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Directors Report of Can Fin Homes Ltd.

Mar 31, 2023

1. FINANCIAL RESULTS

The financial performance for the FY 2022-23 is summarised here below:

(H in Lakhs)
Particulars	Year ended	Year ended
Particulars	March 31, 2023	March 31, 2022
Profit before Tax & Provisions	86,578.93	68,200.01
Less: Impairment on financial instruments	4,175.76	4,694.22
Profit before Tax	82,403.17	63,505.79
Less: Tax expenses:
(a) Provision for Tax - Current Year	19970.99	17,039.02
- Previous Year	360.92	(446.20)
(b) Deferred Taxation	(49.97)	(197.54)
Profit after Tax	62,121.23	47,110.51
Add: Other Comprehensive Income
A. Items that will not be reclassified to profit or loss
(i) Actuarial (Gain)/ loss	(81.07)	(117.72)
(ii) Income tax relating to items that will not be reclassified to profit or loss	20.40	29.63
B. Items that will be reclassified to profit or loss
(i) Income tax relating to items that will be reclassified to profit or loss	0.00	0.00
Other Comprehensive Income	(60.67)	(88.09)
Total Comprehensive Income for the period	62,060.56	47,022.42
Balance brought forward from previous year	36,134.88	25,770.70
	98,195.44	72,793.12
Appropriations: Impact on adoption of Ind AS 116
Transfer to Special Reserve u/s.36(1)(viii) of the Income Tax Act, 1961	16,864.94	13,188.88
Transfer to General Reserve	12,412.11	9,404.48
Additional Reserve (u/s.29C of the NHB Act)	12,412.11	9,404.48
Dividend (including interim dividend)	3,994.62	4,660.39
Tax on Distributed Profits	0.00	0.00
Balance carried forward to balance sheet	52,511.66	36,134.88
	98,195.44	72,793.12

Note:(i) Figures have been regrouped wherever necessary while preparing the statements as per IND-AS requirements.

(ii) The interim dividend of H 1.50 per equity share of face value of H 2/- each paid by the Company during December 2022 has been accounted.

(iii) The proposed dividend of H 2/- per equity share is not recognised as liability in the annual accounts as at March 31, 2023 (in compliance with IND AS 10 - events occurring after the Balance sheet date). The same will be considered as liability on approval by the Members at the 36^th Annual General Meeting.

2. SHAREHOLDER''S WEALTH

Particulars	Year ended March 31, 2023	Year ended March 31, 2022
Earnings Per Share (EPS) (H)	46.65	35.38
Dividend Rate	175%*	150%
Market Price of shares (H)	529.20	631.45
Market Capitalisation (H in crore)	7,046.51	8,408.02
* For the FY 2022-23 the proposed final dividend of H 2 per equity share is subject to approval of shareholders at the 36^th Annual General Meeting.

3. BUSINESS PERFORMANCE HIGHLIGHTS

During the FY 2022-23, Can Fin Homes Limited has performed well to record the highest ever sanctions and disbursements. The Loan book surpassed H31,500 Crore and the NPA percentage was reduced from 0.64% (FY 202122) to 0.55% (FY 2022-23).

a) Sanctions

The Company has sanctioned H9,307 Crore in FY 202223 as against H8,896 Crore during the previous year.

Since inception, the cumulative loan sanctions of your Company stood at H66,805 Crore at the end of the FY 2022-23.

Average ticket size of incremental housing loans and non-housing loans were H25 Lakh and H8 Lakh, respectively.

b) Disbursements

Disbursements during the year amounted to H8,947 Crore as ag ainst H8,279 Crore during FY 2021-22.

The cumulative loan disbursements from inception to the end of the FY 2022-23 was H60,806 Crore.

c) Loans outstanding (Loan Book)

The total loan book as at March 31, 2023 was H31,563 Crore, recording a growth of around 18% over last year (previous year H26,711 Crore). At a portfolio level, housing loans constitute 79%, non-housing loans comprised 21%.

d) Non-Performing Asset (NPA)

The Gross NPA of your Company as at March 31, 2023 was H173.85 Crore (previous year H170.59 Crore). The net NPA as at March 31, 2023 was H82.95 Crore (previous year H80.71 Crore). The gross NPA percentage as at March 31, 2023 stood at 0.55% compared to 0.64% as at March 31, 2022.

e) Profits

Your Directors are happy to inform that during the year under review, your Company recorded an Operating Profit of H865.79 Crore (previous year H682.00 Crore), Profit Before Tax (PBT) of H824.03 Crore (previous year H635.06 Crore) and Profit After Tax (PAT) of H621.21 Crore (previous year H471.11 Crore).

During the year Company has made provisions for standard assets amounting to H40.71 Crore (including management overlay amounting to H17 crore). Provision for standard assets was H34.45 Crore during the previous year.

Provision was made for Non-performing assets amounting to H1.03 Crore (previous year H22.29 Crore). Provisions for Tax Expenses (including Deferred Tax) amounting to H202.82 Crore (previous year H163.95 Crore) was made.

f) Reserves

For reserves during the year, please refer ''Statement of changes in equity'' for the period ended March 31, 2023 in the Notes forming part of Financial Statements.

g) Dividend

Your Company has a consistent track record of dividend payments.

While recommending the dividend, your directors have considered applicable NHB and RBI guidelines, Long term growth plans of the Company, minimum capital requirements and net NPA ratio, etc. Your directors, after giving due consideration to Capital Adequacy requirements, deferred tax liability, its impact on financial markets, the resultant impact on the Company and the Dividend Distribution Policy, have recommended a final dividend of H2/- per equity share (100%), for the financial year ended March 31, 2023, subject to the approval of the Shareholders at the ensuing Annual General Meeting of the Company.

The Board of Directors at their meeting held on November 28, 2022 had declared and paid the Interim dividend of H1.50 per share (75%), for equity share of face value of H2/- each.

The total amount of dividend (Interim and Final) recommended for payment/paid for the year under review is H 46.60 Crore. As per section 194 of Income Tax Act, the Company is required to deduct Tax at Source (TDS) @ 10% on dividend payment if the aggregate dividend amount exceeds H5,000/-. However, no TDS shall be deducted for dividend payment to any Insurance Company and Mutual Funds specified u/s 10(23D) of Income Tax Act. Moreover, as per section 195 of the Act, TDS is required to be deducted @ 20% plus surcharge on payment of Dividend to NonResidents. The Dividend Distribution Policy as required under regulation 43A of SEBI (LODR) Regulations, 2015, is available on the website of the Company (web link https://www.canfinhomes.com/pdf/DIVIDEND-DISTRIBUTION-POLICY-2022-23.pdf).

4. EXPANSION OF BRANCH NETWORK

The network of branches was expanded prudently after

due identification of potential locations. Branch expansion

was restricted on account of the Pandemic during the last

couple of years.

The Company opened five new branches during FY 202223 and upgraded Vidyaranyapura Satellite office as a branch. As at the end of FY 2022-23, the branch network tally stood at 205, spread across 21 States comprising 193 Branches and 12 Satellite Offices.

5. TECHNOLOGY INITIATIVES

All the branches and the Registered Office are connected through a core-banking platform (Integrated Business Suite) with Cloud compute services. The Company has implemented Multiprotocol Label Switching (MPLS) links for a higher bandwidth, security and dedicated uptime.

In order to improve operational efficiency, your Company has implemented Central Know Your Customer (CKYC) software, perfios and web-based Application software for Inspection & Audit. The website of your Company is interactive and user friendly.

Digitalization measures enabled your Company to connect and engage with Customers for business and collections.

Thrust on cyber security was given and security awareness was spread amongst the employees regularly. Information on do''s and don''ts to safeguard the information assets of the Company is being communicated to the employees regularly.

The Business Continuity Plan is tested to address disruption risks in the event of an unforeseen situation and to continue operations smoothly.

Your Company has digital meetings platform for Board and Committee meetings which is paperless, secure, efficient and cost effective. Further, the Company has also a platform for maintaining Structured Digital Database (SDD) for recording movement of Unpublished Price Sensitive Information (UPSI).

Your Company is utilizing the Video Conferencing facility for Board meetings, review meetings with branches, clusters and interviews for recruitments, etc.

Your Company is in the process of technology transformation by upgradation of digital technology and Core Banking System, aiming at improved efficiencies and increased revenue.

6. CUSTOMER-FRIENDLY INITIATIVES

Adhering to its motto of ''Friendship Finance'', the practices followed by the Company are transparent, fair and impartial for the clients, customers, borrowers in all branches across

Details of the Company''s loan and deposit products, schemes, charges and other information are provided on the website of the Company.

In consonance with the Master Direction - Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021 (RBI Master Directions), the Fair Practices Code (FPC) and Most Important Terms and Conditions (MITC) are regularly updated and uploaded on the Company''s website for the ready reference of our customers.

7. FINANCIAL RESOURCES

a) Refinance from National Housing Bank (NHB)

Under the NHB refinance scheme, your Company had got fresh refinance sanction amounting to H1,500 Crore and the same was availed in full during the year under review. Your Company also availed an amount of H1,000 Crore during the year out of unutilised balance of H2,200 Crore, which was sanctioned during the previous year.

b) Borrowings from Bank

During the year, borrowings were diversified through a combination of short-term and long-term loans considering the asset liability management position and to minimize the overall cost of funds. To diversify risks within banks, the Company had exposure from Private and Public Sector Banks. The aggregate bank borrowings (term loans plus overdraft) as at the end of the financial year stood at H15,674.64 Crore; the overall borrowings are within regulatory ceiling of 12 times of the Net Owned Funds.

The overall cost of borrowings from banks was 6.53% p.a. as at March 31, 2023. During the year, the longterm ''rating'' of the Company for term loans was [ICRA] AA , signifying high degree of safety regarding timely servicing of financial obligations.

c) Debentures

(i) Secured Redeemable Non-Convertible Debentures (NCDs)

The Company raised NCDs amounting to H2,236 Crore (previous year H2,135 Crore). The debentures were secured by way of floating charge on the assets i.e., loan receivables specifically earmarked for the purpose, in favour of the Debenture Trustees. The investors to the NCDs are majorly insurance companies, public sector Banks, corporates, PF trusts, mutual funds and other investors of

repute, indicating their safety perception of your Company''s fundamentals and prospects.

The tenure of the outstanding NCDs ranges from 36 months to 39 months. The interest on these debentures was serviced regularly. The outstanding borrowings by way of Secured NCDs as at March 31, 2023 was H4,896 Crore (previous year H3,260 Crore). The average cost of NCDs was 7.09% p.a. The NCDs were rated, CARE AAA'' (Stable) by CARE Limited and ''[ICRA] AA (Stable)'' by ICRA Limited, signifying high degree of safety regarding timely servicing of financial obligations and very low credit risk. These NCDs were listed on the Wholesale Debt Market (WDM) segment of the National Stock Exchange of India Limited.

Your Company plans to raise NCDs up to a maximum of H4,000 Crore from the date of ensuing Annual General Meeting (AGM) upto the conclusion of the next AGM, subject to the approval of members. However, NCDs will be raised subject to cost benefit, asset liability management requirements, compliance with the regulatory guidelines, etc., in this regard.

(ii) Unsecured Non-Convertible Debentures (UNCDs)

During FY 2014-15, your Company had issued ''8.94% Unsecured Non-Convertible Debentures'' in the nature of Tier II Bonds aggregating H100 Crore for a tenure of 10 years. These debentures are subordinated to present and future senior indebtedness of the Company and qualify as Tier II Capital under the RBI Master Directions, 2021 [erstwhile National Housing Bank (NHB) guidelines for assessing Capital Adequacy Requirements]. These Tier II Bonds were rated, Ind AA /Stable'' by India Rating & Research. Your Company has serviced the interest on the above UNCDs on the due date.

The Company is in compliance with the provisions of the RBI Master Directions, 2021 [erstwhile Housing Finance Companies issuance of NonConvertible Debentures on private placement basis (NHB) Directions, 2014] and has been regular in payment of principal and/or interest on the NCDs and UNCDs. Details of borrowings are provided in the notes to accounts.

The Company affirms that there has been no deviation or variation in the utilisation of proceeds of NCDs/UNCDs from the objects stated in the respective offer documents or explanatory

statement to the notice for the general meeting, as applicable. During the year there were no public issues.

The Company confirms that the non-convertible debentures which became due for redemption, have been paid in full and there are no unclaimed or unpaid NCDs/UNCDs as on date.

d) Commercial Paper

Your Company mobilises funds through Commercial Paper (CP) for leveraging cost of borrowing to the extent of undrawn Bank limits. The outstanding at the end of FY 2022-23 was H1,350 Crore (previous year H2,795 Crore). The effective cost of funds raised through CP during the year was 5.67% p.a. The CP issued by your Company was rated at the maximum [ICRA] A1 by ICRA Ltd., and CARE A1 '' by CARE Limited. Instruments with this rating are considered to have very strong degree of safety regarding timely payment of financial obligations.

The Company affirms that there has been no deviation or variation in the utilisation of proceeds of Commercial Papers, from the objects stated in the respective offer documents.

e) Deposits

During the year your Company accepted new deposits amounting to 201.69 Crore (Previous year H266.94 Crore). The outstanding balance of deposits (including interest accrued, but not due) as at March 31, 2023 was H435 Crore (previous year H505 Crore). The rate of interest on public deposits ranged from 4.5% p.a. to 7.25% p.a. while the overall cost (average) of deposits was 6.96% p.a. as at March 31, 2023.

As at March 31, 2023, a sum of H11.94 Crore relating to 724 accounts of public deposits (H13.93 Crore as at March 31, 2022 relating to 759 accounts) remained unclaimed/overdue. Of this amount, a sum of H4.92 Crore relating to 155 accounts (previous year H7.18 Crore relating to 129 accounts) were claimed and renewed/settled up to May 31, 2023. Depositors were intimated regarding the maturity of deposits, with a request to either renew or claim their deposits. Where the deposit remains unclaimed, reminder letters/ SMS are sent to depositors periodically and follow up action is initiated through the concerned branch. Your Company has not defaulted in repayment of deposits or interest during the year. The Company has complied with the requirements under Chapter V of the Companies Act, 2013 to the extent applicable''.

During the year, the deposit schemes of your Company have been rated ''ICRA AA '' Stable, by ICRA Ltd., indicating ''highest credit-quality'' and that the rated deposit programme carried the lowest credit risk. Your Company, being a Housing Finance Company registered with National Housing Bank (NHB), has complied with the Directions/Guidelines issued by the NHB and RBI with regard to deposit acceptance and renewal. Your Company is exempted from the applicability of the Companies (Acceptance of Deposits) Rules 2014.

As per the regulatory requirement vide the communication bearing reference, RBI/2023-24/14 DOR.SFG.REC.10/30.01.021/2023-24 dated April 11, 2023, the Company has already formulated the Green Deposits Policy.

f) Mortgage-backed securities

Your Company did not opt for securitisation during the year under review. There were no securitised assets outstanding as at March 31, 2023.

8. REGULATORY COMPLIANCES

Compliance with Directions/ Guidelines of National Housing Bank (NHB) and other statutes

Your Company has complied with the Master Direction - NonBanking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021, which has been effective from February 17, 2021. Your Company has adhered to all the guidelines and circulars issued by RBI on asset classification of credit/ investments, credit rating, acceptance of deposits, Fair Practices Code (FPC), Most Important Terms and Conditions (MITC), Customer Complaints Redressal Mechanism, Know Your Customer (KYC), Anti-Money Laundering (AML) Guidelines, Asset Liability Management, Capital Adequacy Ratio (CAR) norms, Information Technology frameworks, CERSAI, Implementation of Indian Accounting Standards (Ind AS), Appointment of Statutory Auditors, Guidelines on Reporting and Monitoring of Frauds in Housing Finance Companies and all other related instructions, guidelines and circulars issued by the RBI in letter and spirit with an explicit notification on the website of your Company, to the extent applicable.

Further, Your Company is adhering to all the instructions, guidelines and circulars issued during the year by RBI on various matters such as scale based Regulations, credit ratings, outsourcing of Financial Services, regulatory restrictions on loans and advances, registration with LEI, compensation of Key Managerial Personnel (KMP) and Senior Management, investment grade credit rating for accepting public deposits,

reporting of exit of Senior Management Personnel (SMP) and/ or Non-Executive Directors (NEDs) and succession planning and outsourcing of financial services, to the extent applicable.

NHB vide circular dated December 29, 2022 has implemented the XBRL based reporting platform namely Centralised Reporting and Management information System (CRaMIS) for ease of data submission and more efficient data collection and advised all the HFCs to submit the returns which are due for submission as on December 31, 2022 through the XBRL based CRaMIS Portal. Your Company has successfully registered on CRaMIS portal on January 03, 2023. All the data/ returns are being uploaded on the CRaMIS portal from January 03, 2023.

Your Company has complied with other related statutory Guidelines/Directions/Policies as applicable to the Company from time to time. Compliance of all Regulatory directions/ guidelines of NHB/RBI other statutes are periodically reviewed by the Audit Committee and the Board.

Your Company has complied with Indian Accounting Standards (Ind AS) as notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standard) Amendment Rules, 2016 as applicable read with Section 133 of the Companies Act, 2013 and guidelines issued by National Housing Bank.

IRDAI Compliance

The Company is registered with IRDAI for carrying on the Insurance Agency Business and has complied with the applicable requirements under Insurance Regulatory and Development Act, 1999 and IRDAI (Registration of Corporate Agent) Regulations 2015, as amended from time to time. Being an insurance intermediary, Company is maintaining all the required information as per IRDAI rules. The Company has in place, an appropriate policy on maintenance of records and destruction of old records as required under IRDA Guidelines.

Other Compliances

RBI vide it''s Circular No. RBI/2022-23/34 DOR.CRE. REC.28/21.04.048/2022-23 dated April 21, 2022 has inserted para "103A. Legal Entity Identifier for Borrowersâ under "Chapter XIV of RBI Master Directions, 2021. As per the said para it was advised that non-individual borrowers enjoying aggregate exposure of H5 crore and above from banks and financial institutions (FIs) shall be required to obtain LEI codes as per the prescribed timeline. The Company, had already obtained on April 04, 2018, the Legal Entity Identifier No.335800EJ9Y3XDP5ZDH81 under the erstwhile RBI/2017-18/82-DBR.No.BP.92/21.04. 048/2017-18 dated November 02, 2017 as advised by NHB. The same has been renewed for the year 2023-24.

As required under Section 215 of the Insolvency and Bankruptcy Code, 2016, the Company has registered itself with National e-governance Services Limited (NeSL) authorized by IBBI and obtained registration No.9160743937431514312. Further, the Company has executed an agreement with NeSL on February 28, 2019 and the request by our creditors are being authenticated on NeSL on regular basis.

The Company has registered on TReDS Platform through Receivables Exchange of India Limited (RXIL) vide registration No.CA0000876. The Company is paying the annual fee for maintenance of the said registration.

SEBI Circulars on Investors related matters:

In continuation of its earlier circulars dated November 03, 2021 and December 12, 2021 to put in place a framework for ''Common and simplified norms for processing investor''s service request by RTAs and norms for furnishing PAN, KYC details and Nomination'' by holders of physical securities, which came into effect from March 31, 2022, the SEBI has issued a circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/ CIR /2023/37 dated March 16, 2023 for Common and simplified norms for processing investor''s service requests by RTAs with the norms for furnishing PAN, KYC details and Nomination. It was advised to intimate once again directly the Shareholders, about folios which are incomplete with respect to PAN, KYC details and Nomination.

Your Company had sent letters to all shareholders holding shares in physical form and requested to furnish/update their valid PAN (PAN linked to Aadhar). As per the said Circulars, the folios wherein any one of the documents or details are not available on or after October 1, 2023, will be frozen by the RTA. The RTA will revert the frozen folios to normal status upon receipt of all the documents. Further, linking of PAN with Aadhaar has been made mandatory for all investors w.e.f. March 31, 2022.

Further, the shareholders were also requested to furnish/ update their KYC details, Nomination details, Bank account particulars, specimen signature and contact details to the RTA at the earliest.

As an on-going measure to enhance ease of dealing on security markets, SEBI has issued the following Circulars for efficient and investor friendly processes:

(i) Circular S E B I / H O/M I RS D/M I R S D_ RTA M B/P/ CIR/2022/70 dated May 25, 2022 - Reviewed the process followed by the Registrars to an Issue and Share Transfer Agents and the Issuer companies for issuance of duplicate securities certificates. As per Para 4 of the abovementioned SEBI Circular, it was advised that the

listed company shall take special contingency insurance policy from the insurance company towards the risk arising out of the requirements relating to issuance of duplicate securities in order to safeguard and protect the interest of the listed company. In this regard, the Company has taken Special Contingency Policy.

(ii) Circular No. SEBI/HO/MIRSD/MIRSD_RTAMB/P/ CIR/2022/65 dated May 18, 2023 issued simplification of procedure and standardization of formats of documents for transmission of securities.

(iii) Circular No. SEBI/HO/OIAE/2023/03391 dated

January 27, 2023 issued a letter to all listed Companies and RTA''s for generating awareness on availability of Dispute Resolution Mechanism at Stock Exchanges against Listed Companies /Registrar to an Issue and Share Transfer Agents (RTAs). In this regard it was advised that listed Companies shall co-ordinate with RTAs and shall arrange for sending SMS/ E-mail to all the investors who hold shares in physical form stating that if they have any dispute against the Company and/ or its Registrar and Share Transfer Agent (RTA) on delay or default in processing requests, as per SEBI circular no. SEBI/HO/CFD/DIL2/P/CIR /2022/75 dated May 30, 2022, they can file for arbitration with Stock Exchange. Your Company has sent SMS, E-mails and registered post/speed post to their last known address of the physical shareholders to appraise them about the facility made available.

The Company has also complied with other SEBI circulars issued during the year on GST, NCDs, CPs, ISINs, etc., to the extent applicable.

9. COMPLIANCE UNDER THE COMPANIES ACT, 2013

Your Company has complied with the requirements of the applicable provisions of the Companies Act, 2013 and related Rules during the FY 2022-23. As per the requirements under Section 92(3) of the Act and Rules framed thereunder, the extract of the Annual Return for FY 2022-23 is uploaded on the website of the Company and the same is available at ''Events'' Page. The link for the same is https://www. canfinhomes.com/pdf/form-MGT-7-Provisional-2023. pdf. For more details regarding Compliances, please refer the Secretarial Audit Report enclosed to this Report as Annexure-1.

Significant and material orders

There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and the Company''s operations in future. The details of penalty levied by the Regulator NHB/RBI are provided in the Report on corporate governance.

There are no material changes and commitments affecting the financial position of the Company which have occurred after March 31, 2023 till the date of this report.

CSR activities:

The details of the activities undertaken by the Company as required under the provisions of the Companies Act, 2013 and related rules are provided in detail in Para 22 infra.

The information relating to the particulars on spending in terms of the Corporate Social Responsibility Policy and reasons for not spending/carrying forward the balance amount, if any, during the current year are disclosed in Annexure - 2 to the Report of Directors, forming part of this Annual Report.

The activities undertaken by the Company under CSR are on pan India basis and the projects are executed through the Registered Office and branches of the Company at the respective locations. The total amount/ budget under CSR for the FY 2022-23 was H11.80 Crore, out of which an amount of H7.83 Crore was spent during the year. The entire undisbursed amount of H4.18 Crore pertaining to on-going projects of previous years were spent during the current year. The balance unspent amount of current year H3.07 Crore which is already sanctioned in the FY 2022-23 has been transferred to unspent CSR Account on April 21, 2023 and H0.90 Lakh was disbursed during the month of April 2023, as per the provisions of Companies Act, 2013 and will be disbursed based on the progress of work.

10. CAPITAL ADEQUACY

The Capital Adequacy Ratio (CAR) of your Company as at March 31, 2023 stood at 23.07% (previous year 23.15%) as against the benchmark of 15% prescribed by the RBI Master Directions, 2021.

11. DEPRECIATION

Depreciation was calculated on the written down value method based on useful life, in the manner prescribed in Schedule II to the Companies Act, 2013.

12. DEFERRED TAX ASSET (DTA)

During the year, deferred tax asset (net) of H0.50 Crore (previous year H1.98 Crore) was considered in the Statement of Profit & Loss, on account of various components of asset and liabilities. The DTA outstanding as at March 31, 2023 was H48.43 Crore (previous year H47.73 Crore).

13. RECOVERY ACTION UNDER SECURITISATION & RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 (SARFAESI ACT)

During the year, your Company initiated action against 939 defaulting borrowers under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest ("SARFAESIâ) Act, 2002 and recovered H54.62 Crore (previous year H49.48 Crore) from borrowers. Out of the above amount, H16.27 Crore (previous year H9.66 Crore) was recovered by way of sale of assets under SARFAESI. Apart from this, H0.90 Crore was recovered in Written-off accounts.

14. LISTING OF SECURITIES:

The equity shares of the Company continued to be listed on the BSE Limited (BSE), Mumbai and the National Stock Exchange of India Ltd. (NSE), Mumbai.

The NCDs/UNCDs issued on private placement are listed on National Stock Exchange of India Ltd.

As per SEBI Circular SEBI/HO/DDHS/P/CIR/2021/613 dated August 10, 2021 (updated as on April 13, 2022), captioned "Operational Circular for issue and listing of Non-convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paperâ the Company has listed its Commercial Papers (CPs) on BSE Limited (BSE).

15. HUMAN RESOURCES DEVELOPMENT

The total number of employees of the Company was 976 (811 regular and 165 on contract) as on March 31, 2023 as against 909 (799 regular and 110 on contract) as at the end of the previous year.

Employees form the backbone of the Company. Their knowledge, dedication, aptitude, skills are of primary importance. The Company therefore ensures that the employees are fully equipped to discharge their duties effectively and efficiently and provide the necessary support in this direction by organizing training programmes, orientation sessions, imparting on the job training, enabling them to take part in seminars/ webinars etc. conducted by Regulatory authorities and reputed institutions.

During the year, training in credit, information technology, human relations, customer service, Grievance redressal, finance, taxation, marketing, fraud prevention, KYC & AML, human rights, prevention of sexual harassment at work place and other topics of importance was imparted to employees and executives.

Your Company has put in place a series of HR measures and performance linked incentive including schemes to motivate employees to do better. Industrial relations in your Company continued to be cordial during the year.

During FY 2022-23, no employee, other than the Managing Director, who earns a remuneration of H12.50 Lakhs per month, was employed for a part of the year with a remuneration of H9.15 Lakh or more per month. The ratio of remuneration of each Director to the median of employees'' remuneration and such other details as required under Sec 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 and 2016 are furnished below:

(i) Ratio of remuneration of each director to the median employees'' remuneration for FY 2022-23

The ratio of the remuneration of Managing Director to the median remuneration of the employees (regular employees) of the Company for the FY 2022-23 was 13.37:1

The ratio of the remuneration of Dy. Managing Director to the median remuneration of the employees (regular employees) of the Company for the FY2022-23 was 3.3:1

Non-executive Directors and Independent Directors are eligible for sitting fee only. The details of sitting fee paid to the Directors for the meetings of Board and Committees are given in the Report of Directors on corporate governance''.

(ii) Percentage increase in the remuneration of each Director and Key Managerial Personnel in FY 2022-23

The percentage increase in remuneration in the financial year for the Managing Director & CEO was NIL and that of the Deputy Managing Director was 20.21%. The other Key managerial personnel of the Company are the General Manager, the Chief Financial Officer and the Company Secretary and the percentage increase in their remuneration was 19.22%, 34.48% and 14.98% respectively.

(iii) Percentage increase in the median remuneration of employees in FY 2022-23

The total number of permanent employees of the Company were 811 as on March 31, 2023. Apart from the permanent employees, there were 165 employees on contract as on March 31, 2023.

The percentage increase in the median remuneration of employees in the financial year was 9.12%.

(iv) Average percentile increase already made in salaries of employees other than managerial personnel in last financial year and its comparison with the percentile increase in managerial remuneration

Average percentage increase in remuneration of the employees other than managerial personnel in the last financial year was 5.48% and that of Managerial remuneration was 6.28% during the period under review.

The average increase in the remuneration of both, the managerial and non-managerial personnel was determined based on the Annual Performance Evaluation and also based on the remuneration policy as recommended by the Nomination Remuneration & HR Committee of Directors and approved by the Board of Directors. There were no exceptional circumstances which warranted an increase in managerial remuneration which was not justified by the overall performance of the Company. The Company affirms that the remuneration is as per the remuneration policy of the Company.

(v) Prevention of Sexual Harassment of Women at the Workplace.

The Company has a Policy on ''Prevention of Sexual Harassment of Women at Workplace'' and matters connected therewith or incidental thereto covering all the aspects as contained under the Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013. During FY 2022-23 no cases of sexual harassment were reported.

(vi) Affirmation that the remuneration is as per the Remuneration Policy of the Company:

It is affirmed that the remuneration paid is as per the Remuneration Policy, applicable for Directors, Key Managerial Personnel and other employees, adopted by the Company.

The Company has also in place "Equal Opportunity Policyâ as per Section 21(1) of Rights of the Persons with Disabilities Act, 2018.

The Company has laid down a Code of Conduct for Prevention of Insider Trading, in accordance with the requirements under the Securities and Exchange Board of India (Prevention of Insider Trading) Regulations, 2015 and Companies Act, 2013, with a view to regulate trading in Securities of the Company by its directors, designated persons and employees. The same is made available on the website of the Company. For related link, please refer Annexure-5.

16. TRANSFER OF UNCLAIMED AND UNPAIDDIVIDEND/ DEPOSIT AMOUNTS TO THE INVESTOR EDUCATION AND PROTECTIONFUND (IEPF)

In terms of section 124 and 125 of the Companies Act, 2013, the amounts (dividend, deposits etc., with interest) that remained unclaimed and unpaid for more than 7 years from the date they first became due for payment, should be transferred to IEPF. As an investor-friendly measure, your Company has been intimating the respective shareholders / depositors/investors to encash their dividend warrant/renew matured deposits or lodge their claim for payment of dues, if any, from time to time and the claims made were settled. As per the statutory requirements, the details of such amounts are made available on the website of MCA-IEPF as well as on the Company''s website. In order to pay dividend amounts online, the members/investors are requested to get their shares converted from physical to DEMAT mode, register their bank account particulars and/or opt for ECS facility.

Unclaimed dividends

As at March 31, 2023, dividends aggregating to H1.98 Crore (Previous year H1.96 Crore) relating to dividends declared for the years FY 2015-16 to FY 2021-22 (of which H 0.29 Crore related to Interim & Final dividend for the year 2022), had not been claimed by members. As an investor friendly measure, your Company has intimated members to lodge their claims and related particulars with the Company/ RTA. The dividend pertaining to 2014-15, which remained unclaimed/unpaid amounting to H0.20 Crore (in respect of 2053 shareholders), was transferred to IEPF on August 12, 2022, after settlement of claims by members received in response to the individual reminder letters sent by your Company to the respective members. The dividend pertaining to 2015-16 remaining unclaimed and unpaid, amounting to H 0.27 Crore (in respect of 2091 shareholders) as at March 31, 2023, would be transferred to IEPF during August 2023 after settlement of the claims, if any, received.

The Company takes various initiatives to reduce the quantum of unclaimed dividend and has been periodically intimating the concerned members, requesting them to encash their dividend before it becomes due for transfer to the IEPF.

a) Transfer of shares to IEPF Demat account

''IEPF demat Account'' of IEPF Authority. On verification of records of unpaid/unclaimed dividend, during FY 2022-23, 39 shareholders had not claimed dividend for consecutive 7 years and their shares 28,900 Nos. have been transferred to IEPF demat account within the prescribed period i.e. on 02/09/2022. The details of such transfer are provided on the website of the Company. For more details, please refer ''General Information to shareholders'' in this report.

The status of shares transferred to IEPF as at March 31, 2023, is detailed as under:

Particulars	No. of Shares
Balance as at April 1, 2022	4,65,800
Transferred during financial year 2022-23	28,900
Claims processed by IEPF Authority during the financial year 2022-23	(2,750)
Balance as at March 31, 2023	4,91,950

In terms of the above Rules, reminder letters were sent by the Company to all the shareholders who had not claimed their dividends for a consecutive period of 7 years, informing that their shares will be transferred to IEPF suspense account on the due date i.e., September 25, 2023, if they do not place their claim for unclaimed dividend amounts to the Company. Your Company has provided the related details on its website (Investors page).

b) Unclaimed deposits

Deposits remaining unclaimed for a period of seven years from the date they became due for payment, have to be transferred to the Investor Education and Protection Fund (IEPF) established by the Central Government. The concerned depositor can claim the deposit from the IEPF. As required under Section 125 of the Companies Act, 2013, the unclaimed and unpaid deposits together with interest for the year 2015-16 amounting to H0.25 Crore (previous year H0.32 Crore) that remained unclaimed and unpaid for a period of 7 years were transferred to IEPF during the year under review.

17. PARTICULARS REGARDING CONSERVATIONOF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND EXPENDITURE

During the year, your Company did not earn any income or incur any expenditure in foreign currency/exchange other than payment of Dividend 2022 and interim Dividend 2023 to NRIs on repatriation basis to an extent of H 0.16 Crore through authorised dealers.

Since your Company is a Housing Finance Company and does not carry-out any manufacturing activity, the requirement relating to providing the particulars relating to conservation of energy and technology absorption as per Sec 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules 2014, are not applicable.

Given the nature of business, the Company does not use energy intensively. The Company takes measures towards optimum energy utilisation and conservation, as its responsibility towards the Society by installation and use of Solar Power systems, Solar UPS and power saving lamps like LED lights instead of conventional CFL & Fluorescent lamps in some of its branches.

As a part of Save Green efforts and leverage of technology, a lot of paper work at branches and the Registered Office has been reduced (also refer para 5).

As a green initiative, the Company has started availing the services of ''Dess Digital Software'' for sharing the soft copies of agenda papers pertaining to all the Board and Committee meetings, with the Directors and executives. The other steps include;

â¢ Disposal of E-waste done through the certified e-waste vendor.

â¢ Minimised use of packaged drinking water to reduce the use of plastic bottles.

â¢ Reduced exterior lighting including front lights, Glow sign Boards, etc.

â¢ Old Fluorescent Tubes (FT) & Compact Fluorescent Lamp (CFL) are being replaced with LED.

â¢ Old Air Conditioners are being replaced with power saving ones.

â¢ Old Desktops have been replaced with All-in-one systems.

â¢ Proper earthing done, to avoid wastage of power.

18. DIRECTORS & KEY MANAGERIAL PERSONNEL APPOINTMENTS / RE- APPOINTMENTS:

The Board of Directors made the following appointments/ re-appointments based on the recommendations of the Nomination Remuneration & HR Committee on fit and proper criteria and performance evaluation of the Directors:

1) Shri. Arvind Narayan Yennemadi was appointed as an Independent Director at the Annual General Meeting held on September 07, 2022 for a tenure of 3 years up to the conclusion of the Annual General Meeting of the Company for the financial year 2024-25.

2) Shri. Anup Sankar Bhattacharya was appointed as an Independent Director at the Annual General Meeting held on September 07, 2022 for a tenure of 3 years up to the conclusion of the Annual General Meeting of the Company for the financial year 2024-25.

3) Shri. Suresh Srinivasan Iyer was appointed as the Managing Director and Chief Executive Officer (CEO) of the Company by the Board of Directors on March 18, 2023 initially for a fixed term of 3 years and further extendable to 2 years. The appointment was approved by the members through Postal Ballot on June 04, 2023.

4) Shri. K Satyanarayana Raju, Managing Director and CEO of Canara Bank was appointed as an Additional Director (Non-executive Promoter) on the Board of the Company w.e.f. April 26, 2023 for a tenure upto the date of his superannuation i.e., December 31, 2025. He has been elected as the Chairman of the Board, at the said meeting.

5) Shri. Murali Ramaswami has been appointed as an Additional Director (Non-executive Independent) by the Board of Directors of the Company on June 19, 2023.

6) Shri. Ajay Kumar Singh has been appointed as an additional director and Deputy Managing Director by the Board on June 19, 2023.

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Shri. Debashish Mukherjee is liable to retire by rotation at the ensuing AGM and is eligible for re-appointment. The agenda relating to re-appointment of Shri. Debashish Mukherjee, appointment of Shri. K Satyanarayana Raju (Non-executive Promoter), re-appointment of Smt. Shubhalakshmi Panse (Non-executive Independent), appointment of Shri. Murali Ramaswami (Non-executive Independent) and approval for appointment of Shri. Ajay Kumar Singh are included in the Notice of the ensuing Annual General Meeting and complete particulars of the Directors are provided in the Explanatory Statements forming part of the said Notice.

The directors had filed their consent(s) and declaration(s) that they are not disqualified to become directors in terms of the provisions of Companies Act, 2013 and related Rules.

Shri. Suresh Srinivasan Iyer, Managing Director and CEO of the Company has declared that he is holding 100 nos. of equity shares, Further, as per his declarations, he has not taken any loan(s) from the Company.

All the other Directors have intimated to the Company that they are neither holding any shares nor taken any loan(s) from the Company.

Brief profile of all the Directors are provided in page Nos. 22 to 25 of this Annual Report.

Key Managerial Personnel:

Shri. Suresh Srinivasan Iyer, on his appointment as the Managing Director and Chief Executive Officer (CEO) of the Company by the Board of Directors on March 18, 2023, has been designated by the Board as the Key Managerial Personnel.

Shri. Prashanth Joishy, Deputy General Manager and the Chief Financial Officer of the Company had stepped down from the post of Chief Financial Officer on January 03, 2023, after office hours. Shri. Prashant Joishy, Deputy General Manager, continues to be on the rolls of the Company.

Shri. Apurav Agarwal, ACA, was appointed as the Chief Financial Officer and Key Managerial Personnel of the Company w.e.f. January 04, 2023 by the Board of Directors of the Company at its Meeting held on January 03, 2023. The appointment is in terms of the provisions of Section 203 and all other applicable provisions of the Companies Act, 2013 read with the applicable Rules.

Smt. Shamila M, General Manager and Key Managerial Personnel opted for voluntary retirement and was relieved from the services on May 27, 2023.

Smt. Veena G Kamath, Company Secretary and Key Managerial Personnel resigned on June 16, 2023 on account of relocation. She will continue to discharge her duties during the notice period.

Resignation/Vacation of Office:

Shri. G Naganathan (DIN: 00594503), Non-executive Independent Director on the Board of Company has vacated office on the conclusion of the 35^th Annual General Meeting of the Company on September 7, 2022, on completion of his tenure.

The tenure of office of Smt. Shubhalakshmi Aamod Panse, Non-executive and Independent Director, will be completed on conclusion of the ensuing Annual General Meeting of the Company and the proposal for her re-appointment is being placed before the members at the ensuing Annual General Meeting.

Shri. Amitabh Chatterjee, Deputy Managing Director was repatriated and transfered back to Canara Bank on June 01, 2023.

Shri. Satish Kumar Kalra, Non-executive and Independent Director, has resigned on June 06, 2023 on personal grounds.

Retirement by rotation and re-appointment:

In terms of Section 152 and all other applicable provisions of the Companies Act, 2013, and the Articles of Association of the Company, Shri. Debashish Mukherjee, Director (Nonexecutive and Promoter) retire by rotation at the ensuing

Annual General Meeting and being eligible, offers himself for re-appointment. The agenda relating to re-appointment of Shri. Debashish Mukherjee forms part of the Notice convening the ensuing Annual General Meeting and all other relevant information as per SEBI Regulations are provided in the explanatory statement.

All the appointments and re-appointments of Directors are made by the Board of Directors on the recommendations of the Nomination Remuneration & HR Committee on fit and proper criteria and also based on the performance evaluation of the Directors.

All the appointments and re-appointments mentioned above, which form part of the Notice of the ensuing Annual General Meeting of the Company, are recommended by your Directors to the members for appointment/re-appointment/approval.

19. MEETINGS OF THE BOARD

During the Financial year 2022-23, eleven meetings of the Board of Directors were held and the related details, including that of various committees constituted by the Board, are made available in the Report of Directors on corporate governance forming part of this Annual Report placed before the members. Your Company has complied with all the requirements as applicable under Companies Act, 2013 and related rules, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and also the Master Direction -Non-Banking Financial Company -Housing Finance Company (Reserve Bank) Directions, 2021, in relation to the Board of Directors and the Committees of the Board.

Committees of the Board:

The Board has constituted seven Committees viz. the Audit Committee, the Nomination Remuneration & HR Committee, the Corporate Social Responsibility Committee, the Stakeholders Relationship Committee, the Risk Management Committee, the Management Committee and the IT Strategy Committee.

A detailed note on the composition of the Board and its Committees and other related particulars are provided in the Report of Directors on corporate governance forming part of this Annual Report.

20. DIRECTORS'' RESPONSIBILITY STATEMENT

In accordance with the provisions of section 134(3)(c) of the Companies Act, 2013 and based on the information provided by the management and review of the draft statement by the Audit Committee, the Board of Directors report that-

a) In the preparation of the annual accounts for the year ended on March 31, 2023, the applicable accounting standards have been followed and there are no material departures;

b) The Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the financial year ended on March 31, 2023 and of the profit of the Company 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 Company and for preventing and detecting fraud and other irregularities;

d) The Directors had prepared the annual accounts on an ongoing concern basis;

e) This being a listed Company, the Directors had laid down internal financial controls to be followed by the Company 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.

Declaration by Independent Directors:

The Independent Directors have given declarations to the Company in terms of Section 149(7) and 149(8) of the Companies Act, 2013 and Regulation 25(8) of SEBI (LODR) Regulations, 2015 that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI (LODR), 2015. There has been no change in the circumstances affecting their status as Independent Directors of the Company.

All the Independent Directors of the Company are persons of integrity, expertise and experience and have obtained certificates from the Institute notified under Section 150(1) of the Act, either by completing the online proficiency selfassessment test or by way of exemptions from taking the tests, since they were Directors for more than 10 years from the date specified.

Code of Conduct:

In terms of Regulation 26(3) of the SEBI (LODR) Regulations, 2015, all the members of the Board and Senior Management Personnel have affirmed compliance with the Code of

Conduct of Board of Directors and Senior Management for the FY 2022-23. As required under Schedule V(D) of the said Regulations, a declaration signed by the Managing Director & Chief Executive Officer of the Company stating that the members of the Board and the Senior Management Personnel have affirmed compliance of their respective Codes of Conduct, is placed as an Annexure to the corporate governance report.

21. NOMINATION REMUNERATION AND HR COMMITTEE (NRC) POLICY

Your Company has constituted a Nomination Remuneration and HR Committee (NRC)'' of the Board in terms of Section 178 of the Act, Regulation 19 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and RBI Master Directions for HFCs, 2021. This Committee identifies persons who are qualified to become Directors of the Company. The appointment, renewal, re-appointment, re-categorisation and/or removal of the Directors so identified, including extension or continuation of the term of appointment, will be recommended by the NRC to the Board. This Committee has also laid down the criteria to identify persons who may be appointed to the senior management of the Company. The NRC has formulated the criteria for determining qualifications, positive attributes and independence of a Director, carrying out evaluation of every Director''s performance, performance of the Board and that of the Committees. The NRC Policy of the Company covering all the above aspects is made available on the official website of the Company in terms of Section 134(3) of the Companies Act, 2013. The Board has ensured evaluation of performance of the Board, its Committees and of the individual directors through the meeting of independent directors, meeting of the Nomination Remuneration & HR Committee and evaluation by each of the directors independently, for the year ended March 31, 2023.

22. CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY

The Company has given importance to promote education including special education for tribal students, Construction of class room blocks for Government schools, construction of girls Hostels, providing stationeries and furniture to Government schools, setting up of ''Mini Science Labs'' (TINKER Labs), vocational training, skill enhancement programmes, renovation of Anganawadis, scholarship for under privileged, support for girl child education, providing sanitation and drinking water facility. The Company also contributed for health care by providing medical equipment and machineries, supported old age homes, orphanages

and residential homes for differently abled people, installed RO water purification systems in various schools and hospitals, constructed shelters for animal welfare, donated veterinary equipment and machineries to carryout rescue, treatment and rehabilitation of injured animals. In order to promote renewable energy sources, the Company has contributed towards installation of solar power systems at government schools and solar lighting systems in various villages. The Company has taken various welfare measures for girl child, sports and for women empowerment.

The activities undertaken by the Company under CSR is pan India basis and the projects are executed by Registered Office and our branches in those areas. The total amount/ budget under CSR for the FY 2022-23 was H1180.63 lakhs. The total amount spent under the CSR activities in FY 202223 is H782.72 lakhs. The balance amount of H397.89 lakhs which is already sanctioned in the FY 2022-23 has been transferred to unspent CSR Account during April, 2023 as per provisions of Companies Act and will be disbursed as per the progress of the work.

A summary of CSR details as on March 31, 2023 is given below:
		31-03-2023
Sl. No.	Activities undertaken	No. of organisation	Amount J
		(Beneficiaries)
1.	Animal welfare	5	51,23,948
2.	Construction/repair & renovation of schools/Hostels	3	33,15,100
3.	Desks & Benches/Tables/Almirah/Green Board/ Chairs Etc.	12	88,33,116
4.	Drinking water facility/Supply of others articles of necessity etc.	22	1,26,56,037
5.	Scholarship to students and sponsorship of child education	5	34,97,560
6.	Equipment/Medical Vans/Drinking water facility to Hospitals	13	2,16,64,739
7.	Supported/Equipment to old age homes, orphanages, and residential homes for differently abled people	2	11,09,538
8.	Providing education materials including books, school bags, etc. to the poor children of government schools or schools situated in rural/backward areas	4	11,29,892
9.	Providing training facilities to enhance vocational skills to the poor section of the society	1	3,10,500
10.	Renewable energy projects	20	1,30,69,953
11.	Welfare measures	6	36,57,626
12.	Promoting Tribal Sports	1	7,50,000
13.	Women Empowerment	4	31,54,330
Grand Total		98	7,82,72,339
The Annual Report on CSR activities including brief contents are provided as Annexure 2 to this report.

23. RISK MANAGEMENT POLICY

The Company has a structured Risk Management Framework, designed to identify, assess and mitigate risks appropriately. Your Company has constituted a Risk Management Committee with five Directors, Chief Risk Officer (CRO), Chief Compliance Officer (CCO) and the General Manager of the Company. The Committee is responsible for monitoring and reviewing risk management policy & plan and managing enterprise wide risk. The key risks associated with the business of the company, causes and efficacy of the measures taken to mitigate are

monitored by the committee. Details regarding the same are covered in the management discussion and analysis report which forms part of this Annual Report. In terms of Section 134(3)(n) of the Act, your Directors wish to state that your Company has adhered to the Risk Management Policy. The above policy was reviewed during the year.

24. AUDIT AND INTERNAL CONTROL

Your Company has strengthened the existing internal control systems by introducing measures for minimising operational risks commensurate with the nature of its business and size of operations by reviews at periodical

intervals. Further, your Company has reviewed delegation of authorities and streamlined standard operating procedures for all areas of its business, operations, functions, strengthened the Offsite Transaction Monitoring System (OTMS) to track transactions, early-warning signals across all branches by introducing innovative monitoring tools.

The National Housing Bank conducts inspection of your Company on an annual basis. During the year, the NHB conducted regular inspection of your Company during January 2023 and February 2023, for the position as at March 31, 2022. The Report has been received and the Company has sent a reply within the prescribed time.

Your Company has also put in place a well-defined policy on Risk Based Internal Audit (RBIA) and as per the said policy, 189 branches and 1 CPC were audited in the FY 2022-23.

During the year, 46 loan accounts pertaining to 5 branches, amounting to H5.15 crores has been declared as fraudulent and have been reported to the authorities/ regulators. The Company has classified these accounts as Non-performing Assets and made 100% provision in line with regulatory guidelines. The Audit Committee reviews the audit reports/ remarks/ observations and replies/ compliances including the compliance of KYC norms.

Regular inspection of your Company for review period August 01, 2020 to July 31, 2022 was conducted by Canara Bank. The compliance on the observations were reviewed by the Audit Committee and the Board. Management Audit by Canara Bank was conducted during September-2022 for the review period January 01, 2021 to August 31, 2022.

Reporting of Frauds

There was no instance of fraud during the year under review, which required the Statutory Auditors to report to the Audit Committee and / or to the Board as required under Section 143(12) of the Act and the rules made thereunder.

25. SECRETARIAL AUDIT & SECRETARIAL COMPLIANCE

As required under section 204 of the Companies Act, 2013 and Rules thereof, the Board appointed M/s Swayambhu Viswanathan, Practising Company Secretaries, for conducting the ''Secretarial Audit'' of the Company and for submission of the Annual Secretarial Compliance Report for the financial year 2022-23. The Secretarial Audit for FY 2022-23 was conducted as required u/s.204 of the Companies Act 2013, Regulation 24A of SEBI(LODR) Regulation 2015, by Shri. Swayambhu Viswanathan, FCS, Practising Company Secretary and his team. The report

does not contain any qualification, reservation or adverse remark. The said report also includes the affirmation as per NSE Circular No. NSE/CML/ 2023/09 dated January 25, 2023 and NSE Circular No. NSE/CML/25 dated March 29, 2023 on Standard Operating Process under SEBI (PIT) Regulations, 2015 for ensuring compliance with Structured Digital Database ("SDDâ). The Secretarial Audit Report issued by the Practising Company Secretaries is enclosed to the Report of Directors as Annexure -2 in terms of Section 134(3) (f) read with Section 204(1) of the Act.

In addition to the Secretarial Audit Report, Secretarial Compliance Report has also been issued by the PCS as per the SEBI Circular No.CIR/CFD/CMD1/27/2019 dated February 08, 2019 and NSE Circular No.NSE/CML/2023/30 dated April 10, 2023. The said report has also been submitted to the Stock Exchanges within the prescribed timeline.

Secretarial Standards

The Company has complied with the applicable Secretarial Standards i.e., SS-1 and SS-2 issued by the Institute of Company Secretaries of India for meetings and has referred to Secretarial Standards SS-3 for Dividend and SS-4 for Board''s Report, for good governance.

Loans, Guarantees or Investments:

Since the Company is a NBFC-HFC, the disclosures regarding particulars of the loans given, guarantees given and securities provided is exempt under the provisions of Section 186 (11) of the Companies Act, 2013. As regards investments made by the Company, the details of the same are provided in notes to the financial statements of the Company for the year ended March 31, 2023.

Related Party Transactions:

The particulars of contracts or arrangements with the ''Related Parties'' referred to in sub-section (1) of Section 188 of the Act, are furnished in Note No.44 of the Notes forming part of the financial statements for FY 2022-23, forming a part of the Annual Report. The particulars of Related Party Transactions as required u/s sec 134(3)(h) in the prescribed format (AOC-2) is attached to this Report as Annexure-3.

STATUTORY AUDITORS

M/s. B Srinivasa Rao & Co (Registration No.: 008763S) and M/s. B K Ramadhyani & Co. LLP, Chartered Accountants

(Registration No.: 002878S/S200021) are the joint Statutory Central Auditors of the Company to hold office for a period of three consecutive years from the conclusion of the 34^thAnnual General Meeting upto the conclusion of the 37^thAnnual General Meeting to be held for the Financial Year 2023-24.

The Auditors'' report for the FY 2022-23 annexed to the financial statement for the year under review, does not contain any qualifications.

26. COST RECORDS AND COST AUDIT

Maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Companies Act, 2013 are not applicable for the business activities carried out by the Company.

27. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In terms of Regulation 34(2) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report forms part of this Annual Report.

28. CORPORATE GOVERNANCE

As required under the Companies Act, 2013, Regulation 34 read with Schedule V of the SEBI (LODR) Regulations, 2015 and RBI Master Directions for HFCs, 2021, the ''Report of Directors on corporate governance'' for the year FY 202223 is placed in this Annual Report.

The said Report covers in detail the Corporate Governance Philosophy of the Company, Board Diversity, Directors appointment and remuneration, declaration by Independent Directors, Board evaluation, familiarisation programme, vigil mechanism, etc. The Auditors'' Certificate on corporate governance is provided with this report as Annexure-4.

Business Responsibility & Sustainability Report

For the Financial Year 2021-22, the Company had voluntarily reported it''s first Business Responsibility and Sustainability Report (BRSR) as an annexure to the Report of Directors forming part of the Annual Report. As per SEBI (LODR) Regulations, 2015, with effect from the financial year 2022-23, the top 1000 listed entities (based on market capitalization) shall mandatorily submit a Business Responsibility and Sustainability Report (BRSR) describing the initiatives taken by them from an environmental, social and governance (ESG) perspective, in the format as

specified by SEBI from time to time. In compliance with the said Regulations, the BRSR for FY 2022-23 is provided as a part of this Report as Annexure-6.

Board Evaluation:

The Board of Directors has carried out an annual evaluation of its own performance, performance of the Board committees and that of individual directors pursuant to the provisions of the Act and SEBI Listing Regulations. In terms of Regulation 17(10) of the SEBI (LODR) Regulations, 2015 read with the SEBI Circular No. SEBI/HO/CFD/ CMD/ CIR/P/2017/004 dated January 05, 2017, your Company has put in place the ''Board and Director''s Evaluation Policy'' laying down a framework for evaluation of the Board, its Committees and of the individual directors with defined attributes for evaluation. The Board has evaluated the performance of the independent directors including their criteria of independence as specified in the said regulations and their independence from the management. The directors who were subject to evaluation did not participate in their own evaluation. The results of the evaluation exercise were shared with the Board in subsequent Board Meeting(s).

29. SAVE GREEN EFFORTS & RESPONSIBILITY TOWARDS SOCIETY

Can Fin Homes has always extended its support to the save green efforts mooted by the Ministry of Corporate Affairs (MCA), Government of India. Minimising paper usage by increasing data storage digitally, dispatch of Certificates/ information by way of mail to the customers, utilization of solar energy to light the branches and for computer operations, are few of our initiatives in this direction.

As in the previous years, the Company continues to publish only the statutory disclosures in the print version of the Annual Report. Electronic copies of the Annual Report, Annual General Meeting Notices and such other notices are being sent by e-mail to all members whose e-mail addresses are registered with the Company/ RTA/ Depository participants (DP).

Further, the relaxations provided under various MCA circulars issued from April 13, 2020 to December 28, 2022 and SEBI Circulars issued from March 12, 2020 to January 05, 2023 have been extended till September 30, 2023 and in compliance of the said circulars, the Company had been sending Notices for the general meetings and Postal Ballot only through e-mails to the addresses registered by the members with the Company/RTA/DP and the general meetings have been conducted through VC/OAVM facility;

and e-voting facilities had been provided for remote e-voting as well as voting during the general meetings.

Hard copies of the said documents were sent to only those members and holders of securities/persons who were eligible to receive the same and who had requested for the same as prescribed under provisions of Companies Act and the SEBI LODR Regulations.

The Company has been discharging its Corporate Social Responsibility diligently and has extended its support towards green initiatives and details are covered in para 22 of this report.

30. OUTLOOK FOR 2022-23

Adherence to sound, ethical business practices will continue in the pursuit of qualitative growth, with consistent focus on Asset Quality, Profitability and Liquidity.

While the Company will lend mainly to the salaried category, loans to the self-employed and non-professional category of borrowers in safe geographies will be provided. Thrust areas will be the affordable and mid-segment Housing.

The Company will follow its cost-conscious approach and will persistently monitor collection efforts.

31. ACKNOWLEDGEMENT

Your Directors would like to thank Canara Bank, the promoter, for their continuous support.

Your Directors would like to acknowledge the role of all its stakeholders viz., shareholders, debenture holders, CP holders, depositors, bankers, borrowers, arrangers,

insurance partners, Statutory and Branch Auditors, Secretarial Auditors, panel advocates, panel valuers, agents and all others for their continuous support to your Company and the confidence and faith that they have always reposed.

Your Directors acknowledge and appreciate the guidance and support extended by all the Regulatory authorities including National Housing Bank (NHB), Reserve Bank of India (RBI), Insurance Regulatory and Development Authority of India (IRDAI), Securities Exchange Board of India (SEBI), Ministry of Corporate Affairs (MCA), Registrar of Companies, Karnataka, Stock Exchanges, NSDL and CDSL.

Your Directors thank the Rating Agencies, viz. ICRA, CARE, India Ratings & Research Ltd., (FITCH), the Registrars & Share Transfer Agents, Debenture Trustees and Trustees of public deposits of your Company, Government(s), local/ statutory authorities, and all others for their whole-hearted support during the year and look forward to their continued support in the years ahead.

Your Directors value the professionalism of all the employees who have proved themselves in a challenging environment and whose efforts have stood the Company in good stead and taken it to present level.

For and on behalf of the Board of Directors

Sd/-

Place: Bengaluru K Satyanarayana Raju

Date: June 19, 2023 Chairman

Mar 31, 2022

1. FINANCIAL RESULTS

The financial performance for the FY 2021-22 is summarised here below:

(H in Lakh)
Particulars	Year ended	Year ended
Particulars	March 31, 2022	March 31, 2021
Profit before Tax & Provisions	68,200.01	68,611.18
Less: Impairment on financial instruments	4,694.22	6,853.17
Profit before Tax	63,505.79	61,758.02
Less: Tax expenses:
(a) Provision for Tax - Current Year	17,039.02	17,163.72
- Previous Year	(446.20)	143.50
(b) Deferred Taxation	(197.54)	(1,155.23)
Profit after Tax	47,110.51	45,606.03
Add: Other Comprehensive Income
A. Items that will not be reclassified to profit or loss
(i) Actuarial (Gain )/ loss	(117.72)	(3.92)
(ii) Income tax relating to items that will not be reclassified to profit or loss	29.63	0.99
B. Items that will be reclassified to profit or loss
(i) Income tax relating to items that will be reclassified to profit or loss	0.00	0.00
Other Comprehensive Income	88.09	(2.93)
Total Comprehensive Income for the period	47,022.42	45,603.10
Balance brought forward from previous year	25,770.70	13,126.55
	72,793.12	58,729.64
Appropriations:
Transfer to Special Reserve u/s.36(1)(viii) of the Income Tax Act, 1961	13,188.88	12,054.62
Transfer to General Reserve	9,404.48	9,120.62
Additional Reserve (u/s.29C of the NHB Act)	9,404.48	9,120.62
Dividend (including interim dividend for FY22)	4,660.39	2,663.08
Tax on Distributed Profits	0.00	0.00
Balance carried forward to balance sheet	36,134.88	25,770.70
	72,793.12	58,729.64

Note: (i) Figures have been regrouped wherever necessary while preparing the statements as per IND-AS requirements.

(ii) The interim dividend of H 1.50 per equity share of face value of H 2/- each paid by the Company during December 2021 has been accounted.

(iii) The proposed final dividend of H 1.50 per equity share is not recognised as liability in the annual accounts as at March 31, 2022 (in compliance with IND AS 10 events after the reporting period). The same will be considered as liability on approval of shareholders at the 35th Annual General Meeting.

2. SHAREHOLDERS WEALTH

Particulars	Year ended	Year ended
Particulars	March 31, 2022	March 31, 2021
Earnings Per Share (EPS) (H)	35.38	34.25
Dividend Rate	150%	100%
Market Price of shares (H)	631.45	613.75
Market Capitalisation (H in Cr)	8,408.02	8,172.33

3. BUSINESS PERFORMANCE HIGHLIGHTS

The Company has performed well in the FY 2021-22 under all parameters, despite the second wave of Covid-19, adversely impacting Q1, but for which, the performance would have been even better. The Sanctions and Disbursements touched an all time high in the history of the Company during each of the quarters in September 2021, December 2021 and March 2022. In other words, the Company bettered its performance quarter on quarter and as a result, the Sanctions and Disbursement figures were highest in March 2022 quarter surpassing the previous highest in the December 2021 and September 2021 quarters.

a) Sanctions

The Company sanctioned loans amounting to H 3,018 Cr in March 2022 quarter as against H 2,762 Cr in the same quarter of the previous year. During the year, the Company has sanctioned loans amounting to H 8,896 Cr as compared to H 4,631 Cr in the previous year. Since inception, the cumulative loan sanctions of your Company stood at H 57,498 Cr at the end of the FY22. Average ticket size of incremental housing loans and non-housing loans are H 21.24 Lakh and H 8.66 Lakh, respectively.

b) Disbursements

Disbursements during Q4 FY 22 amounted to H 2,704 Cr which is the highest ever in any single quarter, in comparison to H 2,472 Cr during Q4 FY 21.

During the year, the Company has disbursed loans amounting to H 8,278 Cr as compared to H 4,331 Cr in the previous year. The cumulative loan disbursements from inception to the end of the FY22 is H 51,859 Cr.

c) Loans outstanding (Loan Book)

The total loan book as at March 31, 2022 was H 26,711 Cr, recording a growth of around 21% over last year (previous year H 22,105 Cr). At a portfolio level, housing loans constitute 90%, non housing loans comprise 10%.

d) Non-Performing Asset (NPA)

The Gross NPA of your Company as on March 31, 2022 was H 170.59 Cr (previous year H 201.91 Cr). The net NPA as on March 31, 2022 was H 80.71 Cr. The gross NPA percentage as on March 31, 2022 stood at 0.64% compared to 0.91% as on March 31, 2021.

e) Profits

Your Directors are happy to inform that during the year under review, despite the constraints induced by the Pandemic, your Company recorded an Operating Profit of H 682.00 Cr (previous year H 686.11 Cr), Profit Before Tax (PBT) of H 635.06 Cr (previous year H 617.58 Cr) and Profit After Tax (PAT) of H 471.11 Cr (previous year H 456.06 Cr).

During the year, Company has made provisions for standard assets amounting to H 34.45 Cr (before reversal of H 12.61 Cr of excess provision held as per RBI circular on Covid-19 regulatory package). Out of H 34.45 Cr, an amount of H 15 Cr has been kept as an additional provision for standard assets. Provision for standard assets was H 22.29 Cr during the previous year.

Provision was made for Non-performing assets amounting to H 22.29 Cr (previous year H 22.27 Cr). Provision as per Resolution Framework - 2.0 for COVID-19-related Stress amounting to H 3.09 Cr (in addition to the provision held in the books under RBI COVID-19 Regulatory Package as at March 31, 2021 utilised for the for provision under resolution framework - 2.0 in terms of the RBI guidelines of H 57.23 Cr). Provisions for Tax Expenses (including Deferred Tax) amounting to 163.95 Cr (previous year 161.52 Cr) was made.

f) Reserves

For reserves during the year, please refer statement of changes in equity for the period ended March 31, 2022 forming part of Financial Statements 2022.

g) Dividend

Your Company has a consistent track record of dividend payments. Your Directors, after giving due consideration to Capital Adequacy requirements, deferred tax liability, uncertainty on account of Covid-19, its impact on financial markets, the resultant impact on the Company and the Dividend Distribution Policy, are happy to recommend a dividend of H 1.50 per equity share (75%), for the financial year ended March 31, 2022, subject to the approval of the Shareholders at the ensuing Annual General Meeting of the Company.

The Board of Directors at their meeting held on December 14, 2021 had declared and paid the Interim dividend of H 1.50 per share for equity share of face value of H 2/- each.

The amount of dividend recommended for payment for the year under review is H 19.97 Cr. As per section 194 of Income Tax Act, a Company is required to deduct TDS @ 10% on dividend payment if it exceeds H 5,000/. However, no TDS shall be deducted in the case of dividend payment to any Insurance Company and Mutual Funds specified u/s 10(23D) of Income Tax Act. Moreover, as per section 195 of the Act, TDS is required to be deducted @ 20% plus surcharge on payment of Dividend to Non-Residents. The Dividend Distribution Policy as required under regulation 43A of SEBI (LODR) Regulations, 2015, is available on the website of the Company (web link https://www.canfinhomes.com/ pdf/Dividend-Distribution-Policy-2021-22.pdf).

4. EXPANSION OF BRANCH NETWORK

Your Company has been continuously expanding its network of branches.

During the last two years on account of restrictions imposed by the pandemic, only 4 new branches were opened and Yeshwanthpur (Bengaluru) Satellite office got upgraded as a branch. As at the end of FY22, your Company has an expanded network of 200 branches spread across 21 states comprising 187 branches and 13 Satellite Offices.

5. TECHNOLOGY INITIATIVES

In order to improve operational efficiency, your Company has implemented Central Know Your Customer (CKYC) and web-based Application software for Inspection & Audit. The website of your Company is interactive and user friendly.

Your Company has digital meetings platform for Board and Committee meetings which is paperless, secure, efficient and cost effective. Further, the Company has also digital platform for the tracking of Unpublished Price Sensitive Information (UPSI), in place.

Your Company is useing the Video Conferencing facility for Board meetings, review meetings with branches, clusters and interviews for recruitments etc.

Digitalization measures enabled your Company to connect and engage with Customers for business and collections.

Thrust on cyber security was given and all employees are regularly informed about security awareness and the do''s and don''ts to safeguard the information assets of the Company.

Business continuity plan is tested to address disruption risks in the event of an unforeseen situation and in the unprecedented lockdown this enabled us to continue operations smoothly.

Your Company is in the process of technology transformation by upgradation of digital technology & Core Banking System, aiming at improved efficiencies and increased revenue.

6. CUSTOMER-FRIENDLY INITIATIVES

True to its motto of ''Friendship Finance'', the Company follows transparent, fair and impartial practices for customers in all branches across the country. Necessary information related to our Company, products, schemes and charges is made available in the website of the Company.

As per RBI Master Directions, the Fair Practices Code (FPC) and Most Important Terms and Conditions (MITC) are regularly updated and uploaded on the Company''s website for ready reference of customers.

In the aftermath of the COVID-19 pandemic, required safety measures to safeguard the health and welfare of the customers like provision of sanitizers in all branches, wearing of masks, etc have been continued.

As a responsible Corporate entity, we have conducted Vaccination camps to inoculate and increase the immunity of the customers and the general public.

Our customers across the country have been provided with cotton bags by our branches, to discourage and discontinue the use of plastic which harms the ecosystem. Environment friendly measures like minimum use of paper is also continued with more emphasis on digital storage.

7. FINANCIAL RESOURCES

a) Refinance from National Housing Bank (NHB)

Under the NHB refinance scheme, your Company has got fresh refinance sanction amounting to H 2,200 Cr and availed H 430 Cr under Special Refinance Assistance. Your company availed an amount of H 2,700 Cr during the year out of unutilised balance of H 500 cr which was sanctioned during the previous year and fresh sanction of H 2,200 sanctioned during the year.

b) Borrowings from Bank

During the year, borrowings were diversified through a combination of short-term and long-term loans considering the asset liability management position to reap maximum benefit of interest rates. To diversify risks within banks, we had exposure from PSU/Private/NBFC. The aggregate bank borrowings (term loans plus overdraft) at the end of the financial year stood at H 17,982 Cr; the overall borrowings are within regulatory ceiling of 12 times of net owned funds.

The overall cost of borrowings from banks was 5.56% p.a. as on March 31, 2022. During the year, the long-term ''rating'' of the Company for term loans was [ICRA] AA (Stable), signifying high degree of safety regarding timely servicing of financial obligations.

c) Debentures

(i) Secured Non-Convertible Debentures

Debentures (SRNCD) raised during the year is H 2,135 Cr (previous year was H 275 Cr). The debentures are secured by way of a floating charge on the assets i.e., loan receivables specifically earmarked for the purpose in favour of the Debenture Trustees. Most of the investors in these debentures comprised major insurance companies, public sector banks, corporates, PF Trusts and investors of repute, indicating their perception of safety of your Company''s fundamentals and prospects.

The tenure of the outstanding debentures is range bound from 36 months to 39 months. The interest on these debentures was serviced regularly. The aggregate borrowings by way of Secured NCDs as on March 31, 2022 was H 3,260 Cr (previous year H 1,298 Cr) while the overall cost was 7.23% p.a. The debentures were rated, CARE AAA'' (Stable) by CARE Limited and ''[ICRA] AA (Stable)'' by ICRA Limited, signifying high degree of safety regarding timely servicing of financial obligations and carrying very low credit risk. These debentures were listed on the Wholesale Debt Market (WDM) segment of the National Stock Exchange of India Limited.

Your Company plans to raise Non - Convertible Debentures up to a maximum of H 4,000 Cr subject to cost benefit and asset liability management requirements and subject to the approval of members at ensuing Annual General Meeting.

(ii) Unsecured Non-Convertible Debentures

During FY2014-15, your Company had issued 8.94% Unsecured Non-Convertible Debentures in the nature of

Tier II Bonds aggregating H 100 Cr for a tenure of 10 years. These debentures are subordinated to present and future senior indebtedness of the Company and qualify as Tier II Capital under the National Housing Bank (NHB) guidelines for assessing Capital Adequacy Requirements. These Tier II Bonds were rated, Ind AA /Stable'' by India Rating & Research. Your Company has serviced the interest on the above debentures on the due date.

The Company is in compliance with the provisions of the Housing Finance Companies issuance of Non-Convertible Debentures on private placement basis (NHB) Directions, 2014 and RBI HFC Directions as applicable and has been regular in payment of principal and interest on the NCDs. Details of borrowings are provided in the notes to accounts.

The Company affirms that there has been no deviation or variation in the utilisation of proceeds of Non- Convertible debentures from the objects stated in the offer document or explanatory statement to the notice for the general meeting, as applicable. During the year there were no public issues.

The Company confirms that the non-convertible debentures which became due for redemption, have been paid in full and there are no unclaimed or unpaid nonconvertible debentures as on date.

d) Commercial Paper

Your Company mobilises funds through Commercial Paper (CP) for leveraging cost of borrowing to the extent of undrawn Bank limits. The outstanding at the end of March 2022 was H 2,795 Cr (previous year H 3,594 Cr). The effective cost of funds raised through CP was 4.40% p.a. The CP issued by your Company was rated at the maximum [ICRA] A1 rating by ICRA Ltd., and CARE A1 '' by CARE Limited. Instruments with this rating are considered to have very strong degree of safety regarding timely payment of financial obligations.

The Company affirms that there has been no deviation or variation in the utilisation of proceeds of Commercial Papers, from the objects stated in the offer document.

e) Deposits

During the year, your Company accepted new deposits of H 266.94 Cr (Previous year H 368 Cr). The outstanding balance of deposits (including interest accrued, but not due) as of March 31, 2022 was H 505 Cr (previous year H 442 Cr). The rate of interest on public deposits ranged from 4.5% to 6.75% while the overall cost (average) of deposits was 6.84%

As on March 31, 2022, a sum of H 13.93 Cr relating to 759 accounts of public deposits (H 11.88 Cr as on March 31, 2021 relating to 729 accounts) remained unclaimed/ overdue. Of this amount, a sum of H 7.18 Cr relating to 129 accounts (previous year H 6.87 Cr relating to 244 accounts) were claimed and renewed/settled up to May 31, 2022. Depositors were intimated regarding the maturity of deposits with a request to either renew or claim their deposits. Where the deposit remains unclaimed, reminder letters/SMS are sent to depositors periodically and follow up action is initiated through the concerned branch. Your Company has not defaulted in repayment of deposits or interest during the year. The Company has complied with the requirements under Chapter V of the Companies Act, 2013 to the extent applicable.

During the year, the deposit schemes of your Company have been rated ''ICRA AA '' Stable, by ICRA Ltd., indicating ''highest credit-quality'' and that the rated deposit programme carried the lowest credit risk. Your Company, being a Housing Finance Company registered with National Housing Bank (NHB), has complied with the Directions/ Guidelines issued by the NHB and RBI with regard to deposit acceptance and renewal. Your Company is exempted from the applicability of the Companies (Acceptance of Deposits) Rules 2014.

f) Mortgage-backed securities

Your Company did not opt for securitisation during the year under review. There were no securitised assets outstanding as on March 31, 2022.

8. REGULATORY COMPLIANCES

Compliance with Directions/ Guidelines of National Housing Bank (NHB) and other statutes

The Reserve Bank of India (RBI) on February 17, 2021 issued the Master Direction - Non-Banking Financial Company -Housing Finance Company (Reserve Bank) Directions, 2021 (RBI HFC Directions). These directions came into force with immediate effect. As mentioned in the notification, RBI has issued the subject Regulations to all Housing Finance Companies (HFCs), considering it necessary in the public interest, and being satisfied that, for the purpose of enabling the Bank to regulate the financial system.

Your Company has complied with the Master Direction - Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021. Your Company has adhered to all the guidelines and circulars issued by RBI on asset classification of credit/ investments, credit

rating, acceptance of deposits, Fair Practices Code (FPC), Most Important Terms and Conditions (MITC), Customer Complaints Redressal Mechanism, Know Your Customer (KYC), Anti-Money Laundering (AML) Guidelines, Asset Liability Management, Capital Adequacy Ratio (CAR) norms, Information Technology frameworks, CERSAI, Implementation of Indian Accounting Standards (Ind AS), Appointment of Statutory Auditors, Guidelines on Reporting and Monitoring of Frauds in Housing Finance Companies and all other related instructions, guidelines and circulars issued by the RBI in letter and spirit with an explicit notification on the website of your Company, to the extent applicable.

During the year, RBI vide Circular dated November 12, 2021 on ''Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances - Clarifications'', clarified certain regulatory guidelines to bring about uniformity in the implementation of IRACP norms. The guidelines included specification of due date / repayment date, classification of SMA & NPA, upgradation of accounts classified as NPA, etc. and your Company has complied with all the guidelines and have modified the Loan Agreement in tune with the Circular.

Key changes in the regulations are detailed in the Management Discussion & Analysis report

In terms of the Master Direction -Non-Banking Financial Company -Housing Finance Company (Reserve Bank) Directions, 2021, Housing Finance Companies -Corporate Governance (NHB) Directions, 2016, the Company has attached the Related Party Transactions Policy at the end of this Annual Report.

During the year, the NHB conducted regular inspection of your Company in March 2022, for the position as at March 2021. The management discussions are completed and their report is awaited.

During 2021-22, NHB vide its letter dated June 11, 2021, had imposed a penalty of H 29,13,234/- plus applicable GST @18%, for accepting individual deposits aggregating to H 14,56,617/- from five small depositors for a period of less than 12 months during 2018-19, in contravention with provisions of Para 4 of the HFCs (NHB) Directions, 2010. The Company had replied to NHB that five deposits aggregating to H 14,56,617/- (out of about 4000 deposits), were accepted in the year 2018-19 for a tenure of less than 12 months by three of its branches inadvertently. NHB has imposed a penalty of twice the amount of deposits collected, i.e., H 29,13,234/-. The Company has remitted the amount and had preferred an appeal to NHB against

the levy of penalty. The Company has taken all necessary measures to strengthen the checks and controls to ensure that such incidents do not recur.

a) IRDA Compliance

The Company is registered with IRDAI for carrying on the Insurance Agency Business and has complied with the applicable compliances under Insurance Regulatory and Development Act, 1999 and IRDAI (Registration of Corporate Agent) Regulations 2015, as amended from time to time. The Company has in place a policy on maintenance of records and destruction of old records. Being an insurance intermediary, Company is maintaining all the required information as per IRDAI rules.

b) Other Compliances

The Company, on April 04, 2018 had obtained the Legal Entity Identifier No.335800EJ9Y3XDP5ZDH81 as required under the RBI Circular No.RBI/2017-18/82-DBR. No.BP.92/21.04.048/2017-18 dated November 02, 2017 and as advised by NHB. The same has been renewed for the year 2022-23.

As required under Section 215 of the Insolvency and Bankruptcy Code, 2016, the Company has registered itself with National e-governance Services Limited (NeSL) authorized by IBBI obtained registration No.9160743937431514312. Further, we have executed an agreement with NeSL on February 28, 2019. We are authenticating the request by our creditors on NeSL on regular basis.

The Company has registered on TReDS Platform through Receivables Exchange of India Limited (RXIL) vide registration No.CA0000876.

9. COMPLIANCE UNDER THE COMPANIES ACT, 2013

Your Company has complied with the requirements of the applicable provisions of the Companies Act, 2013 and

related Rules during the FY 21-22. As per the requirements of Section 92(3) of the Act and Rules framed thereunder, the extract of the Annual Return for FY 2021-22 is uploaded on the website of the Company and the same is available at ''Events'' Page. The link for the same is canfinhomes. com/pdf/Events/35thAGM/MGT-7/FY202122.pdf. For more details regarding Compliances, please refer the Secretarial Audit Report enclosed to this Report as Annexure-1.

Significant and material orders

There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and the Company''s operations in future. The details of penalty levied by the Regulator NHB are provided in the Report on Corporate Governance.

There are no material changes and commitments affecting the financial position of the Company which have occurred after March 31, 2022 till the date of this report.

CSR activity:

The Company has given importance to Health Care, promoting education including special education for tribal students, Construction of class room blocks for Government schools, construction of girls Hostel, providing Stationeries and furniture to Government schools, setting up of Mini Science Labs (TINKER Labs), Vocational training, Skill enhancement programmes, renovation of Anganawadis, Scholarships for under privileged and girl child education. Company has also contributed for welfare measures by providing amenities for old age homes, orphanages and centres for residential homes have been constructed for accomodating homeless, displaced individuals and differently abled people. Contribution to Prime Minister''s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES) during COVID-19 pandemic to provide relief to those affected by any kind of emergency or distress situation like COVID-19 also forms part of its CSR activities. During COVID-19 Company has contributed towards setting up of Covid Care Centre and Vaccination for General Public. The Company also focused on animal welfare by providing Mobile van for treatment of injured animals, on Renewable energy by providing solar roof top panels, Solar Lights to village, conservation of natural resources by Installing RO water purification and Rejuvenation of Lakes.

The Company''s CSR measures also give a thrust to healthcare and has provided advanced medical equipment and ambulances to Hospitals all over India. Other information relating to the particulars on spending in terms of the Corporate Social Responsibility Policy and reasons for not spending/carrying forward the balance amount, if any, during the current year are disclosed in a separate

report Annexure - 2 to the Report of Directors, forming part of this Annual Report.

The activities undertaken by the Company under CSR is Pan India basis and the projects are executed by Registered Office and our branches in those areas. The total amount/ budget under CSR for the FY 2021-22 was H 10.70 Cr and undisbursed amount of Preceding years is H 1.74 Cr. The total amount spent under the CSR activities in FY 2021-22 is H 8.25 Cr (including H 1.66 Cr of preceding years). The balance amount of H 4.11 Cr which is already sanctioned in FY 2021-22 has been transferred to unspent CSR Account as per provisions of Companies Act and will be disbursed as per the progress of the work.

10. CAPITAL ADEQUACY

The Capital Adequacy Ratio (CAR) of your Company as at March 31, 2022 stood at 23.15% (previous year 25.46%) as against the Regulatory benchmark of 15% prescribed by the National Housing Bank (NHB) and RBI Master Direction. Impairment Reserve

11. DEPRECIATION

Depreciation was calculated on the Written Down Value Method based on useful life, in the manner prescribed in Schedule II to the Companies Act, 2013.

12. DEFERRED TAX ASSET (DTA)

During the year, Deferred Tax Asset (net) of H 1.98 Cr (previous year H 11.55 Cr) was considered in the Statement of Profit & Loss, on account of various components of asset & liabilities. The DTA outstanding at the end of the March 2022 was H 47.73 Cr (previous year H 45.45 Cr).

13. RECOVERY ACTION UNDER SECURITISATION & RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 (SARFAESI ACT)

During the year, your Company initiated action against 879 defaulting borrowers under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest ("SARFAESI ") Act, 2002 and recovered H 49.48 Cr (previous year H 34.00 Cr) from borrowers. Of this H 9.66 Cr (previous year H 9.31 Cr) was recovered by way of sale of assets under SARFAESI. Apart from this H 1.45 Cr was recovered in Written off accounts (Previous year H 0.31 Cr).

14. LISTING OF SECURITIES:

The equity shares of the Company continued to be listed on the BSE Limited (BSE), Mumbai, and the National Stock Exchange of India Ltd. (NSE), Mumbai.

The non-convertible debentures issued on private placement are listed on National Stock Exchange of India Ltd.

As per SEBI Circular SEBI/HO/DDHS/P/CIR/2021/613 dated August 10, 2021, captioned "Operational Circular for issue and listing of Non-convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paperâ the Company has also listed its Commercial Papers (CPs) on BSE Limited (BSE).

15. HUMAN RESOURCES DEVELOPMENT

The total number of employees of the Company was 909 (799 regular and 110 on contract) as on March 31, 2022 as against 887 (756 regular and 131 on contract) as at the end of the previous year.

During the year, training in credit, information technology, human relations, customer service, Grievance redressal, finance, taxation, marketing, fraud prevention, KYC & AML and other topics of importance was imparted to employees and executives. Our employees are quite adept at the use of technology and could therefore adapt to the work from home scenario, when warranted.

During FY 21-22, no employee, other than the Managing Director who earns a remuneration of H 12.5 Lakhs per month, was employed for a part of the year with a remuneration of H 9.5 Lakh or more per month. The ratio of remuneration of each Director to the median of employees'' remuneration and such other details as required under Sec 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 and 2016 are furnished below:

(i) Ratio of remuneration of each director to the median employees'' remuneration for FY 2022

The ratio of the remuneration of Managing Director to the median remuneration of the employees (regular employees) of the Company for the FY 2021-22 was 12.15: 1

The ratio of the remuneration of Dy. Managing Director to the median remuneration of the employees (regular employees) of the Company for the FY2021-22 was 2.5: 1

(ii) Percentage increase in the remuneration of each Director and Key Managerial Personnel in FY 2022

The percentage increase in remuneration in the financial year for the Managing Director & CEO was NIL and that of the Deputy Managing Director was (0.87%). The other Key managerial personnel of the Company are the General Manager, the Chief Financial Officer and the Company Secretary and the percentage increase in their remuneration was 17.53%, 20.22% and 19.50% respectively.

(iii) Percentage increase in the median remuneration of employees in FY 2022

The total number of permanent employees of the Company were 799 as on March 31, 2022. Apart from the permanent employees, there were 110 employees on contract as on March 31, 2022.

The percentage increase in the median remuneration of employees in the financial year was 33.84%

Average percentage increase in remuneration of the employees other than managerial personnel in the last financial year was 3.75% and that of Managerial remuneration was 20.45% during the period under review.

(v) Prevention of Sexual Harassment of Women at the Workplace.

The Company has in place "Equal Opportunity Policyâ as per Section 21(1) of Rights of the Persons with Disabilities Act, 2018.

(vi) Affirmation that the remuneration is as per the Remuneration Policy of the Company:

It is affirmed that the remuneration paid is as per the Remuneration Policy, applicable for Directors, Key Managerial Personnel and other employees, adopted by the Company.

16. TRANSFER OF UNCLAIMED AND UNPAID DIVIDEND/ DEPOSIT AMOUNTS TO THE INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

In terms of section 124 and 125 of the Companies Act, 2013, the amounts (dividend, deposits etc., with interest) that remained unclaimed and unpaid for more than 7 years from the date they first became due for payment, should be transferred to I EPF. As an investor-friendly measure, your Company has been intimating the shareholders / depositors/investors to encash their dividend warrant/ renew matured deposits or lodge their claim for payment of due, if any, from time to time and claims made are settled. As per the statutory requirements, the details of such amounts are made available on the website of MCA-IEPF as well as on the Company''s website. In order to receive prompt payment of dividend, the members/ investors are requested to DEMAT the shares held in physical mode, register bank account particulars, opt for ECS facility, register nomination and intimate change of address, if any, to the Company/ Depository Participants promptly.

a) Unclaimed dividends

As at March 31, 2022, dividends aggregating to H 1.96 Cr (Previous year H 1.86 Cr) declared for the years FY14-15 to FY20-21 (of which H 0.34 Cr related to dividend for the year 2021), had not been claimed by shareholders. As an investor friendly measure, your Company has intimated shareholders to lodge their claims and related particulars were provided in the annual reports each year as well as on the website of your Company. The dividend pertaining to 201314, which remained unclaimed/unpaid amounting to H 0.20 Cr (in respect of 1,932 shareholders), was transferred to IEPF on September 03, 2021, after the settlement of claims by members received in response to the individual reminder letters sent by your Company to the respective members. The dividend pertaining to 2014-15 remaining unclaimed and unpaid, amounting to H 0.21 Cr (in respect of 2121 shareholders) as on March 31, 2022, would be transferred to IEPF during August 2022 after settlement of the claims received up to the date of completion of seven years i.e. on June 30, 2022.

The Company takes various initiatives to reduce the quantum of unclaimed dividend and has been periodically intimating the concerned shareholders, requesting them to encash their dividend before it becomes due for transfer to the IEPF.

b) Transfer of shares to IEPF Demat account

For more details, please refer ''General Information to shareholders'' in this report.

The status of shares transferred to IEPF as at March 31, 2022, is detailed as under:

Particulars	No. of Shares
Balance as at April 1, 2021	4,15,550
Transferred during financial year 2021-22	51,500
Claims processed by IEPF Authority during the financial year 2021-22	(1,250)
Balance as at March 31, 2022	4,65,800

In terms of the above Rules, reminder letters were sent by the Company to all the shareholders who had not claimed their dividends for a consecutive period of 7 years, informing that their shares will be transferred to IEPF suspense account on the due date, September 12, 2022, if they do not place their claim for unclaimed dividend amounts before the Company. Your Company has provided the related details on its website (Investors page).

c) Unclaimed deposits

Deposits remaining unclaimed for a period of seven years from the date they became due for payment have to be transferred to the Investor Education and Protection Fund (IEPF) established by the Central Government. The concerned depositor can claim the deposit from the IEPF. As required under Section 125 of the Companies Act, 2013, the unclaimed and unpaid deposits together with interest for the year 2014-15 amounting to H 0.32 Cr (previous year H 0.17 Cr) that remained unclaimed and unpaid for a period of 7 years were transferred to IEPF during the year under review.

17. PARTICULARS REGARDING CONSERVATIONOF ENERGY, TECHNOLOGY ABSORPTIONAND FOREIGN EXCHANGE EARNINGS AND EXPENDITURE

During the year, your Company did not earn any income or incur any expenditure in foreign currency/exchange other than payment of Dividend 2021 to NRIs on repatriation basis to an extent of H 0.11 Cr through authorised dealers.

Since your Company is a Housing Finance Company and does not own any manufacturing facility, the requirement relating to providing the particulars relating to conservation of energy and technology absorption as per Sec 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules 2014, are not applicable. Also the Company does not use energy intensively. The

Company is conscious of the importance of imbibing measures towards optimum energy utilisation and conservation. However, the Company as its responsibility towards the society, has taken measures towards optimum energy utilisation and conservation, like installation of Solar Power systems, Solar UPS and power saving lamps like LED lights instead of conventional CFL & Fluorescent lamps in some of its branches.

As a part of Save Green efforts and leverage of technology, a lot of paper work at branches and the Registered Office has been reduced (also refer para 5).

18. DIRECTORS & KEY MANAGERIAL PERSONNEL APPOINTMENTS / RE- APPOINTMENTS:

1) Shri Amitabh Chatterjee, DGM of Canara Bank was appointed as an additional Director and Whole-time Director (designated as Dy. Managing Director) by the Board w.e.f July 15, 2021, and the appointment was approved by the members at the Annual General Meeting held on September 08, 2021.

2) Shri Ajai Kumar was appointed as an Independent Director at the Annual General Meeting held on September 08, 2021 for a tenure of 3 years up to the conclusion of the Annual General Meeting of the Company for the financial year 2023-24.

3) Shri Arvind Narayan Yennemadi, FCA, has been appointed as an Additional Director (Non-executive Independent) by the Board of Directors of the Company on August 04, 2022.

4) Shri Anup Sankar Bhattacharya has been appointed as an Additional Director (Non-executive Independent) by the Board of Directors of the Company on August 04, 2022.

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Shri L V Prabhakar is liable to retire by rotation at the ensuing AGM. He is eligible for re-appointment. The agenda relating to re-appointment of Shri L V Prabhakar, appointment of Shri Arvind Narayan Yennemadi (Non-executive Independent) and appointment of Shri Anup Shankar Bhattacharya (Non

executive Independent) are included in the Notice of the ensuing Annual General Meeting and complete particulars of the Directors are provided in the Explanatory Statements forming part of the said Notice.

The directors had filed their consent(s) and declaration(s) that they are not disqualified to become directors in terms of the provisions of Companies Act, 2013 and related Rules. The directors have intimated to the Company that they are not holding any shares or taken any loan(s) from the Company.

Brief profile of all the Directors are provided in this Annual Report.

Key Managerial Personnel:

Shri Amitabh Chatterjee, DGM of Canara Bank was appointed as an additional Director and Whole-time Director (designated as Dy. Managing Director) and Key Managerial Personnel by the Board w.e.f July 15, 2021 and his appointment was approved by the members at the Annual General Meeting held on September 08, 2021.

Resignation/Vacation of Office:

Dr. Yeluri Vijayanand (DIN: 00594503), Non-executive and Independent Director on the Board of Company has vacated office on the conclusion of the 34th Annual General Meeting of the Company, on completion of his tenure.

The tenure of office of Shri Naganathan Ganesan, FCA, Nonexecutive and Independent Director, will be completed on conclusion of the ensuing Annual General Meeting of the Company.

Retirement by rotation and re-appointment:

In terms of Section 152 and all other applicable provisions of the Companies Act, 2013, and the Articles of Association of the Company, Shri L V Prabhakar, Director (Nonexecutive and Promoter) retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The agenda relating to re-appointment of Shri L V Prabhakar forms part of the Notice convening the ensuing Annual General Meeting and all other relevant information as per SEBI Regulations are provided in the explanatory statement.

All the appointments and re-appointments mentioned above, which form part of the Notice of the ensuing Annual

General Meeting of the Company, are recommended by your Directors to the members for appointment/re-appointment/approval.

19. MEETINGS OF THE BOARD

During the Financial year 2021-22, ten meetings of the Board of Directors were held and the related details, including that of various committees constituted by the Board, are made available in the Report of Directors on Corporate Governance forming part of this annual report placed before the members. Your Company has complied with all the requirements as applicable under Companies Act, 2013 and related rules, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and also the Master Direction -Non-Banking Financial Company -Housing Finance Company (Reserve Bank) Directions, 2021, in relation to the Board of Directors and the Committees of the Board.

Committees of the Board:

Currently the Board has seven Committees viz. the Audit Committee, the Nomination Remuneration & HR Committee, the Corporate Social Responsibility Committee, the Stakeholders Relationship Committee, the Risk Management Committee, the Management Committee and the IT Strategy Committee.

A detailed note on the composition of the Board and its Committees and other related particulars are provided in the Report of Directors on Corporate Governance forming part of this Annual Report.

20. DIRECTORS'' RESPONSIBILITY STATEMENT

a) In the preparation of the annual accounts for the year ended on March 31, 2022, the applicable accounting standards have been followed and there are no material departures;

b) The Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the financial year ended on March 31, 2022 and of the profit of the Company for that period;

d) The Directors had prepared the annual accounts on a going concern basis;

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.

Declaration by Independent Directors:

Code of Conduct:

In terms of Regulation 26(3) of the SEBI (LODR) Regulations, 2015, all the members of the Board and Senior Management Personnel have affirmed compliance with the Code of Conduct of Board of Directors and Senior Management for the FY20-21. As required under Schedule V (D) of the said Regulations, a declaration signed by the Managing Director & Chief Executive Officer of the Company stating that the members of the Board and the Senior Management Personnel have affirmed compliance of their respective Codes of Conduct, as on Annexure to Corporate Governance Report.

21. NOMINATION REMUNERATION AND HR COMMITTEE (NRC) POLICY

Your Company has constituted a Nomination Remuneration and HR Committee (NRC)'' of the Board in terms of Section 178 of the Act, Regulation 19 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and Para 3(II) of NHB Corporate Governance (National Housing Bank) Directions, 2016. This Committee identifies persons who are qualified to become Directors of the Company. The appointment, renewal, reappointment, re-categorisation and/ or removal of the Directors so identified, including extension or continuation of the term of appointment, will be recommended by the NRC to the Board. This Committee has also laid down the criteria to identify persons who may be appointed to the senior management of the Company. The NRC has formulated the criteria for determining qualifications, positive attributes and independence of a Director, carrying out evaluation of every Director''s performance, performance of the Board and that of the Committees. The NRC Policy of the Company covering all the above aspects is made available on the official website of the Company at https://www.canfinhomes.com/ pdf/ Nomination-Remuneration-and-HR-Policy-120419.pdf, in terms of Section 134(3) of the Companies Act, 2013. The Board ensures the annual evaluation of performance of the Board, its Committees and its individual directors through the meeting of Independent Directors, the NRC and evaluation by each of the directors independently.

22. CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY

The Company constituted a Corporate Social Responsibility (CSR) Committee of the Board as prescribed under Section 135 of the Companies Act 2013 and has put the CSR policy in place. The Company has focussed in Promoting

education including special education for tribal students, construction of class room blocks for Government schools, construction of girls Hostel, providing Stationeries and furniture to Government schools, setting up of Mini Science Labs (TINKER Labs), Vocational training, Skill enhancement programmes, renovation of Anganawadis, Scholarships for under privileged and girl child education. The Company also focuses on healthcare by donating advanced medical equipment to Hospitals during Covid-19 pandemic, and also in setting up of Covid Care Centre and Vaccination for General Public. Company has also donated ambulances to Hospitals all over India. Company has also contributed for welfare measures by providing amenities for old age homes, orphanages and centres for residential homes have been constructed for accomodating homeless, displaced individuals and differently abled people. Contribution to Prime Minister''s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES) during COVID-19 pandemic to provide relief to those affected by any kind of emergency or distress situation like COVID-19 also forms part of its CSR activities. Company also focused on animal welfare by providing Mobile van for treatment of injured animals, renewable energy by providing solar roof top panels and Solar Lights to village, conservation of Natural resources by Installing RO water purification and rejuvenation of Lakes.

The activities undertaken by the Company under CSR is PAN India basis and the projects are monitored by Registered Office and our branches in those areas. The total amount/ budget under CSR for the FY 2021-22 was H 10.70 Cr and undisbursed amount of Preceding years is H 1.73 Cr. The total amount spent under the CSR activities in FY 2021-22 is H 8.25 Cr (including H 1.66 Cr of Preceding years) has been transferred to unspent CSR Account as per provisions of Companies Act and will be disbursed as per the progress of the work. A summary of CSR details as on March 31, 2022 is given below:

	31-03-2022
Sl. Activities undertaken No.	No. of organisation (Beneficiaries)	Amount J
1. Animal welfare	1	7,17,926
2. Conservation of Natural Resources	4	13,66,850
3. Construction / Renovation / repair / up gradation of infrastructural facilities at government schools or schools situated in rural/backward areas	18	1,57,62,560
4. Contribution to the Prime Minister''s National Relief Fund or any other fund set up by the Central Government for socio economic development and relief and welfare of the Scheduled Caste, Scheduled Tribes, other backward classes, minorities and women.	1	1,00,00,000
5. Promoting Tribal Sports	1	9,00,000

	31-03-2022
Sl. Activities undertaken No.	No. of organisation (Beneficiaries)	Amount J
6. Providing education materials including books, school bags, etc. to the poor children of government schools or schools situated in rural/backward areas.	3	11,20,375
7. Providing financial assistance / grant / scholarship to poor and meritorious students for persuasion of higher / professional studies.	11	89,05,867
8. Providing infrastructure facilities for differently abled, old, homeless and destitute, like setting up old age homes, day care centers and such facilities	3	14,16,963
9. Providing materials such as computers, tables, chairs, benches, fans, lights, blackboards etc.	8	17,13,100
10. Providing needy equipments and other items to hospitals - Govt. hospitals, charitable hospitals managed by trust/ society	20	3,26,9,904
11. Providing of sanitary, drinking water, solar power facilities to school	2	8,40,681
12. Providing training facilities to enhance vocational skills to the poor section of the society.	2	15,70,000
13. Renewable energy Projects	3	24,95,930
14. Supplementing of Govt-schemes like mid- day meal by Corporates through additional nutrition	1	4,50,000
15. To Provide financial support for creating healthcare infrastructure for COVID care, establishment of medical oxygen generation and storage plants, manufacturing and supply of oxygen concentrators, cylinders and other medical equipment for countering covid19	1	26,00,000
Grand Total	79	8,25,51,156
The Annual Report on CSR activities including brief contents are provided as Annexure 2 to this report.

23. RISK MANAGEMENT POLICY

The Company has a structured Group Risk Management Framework, designed to identify, assess and mitigate risks appropriately. Your Company has constituted a Risk Management Committee with four Directors, Chief Risk Officer (CRO), Chief Compliance Officer (CCO) and two senior executives of the Company. In terms of Section 134(3)(n) of the Act, your Directors wish to state that your Company has adhered to the Risk Management Policy. The above policy was reviewed during the year. For web link please refer Annexure-5.

24. AUDIT AND INTERNAL CONTROL

Your Company strengthened existing internal control systems for reviews at periodical intervals and introduced measures for minimising operational risks commensurate with the nature of its business and size of operations. Further, your Company has reviewed delegation of authorities and streamlined standard operating procedures for all areas of its business/ operations/ functions, strengthened the Offsite Transaction Monitoring System (OTMS) to track transactions/ early-warning signals across all branches by introducing innovative monitoring tools. The National

Housing Bank conducts inspection of your Company on an annual basis. During the year, the NHB conducted regular inspection of your Company in March 2022, for the position as at March 2021. The management discussions are completed and their report is awited.

Your Company has also put in place a well- defined policy on Risk Based Internal Audit (RBIA) and as per the said policy, 186 branches and 4 CPCs were audited in the FY 20-21. Apart from the RBIA, considering the volume of business, 132 branches were also subjected to quarterly/ half yearly internal audit by appointed audit firms. During the year, 41 loan accounts pertaining to 4 branches, amounting to H 4.82 Cr has been declared as fraudulent and have been reported to the authorities/ regulators. The Audit Committee reviews the audit reports/remarks/ observations and replies/ compliances including the compliance of KYC norms. During the year, based on a complaint received, Canara Bank inspection team inspected 21 branches which led to detection of fraud in one branch amounting to H 3.93 Cr involving 37 individual housing loan accounts wherein Income statements/bank statements were found to be fraudulent. The Company has classified these accounts as Non-performing and provided 100% provision in line with regulatory guidelines. In these cases borrowers and

properties are available. The Company has clarified investors as well as stock exchanges in this regard. Company has also taken necessary action against the concerned staff. Further, to rule out any such possibilities and also to improve the workings, inspection was conducted during June 2022 in all branches of the Company with 25% of the branches inspected by an internal inspection team and 75% of the branches inspected by Audit firms covering all accounts sanctioned during the last two years.

Regular inspection of your Company for review period August 01, 2018 to August 31, 2020 was conducted by Canara Bank. The compliance report on the observations were submitted which were reviewed by the Audit Committee and the Board. Management Audit by Canara Bank was conducted during February-2021 for the review period August 01, 2018 to August 31, 2020.

Reporting of Frauds

There was no instance of fraud during the year under review, which required the Statutory Auditors to report to the Audit Committee and / or to the Board and or to the Central Government as required under Section 143(12) of the Act and the rules made thereunder.

25. SECRETARIAL AUDIT & SECRETARIAL COMPLIANCE

As required under section 204 of the Companies Act, 2013 and Rules thereof, the Board appointed M/s Kedarnath & Associates, Practising Company Secretaries, for conducting the ''Secretarial Audit'' of the Company and for submission of the Annual Compliance Report for the financial year 2021-22. The Secretarial Audit for FY21-22 was conducted as required u/s.204 of the Companies Act 2013, Regulation 24A of SEBI(LODR) Regulation 2015 and SEBI Circular No. CIR/CFD/ CMD1/27/2019 dated February 08, 2019, by S. Kedarnath, FCS, Practising Company Secretary and his team. The report does not contain any qualification, reservation or adverse remark. The Secretarial Audit Report issued by the Practising Company Secretary is enclosed to the Report of Directors (Annexure-1) in terms of Section 134(3) (f) read with Section 204(1) of the Act.

In addition to the Secretarial Audit Report, Secretarial Compliance report has also been issued by the Practicing Company Secretary as per the SEBI Circular No. CIR/CFD/ CMD1/27/2019 dated February 02, 2019, and the said report has been submitted to the Stock Exchanges.

Secretarial Standards

The Company complies with the mandatory Secretarial Standards i.e. SS-1 and SS-2 issued by the Institute of Company Secretaries of India and has referred to Secretarial Standards SS-3 and SS-4 for good governance.

Loans, Guarantees or Investments:

There are no particulars of loans, guarantees or investments made during the year in terms of Section 186(1) and 186(2) of the Act requiring disclosure to be made in the report of Directors as required under Section 134(3)(g) of the Act. In terms of Section 186(11) (a) the requirement relating to the disclosure is not applicable to a loan made, guarantee given or security provided by a Housing Finance Company.

Related Party Transactions:

The particulars of contracts or arrangements with the ''Related Parties'' referred to in sub-section (1) of Section 188 of the Act are furnished in Note No.44 of the Notes forming part of the financial statements for FY21-22, forming a part of the Annual Report. The particulars of Related Party Transactions as required u/s sec 134(3)(h) in the prescribed format (AOC-2) is attached to this Report as Annexure-3.

STATUTORY AUDITORS

M/s. B Srinivasa Rao & Co (Registration No.: 008763S) and M/s. B K Ramadhyani & Co. LLP, Chartered Accountants (Registration No.: 002878S/S200021) are the joint Statutory Central Auditors of the Company to hold office for a period of three consecutive years from the conclusion of the 34th Annual General Meeting for a tenure up to the conclusion of the 37th Annual General Meeting to be held for the Financial Year 2023-24.

The auditors'' report for the FY 2021-22 annexed to the financial statement for the year under review does not contain any qualifications.

26. COST RECORDS AND COST AUDIT

27. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In terms of Regulation 34(2) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report forms part of this Annual Report.

28. CORPORATE GOVERNANCE

As required under the Companies Act, 2013, Regulation 34 read with Schedule V of the SEBI (LODR) Regulations, 2015 and Housing Finance Companies -Corporate Governance (National Housing Bank) Directions, 2016, the ''Report of Directors on Corporate Governance'' for the year FY21-22 forms part of in this Annual Report.

The said Report covers in detail the Corporate Governance Philosophy of the Company, Board Diversity, Directors appointment and remuneration, declaration by Independent Directors, Board evaluation, familiarisation programme, vigil mechanism etc. The Auditors Certificate on Corporate Governance is provided with this report as Annexure-4.

Business Responsibility & Sustainability Report:

As per SEBI(LODR) Regulations, 2015, the requirement of submitting a business responsibility report shall be discontinued after the financial year 2021-22 and thereafter, with effect from the financial year 2022-23, the top 1000 listed entities (based on market capitalization) shall mandatorily submit a Business Responsibility and Sustainability Report (BRSR) describing the initiatives taken by them from an environmental, social and governance (ESG) perspective, in the format as specified by SEBI from time to time. Even during the financial year 2021-22, the top 1000 listed entities may voluntarily submit a business responsibility and sustainability report in place of the mandatory business responsibility report. For the Financial Year 2021-22 your Company has included the Business Responsibility and Sustainability Report (BRSR) in the Annual Report 2021-22. In compliance with the said Regulations, the BRSR is provided as a part of this Report as Annexure-6.

Board Evaluation:

The Board of Directors has carried out an annual evaluation of its own performance, board committees, and individual directors pursuant to the provisions of the Act and SEBI Listing Regulations. In terms of Regulation 17(10) of the SEBI (LODR) Regulations, 2015 read with the SEBI Circular No. SEBI/ HO/CFD/ CMD/ CIR/P/2017/004 dated January 05, 2017, your Company has put in place the ''Board and Director''s Evaluation Policy'' laying down a framework for evaluation of the Board, its Committees and of the individual Directors with defined attributes for evaluation. The Board has evaluated the performance of the Independent Directors including their criteria of independence as specified in the said regulations and their independence from the management. The Directors who were subject to evaluation did not participate in their own evaluation. The results of the evaluation exercise were shared with the Board in subsequent Board Meeting(s).

29. SAVE GREEN EFFORTS & RESPONSIBILITY TOWARDS SOCIETY

Can Fin Homes has always extended its support to the save green efforts mooted by the Ministry of Corporate Affairs (MCA), Government of India. Minimising paper usage by increasing data storage digitally, dispatch of Certificates/ information by way of mail to the customers, utilization of solar energy to light the branches and run computer operations, streamlining of the systems and procedures reporting, are few of our initiatives in this direction.

As in the previous years, we continue to publish only the statutory disclosures in the print version of the Annual Report. Electronic copies of the Annual Report, Annual General Meeting Notices and such other notices are being sent to all members whose e-mail addresses are registered with the Company/ Depository participants. Further, as per MCA general circular dated January 13, 2021 notices for the General meeting may be given only through e-mails registered with the Company/DP/RTA. As per SEBI Circular SEBI/HO/CFD/CMD2/ CIR/P/2021/11 dated January 1, 2021 the requirements of Reg.36(1)(b) and (c) and Reg.58 (1)(b) &(c) of the LODR are dispensed with for listed entities who conduct their AGMs during the calendar year 2021 (i.e. till December 31, 2021). Accordingly, the Company conducted the AGM through VC/OAVM facility. Further, MCA General Circular No. 02/2022 dated May 05, 2022 and SEBI Circular SEBI/HO/CFD/CMD2/ CIR/P/2022/62 dated May 13, 2022 has further extended relaxations to companies to conduct their AGMs through Video Conferencing (VC) or through other audio-visual means (OAVM) till December 31, 2022.

[Regulation 36(1)(b) and (c) of the LODR prescribes that a listed entity shall send a hard copy of the statement containing salient features of all the documents, as prescribed in Section 136 of the Companies Act, 2013 to the shareholders who have not registered their email addresses and hard copies of full annual reports to those shareholders, who request for the same, respectively. Regulation 58(1)(b) & (c) of the LODR extend similar requirements to entities which have listed their NCDs and CPs.

We have been discharging our Corporate Social Responsibility diligently and have extended our support to hospitals, education and the weaker sections of society. It has been our constant endeavour to facilitate advanced health care by providing medical equipment, ambulances etc. Literacy enhancement has also been one of the causes that we have continuously espoused with passion for ensuring a better future to the children and youth of our country. We have sanctioned H 10.70 Cr for FY 2021-22 and

spent H 8.50 Cr (H 1.66 Cr of Previous Years) towards various activities which have been detailed in point no.22 of this report.

30. OUTLOOK FOR 2022-23

The country has successfully overcome the first second and third wave of Covid-19 and revival of the economy has been good on account of the various measures taken and schemes introduced by the Government.

Your Company remains committed to keep its flag flying high and conduct its business by adhering to ethical practices and sound principles/procedures that have been followed through its journey of over 34 years.

Focus on the Salaried class customers will continue. We will continue lending for the Affordable and mid-segment Housing. Out thrust will be on Qualitative growth. There will be no dilution of concerted collection efforts to maintain good Asset Quality.

In order to increase profitability, monitoring the cost of funds will be a key function. Pursuit of growth, profitability, asset quality and liquidity will be our goal during this financial year also.

31. ACKNOWLEDGEMENT:

Your Directors would like to thank Canara Bank, the promoter, for their continuous support.

Your Directors would like to acknowledge the role of all its stakeholders viz., shareholders, debenture holders, CP holders, depositors, bankers, lenders, borrowers, merchant bankers, insurance partners, Statutory and Branch Auditors, Secretarial Auditors, panel advocates, panel valuers, agents and all others for their continuous support to your Company and the confidence and faith that they have always reposed.

For and on behalf of the Board of Directors

Sd/-

Place: Bengaluru L V Prabhakar

Date : August 04, 2022 Chairman

Mar 31, 2019

1. FINANCIAL RESULTS

The financial performance for the FY18-19 is summarised here below:

(Rs. in Lakh)

Particulars	Year ended March 31, 2019	Year ended March 31, 2018
Profit before Tax & Provisions	47,059.70	45,318.40
Less: Impairment on financial instruments	109.22	2,210.00
Profit before Tax	46,950.48	43,108.40
Less: Tax expenses:
(a) Provision for Tax - Current Year	17,203.91	16,075.46
- Previous Year	151.54	(334.38)
(b) Deferred Taxation	(78.67)	(1,251.91)
Profit after Tax	29,673.69	28,619.23
Add: Other Comprehensive Income
A. Items that will not be reclassified to profit or loss
(i) Actuarial (Gain )/ loss	(4.21)	(64.53)
(ii) Income tax relating to items that will not be reclassified to profit or loss	1.47	22.33
B. Items that will be reclassified to profit or loss
(i) Income tax relating to items that will be reclassified to profit or loss	0.00	0.00
Other Comprehensive Income	(2.74)	(42.20)
Total Comprehensive Income for the period	29,676.43	28,661.43
Balance brought forward from previous year	81.71	1,025.54
	29,758.14	29,686.97
Appropriations:
Transfer to Special Reserve u/s.36(1)(viii) of the Income Tax Act, 1961	8,739.45	8,300.00
Transfer to General Reserve	5,935.29	12,000.00
Additional Reserve (u/s.29C of the NHB Act)	5,935.29	6,100.00
Proposed Dividend #	2,663.08	2,663.08
Tax on Distributed Profits	547.40	542.18
Balance carried forward to balance sheet	5,937.63	81.71
	29,758.14	29,686.97

Note: Figures have been regrouped wherever necessary while preparing the statements as per IND-AS requirements.

#The proposed dividend of RS.2/- per equity share and tax thereon are not recognised as liability in the annual accounts as at March 31, 2019 (in compliance with IND AS 10 Events occurring after the Balance sheet date). The same will be considered as liability on approval of shareholders at the 32^nd Annual General Meeting.

2. SHAREHOLDERSâ WEALTH

Particulars	Year ended March 31, 2019	Year ended March 31, 2018
Earnings Per Share (EPS) (Rs.)	22.29	21.49
Dividend Rate	100%	100%
Market Price of shares (Rs.)	348.85	484.50
Market Capitalisation (Rs. in Crore)	4,645.08	6,451.32

3. BUSINESS PERFORMANCE HIGHLIGHTS

a) Sanctions

During the year, the Company has sanctioned loans amounting to RS.5952 Crore as compared to RS.5760 Crore in the previous year, recording a growth of 3.3%. Inspite of continued sluggishness in the real estate market post demonetization, teething troubles of RERA and GST implementation, your Company managed to show a slender margin of positive growth, in approvals, during 2018-19.

During the year, as in the previous year, thrust was given to retail (housing and non-housing) loan segment. 88% of fresh loan approvals during the year were for housing and 12% were for non-housing loans. The cumulative loan sanctions since inception of your Company stood at H38074 Crore at the end of the FY19. Average ticket size of incremental housing loans and non-housing loans are RS.18.12 Lakh and RS.9.15 Lakh, respectively.

b) Disbursements

During the year, the Company has disbursed loans amounting to RS.5,479 Crore as compared to RS.5,207 Crore in the previous year, recording a growth of 5.2%. The cumulative loan disbursements from inception to the end of the FY19 was H33,769 Crore.

c) Loans outstanding (Loan Book)

Your Directors are pleased to report that the total loan outstanding as at March 31, 2019 was RS.18381 Crore, recording a growth of around 16.8% over last year (previous year RS.15,743 Crore).

During the year, non-housing loan portfolio has increased from RS.1,654 Crore to RS.1,939 Crore indicating a growth rate of 17.2%, which constitutes 10.5% of total portfolio approximately.

d) Non-Performing Asset (NPA)

The Gross NPA of your Company as on March 31, 2019 was contained at RS.113.51 Crore (previous year RS.67.49 Crore). The net NPA as on date was RS.79.47 Crore, with the NPA provision Coverage Ratio at 39% during the year. The gross NPA percentage as on March 31, 2019 stood at 0.62% compared to 0.43% as on March 31, 2018.

During the year under review, your Company could make a cash recovery of RS.11.44 Crore (previous year RS.9.10 Crore) in respect of accounts which were Non Performing Assets.

e) Profits

Your Directors are happy to inform that during the year under review, your Company recorded an Operating Profit of RS.470.60 Crore (previous year RS.453.18 Crore), Profit Before Tax (PBT) of RS.469.50 Crore (previous year RS.431.08 Crore) and Profit After Tax (PAT) of RS.296.76 Crore (previous year RS.286.62 Crore) registering a Year-on-Year increase of 3.84%, 8.91% & 3.42% respectively. During the year Company has made provisions for standard assets amounting to RS.0.40 Crore (previous year RS.2.10 Crore), provisions for Non-performing assets amounting to RS.0.69 Crore (previous year RS.20.00 Crore), provisions for Taxation and Deferred Tax Asset amounting to RS.172.77 Crore (previous year RS.144.89 Crore).

f) Reserves

For reserves during the year please refer statement of changes in equity for the period ended March 31, 2019 forming part of Financial Statements, 2019.

g) Dividend

Your Company has been paying dividends continuously. Your directors, after giving due consideration to Capital Adequacy requirements, deferred tax liability and the dividend policy, are happy to recommend a dividend of RS.2/- per equity share (100%), for the financial year ended March 31, 2019 for the 4^th successive year. The amount of dividend recommended for payment for the year under review is RS.26.63 Crore. The tax on dividends u/s.115-O of the Income Tax Act, 1961, at about 20.56% (RS.5.47 Crore) [Previous year 20.36% amounting to RS.5.42 Crore] is being paid to the Government by your Company. The Dividend Distribution Policy as required under regulation 43A has been provided as Annexure-3 to this report and is also available on the weblink http://www.canfinhomes.com/ pdf/Dividend-Distibution-Policy-120419-pdf

4. EXPANSION OF BRANCH NETWORK

Your Company has been continuously expanding its network of branches. Though our presence in Southern states is predominant, new branches and satellite offices have been opened in various parts of the country after examining the potential on the basis of surveys conducted.

During FY19, 22 new branches were opened and 1 Satellite Office was upgraded to Affordable Housing Loan Centre (AHLC), for exclusively providing smaller ticket size Loans under Credit Linked Subsidy Scheme (CLSS)(Pradhan Mantri Awas Yojana), Loans under Urban Housing (LUH) and Loans under Rural Housing (LRH) schemes. As at the end of FY19, your Company has an expanded network of 189 outlets spread across 21 states comprising 154 branches, 21 AHLCs and 14 Satellite Offices.

During the FY20, your Company has plans to open 30 more branches / AHLCs, (20 in the 1st phase) taking the total number of outlets to about 200. The Branches of your Company as well as the Registered Office are operating in spacious premises situated in good and accessible localities with the objective of providing a pleasant environment and amenities to our customers.

5. TECHNOLOGY INITIATIVES

All the branches and the Registered Office are linked through a core-banking platform (Integrated Business Suite) under the Application Service Provider (ASP) Model. The Company is in advanced phase for implementation of MPLS links for a higher bandwidth and dedicated uptime.

In order to improve operational efficiency, your Company has embarked on technology initiatives like implementation of C-KYC (Central KYC) solution. The CKYC will act as centralized repository of KYC records of customers in the financial sector with uniform KYC norms and inter-usability of the KYC records across the sector. Your Company has launched new website to make it interactive and more user friendly. Online Grievance Redressal portal has been deployed in the new website.

Your Company has introduced online Application Module in its website and a customer portal to access account statements/ certificates and online money transfer. Your Company also provides SMS alerts and missed call facility to provide information on loan balances.

The Company has set up an in-house team of IT professionals drawn from reputed institutions / firms to enhance IT capabilities.

6. CUSTOMER-FRIENDLY INITIATIVES

The Company continues to follow transparent, fair and impartial practices encompassing all the customers across branches. Information related to our Company, products, schemes and charges are made available in the website of the Company. As per NHB directions, the Fair Practices Code (FPC) and Most Important Terms and Conditions (MITC) are regularly updated and uploaded in the Company''s website for disseminating the information to our customers, clients and general public.

The customer portal has been enabled to access account statements, certificates and online money transfer.

As a customer friendly initiative, under CSR activities, our branches are providing tree saplings along with tree pots and guards to customers. We have also provided cotton cloth bags to our customers across the country through our branches, in order to sensitise people and curb the use of plastic.

7. FINANCIAL RESOURCES

a) Refinance from National Housing Bank (NHB) and borrowings from Banks

During the year, your Company had availed fresh refinance amounting to RS.1000 Crore (previous year RS.90 Crore) under the NHB refinance scheme. The cumulative NHB borrowings as on March 31, 2019 were RS.1,971.22 Crore (previous year RS.2,083.09 Crore), with the overall cost of borrowing (including the loans under Rural Housing and Urban Housing Schemes) of 7.11% p.a.

Borrowings from Bank

During the year, borrowings were diversified through a combination of short-term and long-term loans considering the asset liability management position to derive the maximum benefit of competitive interest rates. The lenders included State Bank of India, Lakshmi Vilas Bank, Federal Bank, HDFC Bank and Corporation Bank apart from Canara Bank, the principal bankers to the Company. The aggregate bank borrowings (term loans plus overdraft) at the end of the financial year stood at RS.8,855.86 Crore (previous year RS.4,635.74 Crore); the overall borrowings are within regulatory ceiling of 16 times of net owned funds.

The overall cost of borrowings from banks was 8.05% p.a. as on March 31, 2019. During the year, the long-term ârating'' of the Company for term loans was â[ICRA] AAA'' (pronounced ICRA triple A) with a negative outlook signifying the highest degree of safety with regard to the timely servicing of financial obligations. The rating has been revised by ICRA as [ICRA] AA (Pronounced as ICRA Double A Plus) outlook stable, signifying high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk. The rationale given for downgrade in credit rating is due to the downgrade in credit ratings of the Company''s principal shareholder (Promoter) viz. Canara Bank.

b) Debentures

(i) Secured Non-Convertible Debentures

The Company has not issued any Secured Redeemable Non-Convertible Non-Cumulative Taxable Debentures (SRNCD) during the year (previous year RS.1,400 Crore). The debentures were secured by way of a floating charge on the assets i.e., loan receivables specifically earmarked for the purpose in favour of the Debenture Trustees. Most of the investors in these debentures comprised major insurance companies, public sector banks, corporates, PF Trusts & Funds and investors of repute, indicating their safety perception in your Company''s fundamentals and prospects.

The tenure of the outstanding debentures are range bound for two to five years. The interest on these debentures was serviced regularly. The aggregate borrowings by way of Secured NCDs as on March 31, 2019 was H3,450.15 Crore (previous year RS.4,898.27 Crore) while the overall cost was 7.92% p.a.

The debentures were rated âIND AAA'' (Outlook Negative) by India Ratings and Research Pvt. Ltd (FITCH), CARE AAA'' (Outlook Stable) by CARE Limited and â[ICRA] AAA'' (Outlook Negative) by ICRA Limited. The rating has been revised by ICRA as [ICRA] AA (pronounced ICRA double A Plus). Outlook stable, signifying high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk. These debentures were listed on the Wholesale Debt Market (WDM) segment of the National Stock Exchange of India Limited.

Your Company plans to raise Non- Convertible Debentures up to a maximum of RS.6,000 Crore subject to cost benefit and asset liability management requirements and with the approval of members at ensuing Annual General Meeting.

(ii) Unsecured Non-Convertible Debentures

During FY14-15, your Company had issued 8.94% Unsecured Non-Convertible Debentures in the nature of Tier II Bonds aggregating RS.100 Crore for a tenure of 10 years. These debentures are subordinated to present and future senior indebtedness of the Company and qualify as Tier II Capital under the National Housing Bank (NHB) guidelines for assessing Capital Adequacy Requirements. These Tier II Bonds were rated âIND AAA'' (Outlook Negative) long-term rating by India Rating & Research Pvt Limited (FITCH), CARE AAA'' (Outlook Stable) by CARE Limited and â[ICRA] AAA'' (Outlook Negative) by ICRA Ltd. The rating has been revised by ICRA as [ICRA] AA (pronounced ICRA double double A Plus). Outlook stable, signifying high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk. Your Company has serviced the interest on the above debentures on the due date.

The rationale for downgrade in credit rating given by ICRA is due to the downgrade in credit ratings of the Company''s principal shareholder (Promoter) viz. Canara Bank.

c) Commercial Paper

Your Company mobilises funds through commercial paper (CP) also. The outstanding at the end of the March 2019 was RS.2,156.11 Crore (previous year RS.2,075.62 Crore). The effective cost of funds raised through CP was 7.76% p.a. The CP issued by your Company was rated at the maximum [ICRA] A1 rating by ICRA Ltd., and CARE A1 '' by CARE Limited indicating, âInstruments with this rating are considered to have very strong degree of safety regarding timely payment of financial obligations''.

d) Deposits

During the year your Company accepted deposits of RS.142.56 Crore (Previous year RS.122.71 Crore). The outstanding balance of deposits (including interest accrued, but not due) as of March 31, 2019 was RS.261.09 Crore (previous year RS.228.30 Crore). The rate of interest on public deposits ranged from 7.00% to 8.10%, while the overall cost (average) of deposits was 7.74% p.a. as on March 31, 2019.

As on March 31, 2019, a sum of RS.19.94 Crore relating to 891 accounts of public deposits (RS.8.81 Crore as on March 31, 2018 relating to 762 accounts) remained unclaimed/ overdue. Of this amount, a sum of RS.5.75 Crore relating to 373 accounts (previous year RS.1.86 Crore relating to 67 accounts) were claimed and renewed/settled upto May 15, 2019. Your Company has not defaulted in repayment of deposits or interest during the year. The Company has complied with the requirements under Chapter V of the Companies Act, 2013 to the extent applicable.

During the year, the deposit schemes of your Company have been rated âMAAA'' (pronounced as M Triple A) with a outlook revised to stable from negative, by ICRA Ltd., indicating âhighest credit- quality'' and that the rated deposit programme carried the lowest credit risk. Your Company, being a housing finance Company registered with National Housing Bank (NHB), has complied with the Directions/Guidelines issued by the NHB with regard to deposit acceptance and renewal. Your Company is exempted from the applicability of the Companies (Acceptance of Deposits) Rules 2014.

e) Mortgage-backed securities

Your Company did not opt for securitisation during the year under review. There were no securitised assets outstanding as on March 31, 2019.

8. REGULATORY COMPLIANCES

a) Compliance with Directions/ Guidelines of National Housing Bank (NHB) and other statutes

Your Company adhered to the prudential guidelines for non- performing assets (NPAs) as per the National Housing Bank (NHB) Directions 2010, as amended from time to time. Your Company complied with the guidelines and directions issued by NHB on withdrawal of preclosure charges for all loans. The Guidelines/ norms for asset classification of credit/ investments, credit rating, acceptance of deposits, Fair Practices Code (FPC), Most Important Terms and Conditions (MITC), Customer Complaints Redressal Mechanism, Know Your Customer (KYC), Anti-Money Laundering (AML) Guidelines, Asset Liability Management, Capital Adequacy Ratio (CAR) norms, Information Technology frameworks, CERSAI and other related instructions, issued by the National Housing Bank (NHB) were implemented in letter and spirit with an explicit notification on the website of your Company, to the extent applicable.

During the year the NHB has issued new master circulars/ circulars for Housing Finance Companies relating to:

(i) Circular No. NHB(ND)/DRS/REG/MC-07/2018 dated July 2, 2018 captioned âMaster Circular- Housing Finance Companies - Corporate Governance (NHB) Directions, 2016".

(ii) Circular No. NHB(ND)/DRS/Policy Circular No.88/2017-18 dated April 16, 2018 and Circular No. NHB (ND)/DRS/Policy Circular No.89/2017-18 dated June 14, 2018 on âImplementation of Indian Accounting Standards (Ind AS)".

(iii) Circular No. NHB (ND)/DRS/Policy Circular No.92/2018-19 dated February 05, 2019 on âGuidelines on Reporting and Monitoring of Frauds in Housing Finance Companies".

Your Company has taken steps to comply with the requirements of all the applicable provisions of the above circulars.

In terms of the Housing Finance Companies - Corporate Governance (NHB) Directions, 2016, the Company has given the Related Party Transactions Policy as Annexure 4 to this Report.

Your Company has complied with requirements as per Para 29 of the Housing Finance Companies (NHB) Directions 2010 except for one instance detailed below:

National Housing Bank (NHB) vide its letter NHB(ND)/DRS/ APPEAL-1/17/A-744/2019 dated January 17, 2019 has imposed a penalty of RS.5900 ( inclusive of GST @ 18%) for alleged contravention of section 32 of the NHB Act, 1987 and the Fair Practice Code issued by NHB, for which the Company has sent a reply and remitted the amount under protest.

During the year, the NHB conducted regular inspection of your Company during August & September 2018, for the position as at March 2018. The compliance on the observations were submitted within the prescribed time to the NHB, which were reviewed by the Audit Committee and the Board.

Your company has complied with other related statutory Guidelines/Directions as applicable to the Company from time to time. Compliance of all Regulatory guidelines of NHB/other statutes are periodically reviewed at Audit Committee and Board.

Your Company has complied with Indian Accounting Standards (Ind AS) as notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standard). Amendment Rules, 2016 as applicable read with Section 133 of the Companies Act, 2013 and guidelines issued by National Housing Bank.

As per NHBletter No.NHB (ND)/DRS/CRCELL/A-3187/2018 dated December 11, 2018, the Company was advised to get registered with National Consumer Helpline (NCH) as convergence partners through INGRAM software. The Company has completed the registration process.

As per National Housing Bank Circular âNHB/ND/DR5/ Policy Circular No.90/2017-18" dated June 15, 2018, IT Strategy Committee has been constituted with Shri G Naganathan, Independent Director as the Chairperson Dy. Managing Director, General Manager and Head of IT Dept. (AGM-IT) [as members of the Committee]. An expert from outside will be invited, if need be.

The National Housing Bank (NHB), vide its Policy Circular NHB(ND)/DRS/Policy Circular No.92/2018-19 dated February 05, 2019 issued Guidelines on reporting and monitoring of Frauds in Housing Finance Companies. Your Company has taken steps to comply with the requirements of the applicable provisions of the above Guidelines.

b) IRDA Compliance

The Company is registered with IRDAI for carrying on the Insurance Agency Business for life and has complied with the applicable requirments under Insurance Regulatory and Development Act, 1999 and IRDAI (Registration of Corporate Agent) Regulations 2015, as amended from time to time.

c) Other Compliances

(i) The Company, on April 04, 2018, had obtained the Legal Entity Identifier No.335800EJ9Y3XDP5ZDRS.81 as required under the RBI Circular -No.RBI/2017-18/82- DBR. No.BP.92/21.04.048/2017-18 dated November 02, 2017 and as advised by NHB. The Registration has been renewed as required on an annual basis.

(ii) As required under Section 215 of the Insolvency and Bankruptcy Code, 2016, the Company has registered itself with National e-governance Services Limited (NeSL) authorized by IBBI obtained registration No.9160743937431514312 and an agreement is executed with NeSL on February 28, 2019.

(iii) As per the ROC letter No. ROCB/Co. No.8699/MSME Notice/2019/3106 dated January 24, 2019 received by the Company and MSME Notification No.S.O. 5621(E) dated November 02, 2018, the Companies registered under the Companies Act, with a turnover of more than RS.500 Crore shall get themselves registered on the Trade Receivables Discounting System (TReDS) platform. The Company has got itself registered on TReDS Platform through Receivables Exchange of India Limited (RXIL) vide registration No.CA0000876.

(iv) As per RBI/2015-16/96 Master Circular No.15/2015-16 on Foreign Investment in India and as per RBI/2017-18/194 A.P (DIR Series) Circular No.30 dated June 07, 2018 on Foreign Investment in India, all types of Companies which have foreign investment are required to report through FIRMS - Reporting in Single Master Form. For the purpose the Company has completed the registration process for Entity User on January 21, 2019 and was issued login credentials. The registration as Business User is in progress.

(v) The Company has complied with all the applicable Regulations of SEBI (LODR) Regulations as amended from time to time and circulars, notifications etc. issued by SEBI.

9. COMPLIANCE UNDER THE COMPANIES ACT, 2013

Your Company has complied with the requirements of the applicable provisions of the Companies Act, 2013 and related Rules during the FY 18-19. In accordance with Sec 134 (3) (a) of the said Act, amended provision, the provisional Annual Return in the prescribed format has been made available on the website of the Company at https://www.canfinhomes. com/pdf/Events/32-AGM/provisionalMGT-7F/2018-19.pdf The extract of Annual Return (MGT-9) is placed as Annexure 8. For more details regarding Compliances, please refer the Secretarial Audit Report (Annexure 2).

10. CAPITAL ADEQUACY

The Capital Adequacy Ratio (CAR) of your Company as at March 31, 2019 was 16.44% (previous year 19.56%). as against the Regulatory benchmark of 12% prescribed by the National Housing Bank (NHB). [This has the impact of Term deposit amounting to RS.25,700.42 Lakh (matured on April 10, 2019) held with Canara Bank which has been reduced for computation of Net owned funds. The Capital to Risk Assets Ratio (CRAR) without considering the aforesaid term deposit would have been 19.24% (Tier I Capital of 17.44%).]

11. DEPRECIATION

Depreciation was calculated on the Written Down Value Method based on useful life, in the manner prescribed in Schedule II to the Companies Act, 2013.

12. DEFERRED TAX ASSET (DTA)

During the year, Deferred Tax Asset (net) of RS.0.77 Crore (previous year RS.12.30 Crore) was considered to the Statement of Profit & Loss, on account of various components of asset & liabilities. The DTA outstanding at the end of the March 2019 was RS.24.00 Crore (previous year RS.23.24 Crore).

13. RECOVERY ACTION UNDER SECURITISATION & RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 (SARFAESI ACT)

During the year, your Company initiated action against 367 defaulting borrowers under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (âSARFAESIâ) Act, 2002 and recovered H36.69 Crore (previous year RS.15.50 Crore) from borrowers of Non-Performing accounts. Of this RS.9.27 Crore (previous year RS.6.69 Crore) was recovered by way of sale of assets under SARFAESI. This apart RS.2.59 Crore was recovered in Written off accounts (Previous year RS.1.30 Crore).

14. LISTING OF SECURITIES

The equity shares of the Company are continued to be listed on the BSE Limited (BSE), Mumbai, and the National Stock Exchange of India Ltd. (NSE), Mumbai. The listing fee payable to these Stock Exchanges were paid before the due dates. The non-convertable debentures issued on private placement are listed on National Stock Exchange of India Ltd.

15. HUMAN RESOURCES DEVELOPMENT

The total number of employees of the Company was 792 (592 regular and 200 on contract) as on March 31, 2019 as against 648 (594 regular and 54 on contract) as at the end of the previous year.

To upgrade knowledge/skill of the employees, select employees were deputed for training programmes/ seminars organised by the National Housing Bank and other reputed institutions. During the year, training in credit, information technology, human relations customer service, Grievance redressal, finance, taxation, marketing, fraud prevention and other topics of importance were imparted to employees and executives. Your Company has put in place a series of HR measures including promotions and appropriate reward schemes. Industrial relations in your Company continued to be cordial during the year.

Particulars of Employees:

During FY18-19, your Company had not employed anyone with a remuneration of RS.102 Lakh or more per annum nor had employed for a part of the year with a remuneration of RS.8.5 Lakh or more. The ratio of remuneration of each Director to the median of employees remuneration and such other details as required under Sec 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, and 2016 are furnished below:

(i) The ratio of the remuneration of Managing Director to the median remuneration of the employees (regular employees) of the Company for the FY18-19 was 3.29: 1 (Non-executive directors and Independent Directors are eligible for sitting fee only).

(ii) The percentage increase in remuneration in the financial year under the head Managing Director was 7.33%, (the remuneration of Managing Director is as per the Service Regulations of Canara Bank in terms of the resolution passed by the members at the General Meeting for appointment in the Company).

The General Manager, Chief Financial Officer and the Company Secretary are employees of the Company and the percentage increase in their remuneration was 7.53%, 9.62% and 1.58 % respectively.

(iii) The percentage increase in the median remuneration of employees in the financial year is 9.32%.

(iv) Apart from 592 permanent employees on the rolls of the Company, there were 200 employees on contract as on March 31, 2019.

(v) Average% increase in remuneration of the employees other than managerial personnel as against that of Managerial remuneration was around 8.36% during the period under review.

The Company affirms that the remuneration is as per the remuneration policy of the Company.

The Company has a Policy on âPrevention of Sexual Harassment of Women at Workplace'' and matters connected therewith or incidental thereto covering all the aspects as contained under the Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013. During FY18-19 no cases of sexual harassment were reported.

During the year âEqual Opportunity Policy" was drafted as per Section 21(1) of Rights of the Persons with Disabilities Act, 2018 and same was approved by the Board in this meeting held on January 23, 2019.

16. TRANSFER OF UNCLAIMED AND UNPAID DIVIDEND/ DEPOSIT AMOUNTS TO THE INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

In terms of section 124 and 125 of the Companies Act, 2013, the amounts (dividend, deposits etc., with interest) that remained unclaimed and unpaid for more than 7 years from the date they first became due for payment, should be transferred to IEPF. As an investor-friendly measure, your Company has been intimating the respective shareholders / depositors / investors to encash their dividend warrant/renew matured deposits or lodge their claim for payment of due, if any, from time to time and claims made are settled. As per the statutory requirements, the details of such amounts are made available on the website of MCA-IEPF as well as on the Company''s website. In order to receive prompt payment of dividend, the members/ investors are requested to demat the shares held in physical mode, register bank account particulars, opt for ECS facility, register nomination and intimate change of address, if any, to the Company/ Depository Participants promptly.

a) Unclaimed dividends

As at March 31, 2019, dividends aggregating to RS.163.76 Lakh (previous year RS.152.18 Lakh) relating to dividends declared for the years FY11-12 to FY17-18 (of which H30.36 Lakh related to dividend for the year 2018), had not been claimed by shareholders. As an investor friendly measure, your Company has sent reminders to shareholders to lodge their claims and related particulars were provided in the annual reports each year as well as on the website of your Company. The dividend pertaining to 2010-11, which remained unclaimed/unpaid amounting to RS.7.67 Lakh (in respect of 1,966 shareholders), was transferred to IEPF on September 20, 2018, after the settlement of claims received from members in response to the individual reminder letters sent by your Company. The dividend pertaining to 2011-12 remaining unclaimed and unpaid, amounting to RS.10.04 Lakh (in respect of 2,135 shareholders) as on March 31, 2019, would be transferred to IEPF during August 2019 after settlement of the claims received up to the date of completion of seven years i.e. on August 08, 2019.

b) Transfer of shares to IEPF Demat account

Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and refund) Amendment Rules, 2017 was notified by the Ministry of Corporate Affairs (MCA) on October 13, 2017. As per Rule 6 of the said Rules, the shares, in respect of which dividend amounts have not been paid or claimed for 7 consecutive years, are required to be transferred to âIEPF demat Account'' of IEPF Authority. On verification of records of unclaimed dividend amounts from 2005 to 2011, which have already been transferred to IEPF on lapse of 7 years (during 2012 to 2018 respectively), 7 shareholders had not claimed dividend for consecutive 7 years and their shares 4750 Nos. have been transferred to IEPF demat account within the prescribed period and the details are provided on the website of the Company. For more details please refer âGeneral Information to shareholders'' in this report. In terms of the above Rules, three reminder letters were sent by the Company to all the shareholders who had not claimed their dividends for a consecutive period of 7 years, informing that their shares will be transferred to IEPF suspense account on the due date, August 8, 2019, if they do not place their claim for unclaimed dividend amounts before the Company. Your Company has provided the related details on its website (Investors page).

c) Unclaimed deposits

As required under Section 125 of the Companies Act, 2013, the unclaimed and unpaid deposits together with interest for the year 2010-11 amounting to RS.5.19 Lakh (previous year RS.10.41 Lakh) that remained unclaimed and unpaid for a period of 7 years were transferred to IEPF during the year under review.

17. PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND EXPENDITURE

Since your Company is a housing finance Company and does not own any manufacturing facility, the requirement relating to providing the particulars relating to conservation of energy and technology absorption as per Sec 134 (3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules 2014, are not applicable.

Your Directors are pleased to inform that Solar Power systems and power saving lamps have been installed in 16 branches so far as a measure towards conservation of energy. Your Company has installed Solar-UPS in some of its branches.

As a part of Save Green efforts and leverage of technology, a lot of paper work at branches and the Registered Office has been reduced (also refer para 5).

During the year, your Company did not earn any income or incur any expenditure in foreign currency/exchange other than payment of Dividend 2018 to NRIs on repatriation basis to an extent of RS.26.34 Lakh through authorised dealers.

18. DIRECTORS & KEY MANAGERIAL PERSONNEL APPOINTMENTS / RE- APPOINTMENTS

The Board of Directors made the following appointments/ re-appointments based on the recommendations of the Nomination, Remuneration & HR Committee:

(1) Shri Shreekant M Bhandiwad, DGM of Canara Bank was appointed as an additional Director and Whole-time Director (designated as Dy. Managing Director) by the Board w.e.f April 28, 2018, and the same was approved at the Annual General Meeting held on July 18, 2018.

(2) Dr. Yeluri Vijayanand was appointed as an Additional Director (Independent) w.e.f. August 29, 2018 for a tenure of 3 years upto the conclusion of the Annual General Meeting of the Company for the financial year 2020-21.

(3) Shri Shankara Narayanan Subramanian (S Subramanian), General Manager of Canara Bank, was appointed as an Additional Director (Non-executive Promoter) w.e.f. October 06, 2018.

(4) Shri Debashish Mukherjee, Executive Director of Canara Bank was appointed as an Additional Director (Nonexecutive Promoter) w.e.f. March 12, 2019.

(5) The tenure of Directorship of Shri G Naganathan in the Company will come to an end on the conclusion of the 32nd Annual General meeting of the Company scheduled to be held on July 17, 2019. Considering the knowledge, expertise, role and contributions of Shri G Naganathan, Independent Director, during the journey of growth of the Company over the last 3 years, Nomination Remuneration & HR Committee has proposed for his re-appointment for a further period of three years i.e., upto the conclusion of the Annual General Meeting of the Company for the financial year 2022, in terms of Section 149(10) of the Companies Act, 2013.

(6) The members had approved the appointment of Shri S K Hota as Managing Director of the Company at the 29th AGM held on June 29, 2016 with effect from May 05, 2016 for a tenure of 3 years and subject to further extension in the period of service, if any, by Canara Bank. In this regard, the Bank has permitted extension of the term of deputation of Shri S K Hota, General Manager of the Bank, for a further period of 6 months i.e., till October 10, 2019, as a special case. Hence, the Board has recommended for his re-appointment/extension of tenure as Managing Director for a further period upto October 05, 2019 to the members and for ratification of actions, since May 19, 2019.

The directors had filed their consent(s) and declarations that they are not disqualified to become directors in terms of the provisions of Companies Act, 2013 and related Rules. The directors have intimated to the Company that they are not holding any shares or taken any loan(s) from the Company. The agenda relating to appointments / reappointments of Directors are provided in the Notice of the 32nd Annual General Meeting of the Company seeking approval from the members. The particulars relating to the Directors and all other relevant information are provided in the explanatory statement forming part of the said Notice for the information of members.

(7) Smt. Bharati Rao, Director (Non-Executive Independent) was elected as the chairperson of the Board w.e.f. July 19, 2018.

(8) Smt. Shamila M, General Manager of the Company was designated as Key Managerial Personnel (KMP) of the Company w.e.f. April 28, 2018.

Resignation/Vacation of Office

1. The tenure of the Office of Shri K N Prithviraj, the NonExecutive Independent Director and Chairperson of the Board, and that of Shri T V Rao, the Non-Executive Independent Director of the Company were completed on conclusion of the 31st Annual General Meeting of the Company held on July 18, 2018. Hence cessed to be the director of the Company.

2. Shri S A Kadur, Director (General Manager, Canara Bank) has laid down his Office on attainment of superannuation w.e.f September 30, 2018. In pursuance of the same, he has tendered his resignation as Director (Non-executive Promoter Director) of the Company and hence cessed to be the director of the Company w.e.f October 01, 2018.

3. Smt. P V Bharathi, Non-executive Promoter Director of the Company has resigned from the Board of the Company w.e.f. February 01, 2019, on her elevation and appointment as the Managing Director & Chief Executive Officer of Corporation Bank.

Retirement by rotation:

In terms of Section 152 and all other applicable provisions of the Companies Act, 2013, and the Articles of Association of the Company, Shri. Shreekant M Bhandiwad, Dy. Managing Director (Whole-time Director), retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The particulars relating to Shri. Shreekant M Bhandiwad, Dy. Managing Director are provided in the Report of Directors on Corporate Governance. Your Directors recommend the re-appointment of Shri. Shreekant M Bhandiwad, as a Director, without affecting his tenure and terms and conditions of appointment as Whole-time Director in terms of Article 28 of the Articles of Association of the Company. The agenda relating to re-appointment of Shri Shreekant M Bhandiwad, Dy. Managing Director forms part of the notice convening the ensuing Annual General Meeting and all other relevant information as per SEBI Regulations are also provided in the explanatory statement.

19. MEETINGS OF THE BOARD

During the Financial year 2018-19, ten meetings of the Board of Directors were held and the related details, including that of various committees constituted by the Board, are made available in the Report of Directors on Corporate Governance forming part of the annual report placed before the members.

Your Company has complied with all the requirements as applicable under Companies Act, 2013 and related rules, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and also HFCs Corporate Governance (NHB) Directions, 2016, in relation to the Board of Directors and the Committees of the Board.

Committees of the Board:

Currently the Board has seven Committees viz. the Audit Committee, the Nomination, Remuneration & HR Committee, the Corporate Social Responsibility Committee, the Stakeholders Relationship Committee, the Risk Management Committee, the Management Committee and the IT Strategy Committee. The IT Strategy Committee was constituted during FY 19 as per National Housing Bank (NHB) Circular âNHB/ND/ DR5/Policy Circular No.90/2017-18" dated June 15, 2018.

A detailed note on the composition of the Board and its Committees and other related particulars are provided in the Report of Directors on Corporate Governance forming part of this Annual Report.

20. DIRECTORSâ RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013, and based on the information provided by the Management, the Board of Directors report that:

(a) in the preparation of the annual accounts for the year ended on March 31, 2019, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

(b) the directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the financial year ended on March 31, 2019 and of the profit and loss of the Company 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 Company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis;

(e) this being a listed Company, the directors had laid down internal financial controls to be followed by the Company 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.

Declaration by Independent Directors:

Code of Conduct:

In terms of Regulation 26(3) of the SEBI (LODR) Regulations, 2015, all the members of the Board and Senior Management Personnel have affirmed compliance with the Code of Conduct of Board of Directors and Senior Management for the FY18-19. As required under Schedule V (D) of the said Regulations, a declaration signed by the Managing Director & Chief Executive Officer of the Company stating that the members of the Board and the Senior Management Personnel have affirmed compliance of their respective Codes of Conduct, is an annexure to Corporate Governance Report.

21. NOMINATION REMUNERATION AND HR COMMITTEE (NRC) POLICY

Your Company has constituted a Nomination Remuneration and HR Committee (NRC) of the Board in terms of Section 178 of the Act, Regulation 19 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and Para 3(II) of NHB Corporate Governance (National Housing Bank) Directions, 2016. This Committee identifies persons who are qualified to become Directors of the Company. The appointment, renewal, reappointment, re-categorisation and/ or removal of the Directors so identified, including extension or continuation of the term of appointment, will be recommended by the NRC to the Board. This Committee has also laid down the criteria to identify persons who may be appointed to the senior management of the Company. The NRC has formulated the criteria for determining qualifications, positive attributes and independence of a Director, carrying out evaluation of every Director''s performance, performance of the Board and that of the Committees. The NRC Policy of the Company covering all the above aspects is made available on the official website of the Company at https://www.canfinhomes.com/ pdf/Nomination-Remuneration-and-HR-Policy-120419.pdf, in terms of Section 134(3) of the Companies Act, 2013. For web link please refer Annexure 9. The Board ensures the annual evaluation of the performance of the Board, its Committees and of its individual directors through the meeting of independent directors, the NRC and evaluation by each of the directors independently.

22. CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY

Your Company constituted a Corporate Social Responsibility (CSR) Committee of the Board as prescribed under Section 135 of the Companies Act 2013 and has put the CSR policy in place. The Company has focussed in promoting education including special education and employment in enhancing vocation skills especially among children. The other areas of focus are women empowerment by promoting gender equality, setting up old age homes, livelihood enhancement projects for the elderly & the differently abled, healthcare sector, Conservation of Solar energy and Ecological balance. During the year the Company also worked in the environmental sustainability by planting trees/saplings.

As a well thought out strategy, all CSR projects of the Company are executed through our own branches with a view to inculcate a sense of social responsibility amongst the staff. The total amount/ budget under CSR for the FY 201819 was RS.10.51 Crore, (including previous year H3.30 Crore), out of which total amount spent under the CSR activities is RS.6.06 Crore. The unspent amount of RS.4.45 Crore has already been sanctioned during the year, however disbursement will be based on progress in the respective projects. A summary of CSR details as on March 31, 2019 is given below:

Sl No.	Activities undertaken	No. of Beneficiaries	Amount in Rupees
1	Construction/ repair & renovation of Schools/ Hostels	7	1,67,98,700
2	Desks & benches/ Tables/ Almirah/ Green Board/ Chairs etc.	32	88,55,728
3	Drinking water facility/ supply of other articles of necessity etc.	10	9,55,956
4	Nali kali round tables/ chairs/ desk & benches/ drinking water facility etc.	13	52,60,763
5	Electrical & Electronic Items to schools	1	72,100
6	Toilet Facility in schools	1	1,18,200
7	Scholarship	3	5,80,052
8	Equipment to hospitals	7	1,48,67,032
9	Equipment to old age home	4	11,07,251
10	Equipment to school	1	3,35,000
11	Eradicating Hunger	3	71,53,333
12	School Bags/Stationery items etc.	2	2,25,278
13	Solar Lighting System	3	24,88,580
14	Environmental Sustainability	1	11,92,270
15	Tree planting under Environmental protection/sustainability/saplings with tree guards/pots to the customers.	2	6,14,240
	Total	90	6,06,24,483

The Annual Report on CSR activities including brief contents are provided as Annexure 5 to this report.

23. RISK MANAGEMENT POLICY

Your Company has constituted a Risk Management Committee with three directors and a senior executive of the Company. In terms of Section 134(3)(n) of the Act, your directors wish to state that your Company has adhered to the Risk Management Policy. The above policy was reviewed during the year. For weblink please refer Annexure 9.

24. AUDIT AND INTERNAL CONTROL

Your Company strengthened existing internal control systems for loan reviews at periodical intervals and introduced measures for minimising operational risks commensurate with the nature of its business and size of operations. Further, your Company has reviewed delegation of authorities and streamlined standard operating procedures for all areas of its business/ operations/ functions, strengthened the Offsite Transaction Monitoring System (OTMS) to track transactions/ early-warning signals across all branches by introducing innovative monitoring tools.

The National Housing Bank conducts inspection of your Company on an annual basis. During the year, the NHB conducted regular inspection of your Company in August/ September 2018 for the position as at March 31, 2018. The compliance on the observations were submitted within the prescribed time to the NHB, which were reviewed by the Audit Committee and the Board.

Your Company has also put in place a well- defined policy on Risk Based Internal Audit (RBIA) and as per the said policy, all the 166 branches due for audit, were audited in the FY18-19.

Apart from the RBIA, considering the volume of business, branches are also subjected to quarterly/ half yearly internal audit by empanelled audit firms. The Audit Committee reviewed the audit reports/remarks/ observations and replies/ compliances including the compliance of KYC norms. Management Audit by Canara Bank was conducted during January, 2019 for the period, January 2017 to December 2018.

25. SECRETARIAL AUDITOR & SECRETARIAL AUDIT REPORT

As required under section 204 of the Companies Act, 2013 and Rules thereof, the Board appointed M/s Kedarnath & Associates, Practising Company Secretaries, for conducting the âSecretarial Audit'' of the Company and for submission of the Annual Compliance Report for the financial year 2018-19.

The Secretarial Audit for FY18-19 was conducted as required u/s.204 of the Companies Act 2013, Regulation 24A of SEBI(LODR) Regulation 2015 and SEBI Circular No. CIR/CFD/ CMD1/27/2019 dated February 08, 2019, by S. Kedarnath, FCS, Practising Company Secretary and his team. In terms of Section 204(3) of the Act, your Directors inform that there is a remark in the report i.e. âNHB vide its letter NHB(ND)/ DRS/APPEAL-1/17/A-744/2019 dated January 17, 2019 has imposed a penalty of H 5,900 (inclusive of GST@18%) for alleged contravention of section 32 of the NHB Act, 1987 and the Fair Practice Code issued by NHB, for which the Company has sent a reply and remitted the amount under protest". Other than above the report does not contain any qualification, reservation or adverse remark. The Secretarial Audit Report issued by the Practising Company Secretaries is enclosed to the Report of Directors (Annexure 2) in terms of Section 134(3) (f) read with Section 204(1) of the Act.

In addition to the Secretarial Audit Report, Secretarial Compliance report has also been issued by the PCS as per the SEBI Circular No. CIR/CFD/CMD1/27/2019 dated February 02, 2019, and the said report has been submitted to the Stock Exchanges.

Secretarial Standards

Loans, Guarantees or Investments:

There are no particulars of loans, guarantees or investments made during the year in terms of Section 186(1) and 186(2) of the Act requiring disclosure to be made in the report of Directors as required under Section 134(3)(g) of the Act. In terms of Section 186(11)(a) the requirement relating to the disclosure is not applicable to a loan made, guarantee given or security provided by a housing finance Company.

Related Party Transactions:

The particulars of contracts or arrangements with the âRelated Parties'' referred to in sub-section (1) of Section 188 of the Act are furnished in Note No.42 of the Notes forming part of the financial statements for FY18-19, forming a part of the Annual Report. The particulars of Related Party Transactions as required u/s sec 134(3)(h) in the prescribed format is attached to this Report as Annexure 7.

26. STATUTORY AUDITORS

Pursuant to the provisions of Section 139, 142 and all other applicable provisions of the Companies Act, 2013 and rules made thereunder, M/s. Varma & Varma, Chartered Accountants (Firm Reg.No.004532S) were appointed by the members as the Statutory Auditors of the Company to hold office from the conclusion of this 30th Annual General Meeting until the conclusion of the 35th Annual General Meeting, subject to ratification by members every year, as applicable, at such remuneration and out-of-pocket expenses, as may be decided by the Board of Directors of the Company. Pursuant to the provisions of Section 143(8) of the Companies Act, 2013 and rules made thereunder, the Members had authorised the Board of Directors to appoint any person(s) qualified for appointment as auditor(s) of the Company under Section 141 and all other applicable provisions of the Companies Act, 2013 as Branch Auditors for audit of any of the Branch of the Company, present and future, from the conclusion of this Annual General Meeting until the conclusion of the 35th Annual General Meeting, subject to ratification by members every year, as applicable, on such terms and conditions, including remuneration and out-of pocket expenses, as may be decided by the Board of Directors of the Company.

The requirement of placing the matter relating to such appointment for ratification by members at every annual general meeting has been dispensed with due to omission of the first proviso to Section 139(1) by the Companies (Amendment) Act, 2017 effective from May 07, 2018 as per the Notification issued by Ministry of Corporate Affairs, Govt. of India [File No.1/1/2018-CL.I dated May 07, 2018].

The Statutory Auditors'' Report for the FY2018-19 does not contain any qualification, reservation or adverse remark.

27. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In terms of Regulation 34(2) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report forms part of this Annual Report.

28. CORPORATE GOVERNANCE

As required under the Companies Act, 2013, Regulation 34 read with Schedule V of the SEBI (LODR) Regulations, 2015 and Housing Finance Companies - Corporate Governance (National Housing Bank) Directions, 2016, the âReport of Directors on Corporate Governance'' for the year FY18-19 is placed in this Annual Report.

The said Report covers in detail the Corporate Governance Philosophy of the Company, Board Diversity, Directors appointment and remuneration, declaration by Independent Directors, Board evaluation, familiarisation programme, vigil mechanism etc. The Auditors Certificate on Corporate Governance is provided with this report as Annexure 1.

Business Responsibility Report:

The SEBI (LODR) Regulations, 2015, mandates inclusion of Business Responsibility Report (BRR) in the prescribed format, as a part of the Annual Report for top 500 listed entities based on the market capitalisation. In compliance with the said Regulations, the BRR is provided as a part of this Report as Annexure 6.

Board Evaluation:

In terms of Regulation 17(10) of the SEBI (LODR) Regulations, 2015 read with the SEBI Circular No. SEBI/HO/CFD/ CMD/ CIR/P/2017/004 dated January 05, 2017, your Company has put in place the âBoard and Director''s Evaluation Policy'' laying down a framework for evaluation of the Board, its Committees and of the individual directors with defined attributes for evaluation. The Board has evaluated the performance of the independent directors including their independence criteria as specified in the said regulations and their independence from the management. The directors who were subject to evaluation did not participate in their own evaluation. The results of the evaluation exercise will be shared with the Board in subsequent Board Meeting(s).

29. SAVE GREEN EFFORTS & RESPONSIBILITY TOWARDS SOCIETY

In recognition and support to the green initiative taken by the Ministry of Corporate Affairs (MCA), Government of India, your Company is sending AGM notices, annual reports, correspondence with the stakeholders etc. to the respective e-mail IDs of stakeholders. To facilitate paperless banking, initiatives taken by your Company include ECS / NACH facility for repayment of loans, streamlining the systems and procedures for reporting by the branches and at the Registered Office through Integrated Business Suite (IBS), networking of branches with the Registered Office, harnessing solar energy for lighting and computer operations in its 16 branches and the like. The usage of paper is minimised.

Through our CSR activities in the field of health care, education and empowerment of the downtrodden, we have strived to improve the lives of lakhs of our country men, women and children. We have sanctioned RS.10.60 Crore for 103 projects and spent RS.6.06 Crore towards the funding of life saving medical equipment and renovation work in about 8 hospitals, supply of books, desks, almirahs, fans, lights water purifiers and other necessary materials as well as repair work in about 68 schools across the country. Scholarships have been provided to meritorious, poor students. The funds were also utilized for improving the lives of inmates in many old age homes, rehabilitation centres for the physically and intellectually disabled. CFHL also contributed to the Akshay Patra Foundation mid-day meal to 6150 children in Mangalagiri for 6 months.

Saplings have been provided to our customers in all parts of the country. Cotton bags have also been procured for distribution to our borrowers and public to discourage the use of plastic.

30. OUTLOOK FOR 2019-20

The slew of measures announced by the Union Government in the Budget to boost housing, particularly PMAY loans, will be a key factor in revival of the real estate market. Your Company will intensify its lending under the Affordable Housing Loan Segment.

We will continue our market expansion in potential locations and have plans to open about 30 new branches during the current fiscal. We have also set the wheels in motion for the distribution of general insurance products through corporate agencies to provide insurance products to secure the health and assets of our customers.

Your Company is targeting a loan book size of RS.23,000 Crore by March 2020. Lending to the salaried class will continue to be our focus. However, with the rising cost of funds, expectations of borrowers for loans at lesser rates, intense competition in the market, etc., margins are expected to remain under pressure.

Your Company would continue its endeavour for growth with quality. Your Company will safeguard and maintain the high standards followed till date, despite the innumerable hurdles that are inevitable in the discharge of its functions.

31. ACKNOWLEDGEMENTS

Your Directors would like to thank Canara Bank, the promoter, for their continuous support.

Your Directors would like to acknowledge the role of all its stakeholders viz., shareholders, debenture holders, CP holders, depositors, bankers, lenders, borrowers, merchant bankers, insurance partners, debenture trustees and all others for their continuous support to your Company and the confidence and faith that they have always reposed in your Company.

Your Directors acknowledge and appreciate the guidance and support extended by all the Regulatory authorities including National Housing Bank (NHB), Insurance Regulatory and Development Authority of India (IRDAI), Securities Exchange Board of India (SEBI), Ministry of Corporate Affairs (MCA), Registrar of Companies, Karnataka, the Stock Exchanges and the NSDL and CDSL.

For and on behalf of the Board of Directors

Sd/-

Place: Bengaluru Bharati Rao

Date : May 22, 2019 Chairperson

Mar 31, 2018

1. FINANCIAL RESULTS

The financial performance for the FY17-18 is summarised here below:

Rs. in lakhs

Particulars	Year ended March 31, 2018	Year ended March 31, 2017
Profit before Tax & Provisions	48,015.56	38,838.06
Less: Provision for Standard Assets	2,10.00	1,065.00
Provision for Doubtful Debts (Written Back)	2,000.00	815.38
Prior Period adjustments	0.00	(58.85)
Profit before Tax	45,805.56	37,016.53
Less: Tax expenses: (a) Provision for Tax - Current Year	13,203.00	11,513.00
- Previous Year	(334.38)	0.00
(b) Deferred Taxation	2,759.52	1,977.65
Profit after Tax	30,177.43	23,525.88
Balance brought forward from previous year	35.20	114.58
	30,212.63	23,640.46
Appropriations: Transfer to Special Reserve u/s.36(1)(viii) of the Income Tax Act, 1961	8,300.00	6,400.00
Transfer to General Reserve	12,000.00	9,200.00
Additional Reserve (u/s.29C of the NHB Act)	6,100.00	4,800.00
Proposed Dividend #	-	-
Tax on Distributed Profits	-	-
Balance carried forward to balance sheet	3,812.63	3,240.46
	30,212.63	23,640.46

#The proposed dividend of RS.2/- per equity share and tax thereon are not recognised as liability in the annual accounts as at March 31, 2018 (in compliance of para 8.5 of AS 4 - contingencies and events occuring after the Balance sheet date). The same will be considered as liability on approval of shareholders at the 31st Annual General Meeting.

2. SHAREHOLDERSâ WEALTH

Rs. in lakhs

Particulars	Year ended March 31, 2018	Year ended March 31, 2017
Earning Per Share (EPS) (Rs.)	22.67	17.68
Dividend Rate	100%	100%
Market Price of shares (Rs.)*	484.50	424.29
Market Capitalisation (Rs. in Crore)	6451.13	5643.03

*The face value of shares have been sub-divided into shares of RS.2/- each w.e.f. October 13, 2017. As at March 31, 2017 the market price of eq. shares of RS.10/- each was RS.2121.45 (NSE).

3. BUSINESS PERFORMANCE HIGHLIGHTS

a. Sanctions

During the year, the Company has sanctioned loans amounting to H 5760 Crore as compared to RS.5451 Crore in the previous year, recording a growth of 6%. Inspite of continued sluggishness in the real estate market post demonetization, teething troubles of RERA and GST implementation, your Company managed to show a slender margin of positive growth, in approvals, during 2017-18.

During the year, as in the previous year, thrust was given to retail (housing and non-housing) loan segment. 89.50% of fresh loan approvals during the year were for housing and 10.50% were for non-housing loans. The cumulative loan sanctions since inception of your Company stood at RS.32122 Crore at the end of the FY18. Average ticket size of incremental housing loans and non-housing loans are RS.18.08 Lakh and RS.8.73 Lakh, respectively.

b. Disbursements

During the year, the Company has disbursed loans amounting to RS.5207 Crore as compared to RS.4792 Crore in the previous year, recording a growth of 9%. The cumulative loan disbursements from inception to the end of the FY18 was RS.28290 Crore.

c. Loans outstanding (Loan Book)

Your Directors are pleased to report that the total loan outstanding as at March 31, 2018 was RS.15743 Crore, recording a growth of 18% over last year (previous year RS.13313 Crore).

During the year, non-housing loan portfolio has increased from RS.1546 Crore to RS.1654 Crore indicating a growth rate of 7%, which constitutes 10.50% of total portfolio.

d. Non-Performing Asset (NPA)

The Gross NPA of your Company as on March 31, 2018 was contained at RS.67.49 Crore (previous year RS.27.91 Cr.). The net NPA as on date was RS.31.62 Crore, with the NPA provision Coverage Ratio at 63% during the year. The gross NPA percentage as on March 31, 2018 stood at 0.43% compared to 0.21% as on March 31, 2017.

During the year under review, your Company could make a cash recovery of RS.9.10 Crore (previous year RS.4.08 Cr.) in respect of accounts which were Non Performing Assets.

e. Profits

Your Directors are happy to inform that during the year under review, your Company recorded an Operating Profit of RS.480.16 Crore (previous year RS.388.38 Crore), Profit Before Tax (PBT) of RS.458.06 Crore (previous year RS.370.17 Crore) and Profit After Tax (PAT) of RS.301.77 Crore (previous year RS.235.26 Crore) registering a Year-on-Year increase of 24%, 24% and 28%, respectively. During the year Company has made provisions for standard assets amounting to RS.2.10 Crore (previous year RS.10.65 Crore), provisions for Non-performing assets amounting to RS.20.00 Crore (previous year RS.8.15 Crore), provisions for Taxation and Deferred Tax Liability amounting to RS.156.28 Crore (previous year RS.134.91 Crore).

f. Dividend

Your Company has been paying dividends continuously. Your directors, after giving due consideration to Capital Adequacy requirements, projected business plan for the year, deferred tax liability and the dividend policy, are happy to recommend a dividend of RS.2/- per equity share (100%) for the third successive year, for the financial year ended March 31, 2018. The amount of dividend recommended for payment for the year under review is RS.26.63 Crore. The tax on dividends u/s.115-O of the Income Tax Act, 1961, at about 20.36% (RS.5.42 Crore) is being paid to the Government by your Company. The Dividend Distribution Policy as required under regulation 43A has been provided as Annexure-4 to this report.

4. EXPANSION OF BRANCH NETWORK

During FY18, 9 new branches and 4 satellite offices were opened and 10 Satellite offices were upgraded to Affordable Housing Loan Centres (AHLCs), which exclusively provide smaller ticket size Loans under Credit Linked Subsidy Scheme (CLSS)(Pradhan Mantri Awas Yojana), Loans under Urban Housing (LUH) and Loans under Rural Housing (LRH) schemes. Under this initiative, the second tranche of 10 AHLCs were opened during FY18 by upgrading existing satellite offices. As at the end of FY18, your Company has an expanded network of 173 outlets spread across 19 states comprising 133 branches, 20 AHLCs and 20 Satellite Offices.

During the FY19, your Company has plans to open 20 more branches / AHLCs, taking the total number of outlets to about 190. The Branches of your Company as well as the Registered Office are operating in spacious premises situated in good and accessible localities with the objective of providing pleasant environment and convenient amenities to our customers.

5. TECHNOLOGY INITIATIVES

In order to improve operational efficiency, your Company embarked on technology initiatives like implemention of C-KYC (Central KYC) solution. The CKYC will act as centralized repository of KYC records of customers in the financial sector with uniform KYC norms and inter-usability of the KYC records across the sector. Your Company is in process to revamp the existing website to make it interactive and more user friendly.

The Company has set up a in-house team of IT professionals drawn from reputed institutions / firms to enhance IT capabilities.

6. CUSTOMER-FRIENDLY INITIATIVES

The Company continues to follow transparent, fair and impartial practices which engulf all the customers across branches. Information related to our Company, products, schemes and charges are made available in the website of the Company. As per NHB directions, the Fair Practices Code (FPC) and Most Important Terms and Conditions (MITC) are regularly updated and uploaded in the Companyâs website for disseminating the information to our customers, clients and general public.

All their respective accounts related information can also be accessed by the borrowers on the Customer Portal.

As a customer friendly initiative, under CSR activities, our branches are providing tree saplings along with tree pots and guards.

7. FINANCIAL RESOURCES

a. Refinance from National Housing Bank (NHB) and borrowings from Banks

During the year, your Company had availed fresh refinance amounting to RS.90.00 Crore (previous year RS.441.21 Crore) under the NHB refinance scheme. The cumulative NHB borrowings as on March 31, 2018 were RS.2,083.10 Crore (previous year RS.3,375.03 Crore), with the overall cost of borrowing (including the loans under Rural Housing and Urban Housing Schemes) of 7.57% p.a. as on March 31, 2018.

Borrowings from Banks

During the year, borrowings were diversified through a combination of short-term and long-term loans considering the asset liability management position to derive the maximum benefit of competitive interest rates. The lenders included State Bank of India, Lakshmi Vilas Bank, Federal Bank and HDFC Bank apart from Canara Bank, the principal bankers to the Company. The aggregate bank borrowings (term loans plus overdraft) at the end of the financial year stood at RS.4,635.74 Crore (previous year RS.2,247.65 Crore); the overall borrowings are within regulatory ceiling of 16 times of net owned funds.

The overall cost of borrowings from banks was 8.03% p.a. as on March 31, 2018. During the year, the long-term âratingâ of the Company for term loans was â[ICRA] AAAâ (pronounced ICRA triple A) with a negative outlook signifying the highest degree of safety with regard to the timely servicing of financial obligations.

b. Debentures

(i) Secured Non-Convertible Debentures

In its continuing efforts to reduce funds cost, your Company issued Secured Redeemable Non-Convertible Non-Cumulative Taxable Debentures (SRNCD) aggregating RS.1,400 Crore (previous year RS.1,862 Crore) in different tranches through private placement with a coupon rate range of 7.32% to 7.89%. The debentures were secured by way of a floating charge on the assets i.e., loan receivables specifically earmarked for the purpose in favour of the Debenture Trustees. Most investors in these debentures comprised major insurance companies, public sector banks, corporates and investors of repute, indicating their safety perception in your Companyâs fundamentals and prospects.

The tenure of debentures is range bound for two to five years. The interest on these debentures was serviced regularly. The aggregate borrowings by way of Secured NCDs as on March 31, 2018 was RS.4,802 Crore (previous year RS.3,602 Crore) while the overall cost was 8.14% p.a.

The debentures were rated âIND AAAâ (Outlook Negative) by India Ratings and Research Pvt. Ltd (FITCH), CARE AAAâ (Under credit watch with developing implications) by CARE Limited and â[ICRA] AAAâ (Outlook Negative) by ICRA Limited. These debentures were listed on the Wholesale Debt Market (WDM) segment of the National Stock Exchange of India Limited.

Your Company plans to raise Non- Convertible Debentures up to a maximum RS.6,000 Crore subject to cost benefit and asset liability management requirements and with the approval of members at ensuing Annual General Meeting.

(ii) Unsecured Non-Convertible Debentures

During FY14-15, your Company had issued 8.94% Unsecured Non-Convertible Debentures in the nature of Tier II Bonds aggregating RS.100 Crore for a tenure of 10 years. These debentures are subordinated to present and future senior indebtedness of the Company and qualify as Tier II Capital under the National Housing Bank (NHB) guidelines for assessing Capital Adequacy Requirements. These Tier II Bonds were rated âIND AAAâ (Outlook Negative) long-term rating by India Rating & Research Pvt Limited (FITCH), CARE AAAâ (Under credit watch with developing implications) by CARE Limited and â[ICRA] AAAâ (Outlook Negative) by ICRA Ltd. Your Company has serviced the interest on the above debentures on the due date.

c. Commercial Paper

Your Company mobilises funds through commercial paper (CP). The outstanding at the end of the March 2018 was RS.2,075.62 Crore (previous year RS.2,320.62 Crore). The effective cost of funds was 6.59% p.a. The CP issue by your Company was rated at the maximum [ICRA] A1 rating by ICRA Ltd., and CARE A1 â (Under credit watch with developing implications) by CARE Limited indicating, âInstruments with this rating are considered to have very strong degree of safety regarding timely payment of financial obligationsâ.

d. Deposits

During the year your Company accepted deposits of RS.122.71 Crore (Previous year RS.149.93 Crore). The outstanding balance of deposits (including interest accrued, but not due) as of March 31, 2018 was RS.228.30 Crore (previous year RS.226.65 Crore). The rate of interest on public deposits ranged from 7.00% to 7.75%, while the overall cost (average) of deposits was 8.46% p.a. as on March 31, 2018.

As on March 31, 2018, a sum of RS.8.81 Crore relating to 762 accounts of public deposits (RS.20.09 Crore as on March 31, 2017 relating to 1,020 accounts) remained unclaimed/ overdue. Of this amount, a sum of RS.1.86 Crore relating to 67 accounts (previous year H 2.29 Crore relating to 140 accounts) were claimed and renewed/settled upto May 15, 2018. Your Company has not defaulted in repayment of deposits or interest during the year. The Company has complied with the requirements under Chapter V of the Companies Act, 2013 to the extent applicable.

During the year, the deposit schemes of your Company have been rated âMAAAâ (pronounced as M Triple A) with a negative outlook, by ICRA Ltd., indicating âhighest credit-qualityâ and that the rated deposit programme carried the lowest credit risk. Your Company, being a housing finance Company registered with National Housing Bank (NHB), has complied with the Directions/Guidelines issued by the NHB with regard to deposit acceptance and renewal. Your Company is exempted from the applicability of the Companies (Acceptance of Deposits) Rules 2014.

e. Mortgage-backed securities

Your Company did not opt for any securitisation during the year under review or during the previous year. There were no securitised assets outstanding as on March 31, 2018.

8. REGULATORY COMPLIANCES

(a) Compliance with Directions/ Guidelines of National Housing Bank (NHB) and other statutes

Your Company adhered to the prudential guidelines for nonperforming assets (NPAs) as per the National Housing Bank (NHB) Directions 2010, as amended from time to time. Your Company complied with the guidelines and directions issued by NHB on withdrawal of pre-closure charges for all loans. The Guidelines/ norms for asset classification of credit/ investments, credit rating, acceptance of deposits, Fair Practices Code (FPC), Most Important Terms and Conditions (MITC), Customer Complaints Redressal Mechanism, Know Your Customer (KYC), Anti-Money Laundering (AML) Guidelines, Asset Liability Management, Capital Adequacy Ratio (CAR) norms, Customer Redressal Mechanism and other related instructions, issued by the National Housing Bank (NHB) were implemented in letter and spirit with an explicit notification on the website of your Company.

As per the National Housing Bank Circulars NHB.HFC.DIR.4/ CMD/2012 dated January 19, 2012, NHB.HFC.DIR.9/CMD/2013 dated September 06, 2013 and NHB.HFC.DIR.18/MD & CE0/2017 dated August 02, 2017, your Company has made a general provision @:

(i) 1% of Standard Assets in respect of Commercial Real Estates other than Residential Housing,

(ii) 0.75% of Standard Assets in respect of Commercial Real Estate - Residential Housing, and

(iii) 0.25% of the total outstanding amount of loans, which are Standard Assets other than (i) and (ii) above.

Loans to individuals for third dwelling unit onwards are treated as Commercial Real Estate (CRE) exposure. A provision of RS.2.10 Crore was made in the books as on March 31, 2018 and the cumulative provision in that regard stood at RS.64.75 Crore as on the above date. The recognition of income and provision for all assets was made in the books as per the Guidelines on Prudential Norms applicable as of March 31, 2018.

During the year the NHB has issued new directions for Housing Finance Companies viz,

i) Implementation of Indian Accounting Standards (Ind AS)

National Housing Bank (NHB) has clarified in terms of paragraph 24 of the Housing Finance Companies (NHB) Directions, 2010 (âDirectionsâ) on Indian Accounting Standards, that the Accounting Standards and Guidance

Notes issued by the Institute of Chartered Accountants of India shall be followed in so far as they are not inconsistent with any of the Directions. Accordingly, HFCs are directed to follow the extant directions on Prudential Norms, including on asset classification, provisioning etc. issued by the NHB. With regards to the implementation of Ind AS, HFCs are advised to be guided by the extant provisions of Ind AS, including the date of implementation.

ii) Acceptance of public deposits - Amendments to Para 6 and 12 of the Housing Finance Companies (NHB) Directions, 2010 (principal Directions) w.e.f. December 08, 2017.

The National Housing Bank (NHB), vide its Notification No. NHB.HFC. DIR.20/ MD&CEO/ 2017 dated December 08, 2017, has amended the following:

1. Para 6 of the principal Directions, which has come into effect from December 08, 2017, for public deposits of individuals for auto renewal of deposits by taking depositorâs consent in the deposit application itself,

2. Para 12 of the principal Directions, which has come into effect from December 08, 2017, for premature payment to the survivor, nominee, legal heirs at their request at the contracted rate for the period run after submission of proof of death.

Your Company has taken steps to comply with the requirements of all the applicable provisions of the above Directions for FY18 including implementation of Ind AS.

In terms of the Directions, the Company has given the Related Party Transactions Policy as Annexure 5 to this Report.

Your Company has complied with requirements as per Para 29 of the Housing Finance Companies (NHB) Directions 2010 except for one instance detailed below:

National Housing Bank (NHB) in its regulatory Audit conducted during the FY 16-17, for FY 14-15 & FY 15-16 has raised an issue on procedure followed by the Company since inception on the valuation of Government securities under HTM category invested for SLR purpose. NHB vide its letter NHB (ND)/DRS/ SUP/9349/2017 dated 19/09/2017 has imposed aggregate penalty of RS.28,62,708.00 under the provisions of Section 29B of the National Housing Bank Act, 1987 for the period 01/04/2014 to 27/07/2016 and the same is paid.

The NHB had conducted Audit of 2015-16 and 2016-17 during the previous year and your Company has complied with the observations and has submitted the final replies to NHB.

Your Company has complied with the Accounting Standards issued by the ICAI, New Delhi, and other related statutory Guidelines/Directions as applicable to the Company from time to time. Compliance of all Regulatory guidelines of NHB/other statutes are periodically reviewed at Audit Committee/Board.

(b) IRDA Compliance

During the year, the Company has registered itself with IRDAI for carrying on the Insurance Agency Business and has complied with the applicable compliances under Insurance Regulatory and Development Act, 1999 and IRDAI (Registration of Corporate Agent) Regulations 2015, as amended from time to time

(i) The Company has obtained the Legal Entity Identifier No.335800EJ9Y3XDP5ZDRS.81 as required under the RBI Circular -No.RBI/2017-18/82 - DBR. No.BP.92/21.04.048/2017-18 dated November 02, 2017 and as advised by NHB.

(ii) As required under Section 215 of the Insolvency and Bankruptcy Code, 2016, the Company has registered itself with National e-governance Services Limited (NeSL)

9. COMPLIANCE UNDER THE COMPANIES ACT, 2013

Your Company has complied with the requirements of the applicable provisions of the Companies Act, 2013 and related Rules during the FY 17-18. In accordance with Sec 134 (3) (a) of the said Act, amended provision, the provisional Annual Return in the prescribed format has been made available on the website of the Company at www.canfinhomes.com /Investors/ 31st Annual General Meeting(path). During FY 17-18 the Company had allotted 52915 Nos. of equity shares to Mr.Koshy George and three others as per the judgement of the Honâble High Court of Kerala in the Writ Petition. Further during October 2017, the equity shares of the Company of face value of RS.10/- were sub-divided into equity shares of RS.2/- each. For more details regarding Compliance, please refer the Secretarial Audit Report (Annexure 3).

10. CAPITAL ADEQUACY

The Capital Adequacy Ratio (CAR) of your Company as at March 31, 2018 was 19.08% (previous year 18.50%), well above the Regulatory benchmark of 12% prescribed by the National Housing Bank (NHB).

11. DEPRECIATION

Depreciation was calculated on the Written Down Value Method based on useful life, in the manner prescribed in Schedule II to the Companies Act, 2013.

12. DEFERRED TAX LIABILITY (DTL)

During the year, Deferred Tax Liability (net) of RS.27.60 Crore (previous year RS.19.78 Crore) was charged to the Statement of Profit & Loss, on account of various components of asset & liabilities including Special Reserve. The DTL outstanding at the end of the March 2018 was RS.141.24 Crore (previous year RS.113.65 Crore).

13. RECOVERY ACTION UNDER SECURITISATION & RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 (SARFAESI ACT)

During the year, your Company initiated action against 373 defaulting borrowers under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (âSARFAESIâ) Act, 2002 and recovered RS.15.50 Crore (previous year RS.8.94 Crore) from borrowers of Non-Performing accounts. Of this RS.6.69 Crore (previous year RS.3.80 Crore) was recovered by way of sale of assets under SARFAESI. This apart RS.1.30 Crore was recovered in Written off accounts (Previous year RS.0.37 Crore).

14. LISTING OF SECURITIES

15. HUMAN RESOURCES DEVELOPMENT

The total number of employees of the Company was 648 (594 regular and 54 on contract) as on March 31, 2018 as against 626 (471 regular and 155 on contract) as at the end of the previous year. Attrition rate stood at about 3.50% for regular employees, which is far below the industry level.

To upgrade knowledge/skill of the employees, select employees were deputed for training programmes/ seminars organised by the National Housing Bank and other reputed institutions. During the year, training in credit, information technology, human relations, finance, taxation, marketing, fraud prevention and other topics of importance were imparted to employees and executives. Your Company has put in place a series of HR measures including promotions, appropriate employee recognition and reward schemes. Industrial relations in your Company continued to be cordial during the year

Particulars of Employees:

During FY17-18, your Company had not employed anyone with a remuneration of RS.102 Lakh or more per annum nor had employed for a part of the year with a remuneration of RS.8.5 Lakh or more. The ratio of remuneration of each Director to the median of employees remuneration and such other details as required under Sec 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, and 2016 are furnished below:

i. The ratio of the remuneration of Managing Director to the median remuneration of the employees (regular employees) of the Company for the FY17-18 was 2.72: 1 (Non-executive directors and Independent Directors are eligible for sitting fee only)

ii. The percentage increase in remuneration in the financial year under the head Managing Director was 7.27%, (the remuneration of Managing Director is as per the Service Regulations of Canara Bank in terms of the resolution passed by the members at the General Meeting for appointment in the Company).

The Chief Financial Officer and the Company Secretary are employees of the Company and the percentage increase in their remuneration was 10.77% and 21.28 % respectively.

iii. The percentage increase in the median remuneration of employees in the financial year is 9.32%.

iv. Apart from 594 permanent employees on the rolls of the Company, there were 54 employees on contract as on March 31, 2018.

v. Average% increase in remuneration of the employees other than managerial personnel as against that of Managerial remuneration was around 10% during the period under review.

The Company affirms that the remuneration is as per the remuneration policy of the Company.

The Company has a Policy on âPrevention of Sexual Harassment of Women at Workplaceâ and matters connected therewith or incidental thereto covering all the aspects as contained under the Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013. During FY17-18 no cases of sexual harassment were reported.

16. TRANSFER OF UNCLAIMED AND UNPAID DIVIDEND/ DEPOSIT AMOUNTS TO THE INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

As an investor-friendly measure, your Company has been intimating the respective shareholders / depositors / investors to encash their dividend warrant/renew matured deposits or lodge their claim for payment of due, if any, from time to time and claims made are settled. As per the statutory requirements, unclaimed deposits/ other dues for the previous seven years as of the date of the Annual General Meeting are made available on the website of MCA-IEPF as well as on the Companyâs website.

In order to receive prompt payment of dividend, the members/ investors are requested to demat the shares held in physical mode, register bank account particulars, opt for ECS facility, register nomination and intimate change of address, if any, to the Company/ Depository Participants promptly.

a. Unclaimed dividends

As at March 31, 2018, dividends aggregating to RS.152.72 Lakh (previous year RS.124.18 Lakh) relating to dividends declared for the years FY10-11 to FY16-17 (of which RS.35.51 Lakh related to dividend for the year 2017), had not been claimed by shareholders. As an investor friendly measure, your Company has intimated shareholders to lodge their claims and related particulars were provided in the annual reports each year as well as on the website of your Company.

The dividend pertaining to 2009-10, which remained unclaimed/unpaid amounting to RS.6.37 Lakh (in respect of 1,917 shareholders), was transferred to IEPF on September 09, 2017, after the settlement of claims by members received in response to the individual reminder letters sent by your Company to the respective members.

The dividend pertaining to 2010-11 remaining unclaimed and unpaid, amounting to RS.8.65 Lakh (in respect of 2,103 shareholders) as on March 31, 2018, would be transferred to IEPF during August 2018 after settlement of the claims received up to the date of completion of seven years i.e. on August 24, 2018.

b. Unclaimed deposits

As required under Section 125 of the Companies Act, 2013 (corresponding Section 205C of the Companies Act, 1956), the unclaimed and unpaid deposits together with interest for the year 2009-10 amounting to RS.10.41 Lakh (previous year RS.0.72 Lakh) that remained unclaimed and unpaid for a period of 7 years were transferred to IEPF during the year under review.

c. Transfer of shares to IEPF Demat account

On verification of records of unclaimed dividend amounts from 2004 to 2010, which have already been transferred to IEPF on lapse of 7 years (during 2011 to 2017 respectively), 364 shareholders had not claimed dividend for consecutive 7 years and their shares 248050 Nos. have been transferred to IEPF demat account within the prescribed period and the details are provided on the website of the Company. For more details please refer âGeneral Information to shareholdersâ in this report.

In terms of the above Rules, three reminder letters were sent by the Company to all the shareholders who had not claimed their dividends for a consecutive period of 7 years, informing that their shares will be transferred to IEPF suspense account on the due date, October 31, 2017, if they do not place their claim for unclaimed dividend amounts before the Company.

Your Company has provided the related details on its website (Investors page).

17. PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND EXPENDITURE

Your Directors are pleased to inform that Solar Power systems and power saving lamps have been installed in 16 branches so far as a measure for conservation of energy. Your Company has installed Solar-UPS in some of its branches.

As a part of Save Green efforts and leverage of technology, a lot of paper work at branches and the Registered Office has been reduced (also refer para 5).

During the year, your Company did not earn any income or incur any expenditure in foreign currency/exchange other than payment of Dividend to NRIs on repatriation basis to an extent of RS.30.82 Lakh through authorised dealers.

18. DIRECTORS & KEY MANAGERIAL PERSONNEL APPOINTMENTS / RE- APPOINTMENTS:

The Board of Directors made the following appointments/ re-appointments based on the recommendations of the Nomination and Remuneration Committee:

(1) Smt Bharati Rao, Former DMD of State Bank of India, was appointed as an additional director and Independent Director with effect from September 05, 2017.

(2) Shri Shreekant M Bhandiwad, DGM of Canara Bank has been appointed as an additional Director and Whole-time Director (designated as Dy. Managing Director) by the Board w.e.f April 28, 2018.

The particulars of directors including their profile are provided in the Report of Directors on Corporate Governance forming part of this Annual Report. Further, the agenda relating to appointments / re-appointments of Directors are provided in the Notice of the 31st Annual General Meeting of the Company seeking approval from the members. The particulars relating to the Directors and all other relevant information are provided in the explanatory statement forming part of the said Notice for the information of members.

Smt. Shamila M, Dy. General Manager, reporting to the Managing Director has been appointed as an additional Key Managerial personnel w.e.f. April 28, 2018, in terms of the Companies (Amendment) Act, 2017.

Retirement by rotation:

In terms of Section 152 and all other applicable provisions of the Companies Act, 2013, and the Articles of Association of the Company, Shri S A Kadur, Director, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The particulars relating to Shri S A Kadur, Director are provided in the Report of Directors on Corporate Governance. Your Directors recommend the re- appointment of Shri S A Kadur as a Director.

The agenda relating to re-appointment of Shri S A Kadur, Director, forms part of the notice convening the ensuing Annual General Meeting and all other relevant information as per SEBI Regulations are also provided in the explanatory statement.

19. MEETINGS OF THE BOARD

During the year, ten meetings of the Board of Directors were held and the related details, including that of various committees constituted by the Board, are made available in the Report of Directors on Corporate Governance forming part of the annual report placed before the members.

Committees of the Board

Currently the Board has six Committees viz. the Audit Committee, the Nomination, Remuneration & HR Committee, the Corporate Social Responsibility Committee, the Stakeholders Relationship Committee, the Risk Management Committee and the Management Committee. A detailed note on the composition of the Board and its Committees and other related particulars are provided in the Report of Directors on Corporate Governance forming part of this Annual Report.

20. DIRECTORSâ RESPONSIBILITY STATEMENT

a) in the preparation of annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;

b) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

c) the Directors have 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 Company and for preventing and detecting fraud and other irregularities;

d) the Directors have prepared the annual accounts on a going concern basis;

e) the Directors, in the case of a listed Company, have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively and

f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

The Independent Directors have given declarations to the Company in terms of Section 149(7) of the Companies Act, 2013, that they meet the criteria of independence as provided in Section149(6).

Code of Conduct

In terms of Regulation 26(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, all the members of the Board and Senior Management Personnel have affirmed compliance with the Code of Conduct of Board of Directors and Senior Management for the FY17-18. As required under Schedule V (D) of the said Regulations, a declaration signed by the Managing Director & Chief Executive Officer of the Company stating that the members of the Board and the Senior Management Personnel have affirmed compliance of their respective Codes of Conduct, is enclosed to this Report as Annexure 2.

21. NOMINATION REMUNERATION AND HR COMMITTEE (NRC) POLICY

Your Company has constituted a Nomination Remuneration and HR Committee (NRC) of the Board in terms of Section 134(3)(e) of the Act, Regulation 19 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and Para 3(11) of NHB Corporate Governance (National Housing Bank) Directions, 2016. This Committee identifies persons who are qualified to become Directors of the Company. The appointment, renewal, reappointment, re-categorisation and/ or removal of the Directors so identified, including extension or continuation of the term of appointment, will be recommended by the NRC to the Board. This Committee has also laid down the criteria to identify persons who may be appointed to the senior management of the Company. The NRC has formulated the criteria for determining qualifications, positive attributes and independence of a Director, carrying out evaluation of every Directorâs performance, performance of the Board and that of the Committees. The NRC Policy of the Company covering all the above aspects is made available on the official website of the Company at http://www.canfinhomes.com/ Investors/ Corporate Governance documents (path) in terms of Section 134(3) (p) of Companies Act, 2013. For web link please refer Annexure 9.

The Board ensures the annual evaluation of its own performance and that of its Committees and individual directors through the meeting of independent directors, the NRC and evaluation by each of the directors independently.

22. CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY

Your Company constituted a Corporate Social Responsibility (CSR) Committee of the Board as prescribed under Section 135 of the Companies Act 2013 and has put the CSR policy in place. The Company has focussed in promoting education including special education and employment in enhancing vocation skills especially among children. The other areas of focus are women empowerment by promoting gender equality, setting up homes and hostels for women and orphans; setting up old age homes, day care centres, livelihood enhancement projects for the elderly & the differently abled and healthcare sector. During the year the company also worked in the environmental sustainability by planting trees/saplings.

As a well thought out strategy, all CSR projects of the Company are executed through our own branches with a view to inculcate a sense of social responsibility amongst the staff. The total amount/ budget under CSR for the FY 2017-18 was RS.668 lakh, (previous year RS.401 lakh), out of which total amount spent under the CSR activities is RS.338 Lakh (previous year RS.436 Lakh). The unspent amount of RS.330 Lakh is carried forward as per provisions of Companies Act with the aim to go in for granular details/ appropriate projects before spending in FY 18-19. A summary of CSR details as on 31/03/18 is given below:

Sl No.	Activities undertaken	No. of Beneficiaries	Amount in Rupees
1	Construction/ repair & renovation of Schools/ Hostels	7	71,57,395.00
2	Desks & benches/ Tables/ Almirah/ Green Board/ Chairs etc.	57	143,08,670.00
3	Drinking water facility/ supply of other articles of necessity etc.	12	17,61,873.00
4	Nalli kalli round tables/ chairs/ desk & benches/ drinking water facility etc.	25	67,56,114.00
5	Electrical & Electronic Items to schools	3	2,71,482.00
6	Toilet Facility in schools	1	3,36,105.00
7	Scholarship	1	35,000.00
8	Equipment for hospitals	1	7,49,724.00
9	Equipments to old age home	1	1,68,650.00
10	Schools bags/stationery items etc.	3	4,55,917.00
11	Solar lighting system	1	34,000.00
12	Tree planting under environmental protection/ sustainability/ saplings with tree guards/ pots to the customers.	3	7,51,770.00
13	Career Digest books to the govt. schools	1	9,98,000.00
	Total	116	337,84,700.00

The Annual Report on CSR activities including brief contents are provided as an Annexure 6 to this report.

23. RISK MANAGEMENT POLICY

Your Company has constituted a Risk Management Committee with four directors and a senior executive of the Company. In terms of Section 134(3)(n) of the Act, your directors wish to state that your Company has adhered to the Risk Management Policy. The above policy was reviewed during the year. For weblink Please refer Annexure 9.

24. AUDIT AND INTERNAL CONTROL

Your Company strengthened existing internal control systems for loan reviews at periodical intervals and introduced measures for minimising operational risks commensurate with the nature of its business and size of operations. Further, your Company has reviewed delegation of authorities and streamlined standard operating procedures for all areas of its business/ operations/ functions, strengthened the Offsite Transaction Monitoring System (OTMS) to track transactions/early-warning signals across all branches by introducing innovative monitoring tools.

The National Housing Bank conducts inspection of your Company on an annual basis. During the year, the NHB conducted regular inspection of your Company in July 2017 for the position as at March 2016 and March 2017. The compliance on the observations were submitted within the prescribed time to the NHB, which were reviewed by the Audit Committee and the Board.

Your Company has also put in place a well- defined policy on Risk Based Internal Audit (RBIA) and as per the said policy, all the 152 branches that became due for audit, were audited in the FY17-18.

25. SECRETARIAL AUDIT

The Secretarial Audit for FY17-18 was conducted as required U/s.204 of the Companies Act 2013, by S. Viswanathan, ACS, Practising Company Secretary. In terms of Section 204(3) of the Act, your Directors are pleased to inform that there was no qualification or observation or other remarks made by the said Company Secretaries in their Secretarial Audit Report. The Secretarial Audit Report issued by the Practising Company Secretaries is enclosed to the report of Directors (Annexure 3) in terms of Section 134(3) (f) read with Section 204(1) of the Act.

Loans, Guarantees or Investments:

There are no particulars of loans, guarantees or investments made during the year in terms of Section 186(1) and 186(2) of the Act requiring disclosure to be made in the report of Directors as required under Section 134(3)(g) of the Act. In terms of Section 186(11)(a) the requirement relating to the disclosure is not applicable to a loan made, guarantee given or security provided by a housing finance Company.

Related Party Transactions:

The particulars of contracts or arrangements with the âRelated Partiesâ referred to in sub-section (1) of Section 188 of the Act are furnished in Note No.32 of the Notes forming part of the financial statements for FY17-18, forming a part of the Annual Report. The particulars of Related Party Transactions as required u/s sec 134(3)(h) in the prescribed format is attached to this Report as Annexure 8.

26. AUDITORS

Pursuant to the provisions of Section 143(8) of the Companies Act, 2013 and rules made thereunder, the Members had authorised the Board of Directors to appoint any person(s) qualified for appointment as auditor(s) of the Company under Section 141 and all other applicable provisions of the Companies Act, 2013 as Branch Auditors for audit of any of the Branch of the Company, present and future, from the conclusion of this Annual General Meeting until the conclusion of the 35th Annual General Meeting, subject to ratification by members every year, as applicable, on such terms and conditions, including remuneration and out-of pocket expenses, as may be decided by the Board of Directors of the Company.

In view of the above, M/s Varma & Varma, Chartered Accountants (Firm Reg.No.004532S) appointed by the members at the 30th Annual General Meeting for a tenure upto the conclusion of the 35th Annual General Meeting will continue as the Statutory Auditors of the Company, at such remuneration and out-ofpocket expenses, as may be decided by the Board of Directors of the Company. Further as authorized by the members at the 30th Annual General Meeting, the Branch Auditors appointed by the Board of Directors of the Company will continue until conclusion of the 35th Annual General Meeting on such terms and conditions, including remuneration and out-of pocket expenses, as may be decided by the Board of Directors of the Company.

27. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In terms of Regulation 34(2) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report forms part of this Annual Report.

28. CORPORATE GOVERNANCE

As required under the Companies Act, 2013, Regulation 34 read with Schedule V of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and Housing Finance Companies - Corporate Governance (National Housing Bank) Directions, 2016, the âReport of Directors on Corporate Governanceâ for the year FY17-18 is placed in this Annual Report.

The said Report covers in detail the Corporate Governance Philosophy of the Company, Board Diversity, Directors appointment and remuneration, declaration by Independent Directors, Board evaluation, familiarisation programme, vigil mechanism etc. The Auditors Certificate on Corporate Governance is provided with this report as Annexure 1.

Business Responsibility Report:

The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, mandates inclusion of Business Responsibility Report (BRR) in the prescribed format, as a part of the Annual Report for top 500 listed entities based on the market capitalisation. In compliance with the said Regulations, the BRR is provided as a part of this Report as Annexure 7.

In terms of Regulation 17(10) of the SEBI (Listing Obligations & Disclosure Requirement) Regulations, 2015 read with the SEBI Circular No. SEBI/HO/CFD/ CMD/CIR/P/2017/004 dated January 5, 2017, your Company has put in place the âBoard and Directorâs Evaluation Policyâ laying down a framework for evaluation of the Board, its Committees and of the individual directors with defined attributes for evaluation. The results of the evaluation exercise will be shared with the Board in subsequent Board Meeting(s), including listing of the identified strengths, areas of improvement and actions to be taken, if any.

29. SAVE GREEN EFFORTS

In the FY 2017-18, your Company conducted a tree plantation drive (November 12, 2017) in commemoration of their 30th anniversary in Bengaluru. Under the auspices of the residents of Akshay Nagar in Bengaluru, about 300 saplings were planted by the staff around the Akshay Nagar lake and Viveka Gudda area. The day has been etched in the annals of the Company as a green Sunday and the beginning of an initiative to plant 30000 trees by involving all the branches of the Company. CFHL also espouses the cause of environment as a CSR initiative and during the year the Company has come out with a novel initiative of gifting a tree sapling/potted plant to each borrower across branches. The aim is to encourage every home buyer to join hands with the Company to ensure a greener environment.

30. OUTLOOK FOR 2018-19

Governmentâs initiative of âHousing for all by 2022â and the consequent incentives to the sector, i.e., extended coverage of MIG under Pradhan Mantri Awas Yojana (PMAY) Credit Linked Subsidy Scheme, increase in carpet area norm for eligibility under CLSS, infrastructure status and rationalization of GST rates in favour of affordable housing etc., are going to be the key drivers of growth in the year 18-19.

We remain buoyant with regard to our market expansion to potential geographies beyond our home turf and have plans to open about 20 new branches during the current fiscal. We also acquired license from the IRDA and began insurance agency business from January 2018. The insurance business adds to our business competitiveness and widens our service portfolio and will generate revenue for the year too.

Your Company is targeting a loan book size of Rs 19,500 Crore by Marchâ 19. Lending to the salaried class will continue to be our mainstay. However, with the rising cost of funds, expectations of borrowers for loans at lesser rates, intense competition in the market, etc., margins are expected to remain under pressure.

The prime focus of your Company would be growth with quality. The onus of maintaining high standards is a formidable challenge, however your Company is confident of meeting the same.

31. ACKNOWLEDGEMENTS

Your Directors would like to thank Canara Bank, the promoter, for their continuous support.

Your Directors would like to acknowledge the role of all its stakeholders viz., shareholders, debenture holders, CP holders, depositors, bankers, lenders, borrowers, merchant bankers, debenture trustees and all others for their continuous support to your Company and the confidence and faith that they have always reposed in your Company.

Your Directors thank the Rating Agencies ICRA, CARE, India Ratings & Research Ltd., (FITCH), the Registrars & Share Transfer Agents, Debenture Trustees and Trustees of public deposits of your Company, Government(s), local/ statutory authorities, and all others for their whole-hearted support during the year and look forward to their continued support in the years ahead.

For and on behalf of the Board of Directors

Place: Bengaluru K N Prithviraj

Date : June 02, 2018 Chairman

Mar 31, 2017

To the Members

The Directors are pleased to present the 30th Annual Report of the business and operations of the Company together with the audited accounts for the year ended March 31, 2017.

1. Financial Results

The financial performance for the FY16-17 is summarized here below:

(Rs, in Lakh)

Particulars	Year ended	Year ended
	March 31, 2017	March 31, 2016
Profit before Tax & Provisions	38,838.06	27,326.61
Less: Provision for Standard Assets	1,065.00	1,400.00
Provision for Doubtful Debts	815.38	540.53
(Written Back)
Prior Period adjustments	-58.85	0.00
Profit before Tax	37,016.53	25,386.08
Tax expenses:
(a) Provision for Tax - Current Year	11,513.00	8,000.00
(b) Deferred Taxation	1,977.65	1,675.56
Profit after Tax	23,525.88	15,710.51
Balance brought forward from previous	114.58	309.30
year
	23,640.46	16,019.81
Appropriations:
Transfer to Special Reserve u/s.36(1)(viii)	6,400.00	5,500.00
of the Income Tax Act, 1961
Transfer to General Reserve	9,200.00	4,000.00
Additional Reserve (u/s.29C of the NHB	4,800.00	3,200.00
Act)
Proposed Dividend	-	2,663.08
Tax on Distributed Profits	-	542.15
Balance carried forward to balance sheet	3,240.46	114.58
	23,640.46	16,019.81

2. Shareholders'' Wealth

Particulars	Year ended March 31, 2017	Year ended March 31, 2016
Earnings Per Share (EPS) (H)	88.38	59.02
Dividend Rate	100%	100%
Market Price of shares (H)	2,121.45	1,154.40
Market Capitalization (Rs,in Crore)	5,643.06	3,070.70

3. Business Performance Highlights

a. Sanctions

During the year, the company has sanctioned loans amounting to Rs,5451 Crore as compared to Rs,4418 Crore in the previous year, recording a growth of 23%. Despite slowdown in real estate market in some parts of the country, stiff competition from Banks & HFCs, the business performance of the company continued to be encouraging during 2016-17.

During the year, your Company continued to focus on retail (housing and non-housing) loan segment which constituted 99% of its total sanctions. 88% of fresh loan approvals during the year were for housing and 12% were for non-housing loans. The cumulative loan sanctions since inception of your Company stood at H26,362 Crore at the end of the FY16-17. Average ticket size of incremental housing loans and non-housing loans are Rs,18 Lakh and Rs,10 Lakh respectively.

b. Disbursements

During the year, the company has disbursed loans amounting to Rs,4,792 Crore as compared to Rs,3,923 Crore in the previous year, recording a growth of 22%. The cumulative loan disbursements from inception to the end of the FY16-17 was Rs,23,083 Crore.

c. Loans outstanding (Loan Book)

The total loan outstanding as at March 31, 2017 were Rs,13,313 Crore, recording a growth of 25% over last year (previous year Rs,10,643 Crore).

Your Company continues to grow in the high-yielding non-housing loan segment. During the year, non-housing loan portfolio has increased from H1,262 Crore to Rs,1,529 Crore indicating a growth rate of 21%, which constitutes 11.86% of total portfolio.

d. Non-Performing Asset (NPA)

Your directors are pleased to report that the Gross NPA of your Company as on March 31, 2017 was contained at Rs,27.91 Crore (previous year Rs,19.76 Crore). The net NPA as on the date continued to be Nil, with the NPA Provision Coverage Ratio at 100% for the 8th year in succession. The gross NPA percentage as on March 31, 2017 stood at 0.21% compared to 0.19% as on March 31, 2016, one of the lowest in the industry.

During the year under review, your Company could make a cash recovery of Rs,4.08 Crore (previous year Rs,3.32 Crore) in respect of accounts which were Non Performing Assets as on March 31, 2016. Recovery in written-off accounts during FY16-17 was Rs,0.37 Crore.

e. Profits

Your Directors are happy to inform that during the year under review, your Company recorded an Operating Profit of Rs,388.38 Crore (previous year Rs,273.27 Crore), Profit Before Tax (PBT) of Rs,370.17 Crore (previous year Rs,253.86 Crore) and Profit After Tax (PAT) of Rs,235.26 Crore (previous year H157.11 Crore) registering a Year-on-Year increase of 42%, 46% and 50%, respectively. During the year Company has made provisions for standard assets amounting to Rs,10.65 Crore (previous year Rs,14.00 Crore), provisions for Non-performing assets amounting to Rs,8.15 Crore (previous year Rs,5.41 Crore), provisions for Taxation and Deferred Tax Liability amounting to Rs,134.91 Crore (previous year Rs,96.76 Crore).

f. Dividend

Your Company has been paying dividends continuously. Your directors, after giving due consideration to Capital Adequacy requirements, projected business plan for the year, deferred tax liability and the dividend policy, are happy to recommend a dividend of H10 per equity share (100%) for the second successive year, for the financial year ended March 31, 2017. The amount of dividend recommended for payment for the year under review is Rs,26.62 Crore The tax on dividends u/s.115-O of the Income Tax Act, 1961, at about 20.36% (Rs,5.42 Crore), is being paid to the Government by your Company.

4. Expansion of Branch Network

During the FY16-17, 10 new branches and 20 satellite offices were opened by CFHL while 4 top performing satellite offices were upgraded to full-fledged branches. Further, CFHL introduced the concept of ''Affordable Housing Loan Centersâ (AHLCs) to exclusively provide smaller ticket size Loans under CLSS (PMAY), Urban Housing (LUH) and Rural Housing schemes. Under this initiative, the first tranche of 10 AHLCs were opened in Q4 by upgrading existing satellite offices. As at the end of FY16-17, CFHL has an expanded network of 170 outlets spread across 19 states comprising 124 branches, 10 AHLCs and 36 Satellite Offices. CFHL became the first HFC to start exclusive Affordable Housing Loan centreâs in sync with the ''Housing for allâ initiative by the Government.

During the FY17-18, CFHL has plans to open 12 branches and 10 SOs. CFHL will also open 20 more AHLCs, taking the number of such exclusive outlets for Affordable Housing Loans to 30, to mark 30th year of CFHLâs commitment to promote home ownership.

The Registered Office and all the branches have good ambience, spacious premises and other facilities to enhance service quality and visibility in the market.

5. Technology Initiatives

All the branches and the Registered Office are linked through a core-banking platform (Integrated Business Suite) under the Application Service Provider (ASP) Model. The Company is also in the process of a tie-up with BSNL for a higher bandwidth MPLS lines.

In order to improve operational efficiency, your Company embarked on technology initiatives like the introduction of Online Application Module in the Companyâs website to receive applications online, mobile website, customer portal in the website to access account statements/certificates at customersâ end, missed call facility to borrowers for their information about outstanding balances in their loan accounts, SMS alerts to remind borrowers of loan installments/new schemes. Your Company has introduced online money transfer and customer portal to facilitate its borrowers to view their statement of account(s), generate certificates, product information and branch location.

6. Customer-Friendly Initiatives

The transparent, ethical, equitable practices adopted towards all customer segments is the hallmark of your Company. With the launch of customer portal, the company has taken a step in the direction of enabling the customer to get easy access to their account related information such as IT certificate, EMI payment details, balance outstanding etc., at the click of a button. Your Companyâs website provides all the major information on the products and applicable charges. The Fair Practice Code (FPC) and Most Important Terms and Conditions (MITC) are made available on the website as per NHBs directions. The distinctive referral scheme wherein customers are benefited from the refund of their processing fees, upon referring new customers to the Company, is also one of our unique customer friendly initiatives. Emphasis continues to be placed on the reduction of the turnaround time (TAT) in sanctioning and disbursing loans at all levels in order to benefit the customers.

7. Financial Resources

a. Refinance from National Housing Bank (NHB) and borrowings from Banks

During the year, your Company had availed fresh refinance amounting to Rs,441.21 Crore (previous year Rs,630.64 Crore) under the NHB refinance scheme. The cumulative NHB borrowings as on March 31, 2017 were Rs,3,375.03 Crore (previous year Rs,3,535.04 Crore), with the overall cost of borrowing (including the loans under Rural Housing and Urban Housing Schemes) of 8.23% p.a. as on March 31, 2017.

Borrowings from Banks

Your Company progressively reduced its dependence on bank borrowings. During the year, borrowings were diversified through a combination of short-term and long-term loans considering the asset liability management position to derive the maximum benefit of competitive interest rates. The lenders included HUDCO, State Bank of India, Bank of Baroda, HDFC Bank and Oriental Bank of Commerce apart from Canara Bank, the principal bankers to the Company. The aggregate bank borrowings (term loans plus overdraft) at the end of the financial year stood at Rs,2,247.65 Crore (previous year Rs,2,536.58 Crore); the overall borrowings are within regulatory ceiling of 16 times of net owned funds.

The overall cost of borrowings (average) was 9.09% p.a. as on March 31, 2017. During the year, the long-term ''ratingâ for term loans for your Company was ''[ICRA]AAAâ (pronounced ICRA triple A) by ICRA Ltd., these ratings assumed to possess the highest degree of safety with regard to the timely servicing of financial obligations.

b. Debentures

(i) Secured Non-Convertible Debentures

In its continuing efforts to reduce fund costs, your Company issued Secured Redeemable Non-Convertible Non-Cumulative Taxable Debentures (SRNCD) aggregating Rs,1,862 Crore (previous year Rs,1,540 Crore) in different tranches through private placement with a coupon rate range of 7.57% to 8.55%. The debentures were secured by way of a floating charge on the assets i.e., loan receivables specifically earmarked for the purpose in favour of the Debenture Trustees. Most investors in these debentures comprised major insurance companies, public sector banks, corporate and investors of repute, indicating their safety perception in your Companyâs fundamentals and prospects.

The tenure of debentures is range bound for two to five years. The interest on these debentures was serviced regularly. The aggregate borrowings by way of Secured NCDs as on March 31, 2017 was Rs,3,602 Crore (previous year Rs,2,090 Crore) while the overall cost was 8.57% p.a.

The debentures were rated ''[CARE] AAAâ by CARE, ''IND AAAâ by India Ratings and Research Pvt. Ltd (FITCH), and ''[ICRA] AAAâ by ICRA Limited. These debentures were listed on the Wholesale Debt Market (WDM) segment of the National Stock Exchange of India Limited.

Your Company plans to raise Nonconvertible Debentures up to a maximum Rs,6,000 Crore subject to cost benefit and asset liability management requirements and with the approval of members at ensuing Annual General Meeting.

(ii) Unsecured Non-Convertible Debentures

During FY14-15, your Company had issued 8.94% Unsecured Non-Convertible Debentures in the nature of Tier II Bonds aggregating Rs,100 Crore for a tenure of 10 years. These debentures are subordinated to present and future senior indebtedness of the Company and qualify as Tier II Capital under the National Housing Bank (NHB) guidelines for assessing Capital Adequacy Requirements. These Tier II Bonds were rated ''IND AAAâ long-term rating by India Rating & Research Pvt Limited (FITCH), ''[CARE] AAAâ by Credit Analysis & Research Ltd., (CARE) and ''[ICRA] AAAâ by ICRA Ltd. Your Company has serviced the interest on the above debentures on the due date.

c. Commercial Paper

Your Company mobilizes funds through commercial paper (CP). The outstanding at the end of the March 2017 was Rs,2,320.62 Crore (previous year Rs,961.37 Crore). The effective cost of funds was 7.43% p.a. The CP issue by your Company was rated at the maximum [ICRA] A1 rating by ICRA Ltd., indicating, ''Instruments with this rating are considered to have very strong degree of safety regarding timely payment of financial obligationsâ.

d. Deposits

During the year your Company accepted deposits of Rs,149.93 Crore (Previous year Rs,67.66 Crore). The outstanding balance of deposits (including interest accrued, but not due) as of March 31, 2017 was Rs,226.65 Crore (previous year Rs,220.97 Crore). The rate of interest on public deposits ranged from 7.50% to 8.10%, while the overall cost (average) of deposits was 8.83% p.a. as on March 31, 2017.

As on March 31, 2017, a sum of H\Rs,20.09 Crore relating to 1,020 accounts of public deposits (Rs,17.06 Crore as on March 31, 2016 relating to 1,106 accounts) remained unclaimed/overdue. Of this amount, a sum of Rs,2.29 Crore relating to 140 accounts (previous year Rs,2.20 Crore relating to 239 accounts) were claimed and renewed/settled up to May 15, 2017. Your Company has not defaulted in repayment of deposits or interest during the year. The Company has complied with the requirements under Chapter V of the Companies Act, 2013 to the extent applicable.

During the year, the deposit schemes of your Company are rated ''MAAAâ (pronounced as M Triple A) by ICRA Ltd., indicating ''highest credit-qualityâ and that the rated deposit programme carried the lowest credit risk. Your Company, being a housing finance Company registered with National Housing Bank (NHB), has complied with the Directions/Guidelines issued by the NHB with regard to deposit acceptance and renewal. Your Company is exempted from the applicability of the Companies (Acceptance of Deposits) Rules 2014.

e. Mortgage-backed securities

Your Company did not opt for any securitization during the year under review or during the previous year. There were no securitized assets outstanding as on March 31, 2017.

8. Compliance with Directions/ Guidelines of National Housing Bank (NHB) and other statutes

Your Company adhered to the prudential guidelines for non-performing assets (NPAs) as per the National Housing Bank (NHB) Directions 2010, as amended from time to time. Your Company complied with the guidelines and directions issued by NHB on withdrawal of pre-closure charges for all loans. The Guidelines/ norms for asset classification of credit/ investments, credit rating, acceptance of deposits, Fair Practices Code (FPC), Most Important Terms and Conditions (MITC), Customer Complaints Redressal Mechanism, Know Your Customer (KYC), Anti-Money Laundering (AML) Guidelines, Asset Liability Management, Capital Adequacy Ratio (CAR) norms, Customer Redressal Mechanism and other related instructions, issued by the National Housing Bank (NHB) were implemented in letter and spirit with an explicit notification on the website of your Company.

As per the National Housing Bank Circulars NHB.HFC.DIR.4/CMD/2012 dated January 19, 2012 and NHB.HFC. DIR.9/CMD/2013 dated September 6,

2013, your Company has made a general provision @:

(i) 1% of Standard Assets in respect of Commercial Real Estates other than Residential Housing,

(ii) 0.75% of Standard Assets in respect of Commercial Real Estate -Residential Housing, and

(iii) 0.40% of the total outstanding amount of loans, which are Standard Assets other than (i) and (ii) above.

Loans to individuals for third dwelling unit onwards are treated as Commercial Real Estate (CRE) exposure. A provision of Rs,10.65 Crore was made in the books as on March 31, 2017 and the cumulative provision in that regard stood at Rs,62.65 Crore as on the above date. The recognition of income and provision for all assets was made in the books as per the Guidelines on Prudential Norms applicable as of March 31, 2017.

Your Company this year has carved out Rs,22.50 Crore from current year P&L and Rs,37.00 Crore from General Reserves towards Deferred Tax Liability (DTL) as per NHB guidelines NHB(ND)/DRS/ Pol.62/2014 dated May 27, 2014 and NHB(ND)/DRS/Pol.65/2014 dated August 22, 2014 and ensured full compliance of regulatory guidelines. Amount which is proposed to be transferred to reserves is given in detail in Note no. 3 of Notes forming part of the financial statements.

During the year the NHB has issued 3 new directions viz.,

(1) Housing Finance Companies -Auditorâs Report (National Housing Bank) Directions, 2016

(2) Housing Finance Companies -Approval of Acquisition or Transfer of Control (National Housing Bank) Directions, 2016

(3) Housing Finance Companies -Corporate Governance (National Housing Bank) Directions, 2016

Your Company has taken steps to comply with the requirements of all the applicable provisions of the above Directions for FY16-17. In terms of the CG Directions, the Company has given the "Related party transaction policy" as Annexure 7 to this Report.

The NHB had conducted Audit of 201415 during the previous year and raised an issue on the procedure followed by the Company since beginning on valuation of Government Security under HTM Category (Held to Maturity) invested for SLR purpose. Since there is no change in regulations/procedures during the period, the matter has been represented by the Company and a final decision is awaited. These facts have been disclosed in the Notes to accounts.

9. Compliance under the Companies Act, 2013

Your Company has complied with the requirements of the applicable provisions of the Companies Act, 2013 and related Rules during the FY 16-17. In accordance with Sec 134 (3) (a) of the said Act, an extract of the Annual Return in the prescribed format is appended as Annexure 4 to this Report.

During FY 16-17 Canara bank, Promoters of the Company had disinvested 35,80,849 (13.45%) equity shares of the Company and the shareholding of the Bank as on March 31, 2017 stood at 30%. The disinvested portion of 13.45% was purchased by M/s. Caladium Investments Pte. Ltd., Singapore, an affiliate of GIC, Singaporeâs Sovereign Wealth Fund.

10. Capital Adequacy

The Capital Adequacy Ratio (CAR) of your Company as at March 31, 2017 was 18.50% (previous year 20.69%), well above the Regulatory benchmark of 12% prescribed by the National Housing Bank (NHB).

11. Depreciation

Depreciation was calculated on the Written Down Value Method based on useful life, in the manner prescribed in Schedule II to the Companies Act, 2013.

12. Deferred Tax Liability (DTL)

Vide Circular NHB (ND)/DRS/Pol.62/2014 dated May 27, 2014, the National Housing Bank (NHB) directed Housing Finance Companies (HFCs) to provide for deferred tax liability with respect to the balance in the Special Reserve created under Section 36(1)(viii) of the Income Tax Act, 1961 as on March 31, 2014 and permitted to adjust the same from retained earnings. Further, Vide Circular NHB(ND)/DRS/Pol.65/2014 dated August 22, 2014, NHB permitted HFCs to adjust the Deferred Tax Liability in a phased manner over three years in the ratio of 25:25:50 starting from FY14-15. Accordingly the Company has to adjust the DTL of Rs,7,399.96 Lakh in three years. The Company has transferred the third and final tranche of 50% being Rs,3700 Lakh in this year ending March 31, 2017 from the General Reserves to DTL (Rs,3700 Lakh transferred in the previous two years). Further, Deferred Tax Liability (net) of Rs,1,977.65 Lakh (previous year Rs,1,675.56 Lakh) was charged to the Statement of Profit & Loss, on account of various components of asset & liabilities including Special Reserve appropriated during the current year.

13. Recovery Action under Securitization & Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Sarfaesi Act)

During the year, your Company initiated action against 188 defaulting borrowers under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest ("SARFAESI") Act, 2002 and recovered H8.94 Crore (previous year H2.66 Crore) from borrowers of Non-Performing accounts. By way of seized assets, your

Company has recovered Rs,3.80 Crore (previous year RS,1.09 Crore). During the year, Company recovered RS,0.37 Crore in written off accounts (previous year RS,0.74 Crore). During the year, your Company negotiated one-time settlement (OTS) with eligible NPA borrowers as per its recovery policy and recovered RS,16.75 Lakh (previous year RS,86.08 Lakh).

14. Listing of Securities

The equity shares of the Company are continued to be listed on the BSE Limited (BSE), Mumbai, and the National Stock Exchange of India Ltd. (NSE), Mumbai. The listing fee payable to these Stock Exchanges were paid before the due dates. The Securities & Exchange Board of India, vide its letter dated December 26, 2014 bearing No. WTM/ RKA/MRD/165/2014, granted an exit to the Bengaluru Stock Exchange Ltd., (BgSE)., Bengaluru.

Listing Agreement: The Securities Exchange Board of India (SEBI), has notified the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 on September 2, 2015 with the aim to consolidate and streamline the provisions of Listing Agreements for different segments of capital to ensure better enforceability. The Regulations were effective from December 1, 2015. Accordingly, as per the requirements, your Company entered into Listing Agreements with the National Stock Exchange of India Ltd and BSE Limited within the prescribed period. Smt. Veena G Kamath, ACS, is the Compliance Officer of the Company from FY 16-17 (Shri K S Sathyaprakash, FCS, was the Compliance Officer of the Company up to 31/05/2016). The Board of Directors has authorized the Company Secretary and the Chief Financial Officer, severally, for reporting disclosure of material events, if any, in terms of Regulation 30 of the said Regulations.

Dividend distribution policy is given as Annexure 8 as required under SEBI amended LODR Regulations.

15. Human Resources Development

The total number of employees of your Company was 626 (471 regular and 155 on contract) as on March 31, 2017 as against 553 (395 regular and 158 on contract) as at the end of the previous year. Attrition rate stood at about 3.50% for regular employees, which is far below the industry level.

To upgrade knowledge/skill of the employees, some employees were deputed for training programmes/ seminars organized by the National Housing Bank and other reputed institutions. During the year, training in credit, information technology, human relations, finance, taxation, marketing, fraud prevention and other topics of importance were imparted to employees and executives. Your Company has put in place a series of HR measures including promotions, appropriate employee recognition and reward schemes. Industrial relations in your Company continued to be cordial during the year.

Particulars of Employees:

During FY16-17, your Company had not employed anyone with a remuneration of H102 Lakh or more per annum nor had employed for a part of the year with a remuneration of H8.5 Lakh or more. The ratio of remuneration of each Director to the median of employees remuneration and such other details as required under Sec 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, are furnished below:

i. The ratio of the remuneration of Managing Director to the median remuneration of the employees (regular employees) of the Company for the FY16-17 was 3.18 : 1 (Non-executive directors and Independent Directors are eligible for sitting fee only)

ii. The percentage increase in remuneration in the financial year under the head Managing Director was 24%, of which part terminal benefits of the earlier Managing Director is also included (the remuneration of Managing Director is as per the Service Regulations of Canara Bank in terms of the resolution passed by the members at the General Meeting for appointment in the Company).

The Chief Financial Officer and the Company Secretary are employees of the Company and the percentage increase in their remuneration was 16.06% and 7.15% respectively.

iii. The percentage increase in the median remuneration of employees in the financial year is 23.84%.

iv. Apart from 471 permanent employees on the rolls of the Company, there were 155 employees on contract as on March 31, 2017.

v. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration: Average % increase in remuneration of the employees as well as that of Managerial remuneration was around 10% during the period under review.

The Company affirms that the remuneration is as per the remuneration policy of the Company.

The Company has a Policy on "Prevention of Sexual Harassment of Women at Workplace" and matters connected therewith or incidental thereto covering all the aspects as contained under the "The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013". During FY16-17 no cases of sexual harassment were reported. The Company has laid down a Code of Conduct for Prevention of Insider Trading, in accordance with the requirements under the Securities and Exchange Board of India (Prevention of Insider Trading) Regulations, 2015 and Companies Act, 2013, with a view to regulate trading in Securities of the Company by its directors, designated persons and employees. The same is made available on the website of the Company.

16. Transfer of Unclaimed and Unpaid Dividend/ Deposit Amounts to the Investor Education and Protection Fund (IEPF)

In terms of (section 125 of the Companies Act, 2013 only section 125 (8) to (11) notified by MCA on September 05, 2016) the amounts (dividend, deposits etc., with interest) that remained unclaimed and unpaid for more than 7 years from the date they first became due for payment, should be transferred to IEPF.

In order to receive prompt payment of dividend, the members/investors are requested to demat the shares held in physical mode, register bank account particulars, opt for ECS facility, register nomination and intimate change of address, if any, to the Company/ Depository Participants promptly.

a. Unclaimed dividends

As at March 31, 2017, dividends aggregating to H124.18 Lakh (previous year H98.34 Lakh) relating to dividends declared for the years FY09-10 to FY15-16 (of which H34.28 Lakh related to dividend for the year 2016), had not been claimed by shareholders. As an investor friendly measure, your Company has intimated shareholders to lodge their claims and related particulars were provided in the annual reports each year as well as on the website of your Company.

The dividend pertaining to 2008-09, which remained unclaimed/unpaid amounting to H5.41 Lakh (in respect of 1,824 shareholders), was transferred to IEPF on October 3, 2016, after the settlement of claims by members received in response to the individual reminder letters sent by your Company to the respective members.

The dividend pertaining to 2009-10 remaining unclaimed and unpaid, amounting to H6.98 Lakh (in respect of 2,062 shareholders) as on March 31, 2017, would be transferred to IEPF during August 2017 after settlement of the claims received up to the date of completion of seven years i.e. on August 25, 2017.

b. Unclaimed deposits

As required under Section 125 of the Companies Act, 2013 (corresponding Section 205C of the Companies Act, 1956), the unclaimed and unpaid deposits together with interest for the year 2008-09 amounting to H0.72 Lakh (previous year H3.62 Lakh) that remained unclaimed and unpaid for a period of 7 years were transferred to IEPF during the year under review.

c. Transfer of shares to IEPF Demat account

Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and refund) Rules, 2016 was notified by the Ministry of Corporate Affairs (MCA) on September 05, 2016. As per Rule 6 of the said Rules, the shares, in respect of which dividend amounts have not been paid or claimed for 7 consecutive years, are required to be transferred to ''IEPF Suspense Account (CFHL)

On verification of records of unclaimed dividend amounts from 2003 to 2009, which have already been transferred to IEPF on lapse of 7 years (during 2010 to 2016 respectively), 430 shareholders have not claimed dividend for consecutive 7 years and their shares are liable to be transferred to IEPF.

In terms of the above Rules, two reminders dated September 24, 2016 and December 02, 2016 were sent by the Company to all the shareholders who have not claimed their dividends for a consecutive period of 7 years, informing that their shares will be transferred to IEPF suspense account on December 25, 2016, if they do not place their claim for unclaimed dividend amounts before the Company.

In the meantime, the action was stayed due to a General Circular No.15/2016 dated December 07, 2016 issued by the MCA informing that revised notifications will be issued.

Further, the MCA issued a revised notification dated February 28, 2017 extending the period for transfer, of unclaimed shares to IEPF Demat Account, up to May 31, 2017. The Company has sent a third reminder dated April 13, 2017 in this regard to 389 shareholders who have not claimed their dividend amounts for a consecutive period of 7 years, informing the said due date for transfer of shares to IEPF Demat account. Your Company has provided the IEPF Rules, the paper notifications issued and a list of the shareholders, whose shares will be transferred to IEPF in the Investor Page of the website of the Company.

17. Particulars regarding conservation of energy, technology absorption and foreign exchange earnings and expenditure

(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules 2014, are not applicable.

As a part of Save Green efforts and leverage of technology, a lot of paper work at branches and the Registered Office has been reduced (also refer para 5).

18. Directors & Key Managerial Personnel Appointments / Reappointments:

The Board of Directors made the following appointments/ re-appointments based on the recommendations of the Nomination and Remuneration Committee:

(1) Shri S K Hota, General manager of Canara Bank was appointed as the Managing Director with effect from May 19, 2016. His appointment was approved by the members at the 29th Annual General Meeting of the Company held on July 20, 2016.

(2) Shri Naganathan Ganesan, FCA, was appointed as an Additional Director (Independent Director) with effect from September 07, 2016.

(3) Shri Thallapaka Venkateswara Rao, Independent Director, has been re-appointed by the Board as an Independent Director for a period of one year from the conclusion of the ensuing Annual General Meeting up to the conclusion of the Annual General Meeting of the Company of the year 2018.

(4) Shri Kokkarne Natarajan Prithviraj, Independent Director, has been re-appointed by the Board as an Independent Director for a period of one year from the conclusion of the ensuing Annual General Meeting up to the conclusion of the Annual General Meeting of the Company of the year 2018.

The particulars of directors including their profile are provided in the Report of Directors on Corporate Governance forming part of this Annual Report. Further, the agenda relating to appointments / re-appointments of Directors are provided in the Notice of the 30th Annual General Meeting of the Company seeking approval from the members. The particulars relating to the Directors and all other relevant information are provided in the explanatory statement forming part of the said Notice for the information of members.

Retirement by rotation:

In terms of Section 152 and all other applicable provisions of the Companies Act, 2013, and the Articles of Association of the Company, Smt. P

V Bharathi, Director, retires by rotation at the ensuing Annual General Meeting and being eligible, offers herself for re-appointment. The particulars relating to Smt. P V Bharathi, Director are provided in the Report of the Directors on Corporate Governance. Your Directors recommend the reappointment of Smt. P V Bharathi as a Director.

The agenda relating to re-appointment of Smt. P V Bharathi, Director, forms part of the notice convening the ensuing Annual General Meeting and all other relevant information as per SEBI Regulations are also provided in the explanatory statement.

Resignations:

Shri C Ilango, Managing Director of the Company had submitted his resignation with effect from May 18, 2016 (after office hours) consequent to his repatriation to Canara Bank.

19. Meetings of the Board

During the year, nine meetings of the Board of Directors were held and the related details, including that of various committees constituted by the Board, are made available in the Report of Directors on Corporate Governance forming part of the annual report placed before the members.

Committees of the Board

Currently the Board has six Committees viz. the Audit Committee, the Nomination and Remuneration Committee, the Corporate Social Responsibility Committee, the Stakeholders Relationship Committee, the Risk Management Committee and the Management Committee. A detailed note on the composition of the Board and its Committees and other related particulars are provided in the Report of Directors on Corporate Governance forming part of this Annual Report.

20. Directors'' Responsibility Statement

a) in the preparation of annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;

b) the Directors have 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 Company at the end of the financial year and of the profit and loss of the Company for that period;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors have prepared the annual accounts on a going concern basis;

f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

The Independent Directors have given declarations to the Company in terms of with Section 149(7) of the Companies Act, 2013, that they meet the criteria of independence as provided in Section149(6).

Code of Conduct

Management for the FY16-17. As required under Schedule V (D) of the said Regulations, a declaration signed by the Managing Director & Chief Executive Officer of the Company stating that the members of the Board and the Senior Management Personnel have affirmed compliance of their respective Codes of Conduct, is enclosed to this Report as Annexure 2.

21. Nomination and Remuneration Committee (NRC) Policy

Your Company has constituted a Nomination and Remuneration Committee (NRC) of the Board in terms of Section 134(3)(e) of the Act, Regulation 19 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and Para 3(II) of NHB Corporate Governance (National Housing Bank) Directions, 2016, consisting of 3 Directors. This Committee identifies persons who are qualified to become Directors of the Company. The appointment, renewal, reappointment, re-categorization and/ or removal of the Directors so identified, including extension or continuation of the term of appointment, will be recommended by the NRC to the Board. This Committee has also laid down the criteria to identify persons who may be appointed to the senior management of the Company. The NRC has formulated the criteria for determining qualifications, positive attributes and independence of a Director, carrying out evaluation of every Directorâs performance. The NRC Policy of the Company covering all the above aspects is made available on the official website of the Company at http://www.canfinhomes.com/Aboutus/ Corporate Governance documents(path).

22. Corporate Social Responsibility (CSR) Policy

Your Company constituted a Corporate Social Responsibility (CSR) Committee of the Board as prescribed under Section 135 of the Companies Act 2013 and has put the CSR policy in place. The Company has focused in promoting education including special education and employment in enhancing vocation skills especially among children. The company also focuses on women empowerment by Promoting gender equality, setting up homes and hostels for women and orphans; setting up old age homes, day care centreâs, livelihood enhancement projects for the elderly & the differently abled. Reducing inequalities faced by socially and economically backward groups and contribution to Prime Ministerâs National Relief Fund also forms part of its CSR activities.

The activities undertaken by the Company under CSR initiative is on Pan India basis and the projects are executed by our branches in those areas. The total amount to be spent under the CSR initiatives for FY16-17 was H402 Lakh (previous year H372 Lakh), out of which projects sanctioned under CSR activities was H392 Lakh. The disbursements/ amount spent on the approved projects during 2016-17 is H436 Lakh which includes H155 Lakh of previous sanctions that are carried over. The unspent amount of H18 Lakh (H8 Lakh pertaining to FY15-16 and H10 Lakh to FY16-17) is carried forward as per provisions of Companies Act with the aim to go in for granular details/ appropriate projects before spending in FY17-18. A summary of CSR details as on March 31, 2017 is given below:

Sl No.	Activities undertaken	No. of Beneficiaries	Amount in Rupees
1	Construction of Schools	6	39,40,412.00
2	Desks & benches/ Tables/ Almirah/ Green Board/ Chairs/ School Bags/ Books	124	215,80,691.00
3	Drinking water facility/ supply of other articles of necessity etc.	28	20,78,533.00
4	Repair and Renovation of schools	11	44,19,961.00
5	Electrical & Electronic Items	5	4,05,551.00
6	Toilet Facility	5	11,15,380.00
7	Scholarship	1	34,600.00
8	Contribution to Pradhan Mantri National Relief Fund	1	100,00,000.00
Total		181	435,75,128.00

The Annual Report on CSR activities including brief contents are provided as an Annexure 6 to this report.

23. Risk Management Policy

Your Company has constituted a Risk Management Committee with two directors and a senior executive of the Company. In terms of Section 134(3)(n) of the Act, your directors wish to state that your Company has drawn and implemented a Risk Management Policy including identification of elements of risks, if any, which may threaten the existence of your Company. The above policy is being reviewed/re-visited once a year or at such other intervals as deemed necessary for modifications and revisions, if any.

24. Audit and Internal Control

Your Company strengthened existing internal control systems for loan reviews at periodical intervals and introduced measures for minimizing operational risks commensurate with the nature of its business and size of operations. Further, your Company has reviewed delegation of authorities and streamlined standard operating procedures for all areas of its business/ operations/ functions, strengthened the Offsite Transaction Monitoring System (OTMS) to track transactions/early-warning signals across all branches by introducing innovative monitoring tools.

The National Housing Bank conducts inspection of your Company on an annual basis. During the year, the NHB conducted credit inspection of your Company in December 2016 for the position as at March 2016. The compliance on the observations were submitted within the prescribed time to the NHB, which were reviewed by the Audit Committee and the Board.

Your Company has also put in place a well- defined policy on Risk Based Internal Audit (RBIA) and as per the said policy, all the 120 branches that became due for audit, were audited in the FY16-17.

Apart from the RBIA Audit, considering the volume of business, branches are also subjected to quarterly/ half yearly internal audit by empanelled audit firms. The Audit Committee reviewed the audit reports/remarks/ observations and replies/ compliances including the compliance of KYC norms.

25. Secretarial Audit

The Secretarial Audit for FY16-17 was conducted as required U/s.204 of the Companies Act 2013, by S. Kedarnath and Associates, a firm of Company Secretaries in Practice. In terms of Section 204(3) of the Act, your Directors are pleased to inform that there was no qualification or observation or other remarks made by the said Company Secretaries in their Secretarial Audit Report. The Secretarial Audit Report issued by the Practicing Company Secretaries is enclosed to the report of Directors (Annexure 3) in terms of Section 134(3) (f) read with Section 204(1) of the Act.

Loans, Guarantees or Investments:

There are no particulars of loans, guarantees or investments made during the year in terms of Section 186(1) and 186(2) of the Act requiring disclosure to be made in the report of Directors as required under Section 134(3)(g) of the Act. In terms of Section 186(11)(a) the requirement relating to the disclosure is not applicable to a loan made, guarantee given or security provided by a housing finance Company.

Related Party Transactions:

The particulars of contracts or arrangements with the ''Related Partiesâ referred to in sub-section (1) of Section 188 of the Act are furnished in Note No.30 of the Notes forming part of the financial statements for FY16-17, forming a part of the Annual Report. The particulars of Related Party Transactions as required u/s sec 134(3)(p) and 134(3)(n) in the prescribed format is attached to this Report as Annexure 5.

26. Auditors

M/s K P Rao & Co., Chartered Accountants, Bengaluru, Statutory Auditors of your Company (Firm Registration No.003135S) appointed by the members at the 29th Annual General Meeting (AGM) of your Company held on July 20, 2016 and other 53 firms of branch auditors who were appointed by the Board based on the approval of the members at the above AGM, to hold office from the conclusion of the said meeting until the conclusion of the ensuing AGM of your Company, would retire at the ensuing AGM. Considering the applicability of the Companies (Audit and Auditors) Rules, 2014, M/s K P Rao & Co, are not eligible for reappointment as Statutory Auditors for your Company for the FY17-18 as they have completed 3 years from the applicability of the Companies (Audit and Auditors) Rules, 2014.

Your Directors recommend the appointment of M/s. Varma & Varma, Chartered Accountants (Firm Regn. No. 004532S) as the Statutory Auditors. The resolutions seeking approval of the members for appointment of Statutory Auditors and fixation of their remuneration and authorization to the Board of Directors for appointment of Branch Auditors and fixation of their remuneration are included in the notice convening the ensuing Annual General Meeting. The above said appointment attracts the provisions of Section 139,142, 143 and all other applicable provisions, if any, of the Companies Act, 2013 and Rules. Your Company has obtained the consent and a certificate from the statutory auditors under section 139 of the Companies Act, 2013 to the effect that their re-appointment, if made, would be in accordance with the conditions as may be prescribed. The statutory auditors have also confirmed that they hold a valid certificate issued by the ''Peer Review Boardâ of The Institute of Chartered Accountants of India.

Statutory Auditors Report

In terms of Section 134(4) and 134(3)(ca) of the Act, your Directors are pleased to inform that, as in the previous years, there is no qualification, reservation or adverse remark or disclaimer made by the statutory auditors of the Company in their audit report for the financial year FY16-17.

The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its Business, adherence to its polices, safeguarding its assets, prevention and detection of frauds/errors, accuracy and completeness of the accounting records and timely preparation of reliable financial disclosures. M/s K P Rao & Co, the Statutory Auditors of the Company have audited the Internal Financial Controls over the Financial Reporting of the Company and submitted a Report, which forms part of the Auditorsâ Report, placed before the members together with the Financial Statements for FY16-17.

Your Directors wish to inform that there are no material changes and commitments, other than what is reported in the financial statements, affecting the financial position of your Company, which occurred between the end of the financial year to which the financial statements relate and the date of this report. Your Directors also wish to inform that there were no significant and material orders passed by the Regulators/Courts/Tribunals impacting the going concern status and Companyâs operations in future.

On January 18, 2016, the Press Information Bureau, Government of India, Ministry of Corporate Affairs (MCA) issued a note outlining the road map for implementation of Indian Accounting Standards converged with IFRS (Ind AS) for Scheduled Commercial Banks (excluding RRBs), Insurance Companies and NBFCs. Companies having Net worth of more than H500 Crore shall comply with the Indian Accounting Standards (Ind AS) for financial statements for accounting period beginning from April 1, 2018 onwards with comparatives for the period ending March 31, 2018 or thereafter.

The applicability of the said notification on your Company is with effect from FY18-19 onwards and necessary steps have been taken for smooth implementation INDIAN ACCOUNTING STANDARDS (IND AS).

27. Management Discussion and Analysis Report

In terms of Regulation 34(2) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report forms part of this Annual Report.

28. Corporate Governance

As required under the Companies Act, 2013, Regulation 34 read with Schedule

V of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and Housing Finance Companies

- Corporate Governance (National Housing Bank) Directions, 2016, the ''Report of Directors on Corporate Governanceâ for the year FY16-17 is placed in this Annual Report.

Business Responsibility Report:

The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, mandates inclusion of Business Responsibility Report (BRR) in the prescribed format, as a part of the Annual Report for top 500 listed entities based on the market capitalization. In compliance with the said Regulations, the BRR is provided as a part of this Report.

In terms of Regulation 17(10) of the SEBI (Listing Obligations & Disclosure Requirement) Regulations, 2015 read with the SEBI Circular No. SEBI/HO/CFD/ CMD/CIR/P/2017/004 dated January 5, 2017, your Company has put in place the ''Board and Directorâs Evaluation Policyâ laying down a framework for evaluation of the Board, its Committees and of the individual directors with defined attributes for evaluation. The results of the evaluation exercise will be shared with the Board in subsequent Board Meeting(s), including listing of the identified strengths, areas of improvement and actions to be taken, if any.

29. Save Green Efforts

In recognition and support to the green initiative taken by the Ministry of Corporate Affairs (MCA), Government of India, your Company is sending AGM notices, annual reports, correspondence with the stakeholders etc. to the respective e-mail IDs of stakeholders. As a step towards paperless banking, initiatives taken by your Company include ECS facility for repayment of loans, streamlining the systems and procedures for reporting by the branches and at the Registered Office through Integrated Business Suite (IBS), networking of branches with the Registered Office, harnessing solar energy for lighting and computer operations in its 16 branches and the like. The usage of the paper is minimized.

As in the previous years, we are publishing only the statutory disclosures in the print version of the Annual Report. Electronic copies of the Annual Report, Annual General Meeting Notices, and such other notices are being sent to all members whose e-mail address are registered with the Company/Depository participants. For members who have not registered their e-mail address and to those who specifically request for physical copies, the same is sent in the permitted mode.

30. Outlook for 2017-18

In tune with the Governmentâs mission to provide "Housing For All By 2022", your Company has geared itself to provide home loans under Credit Link Subsidy Scheme (CLSS) for the Low Income Group (LIG) and Middle Income Group (MIG) segment under Pradhan Mantri Awas Yojana (PMAY), which is likely to give a fillip to the aspirations of persons desirous of owning a home. We have also introduced 2 new products ''New Gruhalakshmi Rural Housing Scheme (new GRHS)â and ''New Loan For Urban Housingâ (New LUH) with low interest rates to compete with the best rates prevailing in the market. The real estate scenario is expected to improve and credit off take is also expected to emerge stronger in the current year. Implementation of Real Estate Regulation Act (RERA) in most of the states of the country is expected to bring a disciplined growth boosting the confidence level of new home buyers.

For the FY17-18, your Company is targeting a loan book size of H17,000 Crore by Marchâ 18. Lending to the salaried class will continue to be our mainstay. The prime focus of your Company would be growth with quality, duly ensuring enhancement of operations, increasing the Non Housing Loan (NHL) portfolio, further improvement in the asset quality and reduction of cost.

The performance of the Company is keenly viewed by our shareholders, stake-holders, customers, banks, peer groups and the general public. The onus of maintaining the high standards is a formidable challenge, however your Company is confident of meeting the same.

31. Acknowledgements

Your Directors would like to thank Canara Bank for continuous support.

Your Directors would like to acknowledge the role of all its stakeholders viz., shareholders, debenture holders, CP holders, depositors, bankers, lenders, borrowers, merchant bankers, Debenture Trustees and all others for their continued support to your Company and the confidence and faith that they have always reposed in your Company.

Your Directors acknowledge and appreciate the guidance and support extended by all the Regulatory authorities including National Housing Bank (NHB), Securities Exchange Board of India (SEBI), Ministry of Corporate Affairs (MCA), Registrar of Companies, Karnataka, the Stock Exchanges and the NSDL and CDSL.

Your Directors thank the Rating Agencies ICRA, CARE, India Ratings & Research Ltd., (FITCH), the Registrars Share Transfer Agents, Debenture Trustees and Trustees of public deposits of your Company, Government(s), local/ statutory authorities, and all others for their whole-hearted support during the year and look forward to their continued support in the years ahead.

For and on behalf of the Board of Directors

Place: Bengaluru K N Prithviraj

Date : May 15, 2017 Chairman

Mar 31, 2013

TO THE MEMBERS,

The Directors are pleased to present the 26th Annual Report of the business and operations of the Company together with the audited accounts for the year ended March 31, 2013, the Silver Jubilee Year of your Company.

Financial Results

The financial performance for fiscal 2013 is summarised here below:

For the year ended For the year ended Particulars March 31, 2013 March 31, 2012 (Rs. in lakh) (Rs. in lakh)

Profit before Tax & Provisions 7370.80 6830.87

Provision for Standard Assets 685.00 1100.00

Provision for Doubtful Debts Written back (823.81) (361.17)

Prior Period adjustments (5.53)

PROFIT BEFORE TAX 7509.61 6097.57

Tax expenses:

(a). Provision for Tax - Current Year 2000.00 1780.00

(b). Previous year 19.52

(c). Deferred Taxation 78.00 (58.42)

PROFIT AFTER TAX 5412.09 4375.99

Balance brought forward from previous year 548.55 936.89

Amount available for appropriation: 5960.64 5312.88

Appropriations:

Transfer to Special Reserve u/s.36(1)(viii) 1500.00 1350.00 of the Income Tax Act, 1961

Transfer to General Reserve 1800.00 2700.00

Additional Reserve (u/s.29C of the NHB Act) 1100.00

Proposed Dividend 81934 614.62

Tax on Distributed Profits 132.93 99.71

Balance carried forward 60837 548.55

5960.64 5312.88

PERFORMANCE HIGHLIGHTS Sanctions

During the year, the housing loans and other loans sanctioned were to the extent of Rs.2092.65 Crore (Previous year Rs.1105.41 Crore) registering a growth of 89% over the previous year. The cumulative loan sanctions since inception of the Company, as at the end of the financial year 2012-13 was Rs.9915.24 Crore.

Disbursement

During the year, the loans disbursed were to the extent of Rs.1813.77 Crore (Previous year Rs.859.07 Crore) registering an increase of 111% over the previous year. The cumulative loan disbursements since inception of the Company as at the end of the financial year 2012-13 stood at Rs.8474.83 Crore.

Loans Outstanding

The cumulative loan(s) outstanding at the end of the year was Rs.4016.15 Crore (Previous year Rs.2674.39 Crore) registering an increase of 50%.

Non Performing Asset (NPA)

During the year, your Company has reduced the gross NPA to Rs.15.66 Crore (Previous year Rs.19.01 Crore) registering a gross NPA ratio of 0.38% and a reduction of 17.62%. The net NPA continued to be Nil, with Provision conversion ratio at 100%. Your Company could register a cash recovery of Rs.2.60 Crore (Previous year Rs.2.14 Crore) in 44 accounts in long-pending NPA accounts by way of One Time Settlement (OTS).

Profits

Your directors wish to inform with pleasure that during the year under review, your Company has recorded a Profit Before Tax (PBT) of Rs.75.10 Crore (Previous year Rs.60.98 Crore) and Profit After Tax (PAT) of Rs.54.12 Crore (Previous year Rs.43.76 Crore) after making provision for standard assets amounting to Rs.6.85 Crore (Previous year Rs.11 Crore) which is a requirement in terms of the Directions of NHB.

Dividend

The subject relating to recommending the Dividend for the year 2012-13 was discussed in detail by the Directors with specific reference to the profit earned by the Company during the year, the requirement of maintaining the Capital Adequacy Ratio (CAR) at 12%, additional requirement of funds for incremental business projected for the next year, amount available for appropriation for the year to increase CAR, appropriation of Rs.11 Crore towards the Additional Reserve u/s.29C of the NHB Act, for the first time and the like.

With due consideration to the views expressed by the members of the Company at the previous annual general meetings, appreciating the confidence reposed by the members in the Company and their continued support, the Board of Directors of your Company have recommended a dividend of Rs.4 per equity share (40%) against Rs.3 per equity share (30%) recommended during the previous year, for the year ended March 31, 2013. The tax on distributed profits u/s.115-O of the Income Tax Act, 1961, at 16.22% is being paid to the Government by the Company.

Branch network expansion

Your Company has a strong marketing and distribution network. Keeping in view the housing needs across the Country, enhancing the level of business significantly and to meet the requirements of a larger section of customers especially for housing and non-housing loans, 17 new branches were opened by your Company in different parts of the Country. Located in major cities, the total branch network of the Company at the end of the financial year stood at 69 (previous year 52). Your Company envisages increasing the number of branches to about 85 by March 31, 2014. The above net work coverage is expected to provide increased market penetration to cater to the evolving needs of our existing customers and tapping a growing potential customer base throughout India. The Registered Office and branches have been up-graded with state-of-the art ambience and facilities to the customers during their visit to the branches have been enhanced. All the branches of the Company are on the core banking platform.

FINANCIAL RESOURCES

Deposits

The deposits outstanding (inclusive of interest accrued, but not due) as of March 31, 2013 were Rs.171.45 Crore as against Rs.143.89 Crore as at the end of the previous year.

As on March 31, 2013 a sum of Rs.11.12 Crore relating to 1800 accounts (Rs.12.14 Crore as on March 31, 2012 relating to 2057 accounts) was unclaimed. Out of the same, a sum of Rs.2.46 Crore relating to 403 accounts (Rs.3.25 Crore relating to 506 accounts) was claimed and renewed/settled as of date. The remaining depositors have been informed individually by the respective branches either to renew or claim their deposit amounts.

The Ministry of Corporate Affairs, Government of India, New Delhi, vide order F.No.07/07/ 2009-CL/VI dated July 12, 2010 has granted an exemption to the Company from the applicability of the provisions of Section 58A(2)(a) and (b) of the Companies Act, 1956 ("the ActÂ) for a period of 3 years with effect from October 22, 2009, which enables the Company to publish abridged deposit advertisement(s) only during the period of validity of the Statutory Advertisement. The said approval is granted subject to certain conditions mentioned vide paragraph nos. (i) to (vii) of the said Order viz., mentioning reference to the statutory advertisements published by the Company with date and name of the news paper, filing of the said abridged advertisement with the Registrar of Companies in Karnataka, within 15 days of its publication, that the exemption granted would be without prejudice to any legal rights available to any depositor or any share holder or creditor as per law in force in respect of recovery of any amount which has become due for repayment and the exemption granted does not convey approval of Central Government under any other provisions of "the ActÂ. The statutory requirements, as applicable, are being complied with periodically.

Rating of deposits

The deposit schemes of the Company continued to be rated as "MAA Â (pronounced M double A plus) by the credit rating agency viz., ICRA Ltd., indicating high-credit-quality and the rated deposit programme carries low credit risk. The high credit quality rating takes into account the strong ownership, low operating cost structure, superior capital adequacy, its favourable liquidity position and comfortable asset quality indicators. The outlook on the rating has also been re-affirmed as "StableÂ.

Long term financial resources

Refinance from National Housing Bank (NHB)

With the continued support by the NHB and to meet the funds requirement due to substantial increase in business operations during the year, your Company availed refinance amounting to Rs.1,326.90 Crore (Previous year Rs.280 Crore) under the NHB''s Refinance Scheme to Housing Finance Companies. The cumulative borrowings from NHB as on March 31, 2013 were Rs.1795.74 Crore (Previous year Rs.595.18 Crore).

Mortgage Backed Securities (MBS)

Your Company did not go in for any securitisation during the year or during the previous year considering its cost and funds available through alternative sources. As such there were no securitised assets outstanding as on March 31, 2013.

Debentures

The Company had no outstanding on account of debentures as on March 31, 2013.

Borrowings from banks

Your Company borrowed Rs.639 Crore from banks during the year compared to Rs.595 Crore during the previous year. The aggregate of term loans, including the overdraft amount, from Canara Bank and HDFC Bank Ltd., outstanding at the end of the financial year stood at Rs.1571.70 Crore as against Rs.1561.23 Crore during the previous year and there were no short-term loans.

Rating of term loans

During the year a Rating for the borrowings by the Company by way of Term Loans was obtained from ICRA Ltd., and the Rating of ICRA AA (pronounced ICRA double A plus) with a stable outlook to the Line of Credit of Can Fin Homes Ltd.

Compliance with Directions/Guidelines of National Housing Bank (NHB) and other statutes

Your Company adhered to the prudential guidelines for Non-Performing Assets (NPAs), issued by the National Housing Bank (NHB) under its Directions 2010, as amended from time to time. Your Company has complied with the Guidelines and Directions issued by the NHB on asset classification of Credit / Investments, Credit Rating, Deposits, Fair Practices Code and Customer Complaints Redressal Mechanism, Know Your Customer (KYC) and Anti Money Laundering Guidelines and other related aspects.

In compliance of the Directions issued by the NHB vide letter No.NHB(ND)/DRS/Pol.No.45/2011-12 dated January 19, 2012, a provision for Standard Assets in respect of Commercial Real Estates is required to be made at 1% and for other Standard Assets, the said provision is required to be made at 0.40%. A provision of Rs.685 Lakh has been made in the books as on March 31, 2013 and the cumulative provision in that regard stood at Rs.18 Crore as of the above date. The recognition of income and provision for non-performing assets has been made in the books as per the Guidelines on Prudential Norms applicable as of March 31, 2013.

Your Company has complied with the Accounting Standards issued by the ICAI, New Delhi and other related statutory guidelines/Directions as applicable to the Company from time to time.

Capital adequacy

The Capital Adequacy Ratio (CAR) maintained by your Company has been above the minimum required level of 12% prescribed by the National Housing Bank (NHB). The Capital Adequacy Ratio of the Company as on March 31, 2013 was 14.72% (Previous year 17.44%). The moderate reduction witnessed in the CAR is mainly due to a high growth rate in business and changes in the rate of provision for Standard Assets in respect of commercial real estates. Your directors have reviewed the position in detail and have initiated steps for monitoring the required CAR during the ensuing year in tune with the business projections for 2013-14.

Recovery action under Securitisation & Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act)

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) has proved to be a useful recovery tool and the Company has been able to successfully initiate recovery action under SARFAESI Act and recover Rs.1.89 Crore relating to 14 Non-Performing accounts.

Particulars of employees

There are no such particulars to be furnished under the provisions of Section 217(2A) of "the ActÂ, read with Companies (Particulars of Employees) Rules, 1975.

Listing of securities

The equity shares of the Company continued to be listed on the Bangalore Stock Exchange Ltd., (Bg.SE), Bengaluru, Bombay Stock Exchange Ltd., (BSE), Mumbai and the National Stock Exchange of India Ltd., (NSE), Mumbai. Your Company has been utilising the e-filing facilities for submission of various returns/reports.

The Listing Fee payable to the above Stock Exchanges has been paid before the due dates.

The securities of the Company are actively traded on the BSE and NSE. The other related particulars are provided to the members in the Report on Corporate Governance.

Man Power - Human Resources Development

The manpower of your Company was 320 as on March 31, 2013, including the Managing Director, executives, officers and other employees, against 251 employees during the previous year.

During the year some of the employees of the Company were deputed for selected training programmes/seminars on different subjects organised by the National Housing Bank and other reputed institutions as a Human Relations measure and to equip the employees with latest changes/ developments in the areas like housing finance and related subjects. Further, during the year internal training on Credit, Information Technology, Human Relations, Finance, Taxation, Marketing and other related topics of importance were imparted to all the employees of the Company.

As a motivational measure and in recognition of their performance under recovery out of NPA accounts, eligible employees were rewarded under the incentive scheme.

Transfer of unclaimed and unpaid dividend/deposit amounts to the Investor Education and Protection Fund (IEPF)

As an investor friendly measure, your Company has been intimating the respective shareholders/ depositors/ investors to encash their dividend warrant/lodge their claim for payment due, if any, from time to time and claims made are settled. Certain amount still remains unclaimed despite constant and sincere efforts by the Company to pay such unclaimed amounts to the investors. As per the statutory requirement such details for the previous 7 years as of the date of the annual general meeting made available on the website of MCA as well as on the Company''s website. With a view to receive prompt payment by the investors, the members/investors are requested to register bank account numbers, opt for ECS facility, register nomination and intimate change of address, if any, to the Company/Depository Participants promptly.

In terms of Section 205C of "the ActÂ, the amounts (dividends, deposits etc.) that remained unclaimed and unpaid for more than 7 years from the date they became first due for payment, should be transferred to IEPF which your Company is complying with from time to time. In terms of the said Section no claim would lie against the Company or the IEPF after such transfer.

(i) Unclaimed dividends

As on March 31, 2013 dividends aggregating to Rs.57.99 Lakh (previous year Rs.53.85 Lakh), relating to dividends declared during 2005-06 to 2011-12, of which Rs.11.88 Lakh related to dividend for the year 2012, had not been claimed by the members of the Company. Your Company has been intimating the shareholders to lodge their claim for dividend from time to time and the related details are being provided in the annual reports every year.

The dividend pertaining to the financial year 2004-05 which remained unclaimed/unpaid amounting to Rs.6.67 Lakh (in respect of 1553 shareholders) was transferred to IEPF during August 2012, after settlement of claims by the members, received in response to the individual reminder letters sent by the Company to the respective members.

The dividend pertaining to the financial year 2005-06 remaining unclaimed and unpaid amounting to Rs.7.82 Lakh (in respect of 1776 shareholders) as at the end of the financial year 2012-13 would be transferred to IEPF during August 2013 after settlement of the claims received upto the date of completion of 7 years.

(ii) Unclaimed deposits

As required under Section 205C of "the ActÂ, the unclaimed and unpaid deposits with interest for the year 2005-06 amounting to Rs.6.13 Lakh (previous year Rs.7.62 Lakh) that remained unclaimed and unpaid for a period of 7 years were transferred to IEPF.

Particulars regarding conservation of energy, technology absorption and foreign exchange earnings and expenditure

Since the Company is a housing finance Company and does not own any manufacturing facility, the requirement relating to providing the particulars relating to conservation of energy and technology absorption stipulated in the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 required to be furnished u/s.217(1)(e) of "the ActÂ, are not applicable.

During the year, your Company did not earn any income or incur any expenditure in foreign currency.

Directors

Your directors wish to report that Mr.Anil Kumar Nayyar, resigned as a director with effect from December 31, 2012 on his superannuation as the General Manager of Canara Bank, the sponsor bank.

The Board of Directors appointed Mr.S.Krishna Kumar, General Manager, Canara Bank as an Additional Director with effect from February 20, 2013. Mr.S.Krishna Kumar is a degree holder in Commerce and a CAIIB. He started his career as a Probationary Officer in Canara Bank during November 1982. During his service in the Bank over a period of 30 years, he has served in different branches/offices across the Country and his forte is Credit, particularly, Corporate Credit.

Pursuant to Article 22 of the Articles of Association of the Company ("ArticlesÂ), read with Section 260 of "the ActÂ, Mr.S.Krishna Kumar would have held office up to the date of the ensuing Annual General Meeting. However, consequent to his transfer to Trichy Circle Office, he has tendered his resignation w.e.f. April 26, 2013.

Your directors wish to place on record their appreciation for the services rendered and contribution made by Mr.Anil Kumar Nayyar and Mr.S.Krishna Kumar during their tenure as directors and as members of certain committees of the Board.

The Board of directors appointed Mr.S.A.Kadur as an additional director w.e.f June 07, 2013. Further particulars relating to Mr.S.A.Kadur are provided in the explanatory statement on the related agenda, forming part of the notice of the ensuing annual general meeting.

In terms of the applicable provisions of Section 260 and all other applicable provisions, if any, of "the ActÂ, and Article 22 of the "ArticlesÂ, Mr.S.A.Kadur, director holds office as such only upto the date of the ensuing Annual General Meeting. Your Company has received a notice in writing from a shareholder, under Section 257 and all other applicable provisions, if any, of "the ActÂ, proposing the appointment of Mr.S.A.Kadur, as a director at the ensuing Annual General Meeting.

Your directors are of the opinion that the appointment of Mr.S.A.Kadur, as a director would be in the best interest of the Company.

Director(s) retiring by rotation

In terms of the provisions of Section 256 and all other applicable provisions, if any, of "the ActÂ, and the "ArticlesÂ, Mr.K.S.Madhava Murthy, Director, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The particulars relating to Mr.K.S.Madhava Murthy are mentioned in the Report of the Directors on Corporate Governance. Your directors recommend the re-appointment of Mr.K.S.Madhava Murthy as a director.

The agenda relating to re-appointment of Mr.K.S.Madhava Murthy is included in the notice convening the ensuing Annual General Meeting.

All the directors of the Company have confirmed that they are not disqualified for being appointed/re-appointed as directors in terms of Section 274(1)(g) of "the ActÂ.

Auditors

M/s K.P.Rao & Co., Chartered Accountants, Bengaluru, Statutory Auditors of the Company (Firm Registration No.003135S) appointed by the members at the 25th annual general meeting of the Company held on August 08, 2012 and other 26 firm of branch auditors appointed by the Board based on the approval of the members at the above annual general meeting, would retire at the ensuing Annual General Meeting and are eligible for re-appointment.

The Company has received a confirmation from M/s.K.P.Rao & Co., Statutory Auditors to the effect that their proposed appointment, if made, would be within the limits prescribed under Section 224(1B) of "the ActÂ.

Your directors recommend the re-appointment of the M/s.K.P.Rao & Co., as the Statutory Auditors. The resolutions seeking approval of the members for appointment of Statutory Auditors and fixation of their remuneration and authorisation to the Board of Directors for appointment of Branch Auditors and fixation of their remuneration have been included in the notice convening the ensuing Annual General Meeting. The above said appointment attracts the provisions of Section 224A, 228 and all other applicable provisions, if any, of "the ActÂ.

Directors'' responsibility statement

In accordance with the provisions of Section 217(2AA) of "the ActÂ, and based on the information provided by the Management, the Board of Directors report that:

(a) In the preparation of annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;

(b) The Accounting Policies selected were applied consistently. Reasonable and prudent judgements and estimates were made so as to give a true and fair view of the state of affairs of the Company as at the end of March 31, 2013 and of the profit of the Company for the year ended on that date;

(c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of "the ActÂ, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(d) The annual accounts have been prepared on a going concern basis.

Management discussion and analysis report

The Management Discussion and Analysis Report prepared in terms of the Clause 49 of the listing agreement forms part of this Report.

Corporate governance

The Management Discussion and Analysis Report, Report of Directors on Corporate Governance and the Auditors Certificate on Corporate Governance issued by the Statutory Auditors of the Company for the year under review as required under "the ActÂ and in pursuance of Clause 49 of the Listing Agreements (placed with the Report of the Directors on Corporate Governance) forms part of this annual report.

Silver Jubilee Celebrations

Your Company commenced a year-long Silver Jubilee Year celebrations from December 27, 2011. As a part of customer initiatives your Company is popularising the new products/ facilities viz., Loans for Commercial Property (LCP), Mortgage Loans, ECS facility, SMS banking, effective functioning of Centralised Document Storage Centres (CDSC) at Bengaluru and Gurgaon for safe keeping of loan documents. The state-of-the-art IBS system is devised so as to provide data security. All branches celebrated customers'' meet whereat the customers, professionals and many others connected with the business participated.

Save green efforts

In recognition and support to the green initiative taken by the Ministry of Corporate Affairs (MCA), Government of India, your Company has been sending the notice, annual reports etc., to the registered e-mail IDs of the Members. As a step towards paperless banking, initiatives taken by your Company include ECS facility for repayment of loans, streamlining the systems and procedures for reporting by the branches and at the Registered Office through Integrated Business Suite (IBS), networking of branches with the Registered Office, harnessing solar energy for lighting and computer operations at certain branches and the like. Thus the usage of paper is brought to minimum.

Outlook for 2013-14

The Indian economy is one of the faster growing economies in the world and the GDP growth is expected to be around 5.7% in 2013-14 as per the estimates by the Reserve Bank of India. With the recent improvement in the demand for housing and real estate sectors, activities in the housing, real estate sectors and infrastructure sectors are expected to remain healthy in the coming years and expected to increase credit demand for housing. In the above scenario, the housing sector is a challenging sector. As such, a sharp increase in demand for residential units and commercial real estate are foreseen.

The Real Estate (Regulation & Development) Bill, mooted recently by the Housing and Poverty Alleviation Ministry, Govt. of India, is a welcome development for the housing companies. The Bill provides for sale of houses in residential projects on the basis of Carpet area or built-up area, registration of the projects by the builders with the Regulator before advertising or starting construction, levy of penalty upto 10% of the project cost for failure to comply with the requirements by the builders for the first time and imprisonment upto 3 years for repeated non-compliance.

Your Company would continue to give a more focussed attention for lending to individual loan segment, project loans and non-housing loans with an emphasis to further enhance its market share in the housing market segment with more emphasis on marketing and customer oriented business relationship.

Your Company expects to maintain a sustained growth in its performance levels during 2013-14 and has put in place a well drawn vision document. However, given the indications about the likely changes in cost of funds and expectations of borrowers for availing loans at reasonably lesser rates, the margins are expected to be under pressure.

Acknowledgements

Your directors would like to place on record the role of Canara Bank for their consistent support and guidance.

Your directors would like to acknowledge the role of all its stakeholders viz., the shareholders, depositors, lenders, borrowers and others for their continued support to the Company and the confidence and faith that they have always reposed in the Company.

Your directors acknowledge and appreciate the guidance and support extended by various regulatory authorities including National Housing Bank (NHB), Securities Exchange Board of India (SEBI), Ministry of Corporate Affairs, Registrar of Companies, Karnataka, the Stock Exchanges and the Depositories.

Your directors thank the Credit Rating Agencies, Government(s), local/statutory authorities, the Registrars and Share Transfer Agents of the Company and all others for their wholehearted support during the year and look forward to their continued support in the years ahead.

Your directors value the professionalism of all the employees of the Company who have worked in a challenging environment and whose efforts have stood the Company in good stead and taken the Company to greater heights.

For and on behalf of the Board of Directors

Sd/-

Place : Bengaluru S.R.IYER

Date : June 07, 2013 Chairman

Mar 31, 2012

The Directors are pleased to present the 25th Annual Report of the business and operations of the Company together with the audited accounts for the year ended March 31, 2012, the Silver Jubilee Year of your Company.

FINANCIAL RESULTS

The financial performance for fiscal 2012 is summarised here below:

For the year ended For the year ended March 31, 2012 March 31, 2011 (Rs in lakh) (Rs in lakh)

Profit before Tax & Provisions 6830.88 5997.11

Less: Provision for Standard Assets 1100.00 -

Provision for Doubtful Debts - Housing Loans (361.16) 145.58

Prior Period adjustments (5.53) _

PROFIT BEFORE TAX 6097.57 5851.53

Tax expenses:

(a) Provision for Tax - Current Year 1780.00 1725.00

(b) Deferred Taxation (58.42) (75.07)

PROFIT AFTER TAX 4375.99 4201.60

Balance brought forward from previous year 936.89 480.50

5312.88 4682.10

Appropriations:

Transfer to Special Reserve u/s.36(1)(viii) 1350.00 1150.00 of the Income Tax Act, 1961

Transfer to General Reserve 2700.00 2000.00

Proposed Dividend 614.62 512.13

Tax on Distributed Profits 99.71 83.08

Provision for Contingencies - -

Balance carried forward 548.55 936.89

5312.88 4682.10

PERFORMANCE HIGHLIGHTS

SANCTIONS

During the year, the housing loans and other loans sanctioned were to the extent of Rs1105.41 crore registering a growth of 102.63% over the previous year. The cumulative loan sanctions since inception of the Company, as at the end of the financial year 2011 -12, was Rs7822.59 crore.

DISBURSEMENT

During the year, the loans disbursed were to the extent of T859.07 crore registering an increase of 81.71% over the previous year. The cumulative loan disbursements since inception of the Company as at the end of the financial year 2011-12 stood at Rs6661.06 crore.

LOANS OUTSTANDING

The cumulative loan(s) outstanding at the end of the year was Rs2674.39 crore as compared to Rs2207.51 crore (including the loan under "Securitised Assets" of Rs3.92 crore, repaid during 2011-12) in the previous year registering an increase of 21.15%.

NON PERFORMING ASSET (NPA)

During the year, your Company has reduced the gross NPA from T23.47 crore to Rs19.01 crore (a reduction of 19%) and the net NPA continued to be Nil (provision conversion ratio: 100%). Your Company has recovered Rs2.14 crore out of long pending core NPA accounts by way of one time settlements.

PROFITS

Your directors are pleased to inform that during the year under review your Company has recorded a Profit Before Tax (PBT) of T60.98 crore as against Rs58.52 crore during 2010-11 and Profit After Tax (PAT) of Rs43.76 crore after making provision for standard assets for Rs11 crore at a time as per the Directions of NHB. Excluding the provision for standard assets, the year-on-year growth of net profit for the year is 30.32%.

DIVIDEND

Your directors have discussed the subject in detail with specific reference to the present minimum required level of Capital Adequacy Ratio (CAR) at 12%, the additional requirement of funds to meet CAR as per the Guidelines/ Directions issued by the Regulators from time to time, future requirement of funds/capital for incremental business projected, further expansion of business and other relevant factors. Considering the above and in the long-term interest of the Company, it is considered prudent and expedient to conserve profits of the Company to the extent possible.

Appreciating the confidence reposed by the members in the Company and their continued support, the Board of Directors of your Company have recommended a dividend of Rs2.50 per equity share (25%) and being the Silver Jubilee Year, an additional dividend of Rs0.50 per equity share (5%) for the year ended March 31, 2012, aggregating to 30%. The tax on distributed profits u/s.115-0 of the Income Tax Act, 1961, at 16.22% is being paid by the Company.

BRANCH NETWORK EXPANSION

With a view to reach out to a large section of customers in need of housing as well as non-housing finance and to increase business performance level, your Company opened 18 new branches in different parts of the Country and the total branch network of the Company at the end of the financial year stood at 52 (previous year 41), 59 branches as of date, located in major cities of the Country. Your Company envisages to increase the number of branches to 70 by March 31, 2013.

SAVE GREEN EFFORTS

In recognition and support to the green initiative taken by the Ministry of Corporate Affairs (MCA), Government of India, your Company has been sending the annual reports including report of directors, report on corporate governance, general information to shareholders of the Company to the registered e-mail IDs of the shareholders. Other initiatives taken by your Company include ECS facility for repayment of loans, paperless banking, sending official communications by way of scanned images and harnessing solar energy for lighting and computer operations at Karur, Madurai, Salem and RN.Palayam branches of the Company.

SILVER JUBILEE CELEBRATIONS

Your Company commenced year-long Silver Jubilee Year celebrations from December 27, 2011. As a part of customer initiatives your Company has launched three new products viz., Loans for Rural Housing (LRH) with housing loans at 9.75% rate of interest, Loans for Commercial Property (LCP) and Loans to Childrens Education (LCE), introduction of ECS facility, establishing Document Storage Centres (DSC) at Bangalore and Gurgaon for safe keeping of loan documents. The state-of-the-art IBS system is devised so as to provide data security. The ambience of branches are being enhanced and media coverage and customers' meet are being held.

FINANCIAL RESOURCES DEPOSITS

The deposits outstanding (inclusive of interest accrued, but not due) as of March 31, 2012 were Rs143.89 crore as against Rs149.76 crore as at the end of the previous year.

As at March 31, 2012 a sum of Rs9.99 crore relating to 2057 accounts (Rs10.44 crore as at March 31, 2011 relating to 2148 accounts) was unclaimed. Out of the same, a sum of Rs3.25 crore relating to 506 accounts was claimed and renewed/settled as of date. The remaining depositors have been informed individually by the respective branches either to renew or claim their deposit amounts.

The Ministry of Corporate Affairs, Government of India, New Delhi, vide order F.NO.07/07/2009-CLA/I dated July 12, 2010 has granted an exemption to the Company from the applicability of the provisions of Section 58A(2)

(a) and (b) of the Companies Act, 1956 ("the Act") for a period of 3 years with effect from October 22, 2009, which enables the Company to publish abridged deposit advertisement(s) only during the period of validity of the Statutory Advertisement. The said approval is granted subject to certain conditions mentioned vide Paragraph nos. (i) to (vii) of the said Order viz., mentioning reference to the statutory advertisements published by the Company with date and name of the news paper, filing of the said abridged advertisement with the Registrar of Companies in Karnataka, within 15 days of its publication, that the exemption granted would be without prejudice to any legal rights available to any depositor or any share holder or creditor as per law in force in respect of recovery of any amount which has become due for repayment and the exemption granted does not convey approval of Central Government under any other provisions of "the Act". The statutory requirements, as applicable, are being complied with periodically.

RATING OF DEPOSITS

The deposit schemes of the Company continued to be rated as "MAA " (pronounced M double A plus) by the credit rating agency viz., ICRA Ltd., indicating high-credit-quality and the rated deposit programme carries low credit risk. The high credit quality rating takes into account the strong ownership, low operating cost structure, superior capital adequacy, its favourable liquidity position and comfortable asset quality indicators. The outlook on the rating has also been re-affirmed as "Stable".

LONG TERM FINANCIAL RESOURCES

REFINANCE FROM NATIONAL HOUSING BANK (NHB)

With the continued support by the NHB, during the year your Company availed refinance amounting to Rs280 crore against Rs253 crore availed during 2010-11 under the NHB's Refinance Scheme to Housing Finance Companies. The cumulative borrowings from NHB as of March 31, 2012 was Rs595.18 crore compared to Rs560.11 crore as at the end of the previous year.

MORTGAGE BACKED SECURITIES (MBS)

Your Company did not 30 in for fresh securitisation during the year or during the previous year considering its cost and funds available through alternative sources.

The entire amount of securitised outstanding as of March 31, 2011 amounting to Rs3.92 crore was paid in full to the investors as per the schedule of re-payment and the account was closed. As such there was no securitised assets outstanding as of March 31, 2012 (refer si.no.4 of Note no.21 on 'Notes on Accounts').

DEBENTURES

The Company had no outstanding on account of debentures as of March 31, 2012.

BORROWINGS FROM BANKS

Your Company borrowed Rs595 crore from banks during the year compared to Rs414 crore during the previous year. The aggregate of term loans from various banks outstanding at the end of the financial year stood at Rs1544.59 crore as against Rs1193.92 crore during the previous year and there were no short-term loans.

RATING OF TERM LOANS

During the year a Rating for the borrowings by the Company by way of Term Loans was obtained from CARE Ltd., and the Rating of CARE AA (Double A Plus) was assigned for long-term bank facilities indicating high safety for timely servicing of debt obligations. The above Rating was obtained by the Company as per Basel-ll requirements.

COMPLIANCE WITH DIRECTIONS/GUIDELINES OF NATIONAL HOUSING BANK (NHB) AND OTHER STATUTES

During the year, the National Housing Bank vide their letter dated August 05, 2011 issued Directions to the Housing Finance Companies for making a provision for Standard Assets at 0.40% of the standard assets outstanding (which was applicable only to the non-housing loans outstanding during the previous year). In view of the above and keeping in view the anticipated requirements for making a provision for standard assets, your Company has made a provision of Rs11 crore as of March 31, 2012, against the requirement of Rs10.62 crore.

Your Company has complied with the Guidelines and Directions issued by the NHB on asset classification of Credit/ Investments, Credit Rating, Fair Practices Code, Know Your Customer (KYC), Deposits and Anti Money Laundering Guidelines, Accounting Standards issued by the ICAI, New Delhi and the like.

CAPITAL ADEQUACY

The Capital Adequacy Ratio (CAR) maintained by your Company has been above the minimum required level of 12% prescribed by the National Housing Bank (NHB). During the year under review, the Risk Weight on housing loans sanctioned to individuals secured by mortgage of immovable property and classified as standard assets was modified. The Capital Adequacy Ratio of the Company as at March 31, 2012 was 17.44% as against 19.14% as at the end of the previous year.

RECOVERY ACTION UNDER SECURITISATION G> RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 (SARFAESI ACT)

The SARFAESI Act 2002, the proceedings under which are summary in nature has been made applicable to the housing finance companies from the year 2003. Your Company has been initiating action under the said Act for recovery of dues and could recover Rs1.35 crore out of 14 accounts that were classified as non-performing assets, by selling the secured assets (security), without intervention of Hon'ble Courts.

PARTICULARS OF EMPLOYEES

There are no such particulars to be furnished under the provisions of Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975.

LISTING OF SECURITIES

The equity shares of the Company continue to be listed on the Bangalore Stock Exchange Ltd., (Bg.SE), Bangalore, Bombay Stock Exchange Ltd., (BSE), Mumbai and the National Stock Exchange of India Ltd., (NSE), Mumbai.

The Listing Fee payable to the above Stock Exchanges has been paid before the due dates.

The securities of the Company are actively traded on the BSE and NSE. The other related particulars are provided to the Members in the Report on Corporate Governance.

MAN POWER - HUMAN RESOURCES DEVELOPMENT

Your Company had 251 employees (excluding the Managing Director on deputation from Canara Bank) as of March 31, 2012 as against 223 employees (215 employees of the Company and 8 officers on deputation from Canara Bank) as at the end of the previous year. During the year, training was imparted to all the employees of the Company, including orientation training to the new recruits, by internal and external faculty.

In order to upgrade knowledge in the fast changing scenario, to enhance employee competencies and up- gradation of skills, all the employees at various levels were nominated for various external training programmes on subjects related to housing finance, taxation, information security, corporate governance, risk management and other related topics of importance.

80 Probationary Officers were appointed during the year. In recognition of the performance and as a motivational measure 55 eligible employees/Officers/Executives were promoted and incentive schemes like Employees Suggestion Scheme and education tour etc. were introduced.

TRANSFER OF UNCLAIMED AND UNPAID AMOUNTS TO THE INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

In terms of Section 205C of the Companies Act, 1956, the amounts (dividends, deposits etc.) that remained unclaimed and unpaid for more than 7 years from the date they became first due for payment, should be transferred to IEPF. In terms of the said Section no claim would lie against the Company or the IEPF after such transfer.

As an investor friendly measure, your Company has been intimating the respective shareholders/depositors/ investors to encash their dividend warrant/lodge their claim for payment due, if any, from time to time and claims made are settled. Certain amount still remains unclaimed despite constant and sincere efforts by the Company to pay such unclaimed amounts to the investors.

(i) UNCLAIMED DIVIDENDS

As of March 31, 2012 dividends aggregating to Rs53.85 lakh (previous year Rs51.81 lakh), relating to dividend declared during 2004-05 to 2010-11, of which Rs9.92 lakh related to dividend for the year 2011, had not been claimed by the shareholders of the Company. The Company has been intimating the shareholders to lodge their claim for dividend from time to time and the related details are being provided in annual reports every year.

The dividend pertaining to the financial year 2003-04 which remained unclaimed/unpaid amounting to Rs5.61 lakh (in respect of 1,308 shareholders) was transferred to IEPF during August 2011, after settlement of claims received in response to the individual reminder letters sent by the Company to the respective shareholders).

The dividend pertaining to the financial year 2004-05 remaining unclaimed and unpaid amounting to Rs7.32 lakh (in respect of 1680 shareholders) as at the end of the financial year would be transferred to IEPF during July 2012 after settlement of the claims received upto the date of completion of 7 years, The Company has sent individual reminder letters to the respective shareholders during April 2012 and with a request to submit their claim forms within a prescribed date.

(H) UNCLAIMED DEPOSITS

During the year, in terms of Section 205C of the Companies Act, 1956, the unclaimed and unpaid deposits with interest for the year 2004-05 amounting to Rs7,62 lakh (previous year Rs2.14 lakh) that remained unclaimed and unpaid for a period of 7 years were transferred to IEPF.

PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND EXPENDITURE

The requirement relating to providing the particulars relating to conservation of energy and technology absorption stipulated in the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 required ' to be furnished u/s.217 (1) (e) of the Companies Act, 1956 are not applicable since the Company is a housing finance Company and does not own any manufacturing facility.

During the year, your Company did not earn any income or incur any expenditure in foreign currency.

DIRECTORS

Your directors wish to report that Mr.Ashok Kumar Jain, director vacated his office with effect from January 19, 2012, by virtue of Section 283(1 Xg) of the Companies Act, 1956 and Mr.RR.Yagnik, director and Chairman of the Board of Directors resigned as a director with effect from January 30, 2012.

Your directors wish to place on record their appreciation for the services rendered and contribution made by Mr.Ashok Kumar Jain during his tenure as a director and Mr.P.R.Yagnik, during his tenure as a director and Chairman of the Board and certain Committees of Directors.

The Board of Directors appointed Mr.RB.Santhanakrishnan FCA, a Practising Chartered Accountant as an Additional Director with effect from February 16, 2012. Further particulars relating to Mr.RB.Santhanakrishnan are provided in the explanatory statement for the related agenda forming part of the notice of the ensuing annual general ' meeting.

In terms of the applicable provisions of Section 260 and all other applicable provisions, if any, of the Companies Act, 1956 and Article 22 of the Articles of Association of the Company, Mr.RB.Santhanakrishnan, director holds office as such only upto the date of the ensuing Annual General Meeting. Your Company has received a notice in writing from a shareholder, under Section 257 and all other applicable provisions, if any, of the Companies Act, 1956 proposing the appointment of Mr.RB.Santhanakrishnan, as a director at the ensuing Annual General Meeting.

Your directors are of the opinion that the appointment of Mr.RB.Santhanakrishnan, as a director would be in the best interest of the Company.

DIRECTOR(S) RETIRING BY ROTATION

In terms of the provisions of Section 256 and other applicable provisions, if any, of the Companies Act, 1956 and the Articles of Association of the Company, Mr.Anil Kumar Nayyar, Director, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The particulars relating to Mr.Anil Kumar Nayyar are mentioned in the Report on Corporate Governance. Your directors recommend the re-appointment of , Mr.Anil Kumar Nayyar as a director.

The agenda relating to re-appointment of MrAnii Kumar Nayyar is included in the notice convening the ensuing Annual General Meeting.

All the directors of the Company have confirmed that they are not disqualified from being appointed as directors in terms of Section 274(1 )(g) of "the Act".

AUDITORS

Ws.K.RRao S' Co., Chartered Accountants, Bangalore, Statutory Auditors of the Company having Registration No.003135S and also the branch auditors for branches in the States of Karnataka, Kerala, Goa, Gujarat, Maharashtra and the new branches, if any, to be opened during 2011 -12 and the Auditors for the other branches viz., M/s.L.U.Krishnan S' Co, Chartered Accountants, Chennai, M/s.K.RRao Associates, Chartered Accountants, Hyderabad and M/s.H.K.Chaudhry S' Co., Chartered Accountants, New Delhi, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.

The Company has received confirmation from M/s.K.P.Rao & Co., Statutory auditors to the effect that their proposed appointment, if made, would be within the limits prescribed under Section 224(1 B) of the Companies Act, 1956.

Your directors recommend the re-appointment of the M/s.K.RRao S' Co., as the statutory auditors. The resolutions seeking approval of the members for appointment of Statutory Auditors and fixation of their remuneration and authorisation to the Board of Directors for appointment of Branch Auditors and fixation of their remuneration have been included in the notice convening the ensuing Annual General Meeting. The above said appointment attracts the provisions of Section 224A, 228 and all other applicable provisions, if any, of "the Act".

DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 217(2AA) of the Companies Act, 1956 and based on the information provided by the Management, the Board of Directors report that:

(a) In the preparation of annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;

(b) The Accounting Policies selected were applied consistently. Reasonable and prudent judgements and estimates were made so as to give a true and fair view of the state of affairs of the Company as at the end of March 31, 2012 and of the profit of the Company for the year ended on that date;

(c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(d) The annual accounts have been prepared on a going concern basis.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In terms of the Clause 49 of the listing agreement, the Management Discussion and Analysis Report forms part of this report.

CORPORATE GOVERNANCE

The Auditors Certificate on Corporate Governance issued by the Statutory Auditors of the Company for the year under review as required under "the Act" and in pursuance of Clause 49 of the Listing Agreements is annexed to the Report of the Directors on Corporate Governance.

OUTLOOK FOR 2012-13

The Indian economy is one of the fastest growing economies in the world and the GDP growth is expected to improve in 2012-13. The real estate sector witnessed a robust growth in the last few years. The demand for commercial property is being driven by the economic growth of the Country. The housing sector alone contributes to about 5-6 per cent of the Country's GDR

The demand for real estate is expected to grow at a Compounded Annual Growth Rate (CAGR) of 19% between 2010 and 2014. Urbanisation and growing household income are a few factors influencing the demand for residential accommodation and growth in the retail sector.

As such, a sharp increase in demand for residential units and commercial real estate are foreseen.

Your Company would continue to give a more focussed attention for lending to individual loan segment, project loans and non-housing loans with an emphasis to further enhance its market share in the housing market segment.

With a view to sustain and enhance its performance level your Company is offering housing as well as non-housing products, with more emphasis on marketing and customer oriented business relationship.

Your Company expects to maintain a sustained growth in its performance levels during 2012-13 and has put in place a well drawn vision document. However, given the indications about the likely changes in cost of funds and expectations of borrowers for availing loans at reasonably lesser rates, the margins are expected to be under pressure.

ACKNOWLEDGEMENTS

Your directors wish to place on record with thanks the role of Canara Bank for their consistent support and guidance.

Your directors would like to thank all its stakeholders viz., the shareholders, depositors, borrowers and others for their continued support to the Company and the confidence and faith that they have always reposed in the Company.

Your directors acknowledge and appreciate the guidance and co-operation extended by various regulatory authorities including National Housing Bank (NHB), Securities Exchange Board of India (SEBI), Ministry of Corporate Affairs, Registrar of Companies, Karnataka, the Stock Exchanges and the Depositories.

Your directors thank the Credit Rating Agencies, Government(s), local/statutory authorities, the Registrars and Share Transfer Agents of the Company and all others for their wholehearted support during the year and look forward to their continued support in the years ahead.

Your directors appreciate and acknowledge the professionalism displayed and the contributions made by the employees whose efforts have kept the CanFin Homes flag flying high.

For and on behalf of the Board of Directors

Sd/-

Place: Bangalore S.R.IYER

Date: June 12,2012 Chairman

Mar 31, 2011

TO THE MEMBERS

The Directors are pleased to present the 24th Annual Report of the business and operations of the Company together with the audited accounts for the year ended March 31, 2011.

FINANCIAL RESULTS

The financial performance for fiscal 2011 is summarised here below:

For the year ended For the year ended

March 31, 2011 March 31, 2010

(Rs.in lakh) (Rs.in lakh)

Profit before Tax & Provisions 5997.11 5400.17

Less: Provision for Doubtful Debts

- Housing Loans 145.58 83.48

Profit Before Tax 5851.53 5483.65

Provision for Tax (1725.00) (1624.68)

Deferred Taxation 75.07 60.00

Profit After Tax 4201.60 3918.97

Balance brought forward from previous year 480.50 160.86

4682.10 4079.83

Appropriations:

Transfer to Special Reserve u/s.36 (1)(viii) of the Income 1150.00 1070.00 Tax Act, 1961

Transfer to General Reserve 2000.00 1450.00

Proposed Dividend 512.13 409.70

Tax on Distributed Profits 83.08 69.63

Provision for contingencies - 600.00

Balance carried forward 936.89 480.50

4682.10 4079.83

PERFORMANCE HIGHLIGHTS

LENDING OPERATIONS

The cumulative loan sanctions of the Company, as at the end of the financial year 2010-11 was Rs.6717.18 crore as compared to Rs.6171.65 crore in the previous year. The housing loans and other loans sanctioned during the year ended March 31, 2011 were to the extent of Rs.545.53 crore as against Rs.652.86 crore sanctioned during the previous year.

DISBURSEMENTS

The cumulative loan disbursements at the end of the year stood at Rs.5801.99 crore as compared to Rs.5329.21 crore in the previous year. The loans disbursed during the year ended March 31, 2011 was to the extent of Rs.472.78 crore as against Rs.546.90 crore disbursed during the previous year.

LOANS OUTSTANDING

The cumulative loan(s) outstanding, (including the loan under "Securitised Assets" of Rs.3.92 crore), at the end of the year was Rs.2207.51 crore as compared to Rs.2106.65 crore in the previous year (with "Securitised Assets" amounting to Rs.6.90 crore).

PROFITS

Your directors are pleased to inform that during the year under review your Company has recorded a Profit Before Tax of Rs.58.52 crore as against Rs.54.84 crore during 2009-10 and Profit After Tax of Rs.42.02 crore as against Rs.39.19 crore during 2009-10.

DIVIDEND

Your Directors have discussed the subject in detail with specific reference to the present position of Capital Adequacy Ratio (CAR), the additional requirement of funds to meet CAR as per the Guidelines/Directions issued by the Regulators from time to time, future requirement of funds/capital for incremental business projected, further expansion of business and other relevant factors. Considering the above and in the long-term interest of the Company it is considered prudent and expedient to conserve profits of the Company to the extent possible. However, appreciating the confidence reposed by the members in the Company and their continued support, the Board of Directors of your Company have recommended a dividend of Rs.2.50 per equity share (25%) for the year ended March 31, 2011.

The Tax on distributed profits u/s.115-O of the Income Tax Act, 1961, at 16.22% is being paid by the Company.

FINANCIAL RESOURCES

DEPOSITS

The deposits outstanding (inclusive of interest accrued, but not due) as of March 31, 2011 were Rs.149.76 crore as against Rs.202.31crore as at the end of the previous year.

Out of the deposits fallen due for repayment up to March 31, 2011, a sum of Rs 10.44 crore (Rs.7.26 crore as of March 31, 2010) relating to 2148 depositors (1702 depositors) had not been claimed or renewed. Subsequently, deposits of Rs 3.05 crore (Rs.1.66 crore) relating to 527 depositors (468 depositors) have been repaid or renewed. The remaining depositors have been requested either to renew or claim their deposits and the branches are making a constant follow up on the subject.

Individual intimations are being sent periodically to the depositors by the respective branches about the maturity of the deposits, in advance, with a request to either renew or claim the said deposits.

The Ministry of Corporate Affairs, Government of India, New Delhi, vide order F.No.07/07/ 2009-CL/VI dated July 12, 2010 has granted exemption to the Company from the applicability of the provisions of Section 58A(2)(a) and (b) of the Companies Act, 1956 ("the Act") for a period of 3 years with effect from October 22, 2009, which enables the Company to publish abridged deposit advertisement(s) only during the period of validity of the Statutory Advertisement. The said approval is granted subject to certain conditions mentioned vide paragraph nos. (i) to (vii) of the said Order viz., mentioning reference to the statutory advertisements published by the Company with date and name of the news paper, filing of the said abridged advertisement with the Registrar of Companies in Karnataka, within 15 days of its publication, that the exemption granted would be without prejudice to any legal rights available to any depositor or any share holder or creditor as per law in force in respect of recovery of any amount which has become due for repayment and the exemption granted does not convey approval of Central Government under any other provisions of "the Act". The statutory requirement is being complied with periodically.

RATING OF DEPOSITS

The deposit schemes of the Company continued to be rated as "MAA " (pronounced M double A plus) by the credit rating agency viz., ICRA Ltd., indicating high-credit-quality and the rated deposit programme carries low credit risk. The high credit quality rating take into account the strong ownership, low operating cost structure, superior capital adequacy, its favourable liquidity position and comfortable asset quality indicators. The outlook on the rating has also been reaffirmed at 'Stable'.

LONG TERM FINANCIAL RESOURCES

REFINANCE FROM NATIONAL HOUSING BANK (NHB)

The NHB has an internal rating mechanism for Housing Finance Companies and your Company has been assigned the 5 Star rating for its refinance schemes by NHB. With the continued support by the NHB during the year your Company availed refinance amounting to Rs.253 crore against Rs.116 crore availed during 2009-10 under the NHB's Refinance scheme to Housing Finance Companies. The cumulative amount outstanding as on March 31, 2011 under the borrowings from the NHB was Rs.560.11 crore compared to Rs.526.03 crore as at the end of the previous year.

MORTGAGE BACKED SECURITIES (MBS)

After considering the availability of funds from other alternative sources at competitive rates, no fresh securitisation was done during the financial year 2010-11 or in the previous year.

The aggregate securitised assets outstanding as of March 31, 2011 was Rs.3.92 crore as against Rs.6.90 crore during the previous year (Refer Note no.2 of Schedule 15 to the Accounts) due to repayments made during the year. During the year the existing loans sold under the MBS issue continued to be serviced as per the schedule of repayment.

The securities issued under Mortgage Backed Securities (MBS) by the Company is rated as "AAA(SO)" by CRISIL, indicating High Safety.

DEBENTURES

The Company had no outstanding on account of debentures issued by the Company as of March 31, 2011.

BORROWINGS FROM BANKS

Your Company borrowed Rs.414 crore from banks during the year compared to Rs.384 crore during the previous year. The aggregate of term loans outstanding at the various banks at the end of the financial year stood at Rs.1193.92 crore (short term loans NiL) as against Rs.1136.97 crore during the previous year (including short term loans amounting to Rs.100 crore).

RATING OF TERM LOANS

As per the BASEL-II requirements, during the year a Rating for the borrowings by the Company by way of Term Loans was obtained from CARE Ltd., and the Rating of CARE AA (Double A Plus) was assigned for long-term bank facilities indicating high safety for timely servicing of debt obligations.

COMPLIANCE WITH GUIDELINES OF NATIONAL HOUSING BANK (NHB)

Your Company has complied with the Guidelines and Directions issued by the NHB on asset classification of Credit / Investments, Credit Rating, Fair Practices Code, Know Your Customer (KYC), Deposits and Anti Money Laundering Guidelines, Accounting Standards issued by the ICAI, New Delhi etc.

CAPITAL ADEQUACY

The Company has been maintaining the Capital Adequacy Ratio (CAR) above the minimum required level of 12% prescribed by the National Housing Bank (NHB) from time to time. During the year under review, the Risk Weight on housing loans sancioned to individuals secured by mortgage of immovable property and classified as standard assets was modified.

The Capital Adequacy Ratio of the Company as at March 31, 2011 was 19.14 % as against 17.11 % during the previous year.

RECOVERY ACTION UNDER SECURITISATION & RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 (SARFAESI ACT)

The SARFAESI Act 2002 has been made applicable to the housing finance companies vide Ministry of Finance, Banking Division, Government of India Gazette Notification (Extraordinary) dated November 10, 2003.

The proceedings under the said Act are summary in nature and are extremely helpful in realising the dues in the accounts classified as non-performing assets (NPA), by selling the Secured Asset (security), without the intervention of Hon'ble Courts.

By initiating action under the provisions of the SARFAESI Act, 2002 during the year, your Company could recover about Rs.3.48 crore out of the 258 accounts that were classified as non-performing assets.

PARTICULARS OF EMPLOYEES

There are no such particulars to be furnished under the provisions of Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975.

BUSINESS OPERATIONS - DISTRIBUTION NET WORK

In order to reach out customers effectively, the Company's distribution net work extends to 41 branches located in major cities of the Country.

Your Company envisages opening more number of branches in due course and also availing the services of a few Direct Selling Agents (DSAs) to enhance its business performance further. Your Company ensures that the quality of loans extended is given utmost importance.

LISTING OF SECURITIES

The equity shares of the Company continue to be listed on the Bangalore Stock Exchange Ltd., (Bg.SE), Bangalore, Bombay Stock Exchange Ltd., (BSE), Mumbai and the National Stock Exchange of India Ltd., (NSE), Mumbai.

The Listing Fee payable to the above Stock Exchanges has been paid before the due dates.

The securities of the Company are actively traded on the BSE and NSE. The other related particulars are provided to the Members in the Report on Corporate Governance.

MAN POWER - HUMAN RESOURCES DEVELOPMENT

Your Company had 224 employees (215 employees of the Company, the Managing Director and 8 officers on deputation from Canara Bank) as at March 31, 2011 as against 205 employees (193 employees of the Company, the Managing Director, the Chief Financial Officer and 10 officers on deputation from Canara Bank) as at March 31, 2010.

Your Company places a strong emphasis on employees competencies and up-gradation of skills of its employees at various levels. During the year, besides providing orientation programme to the probationary officers and the employees were also nominated for various external prorammes on taxation, information security, International Financial Reporting Standards(IFRS), Risk Management and the like.

TRANSFER OF UNCLAIMED AND UNPAID AMOUNTS TO THE INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

In terms of Section 205C of the Companies Act, 1956, the amounts (dividends, deposits etc.) that remained unclaimed and unpaid for more than 7 years from the date they became first due for payment, should be transferred to IEPF (Fund). In terms of the said Section no claim would lie against the Company or the IEPF after such transfer.

The Company has been intimating the shareholders/ depositors/ investors to encash their dividend warrant/lodge their claim for payment due, if any, from time to time and claims made have been settled. Inspite of constant and sincere efforts to pay the unclaimed dividend and deposit amount to the respective shareholders/depositors, certain amount still remain unclaimed.

(I) UNCLAIMED DIVIDENDS

As of March 31, 2011 dividends aggregating to Rs.51.80 lakh (previous year Rs.51.73 lakh) had not been claimed by the shareholders (pertaining to 2003-04 to 2009-10) of the Company. The Company has been intimating the shareholders to lodge their claim for dividend from time to time and the said information is being provided in Annual Reports every year.

The dividend pertaining to the financial year 2002-03 which remained unclaimed/unpaid amounting to Rs.5,73,907.50 (in respect of 1,711) shareholders) was transferred to IEPF during August 2010, after settlement of claims received (before the due date, in response to the individual reminder letters sent to the respective shareholders).

The dividend pertaining to the financial year 2003-04 remaining unclaimed and unpaid amounting to Rs.6,46,550 (in respect of 1479 shareholders), as at the end of the financial year would be transferred to IEPF during July 2011 after settlement of the claims received upto the date of completion of 7 years. The Company has sent individual reminder letters to the respective shareholders during April 2011 and the same must be claimed by July 21, 2011 by the respective share holders, as it is required to be transferred to the IEPF within a period of 30 days from the said date. In terms of the said Section no claim would lie against the Company or the IEPF after such transfer.

(II) UNCLAIMED DEPOSITS

During the year, in terms of Section 205C of the Companies Act, 1956, the unclaimed and unpaid deposits for the year 2003-04 amounting to Rs.1,25,733/- together with interest amounting to Rs.87,791/- aggregating to Rs.2,13,524/-(previous year Rs.3,75,227/-) that remained unclaimed and unpaid for a period of 7 years were transferred to IEPF.

PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND EXPENDITURE

Since the Company does not own any manufacturing facility, the requirement relating to providing the particulars relating to conservation of energy and technology absorption stipulated in the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 required to be furnished u/s.217(3) of the Companies Act, 1956 are not applicable.

During the year your Company did not earn any income or incur any expenditure in foreign currency.

DIRECTORS

Your directors wish to report that Dr.K.K.Deb resigned as a Director and the Managing Director with effect from April 29, 2011 on his repatriation to Canara Bank.

Your directors wish to place on record their appreciation for the services rendered and contribution made by Dr.K.K.Deb during his tenure as a director and the Managing Director of the Company.

The Board of Directors appointed Mr.S.R.Iyer, Mr.K.S.Madhava Murthy, Chartered Accountant and Mr.K.R.Vijayendra as Additional Directors of the Company with effect from January 05, 2011, January 12, 2011 and January 29, 2011, respectively.

Mr. S.R.Iyer is an eminent banker and is the former Managing Director of State Bank of Mysore and State Bank of India. Mr.K.S.Madhava Murthy is a qualified and Practising Chartered Accountant in Bangalore. Mr.K.R.Vijayendra is an eminent banker and is the former General Manager of Union Bank of India.

Further, the Board of Directors appointed Mr.C.Ilango, Deputy General Manager, Canara Bank, as an Additional Director and as the Managing Director of the Company with effect from April 29, 2011, subject to approval of the members of the Company at the ensuing annual general meeting.

Mr.C.Ilango is a Post-graduate degree holder in Agricultural Science and a Certified Associate of the Indian Institute of Bankers (CAIIB). He is a senior banker with over 31 years of commercial banking experience having served across the Country.

Further particulars relating to the above directors are mentioned in the explanatory statement forming part of the notice of the ensuing annual general meeting.

Pursuant to the provisions of Section 260 and all other applicable provisions, if any, of the Companies Act, 1956 and Article 22 of the Articles of Association of the Company, Mr.S.R.Iyer, Mr.K.S.Madhava Murthy, Mr.K.R.Vijayendra, directors and Mr.C.Ilango Director and Managing Director hold office as such only upto the date of the ensuing Annual General Meeting. Your Company has received notices in writing from shareholder(s), under Section 257 of the Companies Act, 1956 proposing the appointment of Mr.S.R.Iyer, Mr.K.S.Madhava Murthy, Mr.K.R.Vijayendra, directors and Mr.C.Ilango Director and Managing Director, respectively, at the ensuing Annual General Meeting.

Your directors are of the opinion that the appointment of Mr.S.R.Iyer, Mr.K.S.Madhava Murthy, Mr.K.R.Vijayendra, as directors and Mr.C.Ilango as a Director and Managing Director of the Company would be in the best interest of the Company.

DIRECTORS RETIRING BY ROTATION

In terms of the provisions of Section 256 and other applicable provisions, if any, of the Companies Act, 1956 and the Articles of Association of the Company, Mr.P.R.Yagnik, Director and Chairman of the Board, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The particulars relating to Mr.P.R.Yagnik are mentioned in the Report on Corporate Governance. Your directors recommend the re-appointment of Mr.P.R.Yagnik, as a director.

The related agenda, together with the explanatory statements on the appointment of Mr.S.R.Iyer, Mr.K.S.Madhava Murthy, Mr.K.R.Vijayendra, directors and Mr.C.Ilango, Director and Managing Director and re- appointment of Mr.P.R.Yagnik as a director of the Company are included in the notice convening the ensuing Annual General Meeting.

All the directors of the Company have confirmed that they are not disqualified from being appointed as directors in terms of Section 274(1)(g) of the Companies Act, 1956.

AUDITORS

M/s K.P.Rao & Co., Chartered Accountants, Bangalore, Statutory Auditors of the Company having registration no.003135S and also the branch auditors for branches in the States of Karnataka, Kerala, Goa, Gujarat, Maharashtra and the new branches, if any, to be opened during 2010-11 and the Auditors for the other branches viz., M/s.L.U.Krishnan & Co, Chartered Accountants, Chennai, M/s.K.P.Rao Associates, Chartered Accountants, Hyderabad and M/s.H.K. Chaudhry & Co., Chartered Accountants, New Delhi, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.

The Company has received confirmation from M/s.K.P.Rao & Co., Statutory and branch auditors, M/s.L.U.Krishnan & Co., M/s.K.P.Rao Associates and M/s.H.K.Chaudhry & Co., branch auditors to the effect that their proposed appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

Your directors recommend the re-appointment of the above statutory/ branch auditors and suitable resolutions in that behalf have been included in the notice convening the ensuing Annual General Meeting. The above said appointment attracts the provisions of Section 224A of the Companies Act, 1956.

DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 217(2AA) of the Companies Act, 1956 and based on the information provided by the Management, the Board of Directors report that:

(a) In the preparation of annual accounts, the applicable Accounting Standards have been followed;

(b) The Accounting Policies selected were applied consistently. Reasonable and prudent judgements and estimates were made so as to give a true and fair view of the state of affairs of the Company as at the end of March 31, 2011 and of the profit of the Company for the year ended on that date;

(c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(d) The annual accounts have been prepared on a going concern basis.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In terms of the Clause 49 of the listing agreement, the Management Discussion and Analysis Report is forming part of this report.

CORPORATE GOVERNANCE

The Auditors Certificate on Corporate Governance issued by the Statutory Auditors of the Company for the year under review as required under the Companies Act, 1956 and in pursuance of Clause 49 of the Listing Agreements is annexed to the Report of the Directors on Corporate Governance.

OUTLOOK FOR 2011-12

India's economy bounced back as a surge in industrial and infrastructure activity, especially the housing finance sector. New frontiers and new directions to strengthen Country's economic and social foundations are envisaged.

Based on certain indicators, the interest rate on loans, especially the housing finance, is likely to move upwards moderately during 2011-12. Though the demand in commercial real estate has been picking-up, a sharp increase in demand for residential units and housing finance could be foreseen.

Your Company would continue to give a more and continued focussed attention for lending to individual loan segment. Various strategies and steps are put in place to enhance its market share in the housing market segment.

With a view to sustain its performance level and enhance and accelerate its growth, your Company has a set of housing and non-housing products and planned to lay a greater stress on marketing and further enhanced business relationship.

Your Company expects a significant increase in business performance during 2011-12 with several planned initiatives already in place. However, given the indications about the likely increase in cost of funds, the margins are expected to be under pressure.

ACKNOWLEDGEMENTS

Your directors wish to place on record with thanks the role of Canara Bank for their consistent support and guidance.

Your directors would like to acknowledge the role of all its stakeholders viz., the shareholders, depositors, borrowers and others for their continued support to the Company and the confidence and faith that they have always reposed in the Company.

Your directors acknowledge and appreciate the guidance and co-operation extended by various regulatory authorities including National Housing Bank (NHB), Securities Exchange Board of India (SEBI), Ministry of Corporate Affairs, Registrar of Companies, Karnataka, the Stock Exchanges and the Depositories.

Your directors thank the Credit Rating Agencies, Government(s), local/statutory authorities and all others for their wholehearted support and look forward to their continued support in the years ahead.

Your directors appreciate and acknowledge the professionalism and contributions made by the employees whose efforts have stood the Company in greater heights.

For and on behalf of the Board of Directors

Bangalore P.R.YAGNIK

June 09, 2011 CHAIRMAN

Mar 31, 2010

The Directors have pleasure in presenting the 23rd Annual Report of the business and operations of your Company together with the Audited Financial Accounts for the year ended March 31, 2010.

FINANCIAL RESULTS

The financial performance for fiscal 2010 is summarised here below :

For the year ended For the year ended

March 31, 2010 March 31, 2009

(Rs.lakh) (Rs.lakh)

Profit before Tax S> Provisions 5400.17 4440.91

Less : Provision for Doubtful Debts - Housing Loans 83.48 (57.10)

Profit Before Tax 5483.65 4383.81

Provision for Tax (1624.68) (1237.64)

Provision for Fringe Benefit Tax - (6.25)

Deferred Taxation 60.00 13.00

Profit After Tax 3918.97 3152.92

Balance brought forward from previous year 160.86 37.27

4079-83 3190.19

Appropriations:

Transfer to Special Reserve u/s.36(1 ) (viii) 1070.00 900.00 of theIncome Tax Act, 1961

Transfer to General Reserve 1450.00 1650.00

Proposed Dividend 409.70 409.70

Tax on Distributed Profits 69.63 69.63

Provision for contigencies 600.00 -

Balance carried forward 480.50 160.86

4079.83 3190.19

PERFORMANCE HIGHLIGHTS LENDING OPERATIONS

The cumulative loan sanctions of the Company, as at the end of the financial year 2009-10 was Rs.6171.65 crore as compared to Rs.5518.79 crore in the previous year. The housing loans and other loans sanctioned during the year ended March 31, 2010 were to the extent of Rs.652.86 crore as against Rs.356.28 crore sanctioned during the previous year registering a growth of about 83%.

DISBURSEMENTS

The cumulative loan disbursements at the end of the year stood at Rs.5329.21 crore as compared to Rs.4782.30 crore in the previous year. The loans disbursed during the year ended March 31, 2010 was to the extent of Rs.546.90 crore as against Rs.300.54 crore disbursed during the previous year registering a growth of about 82%.

The cumulative loan(s) outstanding, (including the loan under "Securitised Assets"), at the end of the year was Rs.2106.65 crore (with Securitised Assets amounting to Rs.6.90 crore), as compared to Rs.1887.18 crore in the previous year, (with Securitised Assets amounting to Rs.18.26 crore) registering a growth of about 12%.

PROFITS

Your Directors are pleased to inform that during the year under review your Company has recorded a Profit Before Tax of Rs.54.84 crore as against Rs.43.84 crore during 2008-09 and Profit After Tax of Rs.39.19 crore as against Rs.31.53 crore during 2008-09.

DIVIDEND

Your Directors have discussed the subject in detail with specific reference to the present position of Capital Adequacy Ratio (CAR), the additional requirement of funds to meet CAR as per the Guidelines / Directions issued by the Regulators from time to time, future requirement of funds / capital for incremental business projected, further expansion of business and other relevant factors. Considering the above and in the long-term interest of the Company it is considered prudent and expedient to conserve profits of the Company to the extent possible. However, appreciating the confidence reposed by the members in the Company and their continued support, the Board of Directors of your Company have recommended a dividend of Rs.2/- per equity share (20%) for the year ended March 31, 2010.

The Tax on distributed profits u/s.115-0 of the Income Tax Act, 1961, at 16.60% is being paid by the Company.

FINANCIAL RESOURCES DEPOSITS

The deposits outstanding (inclusive of interest accrued, but not due) as of March 31, 2010 were Rs.202.31 crore as against Rs.165.35 crore as at the end of the previous year, registering an increase of about 22.35%.

Out of the deposits fallen due for repayment up to March 31, 2010, a sum of Rs.7.26 crore (Rs.7.97 crore as of March 31, 2009) relating to 1702 depositors (1,990 depositors) had not been claimed or renewed. Subsequently, deposits of Rs.1.66 crore (Rs.1.70 crore) relating to 468 depositors (386 depositors) have been repaid or renewed. The remaining depositors have been requested either to renew or claim their deposits and the branches are making a constant follow up on the subject.

The depositors are being periodically informed by the respective branches about the maturity of the deposits, in advance, with a request to either renew or claim the said deposits.

The Ministry of Corporate Affairs, Government of India, vide order F.No.07/07/2009-CLTVI dated July 12, 2010 has granted exemption to the Company from the applicability of the provisions of Section 58A(2)(a) and (b) of the Companies Act, 1956 ("the Act") for a period of 3 years with effect from October 22, 2009, which enables the Company to publish abridged deposit advertisement(s) only during the period of validity of the Statutory Advertisement. The said approval is granted subject to certain conditions mentioned vide paragraph nos. (i) to (vii) of the said Order viz., mentioning reference to the statutory advertisements published by the Company with date and name fo the news paper, filling of the said abridged advertisement with the Registrar of Companies in Kamataka, within 15 days of its publication, that the exemption granted would be without prejudice to any legal rights available to any depositor or any share holder or creditor as per law in force in respect of recovery of any amount which has become due for repayment and that the exemption granted does not convey approval of Central Government under any other provisions of "the Act".

RATING OF DEPOSITS

The deposit schemes of the Company continued to be rated as "MAA+" (pronounced M double A plus) by the credit rating agency viz., ICRA Ltd., indicating High Safety and has assigned a stable outlook to the Rating. The Rating indicates high credit quality and the rated deposit programme carries low credit risk. The high credit quality Rating take into account the strong ownership, low operating cost structure, superior capital adequacy, its favourable liquidity position and comfortable asset quality indicators.

LONG TERM FINANCIAL RESOURCES REFINANCE FROM NATIONAL HOUSING BANK

With the continued support by the National Housing Bank (NHB), your Company availed refinance amounting to Rs.116 crore during the year under reference against Rs.125 crore in the previous year. The cumulative amount outstanding as on March 31, 2010 under the borrowings frorr the NHB was Rs.526.03 crore compared to Rs.594.24 crore as at the end of the previous year.

MORTGAGE BACKED SECURITIES (MBS)

After considering the availability of funds from other alternative sources at competitive rates, no fresh securitisation was done during the financial year 2009-10 or in the previous year.

The aggregate securitised assets outstanding as of March 31, 2010 were Rs.6.90 crore as against Rs.18.26 crore during the previous year (Refer Note No.2 of Schedule 15 to the Accounts), due to repayments made during the year.

During the year the existing loans sold under the MBS issue continued to be serviced as per the schedule of repayment.

The securities issued under Mortgage Backed Securities (MBS), by the Company, are rated as :

MBS Issue Rating Rating Agency Indicating

MBS-I AAA(SO) CRISIL High Safety

MBS-II & III LAAA(SO) ICRA Ltd. Highest Safety

The amount raised through MBS-I and MBS-II were since redeemed during the year.

DEBENTURES

The Company had no outstanding on account of debentures as of March 31, 2010.

OTHER BORROWINGS

Your Company borrowed Rs.384 crore from banks during the year compared to Rs.307 crore during the previous year. The aggregate of term loans outstanding at the various banks at the end of the financial year stood at Rs.1131.29 crore (including short term loans amounting to Rs.100 crore) as against Rs.884.04 crore during the previous year (including short term loans amounting to Rs.3.67 crore).

RATING OF TERM LOANS

As per the BASEL-II requirements, during the year a Rating for the borrowings by the Company by way of Term Loans was obtained from M/s. CARE Ltd. and was assigned a Rating of CARE AA+ (Double A Plus) for long-term bank facilities indicating high safety for timely servicing of debt obligations.

COMPLIANCE WITH GUIDELINES OF NATIONAL HOUSING BANK (NHB)

Your Company has complied with the Guidelines and Directions issued by the NHB on asset classification of Credit / Investments, Credit Rating, Fair Practices Code, Know Your Customer (KYC), Deposits and Anti Money Laundering Guidelines, Accounting Standards issued by the ICAI, New Delhi etc.

CAPITAL ADEQUACY

The Company has been maintaining the Capital Adequacy Ratio (CAR) above the minimum required level prescribed by the National Housing Bank (NHB) from time to time. The rate prescribed for the present is 12%. During the year under review, the Risk Weight on housing loans continued to remain same.

The Capital Adequacy of the Company as at March 31, 2010was 17.11 % as against 16.08 % during the previous year.

ACQUISITION OF SHARES

During the year, Canara Bank viz., the sponsor bank of the Company has acquired through secondary market 4,00,017 nos. of equity shares in the Company aggregating to 1.95% (approx) of the total shares / voting rights. The share holding by Canara Bank as at the end of the year was 42.332%.

RECOVERY ACTION UNDER SECURITISATION 6ÃÂ» RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 (SARFAESI ACT)

The SARFAESI Act, 2002 has been made applicable to the housing finance Companies vide Ministry of Finance, Banking Division, Government of India Gazette Notification (Extraordinary) dated November 10, 2003.

The proceedings under the said Act are summary in nature and are extremely helpful in realising the dues in the accounts classified as non-performing assets (NPA), by selling the Secured Asset (security), without the intervention of Honble Courts.

By initiating action under the provisions of the SARFAESI Act, 2002 during the year, your Company could recover about Rs.4.26 crore out of the 40 accounts that were classified as non-performing assets.

PARTICULARS OF EMPLOYEES

There are no such particulars to be furnished under the provisions of Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975.

BUSINESS OPERATIONS - DISTRIBUTION NET WORK

The business operations are carried on through its 40 branches in major cities of the Country to cater to the requirements of its customers.

LISTING OF SECURITIES

The equity shares of the Company continue to be listed on the Bangalore Stock Exchange Ltd., (Bg.SE), Bangalore, Bombay Stock Exchange Ltd., (BSE), Mumbai and the National Stock Exchange of India Ltd., (NSE), Mumbai.

The Listing Fee payable to the above Stock Exchanges has been paid before the due dates.

The securities of the Company are actively traded on the BSE and NSE. The other related particulars are provided to the Members in the Report on Corporate Governance.

MAN POWER - HUMAN RESOURCES DEVELOPMENT

Your Company had 205 employees (193 employees of the Company, the Managing Director, the Chief Financial Officer and 10 officers on deputation from Canara Bank) as at the end of 2009-10 as against 202 employees (189 employees of the Company, the Managing Director, the Chief Financial Officer and 11 Officers on deputation from Canara Bank) as at the end of 2008-09.

As in the previous years, some of the employees of the Company were deputed for selected training programmes / seminars on different subjects organised by reputed institutions, which were found to be useful.

PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND EXPENDITURE

Since the Company does not own any manufacturing facility, the particulars relating to conservation of energy and technology absorption stipulated in the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 required to be furnished u/s.217(3) of the Companies Act, 1956 are not applicable.

The Company did not earn any income or incur any expenditure in foreign currency.

TRANSFER OF UNCLAIMED AND UNPAID AMOUNTS TO THE INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

In terms of Section 205C of the Companies Act, 1956, the amounts (dividends, deposits etc.) that remained unclaimed and unpaid for more than 7 years from the date they became first due for payment, shall be transferred to IEPF (Fund). In terms of the applicable statutory provisions of the Companies Act, 1956 no claim would lie against the Company or the said Fund after such transfer to IEPF.

The Company has been intimating the shareholders / depositors / investors to lodge their claim for payment due, if any, from time to time and such claims have been settled. Inspite of constant and sincere efforts to pay the unclaimed dividend and deposit amount to the respective shareholders / depositors, certain amount still remain unclaimed.

(I) UNCLAIMED DIVIDENDS

As of March 31, 2010 dividends aggregating to Rs.51.73 lakh (previous year,Rs.61.66 lakh) had not been claimed by the shareholders (pertaining to 2002-03 to 2008-09). The Company has been intimating the shareholders to lodge their claim for dividend from time to time and such information is being mentioned in Annual Reports every year,

The dividend pertaining to the financial year 2001 -02 which remained unclaimed / unpaid amounting to Rs.5,63,312 (in respect of 1,271 shareholders) was transferred to IEPF during August 2009, after settlement of claims received (before the due date, in response to the individual reminder letters sent to the respective shareholders).

The dividend pertaining to the financial year 2002-03 remaining unclaimed and unpaid amounting to Rs.6,57,382 (in respect of 1,711 shareholders) as at the end of the financial year, would be transferred to IEPF during July 2010 after settlement of the claims received upto the date of completion of 7 years from the date of declaration of dividend. The Company has sent individual reminder letters to the respective shareholders during June 2010.

(ii) UNCLAIMED DEPOSITS

During the year, in terms of Section 205C of the Companies Act, 1956, the unclaimed and unpaid deposits for the year 2002-03 amounting to Rs.3,75,227/- together with interest amounting to Rs.1,06,789/- aggregating to Rs.4,82,016/- (previous year Rs.4,07,000), that remained unclaimed and unpaid for a period of 7 years from the date they became first due for payment, were transferred to IEPF.

DIRECTORS

Your Directors wish to report that Mr.S.Doreswamy, Director and Chairman of the Company resigned from the Board with effect from September 11, 2009.

The Board of Directors appointed Mr.P.R.Yagnik, as the Chairman of the Board with effect from October 14, 2009.

Your Directors also wish to report that Mrs.Mythili Krishnamurthy, Managing Director resigned as the Managing Director with effect from June 15, 2010 and as a Director with effect from July 15, 2010 on her repatriation to Canara Bank. Further, Mr.P.Santosh Kumar, Director resigned with effect from June 19, 2010 and Mr.J.S.Vasan, Director resigned with effect from June 30, 2010 on superannuating his services from Canara Bank.

Your Directors wish to place on record their appreciation for the services rendered and contribution made by Mr.S.Doreswamy, Mrs.Mythili Krishnamurthy, Mr.P.Santosh Kumar and Mr.J.S. Vasan during their tenure as the Chairman, Managing Director(s) and Directors, respectively and as member(s) of various committee(s) constituted by the Board.

The Board of Directors appointed Mr.Ashok Kumar Jain, Chartered Accountant as an Additional Director of the Company with effect from August 27, 2009.

Mr.Ashok Kumar Jain is a qualified and Practising Chartered Accountant in Agra. He is a Non-Official Director on the Board of Allahabad Bank since October 10, 2007 and presently the member of the Board of Directors and Chairman of Management Committee and Audit Committee of the Bank.

He was a non-official Director on the Board of Punjab National Bank from November 2001 to November 2004 and during the said period he was the Chairman / Member of various sub-committees of the Board. Mr.Ashok Kumar Jain has about 31 years of professional experience in conducting various audits of nationalised banks, Public Sector Undertakings and reputed organisations in private sector. Further particulars relating to MrAshok Kumar Jain are mentioned in the explanatory statement forming part of the notice of the ensuing annual general meeting.

The Board of Directors appointed Mr.Anil Kumar Nayyar, General Manager, Canara Bank as an Additional Director of the Company with effect from July 16, 2010.

Mr.Anil Kumar Nayyar is a degree holder in Science, a graduate in Law and a CAIIB.

Mr.Anil Kumar Nayyar started his career as an Officer in Canara Bank in the year 1972. During his service in the Bank over a period of about 38 years, he has served in different parts of the Country and headed Circle Office at Jalandhar Circle. Mr .Anil Kumar Nayyar has varied and rich experience of commercial banking. He is presently working as General Manager, Corporate Credit Wing, Canara Bank, Head Office, Bangalore.

Further, the Board of Directors appointed Dr.K.K.Deb, Deputy General Manager, Canara Bank, as an Additional Director and as the Managing Director of the Company with effect from June 15, 2010.

Dr.K.K.Deb is a Masters degree holder in Science, a graduate in Law and a CAIIB. He holds a Doctorate in Chemistry.

Dr.K.K.Deb started his career as an Officer in Canara Bank in the year 1979. During his service in the Bank over a period of 31 years, Dr.K.K.Deb has headed Regional Office and Circle Office at Meerut. He has good exposure to the matters relating to credit, retail loans, SMEs, etc. and also looking after the recovery & legal portfolio of Canara

Bank, Mumbai Circle. Dr.K.K.Deb has worked as a faculty at the Staff Training College of Canara Bank in Bangalore and also headed Regional Staff Training College at New Delhi. He has a varied experience in commercial Banking, having served in many branches across India.

Pursuant to the provisions of Section 260 and all other applicable provisions, if any, of the Companies Act, 1956 and Article 22 of the Articles of Association of the Company, MnAshok Kumar Jain, Director, Mr.Anil Kumar Nayyar, Director and Dr.K.K.Deb, Director and Managing Director hold office only upto the date of the ensuing Annual General Meeting, your Company has received notices in writing from shareholder(s), under Section 257 of the Companies Act, 1956 proposing the appointment of MnAshok Kumar Jain, MnAnil Kumar Nayyar and Dr.K.K.Deb, as Directors and Managing Directors, respectively, at the ensuing Annual General Meeting. The related agenda, together with the explanatory statements on the appointment of Mr.Ashok Kumar Jain, Mr.Anil Kumar Nayyar and Dr.K.K.Deb, as Directors and Managing Director, respectively, is forming part of the notice convening the ensuing Annual General Meeting.

Your Directors are of the opinion that the appointment of Mr.Ashok Kumar Jain, Mr .Anil Kumar Nayyar as a Directors, Dr.K.K.Deb, as a Director and Managing Director would be in the best interest of the Company.

DIRECTORS RETIRING BY ROTATION

In terms of the provisions of Section 256 and other applicable provisions, if any, of the Companies Act, 1956 and the Articles of Association of the Company, Dr.Ashok K.Mittal, Director, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The particulars relating to Dr.Ashok K.Mittal is mentioned in the Report on Corporate Governance. Your Directors recommend the re-appointment of Dr.Ashok K.Mittal, as a Director.

The Directors of the Company have confirmed that they are not disqualified from being appointed as directors in terms of Section 274(1 )(g) of the Companies Act, 1956.

AUDITORS

M/s. K.P.Rao S> Co., Chartered Accountants, Bangalore, Statutory Auditors of the Company and also the branch auditors for branches in the States of Karnataka, Kerala, Goa, Gujarat, Maharashtra and the new branches, if any, to be opened during 2010-11 and the Auditors for the other branches viz., M/s. L.U.Krishnan &> Co., Chartered Accountants, Chennai, M/s. K.P.Rao Associates, Chartered Accountants, Hyderabad and M/s. H.K. Chaudhry & Co., Chartered Accountants, New Delhi, will retire as the statutory and / or branch auditors, respectively, at the end of the forthcoming Annual General Meeting and they are eligible for re-appointment.

The Company has received confirmation from M/s. K.P.Rao S> Co., Statutory and branch auditors, M/s. LU.Krishnan & Co., M/s. K.P.Rao Associates and M/s. H.K.Chaudhry &Ã Co., branch auditors to the effect that their proposed appointment, if made, would be within the limits prescribed under Section 224(1 B) of the Companies Act, 1956.

Your Directors recommend the re-appointment of the above statutory / branch auditors and a suitable resolution in this behalf forms part of the agenda for the forthcoming Annual General Meeting, requiring approval of the shareholders. The above said appointment attracts the provisions of Section 224A of the Companies Act, 1956.

CORPORATE GOVERNANCE

The Auditors Certificate on Corporate Governance issued by the Statutory Auditors of the Company for the year under review, as required under the Companies Act, 1956 and in pursuance of Clause 49 of the Listing Agreements is annexed to the Report of the Directors on Corporate Governance.

OUTLOOK FOR 2010-11

Indias economy bounced back as a surge in industrial activity and strong services growth helped it regain the scorching expansion pace it kept before the global economic slow-down. The Indian economy is coming out of the slowdown and returning to normalcy. New frontiers and new directions to strengthen Countrys economic and social foundations are envisaged.

During the last few years though the growth was largely based on domestic efforts, foreign trade and capital inflows played a catalytic role. The likely growth for 2010-11 is expected to be about 8.5 per cent. With the revival of economy coupled with good monsoon this year is expected to result in the growth in double digit in 2011-12.

Based on certain indicators, the interest rate on loans, especially the housins finance, is likely to move slightly upward during 2010-11. Though the demand in commercial real estate has not picked up significantly, a sharp up-tick in demand for residential units and housing finance could be foreseen.

Your Company would continue to give a more and continued focussed attention to lending to individual loan segment keeping in view the encouragement received in the form of enhanced business performance during the year. Various strategies are put in place to enhance its marketing share in the housing market segment.

Your Company recorded a very good business performance during the year 2009-10 and the Company aims at building more and more quality assets in the years ahead.

With a view to sustain its performance level and to enhance and accelerate its growth, your Company has a range of housing and non-housing products and will lay greater stress on marketing and improved business relationship.

Your Company, with several planned initiatives is expecting a significant improvement in business performance for the year 2010-11. However, given the indications about the likely increase in cost of funds, the margins are expected to be under pressure.

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 217(2AA) of the Companies Act, 1956 and based on the information provided by the Management, the Board of Directors report that:

(a) In the preparation of annual accounts, the applicable Accounting Standards have been followed, together with proper explanation;

(b) The Accounting Policies selected were applied consistently. Reasonable and prudent judgements and estimates were made so as to give a true and fair view of the state of affairs of the Company as at the end of March 31, 2010 and of the profit of the Company for the year ended on that date;

(c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(d) The annual accounts have been prepared on a going concern basis.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In terms of the provisions of the listing agreement, the Management Discussion and Analysis Report forms a part of this report.

ACKNOWLEDGEMENTS

Your Directors wish to place on record the role of Canara Bank with thanks for their consistent support and guidance. They also wish to thank the National Housing Bank (NHB), shareholders, borrowers, depositors for their continued support to the Company, confidence and faith that they have always placed in the Company.

Your Directors acknowledge and appreciate the guidance and co-operation extended by various regulatory authorities including National Housing Bank (NHB), SEBI, Ministry of Corporate Affairs, Registrar of Companies, Karnataka, the Stock Exchanges and the Depositories.

Your Directors thank the Registrars and Share Transfer Agents of the Company, Credit Rating Agencies, Govemment(s), local / statutory authorities and all others for their whole hearted support and look forward to their continued support in the years ahead.

Your Directors appreciate and acknowledge the contributions made by the employees whose efforts made the Company to reach greater heights.

For and on behalf of the Board of Directors

P.R.YAGNIK

CHAIRMAN

Place: Bangalore Date: July 03, 2010

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