising from
hedge ineffectiveness, if any, are recognized in the Revenue Account.
The tenure of the hedging instrument may be less than or equal to the tenure of underlying hedged
asset/liability.
21. Claims outstanding
As at March 31, 2026, there were 111 claims amounting to ' 1,816 Lakh (Previous year ended March 31, 2025:
144 claims amounting to ' 1,836 Lakh) settled and remaining unpaid for a period of more than six months.
These claims remain unpaid awaiting receipt of duly executed discharge documents from the claimants.
All claims are to be paid to claimants in India.
22. Provision for NPA (non standard assets) for debt portfolio
Provision for doubtful debts is made In line with the 'Guidelines on Prudential norms for income recognition,
Asset classification, Provisioning and other related matters in respect of Debt portfolio' as specified by IRDAI
vide the Master Circular on Actuarial, Finance and Investment Functions of Insurers dated May 17, 2024, as
amended from time to time, and has been recognized in the Profit and Loss account (Shareholders' Fund)
and Revenue Account (Policyholders' Fund), as per below table:
During the year ended March 31, 2026, the Company has not recognized any additional NPA provision on
investments in debt securities.
The Company has also not reversed any outstanding NPA provision on IL&FS Group NCDs, as no further
distribution has been received against these securities.
I n FY 24-25 the Company received 162,759 units (fair value: ' 162.8 Lakh) and 1,037,241 units (fair value:
' 1,037.2 Lakh) of Roadstar Infrastructure Investment Trust (InvITs) under the Shareholders' Fund and
Policyholders' Fund respectively, as part of the IL&FS Group resolution framework. These InvIT units were
allotted towards partial repayment of the principal outstanding on IL&FS Group NCDs. The InvIT units were
listed and subsequently traded on the stock exchanges and continue to be included under the impairment
provision relating to InvITs.
23. Segmental reporting
As per Accounting Standard (as) 17, "Segment Reporting", read with the IRDAI (Actuarial, Finance and
Investment Functions of Insurers) Regulations, 2024, Segmental Accounts are disclosed in Annexure 2.
24. Policyholders' surplus
The surplus arising in the non-participating funds amounting to ' 69,672 Lakh (Previous year ended March 31,
2025: ' 58,771 Lakh) has been transferred to Profit and Loss account based on the recommendation by the
Appointed Actuary.
26. Unit Linked Funds
The Company has presented the financial statements of the unit linked funds in Annexure 3 and 4 as
required by the Master Circular.
27. The Micro, Small and Medium Enterprises Development Act, 2006
According to information available with the management, on the basis of intimation received from suppliers,
regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act),
the details of amounts due to Micro and Small Enterprises under the said Act as on March 31, 2026 are as
follows:
28. Earnings per equity 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 year. For the
purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity
shareholders and the weighted average number of equity shares outstanding during the year are adjusted
for effects of all dilutive equity shares.
29. Subsidiaries:
The Company has two subsidiaries, for which information is given as under:
i. HDFC Pension Fund Management Limited (formerly HDFC Pension Management Company Limited)
("HDFC Pension") is a wholly owned subsidiary of HDFC Life Insurance Company Limited and has
been a licensed pension fund manager since 2013 and also licensed as Point of Presence (PoP) for
distribution of NPS and servicing to public at large since February 2019. It was granted license under
the new Request for Proposal (RFP) by the PFRDA and was issued certificate of registration dated
March 30, 2021 to act as Pension Fund under NPS architecture. HDFC Pension has been a preferred
pension fund manager and its Assets Under Management have grown to ' 15,600,663 Lakh as at
March 31, 2026 (as at March 31, 2025'11,562,749 Lakh).
ii. HDFC International Life and Re Company Limited ("HDFC International Life & Re") is a wholly owned
foreign subsidiary incorporated in Dubai International Financial Centre ("DIFC") as a Company Limited by
Shares under the previous Companies Law, DIFC Law No.2 of 2009 on January 10, 2016 under registration
number 2067. The Company has been designated as a Private Company under the Companies Law,
DIFC Law no. 5 of 2018 as on the date of its enactment. HDFC International Life & Re is regulated by
the Dubai Financial Services Authority ("DFSA") and is licensed to undertake life reinsurance business.
It provides risk-transfer solutions, prudent underwriting solutions and value added services, among
others, across individual life, group life and group credit life lines of business. HDFC International Life
& Re currently offers reinsurance solutions in the Gulf Cooperation Council ("GCC"), Middle East &
North Africa ("MENA") region and India. The Company has been granted the Certificate of Registration
to set up overseas Branch in GIFT City, IFSC (regulated by the IFSCA) for conduct of life and health
insurance classes of business and has started operations in GIFT City in August 2023. In October 2025,
S&P Global Ratings confirmed the long-term insurer Financial Strength Rating (FSR) of the Company,
while changing the outlook as "Stable". In addition, AM Best Ratings has assigned the Company a long¬
term insurer Financial Strength Rating (FSR) as B (Good).
30. Final Dividend
The Board of Directors have recommended a final dividend of ' 2.10 per equity share of face value of ' 10
each in its board meeting held on April 16, 2026, subject to Shareholders approval in the Annual General
Meeting.
31. During the year ended March 31, 2026, the Company had transactions with related parties, which have been
identified by the management as per the requirements of the Accounting Standard (as) 18, "Related Party
Disclosures". Details of these related parties, nature of the relationship, transactions entered into with them
and the balances in related party accounts at year end are as mentioned below:
34. Share application money received pending allotment of shares amounting to ' 98 Lakh (Previous year
' 64 Lakh) disclosed in the Balance Sheet as on March 31, 2026 relates to the application money received
towards Employee Stock Option Plans under Company's Employee Stock Options Scheme(s).
35. The Company claims credit of Goods and Services Tax ('GST') on input services, which is set off against GST
on output services in accordance with the Goods and Services Tax Law. The reversal of input tax credit as
per the Goods and Services Tax law is considered in Schedule 3 - 'Operating expenses related to Insurance
business' under 'Goods and Services Tax (GST)'. The unutilised credits towards GST on input services are
carried forward under Schedule 12 - 'Advances and Other Assets' in the Balance Sheet.
During the year ended March 31, 2026, the Company has not recognized any additional NPA provision on
investments in debt securities. The Company has also not reversed any outstanding NPA provision on IL&FS
Group NCDs, as no further distribution has been received against these securities.
I n FY 24-25 the Company received 162,759 units (fair value: ' 162.8 Lakh) and 1,037,241 units (fair value:
' 1,037.2 Lakh) of Roadstar Infrastructure Investment Trust (invITs) under the Shareholders' Fund and
Policyholders' Fund respectively, as part of the IL&FS Group resolution framework. These InvIT units were
allotted towards partial repayment of the principal outstanding on IL&FS Group NCDs. The InvIT units were
listed and subsequently traded on the stock exchanges and continue to be included under the impairment
provision relating to InvITs.
2. Deposits made under local laws
The Company has no deposit (Previous year ended March 31, 2025: ' Nil) made under local laws or otherwise
encumbered in or outside India as of March 31, 2026, except investments and deposits detailed in Note 16 of
Schedule 16(b).
3. Percentage of business sector wise
Sector-wise break-up of policies issued, lives covered and gross premium underwritten during the year is
as follows:
IIRDAI has issued Insurance Regulatory and Development Authority of India (Rural, Social Sector and Motor
Third Party Obligations) Regulations, 2024 dated March 28, 2024. For this purpose, 2,124 Gram Panchayats
were allocated to the Company by the Life Insurance Council. The Company has covered the required 15%
or more lives in all 2,124 Grama Panchayats.
4. Allocation of investments and investment income
The underlying investments held on behalf of the shareholders and the policyholders are included in
Schedules 8, 8A and 8B. The investment income arising from the investments held on behalf of shareholders
has been taken to the Profit and Loss Account and those held on behalf of policyholders to the Revenue
Account.
a. The persistency ratios are calculated in accordance with the IRDAI circular no. IRDAI/F&A/CIR/
MISC/256/09/2021 dated September 30, 2021.
b. The persistency ratios for the year ended March 31, 2026 have been calculated for the policies issued in
the March to February period of the relevant years. For eg: the 13th month persistency for current year is
calculated for the policies issued from March 2024 to February 2025.
c. Rural business policies issued from FY 2018-19 onwards are included in persistency ratio calculations.
d. Ratios for previous year have been reclassified/regrouped wherever necessary
8. Impairment of investments
I n accordance with the Insurance Regulatory and Development Authority of India (Actuarial, Finance
and Investment Functions of Insurers) Regulations, 2024, Accounting Principle for Preparation of Financial
Statements on procedure to determine the value of investment and the relevant circular, the impairment
in value of investments other than temporary diminution has been assessed as at March 31, 2026 and
accordingly impairment provisions have been provided as below.
Listed equity shares / Infrastructure Investment Trusts (iNVITs)
A provision/(reversal) for impairment loss has been recognised in Revenue Account and Profit and Loss
Account under the head "Provision for diminution in the value of investments" and corresspondingly,
Policyholders' and Shareholders' Fair Value Change Account under Policyholders' and Shareholders' Funds
respectively in the Balance Sheet have been adjusted for such (reversal)/provision of impairment loss, the
details of which are given below:
I n FY 2024-25 the Company received 162,759 units (fair value: ' 162.8 Lakh) and 1,037,241 units (fair value:
' 1,037.2 Lakh) of Roadstar Infrastructure Investment Trust (InvITs) under the Shareholders' Fund and
Policyholders' Fund respectively, as part of the IL&FS Group resolution framework. These InvIT units were
allotted towards partial repayment of the principal outstanding on IL&FS Group NCDs. The InvIT units were
listed and subsequently traded on the stock exchanges and continue to be included under the impairment
provision relating to InvITs.
Unlisted Equity Shares
A provision/(reversal) for impairment loss has been recognised in Revenue Account and Profit and Loss
Account under the head "Provision for diminution in the value of investments" and corresspondingly, Other
than Approved Investments under Schedule 8A (Policyholders' Investments) and Schedule 8 (Shareholders'
Investments) respectively have been adjusted for such diminuton, the details of which are been given
below:
Security Receipts and Venture Fund
A provision/(reversal) for impairment loss has been recognised in Revenue Account and Profit and Loss
Account under the head "Provision for diminution in the value of investments" and corresspondingly, Other
than Approved Investments under Schedule 8A (Policyholders' Investments) and Schedule 8 (Shareholders'
Investments) respectively have been adjusted for such diminuton, the details of which are been given
below:
17. I n accordance with the IRDAI Master Circular on Actuarial, Finance and Investment Functions of Insurers
dated May 17, 2024, the Company has declared March 31, 2026 as a business day. NAV for all unit linked
funds were declared on March 31, 2026. All applications received till 3 PM on March 31, 2026, were processed
with NAV of March 31, 2026. Applications received after this cut-off for unit linked funds are taken into the
next financial year.
18. Long term contracts
The Company has a process whereby periodically all long term contracts are assessed for material
foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provisions as
required under any law/accounting standard for material foreseeable losses on such long term contracts
including derivative contracts has been made in the financial statements.
For insurance contracts, actuarial valuation of liabilities for policies in force is done by the Appointed Actuary
of the Company. The assumptions used in valuation of liabilities for policies in force are in accordance with
the guidelines and norms issued by the IRDAI and the Institute of Actuaries of India in concurrence with the
IRDAI.
19. IND AS Implementation
Based on the Regulator's email dated October 10, 2024 the Company was identified under phase 1 to
implement Ind AS standards. Accordingly, the Company had initiated the Ind AS project implementation
and updated its Audit Committee and the Board of Directors on the progress of the Ind AS implementation
on a quarterly basis.
As required by the Regulator, during the current year, the Company has also submitted proforma IndAS
financials for FY 2024 and 2025 with limited review report by an independent firm of Chartered Accountants
and an Independent Actuarial firm.
Consequent to IRDAI notification F. No. IRDAI/Reg/2/216/2026 dated March 30, 2026, on the implementation
of Ind AS for the insurance sector with effective from April 1, 2026, the Company has reassessed its progress
on the system readiness for Ind AS implementation along with the project timelines. Based on the complexity
of the project and its implementation timelines, the Company intends to seek forbearance from IRDAI to
implement Ind AS from April 1, 2027.
20. The Board of Directors have approved a proposal in its meeting held on April 16, 2026 for raising capital
by way of issuance of equity shares of the Company through a preferential allotment upto ' 100,000 Lakh,
subject to the approval of the Shareholders of the Company and such other statutory and regulatory
approvals as may be required.
21. 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 Company to or any other person or entities, including foreign entities
('Intermediaries') with the understanding, whether recorded in writing or otherwise, that the Intermediary
shall lent or invest in party identified by or on behalf of the Company (Ultimate beneficiaries). The Company
has also not received any fund from any parties (Funding Party) with the understanding that the Company
shall whether, directly or indirectly lent or invest in other persons or entities identified by or on behalf of
the Funding Party ('Ultimate Beneficiaries') or provide any guarantee, security or the like on behalf of the
Ultimate Beneficiaries.
|