3.7 Provisions

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

3.8 Contingent liabilities and assets

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

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

3.9 Employee benefits

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

3.9.1Defined contribution plan

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

3.9.2 Defined benefit plan

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

3.9.3 Other employee benefits

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

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

3.9.4 Share based payments

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

The cost of equity-settled transactions is measured
using the fair value method and recognised,
together with a corresponding increase in the "Share
options outstanding account" in reserves. The
cumulative expense recognised for equity-settled
transactions at each reporting date until the vesting
date reflects the extent to which the vesting period
has expired and the Company's best estimate of the

number of equity instruments that will ultimately
vest. The expense or credit recognised in the
statement of profit and loss for the year represents
the movement in cumulative expense recognised
as at the beginning and end of that year and is
recognised in employee benefits expense.

3.10 Taxes

3.10.1 Current income tax

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

3.10.2 Deferred tax

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

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

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

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

3.11 Earning per share

Basic earnings per share is calculated by dividing the
net profit or loss for the year attributable to equity
shareholders by the weighted average number of equity
shares outstanding during the period. Partly paid equity
shares are treated as a fraction of an equity share
to the extent that they are entitled to participate in
dividends relative to a fully paid equity share during the
reporting year.

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

3.12 Segment information

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

3.13 Financial instruments

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

3.13.1 Business Model Assessment

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

so a prospective change to the classification
of those assets.

3.13.2 Financial Assets

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

3.13.2.1 Initial recognition and measurement

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

3.13.2.2 Classification and Subsequent
measurement

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

- at amortised cost

- at fair value through other comprehensive
income (FVTOCI)

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

3.13.2.3 Loans at amortised costs

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

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

(b) Contractual terms of the asset give rise
on specified dates to cash flows that
are solely payments of principal and
interest (SPPI) on the principal amount
outstanding. After initial measurement,
such financial assets are subsequently
measured at amortised cost using the
effective interest rate (EIR) method
less impairment. Amortised cost is

3.13.2.7 Investments

Investments in equity instruments are
classified as FVTPL, unless the related
instruments are not held for trading and
the Company irrevocably elects on initial
recognition of financial asset on an asset-by¬
asset basis to present subsequent changes
in fair value in other comprehensive income
(FVTOCI). All other investments are classified
and measured as FVTPL only.

3.13.3 Financial Liabilities

3.13.3.1 Initial recognition and measurement

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

Subsequent measurement

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

3.13.3.2 Borrowings

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

3.13.4 Reclassification of financial assets and
liabilities

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

3.13.5 De-recognition of financial assets and liabilities

3.13.5.1 De-recognition of financial assets

A financial asset (or, where applicable, a
part of a financial asset or part of a group

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

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

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

3.13.5.2 De-recognition of financial liabilities

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

3.14 Impairment of financial assets

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

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

The ECL allowance is based on the credit losses
expected to arise over the life of the asset (the

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

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

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

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

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

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

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

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

3.14.2 The calculation of ECL

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

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

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

The mechanics of the ECL method are
summarised below:

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

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

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

3.15 Write-offs

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

3.16 Fair value measurement

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

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

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

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

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

All assets and liabilities for which fair value is measured
are categorised with fair value hierachy into Level I, Level
II and Level III based on the degree to which the inputs
to the fair value measurements are observable and the
significance of the inputs to the fair value measurement
in its entirety, which are as follows:

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

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

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

3.17 Foreign currency

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

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

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

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

3.18 Hedge accounting

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

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

Cash flow hedge

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

Here, the effective portion of changes in the fair value of
derivatives that are designated and qualify as cash flow
hedges is recognised in other comprehensive income
and accumulated in equity as 'hedging reserve'.

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

Amounts previously recognised in other comprehensive
income and accumulated in equity relating to the
effective portion are reclassified to profit or loss in the
periods when the hedged item affects profit or loss, in
the same head as the hedged item.

The effective portion of the hedge is determined at the
lower of the cumulative gain or loss on the hedging
instrument from inception of the hedge and the
cumulative change in the fair value of the hedged item
from the inception of the hedge and the remaining
gain or loss on the hedging instrument is treated as
ineffective portion.

Hedge accounting is discontinued when the hedging
instrument expires or is sold, terminated, or exercised,
or when it no longer qualifies for hedge accounting.
Any gain or loss recognised in other comprehensive
income and accumulated in equity at that time remains
in equity and is recognised in profit or loss when the
forecast transaction is ultimately recognised in profit or
loss. When a forecast transaction is no longer expected
to occur, the gain or loss accumulated in equity is
recognised immediately in profit or loss.

A derivative with a positive fair value is recognised as a
financial asset whereas a derivative with a negative fair
value is recognised as a financial liability.

3.19 Leases (where the Company is the lessee)

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

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

The Company as a lessee

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

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

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

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

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

Certain lease arrangements includes the options to
extend or terminate the lease before the end of the
lease term. ROU assets and lease liabilities includes
these options when it is reasonably certain that they
will be exercised. The right-of-use assets are initially
recognized at cost, which comprises the initial amount of
the lease liability adjusted for any lease payments made

at or prior to the commencement date of the lease plus
any initial direct costs less any lease incentives. They
are subsequently measured at cost less accumulated
depreciation and impairment losses.

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

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

3.20 Recent Accounting pronouncements

3.20.1 Key New and amended standards adopted by
the Company

The Ministry of Corporate Affairs ("MCA") notifies
new standards and amendments to existing
standards under the Companies (Indian Accounting
Standards) Rules, as issued from time to time.
For the year ended March 31, 2025, the MCA has
notified Ind AS 117 - Insurance Contracts and
amendments to Ind AS 116 - Leases, specifically
relating to sale and leaseback transactions, which
are applicable to the Company with effect from
April 1,2024. The Company has reviewed these new
pronouncements and, based on its evaluation, has
determined that they do not have any significant
impact on its financial statements.

3.20.2 Key Amendments applicable from next
Financial year

For the year ended March 31,2025, the Ministry
of Corporate Affairs has not notified any new
standards or amendments to the existing standards
applicable to the Company.

20 Other equity* (Contd..)

Nature and purpose of reserve

20.1 Securities premium

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

20.2 Capital reserve

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

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

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

20.4 Share option outstanding account

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

20.5 Retained earnings

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

20.6 Other comprehensive income

Effective portion of Cash Flow Hedge

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

31 Employee benefits

A. Defined benefit plan

The Company provides for the gratuity, a defined benefit retirement plan covering qualifying employees. Employees who
are in continous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/
termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied
by the number of years of service subject to maximum benefit of H 0.20 crore. The Company has funded gratuity plan and
makes contibutions to Gratuity scheme administered by the insurance company through its Gratuity Fund.

B. Defined contribution plan

The Company makes Provident fund and Employee State Insurance Scheme contributions which are defined contribution
plans for qualifying employees. Under the schemes, the Company is required to contribute a specified percentage of
the basic salary to fund the benefits. The contributions payable to these plans by the Company are administered by the
Government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor
any constructive obligation.The Company recognised H 40.40 crore (March 31, 2024 : H 35.71 crore) for Provident fund
contributions and H 9.24 crore (March 31, 2024 : H 8.52 crore) for Employee State Insurance Scheme contributions in the
Statement of Profit and Loss.

Inflation risk

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

Life expectancy

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

Code on Social Security

The Code on Social Security, 2020 ('Code') relating to employee benefits during employment and post-employment benefits
received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date
on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued.
The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period
the Code becomes effective.

^ATax Matters - Indirect Taxes: This litigation is related to Input tax credit claimed which is disallowed by department of Goods and services tax
in the Tamil Nadu state for FY 2017-18 and 2018-19. The Company filed an appeal against this matter with Commissioner Appeals-II Chennai.

$Tax Matters - Indirect Taxes: This litigation is related to Input tax credit claimed on IPO expenses which is disallowed by department of
Goods and services tax in the Karnataka state for FY 2018-19. The Company has filed an appeal with Commissioner of Appeals. Also, matter
was heard and the Company is awaiting for disposal of the appeal soon.

*Tax Matters- Indirect Taxes: This litigation is related to Input tax credit claimed which is disallowed by department of Goods and services
tax in the West Bengal state for FY 2019-20. The Company filed an appeal against this matter with Commissioner Appeals.

(b) In addition, the Company is involved in other legal proceedings and claims, which have arisen in the ordinary course of
business. The management believes that the ultimate outcome of these proceedings will not have a material adverse effect
on the Company financial position and result of operations.

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

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

Fair value hierarchy

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

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

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

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

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

Valuation methodologies of financial instruments not measured at fair value

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

Loans (measured at amortised cost)

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

Financial liabilities measured at amortised cost

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

41 Risk Management

41.1 Introduction and risk profile

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

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

41.1.a Risk management structure

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

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

The Risk Management guidelines will be
implemented through the established organization
structure of Risk Department. The overall
monitoring of the Risks is done by the Chief
Risk Officer (CRO) with the support from all the
department heads of the Company. The Board
reviews the status and progress of the risk and risk
management system, on a quarterly basis through
the Audit Committee and Risk Management

Committee. The individual departments are
responsible for ensuring implementation of
the risk management framework and policies,
systems and methodologies as approved by the
Board. Assignment of responsibilities in relation
to risk management is prerogative of the Heads
of Departments, in coordination with CRO. While
each department focuses on its specific area of
activity, the Risk Management Unit operates in
coordination with all other departments, utilising all
significant information sourced to ensure effective
management of risks in accordance with the
guidelines approved by the Board. The unit works
closely with and reports to the Risk Management
Committee, to ensure that procedures are
compliant with the overall framework.

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

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

41.1.b Risk mitigation and risk culture

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

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

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

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

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

41.1.c Risk measurement and reporting systems

The heads of all the departments in association with
risk management department are responsible for
coordinating the systems for identifying risks within
their own department or business activity through
RCSA exercise to be conducted at regular intervals.

Based on a cost / benefit assessment of a risk, as is
undertaken, some risks may be judged as having to
be accepted because it is believed mitigation is not
possible or warranted.

As the risk exposure of any business may undergo
change from time to time due to continuously
changing environment, the updation of the Risk
Register will be done on a regular basis.

All the strategies with respect to managing these
major risks shall be monitored by the CRO and MLRC.

The Management Level Risk Committee meetings
are held as necessary or once a month. The
Management Level Risk Committee would monitor
the management of major risks specifically
and other risks of the Company in general. The
Committee takes an integrated view of the risks
facing the entity and monitor implementation of
the directives received from Risk Management
Committee and actionable items drawn from the
risk management framework.

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

- Review of business growth and portfolio quality.

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

- Review of process compliances across
organisation.

- Review of HR management, training and
employee attrition.

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

- Discuss and review performance of IT systems.

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

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

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

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

41.1.d Risk Management Strategies
Excessive risk concentrations

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

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

Political Risk mitigation measures:

• Low cost operations and low pricing for
customers.

• Customer centric approach, high customer
retention.

• Rural focus.

• Systematic customer awareness activities.

• High social focused activities.

• Adherence to client protection guidelines.

• Robust grievance redressal mechanism.

• Adherence to regulatory guidelines in letter
and spirit.

Concentration risk mitigation measures:

• District centric approach.

• District exposure cap.

• Restriction on growth in urban locations.

• Maximum disbursement cap per loan account.

• Maximum loan exposure cap per customer.

• Diversified funding resources.

Operational & HR Risk mitigation measures:

• Stringent customer enrolment process.

• Multiple products.

• Proper recruitment policy and appraisal system.

• Adequately trained field force.

• Weekly & fortnightly collections - higher
customer touch, lower amount instalments.

• Multilevel monitoring framework.

• Strong, Independent and fully automated
Internal Audit function.

• Strong IT system with access to real time
client and loan data.

Liquidity risk mitigation measures:

• Diversified funding resources.

• Asset liability management.

• Effective fund management.

• Maximum cash holding cap.

Expansion risk mitigation measures:

• Contiguous growth.

• District centric approach.

• Rural focus.

• Branch selection based on census data &
credit bureau data.

• Three level survey of the location selected.
Credit risk

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

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

To address credit risk, the Company has stringent
credit policies for customer selection. To ensure
the credit worthiness of the customers, stringent
underwriting policies such as credit investigation,
both in-house and field credit verification, is in
place. In addition, the company follows a systematic
methodology in the selection of new geographies
where to open branches considering factors such
as the portfolio at risk and over indebtedness of the
proposed area/region, potential for micro-lending
and socio-economic risk evaluation (e.g., the risk of
local riots or natural disasters). Loan sanction and
rejections are carried out at the head office. A credit
bureau rejections analysis is also regularly carried
out in Company.

Credit risk is being managed by continuously
monitoring the borrower's performance if
borrowers are paying on time based on their
amortization dues. The Company ensures stringent
monitoring and quality operations through
both field supervision (branch/area/region staff
supervision, quality control team supervision)
and management review. Management at each
Company's head office closely monitors credit

risk through system generated reports (e.g., PAR
status and PAR movement, portfolio concentration
analysis, vintage analysis, flow-rate analysis) and
Key Risk Indicators (KRIs) which include proactive
actionable thresholds limits (acceptable, watch and
breach) developed by CRO, revised at the MLRC and
at the Risk Committee at the Board level.

Some of the main strategies to mitigate credit risk are:

1. Maintain stringent customer
enrolment process,

2. Undertake systematic customer awareness
activities/ programs,

3. Reduce geographical concentration ofportfolio,

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

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

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

7. Decrease field staff turnover,

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

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

41.2 Impairment assessment

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

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

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

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

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

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

The accounts which were restructured under
the resolution Framework for Covid-19 related
stress as per RBI circular dated August 6,

2020 (Resolution Framework 1.0) and May 05,

2021 (Resolution Framework 2.0) were initially
classified under Stage-2.

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

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

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

Stage 1: 0 to 15 DPD.

Stage 2: 16 to 60 DPD (SICR).

Stage 3: above 60 DPD (Default).

(ii) Self Help groups (SHG)

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

Stage 1: 0 to 30 DPD.

Stage 2: 31 to 60 DPD (SICR).

Stage 3: Above 60 DPD (Default).

(iii) Staging classification of Individual Loans of
the Company

For monthly repayment model, the Company
has identified the following stage classification
to be the most appropriate for these loans :

Stage 1: 0 to 30 DPD.

Stage 2: 31 to 90 DPD (SICR).

Stage 3: Above 90 DPD (Default).

41.2. b Probability of Default ('PD')

(i) Group lending (Including SHG)

PD describes the probability of a loan to
eventually falling into Stage 3. PD %age is
calculated for each loan account separately
a nd is d etermined by usin g ava ilable
historical observations.

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

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

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

(ii) Individual Loans

Individual loans is a relatively new portfolio that
was started in November 2016. Performance
history of matured vintage loan is not available
in adequate number to build PD or LGD
model. The ECL estimation for Individual loans
portfolio is carried out using a method which is
based on management judgement.

41.2. c Exposure at default (EAD)

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

41.2. d Loss given default (LGD)

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

(i) Group lending loans (Including SHG)

LGD is computed as below:

The Company determines its expectation
of lifetime loss by estimating recoveries
towards its loan through analysis of historical

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

(ii) Individual loans

Individual loans is a portfolio that was started
in November 2016. Performance history
of matured vintage loan is not available in
adequate number to build PD or LGD model.
The ECL estimation for individual loans
portfolio is carried out using a methodology
which is based on management judgement.

41.2. e Grouping financial assets measured on a
collective basis

The Company believes that the Joint Group Lending
loans (JLG) have shared risk characteristics (i.e.
homogeneous) while SHG loans and Individual
loans (IL) have risk characteristics different from
JLG loans. Therefore, JLG, SHG and IL are treated
as three separate groups for the purpose of
determining impairment allowance.

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

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

ECL estimates are subject to adjustment based
on the output of macroeconomic model which
incorporates forward looking assessment of the
economic environment under which the company
operates in the form of Management overlay.

41.3 Capital

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

Capital management

The Company's objectives when managing
capital are to

• safeguard their ability to continue as a going
concern, so that they can continue to provide

returns for shareholders and benefits for
other stakeholders, and

• Maintain an optimal capital structure to reduce
the cost of capital. The Company manages its
capital structure and makes adjustments to ii
according to changes in economic conditions
and the risk characteristics of its activities. Ir
order to maintain or adjust the capital structure
the Company may adjust the amount of dividenc
payment to shareholders, return capital tc
shareholders or issue capital securities.

Plan nin g

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

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

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

41.4 Liquidity risk and funding management

Liquidity risk arises due to the unavailability of adequate
amount of funds at an appropriate cost and tenure. The
Company may face an asset-liability mismatch caused
by a difference in the maturity profile of its assets and
liabilities. This risk may arise from the unexpected
increase in the cost of funding an asset portfolio at
the appropriate maturity and the risk of being unable
to liquidate a position in a timely manner and at a
reasonable price. We monitor liquidity risk through our
Asset Liability Management Committee. Monitoring
liquidity risk involves categorizing all assets and liabilities
into different maturity profiles and evaluating them for
any mismatches in any particular maturities, particularly
in the short-term. We actively monitor our liquidity
position to ensure that we can meet all borrower and
lender-related funding requirements.

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

Diversified funding resources:

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

Asset Liability Management (ALM) can be termed as a risk
management technique designed to earn an adequate
return while maintaining a comfortable surplus of
assets over liabilities. ALM, among other functions, is
also concerned with risk management and provides
a comprehensive as well as dynamic framework for
measuring, monitoring and managing liquidity and
interest rate risks. ALM is an integral part of the financial
management process of the Company. It is concerned
with strategic balance sheet management, involving risks
caused by changes in the interest rates and the liquidity
position of Compa ny. I t involves assessment of va riou s
types of risks and altering the asset-liability portfolio in a
dynamic way in order to manage risks.

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

The scope of ALM function can be described as follows:

i. Funding and Capital Management,

ii. Liquidity risk management,

iii. Interest Rate risk management,

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

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

41.5 Market Risk

41.5.1 Market risk

Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in
market variables such as interest rates, foreign exchange rates and equity prices. The Company classifies exposures
to market risk into either trading or non-trading portfolios and manages each of those portfolios separately.

41.5.2 Interest rate risk

Interest rate risk is the risk where changes in market interest rates might adversely affect the Company's financial
condition. The immediate impact of changes in interest rates is on earnings (i.e. reported profits) by changing its Net
Interest Margin (NIM). The risk from the earnings perspective can be measured as changes in Net Interest Margin
(NIM). In line with RBI guidelines, the traditional Gap analysis is considered as a suitable method to measure the
Interest Rate Risk for the Company.

In case of Compnay it may be noted that portfolio loans are not rate sensitive as there is no re-pricing of existing
loans carried out. Only some of the liabilities in the form of borrowings are rate sensitive and considering the size of
our business the quantum of impact of change of interest rate of borrowings on liquidity is not significant and can be
managed with appropriate treasury action.

The following table demonstrates the sensitivity to a reasonably possible charge in interest rates (all other variables
being constant) of the Company's statement of profit and loss.

41.5.5 Hedging Policy

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

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

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges
is recognised in other comprehensive income and accumulated under the heading cash flow hedging reserve within
equity. The gain or loss relating to the ineffective portion is recognised immediately in the statement of profit and loss,
and is included in the '(Gain) / Loss in Fair Value of Derivatives' line item.

$Proceeds received with respect to the securitisation/PTC transaction. There is no gain/loss on sale on account of securitisation.

"Prinicpal oustanding/payable considered under collateralised borrowing from banks arising out of securitisation transaction in
financial statement

#Principal outstanding of the pool as at the year end
**Principal amount paid to Investor out of the collection made.

“Principal Collection made from the pool.

##securitization deal consider here, after maturity of all loans in the pool on or before reporting date.

***Company considers the securitization as one of the mode of fund raising. As this do not meets the criteria for derecognition, the same
remains on balance sheet item and the amount received is considered as borrowing. Company remits the interest payable and principal
collection from the pool to the lender at periodic intervals as per the agreement.

43 (Contd..)

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

The ALM support group consist of CFO and Head-Treasury who shall be responsible for analysing, monitoring and

reporting the liquidity profile to the ALCO.

*Notes

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

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

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

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

(ii) The Company has not transferred any non-performing assets (NPAs).

(iii) The Company has not acquired any loans through assignment.

(iv) The Company has not acquired any stressed loan.

y. Liquidity Coverage Ratio Disclosure

Institutional set-up for liquidity risk management

Master Direction - (NBFC - Scale Based Regulation) Directions, 2023 dated October 19, 2023 (including amendments from time
to time), mandates that all non-deposit taking NBFCs with asset size of H5,000 crore and above and all deposit taking NBFCs
irrespective of the asset size shall adhere to the guidelines mentioned thereunder while computing the Liquidity Coverage
Ratio, with the minimum LCR to be 100%.

The Company follows the criteria laid down by RBI for calculation of High Quality Liquid Assets (HQLA), gross outflows
and inflows within the next 30-day period. HQLA predominantly comprises cash and balance with other banks in current
account. All significant outflows and inflows determined in accordance with RBI guidelines are included in the prescribed
LCR computation template.

44 Operating segments

There is no separate reportable segment as per Ind AS 108 on 'Operating Segments' in respect of the Company. The
Company operates in single segment only. There are no operations outside India and hence there is no external revenue or
assets which require disclosure. No revenue from transactions with a single external customer amounted to 10% or more
of the Company's total revenue for the year ended March 31,2025 and March 31,2024.

45 Goodwill impairment testing

Goodwill is subject to review for impairment annually or more frequently if events or circumstances indicate that it is
necessary. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows
from continuing use that are largely independent of the cash inflows from other assets or groups of assets is considered as
a cash generating unit. Goodwill does not generate cash flows independent of other assets of the overall business and its
fair value cannot be separately estimated. Therefore, it has been tested at a Cash generating Unit level ("level comprising
all assets of the business including goodwill"). Goodwill carried as at the balance sheet date represents goodwill acquired
in a business combination of the Company with Madura Microfinance Ltd ('MMFL') and since both are in similar businesses,
on merger of MMFL, the Company as a whole has been treated as one Cash Generating Unit (CGU) representing lowest
level at which the goodwill is monitored for internal management purposes and the business of erstwhile MMFL and the
Company are not treated as two distinct operating segments by the company. In view of this, CAGL as a whole is valued as
one CGU for the purpose of assessing the impairment of goodwill. Based on the assessment no impairment was identified
in FY 2024-25 (FY 2023-24: Nil)

The carrying amount of goodwill as at March 31,2025 is H 375.68 crores (March 31,2024: H 375.68 crores).

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

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

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

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

For the accounting software, the audit trail feature was partially enabled at the database level during the previous year
(w.e.f. March 2024) and this was then extended to cover the entire database level audit trail effective from 06 January
2025. For the loans origination system with respect to retail loans, the audit trail feature was enabled at the database level
effective from 10 October 2024. The loan management system had the audit trail feature enabled at the database level
throughout the year. This audit trail functionality has operated effectively during the respective periods from when they
were enabled across various accounting software. Further, access to the database of all accounting software is available
only to database administrators for the limited purpose of its maintenance for which access and monitoring controls
are enabled and all such activities of the administrators have been logged and monitored throughout the year through
privilege access management tools.

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

The Company has preserved the audit trail for the above period in compliance with statutory requirements for record
retention. The Company has enabled the audit trail at the database level for all users from the effective dates, except for a
few user accounts which are 'service accounts' that are solely used for software integration purposes.

(i) No Benami Property is held by the Company and/or there are no proceedings that 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.

(ii) The Company has reviewed transactions to identify if there are any transactions with struck off companies. To the
extent information is available on struck off companies, there are no transactions with struck off companies.

(iii) There were no delays in repayment of borrowings and Subordinated liabilities as at March 31, 2025 and March 31,
2024.

(iv) There are no charges or satisfaction in relation to any debt / borrowings which are yet to be registered with ROC
beyond the statutory period.

(v) 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.

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

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

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

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

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

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

or

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

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

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

(ix) Other litigation:

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

as the demand was calculated based on factually incorrect data. Further, the Company has submitted necessary
supporting evidences for the notice issued under Section 250 of IT Act (hearing of the matter).

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

49 Previous year figures have been regrouped/rearranged, wherever considered necessary, to conform to the classification/
disclosure adopted in the current year and such regrouping/ reclassification are not material.

In terms of our report attached

For Walker Chandiok & Co LLP For Varma & Varma For and on behalf of Board of Directors of

Chartered Accountants Chartered Accountants CreditAccess Grameen Limited

ICAI Firm's Registration ICAI Firm's Registration

Number: 00107N/N500013 Number: 004532S

Manish Gujral K P Srinivas Udaya Kumar Hebbar Lilian Jessie Paul

Partner Partner Managing Director Independent Director

Membership No. 105117 Membership No. 208520 DIN: 07235226 DIN: 02864506

Place: Bengaluru Place: Bengaluru Ganesh Narayanan Nilesh Shrikrishna Dalvi

Date: May 16, 2025 Date: May 16, 2025 Chief Executive Officer Chief Financial Officer

M J Mahadev Prakash

Company Secretary and Chief
Place: Bengaluru Compliance Officer

Date: May 16, 2025 Membership No. ACS-16350