The Board of Directors (‘Board’) of IDFC FIRST Bank Limited (‘IDFC FIRST Bank’ or the ‘Bank’) is pleased to present the Annual Report together with the Audited Financial Statements, for the Financial Year (‘FY’) ended March 31, 2026.
Since the merger of Capital First and IDFC Bank in December 2018, the Bank has successfully transformed itself from an infrastructure-focused institution into a technology-driven Universal Bank, anchored in a customer-first culture, technology-led innovation, and strong ethical values at its core. Through calibrated product diversification, robust loan growth with steady asset quality, and the development of a granular and sticky retail deposit franchise, the Bank has established strong foundations for sustainable growth. The Bank has continued to strengthen its balance sheet, expand its customer franchise, and enhance its operating capabilities while maintaining stable asset quality and high standards of governance. The key achievements of the Bank during FY 2025-26 are highlighted below:
• Loans and Advances (including credit substitutes and net of IBPC) increased to ' 2,90,278 crore as on March 31, 2026, by 20% YoY from ' 2,41,926 crore as on March 31, 2025.
• The Bank has increased its corporate (non-infra) loan book by 31% to ' 52,492 crore as on March 31, 2026.
• Infrastructure financing reduced by 14% on a YoY basis and now constitutes less than 1% of total loans and advances as on March 31, 2026.
• Exposure to top 20 single borrowers was stable at 5% as of March 31, 2026.
• Similarly, the Bank's exposure to top 5 industries remained stable at 20% as on March 31, 2026, which has further strengthened the balance sheet.
• The Bank continues to be a customer-focused institution, with a strong emphasis on service quality, digital capabilities, and governance standards.
• I n the recent period, the Bank has further reinforced
its control environment and customer-centric processes, with a renewed focus on strengthening trust and resilience. These efforts, alongside its digital strengths, continue to support customer acquisition and contribute to the steady growth of its deposit franchise.
• The total deposits including certificate of deposits increased by 17% YoY to reach ' 2,94,475 crore as of March 31, 2026, from ' 2,52,065 crore as of March 31, 2025.
• Customer Deposits of the Bank increased to ' 2,84,453 crore as on March 31, 2026, as compared to ' 2,42,543 crore as on March 31, 2025, YoY increase of 17%.
• The total CASA Deposits increased to ' 1,46,650 crore as on March 31, 2026, from ' 1,18,237 crore as on March 31, 2025, YoY increase of 24%.
Average CASA Ratio for FY 2025-26 stood at 48.8% as compared to 46.1% for FY 2024-25.
• Retail Deposits are now 79% of the overall customer deposits as of March 31, 2026, in line with the strategic priority to retailize the deposits. During the year Retail Deposits grew from ' 1,91,268 crore to ' 2,23,899 crore, YoY increase of 17%.
• The Bank has repaid all pre-merger legacy borrowings alongside reducing the dependency on certificate of deposits and building a high-quality retail deposits franchise.
During FY 2025-26, IDFC FIRST Bank further strengthened its earnings profile, demonstrating resilience and continued progress in its transformation journey. The Bank maintained a strong core earnings trajectory, driven by healthy growth in operating income and core operating profit. This performance was supported by expansion of the loan portfolio, sustained growth in the CASA franchise, improving operating leverage, and the continued maturation of newer businesses, including credit cards and wealth management.
During the Q4 FY 2025-26, the Bank identified and reported a fraud incident. The entire financial impact
of the incident, amounting to ' 646 crore (' 483 crore post-tax), has been fully recognised in the financial statements for the year. The Bank undertook a comprehensive review of its processes and control environment and has initiated measures to further strengthen its internal controls, risk management framework, and governance practices, incorporating learnings from the incident, with a view to enhancing operational resilience and mitigating future risks.
• Healthy Net Interest Income (‘NII') Growth: The NII increased by 10.0% to ' 21,215 crore in FY 2025-26 from ' 19,292 crore in FY 2024-25. The moderation in NII was attributable to decline in high-yielding microfinance portfolio and reduction in repo rate by 125 bps since February 2025.
• Net Interest Margin (‘NIM'): The NIM (NIM = Net Interest Income as a % of interest earning assets gross of IBPC and sell-down) for the full FY 202526 was at 5.75% as compared to 6.09% in FY 2024-25, reflecting changes in portfolio mix and yield dynamics during the year
• Steady growth in Total Income (NII Fees and Other Income Trading Income): The total income for the full year increased by 11.6% to ' 29,363 crore in FY 2025-26 from ' 26,314 crore in FY 2024-25, reflecting continued business momentum across core segments.
• Core Operating Profit: For the full year, the Operating Profit de-grew by 1.0% to ' 6,997 crore in FY 2025-26 from ' 7,069 crore in FY 2024-25.
• Provision: For the full year, total Provisions stood at ' 5,653 crore in FY 2025-26 as compared to ' 5,515 crore in FY 2024-25.
• Profit After Tax: The Net Profit for the FY 2025-26 was ' 1,636 crore as compared to ' 1,525 crore in FY 2024-25, reflecting the combined effect of operating performance, provisioning discipline, and the full recognition of the fraud-related impact during the year.
4. Asset Quality of the Bank:
• Bank's Gross NPA ratio as of March 31, 2026, stood at 1.61% as compared to 1.87% as of March 31, 2025.
• Bank's Net NPA ratio as of March 31, 2026, stood at 0.48% as compared to 0.53% as of March 31, 2025.
• The Gross NPA % in the Retail, Agri & MSME Finance Book stood at 1.47% as of March 31, 2026, as compared to 1.70% as of March 31, 2025.
• Net NPA ratio of this segment stood at 0.56% as of March 31, 2026, as compared to 0.62% as of March 31, 2025.
• The microfinance (MFI) sector is experiencing a strong resurgence following past asset-quality challenges. As a result, the GNPA ratio improved materially to 4.72% as of March 31, 2026, compared to 7.71% as of March 31, 2025.
5. Strong Capital Adequacy:
Capital Adequacy Ratio stood at 15.60% with CET-1 Ratio at 13.73% as of March 31, 2026.
6. Strong Franchise:
As on March 31, 2026, the Bank has built a national footprint through the operation of 1,147 branches (out of which 777 are Urban Branches and 370 are Rural Branches, reflecting an overall addition of 145 branches during FY 2025-26) across India, 289 asset outlets, 1,050 ATMs and 694 Corporate Business Correspondent (‘BC') branches.
Points of Presence comparison chart:
Particulars
FY 2025-26
FY 2024-25
Urban Bank Branches
777
657
Rural Bank Branches
370
345
ATMs (including Recyclers)
1,050
1,041
Asset Service Branches
289
274
Rural BC Branches (IDFC FIRST Bharat Limited)
637
Other BC Branches
57
68
The Bank offers a wide gamut of products to cater to the needs of customers from all segments which can be viewed on our website at www.idfcfirst.bank.in.
(' in crore)
Deposits
2,94,475
2,52,065
Borrowings
36,621
38,975
Investments
85,966
80,716
Advances
2,80,391
2,33,113
Total Assets / Liabilities
3,99,780
3,43,819
Total Income
48,422
43,523
Profit Before Tax
1,833
1,900
Net Profit
1,636
1,525
Balance in Profit & Loss Account brought forward from previous year
1,708
(688)
Amount available for Appropriations
3,344
2,111
Appropriations
Transfer to Statutory Reserve
410
385
Transfer to Capital Reserve
201
88
Transfer to Special Reserve
26
30
Transfer from Investment Fluctuation Reserve
(95)
(100)
Proposed dividend (includes tax on dividend)
296
Balance in profit and loss account carried forward
2,507
Capital adequacy ratio (Basel III)
15.60%
15.48%
Gross NPA %
1.61%
1.87%
Net NPA %
0.48%
0.53%
The Board at its meeting held on April 25, 2026, recommended a dividend of ' 0.25 per equity share of face value of ' 10 each (equivalent to 2.50% of the face value)
for the financial year ended March 31, 2026, subject to the approval of the shareholders at the ensuing Annual General Meeting (‘AGM’) of the Bank.
Pursuant to Regulation 43A of the Securities and Exchange Board of India (‘SEBI’) (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (‘SEBI Listing Regulations’), the Bank has adopted a Dividend Distribution Policy that seeks to maintain an appropriate balance between rewarding shareholders through distribution of profits and retaining adequate capital to support the Bank's long-term growth, business requirements, and financial strength.
This Policy is available on the Bank's website: www.idfcfirst.bank.in under ‘The Bank' ^ ‘Investors' ^ ‘Corporate Governance' ^ ‘Codes and Policies'.
As at March 31, 2026, the Bank remained well capitalised, with a Capital Adequacy Ratio (‘CAR’) of 15.60% under the Basel III framework, comfortably above the regulatory requirement of 11.50%. The Bank's Tier I CAR stood at 13.73%, reflecting the strength of its core capital base and its continued focus on maintaining a prudent capital structure.
The Bank's capital position provides resilience to navigate evolving business conditions and external macroeconomic developments, while supporting calibrated growth across its key business segments. The successful capital raise during the year underscores the confidence of investors in the Bank's long-term strategy and growth prospects.
India continues to offer a significant long-term opportunity, driven by structural growth in consumption, increasing financial inclusion, and the ongoing formalisation and financialisation of the economy, particularly across the retail and MSME segments. The Bank remains focused on building a diversified and granular franchise through a balanced approach to asset growth, liability franchise expansion, and prudent risk management. The combined strengths of the institution, together with ongoing investments in underwriting, monitoring, governance and control frameworks, position the Bank
to capture these opportunities in a measured and sustainable manner.
The Bank remains committed to safeguarding the interests of its depositors, customers and shareholders through a disciplined focus on balance sheet strength, asset quality, risk management and governance. The Bank will continue to strengthen these foundations with the objective of delivering sustainable growth, long-term value creation and financial resilience.
The Bank has one wholly owned subsidiary, IDFC FIRST Bharat Limited (‘IDFC FIRST Bharat’). IDFC FIRST Bharat acts as a Business Correspondent for the Bank and plays a significant role in the distribution of the Bank's products and services, thereby supporting and accelerating the Bank's financial inclusion initiatives.
During FY 2025-26, IDFC FIRST Bharat sourced loans aggregating to ' 8,216 crore. For the year under review, IDFC FIRST Bharat reported a loss after tax of ' 43.49 crore as per IND-AS financial statement.
In accordance with the provisions of the Companies Act, 2013 (‘Companies Act’) and the SEBI Listing Regulations, the Bank has adopted a Policy for Determining Material Subsidiaries, which is available on the Bank's website at www.idfcfirst.bank.in under ‘The Bank' ^ ‘Investors' ^ ‘Corporate Governance' ^ ‘Codes and Policies'.
As on March 31, 2026, the Bank had two associate companies, viz. Millennium City Expressways Private Limited and Jetpur Somnath Tollways Private Limited, in which the Bank held 29.31% and 26.00% equity stake, respectively.
Pursuant to the provisions of the Companies Act, a statement containing the salient features of the financial statements of the Bank's subsidiary and associate companies in Form AOC-1 forms part of this Annual Report and is annexed herewith as Annexure 1.
In accordance with the provisions of Section 129(3) of the Companies Act read with Rule 8 of the Companies (Accounts) Rules, 2014, as amended, the Bank has prepared consolidated financial statements, which forms part of this Annual Report.
In accordance with the fourth proviso to Section 136(1) of the Companies Act and Regulation 46(2)(s) of the SEBI Listing Regulations, the Annual Report of the Bank, containing standalone financial statements and the consolidated financial statements and all other documents required to be attached thereto are available on the Bank's website at www.idfcfirst.bank.in under ‘The Bank' ^ ‘Investors' ^ ‘View All Annual Reports'.
Further, in accordance with the fifth proviso to the said section, the audited financial statements of the Bank's wholly owned subsidiary, IDFC FIRST Bharat, have been hosted on the Bank's website at www.idfcfirst.bank. in under ‘The Bank' ^ ‘Investors' ^ ‘View All Annual Reports'.
The details of the credit ratings assigned to the Bank and any revisions thereto during FY 2025-26, in respect of the various debt and financial instruments outstanding as on March 31, 2026, are provided in the Corporate Governance Report, which forms an integral part of this Annual Report.
As on April 01, 2025, the Authorised Share Capital of the Bank stood at ' 14,000 crore, comprising of 1296.20 crore equity shares of face value of ' 10 each and 10.38 crore preference shares of face value of ' 100 each.
With a view to providing greater flexibility in future capital raising, the Board, at its meeting held on April 17, 2025, approved the reclassification of the Bank's authorised share capital to ' 14,000 crore, comprising of 1270 crore equity
shares of face value of ' 10 each and 130 crore preference shares of face value of ' 10 each.
The aforesaid reclassification was approved by the Reserve Bank of India (‘RBI’) on May 15, 2025, and by the shareholders of the Bank through Postal Ballot on May 17, 2025.
The authorized share capital of the Bank remained same as on March 31, 2026.
Paid-up Share Capital
During FY 2025-26, the Bank increased its paid-up equity share capital through the issuance and allotment of equity shares, as detailed below:
1] Convertible Cumulative Preference Shares allotment and its conversion into equity shares
During FY 2025-26, the Bank undertook a Preferential Issue of 124,98,80,388 Compulsorily Convertible Cumulative Preference Shares (‘CCPS') of face value of ' 10 each, following the receipt of requisite approvals from the shareholders, the RBI and other applicable regulatory authorities.
During the year, the CCPS were converted into an equivalent number of equity shares in accordance with the terms of issue and applicable laws and regulations.
The Bank complied with all applicable legal and regulatory requirements in relation to the issuance and conversion of the CCPS. The proceeds raised through the issue were fully utilised for the purposes for which they were raised.
Details of the Preferential Issue and related disclosures are available on the websites of BSE Limited (‘BSE') and the National Stock Exchange of India Limited (‘NSE’), as well as on the Bank's website at www.idfcfirst.bank.in under ‘The Bank' ^ ‘Investors' ^ ‘Corporate Governance' ^ ‘Announcements'.
2] Allotment of equity shares pursuant to exercise of stock options
IDFC FIRST Bank Employee Stock Option Scheme (‘ESOP Scheme') is framed with an object of encouraging higher participation on the part of employees in the Bank's growth and success. An effective stock option scheme enables retention of
talent and aligning employee interest to that of the shareholders.
During FY 2025-26, the Bank issued and allotted 2,97,11,876 equity shares to eligible employees pursuant to the exercise of stock options granted under the ESOP Scheme of the Bank.
Consequent to the aforesaid allotment of equity shares during the year, the issued, subscribed and paid-up equity share capital of the Bank stood at ' 86,01,69,92,480 as on March 31, 2026, comprising 8,60,16,99,248 equity shares.
Subsequent to the FY ended March 31, 2026, and up to the date of this Report, the Bank has allotted 1,52,04,525 equity shares to eligible employees pursuant to the exercise of stock options granted. Consequent thereto, the issued, subscribed and paid-up equity share capital of the Bank stands at ' 86,16,90,37,730 comprising 8,61,69,03,773 equity shares of face value, as on the date of this Report.
There were no material modifications to the ESOP Scheme during FY 2025-26. The ESOP Scheme continues to be in compliance with the provisions of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, as amended (‘SEBI (SBEB & SE) Regulations').
The details and disclosures with respect to ESOP Scheme as required under SEBI (SBEB & SE) Regulations and circulars issued thereunder, have been uploaded on the Bank's website at: www.idfcfirst. bank.in under ‘The Bank'^ ‘Investors' ^ ‘View All Annual Reports'. Further, disclosure as per the ‘Guidance Note on Accounting for Employee Share-based Payments' issued by the Institute of Chartered Accountants of India, are appearing under the Note 18.24 to the Standalone Financial Statements of IDFC FIRST Bank, forming part of this Annual Report.
Our Bank has not issued any equity shares with differential voting rights.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
All appointments and re-appointments of Directors are made in accordance with the applicable provisions of the
Companies Act and the rules made thereunder, the SEBI Listing Regulations, the Banking Regulation Act, 1949 (‘Banking Regulation') and the guidelines, directions and circulars issued by the RBI from time to time. The Bank has in place a framework governing Board diversity, fit and proper criteria, and succession planning for the appointment of Directors to its Board.
The Nomination and Remuneration Committee (‘NRC’) undertakes the requisite due diligence prior to the appointment of Directors and ensures compliance with the ‘Fit and Proper' criteria prescribed by the RBI.
The Bank's Policy on Board Diversity is available on its website at: www.idfcfirst.bank.in under ‘The Bank' ^ ‘Investors' ^ ‘Corporate Governance' ^ ‘Codes and Policies'.
The changes in the composition of the Board during FY 2025-26 are set out below:
Appointment/ Re-appointment of Directors
Mr. Narendra Ostawal
Mr. Narendra Ostawal (DIN: 06530414) was appointed as a Non-Executive Non-Independent Director, liable to retire by rotation, on the Board of the Bank as the nominee of Currant Sea Investments B.V. (‘Investor Nominee’ / ‘Investor Director’), with effect from September 30, 2025, pursuant to the approval granted by the RBI vide its letter dated September 17, 2025. The appointment was subsequently approved by the shareholders of the Bank through Postal Ballot on December 20, 2025.
Mr. S. Ganesh Kumar
Mr. S. Ganesh Kumar (DIN: 07635860) was re-appointed as an Independent Director of the Bank for a second term of three (3) consecutive years, with effect from April 30, 2026 up to April 29, 2029 (both days inclusive). The re-appointment was approved by the shareholders of the Bank through Postal Ballot on April 17, 2026.
Re-appointment of Director retiring by rotation
Mr. Pradeep Natarajan
In accordance with the provisions of Section 152(6) of the Companies Act, Mr. Pradeep Natarajan (DIN: 10499651), Executive Director, retires by rotation at the ensuing Annual General Meeting (‘AGM') and, being eligible, has offered
himself for re-appointment. The resolution seeking his re-appointment forms part of the Notice convening the ensuing AGM.
Brief profiles of all the Directors of the Bank are available on the Bank's website at www.idfcfirst.bank.in under ‘The Bank' ^ ‘About Us' ^ ‘Board of Directors'.
None of the Directors of the Bank is disqualified from being appointed or continuing as a Director under the provisions of Section 164 of the Companies Act.
Further, the Bank has received Secretarial Audit Report from M/s. Makarand M. Joshi & Co., Practicing Company Secretaries, Bank's Secretarial Auditor, certifying that during the financial year under review, the Board of the Bank is duly constituted with proper balance of Executive Director, Non-Executive Directors and Independent Directors.
Additionally, pursuant to the SEBI Listing Regulations, the Bank has obtained a certificate from M/s. Bhandari & Associates, Practicing Company Secretaries, confirming that none of the Directors on the Board of the Bank as on March 31, 2026, have been debarred or disqualified from being appointed or continuing as Directors of Companies by the Securities and Exchange Board of India, Ministry of Corporate Affairs, or any such other statutory authority.
As on the date of this Report, the following officials are designated as the Key Managerial Personnel (‘KMP’) of the Bank pursuant to Section 203(1) of the Companies Act:
• Mr. V. Vaidyanathan, Managing Director & Chief Executive Officer;
• Mr. Pradeep Natarajan, Executive Director;
• Mr. Sudhanshu Jain, Chief Financial Officer & Head - Corporate Centre; and
• Mr. Satish Gaikwad, General Counsel and Company Secretary.
Declaration by Independent Directors
The Bank has received declarations from all its Independent Directors, both at the time of their appointment and at the first meeting of the Board held during FY 2025-26, confirming that they meet the criteria of independence prescribed under Section 149(6) of the Companies Act, read with Rule 5 of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended, and Regulation 16(1)(b) of the SEBI Listing Regulations. The Independent
Directors have also confirmed their commitment to abide by the Code for Independent Directors set out in Schedule IV to the Companies Act.
The Board is satisfied that all the Independent Directors continue to fulfil the conditions of independence as prescribed under the applicable laws and that there has been no change in the circumstances affecting their status as Independent Directors. In the opinion of the Board, the Independent Directors possess the requisite integrity, expertise, experience, proficiency and competencies required to effectively discharge their duties and responsibilities, in accordance with the provisions of the Companies Act, the SEBI Listing Regulations and the Bank's policies.
Further, all the Independent Directors of the Bank have complied with the requirements of Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended, relating to registration and other compliances applicable to persons eligible and willing to be appointed as Independent Directors. They have also confirmed their enrolment in the databank of Independent Directors maintained by the Indian Institute of Corporate Affairs, as required under the applicable regulatory framework.
At the time of appointment, all Directors undergo a structured induction and familiarisation programme designed to provide them with a comprehensive understanding of their roles, responsibilities, rights and duties as members of the Board. The programme also provides an overview of the Bank's business model, organisational structure, operations and governance framework.
To facilitate a deeper understanding of the Bank's governance structure and internal practices, Directors are provided with a comprehensive set of documents and policies. These include, inter-alia, the Board Committees Chart, the Code of Conduct for Directors, the Code for Prevention of Insider Trading, the Policy on Related Party Transactions, and details pertaining to the remuneration of Non-Executive Directors by way of sitting fees and remuneration. Furthermore, Directors are familiarized with Bank's website to access historical financial results, annual reports, investor presentations, the
Bank's Memorandum and Articles of Association, and other pertinent regulatory documents.
In addition, comprehensive presentations are made at meetings of the Board and its Committees on a periodic basis. These presentations cover a wide range of topics including the Bank's financial and operational performance, strategic initiatives, macroeconomic and industry developments, regulatory updates, risk management practices, and the evolving fiduciary responsibilities of Directors.
Throughout the year, the Board and its Committees were regularly apprised of significant developments relating to the Bank's operations and external environment through detailed presentations, discussions and management updates. These initiatives facilitate continuous familiarisation and enable the Directors to remain well informed, thereby supporting effective oversight and informed decisionmaking in the discharge of their fiduciary duties.
During FY 2025-26, the Board met thirteen (13) times, i.e. on April 17, 2025, April 26, 2025, July 3, 2025, July 26, 2025, September 30, 2025, October 8, 2025, October 18, 2025, October 27, 2025, January 2, 2026, January 31, 2026, February 21, 2026, March 4, 2026, and March 25, 2026. The details of the meetings held during the year, including the attendance of Directors thereat, are provided in the Corporate Governance Report, which forms an integral part of this Annual Report.
In compliance with various regulatory requirements, several Board-level Committees have been constituted to delegate matters that require greater and more focused attention.
Details on the constitution, brief terms of reference, meetings held and attendance of all the Board-level Committees are given in the Corporate Governance Report forming part of this Annual Report.
The Board members carries out an annual evaluation of the Board, Board Committees, and Individual Directors, including Chairperson, pursuant to the provisions of the Companies Act and the SEBI Listing Regulations.
The evaluation brings out the cohesiveness of the Board, a Boardroom culture of trust and co-operation, and Boardroom discussions which are open, transparent and encourage diverse viewpoints. Other areas of strength includes effective discharge of Board's roles and responsibilities.
The detailed process indicating the manner in which the annual evaluation has been carried out pursuant to the SEBI Listing Regulations and Companies Act, is provided in the Corporate Governance Report, which forms part of this Annual Report.
The Bank has formulated and adopted the Remuneration Policies for the (i) Non-Executive Part-Time Chairman and Non-Executive Directors; (ii) Whole Time/ Executive Directors, Material Risk Takers, Key Managerial Personnel, Senior Management Personnel and Control Function and all other employees; (‘Remuneration Policies’), in terms of the relevant provisions of the Companies Act and rules made thereunder, SEBI Listing Regulations, Banking Regulation and the RBI guidelines issued in this regard, from time to time.
During the year, the Remuneration Policies were reviewed and approved by the NRC and the Board.
The Remuneration Policies have been hosted on the website of the Bank at: www.idfcfirst.bank.in under ‘The Bank' ^ ‘Investors' ^ ‘Corporate Governance ‘ ^ ‘Codes and Policies' and are available on the following weblink:
Remuneration Policy - (For Non-Executive Part-Time Chairman and Non-Executive Directors)
Remuneration Policy - (For the Whole Time/ Executive Directors, Material Risk Takers, Key Managerial Personnel, Senior Management Personnel and Control Function and all other employees)
All Non-Executive Directors are paid sitting fees for attending meetings of the Board and its Committees, as determined by the Board from time to time in accordance with the applicable regulatory provisions. In addition, expenses incurred by them for attending such meetings in person are reimbursed at actuals.
Pursuant to the applicable RBI guidelines and the approval of the shareholders, a fixed remuneration of ' 28 lakh per annum was paid to each Non-Executive Director during FY 2025-26 on a proportionate basis. The Chairperson of the Bank was paid a fixed remuneration of ' 30 lakh per annum, pursuant to the approval granted by the RBI.
Mr. Narendra Ostawal, Non-Executive Non-Independent Director, opted not to receive any fixed remuneration and sitting fees from the Bank, during his tenure with the Bank.
The Bank has formulated and adopted a Corporate Social Responsibility (‘CSR’) Policy, which sets out the guiding principles and focus areas for undertaking CSR initiatives in accordance with Schedule VII of the Companies Act. The CSR Policy is available on the Bank's website at: www.idfcfirst.bank.in under ‘The Bank' ^ ‘Investors' ^ ‘Corporate Governance ^ ‘ Codes and Policies'.
The CSR initiatives of the Bank in FY 2025-26 were implemented directly or through various implementation agencies/ partners. In order to achieve impact and scale, the CSR activities undertaken during the year mainly focused on areas: [a] Livelihoods, [b] Health and Sanitation, [c] Education, [d] Environment and [e] Employee Volunteering Programme.
The Annual Report on CSR activities, including details of the CSR expenditure incurred and unspent, if any, during FY 2025-26, along with a summary of the impact assessment of CSR projects undertaken in accordance with the applicable provisions of the Companies Act, and the Companies (Corporate Social Responsibility Policy) Rules, 2014, is annexed to this Report as ANNEXURE 2.
The Bank identified an incident of unauthorised and fraudulent activity at its Sector 32 Branch, Chandigarh, involving certain employees and potentially other individuals/entities. The matter was disclosed to the Stock Exchanges on February 22, 2026, and KPMG Assurance and Consulting Services LLP was appointed to conduct an independent forensic review.
The forensic review concluded that the incident arose from collusion involving certain employees/ex-employees of the Branch, certain employees of customers and some third parties. The matter was confined to a specific set of accounts operated through the Chandigarh Branch and has not been observed at any other branch of the Bank.
The Bank's control framework at the Branch included maker-checker controls, customer confirmations, account statements and transaction alerts, and the Core Banking System records remained accurate. However, the forensic review found that certain employees/ex-employees of the Branch, certain employees of customers and some third parties acted in collusion to circumvent these controls and carry out the unauthorised transactions.
The net principal amount of ~ R 646 crore identified in the forensic review is in line with the Bank's earlier disclosures. The Bank promptly paid R 646 crore along with applicable interest to the concerned departments, and the amount was recognised in the books during Q4 FY2025-26.
The Bank has since implemented additional preventive and technology-led controls, including enhanced centralised oversight, strengthened customer communication processes and other measures to improve monitoring and mitigate collusion risk.
The Bank is a victim of this fraud and continues to work closely with the relevant investigative authorities on recovery and corrective actions.
In accordance with regulatory requirements, the Joint Statutory Auditors and Secretarial Auditors have made the requisite filing in Form ADT-4. Apart from this matter, no other instances of fraud were identified by the auditors during FY2025-26.
Details of provisioning relating to fraud accounts are provided in Note 18.05(h) to the Standalone Financial Statements as at March 31, 2026.
The Bank has established a strong and deeply embedded risk culture that is integral to its strategy, governance, and day-to-day operations. The Bank seeks to enhance longterm resilience by maintaining an appropriate balance between risk and return while safeguarding its capital,
liquidity, earnings stability, and reputation. This is supported by a comprehensive risk governance framework anchored in the Board-approved Risk Appetite Statement, which clearly articulates the nature and level of risks the Bank is willing to assume in pursuit of its strategic objectives.
The Board of Directors retains responsibility for oversight of the Bank's risk management framework and is supported by the Risk Management Committee (‘RMC') and various management-level committees. These governance forums provide robust oversight across all key risk categories, including credit risk, market risk, liquidity risk, operational risk, information security risk, and any other emerging risks. The RMC regularly reviews the Bank's risk profile, risk appetite adherence, stress testing outcomes, and capital adequacy assessments, while also overseeing critical frameworks such as the Internal Capital Adequacy Assessment Process (‘ICAAP') to ensure preparedness against adverse but plausible scenarios.
The Bank has implemented a comprehensive Board-approved Risk Management Policy that establishes the principles, governance structures, and accountability mechanisms required for effective risk management. The policy facilitates the systematic identification, measurement, monitoring, mitigation, reporting, and escalation of risks across the organisation, ensuring alignment with the Bank's risk appetite and strategic goals. The framework incorporates well-defined risk ownership, clear reporting and escalation protocols.
The Bank's risk management architecture is further strengthened by robust stress testing and scenario analysis programmes that assess the potential impact of extreme yet plausible events on capital, liquidity, earnings, and asset quality. These exercises enable the Bank to proactively identify vulnerabilities, evaluate resilience under stressed conditions, and implement appropriate mitigation strategies. The Bank continuously enhances its risk assessment methodologies, controls, and monitoring mechanisms by incorporating insights from operating experience and emerging risk events, enabling it to remain responsive to evolving economic, regulatory, technological, and geopolitical developments. Supported by a diversified and granular funding profile, the Bank has built and maintained prudent capital and
liquidity buffers that provide resilience across economic cycles and periods of market stress. The funding strategy is designed to minimise concentration risks while ensuring stable access to funding sources, thereby supporting business continuity even under adverse operating conditions.
The Bank's capital position provides confidence to regulators, credit rating agencies, depositors, investors, and other stakeholders. Capital management is guided by a forward-looking and risk-sensitive approach that seeks to maintain an optimal balance between growth, profitability, and resilience. The Bank continuously assesses its capital requirements under both normal and stressed conditions to ensure that sufficient capital is available to absorb potential losses and support future business growth.
In recent years, the Bank has made significant progress in resolving legacy stressed assets and further reducing the stock of inherited problem exposures. Simultaneously, the Bank has continued to improve its balance sheet through portfolio diversification, disciplined underwriting standards, and an increased focus on granular customer segments and exposures. The Bank remains committed to ensuring that asset growth is supported by stable, diversified funding sources, appropriate capitalisation levels, and prudent risk selection. Through these measures, the Bank aims to maintain strong asset quality, preserve financial resilience, and deliver sustainable value creation while operating within its defined risk appetite.
The Bank has adequate internal controls and processes in place with respect to its financial statements that provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements. These controls and processes are driven through various policies, procedures and certifications which also ensure the orderly and efficient conduct of the Bank's business, including adherence to Bank's policies, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. The controls and processes are being reviewed periodically.
The Bank has a mechanism of testing the controls and processes at regular intervals for their design and operating effectiveness to ascertain the reliability and authenticity of financial information.
The Bank has instituted a comprehensive Information and Cyber Security Framework that is foundational to its digital operations and growth strategy. Security considerations are integral to the design and operation of the Bank's platforms and are embedded both culturally and technologically across the organisation.
A multi layered security governance and operating model is supported through strategic investments in specialist security teams, subject matter experts, trusted partners, and structured processes to effectively build, operate, and oversee the Bank's Information Security function.
The Bank's security architecture leverages advanced and state of the art technologies, including select industry first implementations, and is anchored on a defence in depth approach aligned to recognised global standards and best practices.
As part of its continued focus on strengthening cyber resilience, the Bank remains committed to addressing new age and emerging threats while further improving the effectiveness and optimisation of previously deployed security controls.
The Bank maintained compliance with applicable regulatory mandates and security standards, including ISO 27001 ISMS (Information Security Management System) and PCI DSS (Payment Card Industry Data Security Standard). Recognising the dynamic nature of cyber risks, continuous efforts are underway to enhance proactive, adaptive, and automated capabilities for threat detection, response, recovery, and resilience.
The Bank has always been committed to good corporate governance practices, including matters relating to the Related Party Transactions (‘RPTs’). All the RPTs that were entered into during the financial year were on an arm's length basis and were in ordinary course of business.
Transactions entered into by the Bank with related parties in the normal course of its business were placed before the Audit Committee of the Board (‘ACB’). Prior omnibus approval for normal banking transactions is also obtained from the ACB for the RPTs which are repetitive in nature as well as for the normal banking transactions which cannot be foreseen. A statement giving details of all RPTs, entered pursuant to the omnibus approval so granted, is placed before the ACB for their review.
In terms of Regulation 23(9) of the SEBI Listing Regulations, the Bank submits the disclosure of RPTs to the Stock Exchanges in the prescribed format on a half-yearly basis. These disclosures are also updated on the Bank's website.
There were no transactions entered into individually or taken together with the previous transactions during the financial year with related parties, which were not in the normal/ ordinary course of the business of the Bank, nor were there any transactions with related parties or others, which were not on an arm's length basis. Hence, pursuant to Section 134(3)(h) of the Companies Act, read with Rule 8(2) of the Companies (Accounts) Rules, 2014, as amended, there are no RPTs to be reported under Section 188(1) of the Companies Act. Hence, e-Form AOC-2 is not applicable to the Bank.
The Bank has not entered into any material financial or commercial transactions with its subsidiaries and other related parties as per Accounting Standard - 18 and the SEBI Listing Regulations that may have potential conflict with the interest of the Bank at large.
Pursuant to the provisions of the Companies Act and the rules made thereunder SEBI Listing Regulations, the Bank has in place a Board approved policy on related party transactions. The said policy is also uploaded on the Bank's website at www.idfcfirst.bank.in under ‘The Bank' ^ ‘Investors' ^ ‘Corporate Governance' ^ ‘Codes and Policies'.
The Management Discussion and Analysis Report for the year under review, as required by Regulation 34(2)(e) of the SEBI Listing Regulations, forms part of this Annual Report.
Your Directors are committed to achieve the highest standards of Corporate Governance. A separate section on Corporate Governance standards followed by our Bank and the relevant disclosures, as stipulated under the SEBI Listing Regulations, Companies Act, and rules made thereunder forms part of this Annual Report.
A certificate from the Secretarial Auditors of the Bank, M/s. Makarand M. Joshi & Company, Practicing Company Secretaries, confirming compliance to the conditions of Corporate Governance as stipulated under the SEBI Listing Regulations is enclosed in the Corporate Governance Report and forms part of this Annual Report.
A certificate issued by MD & CEO and Chief Financial Officer of the Bank, in terms of Regulation 17(8) of the SEBI Listing Regulations, for the year under review was placed before the Board and forms part of this Annual Report.
Pursuant to the requirement under Section 134(5) of the Companies Act, it is hereby confirmed that:
a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b. the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as on March 31, 2026 and of the profit of the Bank for that period;
c. the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;
d. the Directors had prepared the annual accounts on a going concern basis;
e. the Directors had laid down internal financial controls to be followed by the Bank and that such internal
financial controls are adequate and were operating effectively; and
f. the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Being a Banking Company, the disclosures required as per Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, 2014, as amended, read with Sections 73 and 74 of the Companies Act, are not applicable to our Bank.
As per the applicable provisions of the Banking Regulation details of the Bank's deposits have been included under Schedule 3 - Deposits, in the preparation and presentation of the financial statements of the Bank.
Pursuant to Section 186 (11) of the Companies Act, the provisions of Section 186 of the Companies Act, except sub-section (1), do not apply to a loan made, guarantee given, or security provided, or any investment made by a banking company in the ordinary course of business. The particulars of investments made by the Bank are disclosed in Schedule 8 - Investments of the Financial Statements as per the applicable provisions of the Banking Regulation.
The Bank is not required to maintain cost records as specified by the Central Government under Section 148(1) of the Companies Act.
The Business Responsibility and Sustainability Report, in terms of Regulation 34(2)(f) of the SEBI Listing Regulations, describing the initiatives taken by IDFC FIRST Bank from an environmental, social and governance perspective is hosted on the Bank's website at www.idfcfirst.bank.in under ‘The Bank' ^ ‘Investors' ^ ‘View All Annual Reports' and
constitutes a part of this Annual Report. Further in terms of the said regulation the Bank has obtained reasonable assurance on BRSR Core from SGS India Private Limited (‘SGS’). The assurance statement issued by SGS forms part of the BRSR provided on the website.
ESG, CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Our Bank's ESG approach primarily straddles three key priorities. These include integrating ESG into the Bank's products and services; building a culture of sustainability within the organisation; and driving initiatives that can create large-scale impact. Towards this extent, the Bank has introduced products such as electric vehicles financing and green deposits for customers; engaged its employees with dedicated ESG sessions; and have taken initiatives that can further the sustainability imperative. These efforts continue to scale, under the guidance from the Bank's Corporate Social Responsibility & ESG Committee. The Bank is also an official participant of the United Nations Global Compact. As a result of its ESG strategy and initiatives, the Bank continues to be scored by several external ESG rating agencies, across which it has seen progressively improving performance.
Detailed initiatives taken for environmental management and conservation of energy have been mentioned in the Annual Report and Business Responsibility and Sustainability Report, which are hosted on the Bank's website at www.idfcfirst.bank.in under ‘The Bank' ^ ‘Investors' ^ ‘View All Annual Reports'.
Also, our Bank has been increasingly using information technology in its operations, for more details, please refer Management Discussion and Analysis Report, which forms part of this Annual Report.
Further, Foreign Exchange earnings and outgo are part of the normal banking business of the Bank.
There were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status or the operations of the Bank.
During the year under review, there has been no change in the nature of business of the Bank.
There are no material changes and commitments, affecting the financial position of the Bank between the end of the financial year of the Bank i.e. March 31, 2026, and the date of the Board Meeting in which the Directors' Report was approved i.e. July 25, 2026.
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, is appended as ANNEXURE 3 to this report.
In terms of Section 197(12) of the Companies Act, read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, a statement showing the names and other particulars of the employees drawing remuneration in excess of limits set out in said rules forms part of this Annual Report and any member interested may obtain the said statement by writing to the Company Secretary of the Bank.
In accordance with the provisions of Section 136(1) of the Companies Act, the Annual Report excluding the aforesaid information, is being sent to the members of the Bank and others entitled thereto.
The Reserve Bank of India vide its Circular No. RBI/2021-22/25 Ref. No. DoS.CO.ARG/ SEC.01/08.91.001/2021-22 dated April 27, 2021, had issued the Guidelines for Appointment of Statutory Central Auditors (SCAs)/ Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) (‘RBI Guidelines’).
Pursuant to the RBI Guidelines, the Bank is required to appoint at least two (2) Joint Statutory Auditors, considering its asset size (i.e. more than ' 15,000 crore). Accordingly, the Members of the Bank at their 10th AGM held on August 30, 2024, had approved the appointment of M/s. M.P. Chitale & Co., Chartered Accountants (Firm Registration No. 101851W) as one of the Joint Statutory Auditors of the Bank, for a period of 3 years, i.e. from the conclusion of 10th AGM until the conclusion of the 13th AGM, subject to them satisfying eligibility norms and RBI approval each year.
Also, pursuant to expiry of term of M/s. Kalyaniwalla & Mistry LLP, Chartered Accountants (Firm Registration No. 104607W/W100166), the Members of the Bank at their 11th AGM held on July 29, 2025, had approved the appointment of M/s. Walker Chandiok & Co LLP, Chartered Accountants (Firm Registration No. 001076N/ N500013) as one of the Joint Statutory Auditors of the Bank, for a period of 3 years, i.e. from the conclusion of 11th AGM until the conclusion of the 14th AGM, subject to them satisfying eligibility norms and RBI approval each year.
Accordingly, based on the recommendation of the Audit Committee and the Board, the RBI approved the re-appointment of M/s. M.P. Chitale & Co., Chartered Accountants, for its third year, and re-appointment of M/s. Walker Chandiok & Co LLP, Chartered Accountants, for its second year, to act as Joint Statutory Auditors of the Bank for FY 2026-27.
There were no qualifications, reservations, adverse remarks or disclaimers made by the Statutory Auditors in their report for the financial year ended March 31, 2026.
Pursuant to regulation 24A of SEBI Listing Regulations and the provisions of Section 204 of the Companies Act, read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, the Board of the Bank had appointed M/s. Makarand M. Joshi & Co., Company Secretaries (Firm Registration No: P2009MH007000), to act as the
Secretarial Auditor of the Bank from FY 2025-26 up to FY 2029-30. The said appointment was approved by the members of the Bank at the 11th AGM held on July 29, 2025.
There were no qualifications, reservations, adverse remarks or disclaimers made by the Secretarial Auditors in their report for the financial year ended March 31, 2026. The Secretarial Audit Report is appended as ANNEXURE 4 to this report. Further the report is self-explanatory. Secretarial Standards:
The Bank has followed the applicable Secretarial Standards with respect to Meetings of the Board of Directors (SS-1) and General Meetings (SS-2) issued by the Institute of Company Secretaries of India.
Our Bank has established a robust and well-structured framework for conducting concurrent audits across critical functions and processes, including treasury, trade finance operations, retail and wholesale banking operations, information technology, SWIFT, office accounts, retail liability branches and cash processing centres, in line with extant regulatory guidelines. The audits are conducted by empanelled and reputed Chartered Accountant firms / CERT-In certified firms, as applicable. Key findings, themes and other relevant matters emanating from concurrent audits are presented to the Audit Committee of the Board on a periodic basis.
During the year, drawing upon learnings from a significant fraud incident at one of the Bank's branches, the concurrent audit framework was further augmented through coverage of financial transactions across liability branches and focused coverage of High-Risk branches. These measures further strengthened oversight on branch-level controls.
Pursuant to Section 92(3) read with Section 134(3)(a) of the Companies Act, the Annual Return as on March 31, 2026 is available on the Bank's website www.idfcfirst.bank.in under ‘The Bank' ^ ‘Investors' ^ ‘View All Annual Reports'
Disclosures in relation to Whistle Blower Policy and Vigil Mechanism forms part of Corporate Governance Report.
Our Bank has complied with the provisions relating to constitution of Internal Committee to investigate and inquire into sexual harassment complaints in line with ‘The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013'.
Our Bank has in place a policy on Anti-Sexual Harassment, which reflects the Bank's zero-tolerance towards any form of prejudice, gender bias and sexual harassment at the workplace. Our Bank undertakes ongoing trainings to create awareness on this policy.
Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 forms part of Corporate Governance Report.
The Bank has complied with the applicable provisions of Maternity Benefit Act, 1961 for female employees of the Bank with respect to leaves and maternity benefits thereunder.
During the year under review, our Bank was recognized in various ways and the significant awards presented to our Bank are listed below:
• IDFC FIRST Bank wins FE India's Best Banks Award for best ‘Savings Product'
• IDFC FIRST Bank wins The Great Indian Corporate Communication Team of the Year in Banking Award
• Automobile Lending Initiative
• Digital Consumer Banking Initiative of the Year - India
• Financial Inclusion Initiative of the Year - India
• The Brandon Hall Group recognizes IDFC FIRST Bank for its Candidate Onboarding experience
• IDFC FIRST Bank wins the Best Mid-Sized Bank Award
• Capital Finance International recognizes IDFC FIRST Bank for the Best Mobile Banking App 2024
• IDFC FIRST Bank has been honored with the Award for Best Bank for Creating Awareness among MSMEs, (Private Sector) by the Chamber of Indian Micro and Small Enterprises (CIMSME)
• IDFC FIRST Bank has been honored with the Jury Special Award for Supporting MSMEs
• IDFC FIRST Bank wins the Best MSME Friendly Bank (Private Sector) Award
• IDFC FIRST Bank has been recognized as India's Leading Private Bank (Mid) at Dun & Bradstreet's BFSI & Fintech Summit 2025
• IDFC FIRST Bank wins the Best Private Sector Bank Award
• IDFC FIRST Bank wins Best Private Sector Bank by M1 TReDS Exchange
• Global Fintech Awards - Best Green Banking Initiative
• SKOCH ESG Awards - Green Infrastructure (Silver)
• 6th Green Urja & Efficiency Awards by the Indian Chamber of Commerce (ICC) - Excellence Award (Gold)
• Green Champion Award 2025 by IGBC
• FE Best Banks Awards 2025 - Best Digital
• Global Fintech Awards 2025 - Best Digital
Transformation Program Global Fintech Awards 2025
• Best Green Banking Initiative' IGBC Summit 2025, Green Visionary Award
• TIME and Statista - India's Best Employers 2025 Asian Banking & Finance
• Mobile Banking & Payment Initiative of the Year, India, Asian Banking & Finance - Retail Banking Awards 2025
• CFI Best Digital Bank India 2025
• IDFC FIRST Bank wins Best Innovation in Retail Banking, India at International Banker Awards -Second Successive Year!
• JioStar RE.iMAGiNE Awards: Editor's Choice Award for “Cricket Catalyst Brand of the Year” (Gold)
• JioStar RE.iMAGiNE Awards: Most Viral Campaign Award (Silver)
• IDFC FIRST Bank wins Gallup Exceptional Workplace Award
• AmbitionBox Employee Choice Awards 2026
• LinkedIn Talent Awards 2025: IDFC FIRST Bank recognized as Talent Insights Pioneer
To support the ‘Green Initiative', the members who have not updated their e-mail addresses are requested to update the same with their respective Depository Participants (‘DPs’), in case shares held are in electronic form or communicate their e-mail address to the Registrar and Share Transfer Agent i.e. KFin Technologies Limited or to the Bank, in case shares are held in physical form, so that future communications can be sent to members in electronic mode. Note on Green Initiative forms part of the 12th AGM Notice.
Your Directors would like to place on record their gratitude for all the guidance and co-operation received from the Reserve Bank of India and other government and regulatory agencies. The Board would also like to take this opportunity to express appreciation to its valued customers for their continued patronage and to the members of the Bank for their continued support.
Your Directors sincerely acknowledge the commitment and hard work put in by all employees of the Bank through its transformational journey. Their valuable contribution has enabled the Bank to make significant progress towards building a great institution.