5.9 CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Contingent liabilities are disclosed for:

a. possible obligations which will be confirmed only by future events not wholly within the control of the
Company, or

b. present obligations arising from past events where 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.

c. Contingent assets are disclosed wherein an inflow of economic benefits is probable.

d. The Company has not recognized the Assets & Liability in respect of Arbitration Decree.

5.10 SHARE CAPITAL

a. Ordinary shares are classified as equity, incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from proceeds.

b. The Company may capitalize permitted Reserves and Security Premium for Bonus Shares.

c. The Company has issued equity shares under Paisalo ESPS scheme at discounted price which has been
recognized in the Profit & Loss Statements and Reserve & Surplus.

5.11 SEGMENT REPORTING POLICY

The Chief Executive Officer reviews the operation at the Company level. Therefore, the operations of the Company
fall under "Financing activities" business only, which is considered to be the only segment in accordance with the
provisions of Ind AS 108- Operating segment.

5.12 BUSINESS MODEL

During the previous year, the company entered into bilateral assignment transactions against outstanding loans.
But the value of these loans are trivial in light of the Company's AUM, thus Company's business model continue to
be 'Hold to collect' as per Ind AS 109- Financial Instruments.

5.13 EMPLOYEE RETIREMENT BENEFITS

Contributions to Provident Fund and Super Annuation Fund made during the year, are charged to Statement of
Profit and Loss.

Employees Gratuity liabilities has been calculated on the basis of Projected Unit Credit method adopted by LIC of
India at the time of renewal of gratuity policy. Accordingly, Company has made contribution in line of that which
is charged to Statement of Profit & Loss Account in the year of contribution.

5.14 BORROWING COST

Borrowing costs, which are directly attributable to the acquisition/construction of fixed assets, till the time such
assets are ready for intended use, are capitalized as a part of the cost of assets.

All borrowing costs other than mentioned above are expensed in the period they are incurred. In case of
unamortized identified borrowing cost is outstanding at the year end, it is classified under loans and advances as
unamortized cost of borrowings.

In case any loan is prepaid/cancelled then the unamortized borrowing cost, if any, is fully expensed off on the
date of prepayment/cancellation.

5.15 RELATED PARTY

A related party is a person or an entity that is related to the reporting entity. A related party transaction is a
transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether
a price is charged.

A person or a close family member is related if he:

• Has control/joint control;

• Has significant influence;

• Is a member of the Key Managerial Personnel (KMP);
of the reporting entity or its parent.

Close members of the family of a person are those family members who may be expected to influence, or be
influenced by, that person in their dealings with the entity including:

• that person's children, spouse or domestic partner, brother, sister, father and mother;

• children of that person's spouse or domestic partner; and

• dependants of that person or that person's spouse or domestic partner.

Key Management Personnel are those persons having authority and responsibility for planning, directing and
controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise)
of that entity.

Company has duly complied with all the disclosure requirements of Ind AS 24 "Related Party Disclosures"

5.16 REVENUE RECOGNITION

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and
the revenue can be reliably measured. The Company follows the accrual basis for all revenue recognition. Interest
income is recognized on due basis and penal income is recognized on receipt basis. For recognition of revenue,
the valuation of listed shares is considered at market price and that of security receipts as per the valuation
report as at Balance Sheet date.

Processing fees received from customer was recognized as income in the year of receipt under India GAAP. But,
as per Ind AS, the same is now amortized over the period of relevant loan.

5.17 EARNINGS PER SHARE

The Earnings per Share (Basic as well as Diluted) is calculated based on the net profit or loss for the period
attributable to equity shareholders i.e. the net profit or loss for the period.

For the purpose of calculating (Basic and Diluted EPS), the number of equity shares taken is the weighted average
number of equity shares outstanding during the period.

34. Figures for the previous year have been regrouped/rearranged/reclassified and restated wherever considered
necessary.

35. The company has paid all its dues to Small Scale Industrial Undertakings within the due time limit. There are no
outstanding due pending more than 45 days under the Micro, Small and Medium Enterprises Act, 2006

36. a) Contingent Liabilities:

i) The company has given corporate guarantee for the loans taken by its wholly owned subsidiary Company
M/s Nupur Finvest Pvt. Ltd. from the following Banks / FIs / NBFCs

iTin I akhs)

b) Contingent Assets:

In March 2020, Paisalo Digital Limited engaged in a significant transaction involving the transfer of book-debts
amounting to Rs. 23.29 Crores. These debts primarily consisted of loans extended to 'Bottom of Pyramid' customers,
in accordance with a 10:90 risk and rewards sharing arrangement with Central Bank of India. This strategic
move adhered to the regulatory guidelines set forth by the Reserve Bank of India (RBI), reflecting the company's
commitment to prudent financial practices.

However, the unforeseen emergence of the Covid-19 Pandemic shortly thereafter precipitated unforeseen
challenges within this demographic segment, resulting in a notable increase in loan defaults. Despite the
company's proactive measures to mitigate these challenges, a portion of the loans turned non-performing,
impacting both Paisalo Digital Limited and Central Bank of India.

Of particular concern was Central Bank of India's unilateral action on March 31, 2023, whereby they debited
Paisalo Digital Limited's Cash Credit account by Rs. 5.38 Crores. This action, which deviated from the agreed
terms of the transaction, has raised legal and operational concerns. Since the requests for resolution of dispute
through negotiation have not been considered by the Bank hence the Company has filed a Civil Suit bearing no.
CS (COMM) 212/2026 against the Central Bank of India before the Hon'ble Delhi High Court seeking inter alia a
direction for the refund/ restitution of a sum of Rs. 5,38,38,890.41/-(Rupees Five Crores Thirty Eight Lakhs Thirty Eight
Thousand Eight Hundred Ninety and Forty One Paisa)

As a prudent accounting measure, the company has already charged this disputed amount to the profit and loss
statement in the previous year as an exceptional item. However, given the merits of the company's position in
contesting this debit, the amount continuous to be classified as a contingent asset pending resolution.

Notes:

(1) Related party relationship is as identified by the Company on the basis of information available with them
and accepted by the auditors as correct.

(2) No amount has been written off or written back during the year in respect of debt due from or to related
parties.

(3) Company has entered into transactions with certain parties as listed above during the year under
consideration. Full disclosures have been made and the Board/Audit Committee considers such transactions
to be in normal course of business and at rates agreed between the parties.

(4) The key management personnel and their relatives have given personal guarantees and collaterals for
loans raised by the Company but Company has not provided any guarantee to these persons nor paid any
consideration for furnishing such guarantees.

(5) Company has extended its guarantee to Banks/ Financial Institutions for credit facilities availed by the wholly
owned subsidiary Nupur Finvest Pvt. Ltd.

38. Working Capital, Working Capital Demand Loan and Term Loan Borrowings:

The Company has an arrangement with a consortium of Seven banks under the leadership of Bank of Baroda for
its working capital requirements. The facility is primarily secured by the hypothecation of book-debts / receivables
of the Company and collaterally by mortgage of immovable properties including office premises, a flat owned by
the Company and four commercial properties by third parties as well as personal and corporate guarantees. The
outstanding details of the member banks in the consortium is as under:

39. During the year 2025-26, out of USD 48 million FCCBs, FCCBs of USD 4 million has been converted into 74,03,585 equity
share at Re. 1 each at a premium of Rs. 44.74 per equity share.

In the previous year 2024-25, the Company has issued 50000 7.50% Foreign Currency Convertible Bonds (FCCBs) of
USD 1000 each aggregate amount USD 50 million equivalent to Rs. 423.30 crores. Out of such FCCBs, FCCBs of USD 2
million have been converted into 37,01,792 equity share at Re. 1 each at a premium of Rs. 44.74 per equity share.

During the year 2025-26, the Company has raised ECBs of USD 15 million equivalent to Rs. 142.16 Crore through State
Bank of India. Further, the State Bank of India has converted the four INR based Term Loan into FCNR TLs (Foreign
Currency based Term Loans)

45. The Company had not taken any exposure in Derivatives during the financial year 2025-26.

46. Disclosure relating to Securitization:

i) The Company has not done securitization of any of its loans & advances to any organization during the financial
year 2025-26 and there is no outstanding amount as on Balance Sheet date. Also, the Company has not sold its
financial assets to any Securitization/Reconstruction Company for Asset Reconstruction. Further the Company
has not undertaken new assignment transactions during the Financial Year 2025-26.

ii) The Company has not purchased any non-performing assets (NPAs) from other NBFCs or financial institutions

a) Disclosures pursuant to RBI Notification - RBI/2020-21/16 DOR.No.BP.BC/3/21.04.048/2020-21 dated 6 August
2020 and RBI/2021-22/31/DOR.STR.REC.11 /21.04.048/2021-22 dated 5 May 2021

There were no borrower accounts where resolution plans had been implemented under RBI 's Resolution
Framework 2.0 dated 5 May 2021 during the year.

b) Disclosures pursuant to RBI Notification - RBI /DOR/2021-22/86 DOR.STR.REC.51 /21.04.048/2021-22 dated 24
September 2021

(a) Details of transfer through assignment in respect of loans not in default during the financial year ended
31 March, 2026

(d) The Company has not acquired any stressed loan during the financial year ended 31 March, 2026.

iii) Co-Lending Operations with Banks

Paisalo Digital Ltd. has forged strategic Co-Lending partnerships with five prominent banking institutions—State
Bank of India, Bank of Baroda, UCO Bank, Punjab National Bank, and Karnataka Bank. These collaborations are built
on a shared goal: advancing financial inclusion by providing timely, accessible credit to underserved segments,
especially in the agriculture (AGRI) sector, micro, small, and medium enterprises (MSMEs), and other small business
ecosystems.

Under the Reserve Bank of India's regulated Co-Lending Model (CLM), Paisalo Digital Ltd. contributes 20% of the
loan amount while the partner banks provide the remaining 80%. This model enables equitable risk and return
sharing and allows both parties to leverage their strengths—Paisalo's deep penetration into rural and semi-urban
markets and the banks' robust funding capabilities and regulatory frameworks.

The Co-Lending arrangement is designed to streamline credit delivery through end-to-end digital processes,
ensuring faster loan disbursal and minimal friction for the borrower. By integrating operational workflows and
aligning underwriting criteria, Paisalo and its banking partners can optimize risk assessment, improve cost efficiency,
and provide competitive interest rates. While the banks' rates remain aligned with prevailing benchmarks, Paisalo
retains the flexibility, within regulatory limits, to set its own rates, thereby maintaining a fair and transparent pricing
mechanism for borrowers.

Recent regulatory developments and clarifications from the Reserve Bank of India have further bolstered the
Co-Lending framework, providing increased clarity and operational confidence to participating entities. Paisalo
continues to invest in digital infrastructure to support seamless onboarding, documentation, and disbursement
processes—positioning itself as a key enabler of last-mile credit delivery. However, under the new co-lending
regulatory guidelines, the company is renewing its relationships and has reduced business until it achieves
compliance.

In essence, Co-Lending reflects a transformative shift in credit distribution strategy, one that synergizes institutional
capital with grassroots reach. For Paisalo Digital Ltd., it is not just a business model; it is a core pillar of its mission
to democratize credit and foster inclusive economic development. The company's forward-looking alliances
in this space are expected to remain a significant driver of growth, contributing meaningfully to both financial
performance and social impact.

d) Details of financing of parent company products : NILe) Details of Single Borrower Limit and Group Borrower Limit exceeded by NBFC

The company has adhered to the Prudential Exposure norms as prescribed by RBI and has not given any advances
exceeding the limits as prescribed for Single borrower and Group Borrower.

f) Unsecured Advances

The unsecured advances outstanding as at Balance Sheet date are Rs. 27,364.48 Lakhs. The Company does not
have any loan or advances which are partially secured against any sort of licenses, rights, authorizations charged
to the company.

g) Unhedged Foreign Currency Exposure

There is no unhedged foreign currency exposure as on reporting date.

49. Registration obtained from other financial sector regulators:

RBI Registration No. : B-14.02997

Company Identification No. : L65921DL1992PLC120483

The company has never been penalized for any non-compliance by financial sector regulators.

50. Bank borrowings and Long Term Debt Securities of the Company have been assigned rating of "IVR AA/STABLE
OUTLOOK” by Infomerics Valuation and Rating Pvt. Ltd. and "BWR AA/STABLE OUTLOOK" by Brickwork Rating India Pvt. Ltd.
which denotes "Instruments with this rating are considered to have high degree of safety regarding timely servicing of
financial obligations. Such instruments carry low credit risk". Similarly, the Company has been assigned rating of "IVR
A1 (IVR A One Plus)" for Commercial Paper by Infomerics Valuation and Rating Pvt Ltd and BWR A1 by Brickwork Rating
India Pvt. Ltd. which denotes "Securities with this rating are considered to have very strong degree of safety regarding
timely payment of financial obligation. Such instruments carry lowest credit risk."

d) The Company has issued Foreign currency convertible bonds of USD 50 million in the previous year 2024-25,
which are duly hedged against repayment of interest and maturity value, out of these FCCBs of USD 2 million has
been converted into equity share during the previous year 2024-25 and USD 4 million in the current year 2025¬
26. The profit/(loss) on exchange rate fluctuation have been duly recognised in Profit & Loss Statements. Further,
during the year, the Company has raised borrowing in the form of ECBs through State Bank of India of USD 15
million which are also duly hedged for repayment of interest and maturity value.

e) Concentration of NPAs

Provisioning for Substandard Assets/Doubtful Assets/Loss Assets has been made in compliance with the directions
of Reserve Bank of India. As per decision of the Board of Directors in the cases where loan installments are overdue
for more than 90 days past due and management is of the opinion that its recovery chances are very remote
or negligible, the Company writes off these accounts (Net of Future Interest Charges) as bad debts. In all other
cases where loan installments are overdue for more than 90 days past due the provisioning for non-performing
assets is made in compliance with Non-Banking Financial Company Systemically Important Non-Deposit Taking
Company and Deposit Taking Company (Reserve Bank) Directions 2016, as applicable to the company. As per the
RBI Directions dated 1^st September 2016 updated as on 23^rd February 2018 Company has made general provision
of 0.40% of Standard assets. Other directives of Reserve Bank of India have been duly complied with. The details of
top 4 NPA's written off during the year are given below:

59. Uncertainty relating to the global health pandemic from COVID-19 ("Covid-19"):

a) The global landscape remains fraught with challenges, largely stemming from the COVID-19 pandemic. This
unprecedented crisis has precipitated multifaceted repercussions, including sweeping government interventions,
a resilient economic rebound after a severe global recession, surging inflation, geopolitical tensions such as the
conflict in Ukraine, and substantial economic sanctions imposed on Russia.

b) In light of the enduring ramifications of the global pandemic, Paisalo Digital Ltd. has proactively instituted
alternative work modalities to safeguard the health and well-being of its workforce and business associates.
These measures include facilitating remote work arrangements, particularly for operations and call centres
during periods of enforced lockdowns. Equipping employees with the requisite technological infrastructure has
ensured the secure and efficient delivery of services to borrowers.

Throughout the fiscal year, the company has fostered robust communication channels through virtual sessions
with branches, employees, and business associates, thereby sustaining proactive customer engagement.
Services such as Door Step Sourcing and Servicing have been meticulously executed, adhering to stringent safety
protocols and implementing essential non-pharmaceutical interventions. Despite prevailing challenges, the
majority of branches, employees, and business associates have remained operational, playing a pivotal role in
extending essential credit to borrowers.

Furthermore, Paisalo Digital Ltd. has swiftly adapted to evolving circumstances, innovating digital and analogue
tools to facilitate credit requests and optimize loan recovery mechanisms.

c) During the financial year 2025-26, no significant governmental, regulatory, or banking frameworks were introduced
specifically targeting COVID-19 relief or aid for Non-Banking Financial Companies (NBFCs) such as Paisalo Digital
Ltd. However, NBFCs have increasingly served as conduits for government and major banks, leveraging their local
presence to directly support households in need.

The stability in funding and liquidity afforded to Paisalo Digital Ltd. is fortified by its entrenched local footprint,
robust credit and risk assessment methodologies, and enduring partnerships with esteemed banking entities.

60. In the financial year 2025-26, Paisalo Digital Ltd. delivered a robust non-fund based income of E 985.35 lakhs. This
income segment, comprising fees, commissions, and ancillary service revenue, illustrates the company's focus on
building a diversified and resilient revenue base beyond traditional interest income.

62. Risk Management Framework:

The company operates in a complex risk landscape that could significantly affect its business, operations, and
financial performance. These risks include Credit Risk, Liquidity & Funding Risk, Market Risk, and Operational Risk. To
address these challenges, management has developed a comprehensive risk management framework to identify,
analyse, and mitigate potential threats while ensuring adherence to predefined risk limits.

i) Creating a Stable Business Planning Environment

One of the primary objectives of the risk management framework is to create a stable business planning
environment by mitigating the impact of interest rate fluctuations on the company's business plan. This involves
assessing the potential effects of interest rate changes on the company's financial position and operations,
thereby enabling more accurate forecasting and strategic decision-making.

ii) Achieving Greater Predictability to Earnings

Another key goal is to improve earnings predictability by quantifying expected earnings in advance. This involves
forecasting future earnings based on factors such as market conditions, customer behaviour, and economic
trends. By accurately predicting earnings, the company can allocate resources more effectively, plan investments,
and manage its financial performance.

A) Credit Risk

Credit risk is the potential financial loss the company may incur if a customer or counterparty fails to fulfil
its contractual obligations. This risk primarily arises from trade and other receivables, cash equivalents, and
bank balances. To assess credit risk, the company uses metrics such as the installment default rate, overdue
position, and debt management efficiency.

Credit risk is closely monitored through analysis of credit exposures, portfolio monitoring, and evaluation of
customer and portfolio concentration risk. The risk management unit employs a robust control framework
to manage credit risk effectively. This framework aligns credit and debt management policies, leverages
external data from credit bureaus, and involves regular reviews of portfolios and delinquencies by senior and
middle management teams.

By implementing these strategies, Paisalo Digital Ltd aims to proactively identify and mitigate credit risks,
thereby safeguarding its financial stability and ensuring the continuity of its operations.

(a) Loans, Trade & Other Receivables

Managing credit risk from loans, trade, and other receivables is a multifaceted process that involves
a comprehensive approach to mitigate potential financial losses and uphold the company's financial
stability. Here's a detailed overview of how the company manages credit risk:

1. Establishing Credit Limits: The company carefully sets credit limits for each customer, taking into
account factors such as creditworthiness, financial history, and repayment capacity. These credit
limits serve as a safeguard against excessive borrowing and help minimise the risk of default.

2. Credit Approvals Process: Every credit request undergoes a stringent approval process that
evaluates the creditworthiness of the customers and assesses associated risks. This process
involves analyzing financial statements, credit reports, and other relevant information to determine
the likelihood of repayment. Only credit requests meeting predefined risk criteria are approved.

3. Continuous Creditworthiness Monitoring: The company continuously monitors the
creditworthiness of its customers to identify changes in their financial circumstances that may
affect their ability to repay loans or fulfil obligations. This ongoing monitoring includes regular
reviews of credit reports, financial statements, and market trends to accurately assess credit risk
profiles.

4. Regular Monitoring of Receivables: The company maintains a vigilant stance by regularly
monitoring outstanding receivables to ensure timely repayment by customers. This includes
tracking payment schedules, identifying overdue accounts, and implementing effective collection
strategies for delinquent accounts. By closely monitoring receivables, the company can promptly
identify potential credit risks and take appropriate action to mitigate them.

5. Ageing Analysis: The company conducts thorough ageing analysis of loans and trade receivables
to categorize outstanding receivables based on their ageing profile. This analysis helps identify
accounts that are overdue or at risk of default, enabling the company to prioritize collection efforts
and allocate resources efficiently. By understanding the ageing profile of receivables, the company
can implement targeted credit management strategies to minimize credit risk exposure.

(b) Cash & Cash Equivalents & Other Bank Balances

Regarding the management of cash and cash equivalents, the company maintains a robust process
to assess the creditworthiness of banks and financial institutions where funds are held. This evaluation
is conducted regularly and includes comprehensive assessments of financial stability, regulatory
compliance, and risk management practices. By ensuring the creditworthiness of banking partners,
the company mitigates the risk associated with cash holdings and safeguards its liquidity position. The
company holds cash and cash equivalents and other bank balances of Rs. 14,982.18 Lakh as at 31 March
2026.

B) Liquidity & Funding Risk

Liquidity risk poses a substantial threat to the Company's ability to meet its financial obligations, particularly those
settled in cash or other financial assets. This risk encompasses several dimensions, including funding risk, which
manifests in various scenarios:

1. I nability to Raise Incremental Funds: The company faces the risk of being unable to secure additional
borrowings to meet its operational needs or fulfil repayment obligations. This could arise due to limited
access to capital markets or lender reluctance amid uncertain economic conditions.

2. Cash Flow Mismatches: Funding risk also arises when long-term assets cannot be financed over their
expected term, leading to cash flow mismatches. Such mismatches may arise from unexpected changes in
market conditions or disruptions in the funding environment.

3. Market Volatility Impacting Funding: Volatility in financial markets can further exacerbate funding risk by
hindering the company's ability to source funds from banks and money markets. Fluctuations in interest
rates, credit spreads, or investor sentiment may impede access to funding avenues, heightening liquidity
concerns.

Measuring liquidity risk involves several key metrics and assessments:

1. Identification of Structural and Dynamic Liquidity Gaps: The company analyzes structural and dynamic
liquidity statements to identify gaps between available funds and near-term liabilities. This entails assessing
the maturity profile of assets and liabilities to gauge liquidity adequacy.

2. Assessment of Incremental Borrowing Needs: Evaluating the incremental borrowings required to fulfill
repayment obligations and support the company's business plan amidst prevailing market conditions is
crucial. This assessment considers factors such as interest rate environment, credit availability, and funding
costs.

3. Monitoring Liquidity Coverage Ratio (LCR): The company tracks its liquidity coverage ratio in adherence
to regulatory guidelines, ensuring sufficient high-quality liquid assets are held to cover short-term liquidity
needs under stress scenarios.

Managing liquidity risk involves proactive measures implemented by the treasury team:

1. Gap Analysis and Scenario Testing: The company continuously assesses the gap between fund visibility and
near-term liabilities, considering evolving liquidity conditions and regulatory requirements for non-banking
financial companies (NBFCs). Stress tests and scenario analyses are conducted to evaluate potential liquidity
shortfalls and compare them against available buffers.

2. Adaptive Funding Strategies: A dynamic approach to funding involves aligning funding sources with
emerging market conditions in banking and money markets. The company adjusts its funding mix and
borrowing strategies to optimize liquidity and mitigate funding risks.

3. Maintaining Liquidity Buffers: Building and maintaining liquidity buffers is essential to mitigate liquidity risk.
These buffers serve as a cushion during periods of funding stress and provide resilience against unexpected
liquidity shocks.

4. Strategic Asset-Liability Management: The company employs positive asset-liability management
practices to match asset and liability durations, reducing the risk of cash flow mismatches. This entails
aligning asset maturities with liability obligations to minimize funding gaps.

5. Diversification and Relationship Management: Diversifying funding sources and cultivating strong
relationships with banks and financial institutions enhance the company's ability to access funding under
diverse market conditions. Maintaining a robust pipeline of sanctions and approvals ensures access to
funding avenues when needed.

In essence, the management of liquidity risk is a dynamic and multifaceted endeavor, requiring a proactive
and strategic approach from the treasury team. Through the judicious application of liquidity buffers, long¬
term funding strategies, asset-liability management, pipeline management, and prudent loan assignments,
the treasury team fortifies the Company's liquidity position, safeguards against funding uncertainties, and
fosters financial resilience in an ever-evolving financial landscape.

C) Market Risk

Market risk, a critical facet of financial risk management, underscores the potential for future earnings, fair values,

or cash flows to incur losses due to adverse fluctuations in market rates and prices, or the values of market

risk-sensitive instruments. This encompasses Currency Risk, Interest Rate Risk, and Price Risk, each demanding

meticulous assessment and proactive management strategies.

1. Measurement Techniques: Market risk is quantified through a suite of sophisticated metrics and
methodologies, including Value at Risk (VaR), basis point value (PV01), and modified duration analysis. These
tools facilitate a comprehensive evaluation of portfolio dynamics and the potential impact on income
streams, particularly in terms of net interest income. The Company's exposure to market risk is analyzed
across various dimensions, encompassing equity investments, interest rate fluctuations within investment
portfolios, and the implications of floating rate assets and liabilities with varying maturity profiles.

2. Monitoring Protocols: Rigorous monitoring protocols are employed to track fluctuations in equity prices
and interest rate sensitivities under diverse stress test scenarios. Through simulated simulations of probable
interest rate movements, both fixed and floating assets and liabilities are scrutinized to gauge resilience under
adverse market conditions. This proactive monitoring framework enables the identification of vulnerabilities
and informs timely risk mitigation strategies.

3. Management Strategies: The management of market risk is entrusted to the Company's treasury team,

operating under the guidance of the Board. This dedicated team implements a multi-faceted approach
tailored to address specific risk exposures:

- Currency Risk: Given the Company's exclusive operations within India, exposure to foreign currency risk
is mitigated. The Company has issued Foreign currency convertible bonds of USD 50 million, which are
duly hedged against repayment of interest and maturity value, out of these FCCBs of USD 6 million has
been converted into equity share during the year. The Company has also issued ECBs of USD 15 million,
which are duly hedged against repayment of interest and maturity value.

- Interest Rate Risk: The Company actively manages interest rate risk by closely monitoring market interest
rate movements and their potential impact on interest-bearing liabilities and assets. This proactive
stance enables the Company to adapt swiftly to changing interest rate environments and optimize its
interest rate exposure.

- Price Risk: Equity price risk arising from investments is managed through prudent portfolio diversification
strategies. The Company strategically diversifies its investment portfolio within predefined limits to
mitigate concentration risk and optimize risk-adjusted returns.

4. Governance Framework: The management of market risk is conducted under the oversight of the Board of
Directors. The treasury team, comprising seasoned professionals with expertise in financial risk management,
implements risk mitigation strategies in alignment with the Board's directives and risk appetite. This ensures
that market risk management practices are consistent with the Company's strategic objectives and
regulatory compliance obligations.

I n essence, the management of market risk requires a judicious blend of quantitative analysis, robust
monitoring mechanisms, and proactive risk mitigation strategies. By leveraging sophisticated measurement
techniques, rigorous monitoring protocols, and strategic management frameworks, the Company navigates
the complexities of market risk dynamics while safeguarding its financial stability and optimizing long-term
performance.

D) Operational Risk

Operational risk, a multifaceted challenge inherent in the company's operational landscape, arises from a
spectrum of sources, encompassing internal processes, human resources, technological systems, and external
factors. To effectively manage operational risks, the Company has instituted a comprehensive framework of
internal controls and procedures, meticulously designed to govern critical activities across various functional
domains, including loan acquisition, customer service, IT operations, and finance functions.

1. I nternal Control Systems: At the heart of operational risk management lies a robust system of internal
controls, meticulously crafted to mitigate the risk of inadequate or failed internal processes, people, or
systems. These controls span a myriad of functions, facilitating proactive identification and remediation
of potential vulnerabilities. Through continuous monitoring and assessment, the Company endeavors to
strengthen its internal control environment, ensuring operational resilience and efficiency.

2. I nternal Audit Oversight: Internal Audit plays a pivotal role in operational risk management, conducting
comprehensive reviews of all operational functions at least annually. This diligent scrutiny serves to unearth
process gaps and deficiencies in a timely manner, enabling corrective actions to be implemented promptly.
By providing independent assurance and insights, Internal Audit reinforces the Company's commitment to
sound governance practices and operational excellence.

3. Compliance and Control Units: Within the IT and Operations functions, dedicated compliance and control
units operate in tandem to uphold the integrity and security of internal processes. Through continuous
monitoring and evaluation, these units assess adherence to regulatory requirements and internal policies,
proactively identifying and addressing operational risks. By fostering a culture of compliance and risk
awareness, these units contribute to the Company's resilience in the face of evolving operational challenges.

4. Disaster Recovery and Business Continuity Planning: Recognizing the imperative of business continuity in
the face of unforeseen events, the Company has established robust Disaster Recovery (DR) and Business
Continuity Plans (BCP). These plans are meticulously crafted to ensure the seamless continuation of
operations and services to customers in the event of natural disasters, technological outages, or other
disruptive incidents. Regular testing and analysis of these plans enable the Company to identify and rectify
any gaps in the framework, bolstering its readiness to navigate unforeseen disruptions effectively.

In essence, operational risk management is woven into the fabric of the Company's governance framework,
underpinned by a relentless commitment to process excellence, regulatory compliance, and business
continuity. Through the concerted efforts of internal control systems, audit oversight, compliance units, and

robust disaster recovery planning, the Company strives to fortify its operational resilience and safeguard its
business operations against a spectrum of potential risks and contingencies.

63. Additional information pursuant to Ministry of Corporate Affairs notification dated March 24, 2021 with respect to

amendments in Schedule iii of Companies Act, 2013:

i) The Company has made provision for dividend @ Rs. 0.10 each per share and the same will be declared & paid
after the approval of the shareholders in their Annual General Meeting.

ii) All the borrowings of the Company are used for the specific purpose for which it was taken.

iii) There are no proceedings which have been initiated or pending against the Company for holding any benami
property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.

iv) The Company is not a willful defaulter as declared by any bank or financial Institution or any other lender.

v) The Company does not have any transactions with the companies struck off under section 248 of Companies Act,
2013 or Section 560 of Companies Act, 1956.

vi) There are no charges or satisfaction yet to be registered with Registrar of Companies (ROC) beyond the statutory
period.

vii) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read
with Companies (Restriction on number of Layers) Rules, 2017.

viii) There are no transactions which are not recorded in the books of accounts that has been surrendered or disclosed
as income during the year in the tax assessments under the income Tax Act, 1961 (such as, search or survey or any
other relevant provisions of the Income Tax Act, 1961).

xi) The Company has not traded or invested in Crypto currency or Virtual Currency during the year.

(9) Qualitative Disclosure on LCR

As per Reserve Bank of India guidelines, all deposit-taking NBFCs irrespective of their asset size and non-deposittaking
NBFCs with an asset size of INR5,000 Crores and above are required to maintain a liquidity coverage ratio (LCR) to
ensure availability of adequate high-quality liquid assets (HQLA) to survive any acute liquidity stress scenario i.e, cash
outflow increased to 115% and cash inflow decreased to 75%, lasting for 30 days. As per RBI guidelines, LCR has been
calculated using the simple average of daily observations over the previous quarter (over a period of 90 days).

Cash outflows under secured and unsecured wholesale funding include contractual payments of the term loan, NCDs,
and other debt obligations including interest payments due in next 30 days. Other contractual funding obligations
include contractual payments due in next 30 days. To compute inflow from fully performing exposures, the Company
considers collection from performing advances including interest due in the next 30 days. Other cash inflows include
cash from unencumbered fixed deposits, Certificates of deposits, undrawn lines of credit, and mutual fund investments
maturing in the next 30 days.

Notes:

1. Provisioning norms shall be applicable as prescribed in the Non-Banking Financial Company-Systemically
Important Non-Deposit Taking Company and Deposit Taking Company (Reserve Bank) Direction, 2016.

2. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of
investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect
of quoted investments and break up/fair value/NAV in respect of unquoted investments shall be disclosed
irrespective of whether they are classified as long term or current in column (5) above.