15. Provisions and Contingent Liabilities

A provision is recognised when there is a present
obligation as a result of past event, and there is a
probability of an outflow of resources that will be
required to settle the obligation and in respect of
which a reliable estimate can be made. Provisions are
determined based on the Management's best estimate
required to settle the obligation as at the balance sheet
date. These are reviewed at each balance sheet date
and adjusted to reflect the current best estimates.

In case where the available information indicates that
the loss on the contingency is reasonably possible but
the amount of loss cannot be reasonably estimated, a
disclosure is made in the financial statements. In case
of remote possibility, neither provision nor disclosure
is made in the financial statement.

Contingent Assets are neither recognized nor disclosed
in the financial statements since this may result in the
recognition of income that may never be realized.

16. Country risk

In addition to the provisions required to be held
according to the asset classification status, provisions
are also required to be made towards country-wise net
funded exposure on foreign exchange transactions
exceeding the threshold limits (other than for home
country). Provision will be made where the net funded
exposure of any country is 1% or more of the Bank's
total funded assets.

Further, till such time internal rating systems
are developed by the Bank, the seven-category

classification followed by Export Credit Guarantee
Corporation of India Ltd. (ECGC) will be utilised for the
purpose of classification of country risk exposures viz.,
countries will be classified into seven risk categories
namely insignificant (A1), low (A2), moderately low
(B1), moderate (B2), moderately high (C1), high (C2)
and very high (D).

17. Corporate Social Responsibility

Expenditure towards corporate social responsibility, in
accordance with Companies Act, 2013 is recognised
in the Profit and Loss Account.

18. Operating Lease

Leases where all the risks and rewards of ownership
are retained by the lessor are classified as ‘Operating
lease'. Operating lease payments are recognised as
an expense in the Profit and Loss Account as per the
lease terms. Initial direct costs in respect of operating
leases such as legal costs, brokerage costs etc., are
recognised as expense immediately in the Profit and
Loss Account.

19. Net Profit

The net profit disclosed in the Profit and Loss Account
is after providing for :

• Provision for taxes, standard assets and non¬
performing assets;

• Provision for depreciation on investments,

• Provision for employee benefits; and

• Other usual and necessary provisions

SCHEDULE 18 - NOTES ON ACCOUNTS FORMING
PART OF THE FINANCIAL STATEMENTS FOR THE YEAR
ENDED MARCH 31, 2025

The schedule provides disclosure for the year ended 31^st March
2025 (with comparative position of previous year, wherever
applicable) as per Reserve Bank of India's (RBI) Master Circular
on Disclosure in Financial Statements.

(Amounts given herein are denominated in Rupees crore unless
specified otherwise)

b. Draw down from Reserves

During the year, there has been no draw down from the reserves to the Profit & Loss account.

Basel III disclosures

In accordance with RBI circular DOR.CAP.REC.4/21.06.201/2024-25 dated 01^st April 2024, read together with RBI circular
DBR.No.BP.BC.1/21.06.201/2015-16 dated 1^st July 2015, Banks are required to make Pillar 3 disclosures under Basel III
capital regulations. Accordingly, necessary disclosures have been made available on the Bank's website - https://www.kvb.
co.In/about-us/disclosures/pillar-MI-dlsclosures/. These disclosures have not been subjected to audit by the Joint Statutory
Central Auditors.

1.1 Tier II Capital

During the year ended 31^st March 2025, the Bank did not raise any subordinated debt bonds qualifying for Tier II capital.

1.2 Proposed Dividend

The Board of Directors have recommended a dividend of 130% i.e. Rs.2.60 per equity share of Rs. 2.00 each for the year
2024-25 (Previous year 120%-Rs.2.40 per equity share), subject to the approval of the shareholders at the ensuing Annual
General Meeting.

In accordance with Accounting Standards 4 - Contingencies and Events Occurring after the Balance Sheet date notified under
the Companies (Accounting Standards) Rules 2021, the proposed dividend has not been shown as an appropriation from the
Profit and Loss account for the year ended 31^st March 2025 and correspondingly not reported under Other Liabilities and
Provisions as at 31^st March 2025. However, capital adequacy ratio has been computed by reducing the proposed dividend.

2b. Liquidity Coverage Ratio (LCR)
i. Qualitative disclosure

Pursuant to RBI guidelines on implementation of
Basel III framework applicable to banks in India with
effect from 1^st January 2015, measurement of LCR by
Bank is undertaken for stress testing. LCR promotes
short term resilience of banks to potential liquidity
disruptions by ensuring that they have sufficient high
quality liquid assets (HQLAs) to survive an acute stress
scenario lasting for 30 days. As per extant regulatory
guidelines, the minimum LCR to be maintained by
banks is specified at 100%.

i.a Objective

LCR standard aims to ensure that a bank maintains
an adequate level of unencumbered HQLAs that
can be converted into cash to meet its liquidity
needs for a 30 calendar day time horizon under
a significantly severe liquidity stress scenario
specified by supervisors. At a minimum, the stock
of liquid assets should enable the bank to survive
until day 30 of the stress scenario, by which time
it is assumed that appropriate corrective actions
can be taken.

Bank has consistently maintained LCR above

100% during FY 2024-25 (as well as during

FY 2023-24) i.e. at levels higher than the

required regulatory minimum level, on an

ongoing basis.

i.b Composition of HQLA

• Cash in hand

• Excess CRR balance as on that particular day

• Excess Government Securities in excess of
minimum SLR requirement

• Government Securities within the
mandatory SLR requirement to the extent
allowed by RBI under MSF (presently to the
extent of 2% of NDTL as allowed for MSF)

• Facility to avail liquidity for liquidity coverage
ratio at 15% of NDTL

• AAA rated bonds and AA- & above
and marketable securities representing
claims guaranteed by sovereigns having
risk weights higher than 20% but not
higher than 50%

• Common equity shares not issued by the
bank or any of its affiliated entities and
included in NSE CNX Nifty and / or S&P
BSE Sensex indices.

2c. Net Stable Funding Ratio (NSFR)

Qualitative disclosure

NSFR = Amount of available stable funding (ASF) 4- amount
of required stable funding (RSF).

NSFR indicates that the Bank maintains a stable funding
profile in relation to the composition of its assets and off-
balance sheet activities and promotes funding stability i.e.
resilience over a longer-term time horizon by requiring
banks to fund their activities with more stable sources of
funding, on an on-going basis.

ASF is defined as the portion of capital and liabilities,
expected to be reliable over the time horizon considered
by NSFR, which extends to one year. RSF is a function of
the liquidity characteristics and residual maturity of various
assets (including off-balance sheet exposures) held. RBI has
mandated that minimum NSFR of 100% is to be maintained
with effect from October 01, 2021.

NSFR standard is structured to:

a) Ensure that investment banking inventories, off-
balance sheet exposures, securitization pipelines and
other assets and activities are funded with at-least a
minimum amount of stable liabilities;

b) Avoid over-reliance on wholesale funding during times
of buoyant market liquidity;

c) Counterbalance the cliff-effects of the liquidity
coverage ratio approach;

d) Offset incentives for institutions to fund their stock of
liquid assets with short-term funds that mature just
outside the supervisory defined horizon for LCR; and

e) Require stable funding for all illiquid assets and
securities held, including those held in HFT/AFS
i.e. reckon illiquidity and not the assumed execution
turnover period.

The following assumptions are used by RBI in the
calibration of NSFR :

• Longer-term liabilities are assumed to be more stable
than short-term liabilities;

• Short-term (maturing in less than one year) deposits
provided by retail customers and funding provided by
small business customers are behaviorally more stable
than wholesale funding of the same maturity from
other counterparties;

• For the sake of continuity and resilience of credit
creation, stable funding for some proportion of lending
to the real economy is required;

• Banks may seek to roll over a significant proportion of
maturing loans to preserve customer relationships;

• Short-dated assets (maturing in less than one year)
require a smaller proportion of stable funding because
these could be allowed to mature without rolling-over;

• Unencumbered, high-quality assets that can be
securitized or traded or used as collateral to secure
additional funding, do not need to be wholly financed
with stable funding; and

• At least a small portion of the potential calls on
liquidity arising from off-balance sheet commitments
and contingent funding obligations need to be met by
stable funding.

NSFR is measured on a quarterly basis and advanced
techniques such as stress testing, sensitivity analysis
etc. are conducted periodically to assess the impact of
various contingencies.

3.6 Transfer to Capital Reserve

Net profit on sale of securities includes profit of Rs. 0.39 crore on sale of securities from HTM category (Rs. 1.52 during the
previous year). As per RBI guidelines, an amount of Rs. 0.22 crore (after netting of taxes and transfer to Statutory Reserve) is
transferred to Capital Reserve for the year ended 31.03.2025 (Rs. 0.85 during the previous year).

3.7 SLR investments under HTM category

The percentage of SLR investment under HTM category as on 31^st March 2025 was 19.36% of Demand and Time Liability of
the Bank (previous year 19.26%) which is within permissible limit as per RBI guidelines.

3.8 Interest income on investment is net of amortization expenses of Rs. 85.28 crore (Rs. 103.62 crore during previous year).

3.10 There has been no change in the accounting policy except with respect to ‘Investments' to comply with the Reserve Bank of India
Master Direction on Classification, Valuation and Operation of Investment Portfolio of Commercial Banks (Directions) 2023 dated
September 12, 2023 (‘Master Direction') which is effective from April 01, 2024 read with the frequently asked questions issued
by the Fixed Income Money Market and Derivatives Association of India (‘FIMMDA').

Accordingly, the investment of the Bank as at April 01, 2024 have been reclassified, wherever required and valued in accordance
with the requirement of said Master Direction and transitional adjustment on account of ‘Available For Sale' (AFS) portfolio and
other securities has been adjusted in AFS reserve and opening General reserve to the extent of Rs.23.01 crore and Rs.260.98
crore (which includes reversal of provision for depreciation of Rs.58.06 crore and transfer of Investment Reserve of Rs.202.92
crore) respectively. Thus, corresponding year ended figures in respect of March 31, 2024 are not comparable. The impact on
account of this change in the accounting policy is not material for the quarter and year ended March 31, 2025.

All investments purchased and sold during the year ended March 31, 2025 are done in compliance with the requirements of the
master direction & revised accounting policy. In compliance with Master Directions, the valuation gains and losses for the year
ended March 31, 2025 across all performing investment held under AFS is aggregated and the net gain amounting to Rs.55.02
crore (net of tax) has been directly credited to AFS Reserve. The securities held in Fair Value through Profit and Loss (‘FVTPL')
and Held for Trade (‘HFT') are fair valued and valuation losses (net) for the year ended March 31, 2025 amounting to Rs.5.02
crore arising on such valuation have been charged to the Profit and Loss.

5.5 Factoring Exposures

Bank undertakes factoring, including factoring through
TReDS (Trade Receivable Discounting System) platform.
TReDS transactions are undertaken across various
platforms viz., RXIL (Receivables Exchange of India Limited),
M1Xchange and Invoicemart (ATreds). Receivables of rated
large corporates and that of MSME units from corporates
are financed through factoring. Finance extended through
factoring form part of advances portfolio of the Bank, and
the position of factoring exposure is given below:

our Bank, provided the borrower is having foreign exchange
business relationship with the Bank. Bank holds a provision
of Rs. 3.79 crore as on 31.03.2025 (Previous year Rs. 6.99
crore) towards UFCE of its clients.

5.8 Details of Single Borrower Limit (SBL), Group Borrower
Limit (GBL) exceeded by the bank.

The Bank has not exceeded the prudential credit exposure
limits in respect of Single Borrower Limit and Group
Borrower Limit (not exceeded the same for previous year).

7.3 Disclosures on risk exposure in derivatives
Qualitative Disclosure

Structure, Organisation, Scope, Nature of risk management
in derivatives

Dealing in derivatives is centralized in the integrated
Treasury of the Bank. Treasury is segregated into three
functional areas i.e., front office, mid office and back office.

Derivative transactions are entered into by the front
office; mid office conducts an independent check of the
transactions entered into by the front office and ensures
compliance with various internal and regulatory guidelines.
Back Office undertakes activities such as confirmation,
settlement, accounting, risk monitoring and reporting.

Rupee derivative deals are executed for hedging or for
trading. The risk in the derivatives portfolio is monitored by
assessing the MTM position of the portfolio on a daily basis
and the impact on account of probable market movements.
The overall portfolio is operated within the risk limit fixed
by the Bank. Forex derivative deals are offered to clients
on back-to-back basis. The outstanding deals are marked
to market on monthly basis. The MTM values are informed
to the clients every month and margin topped up where
required. Banks have been permitted to adopt the Current

Exposure Method for measurement of Credit Exposure of
Derivative products as per extant RBI guidelines.

The Board reviews the risk profile of the outstanding
portfolio at regular intervals.

Accounting

Accounting policies for derivatives adopted by the Bank are
as per RBI guidelines. Hedge swaps are accounted for like
a hedge of the asset or liability. The income / expense on
hedge swaps are accounted on accrual basis except where
swap transactions whose underlying is subjected to MTM.
Such hedge swaps are marked to market on a monthly
basis and the gain / losses are recorded as an adjustment
to the designated asset / liability. The non-hedge swaps
are marked to market every month and the MTM losses in
the basket are accounted in the books while MTM profits
are ignored.

Collateral Security

As per market practice, no collateral security is insisted for
the contracts with counter parties like Banks / PDs etc. For
deals with corporate clients, appropriate collateral security
/ margin etc. are stipulated whenever considered necessary.

Credit Risk Mitigation

Most of the deals are contracted with Banks / major PDs /
highly rated clients and no default risk is anticipated on the
deals with them.

The market making and the proprietary trading activities in
derivatives are governed by the Integrated Treasury policy of
the Bank, which lays down the position limits, stop loss limits
as well as other risk limits. As far as forex derivatives are
concerned, they are undertaken on back-to-back basis only.

Risk monitoring on derivatives portfolio is done on a daily
basis. The Bank measures and monitors risk using Price
Value of a Basis Point (PVBP) approach. Risk reporting
on derivatives forms an integral part of the management
information system and the marked to market position and
the PVBP of the derivatives portfolio is reported on a daily
basis to the top management.

Risk monitoring on forex derivatives is done on a monthly
basis. It is reported to the top management and related
clients on monthly basis.

Note: There are no derivative transactions undertaken during the year (also no derivative transactions undertaken during previous
year), other than Forward Forex Contracts. Bank does not have any open position in the Derivative instruments in trading book
as on 31^st March 2025 (also as on 31^st March 2024).

7.4 Credit default swaps

The bank has not undertaken any Credit Default Swaps during FY 2024-25 and FY 2023-24.

12. Disclosure of penalties imposed by RBI

During the year RBI has levied the following penalties -

1. Rs. 0.08 crore penalty imposed by RBI for non-compliance
with certain directions issued by RBI on ‘Loan System for
Delivery of Bank Credit'.

2. Rs. 0.02 crore emanating out of deficiencies found while
processing the currency notes remitted by the Bank,
Rs. 0.004 crore for the deficiencies found in the branch
incognito visit by RBI and Rs. 0.007 crore for the deficiencies
found in the ATM cash outs (Previous year Rs. 0.03 crore).

13. Disclosures on Remuneration

Qualitative Disclosure

a. Information relating to the composition and mandate
of the Nomination and Remuneration Committee (NRC)

As on 31^st March 2025, the Nomination & Remuneration
Committee (NRC) of the Board consists of three Independent
Directors. Further as per requirement of RBI guidelines
a member of Risk Management Committee of the Board
is also made member in NRC. The Composition complies
with RBI guidelines, provisions of Companies Act, 2013 and
SEBI (Listing Obligations and Disclosure Requirements),
Regulations, 2015 (‘SEBI LODR').

The mandate of Nomination and Remuneration

Committee includes:

a. To formulate criteria for determining qualifications,
positive attributes and independence of a director, in
terms of fit and proper criteria issued by the RBI from
time to time.

b. To devise policy on Board Diversity, and policy on
Appointment and Succession Planning for Directors.

c. To formulate/review criteria for evaluation of
performance of Chairman, Independent Directors,
Board of Directors, Committees of Board.

d. To recommend persons who are qualified to become
directors and who may be appointed in senior
management in accordance with the criteria laid
down and recommend to the board of directors their
appointment and removal.

e. To frame/review Compensation Policy towards
ensuring effective alignment between remuneration
and risk. Directors and Senior Management Personnel
shall be part of the Compensation Policy.

f. To review and recommend to the board, all
remuneration, in whatever form, payable to Directors
& senior management.

g. To formulate the criteria for variable pay and fix the
thresholds for applying malus & clawback on the grant
of variable pay payable to MD & CEO/ WTD.

h. To consider grant of stock options to employees,
administer and supervise the Employee Stock
Option Plans in conformity with statutory provisions
and guidelines.

i. To provide inputs, if required, to Board for making
disclosures regarding policies, appointments,
remuneration etc. of Directors and Senior Management
personnel in the Annual Reports/ Directors Reports/
Financial Statements etc. as may be required by the
regulations from time to time.

j. To perform any other functions or duties as stipulated
by the Companies Act, RBI, SEBI, Stock Exchanges and
any other regulatory authority or under any applicable
laws as may be prescribed from time to time.

b. Information relating to the design and structure of
remuneration processes and the key features and
objectives of remuneration policy

The Bank has Board approved Compensation Policy in terms
of the RBI guidelines, provisions of Companies Act, 2013
and SEBI (Listing Obligations and Disclosure Requirements),
Regulations, 2015 (‘SEBI LODR'). The Compensation
Policy of the Bank covers the compensation payable to
all the employees including the MD&CEO/ WTD, Key
Managerial Personnel, Material Risk Takers, Control Function
Staff as per the guidelines of RBI and also fee payable
including fixed remuneration to Non- Executive Directors/
Independent Directors. Nomination and Remuneration
Committee (NRC) of the Bank oversees the framing, review
and implementation of compensation policy on behalf of
the Board of Directors. Further as per requirement of RBI
guidelines a member of Risk Management Committee of
the Board is also a member in order to consider risk related
aspects in remuneration structures.

In terms of RBI Guidelines and Compensation Policy of
the Bank the position of Managing Director & CEO and
Executive Directors are identified as Material Risk Taker
(MRT). The compensation payable to MRTs is divided into
fixed and variable components. Non-Executive Directors/
Independent Directors are paid sitting Fees for attending
Board/ Committee meetings. Part-time (Non-Executive)
Chairperson is entitled for honorarium, as approved by
Reserve Bank of India and Shareholders of the Bank. In terms
of RBI circulars and as approved by the shareholders vide
postal ballot resolution dated July 16,2024, Non-Executive
Directors of the Bank including Independent directors
(Other than Non-Executive (Part-time) Chairperson) are
eligible for fixed compensation to the tune of 0.2% of the
profit available for distribution subject to a maximum of
Rs.20 Lakhs for each Director per annum with effect from
FY 2024-25, for a period of three (3) years. The said fixed
compensation payable shall be in proportion to the tenure
of the Directors on the Board during the year.

Remuneration to employees (other than MRTs) is defined
by the IBA pay scale / CTC pay structure, both of which are
approved by the Board. The IBA pay scale is an industry
standard across all PSBs and old generation private banks,
while the CTC pay structure specific to KVB has been
formulated on the basis of comparative industry practices.

The objective is to suitably compensate every employee
as per his position in the organization so as to adequately
recognize his contributions.

Objective of the Compensation policy is to align the
compensation with prudent risk taking;

• Compensation must be adjusted for all types of risks

• Compensation outcomes must be symmetric with
risk outcomes

• Compensation pay-out schedules must be sensitive to
the time horizon of risks

• The proportion of cash, equity and other forms of
compensation must be consistent with risk alignment.

c. Description of the ways in which current and future risks
are taken into account in the remuneration processes. It
should include the nature and type of the key measures
used to take account of these risks

With respect MRTs the clauses of Compensation Policy
adopted by the Bank address the issues pertaining to
current and future risks. While current risks are factored in
fixed pay, the future risks are factored in variable pay. The
variable pay shall be based on predefined KPIs having a wide
variety of measures related to Governance, Internal Controls,
appropriate risk management practices and adherence to
Compliance, etc. as set out by NRC. This risk adjustment
factors in both quantitative and qualitative elements. The
Policy effectively aligns the compensation with prudent risk
taking and shall be symmetrical with risk outcomes as well
as sensitive to the time horizon of risk. Further in adherence
to FSB implementation standards & RBI Guidelines, variable
pay has deferral arrangements. In the event of negative
outcomes & misconduct risk, the deferred compensation
shall be subjected to malus and claw back arrangements in
tune with the RBI guidelines.

The remuneration (other than MRTs) as per IBA / CTC
package is position / designation specific and not necessarily
risk specific. However, there are sufficient systems and
procedures in place in the Bank (including KVB Officer
Employees, Conduct Regulations and Discipline & Appeal
Regulations, and also Malus / Claw back clauses in the
employment contracts wherever applicable and continuous
monitoring / auditing etc) to ensure risk mitigation
and prevention.

Board of Directors of the Bank through NRC shall exercise
oversight & effective governance over the framing and
implementing the Compensation policy.

d. Description of the ways in which the Bank seeks to
link performance during a performance measurement
period with levels of remuneration

Bank follows a performance-based remuneration, which
motivates and rewards high performers who strengthen
long-term customer relations,and generate income
and shareholder value. The Bank while designing the
compensation structure ensures that there is a proper
balance between fixed pay and variable pay. Bank ensures
that variable pay shall relate to the performance. The
variable pay could be in cash, stock linked instruments or a
mix of both.

While fixing the Variable Pay, performance parameters
under financial and non-financial areas of operations are
assessed. The financial performance of the bank is factored
while determining the amount of variable remuneration to be
paid. Variable Pay shall be fixed on the basis of performance
matrix broadly categorized as a) Bank as a whole, b)
Business Unit, c) Individual, based on the quantitative and
qualitative criteria. The quantitative criteria shall relate
to the performance of the Bank and certain qualitative
factors taking into account the, Governance Measures,
Cost to Income Ratio, Internal controls, appropriate risk
management practices and adherence to compliance, etc
as set out by NRC.

In the event of subdued or negative financial performance
of the bank and or the relevant line of business in any year,
having misconduct, the deferred compensation shall be
subjected to malus and claw back arrangements in tune
with the RBI guidelines.

e. A discussion of the bank’s policy on deferral and vesting
of variable remuneration and criteria for adjusting
deferred remuneration before vesting and after vesting

As per the Compensation Policy, Variable pay is eligible on the
achievement of certain business/compliance targets fixed by
the management. The structuring of remuneration in case
of MD & CEO/WTD shall be subject to the approval of RBI.

Deferral arrangements for variable pay in case of MD &
CEO/WTD and other employees who are MRTs and Control

Function Staff, in adherence to FSB implementation
standards shall be;

a minimum of 60% of the total variable pay shall be under
deferral arrangements.

If cash component of variable pay equals or exceeds
Rs.25.00 Lakhs, then at least 50% of the cash bonus shall
be deferred.

The deferral period shall be a minimum of three years
applicable to both cash and non-cash components of the
variable pay. Deferred remuneration shall either vest fully
at the end of the deferral period or be spread out over
the course of the deferral period. The first such vesting
shall be not before one year from the commencement of
the deferral period. The vesting shall be no faster than
on a pro-rata basis. Additionally, vesting, shall not take
place more frequently than on a yearly basis, to ensure
a proper assessment of risks before the application of
ex-post adjustments.

Subject to bank's ESOP schemes, NRC at its discretion
may specify a retention period after the vesting of stock
linked instruments which have been awarded as variable pay
during which they cannot be sold or accessed.

In cases where the compensation by way of share linked,
instruments is not permitted by law / regulations, the entire
variable pay can be in cash, subject to deferral /vesting /
malus-clawback norms.

f. Description of the different forms of variable
remuneration (i.e. cash, shares, ESOPs and other
forms) that the bank utilizes and the rationale for using
these different forms

Variable pay is purely based on performance and is measured
through KPIs. Bank ensures that the compensation
structure is comprehensive and considers both, qualitative
and quantitative performance measures. The variable pay
would be in the form of cash & non-cash components (in
the form of Share linked instruments).

Bank has two Employees Stock Option Schemes viz; KVB
ESOS 2011 and KVB ESOS 2018. NRC may grant stock
options under the Employees Stock Options Schemes from
time to time in terms of SEBI (Share Based Employee
Benefits and Sweat Equity) Regulations, 2021 (Erstwhile
SEBI (Share Based Employee Benefits) Regulations, 2014).

In case of other employees Bank also subscribes to different
forms of variable pay such as performance linked incentives,
Ex-gratia for other employees, non-cash incentives, Bonus,
any other incentives by whatever name called having the
similar features. The Bank shall not grant any severance
pay (other than the terminal benefits and gratuity as
per the provisions). Bank shall not provide any facility or
funds or permit to insure or hedge his/her compensation
structure to offset the risk alignment effects embedded in
the compensation package.

* - Deviation from Mean Pay of the Bank, in respect of MD &CEO and Executive Director Shri. J.Natarajan, compensation has
seen a significant change due to the following reasons:

a. The revision in remuneration (both fixed and variable) paid to MD&CEO during the FY 2024-25 has been considered and
the increase compared to previous FY 2023-24 is because of variable pay payments i.e. cash component of FY 23-24,
deferral cash component of FY 20-21, 21-22, 22-23, Exercise of non-cash component of variable pay (ESOS) pertaining
to FY 20-21, 21-22, 22-23 and perquisites as per Income Tax act,1961.

b. The remuneration (fixed and variable) paid to ED during the FY 2024-25 has been considered and the increase compared to
previous FY 2023-24 is because of variable pay payments i.e. cash component of FY 23-24, exercise of non-cash component
of variable pay (ESOS) pertaining to FY 20-21, 21-22, 22-23 (during which time he served as the President) and perquisites
as per Income Tax act,1961.

13.1 Remuneration (including sitting fees, profit related commission and Honorarium) paid to non-executive directors during the year
is Rs 2.45 Crore (previous year Rs. 2.57 Crore).

13.2 Stock options

The Bank has formulated and adopted Employee Stock Option Schemes to provide a platform to employees for participating
in the ownership of the Bank and in its long-term growth. The Bank uses stock options as a compensation tool to attract and
retain critical talent and encourage employees to align individual performances with that of the Banks' objectives. Currently, the
Bank has the following Schemes in compliance with the provisions of SEBI (Share Based Employee Benefits and Sweat Equity)
Regulations, 2021:

• Karur Vysya Bank Employees Stock Option Scheme 2011 (“KVB-ESOS-2011”)

• Karur Vysya Bank Employees Stock Option Scheme 2018 (“KVB-ESOS-2018”)

Note:

1. Vesting eligibility under these schemes are purely based on achievement of performance matrix. The vesting period shall
be under deferral arrangement upto three years from the date of grant, however minimum vesting period of one year
is mandatory.

2. Details outstanding as on April 01, 2024 pertains to options granted during previous years viz; FY 2020-21, 2021-22,
2022-23 and 2023-24.

3. Based on the eligibility conditions during the year 1,21,259 options (ESOS 2011 scheme - 38,971 options and ESOS 2018
scheme - 82,288 options) were lapsed, and the said options were added back to the Employee Stock Option pools.

4. The Bank has granted 63,695 options of face value Rs 2/- each to Material Risk Takers (MRTs) - MD & CEO and Executive
Director (for his performance in the role of President) under KVB ESOS 2018 scheme during the year. In terms of RBI
Guidelines on Compensation Policy, the said grant is part of their variable pay non-cash component for the performance
assessment period of FY 2023-24. Further Bank has also granted 49,060 options of face value Rs 2/- each to Senior
Management under KVB ESOS 2018 scheme during the year as a part of their non-cash component for the performance
assessment period of FY 2023-24. The vesting period shall be under deferral arrangement of three years from the
date of grant.

further notice. RBI has not issued any further notification
on implementation of IndAS by SCBs during the financial
year 2024-25.

In compliance to the RBI circular dated 11^th February 2016,
the status of IndAS implementation is given below:

Proforma IndAS statements have to be submitted to RBI on
half-yearly basis with effect from FY 2021-22; accordingly,
proforma IndAS statements for the half-year ended 30^th
September 2024 have been prepared and submitted to
RBI. Bank has evaluated IndAS solution offered by various
vendors. Bank had selected the software vendor for
IndAS evaluation and implementation and UAT testing is
under process.

14.6 Status with regard to IndAS Implementation

Ministry of Corporate Affairs (MCA), Government of India,
notified the Companies (Indian Accounting Standards)
Rules, 2015 on February 16, 2015. Vide press release
dated 18^th January 2016, MCA notified the roadmap for
implementation of Indian Accounting Standards (IndAS)
(converging with the Internal Financial Reporting Standards
(IFRS)) for Scheduled Commercial Banks (SCBs) excluding
Regional Rural Banks, Non-Banking Financial Companies and
Insurance Companies. Accordingly, RBI, vide circular DBR.
BP.BC.No.76/21.07.001/2015-16 dated 11^th February
2016, advised SCBs to follow IndAS from 1^st April 2018,
subject to guidelines / directions to be issued in this regard.

RBI initially deferred IndAS implementation by SCBs to
1^st April 2019; subsequently, vide circular DBR.BP.BC.
No.29/21.07.001/2018-19 dated 22^nd March 2019,
implementation of IndAS by SCBs has been deferred till

14.8 Disclosure on amortisation of expenditure on account of
enhancement in family pension of employees of banks.

The revision in family pension payable to employees of the
Bank covered under 11^th Bipartite Settlement and Joint
Note dated 11^th November 2020 was quantified on 26^th
August 2021; the Bank opted to amortize the additional
liability of Rs. 80.26 crore based on actuarial valuation
during the three quarters of financial year 2021-22 equally,
and the same has been accordingly expensed to Profit &
Loss account in the previous financial year 2021-22 itself.

14.9 Disclosure requirement as per Accounting
Standards (AS)

In compliance with the guidelines issued by the RBI
regarding disclosure requirements of the various Accounting
Standards, the following information is disclosed:

a. There are no material prior period income and
expenditure included in the Profit & Loss account,
which requires a disclosure as per AS-5.

For the preparation of these financial statements,
the bank has followed the same accounting policies
and generally accepted practices adopted for the
preparation of audited financial statements for the
year ended 31^st March 2025.

b. Revenue Recognition (AS-9)

Bank recognises revenue on accrual basis, as per
details given in item C.1 of the Significant Accounting
Policy of the Bank (Schedule 17).

c. Effects of changes in Foreign Exchange
Rates (AS-11)

Bank has followed the guidelines issued by RBI
and FEDAI, in order to comply with the applicable
requirements under AS-11. Accordingly, foreign
exchange transactions are accounted as per details
given item C.6 of the Significant Accounting Policy of
the Bank (Schedule 17).

d. Employee Benefits (AS -15)

The Bank is following AS-15 (Revised 2005) ‘Employee
Benefits' as under:

a. In respect of Contributory Plan, viz.,

Provident Fund: The Bank pays fixed contribution
at pre-determined rates to a separate trust, which
invests in permitted securities. The obligation of
the Bank is limited to such fixed contribution.

National Pension Scheme: As per industry
settlement dated 27^th April 2010, employees who
have joined on or after 1^st April 2010 are covered
under National Pension System (NPS) regulated
by Provident Fund Regulatory Development
Authority (PFRDA). Employer's contribution to
NPS has been recognised as expenditure in the
profit and loss account.

b. In respect of Defined Benefit Plans, viz.,

Gratuity: The Bank Provides for Gratuity,
a defined benefit plan (the Gratuity Plan)
covering the eligible employees. The Gratuity
Plan provides a lump sum payment to vested
employees on retirement, death, incapacitation
or termination of employment, of an amount
based on respective employee's salary and tenure
of employment.

Pension: The Bank Provides for Monthly pension,
a defined benefit plan (the Pension Plan) covering
the eligible employees. The Pension Plan provides
a monthly pension after the retirement of the
employees till death and to the family after his
death of the pensioner based on the respective
employee's salary and tenure of the employment.

e. Segment Reporting: (AS-17)

1. Business Segments

For the purpose of segment reporting, the reportable segments are identified into Treasury, Corporate/Wholesale
banking, Retail banking and other banking operations, in compliance with RBI guidelines. Brief description of activities
of each segment and revenue attributable thereto is as under:

1. Treasury portfolio comprises of investments in Central and State Government securities, debt instruments of
Banks, FIs, Insurance companies, PSUs and corporates, certificate of deposits, equity shares, mutual funds,
security receipts etc. as well as forward contracts, derivatives and foreign exchange operations on proprietary
account and for customers, including trading in these instruments as well as borrowing and lending operations.

Treasury income is primarily earned through interest on investments, forex income as well as income from
securities trading; expenditure includes interest on funds borrowed and other allocated overheads.

2. Corporate/ Wholesale banking includes all advances to trusts, partnership firms, companies, and statutory bodies,
which are not included under Retail Banking.

Revenue comprises of interest and fees / charges earned from such clients and expenses are those incurred on
interest towards funds utilized and other allocated overheads.

3. Retail banking comprises of lending of funds and other banking services to any legal person including small business
customers, on the basis of the borrower, nature of the product, granularity of the exposure and quantum thereof.

Revenue comprises of interest and fees / charges earned from such clients and expenses are those incurred on
interest towards funds utilized and other allocated overheads.

j. Accounting for Investments in Associates in Consolidated Financial Statements (AS-23)

The Bank has no Associates. Hence reporting under AS-23 is not applicable (not applicable for previous year also).

k. Discontinuing operations (AS-24)

The Bank has not discontinued any of its operations. Hence reporting under AS-24 is not applicable (not applicable for
previous year also).

l. Interim Financial Reporting (AS-25)

Quarterly financial reviews have been carried out as per extant RBI and SEBI guidelines, and reporting / filing of the
prescribed information have been complied with by the Bank.

m. Impairment of Assets (AS - 28)

In the opinion of the Management, there is no impairment of its Fixed Asset to any material extent as at 31^st March 2025
requiring recognition in terms of Accounting Standard 28 (also as at 31^st March 2024).

14.12 The Bank has deposited an amount of Rs. 603.26 crore
(Rs.599.91 crore during the previous year) towards
disputed tax liability. In the opinion of the Bank, no provision
is considered necessary based on favourable decisions by
various courts.

As advised by Tax Consultants of the Bank, there are high
chances of favourable outcome in these cases considering
legal provision, favourable judicial pronouncements and / or
appellate orders on identical issues for past years. Hence, the
Bank does not consider it necessary to make any provision or
include the same under Schedule 12- Contingent Liability,
to the Balance sheet. All pending litigations which may have
an impact on its financial position have been estimated
and provided for in the financial statements. In respect of

other pending litigations, in opinion of the management, no
provision is required as it does not expect to have any impact
on its financial position.

14.13 Disclosure on Investor Education and Protection
Fund (IEPF)

As per the Companies Act 2013 read with IEPF rules,
dividends unclaimed for more than seven years from the
date of their declaration, all shares in respect of which
dividends remain unclaimed for the last seven consecutive
years and the application money received by the Bank for
allotment of shares being due for refund/unclaimed for
seven years, are to be transferred to Investor Education and
Protection Fund.

In compliance with the above provisions, the unclaimed
dividend amount of Rs 0.48 crore (Rs.0.56 crore of
previous year) for the FY 2016-17 and 1,69,766 shares
(85,482 shares for previous year) of face value Rs. 2/-
each, in respect of which the dividends remain unclaimed
from FY 2016-17 for the last seven consecutive years,
were transferred to the Investor Education and Protection
Fund (IEPF) during the year ended March 31, 2025 within
the timelines.

Further the application money due for refund during the
year to the tune of Rs. 0.05 crore with respect to Rights
Issue-2017 remaining unclaimed for a period seven
years was transferred with a short delay of 12 days due
to technical glitch on MCA V3 Portal. The due date for
transfer of amount is January 20, 2025 and the process
for transferring the amount was initiated well before the
due date. With respect to technical glitch in MCA V3 Portal,
we have raised service tickets with MCA twice on January
17 & 22, 2025. The technical glitch was rectified after
continuous follow up with MCA on January 30, 2025 and
subsequently the application money due for refund was
transferred to IEPF on February 01, 2025.

14.14 a. Corporate Social Responsibility (CSR)

The expense required to be spent by the Bank during
the year towards its CSR obligation amount to Rs.
29.72 crore (Previous year Rs.18.39 crores). The Bank
has incurred an expenditure of Rs. 4.15 crore (Previous
year Rs. 8.06 crore) towards its CSR obligations and
has provided Rs. 25.44 crore (Previous year Rs.
10.33 crore) during the year for various future CSR
projects. The Bank has set off the excess CSR expense
brought forward from previous year amounting to Rs.
0.30 crore.

14.14.b. Disclosure under Micro, Small and Medium
Enterprises Development Act, 2006:

Under the Micro, Small and Medium Enterprises
Development Act, 2006 which came into force from 2
October, 2006, certain disclosures are required to be
made relating to Micro, Small and Medium enterprises.
The required disclosure is given below:

a. Claims against the Bank not acknowledged as debts

These represent claims filed against the Bank in
the normal course of business relating to various
legal cases currently in progress. These also include
demands raised by income tax and other statutory
authorities and disputed by the Bank.

b. Liability on account of forward exchange and
derivative contracts

The Bank presently enters into foreign exchange
contracts and interest rate swaps with interbank
counterparties and customers. Forward exchange
contracts are commitments to buy or sell foreign
currency at a future date at the contracted rate.
Interest rate swaps are commitments to exchange
fixed and floating interest rate cash flows in the
same currency based on fixed rates or benchmark
reference. The notional amounts of such foreign
exchange contracts and derivatives provide a basis
for comparison with instruments recognized on the
balance sheet but do not necessarily indicate the
amounts of future cash flows involved or the current
fair value of the instruments and, therefore, do not
indicate the Bank's exposure to credit or price risks.
The fluctuation of market rates and prices cause
fluctuations in the value of these contracts and the
contracted exposure become favourable (assets) or
unfavourable (liabilities).

c. Guarantees given on behalf of constituents

As a part of its banking activities, the Bank issues
guarantees on behalf of its customers to enhance
their credit standing. Guarantees represent irrevocable
assurances that the Bank will make payments in the
event of the customer failing to fulfil its financial or
performance obligations.

d. Acceptances, endorsements and other obligations

These include documentary credit issued by the
Bank on behalf of its customers and bills drawn by
the Bank's customers that are accepted or endorsed
by the Bank.

Includes Capital commitments and amount transferred
to RBI under the Depositor Education and Awareness
Fund (DEAF). (Refer schedule 12 for amounts relating
to contingent liability.)

14.16 Inter-branch transactions

Inter Branch/Office accounts reconciliation has been
completed upto 31^st March 2025 and all the inter branch
entries have been reconciled upto 31^st March 2025.

14.17 The bank has filed a writ petition and obtained an interim
stay from the Hon'ble High Court of Madras in respect of
a show cause notice issued during the year/quarter ended
December 31, 2024 by the Commercial Taxes Department,
Tamil Nadu, proposing to levy Goods and Service Tax (GST)
and penalty thereon aggregating to Rs.253743.26 lakhs for
an earlier year. The management has been legally advised
that the same is not tenable as per provisions of GST Act
and hence does not require any provision or disclosure
as contingent liability in the financial results. The above
matter has also been intimated to the Stock Exchanges
on December 21, 2024, as per the requirements of the
Listing agreement.

14.18 Balancing of books

The books of accounts have been balanced and tallied in
all branches of the Bank as on 31^st March 2025 (also as on
31^st March 2024).

14.19. Audit Trail

As required by Rule 11 (g) of the Companies (Audit and
Auditors) Rules 2014, which is effective from April 1,
2023, the Company is using an accounting software for
maintaining its books of account which has a feature of
recording audit trail (edit log) facility and the same has
operated throughout the year for all relevant transactions
recorded in the software. In respect of Digital Gold Loan,
PeopleSoft HRMS and Bullion Precious Metal the audit
trail (edit log) was enabled at database level/ captured in
DAM tool from June 13, 2023, July 9,2023 and February
01, 2024 respectively. In respect of LOS software, the
management is of the opinion that maintaining edit/ audit
logs at the service provider's end is beyond the control of the
bank and as confirmed by the service provider no request

to access the data base of LOS has been requested by the
Bank throughout the year. Accordingly, this has no impact
on the financials and related internal controls of the bank.

15. Disclosure under Rule 11(e) of the Companies (Audit &
Auditors) Rules, 2014

The Bank, as part of its normal business, grants loans
and advances to Non-Banking Finance Company/ies,
real estate promoters / developers, makes investment,
provides guarantees (including against margin / guarantees
received from third parties / banks) and accepts deposits
and borrowings from its customers, other entities and
persons. Also, the Bank, as part of its normal business,
avails refinance from financial institutions and other entities
wherein the proceeds are applied to a category of customers
with specific profile parameters. These transactions are part
of Bank's authorised normal business, which is conducted in
adherence to extant regulatory requirements.

Other than the transactions described above -

1. No funds have been advanced or loaned or invested (either
from borrowed funds or share premium or any other sources
or kind of funds) by the Bank to or in any other person(s)
or entity(ies), including foreign entities (“Intermediaries")
with the understanding, whether recorded in writing or
otherwise, that the Intermediary shall lend to or invest in
other persons or entities identified by or on behalf of the
Bank (“Ultimate Beneficiaries") or provide any guarantee,
security or like on behalf of the Ultimate Beneficiaries.

2. The Bank has not received any funds from any person(s)
or entity(ies) (“Funding Party") with the understanding,
whether recorded in writing or otherwise, that the Bank
shall, whether, directly or indirectly, lend to or invest in other
persons or entities identified by or on behalf of the Funding
Party (“Ultimate Beneficiaries") or provide any guarantee,
security or the like on behalf of the Ultimate Beneficiaries.

16. Figures of the previous year have been regrouped/
rearranged/reclassified wherever necessary.

DR.MEENA CHINNASAMY B. RAMESH BABU J. NATARAJAN SANKAR RAMSHANKAR R M.SRINIVASA RAO

HEMCHANDRA GANESAN BALABHADRAPATRUNI

Non-executive Audit Committee Managing Director Executive Executive Director Chief Financial Company Secretary

Independent (Part-time) Chairman & C E O Director Officer

Chairperson

DIN: 05337181 DIN: 07615862 DIN: 06900325 DIN: 02710776 DIN: 08846754

As per our report of even date

For Kalyaniwalla & Mistry LLP For Varma & Varma

Chartered Accountants Chartered Accountants

FRN: 104607W/W100166 FRN:004532S

Anil A. Kulkarni Vivek Krishna Govind

Place : Karur Partner Partner

Date : May 19, 2025 M. No. 047576 M. No. 208259