4.15 Provisions, Contingent Liabilities
and Contingent Assets

A provision is recognised when the Bank has a present

obligation as a result of 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. Provisions are not
discounted to their present value and are determined based
on the best estimate required to settle the obligation at the
reporting date. These estimates are reviewed at each reporting
date and adjusted to reflect the current best estimates.

A contingent liability is a possible obligation that arises
from past events whose existence will be confirmed
by the occurrence or non-occurrence of one or more
uncertain future events beyond the control of the Bank

or a present obligation that is not 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
Bank does not recognise a contingent liability but discloses
its existence in the financial statements.

Contingent Assets are not recognised in the

financial statements.

4.16 Leases

Leases where the lessor effectively retains substantially all
the risks and benefits of ownership of the leased items are
classified as operating leases. Operating lease payments
are recognised as an expense in the profit and loss account
on a straight line basis over the lease term.

4.17 Cash and Cash equivalent

Cash and cash equivalents include cash in hand, balances
with RBI, balances with other banks and money at call and
short notice.

4.18 Share Issue Expenses

Share issue expenses are adjusted against the Securities
Premium Account in terms of Section 52(2) of the

Companies Act, 2013.

4.19 Reward points

Reward points on cards are accounted for based on value
per point after taking into account the probability of
redemption of such reward points

4.20 Derivative Transactions

Derivative transactions comprises of forward contracts,
currency swaps and interest rate swaps. The Bank
undertakes derivative transactions for trading and hedging
balance sheet assets and liabilities.

The Bank recognises all derivative contracts (other than those
designated as hedges) at fair value, on the date on which the
derivative contracts are entered into and are remeasured at
fair value as at the Balance Sheet or reporting dates.

Derivative transactions such as Foreign exchange forward
contracts, Forex swap and Interest rate swaps outstanding
as at the Balance Sheet date and held for trading, are fair
valued at present value basis. The resulting profit or loss
on valuation is recognised in the Profit and Loss Account.

Derivatives which are not intended for trading such as
Foreign exchange forward contracts and Forex swaps and
which are outstanding at balance sheet date are fair valued
at the FEDAI closing SPOT rate. The premium or discount
arising at the inception of such Forward contracts and
Forex swaps is amortised as expense or income over the
life of the contract.

Derivatives are classified as assets when the fair value is
positive (positive marked to market value) or as liabilities
when the fair value is negative (negative marked
to market value).

Pursuant to the RBI guidelines, any receivable under a
derivative contract with a counterparty which remains
overdue for more than 90 days, mark-to-market gains on
any other derivative contract with the same counterparty,
is reversed through Profit and Loss account.

Note: The Bank has assessed its obligations arising in the normal course of business, including pending litigations,
proceedings pending with tax authorities and other contracts including derivative and long term contracts. In
accordance with the provisions of AS 29 on 'Provisions, Contingent Liabilities and Contingent Assets', the Bank

recognises a provision for material foreseeable losses when it has a present obligation as a result of a past event and it
is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate
can be made. In cases where the available information indicates that the loss on the contingency is reasonably possible
or the amount of loss cannot be reasonably estimated, a disclosure to this effect is made as contingent liabilities in
the financial statements. The Bank does not expect the outcome of these proceedings to have a materially adverse
effect on its financial results.

18.2 Capital

During the year ended March 31, 2025, the Bank has allotted 1,657 Equity Shares (Previous Year: 133,268) of ?10/-
each in respect of stock option exercised aggregating to ?0.0298 crore (Previous Year: ?2.40 crore). Accordingly,

share capital increased by T0.0017 crore (Previous Year: T0.13 crore) and share premium increased by T0.03 crore
(Previous Year: ?2.27 crore) respectively.

18.3 Proposed dividend

The Board of Directors at its meeting held on April 30, 2025, has proposed a dividend of ?1.50 per share

(Previous Year: T1.50 per share) for the year ended March 31, 2025 subject to approval of the members at the ensuing
Annual General Meeting. In terms of revised Accounting Standard (AS) 4 'Contingencies and Events occurring

after the Balance sheet date as notified by the Ministry of Corporate Affairs through amendments to Companies
(Accounting Standards) Rules, 2021, the Bank has not accounted for proposed dividend aggregating to T241.65 crore
(Previous Year: T241.65 crore) as a liability for the year ended March 31, 2025. Effect of the proposed dividend has
been reckoned in determining capital funds in the computation of capital adequacy ratios as at March 31, 2025 and
March 31, 2024.

#An amount of ?0.0298 crore raised pursuant to exercise of employee stock options during the year ended March

31, 2025 (year ended March 31, 2024: T2.40 crore)

*The Bank has not raised (March 31, 2025: Nil) perpetual debt capital instruments qualifying for Additional Tier-1
capital and subordinated debt qualifying for Tier-2 capital (March 31, 2024: Nil).

In accordance with the RBI guidelines, banks are required to make consolidated Pillar 3 and Net Stable Funding
Ratio (NSFR) disclosures under the Basel III Framework. These disclosures are available on the Bank's website
at the following link:httDs://www.bandhanbank.com/regulatorv-disclosures. The disclosures have not been
subjected to audit by the statutory auditors of the Bank.

"Basis the clarification received, the Bank w.e.f quarter ended June 30, 2024 has assigned risk weight of 125%
to its Emerging Entrepreneurs Business (EEB) Group Loans and Small Business & Agri Loans (SBAL) portfolio as

against 75% risk weight assigned earlier. Accordingly capital adequacy as on March 31, 2024 been recomputed
at 14.69% as against 18.28% disclosed earlier. Subsequently as per RBI Circular on "Review of Risk Weights on

Microfinance Loans" dated February 25, 2025; the Bank has assigned risk weight of 75% to its EEB Group Loans
and SBAL portfolio where such advances meets the criteria to be classified as regulatory retail portfolio (RRP)
for regulatory capital purposes.

B) Draw Down From Reserve

There has been no draw down from reserves during the year ended March 31, 2025 and March 31, 2024.

C) Sale and transfers of Securities to / from HTM Category

During the year ended March 31, 2025 and the Previous Year ended March 31, 2024 the Bank has not sold and
transferred securities to or from HTM category exceeding 5% of the book value of investment held in HTM category
at the beginning of the year. The 5% threshold referred to above does not include onetime transfer of securities
to/from HTM category with the approval of Board of Directors permitted to be undertaken by banks as per extant
RBI guidelines, sale of securities under pre-announced Open Market Operation (OMO) auction to the RBI and sale
of securities or transfer to AFS / HFT consequent to the reduction of ceiling on SLR securities under HTM.

F) Divergence in asset classification and provisioning

In terms of the RBI guidelines banks are required to disclose the divergence in asset classification and provisioning
consequent to RBI's annual supervisory process i n their notes to accounts to the financial statements, wherever
the additional provisioning assessed / additional gross NPAs identified by RBI exceeds the threshold specified by
RBI. The threshold for provisioning is 5 per cent (Previous year 5 per cent) of the reported profit before provisions
and contingencies for the reference period and that for additional gross NPAs is 5 per cent (Previous year 5 per
cent) of the published incremental Gross NPAs for the reference period.

Based on the above, there was no divergence in asset classification and provisioning for NPAs in current year and
no reportable divergence for the Previous Year.

G) Transfer of Loan Exposures

Details of loans transferred excluding through Inter- Bank Participation Certificate (IBPC) & acquired
during the year ended March 31, 2025 under the RBI Master Direction on Transfer of Loan Exposures dated

September 24, 2021 are given below:

i) Details of Financial Assets sold to Securitisation / Reconstruction company for Reconstruction

There was no stressed loans transferred and Investment made in Security Receipts during the year ended
March 31, 2025 to ARCs for technically written off and NPA accounts. Details for the Previous Years is
given below:

ii) Details of Non Performing Financial Assets Purchased

The Bank did not purchase any Non Performing Financial Assets during the year ended March 31,2025 and
March 31,2024.

iii) Details of Special Mention Account (SMA) or Stressed Financial Assets Purchased

The Bank did not purchase any Special Mention Account (SMA) or Stressed Financial Assets during the year
ended March 31,2025 and March 31,2024.

Note:

Exposure is higher of limits sanctioned or the amounts outstanding as at the year end.

#As per the Master Circular on Exposure norms dates July 01,2014 banks direct investment in shares, convertible bonds, convertible
debentures, units of equity oriented mutual funds and exposures to venture capital funds have been shown at their respective cost price.

C) Details of Single Borrower Limit (SGL) / Group Borrower Limit (GBL) exceeded by the Bank

During the year ended March 31, 2025 and March 31, 2024, the Bank's credit exposure to single borrower and

group borrowers was within the prudential exposure limits prescribed by RBI.

D) Unsecured Advances against Intangible Collaterals

During the year ended March 31, 2025 and March 31, 2024, there are no unsecured advances for which intangible
securities such as charge over the rights, licenses, authority etc. has been taken as collateral by the Bank.

E) Risk Category wise Country Exposure

As per the extant RBI guidelines, the country exposure of the Bank is categorised into seven risk categories
namely insignificant, low, moderately low, moderate, moderately high, high, very high on the basis of Export
Credit Guarantee Corporation of I ndia Limited (ECGC) guidelines. The net funded exposure of the Bank in respect

of foreign exchange transactions with each country is within 1% of the total assets of the Bank and hence no
provision is required to be made in respect of country risk as per the RBI guidelines.

F) Unhedged Foreign Currency Exposure

During the year ended March 31, 2025, the Bank made provision of ?0.16 crore (Previous Year: ?4.20
crore) towards un-hedged foreign currency exposure. As on March 31, 2025, the Bank held cumulative
provision towards un-hedged foreign currency exposure of ?11.56 crore (Previous Year: ?11.40 crore).
As on March'25, the Bank is required to provide additional Capital of ?90.17 crore (Previous Year: ?124.88 crore)
towards borrowers having un-hedged foreign currency exposures in accordance with RBI guidelines.

G) Intra Group Exposures

The Bank did not have any intra group exposure during the year ended March 31,2025 and March 31,2024.

H) Factoring Exposures

The Bank did not have any factoring exposure during the year ended March 31,2025 and March 31,2024.

D) The Code on Social Security, 2020

The Code on Social Security 2020 ('the Code') relating to employee benefits, during the employment and
postemployment, has received Presidential assent on September 28, 2020. The Code has been published in

the Gazette of India. Further, the Ministry of Labour and Employment has released draft rules for the Code on
November 13, 2020. The effective date from which the changes are applicable is yet to be notified and rules for
quantifying the financial impact are not yet issued. The Bank will assess the impact of the Code and will give
appropriate impact in the financial statements in the period in which, the Code becomes effective and the related
rules to determine the financial impact are published.

18.11 Segment Reporting

A) Segment Identification

Pursuant to the guidelines issued by RBI on AS 17 - Segment Reporting - Enhancement of Disclosures dated
April 18, 2007, the following business segments have been reported:

i) Treasury :

Treasury operations include investments in sovereign securities and trading operations. The Treasury segment
also includes the central funding unit.

ii) Retail banking :

Includes lending to individuals/small businesses through the branch network and other delivery channels subject

to the orientation, nature of product, granularity of the exposure and low value of individual exposure thereof.
It also includes liability products, card services, internet banking, mobile banking, ATM services and NRI services.

All deposits sourced by branches are classified in retail category.

iii) Corporate/Wholesale Banking:

Includes corporate relationships not included under Retail Banking.

iv) Other Banking Business :

Include para banking activities like third party product distribution and other banking transaction not covered
under any of the above three segments.

Income, expenses, assets and liabilities are either specifically identified with individual segments or are allocated
to segments on a systematic basis.

The liabilities of the Bank are first used by the units generating the same. Any excess liabilities of the units are
pooled to central funding unit (Treasury). Treasury then lends these funds to other units at appropriate rates.

The transfer pricing mechanism of the Bank is periodically reviewed. The segment results are determined based
on the transfer pricing mechanism prevailing for the respective reporting periods.

Revenues of the Treasury segment primarily consist of fees and gains or losses from trading operations and
i nterest income on the investment portfolio. The pri ncipal expenses of the segment consist of interest expense

on funds borrowed from external sources and other internal segments, premises expenses, personnel costs,
other direct overheads and allocated expenses.

Revenues of the Corporate/Wholesale Banking segment consist of interest and fees earned on loans given to
customers falling under this segment and fees arising from these. Revenues of the Retail Banking segment

are derived from interest earned on loans classified under this segment, fees for banking services and ATM
interchange fees. Expenses of the Corporate/Wholesale Banking and Retail Banking segments primarily comprise
interest expense on deposits and funds borrowed from other internal segments, infrastructure and premises
expenses for operating the branch network and other delivery channels, personnel costs, other direct overheads

and allocated expenses.

Segment income includes earnings from external customers and from funds transferred to the other segments.
Segment result includes revenue as reduced by interest expense and operating expenses and provisions, if any,
for that segment. Segment-wise income and expenses include certain allocations. I nter segment interest income

and interest expense represent the transfer price received from and paid as per the transfer pricing mechanism
presently followed by the Bank.

Notes:

The business of the Bank does not extend outside India and it does not have any assets outside India or earnings emanating from
outside India. Accordingly, the Bank has reported operations in the domestic segment only.

'Treasury segment liabilities includes share capital and reserve & surplus

The RBI vide its circular dated April 07, 2022 on establishment of Digital Banking Units (DBUs), has prescribed reporting of Digital
Banking Segment as a sub-segment of Retail Banking Segment. The Bank does not have any DBUs, hence Digital Banking Segment
disclosures is not applicable.

Previous year figures are shown in"()".

Segment information is provided as per the MIS available for internal reporting purposes, which include certain estimates/assumptions.
The methodology adopted in compiling and reporting the above information has been relied upon by the auditors.

18.12 Related Party disclosure

The Bank has transactions with its related parties comprising of associates/other related entities, key management
personnel and the relatives of key management personnel.

As per AS 18 "Related Party Disclosures", notified under section 133 of the Companies Act 2013, read together with

paragraph 7 of the Companies (Accounts) Rules 2014, the Bank's related parties for the year ended March 31, 2025
are disclosed below:

18.15 Liability for Operating Leases

The Banking Units premises are generally rented on cancellable terms for less than twelve months with no escalation
clause and renewable at the option of the Company. The Head office and the Bank Branches office premises are
obtained on non- cancellable lease terms. Lease payment during the year are charged in the statement of profit & loss.

The amount of rent expenses included in the Profit & Loss account towards operating leases aggregate to 7364.80
crore (Previous year ended March 31,2024: 7298.43 crore).

Particulars of future minimum lease payment in respect of Head office & Bank branches are as mentioned below :

18.16 Small and Micro Industries

Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from
October 02, 2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises.

There have been no reported cases of delays in payments to micro and small enterprises or of interest payments due
to delays in such payments during the years ended March 31, 2025 and March 31, 2024. The above is based on the
information available with the Bank which has been relied upon by the auditors.

18.17 Description of contingent liabilities

i) Claims against the Bank not acknowledged as debts:

An amount of 7280.77 crore (Previous year: 799.73 crore) is outstanding as at March 31, 2025, as claims against
the Bank not acknowledged as Debts including 7162.90 crore (Previous year: 740.69 crore) being in the nature

of a contingent liability on account of proceedings pending with Tax authorities. The Bank is a party to various
taxation matters in respect of which appeals are pending and various legal proceedings in the normal course of
business. The Bank has reviewed and classified these items as possible obligations based on legal opi nion/judicial
precedents/assessment and does not expect the outcome of these proceedings to have a materially adverse
effect on the Bank's Financial Statements.

ii) Liability on account of Forward Exchange contracts

The Bank has entered into foreign exchange contracts with interbank Counterparties. Forward exchange contracts
are commitments to buy or sell foreign currency at a future date at the contracted rate. The forward exchange
contracts that are not intended for trading and are entered into to establish the amount of reporting currency
required or available at the settlement date of a transaction are effectively valued at closing spot rate. The premium
or discount arising on inception of such forward exchange contracts is amortised over the life of the contract as
interest Expense / income. The amount in contingent liability represents notional outstanding principal amount.

iii) Guarantees given on behalf of constituents, Acceptances, Endorsements and Others

An amount of 72,008.19 crore (Previous year: 71,716.15 crore) is outstanding as at March 31, 2025. As part of its

commercial banking activity, the Bank issues documentary credit and guarantees on behalf of its customers.
Guarantees generally represent irrevocable assurances that the Bank will make payments in the event of the
customer failing to fulfil its financial or performance obligations.

iv) Currency swaps & interest rate swaps

This item represents the notional principal amount of various derivative instruments which the Bank undertakes

in its normal course of business. The Bank undertakes these contracts to manage its own interest rate and foreign
exchange positions.

18.19 Disclosures on Remuneration
Qualitative Disclosures

A) Information relating to the composition and
mandate of the Remuneration Committee.

The Bank's Nomination and Remuneration
Committee (NRC) oversees the framing, review
and implementation of the Compensation Policy
on behalf of the Board of Directors. The NRC
reviews the policy at least once a year to ensure
that the reward design is aligned to industry best
practices and is consistent with effective risk
management and long term business interests of
the Bank. The NRC works in close coordination
with the Risk Management Committee of the
Bank, to achieve the effective alignment between
remuneration and risks.

As on March 31,2025 the NRC comprises of the

following directors.

Mr. Suhail Chander - Chairman

Dr. A S Ramasastri
Mr. Philip Mathew

The NRC functions with the following
main objectives:

i) To identify persons who are qualified to

become directors in accordance with the
criteria laid down, recommend to the Board

their appointment, re-appointment or
removal and to carry out evaluation of every
Director's performance;

ii) To formulate the criteria for determining
qualifications, positive attributes and
independence of a Director and decide their
'fit & proper' status;

iii) To oversee the framing, review and
implementation of compensation policy of
the Bank and recommend to the Board the
overall remuneration philosophy and policy
including the level and structure of fixed
pay, variable pay, perquisites, bonus pool,
stock based remuneration to employees;

iv) To oversee the framing, implementation and
review of the Remuneration of the Whole
Time Director (WTDs) /Managing Director
(MD)/ Chief Executive Officer (CEOs) as
per the RBI Guidelines and Companies Act,
2013. The Committee shall recommend
to the Board the remuneration package
for the Managing Director & CEO and the
other Whole Time Directors - including the
level of fixed pay, variable pay, stock based
Remuneration and perquisites;

v) To review the HR strategy and policy
i ncluding the conduct and ethics of the Bank

and review any fundamental changes in the
organisation structure which could have
wide ranging and high risk implications;

vi) To review and recommend to the Board, the

succession policy at the level of Managing
Director & CEO, other WTDs, senior
management one level below the Board and
key roles.

B) Information relating to the design and structure of
remuneration processes and the key Features and
objectives of remuneration policy

The Compensation Policy reflects the Bank's

objectives for good corporate governance as
well as sustained and long-term value creation
for stakeholders. The aims of the Bank's
remuneration framework are to:

i) Attract, motivate and retain people with
requisite skill, experience and ability to

deliver the Bank's strategy;

ii) Create an alignment and balance
between the rewards and risk exposure of
shareholders and interests of employees;

iii) Link rewards to creation of long term
sustainable shareholder value consistent
with strategic goals and appropriate risk
management; and

iv) Encourage behaviour consistent with the
Bank's values and principles.

v) Support appropriate conduct and
meritocratic culture through differentiated

performance rewards

To achieve the above objectives, the philosophy
adopted by the Bank is as follows:

i) Market referenced: offer employees

competitive salary, achieved through
benchmarking with peer groups.

ii) Making fixed salary the main
remuneration component.

iii) Ensure that jobs of similar internal value are
grouped and pegged within a range guided
by market benchmarked jobs.

iv) Risk Adjusted: By integrating non-financial

considerations relating to conduct in
performance assessments, employing
proper mix of compensation elements and
aligning compensation incentives to risk
outcomes and factoring the time horizon
of risks

v) Focus on 'Total rewards', all aspects of
compensation, rewards and well defined
benefits, including rewarding work
environment and personal development.

vi) The focus will be to ensure that the Bank
is competitive in its overall salary offer to
its employees without being excessively
expensive for the Bank.

The compensation structure for the MD & CEO
also mirrors the Bank's philosophy of aligning
with the principles of sound compensation
practices to ensure:

i) Effective and independent governance
of compensation.

ii) Effective alignment of compensation with

prudent risk taking.

iii) Effective supervisory oversight and
engagement by stakeholders.

Design & Structure of Remuneration process

The total compensation is a prudent mix of
fixed remuneration and performance-based
variable remuneration

The key remuneration elements are:

1) Fixed Pay

2) Discretionary Performance-based
Variable Remuneration

The Bank ensures that the fixed pay element is
reasonable, taking into account the market rates
and trends. The fixed pay is reviewed annually
using market intelligence provided by a leading
global performance/reward consulting and
benchmarking firm for financial services industry
to ensure that the Bank remains competitive in

marketplace and that the Bank is able to attract
and retain best talent. The level of fixed pay
shall be sufficient enough in order to discourage

inappropriate risk-taking.

Performance-based variable remuneration may
comprise cash bonus, stock linked instruments,

and is awarded by ensuring:

i) an appropriate balance between fixed and
performance-based components;

ii) that the fixed component represents a
higher proportion of the total remuneration;

iii) that the performance-based component
reflects the risk underlying the
achieved result;

iv) that a substantial part of the performance-
based component may be deferred;

v) that no hedging of deferred shares
takes place;

Presently, the bank utilises only two form of

performance based variable remuneration,
viz.,cash bonus, ESOP, as referred in note no 18.32

is linked to continuous service with the Bank.

The compensation policy of the Bank is reviewed

by the NRC and approved by the Board of
Directors. The NRC oversees the implementation

of the policy and reviews the fixed pay increases,
the organisational performance threshold for
bonus to be paid, cash bonus and deferred
variable remuneration.

C) Description of the ways in which current and
future risks are taken into account in the
remuneration process

The MD & CEO, employees in the grades of

SVPs and above and employees engaged in
the functions of Risk Control and Compliance
are included in the policy of risk alignment
of compensation.

The alignment of compensation to prudent risk
taking is ensured through the following:

i) Structure of remuneration is such that
a significant part of performance based
variable remuneration is deferred.

ii) Performance hurdles includes financial
and non-financial parameters, ensuring
compensation is aligned to both.

iii) Fixed Salary is reasonable and sufficient,
thereby discouraging inappropriate
risk taking.

iv) Annual Bonus Plan is managed with an
independent governance framework.

v) Variable remuneration awards are
conditional, discretionary and contingent
upon a sustainable and risk-adjusted
performance. They are therefore
capable of forfeiture or reduction at the
Bank's discretion.

vi) For employees included in the policy of risk

alignment of compensation, NRC has the
discretion to apply malus and clawback -
ex-post risk adjustment, allowing the Bank

to adjust previously awarded remuneration
to take account of subsequent performance
and potential risk outcomes and thus
enabling to recoup variable pay in the event
of a negative contribution.

Deferral of Variable Pay

To ensure that risk measures are not focused
only on the achievement of short term goals,
variable payout is deferred, if it exceeds 50% of
the fixed pay.

The Bank's compensation policy aims to ensure
that both ex-ante estimates and ex-post

outcomes of risk affect payoffs; so that one
or the other, can better address the various
situations or risks.

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

The Bank has a performance measurement
framework in place to assess the achievements
of the organisation as a whole, its business lines
and organisational units as well as individual
employees. In order to maximise the incentive to
deliver adequate performance and to take into
account any risks of the business activities, the
Bank seeks to closely link remuneration outcomes
with performance and risk outcomes. Accordingly,
the Bank's performance management and
compensation philosophy is designed in a manner
to help achieve the Bank's business objectives.

The performance management system in the
Bank is aligned to the balanced scorecard
approach. The goal setting process helps

individuals to have clarity on their roles and align
their profiles in line with the broad organisation
strategy. Both quantitative / financial and
qualitative / non-financial performance measures
are considered. The qualitative or non-financial
measures include customer service, adherence
to risk and compliance standards, behaviour and
values such as accountability, team work, etc.,
which builds a culture conducive to sustainable
business performance.

The performance appraisal process starts with
the employee conducting self-appraisal followed
by the assessment of the supervisor via appraisal
feedback and discussion.

Individual fixed pay increases and variable
remuneration are based on the final performance
ratings. In addition, the fixed pay increase is
also influenced by an employee's position in

the salary range and relevant market salaries.
Performance related variable compensation
is linked to corporate performance, business
performance and individual performance. The
performance ratings based bonus distribution
matrix is reviewed by the NRC.

Employees engaged in all control functions
including Compliance and Risk do not carry
business profit targets in their goal sheets
and hence are compensated based on their
achievement of key result areas as per the
balance score card. The aim is to ensure that
the remuneration system and outcomes
relating to such control functions maintain the
independence of the function and Bank's robust
risk management framework. Accordingly, for the
control functions, the variable pay is conservative
to promote prudent risk management behaviour
and the 'pay mix' is skewed towards fixed pay.

In the case of performance evaluation of the
Managing Director and Chief Executive Officer of

the Bank, factors such as financial performance
measures, cost management initiatives,
other strategic initiatives, prudential risk and
compliance management, recognition and awards
to the Bank, etc., is taken into account, which may
vary from year to year depending on the Bank's
strategic priorities. Based on the inputs from
NRC, the Board reviews the performance and

recommends the rate of bonus to be paid, and
the increments for the MD & CEO, for regulatory

approval in terms of Section 35B of the Banking
Regulation Act, 1949 (B.R. Act, 1949).

E) Bank's policy on deferral and vesting of variable
remuneration and bank's policy and criteria for
adjusting deferred remuneration before vesting
and after vesting.

In terms of RBI guidelines, the Compensation Policy

specifically addresses the following categories
of employees:

Category I : Managing Director &Chief Executive
Officer / Whole Time Directors / Material Risk Takers

Category II : Risk Control and Compliance Staff

Category III: Other Categories of Staff (employees

receiving share-linked variable pay)

The following principles are applied for grant
and deferral of performance-based variable
remuneration for the above categories
of employees.

Category I

i) Variable pay shall not exceed 3 (three)
times the annual fixed pay for MD & CEO
and WTDs.

ii) Variable pay shall not exceed 2.5 (two and
half) times the annual fixed pay for MRTs.

iii) At minimum, variable pay shall be equal to
the annual fixed pay.

iv) If an executive is barred by regulation/ statute
to receive grant of share-linked i nstruments,

the variable pay shall be capped at 1.5 (one
and half) times the annual fixed pay, but will
be more than 50% of the annual fixed pay

v) I f variable pay is up to 2 (two) times the
annual fixed pay, then at least 50% of the
variable pay shall be in the form of share-
linked instruments (i.e. non-cash).

vi) If variable pay is between 2 (two) to 3 (three)
times the annual fixed pay, then at least two—
thirds of the variable pay shall be in the form
of share-linked instruments (i.e. non-cash).

vii) At least 60% of total variable pay shall be
deferred including at least 50% of cash-
based variable pay. However, in cases where
the cash component of variable pay is under
?25 lakh, the Bank at its discretion, may not
necessarily have deferral requirements.

viii) Deferral of cash based variable pay shall
be for 3 years on pro-rata yearly basis
(annual vesting).

ix) Deferral of share-linked variable pay shall be
for 4 years on pro-rata yearly basis (annual
vesting).

x) In case the employee exits the organisation
before the vesting of all three parts, the
remaining deferred cash based variable pay
will not be paid

Category II

i) The mix of Fixed Pay and Variable
remuneration will be weighed towards
Fixed Pay.

ii) Variable pay shall not exceed the annual
fixed pay.

iii) At least 40% of the variable pay shall be in
the form of share-linked instruments (i.e.

non-cash).

iv) Deferral of share-linked variable pay shall
be for 4 years on pro-rata yearly basis
(annual vesting).

v) The compensation will be commensurate to
their key role in the Bank.

Category III

i) Variable Remuneration will be as per the
NRC approved pay-out levels in terms of
performance, grade and role matrix.

ii) Variable pay shall not exceed the annual
fixed pay.

iii) At least 50% of the variable pay shall be in
the form of share-linked instruments (i.e.

non-cash).

iv) Deferral of share-linked variable pay shall
be for 4 years on pro-rata yearly basis
(annual vesting).

For the three categories of employees mentioned
hereinabove, the awarded performance based
variable pay shall be subject to in-year adjustment,
malus or clawback as decided by the NRC, in the
event of negative contribution of the Bank and /
or relevant line of business and in material cases
of detrimental conduct of individual or business.

Negative contribution of the Bank and / or
relevant line of business is defined as:

Conduct related:

i) If an employee engages in certain
detrimental conduct, including mis-selling
practices, manipulation of interest rate
benchmarks, illegal activity, breach of a
fiduciary duty, etc. that causes material
financial or reputational harm to the Bank.

ii) If the award was based on a material
misrepresentation by the employee.

iii) If there is reasonable evidence of employee

malfeasance and breach of integrity inviting
disciplinary actions.

iv) Violation of Anti Hedging and Anti Pledging
Policy or Code of Conduct for Prevention of

Insider Trading.

Risk related and others:

i) If the awarded performance-based variable
pay was granted on a deliberately erroneous
foundation or an incorrect decision made
due to gross negligence not considered as
errors of judgement.

ii) If the employee who is reasonably expected

to be aware of the failure, misconduct or
weakness in approach that contributed
to the failure, improperly or with gross
negligence failed to identify, assess, report
or escalate in a timely manner.

iii) If the performance, decisions or actions
taken leads to the Bank or the relevant
business unit suffering a significant material
downturn in its financial performance.

iv) If the RBI assessed divergence in the Bank's
provisioning for Non-Performing Assets

(NPAs) or asset classification exceeds the
prescribed threshold for public disclosure,
the bank shall not pay the unvested

portion of the variable compensation for
the assessment year under malus clause.
Further, in such a situation, there shall
not be any increase in variable pay for

the assessment year. In case the bank's

post assessment Gross NPAs are less than
2.0%, these restrictions will apply only
if the criteria for public disclosure are
triggered either on account of divergence
in provisioning or both provisioning and
asset classification.

v) In the event of a material restatement,
correction or amendment of the Bank's
financial results for the relevant period.

18.26 Green Deposits raised by the bank

There has been no green deposits during the year ended March 31, 2025 and March 31, 2024.

18.27 Disclosure on Liquidity Coverage Ratio

(A) Qualitative disclosure

The Bank has adopted the Basel III framework on liquidity standards as prescribed by RBI and has put in place
requisite systems and processes to enable periodical computation and reporting of the Liquidity Coverage

Ratio (LCR). The Risk department computes the LCR and reports the same to the Asset Liability Management
Committee (ALCO) every month for review.

The Bank 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 Government securities in excess of
minimum SLR requirement viz. Treasury Bills, Central and State Government securities and excess of minimum

cash reserve ratio (CRR).

The Board of Directors has the overall responsibility for management of liquidity risk. The Board at overall level
decides the strategy, policies and procedures of the bank to manage liquidity risk in accordance with the liquidity
risk tolerance/limits. The Board has constituted Risk Management Committee, which reports to the Board, and
consist of Managing Director and certain other Board members. The Committee is responsible for evaluating
the overall risks faced by the bank including liquidity risk.

18.29 Disclosure on Derivatives

(i) Derivatives

Derivatives are financial instruments whose characteristics are derived from underlying parameters like interest
rates or foreign exchange rates. These include forward contracts, swaps, etc. These transactions may expose
the Bank to risks primarily in the nature of market and credit risk. The following sections outline the nature and

terms of the derivative transactions undertaken by the Bank.

Interest Rate swaps undertaken by the Bank involve the exchange of interest obligations with a counterparty
for a specified period without exchanging the underlying principal i.e., notional amount. The Bank has
undertaken derivative transactions in Rupee Interest Rate Swaps (OIS) only on the Astroid platform of CCIL for
proprietary trading.

Foreign Exchange forward contracts and Foreign Exchange Swaps are agreements to buy /sell/exchange fixed
amounts of currency against another currency at an agreed exchange rate on Spot / forward date. These
instruments are carried at fair value.

The Bank has adopted the following mechanism for managing risks arising out of the derivative transactions.

The derivative transactions are governed by the Investment Policy and Market Risk Management Policy of the
Bank as well as by the extant RBI guidelines. The risk limits are set up and actual exposures are monitored vis-a-vis
the limits allocated. These limits are set up taking into account market volatility, risk appetite, business strategy
and management experience. Risk limits are in place for risk parameters viz. Value at Risk (VaR), Maximum tenor,
deal size and Price Value of a Basis Point (PVBP). Actual positions are monitored against these limits on a daily
basis and breaches if any are reported promptly.

The Treasury has entered into derivative transactions with interbank counterparties. The Bank has an independent
back-office and mid-office as per regulatory guidelines. The MTM position of the derivative portfolio is monitored

on a daily basis. The risk profile of the outstanding portfolio is reviewed by the Board at regular intervals.

Derivative transactions such as foreign exchange forward contracts, foreign exchange swap and Interest rate
swaps outstanding as at the Balance Sheet date and held for trading, are fair valued. The resulting profit or loss
on valuation is recognised in the Profit and Loss Account. Derivatives which are not intended for trading such

as, Foreign Exchange forward contracts and Forex swaps and which are outstanding at balance sheet date, are
fair valued at the FEDAI closing rate. The premium or discount arising at the inception of such Forward contracts
and Foreign Exchange swaps are amortised as expense or income over the life of the contract. Derivatives are
classified as assets when the fair value is positive (positive marked to market value) or as liabilities when the fair
value is negative (negative marked to market value). Bank has placed margin/collateral to Central Counterparty
(CCIL) for various asset classes, wherever applicable.

18.32 Employee Stock Option Scheme (ESOS)

On July 26, 2017 the board of directors approved the Bandhan Bank Employee Stock Option Plan Series 1 for issue
of stock options to eligible employees and directors of the Bank.

The Shareholders of the Bank at the meeting held on November 23, 2017 has approved the Employee Stock Option

Plan Series 1 and the grant of Employee Stock Option to the employees of the Bank. The said approval accords the
Board of Directors of the Bank or any Committee including the Nomination and Remuneration Committee, which
the Board has constituted, to create, offer, and grant at any time to permanent employees of the Bank, including
any Director of the Bank, whether whole-time or otherwise but excluding Promoter(s), Independent Directors and
Directors holding directly or indirectly more than 10% of the outstanding equity shares, employee stock options from
time to time in one or more tranches.

This plan was framed in accordance with the SEBI (Employee Stock Option Scheme & Employee Stock Purchase

Scheme) Guidelines, 1999 as amended from time to time and as applicable at the time of the grant. The accounting
for the stock options has been in accordance with the SEBI (Share Based Employee Benefits) Regulations, 2014 to

the extent applicable.

Employee Stock Option Plan Series 1 provides for the issuance of options at the recommendation of the Nomination
and Remuneration Committee of the Board ('NRC') at the closing price on the working day immediately preceding

the date when options are granted. The closing price of the Bank's equity share on an Indian stock exchange with the
highest trading volume as of the working day preceding the date of grant set forth by the NRC at the time of grant.
The period in which the options may be exercised cannot exceed five years from date of expiry of vesting period.
However, if the participant's employment terminates due to retirement (including pursuant to any early/ voluntary
retirement scheme), the whole of the unvested options shall vest on the first vesting date relating to the said grant,
immediately following the date of superannuation. During the years ended March 31, 2025 and March 31, 2024, few
modifications were made to the terms and conditions of ESOPs as approved by the NRC.

18.34 Disclosure under Rule 11(e) of the
Companies (Audit and Auditors) Rules, 2014

As part of the normal banking business, the Bank grants
loans and advances to its borrowers with permission
to lend/invest or provide guarantee/security in other
entities identified by such borrowers or on the basis
of the basis of security/guarantee provided by the co¬
borrower. Similarly, the Bank may accept funds from its
customers, who may instruct the Bank to lend/invest/
provide guarantee or security or the like against such
deposit in other entities identified by such customers.
These transactions are part of Bank's normal banking
business, which is conducted after exercising proper
due diligence including adherence to "Know Your
Customer" guidelines.

Other than the nature of transactions described above:

• No funds have been advanced or loaned or invested
by the Bank to or in any other person(s) or entity(ies)
("Intermediaries") with the understanding that the
Intermediary shall lend or invest in party identified by
or on behalf of the Bank (Ultimate Beneficiaries).

• The Bank has not received any fund from any party(s)
(Funding Party) with the understanding that the Bank
shall whether, directly or indirectly lend or invest in
other persons or entities identified by or on behalf
of the Bank ("Ultimate Beneficiaries") or provide
any guarantee, security or the like on behalf of the
Ultimate Beneficiaries.

18.35 Disclosure of Items that exceeds one
percent under respective categories:

Other expenditure includes IT Operating expenses
amounting to ?277.20 crore (Previous Year: ?305.13
crore) exceeding 1% of the total income of the Bank.

18.36 Other Assets includes Investment in RIDF (Rural
Infrastructure Development Fund) amounting to
?4,499.88 crore (Previous Year ended March 31, 2024

?6,244.61 crore)

18.37 Remuneration by way of sitting fees paid to the
Non-Executive Directors for attending meeting of
the Board and its committees during the year ended
March 31, 2025 amounting to ?4.25 crore (Previous

Year: ?3.38 crore).

18.38 Accounting Software Used for
maintenance of Books of Accounts

As per the requirements of rule 3(1) of the Companies
(Accounts) Rules 2014 the Bank uses only such

accounting software(s) for maintaining its books of
account that have 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 within such
accounting software. This feature of recording audit
trail has operated throughout the year and was not
disabled, tampered with during the year and audit trail
has also been preserved in accordance with statutory
record retention requirements, except

(a) the audit trail configured at database level
logs record only modified values in respect of
two accounting software(s). Further, for one
of these applications, the changes to capture
pre-modified values was implemented from
March 25, 2025.

(b) the audit trail to log any direct data changes
was enabled at database level in case of one
accounting software, from May 25, 2024.

The Bank has preserved the audit trail as per the
statutory requirements for record retention except
in the case of two sunset software discontinued
during the previous financial year and one accounting
software wherein audit trail was enabled at database
level from February 18, 2024.

18.39 Provision for credit card and debit card
reward points

Reward points on cards are accounted for based on
value per point after taking into account the probability
of redemption of such reward points. The Bank made
provision of ?5.85 crore in FY 24-25 (Previous Year: Nil)
in respect of reward points on debit & credit cards.

18.44 Implementation of IFRS converged Indian
Accounting Standards (Ind AS)

The RBI issued a circular in February, 2016 requiring

banks to implement Indian Accounting Standards
('Ind AS') and prepare Ind AS financial statements
with effect from April 01, 2018. In line with the RBI

guidelines on Ind AS implementation, the Bank has
formed a Steering Committee comprising members
from the concerned functional areas. As advised by
the RBI, the Bank has also submitted Proforma Ind AS
financial statements every half year to the RBI.

Further, RBI vide its communication dated
August 08, 2021, had advised the bank to submit

Proforma Ind AS financial statements.

Further on January 16, 2023 RBI released a discussion
paper on the Expected Loss (EL) based approach for
loan loss provisioning by banks to formulate a principle
based guidelines supplemented by regulatory
backstops wherever necessary.

However, the RBI in its press release issued on March
22, 2019 has deferred the applicability of Ind AS till

further notice for Scheduled Commercial Banks.

The Bank has made a diagnostic study to identify the
gaps, process and system changes required to implement
Ind AS and is in the process of implementing necessary
changes in its IT system and other processes. The Bank
is regularly holding workshops and training for its staff.

18.45 The Bank has applied its significant accounting
policies in the preparation of these financial results
consistent with those followed in the annual financial
statements for the year ended March 31, 2024 and
any circular / direction issued by RBI is implemented
prospectively when it becomes applicable. Basis
the RBI circulars/ directions, changes has been
made during the year which are disclosed in Note

18.46 below.

18.46 A) Policies on classification and valuation

of investments:

With effect from April 01, 2024 the Bank adopted the

revised framework of classification and valuation of
investments issued by RBI vide Master Direction No.
RBI/DOR/2023-24/104 DOR.MRG.36/21.04.141/2023-
24 on Classification, Valuation and Operation of
Investment Portfolio of Commercial Banks (Directions),
2023 dated September 12, 2023. The disclosure of
transition impact in terms of Para 43 of the RBI Circular
is disclosed in Note 18.5(A)(ii) of Notes to Accounts &
Accounting Policy (refer 4.2)

B) Accounting for Employees Stock
Option Expense:

Pursuant to RBI Guidelines on Compensation of Whole
Time Directors/ Chief Executive Officers/ Material

Risk Takers and Control Function Staff, the Bank was
recognising the cost of new stock options granted on
or after April 01, 2021 to the Whole Time Directors,

Chief Executive Officers, Material Risk Takers and
Control Function Staff at fair value on the date of
grant using the Black-scholes model. During the year,
pursuant to RBI advisory, the Bank has changed its
accounting policy in respect of share based payment
to all employees from intrinsic value method to
fair value method for stock options granted after
March 31, 2021 and consequently the bank has
recognised fair value of options estimated using
Black-Scholes model, as compensation expense over
the vesting period as discosed in Accounting Policy
(refer 4.10)

18.47 With respect to the claim under Credit Guarantee
Fund for Micro Units (CGFMU), the Bank has received
from NCGTC on January 21, 2025 the claim payout
of ?289.59 crore. Accordingly, 'Other Income' for
the year ended March 31, 2025 includes an amount
aggregating to T537.61 crore (claim receivable
of ?289.59 crore and reversal of ?248.02 crore
pertaining to recoveries related to first tranche of
accounts held under 'Other Liabilities'). In relation
to the ECLGS scheme, the Bank has received a
claim of ?123.25 crore from NCGTC during the year
ended March 31, 2025. This is in addition to the
claim received of T161.13 crore in earlier years. The
balance claim would be received in line with the
Scheme Guidelines. The said amount has reduced
the provisions debited to Profit & Loss Account
under "Provisions & Contingencies" and also been
considered for computing Net NPA's as per the
consistent accounting policy followed by the Bank.

18.48 Previous year figures have been regrouped/
reclassified, wherever necessary, to conform to
current year classification.

As per our report of even date For and on behalf of Board of Directors

For Bandhan Bank Limited

For Singhi & Co For V. Sankar Aiyar & Co. Partha Pratim Sengupta Anup Kumar Sinha Vijay Nautamlal Bhatt

Chartered Accountants Chartered Accountants Managing Director & CEO Non-Executive ACB Chairman &

(Independent) Chairman Independent Director

Firm Registration Number : Firm Registration Number : Kolkata Kolkata Kolkata

302049E 109208W DIN: 08273324 DIN: 08249893 DIN: 00751001

Ravi Kapoor Karthik Srinivasan Ratan Kumar Kesh Rajinder Kumar Babbar Rajeev Mantri

Partner Partner Executive Director & COO Executive Director & CBO Chief Financial Officer

Membership Number : 040404 Membership Number : 514998 Kolkata Kolkata Kolkata

Place : Kolkata Place : Kolkata DIN: 10082714 DIN: 10540386

Date : April 30, 2025 Date : April 30, 2025

Indranil Banerjee

Company Secretary
Kolkata