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Directors Report of YES Bank Ltd.

Mar 31, 2023

Your Directors are pleased to present the Nineteenth Annual Report on the business and operations of the Bank together with the audited financial statements (standalone as well as consolidated) for the financial year ended March 31,2023.

BUSINESS OVERVIEW

FY 2022-23 was the third year of the new journey of YES BANK under the new management, post the YES BANK Limited Reconstruction Scheme, 2020 ("Scheme") which was implemented in March 2020. Whilst, in the first year, the focus was on rebuilding the Bank, in the second year, we swiftly shifted our focus on growing the Bank, in the third year, we achieved critical milestones of equity capital raise from two global marquee Private Equity investors, transfer of legacy stressed asset pool to ARC- which was by far the single largest transaction of sale of non-performing assets in the Indian Banking System, and continued to build on a strong momentum on both our asset and liability with focus on granularity and in risk calibrated manner. The Directors are pleased to inform the shareholders that the Bank''s Total Assets in FY 2022-23 crossed '' 3.55 lakh crore, with deposits crossed '' 2.18 lakh crore and CASA ratio at ~30.8%.

The Bank has further progressed on its transformation journey and has emerged as a re-energised, recapitalised and recalibrated organisation, by leveraging on a unique opportunity to learn from past challenges and become stronger, while continuing to fulfill its unwavering commitment towards its customers and stakeholders. The Bank is on track to achieve its longer-term Strategic Objectives and none of this would have been possible without the confidence reposed of the Bank''s customers, depositors and investors. The confidence of stakeholders has not only been seen through the improving financial performance of the Bank during the last year, but also through external validation in the form of Credit Rating upgrades, successful client win-backs and acquisition strategy, re-inclusion of the stock in marquee indices amongst others.

The Bank undertook multiple initiatives to grow the Bank''s business and launched innovative and tailored propositions for its customers. The Bank launched a first of its kind floating rate Fixed Deposit linked to RBI repo rate - an Intelligent Fixed Deposit with Dynamic Returns. In addition, the Bank was a preferred partner of choice for the Government/RBI in multiple new breakthrough initiatives such as Unified Logistics Interface Platform

("ULIP"), Digital Banking Units and Digital Rupee (e?) - the Central Bank Digital Currency ("CBDC"). The Bank issued first e-BG in partnership with National E-Governance Services Limited. YES BANK also became the first bank in Asia Pacific to bring forth a debit card in Mastercard''s premium Elite Platform. The Bank also launched industry first Build Your Own Card which allows customer to fully customise a credit card.

The Bank was certified as Great Place To Work® Certified™ which is a reflection of Bank''s high-trust and high performance culture.

Key highlights of the transformation Journey over the course of FY 2022-23 included:

• Completed assignment of identified pool of stressed assets to the J.C. Flowers ARC amounting to nearly '' 48,000 crore. This is single largest transaction of sale of non-performing assets in Indian Banking System.

• Capital raise of '' 8,887 crore from two marquee private equity investors viz. CA Basque Investments (affiliates of The Carlyle Group) & Verventa Holdings Limited (affiliates of Advent International), the second largest private capital raise transaction to take place in the Indian Banking Sector over the last two decades.

• The Bank also received multiple ESG certifications and scoring highest amongst the bank on S&P Global, CDP rating and Moody''s ratings.

The Bank continued its efforts towards building a stronger retail franchise with contribution of retail advances compared to total advances, increased to ~45% in FY 2022-23 compared to 36% in FY 2021-22. Digitisation remains the Bank''s key pillar to grow the Retail, SME and the Transaction Banking businesses. The Bank has seen new sanctions/disbursements of ~'' 1,00,000 crore in FY 2022-23 with Retail Assets disbursements of 50,000 crore. The Bank has significant presence within the new-age payments space with the highest market share of ~38% in UPI transactions (by volume) in FY 2022-23.

STATE OF THE AFFAIRS OF THE BANK

The Bank''s fundamentals have strengthened and it has emerged from the crisis as a financially sound, well capitalised, well governed institution, with customer centricity and digital at the heart of its strategy. The Bank remains focused on its priorities and looks to continue this momentum onwards and upwards so that it can deliver on its strategic objectives while creating superior value for all its stakeholders.

BUSINESS OUTLOOK

The overall bank credit trajectory is expected to remain healthy on account of continued capex investments, expansion of public digital infrastructure, several path breaking growth impetus initiatives such as PM Gatishakti, National Logistics Policy and the Production Linked Incentives ("PLI") scheme announced for 13 key sectors by the government.

Improved resilience of the banking system is likely to support stronger credit growth to SME''s and retail segments. Home Loans will be a major driver of credit growth as demand for residential purchases is expected to continue growing. Unsecured Lending is also expected to see improvement as the segment will continue to be attractive on a risk-adjusted return basis.

Overall, the Indian Banking Sector is well positioned to fund faster credit growth, with healthy capital buffers, high profitability metrics, and waning asset quality pressures. These factors together with a strong deposits growth augur well for the Banking sector.

While, the above-mentioned are positive for the sector, there are also certain risks that could impact the sector, such as continued geopolitical tensions that could impact interest rates as well as many downstream sectors (some of which are already under pressure because of increased commodity prices); and higher-than-expected slowdown in private consumption. Credit growth may also be partially impacted by movement in real cost of credit in the international markets, overall inflation trajectory and consumption behaviour.

CHANGE IN THE NATURE OF BUSINESS

During the year under review, there has been no change in the nature of business of the Bank.

FINANCIAL PERFORMANCE (STANDALONE)

('' in million)

April 01, 2022 to March 31, 2023

April 1, 2021 to Change March 31, 2022

Deposits

2,175,018.62

1,971,917.33 203,101.29

Borrowings

774,519.92

722,045.84 52,474.09

Advances

2,032,694.44

1,810,519.91 222,174.53

Total Assets/Liabilities

3,547,861.31

3,182,202.25 365,659.06

Net Interest Income

79,175.72

64,978.54 14,197.18

Non Interest Income

39,266.50

32,624.69 6,641.81

Operating profit

31,827.64

29,159.29 2,668.35

Provisions and Contingencies

22,198.46

14,800.81 7,397.65

Profit before Tax

9,629.18

14,358.48 (4,729.30)

Provision for taxes

2,455.10

3,696.36 (1,241.26)

Net Profit/(Loss)

7,174.09

10,662.12 (3,488.04)

Add: Surplus/(Deficit) brought forward from last period

(106,965.66)

(108,719.60) 1,753.94

Amount available for appropriation

(99,791.58)

(98,057.48) (1,734.10)

Appropriations

Statutory Reserve under section 17 of the Banking Regulation Act, 1949

1,793.52

2,665.53 (872.01)

Capital Reserve

31.67

108.31 (76.64)

Investment Reserve

16.79

34.30 (17.51)

Investment Fluctuation Reserve

2,358.76

1,347.89 1,010.88

Surplus carried to Balance Sheet

(103,992.32)

(102,213.50) (1,778.81)

Key Performance Indicators

Net Interest Margin

2.60%

2.30%

Return on Annual Average Assets

0.21%

0.36%

Return on Equity

2%*

3.19%

Cost to Income Ratio

73.10%

70.10%

*For the purpose of determining ROE, the Bank has considered weighted average shareholder funds during the year. Basis simple average of shareholder funds the ROE is 1.9%.

Net Profit for FY 2022-23 is '' 7,174.09 million as compared to profit of '' 10,662.12 million for the FY 2021-22 lower by 32.7% largely on account of higher provision to step-up Provision Coverage Ratio ("PCR") on NPA as well as security receipts.

Net Interest Income ("NII") of the Bank increased by 21.8% to '' 79,175.72 million during FY 2022-23 as compared to '' 64,978.54 million during

FY 2021-22. The Net Interest Margin ("NIM") was 2.6% in FY 2022-23. Non-interest income consists of fee, trade income and gain on sale of securities. Non-interest income increased by 20.4% from '' 32,624.69 million in FY 2021-22 to '' 39,266.50 million in FY 2022-23. Higher non-interest income and NII was largely offset by higher operating expenditure.

Operating expenses increased by 26.5% from '' 68,443.94 million in FY 2021-22 to '' 86,614.58 million in FY 2022-23. The employee cost increased from '' 28,556.91 million in FY 2021 -22 to '' 33,627.00 in FY 2022-23. Other operating cost increased by 32.8% from '' 39,887.03 million in FY 2021-22 to '' 52,988 million in FY 2022-23.

Provisions and contingencies (excluding provision for taxes) increased by 50.0% from '' 14,800.81 million in FY 2021-22 to '' 22,198.46 million in FY 2022-23.

DIVIDEND

During FY 2022-23, the Bank has not declared any dividend on equity shares.

TRANSFER TO RESERVES

As per requirement of RBI regulations, the Bank has transferred the following amounts to various reserves during Financial Year ended March 31, 2023:

Amount transferred to

'' in million

Statutory Reserve

1,793.52

Capital Reserve

31.67

Investment Reserve

16.79

Investment Fluctuation Reserve

2,358.76

TRANSFER OF EQUITY SHARES, UNPAID/ UNCLAIMED DIVIDEND TO THE INVESTOR EDUCATION AND PROTECTION FUND

In accordance with the provisions of Section 124 and 125 of the Companies Act, 2013 and Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules"), dividend which remain unpaid or unclaimed for a period of seven years from the date of transfer to the Unpaid Dividend Account shall be transferred by the company to the Investor Education and Protection Fund ("IEPF").

Further, the provisions of section 124(6) of the Companies Act 2013, read with the IEPF Rules mandates companies to transfer all shares in respect of which dividend has

not been paid or claimed for seven consecutive years or more to the designated demat account of the IEPF Authority. The Members whose dividend/shares are transferred to the IEPF Authority can claim their shares/ dividend from the IEPF Authority following the procedure prescribed in the Rules.

In accordance with the said IEPF Rules, the Bank had sent notices to all the concerned shareholders whose shares were due for transfer to the IEPF Authority advising them to claim their unclaimed dividend and simultaneously, published newspaper advertisement in this regard.

The details of dividend transferred to IEPF during the year are as under:

Financial

Year

Dividend declared on

Amount transferred to IEPF

(in '')

Date of transfer to IEPF

2014-15

June 06, 2015

18,29,394.00

July 18,2022

SHARES TRANSFERRED/CREDITED TO IEPF:

During the Financial Year 2022-23, the Bank transferred 31,736 Equity Shares to IEPF Authority corresponding to unclaimed dividend for the year 2014-15. The IEPF Authority holds 2,23,395 Equity Shares in the Bank as at 31st March, 2023.

Members who have not yet claimed their dividends for the Financial years 2015-16 and/or subsequent years till Financial year 2018-19 are requested to submit their claims to KFin Technologies Limited without any delay. The details of Nodal Officer appointed under the provisions of IEPF are available on the website of the Bank.

CAPITAL RAISING & CAPITAL ADEQUACY RATIO ("CAR")

On December 13, 2022, the Bank issued 3,696,155,702 equity shares of face value '' 2 each fully paid up for cash on a preferential basis. During the year ended March 31, 2023, the Bank has issued 3,666,651 equity shares (Previous year: 47,000 equity shares) of face value of '' 2 each pursuant to the exercise of stock options by employees under the approved stock option schemes.

The Bank has not issued any equity shares with differential voting rights during the year.

Post allotment of aforesaid equity shares, the issued, subscribed and paid up share capital of the Bank stands at '' 57,509,550,668 comprising of 28,754,775,334 equity shares of '' 2 each as at March 31, 2023.

MOVEMENT IN SHARE CAPITAL & CAPITAL ADEQUACY RATIO ("CAR")

'' in million

As at March 31, 2023

As at March 31, 2022

Opening Share Capital

50,109.91

50,109.81

Addition due to exercise of share option

7.33

0.09

Addition due to shares issued on preferential basis

7,392.31

Addition due to shares warrants issued

9,483.92

-

Closing share capital and Share warrant

66,993.47

50,109.91

CET-I ratio is at 13.3% and CRAR is at 17.9%. NNPA ratio significantly improved at 0.8% pursuant to sale of stressed assets to Asset Reconstruction Company ("ARC").

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report for the year under review as stipulated in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") is presented in a separate section forming part of the Annual Report.

RISK MANAGEMENT FRAMEWORK

The Bank''s Enterprise Risk Management framework encompasses the following:

Risk Governance Framework: The Bank has implemented an Enterprise Risk Governance framework to ensure non-silo based management and oversight of Risk. The Bank''s Risk Management philosophy is guided by the Three Lines of Defence:

• First Line of Defence - Business Management: Each business segment of the Bank has risk ownership and is responsible for assessment and management of risks and has the overall responsibility of the management and mitigation of the Risk. The segments are required to implement appropriate procedures to fulfil their risk governance responsibilities.

• Second Line of Defence - Independent functions: The Bank''s independent oversight functions, such as, Risk Management, Credit Underwriting, Compliance, Legal, Fraud Containment Unit, etc. set standards for management and oversight of risks, including compliance with applicable laws, regulatory requirements and policies.

- Risk Management: Risk Management team reporting into the Chief Risk Officer establishes policies and guidelines for risk assessment and management and contributes to controls and tools to manage, measure and mitigate risks faced by the Bank. Risk Management comprises units such as Enterprise Risk, Market Risk, Operational Risk, Legal Risk, Information Security, Portfolio Analytics, Retail, SME & Rural Policy, Risk Secretarial Unit, etc which are responsible for independent review, monitoring and reporting of all risk control parameters and taking appropriate corrective actions where necessary. These units also ensure compliance to internal policies and regulatory guidelines.

- Credit Underwriting: The Credit Risk team reporting into the Chief Credit Risk Officer ensures an independent assessment of credit proposals and is responsible for monitoring the credit quality of the Bank''s portfolio and undertaking portfolio reviews. The Credit Risk team is a specialised function that is well staffed with individuals having the necessary experience as well as skillsets to provide a balanced view of credit proposals to the sanctioning authorities.

- Compliance: The Compliance unit is responsible for tracking implementation of all regulatory circulars/communication, review of new products & processes from regulatory perspective, conducting compliance reviews to ensure adherence to regulatory guidelines and monitoring progress in rectification of significant deficiencies (if any) pointed out by regulators in inspection reports as well as implementation of recommendations made therein. This ensures that the overall Compliance Risk of the Bank is managed and mitigated.

- FCU & AML: The Fraud Containment Unit ("FCU") is responsible for prevention and detection of internal and external frauds in the areas of Liabilities, Product and Support functions. The unit conducts transaction monitoring, forensic scrutiny, employee awareness trainings and vulnerability assessments to help achieve the said objective. The Anti Money Laundering Unit ("AML") is responsible for identifying and reporting of

suspicious transactions and other regulatory reports such as Cash Transaction Report, Cross Border Wire Transfer Report, Not for Profit Organisation Transaction report etc. as prescribed under PMLA Act/Regulators, across all Business segments of the Bank. The AML unit is equipped with qualified, trained and experienced staff, which monitors various transactions undertaken by customers with a view to combat financial crimes and prevents misuse of the accounts for money laundering.

• Third Line of Defence - The Bank''s Internal Audit Department independently reviews activities of the first two lines of defence based on a risk-based audit plan and methodology approved by the Audit Committee of the Board. Internal Audit Department provides independent assurance to the Audit Committee of the Board, top management and regulators regarding the effectiveness of the Bank''s governance and controls framework designed for risk mitigation.

The Board of Directors of the Bank has overall responsibility for Risk Management. The Board oversees the Bank''s Risk and related control environment, reviews and approves the policies designed as part of overseeing the Risk Management practices. The Board ensures that comprehensive policies, systems and controls are in place to identify, monitor and manage material risks at a Bank-wide level, with clearly defined risk limits. The Board has laid down Risk Appetite Statement which articulates the quantum of risk the Bank is willing and able to assume in its exposures and business activities in pursuit of its strategic objectives and desired returns. The Board has also established policies governing risk management, such as, Credit Policy, Asset Liability Management Policy, Operational Risk Management Policy, Information Security Policy, Enterprise Risk Management Policy, Group Risk Management Policy, Model Risk & Governance Policy, Risk Based Pricing Policy, Stress Testing Policy, etc. which establish the Risk Appetite Framework within the overall Risk Appetite Statement.

The Board has put in place four Board level Committees which inter-alia pertain to Risk Management, viz. Risk Management Committee ("RMC"), Audit Committee ("AC"), Fraud, Willful Defaulters and Non Co-operative Borrowers Monitoring Committee (FWD & NCBMC) and Board Credit Committee ("BCC") to deal with risk management practices, policies, procedures and to have adequate oversight on the risks faced by the Bank.

The Board Committees have set up various Executive level committees for oversight over specific risks.

1. Apex Management Committee

2. Enterprise Risk, Reputation Risk and Model Assessment Committee

3. Management Credit Committee

4. Executive Credit Committee

5. Asset & Liability Management Committee

6. Operational Risk Management Committee

7. Standing Committee on Customer Service

8. Fraud & Suspicious Transaction Monitoring Committee

9. Committee for Classification of Wilful Defaulters & Non-Cooperative Borrowers

10. Accountability Review Committee

11. Whistle Blower Committee

12. Disciplinary Committee

13. Internal Committee under POSH - The Bank''s Internal Committee is constituted in lines with "The Sexual harassment of women at workplace (Prevention, Prohibition and Redressal) Act, 2013" to investigate and redress the complaints of sexual harassment

14. Steering Committee for IFRS (IndAS)

15. Product Process Approval Committee

16. IT Steering Committee

17. Security Council

18. Stressed Asset Monitoring Committee

19. Sustainability Council

20. Fraud Identification Committee

21. Governing Body for IBU (IFSC Banking Unit)

These Committees review various aspects / key risks and ensure that the best-in-class frameworks are in place to oversee day-to-day management of underlying business activities, transactions and associated risks while dealing with internal and external stakeholders. Further, Risk events, potential threats, performance of the Bank vis-avis Risk Limits and Risk Appetite, Risk Profile dashboard covering key risk indicators, etc. are presented to these Committees, with periodic trends highlighted along with level and direction of risk. The Bank also conducts a detailed Internal Capital Adequacy Assessment Policy

("ICAAP") review exercise at least on an annual basis to identify its Risk universe, review its Risk appetite in line with its business strategy as well as assess its internal controls and mitigation measures in place for the risks and capital requirements. The ICAAP document is approved by the RMC and the Board.

Additionally, in line with best Risk Governance practices, the Bank has segregated credit underwriting and risk management verticals. The underwriting vertical consisting of Credit Units is headed by the Chief Credit Risk Officer ("CCRO") and the risk controls and policy vertical consisting of various independent control units is headed by the Chief Risk Officer ("CRO"). The CRO reports to the Risk Management Committee while the CCRO reports to the Managing Director & Chief Executive Officer, also accountable to Board Credit Committee.

DEPOSITS

Being a banking company, the disclosures required as per Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, 2014, read with Sections 73 and 74 of the Companies Act, 2013 are not applicable to your Bank.

AWARDS AND RECOGNITION

During the year under review, the Bank was recognised in various ways/by various institutes.

Some of the key awards won by the Bank are listed below:

1. Best Payments Initiative award at the Economic Times BFSI Excellence Awards

2. Best AI & ML Bank and Best Technology Bank at IBA''s 18th Annual Banking Technology Conference and Awards: 2021-22

3. Excellence in HR Business Partnership Function at the Economic Times Human Capital Awards

4. Best Technology Implementation at the Digital Banker Digital CX Awards

5. Great Place To Work certification by the Great Place to Work ® (GPTW) Institute, India

6. India In-House Team of the Year at the Asian Legal Business India Law Awards 2023

DIVERGENCE IN ASSET CLASSIFICATION AND PROVISIONING FOR NPAs

Based on the condition mentioned in RBI circular, no disclosure on divergence in asset classification and provisioning for NPAs is required with respect to RBI''s supervisory process for the year ended March 31, 2022.

SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS

As at March 31, 2023, the Bank had one wholly-owned subsidiary, i.e. YES Securities (India) Limited ("YSIL").

The Bank does not have any material subsidiary, associate and joint venture company. There were no entities which became or ceased to be the Bank''s Subsidiaries, associates or joint ventures during the year.

Performance and Financial Position of YSIL is given in Management Discussion & Analysis which forms part of this Annual Report.

The brief details about business of the subsidiary company is as under:

YES Securities (India) Limited

YES Securities (India) Limited ("YSIL'') is a Wholly Owned Subsidiary of the Bank that completed tenth year of its operation in the FY 2022-23. YSIL is a full scale capital market intermediary that offers retail, HNI, corporate and institutional customers a comprehensive range of products and services encompassing Broking, Investment Banking, Merchant Banking, Research and Institutional Equities sales and trading.

YSIL is registered with the Securities and Exchange Board of India ("SEBI") as a stock broker holding membership of the National Stock Exchange of India Limited ("NSE"), BSE Limited ("BSE"), Multi Commodity Exchange of India ("MCX") & National Commodity & Derivatives Exchange Limited ("NCDEX").

YSIL is also registered with SEBI as Category I Merchant Banker, Investment Adviser, Research Analyst as well as registered as Depository Participant with Central Depository Services Limited ("CDSL") and National Securities Depository Limited ("NSDL"). YSIL is Sponsor & Investment manager of YSL Alternates Alpha plus Fund which is a SEBI registered Category III Alternative Investment Fund. YSIL is also registered with Association of Mutual Funds of India ("AMFI").

The Consolidated Financial Statements of the Bank and its Subsidiary company for the Financial Year ended March 31, 2023 prepared in accordance with the requirement of Section 129(3) of the Companies Act, 2013 shall be laid before the ensuing AGM and it forms part of this Annual Report.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of Financial Statements of subsidiary company of the Bank in Form AOC-1 forms part of the Annual Report. The Financial Statements of the subsidiary company of the Bank are made available on the website of the Bank at weblink https://www.yesbank. in/about-us/investors-relation/financial-information/ annual-reports; Financials of Bank and its subsidiary shall also be available for inspection by members or trustees of the holders of any Debentures/Bonds of the Bank at its Registered office.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Bank has implemented adequate procedures and internal controls which provide reasonable assurance regarding reliability of financial reporting and preparation of financial statements. The Bank also ensures that internal controls are operating effectively. There is utmost attention accorded to Internal Financial Controls at both, the highest levels at Management as well as the Audit Committee of the Board. There is no material weakness in the Bank''s framework with respect to Internal Financial Controls over Financial Reporting and the Bank shall continue to review its overall control framework on an ongoing basis to ensure robustness and effectiveness of its controls.

MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE BANK

There are no material changes and commitments, affecting the financial position of the Bank which has occurred between the end of the financial year of the Bank i.e. March 31, 2023 and the date of the Directors'' Report i.e. May 12, 2023.

ESTIMATION OF UNCERTAINTIES RELATING TO THE GLOBAL HEALTH PANDEMIC FROM COVID-19

While India is emerging from COVID-19 pandemic, the extent to which any new wave of COVID-19 will impact the Bank''s results will depend on ongoing as well as future developments, inter-alia including, the impacts of actions of governments and other authorities to contain its spread or mitigate its impact.

RATINGS OF VARIOUS DEBT INSTRUMENTS

The Credit Rating and change/revision in the Credit Ratings for various debt instruments issued by the Bank from time to time are provided in the Corporate Governance Report forming part of the Annual Report.

LOANS, GUARANTEES OR INVESTMENTS IN SECURITIES

Pursuant to Section 186(11) of the Companies Act, 2013, loans made, guarantees given or securities provided or acquisition of securities by a Banking company in the ordinary course of its business are exempted from disclosure requirements under Section 134(3) (g) of the Companies Act, 2013.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the year, the Bank has entered into transactions with the related parties in the ordinary course of business. The Bank has not entered into any materially significant transactions with the related parties including Directors, Key Managerial Personnel, Subsidiaries or Relatives of the Directors, which could lead to a potential conflict of interest between the Bank and these parties. The details of the transactions with related parties, were placed before the Audit Committee from time to time. There were no material individual transactions with related parties, which were not in the ordinary course of business of the Bank, nor were there any transactions with related parties, which were not on arm''s length basis. Hence, there are no Related Party Transactions to be reported under Section 188(1) of the Companies Act, 2013, in form AOC-2. Suitable disclosure as required by the Accounting Standards (AS-18) has been made in the notes to the Financial Statements. The Bank has submitted with the Stock Exchanges and also published on the Bank''s website, disclosure on Related Party Transactions, drawn in accordance with applicable accounting standards as per the requirements of Regulation 23(9) of Listing Regulations for the half year ended September 30, 2022 and March 31, 2023 respectively. Further, Omnibus approval for transactions is obtained from the Audit Committee for the related party transactions which are repetitive in nature as well as for the normal banking transactions which cannot be foreseen and accordingly the required disclosures are made to the Committee for their approval.

The Board of Directors have formulated a policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions pursuant to the provisions of the Companies Act, 2013 and Listing Regulations. The same is displayed on the website of the Bank at https://www.yesbank.in/ pdf?name=policies pdf6.pdf.


DIRECTORS & KEY MANAGERIAL PERSONNEL

During the Financial Year 2022-23, the following changes took place in the composition of the Board of Directors:

CESSATIONS:

Mr. Ravindra Pandey

Mr Ravindra Pandey, Nominee Director (Non-Executive) of State Bank of India on the Board of the Bank ("SBI"), appointed pursuant to YES BANK Limited Reconstruction Scheme March 2020 ("Reconstruction Scheme") resigned from the directorship of the Bank, effective from July 1, 2022 consequent to his superannuation from SBI.

Erstwhile Board

The following Directors appointed pursuant to the YES BANK Limited Reconstruction Scheme, 2020 ("Reconstruction Scheme") demitted their office from the Board of the Bank, on formation of alternate Board, w.e.f. July 15, 2022:

a. Mr. Sunil Mehta, Chairman & Non-Executive Director

b. Mr. Mahesh Krishnamurti, Non-Executive Director

c. Mr. Atul Bheda, Non-Executive Director

d. Mr. Vadalur Subramanian Radhakrishnan,

Nominee Director (Non-Executive) of State Bank of India ("SBI")

e. Mr. Atul Malik, Non-Executive Director

(Re-appointed as part of the alternate Board with effect from July 15, 2022)

f. Ms. Rekha Murthy, Non-Executive Director

(Re-appointed as part of the alternate Board with effect from July 15, 2022)

g. Mr. Sharad Sharma, Non-Executive Director

(Re-appointed as part of the alternate Board with effect from July 15, 2022)

h. Mr. Prashant Kumar, Managing Director & Chief Executive Director (Re-appointed as part of the alternate Board with effect from July 15, 2022)

Additional Directors appointed by Reserve Bank of India

Mr. Ananth Narayan Gopalakrishnan and Mr. Rama Subramaniam Gandhi, additional directors appointed by Reserve Bank of India ("RBI"), continued on the Board till they ceased to be on the Board of the Bank, w.e.f. July 20, 2022, pursuant to the RBI order dated July 20, 2022.

APPOINTMENTS:

Formation of alternate Board:

The following Directors were appointed as a part of the alternate Board of the Bank, w.e.f. July 15, 2022, by the Shareholders at the 18th Annual General Meeting:

a. Mr. Atul Malik, Independent Director

b. Ms. Rekha Murthy, Independent Director

c. Mr. Sharad Sharma, Independent Director

d. Ms. Nandita Gurjar, Independent Director

e. Mr. Sanjay Kumar Khemani, Independent Director

f. Mr. Sadashiv Srinivas Rao, Independent Director

g. Mr. Thekepat Keshav Kumar, Non-Executive NonIndependent Director

h. Mr. Sandeep Tewari, Non-Executive Non

Independent Director

i. Mr. Prashant Kumar, Director

Mr. Ananth Narayan Gopalakrishnan and

Mr. Rama Subramaniam Gandhi, additional directors appointed by RBI, continued to be Directors on the alternate Board of the Bank, as on the date of 18th Annual General Meeting of the Bank, i.e. July 15, 2022. They ceased to be on the Board of the Bank, w.e.f. July 20, 2022, pursuant to the RBI order dated July 20, 2022.

The Independent Directors i.e. Mr. Atul Malik, Ms.RekhaMurthy,Mr.SharadSharma,Ms.NanditaGurjar, Mr. Sanjay Kumar Khemani and Mr. Sadashiv Srinivas Rao were appointed for the period of five years w.e.f. July 15, 2022 till July 14, 2027.

Recategorisation

Pursuant to letter dated May 18, 2022 received from State Bank of India, Mr. Thekepat Keshav Kumar and Mr. Sandeep Tewari were recategorised as Nominee Director of State Bank of India w.e.f. August 25, 2022.

Mr. Prashant Kumar

Pursuant to the recommendation of the Nomination & Remuneration Committee of the Bank ("N&RC"), the Board at its meeting held on July 15, 2022, approved and recommended to RBI, appointment of Mr. Prashant Kumar as the Managing Director and Chief Executive Officer ("MD & CEO") of the Bank, for a period of three (3) years.

In order to have management continuity pending review and approval by RBI of the above recommendation, the Board at the said meeting basis the recommendation of the N&RC, also approved and recommended to the RBI, appointment of Mr. Prashant Kumar as Interim MD & CEO of the Bank. The RBI vide its letter dated July 15, 2022, approved the appointment of Mr. Prashant Kumar as the Interim MD & CEO of the Bank, for the period of three (3) months, w.e.f. July 15, 2022 or till the appointment of a regular MD&CEO of the Bank, wherever is earlier, which was subsequently approved by the Shareholders of the Bank at the Extra Ordinary General Meeting held on August 24, 2022.

The RBI vide its letter dated October 6, 2022, approved the appointment of Mr. Prashant Kumar as the MD & CEO of the Bank, for a period of three (3) years w.e.f. October 6, 2022, which was subsequently approved by the Shareholders of the Bank through Postal Ballot on March 9, 2023.

Mr. Rama Subramaniam Gandhi

Pursuant to the recommendation of the N&RC, the Board at its meeting held on July 23, 2022, appointed Mr. Rama Subramaniam Gandhi as an Additional Independent Director on the Board of the Bank for the period of five (5) years effective from July 23, 2022, subject to approval of shareholders.

The Shareholders of the Bank, at the Extra Ordinary General Meeting held on August 24, 2022, approved the appointment of Mr. Rama Subramaniam Gandhi as an Independent Director of the Bank for a period of five (5) consecutive years from July 23, 2022 to July 22, 2027.

Based on the recommendation of the Board of the Bank, the RBI vide its letter dated September 20, 2022, approved the appointment of Mr. Rama Subramaniam Gandhi as the Non-Executive (Part-time) Chairman of the Bank, for a period of three (3) years w.e.f. September 20, 2022.

Mr. Sunil Kaul and Ms. Shweta Jalan

Pursuant to the recommendation of the N&RC, the Board at its meeting held on December 13, 2022, appointed Mr. Sunil Kaul (Nominee of CA Basque Investments) and Ms. Shweta Jalan (Nominee of Verventa Holdings Limited) as Additional Directors on the Board of the Bank, effective from December 13, 2022, which was subsequently approved by the Shareholders of the Bank through Postal Ballot on March 9, 2023.

Mr. Rajan Pental

Pursuant to the recommendation of the N&RC, the Board at its meeting held on September 20, 2022, approved the appointment of Mr. Rajan Pental as an Additional Director on the Board of the Bank with effect from the date of receipt of RBI approval for appointment as an Executive Director.

Further, the Board of Directors at its said meeting of September 20, 2022 also approved and recommended to the RBI, the appointment and remuneration of Mr. Rajan Pental as Executive Director of the Bank for a period of three (3) years effective from the date of receipt of RBI approval.

The RBI vide its letter dated February 2, 2023, approved the appointment of Mr. Rajan Pental as an Executive Director of the Bank for a period of three (3) years w.e.f. February 2, 2023.

The Shareholders through Postal Ballot, on March 9, 2023, approved the appointment of Mr. Rajan Pental as a Director of the Bank and also as an Executive Director for a period of three (3) years w.e.f. February 2, 2023.

Key Managerial Personnel of the Bank

During the FY 2022-23, following changes took place in the Key Managerial Personnel;

1. Mr. Prashant Kumar the MD & CEO of the Bank, appointed as per the Scheme notified by the Ministry of Finance, Government of India under Notification No. G.S.R. 174(E) dated March 13, 2020, ceased to be the Director and Key Managerial Personnel of the Bank w.e.f. July 15, 2022.

The Shareholders at its 18th Annual General Meeting, appointed, Mr. Prashant Kumar as the Director of the Bank, w.e.f. July 15, 2022.

Pursuant to the recommendation of the N&RC, the Board at its meeting held on July 15, 2022, appointed Mr. Prashant Kumar as the MD & CEO, subject to approval of the RBI.

However, in order to have management continuity pending review and approval by RBI of the above recommendation, the Board at the same meeting on recommendation of the N&RC, appointed Mr. Prashant Kumar as the Interim MD & CEO as well, which was approved by the RBI vide its letter dated July 15, 2022. Subsequently, the RBI vide its letter dated, October 6, 2022, approved the appointment of Mr. Prashant Kumar as the MD & CEO of the Bank, for a period of three (3) years w.e.f. October 6, 2022.

2. Mr. Rajan Pental was appointed as the Executive Director and Key Managerial Personnel w.e.f. February 2, 2023.

As on the date of this report, in terms of Section 203(1) of the Companies Act, 2013, Mr. Prashant Kumar, Managing Director & Chief Executive Officer, Mr. Rajan Pental, Executive Director, Mr. Niranjan Banodkar, Chief Financial Officer and Mr. Shivanand Shettigar, Company Secretary are the Key Managerial Personnel of the Bank.

STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS

As per the Reconstruction Scheme through which the erstwhile Board was constituted, none of the Directors were designated as Independent Directors. Hence, the Bank was not required to obtain declarations under Section 149(6) and 149(7) of the Companies Act, 2013 and Regulation 16(1)(b) and Regulation 25(8) of the Listing Regulations, from the erstwhile Board. However, as a matter good governance the Bank had obtained declarations from six Non-Executive Directors who were appointed/co-opted pursuant to the Scheme, confirming that they meet the criteria of independence as required under the relevant provisions of Companies Act, 2013 and Listing Regulations.

The alternate Board of the Bank was constituted w.e.f. July 15, 2022 which operates under the applicable laws & regulations as against the erstwhile Board which was constituted and functioned under the ambit of the Scheme. The Bank has already complied with all the conditions of the Scheme and made an application to RBI for confirmation that the Bank is out of the Scheme. However, the said confirmation from RBI is awaited and till such time, the Bank is still deemed to be under the Scheme.

The Bank has received necessary declarations from each Independent Director under Section 149(6) and 149(7) of the Companies Act, 2013 and Regulation 16(1)(b) and Regulation 25(8) of the Listing Regulations, that they meet the criteria of independence laid down thereunder. The Board has assessed the veracity of the confirmations submitted by the Independent Directors, as required under Regulation 25(9) of the SEBI Listing Regulations.

During the year, there has been no change in the circumstances affecting their status as Independent Directors of the Bank and that they are not debarred from holding the office of director under any SEBI order or any other such authority.

STATEMENT REGARDING OPINION OF THE BOARD WITH REGARD TO INTEGRITY, EXPERTISE AND EXPERIENCE (INCLUDING THE PROFICIENCY) OF THE INDEPENDENT DIRECTORS APPOINTED DURING THE YEAR

In the opinion of the Board, the Independent Directors are persons of integrity and possess the requisite experience, expertise and proficiency required under all applicable laws and the policies of the Bank.

NUMBER OF MEETINGS OF THE BOARD AND IT''S VARIOUS COMMITTEES

The details of Meetings of Board and Committees held during the year, attendance of Directors at the meetings and constitution of various Committees of the Board are included separately in the Corporate Governance Report, which forms part of the Annual Report.

PERFORMANCE EVALUATION OF THE BOARD

In line with the provisions of the Companies Act, 2013, Listing Regulations and SEBI Guidance Note on the Board Evaluation dated January 05, 2017 and as per the performance evaluation framework approved by the Nomination & Remuneration Committee and endorsed by the Board, the Board has carried out the performance evaluation of the Directors including Chairman, Managing Director & CEO, Executive Directors, Board Level Committees and Board as a whole for the FY 2022-23.

The Bank had formulated separate questionnaires for the aforesaid evaluation and was circulated to the members of the Board electronically. The said questionnaires covered various aspects of evaluation, including the following:

i. Individual Directors - Attendance and Participation, Contribution in Strategic Planning, Responsibilities towards Stakeholders, Compliance & Governance and Updation of Knowledge.

ii. MD&CEO and Executive Director - Experience and Knowledge, Performance of the Bank, Awards and recognition, Leadership, Attendance and Participation, Contribution in Strategic Planning and Responsibilities towards Stakeholders.

iii. Chairman - Conduct of Meeting, Impartiality, Attendance and Participation, Experience and Knowledge, Leadership, Contribution in Strategic Planning, Responsibilities towards Stakeholders and effective use of resources.

iv. Board - Composition and Diversity, Committees of the Board, Discussions at the Meetings, Teamwork and Cohesiveness of Board decisions, Understanding of roles and responsibilities and Grievance redressal of Stakeholders.

v. Committees - Composition and balance of skill sets, adherence to pre-approved meeting schedule, frequency and overall contribution, understanding of regulatory environment and developments, Interaction with Board , Independence of Committee from Board and justice to the role of the Committees.

The Independent Directors at their meeting held on April 22, 2023, reviewed the performance of Non-Independent Directors, Chairman, Managing Director & CEO, Executive Directors and Board as a whole and submitted the summary report of evaluation to the Board for their consideration. Further, the Board at its meeting held on April 22, 2023, based on the summary report of the Independent Directors and the responses received to the questionnaire, assessed the performance of the Directors including Chairman, Managing Director & CEO, Executive Directors, Board Level Committees and Board as a whole and submitted the summary report of evaluation to N&RC for reviewing the implementation of performance evaluation as per the approved framework. The N&RC at its meeting held on May 10, 2023, reviewed the implementation and compliance of the performance evaluation framework basis the report submitted by the Board.

The Chairman of the Board and the Chairperson of Nomination & Remuneration Committee and an Independent Director who chaired the meeting of the Independent Director took the lead in the process of evaluation and sharing the feedback with the Individual Directors and discussion on actionable. The feedback on Board and Board Level Committees were also shared for further action. The Board of Directors also identified specific actionable with due emphasize and focus on sustainable improvement in governance practices and business growth.

POLICY ON APPOINTMENT OF DIRECTORS

The Board of Directors of the Bank had formulated and adopted policy on "Board Diversity and Fit & Proper Criteria and Succession Planning" for appointment of Directors on the Board of the Bank and succession planning. The details of the same have been included in the Report on Corporate Governance forming part of this Annual Report.

REMUNERATION POLICY

The Board of Directors of the Bank had formulated and adopted policies for Remuneration of Directors including the Chairman of the Bank. The details of the same are made available on the Bank''s website and can be accessed at https://www.yesbank.in/pdf/board kmp sr mgmt remuneration policy pdf.

Further, the Bank has a separate Total Rewards Policy articulated in line with relevant RBI guidelines which inter alia deals with the Compensation & Benefits of the Managing Director & CEO and the Whole-time Directors.

EMPLOYEE REMUNERATION

a) The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this report. In terms of Section 136 of the Companies Act, 2013, the same would be available for inspection during working hours at the Registered Office of the Bank till the date of Annual General Meeting. A copy of this statement may be obtained by the Members by writing to the Company Secretary of the Bank.

b) The ratio of the remuneration of each Director and employees of the Bank as required under the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure 1 to the Report.

EMPLOYEES STOCK OPTION SCHEME

YES BANK has instituted Stock Option Plans to enable its employees to participate in Bank''s future growth and financial success. The Bank provides its employees a platform for participating in important decision making and instilling long term commitment towards future growth of the Bank by way of rewarding them through Stock Options. In terms of Total Rewards Policy of the Bank, employees are granted options as part of

Annual Performance Review process based on their performance as well as to ensure their retention, and to hire the best talent for its senior management and key positions. The detailed disclosures as stipulated under Regulation 14 of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 is hosted on the website of the Bank at https://www.yesbank.in/pdf?name=esos disclosure pursuant to regulation 14 of sebi sbeb n se regulations 2021 pdf.pdf.

CORPORATE GOVERNANCE

The Bank is committed to follow best Corporate Governance practices and adheres to the Corporate Governance requirements set by the Regulators under the applicable Laws/Regulations. In line with the foregoing, the Bank has adopted a Code of Corporate Governance which acts as a guide to the Bank and the Board on the best practices in the Corporate Governance.

A separate section on Corporate Governance standards followed by the Bank and the relevant disclosures, as stipulated under Listing Regulations, Companies Act, 2013 and rules made thereunder forms part of the Annual Report.

A Certificate from M/s. BNP & Associates, Practicing Company Secretaries, conforming compliance by the Bank to the conditions of Corporate Governance as stipulated under Listing Regulations, is annexed to the Report on Corporate Governance, which forms part of the Annual Report.

VIGIL MECHANISM/WHISTLE- BLOWER POLICY

In line with the provisions of Listing Regulations, the Companies Act, 2013 and the principles of good governance, the Bank has devised and implemented a vigil mechanism, in the form of ''Whistle-Blower Policy''. The policy devised is also aligned to the recommendations of Protected Disclosure Scheme for Private Sector and Foreign Banks, instituted by RBI. Detailed information on the Vigil Mechanism of the Bank is provided in the Report on the Corporate Governance which forms part of the Annual Report.

CORPORATE SOCIAL RESPONSIBILITY

In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Bank has constituted Corporate Social Responsibility and Environmental, Social & Governance ("CSR&ESG") Committee and statutory disclosures with respect to

the CSR&ESG Committee and Annual Report on CSR Activities forms part of this Report as Annexure 2. The CSR Policy is available on the website of the Bank and can be accessed at https://www.yesbank.in/pdf/ ybl corporate social responsibility policy.

AUDITORS & REPORTS OF THE AUDITORS

A. Statutory Auditors

In terms of the Guidelines issued by the Reserve Bank of India ("RBI") vide Circular No. DoS.CO.ARG/ SEC.01/08.91.001/2021-22 dated April 27, 2021, the Members of the Bank at the 17th Annual General Meeting held on August 27, 2021 had approved the amendment in the tenure and terms of appointment of M/s. M. P. Chitale & Co., Chartered Accountants (ICAI Firm Registration No. 101851W) to hold office from the conclusion of the Sixteenth Annual General Meeting until the conclusion of the Nineteenth Annual General Meeting of the Bank to be held in the year 2023 who shall act as Joint Auditors of the Bank for the remainder of the revised term, and also approved the appointment of M/s. Chokshi & Chokshi LLP, Chartered Accountants, (ICAI Firm Registration No. 101872W/W100045), as Joint Statutory Auditors of the Bank to hold office from the conclusion of the Seventeenth Annual General Meeting until the conclusion of the Twentieth Annual General Meeting of the Bank to be held in the year 2024 subject to approval by RBI on an annual basis.

There were no qualifications, reservation or adverse remarks made by the Statutory Auditors in the Auditor''s Report for Financial Year 2022-23.

B. Secretarial Auditors

Pursuant to Section 204 of the Companies Act, 2013, M/s. BNP & Associates, Practicing Company Secretaries, were appointed as Secretarial Auditors of the Bank to conduct the secretarial audit for the FY 2022-23. The Bank provided all assistance and facilities to the Secretarial Auditors for conducting their audit. The Report of Secretarial Auditors for the FY 2022-23 is annexed to this report as Annexure

3. There are no qualifications, reservations or adverse remarks in the Secretarial Audit Report for FY 2022-23.

In terms of SEBI Circular no CIR/CFD/CMD1/27/2019 dated 8 February, 2019, relating to Annual Secretarial Compliance Report, the Bank had appointed M/s. BNP & Associates, Practicing Company Secretaries, for issuing the aforesaid

report for FY 2022-23. The Bank has submitted the Annual Secretarial Compliance Report to the Stock Exchanges within the prescribed time limit.

MAINTENANCE OF COST RECORDS

Being a Banking Company, the Bank is not required to maintain cost records as per sub-section (1) of Section 148 of the Companies Act, 2013.

REPORTING OF FRAUDS BY THE AUDITORS

During the Financial Year 2022-23, pursuant to Section 143(12) of the Companies Act, 2013, neither the Statutory Auditors nor the Secretarial Auditors of the Bank have reported any instances of frauds committed in the Bank by its officers or its employees.

BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT

As stipulated in Listing Regulations, the Business Responsibility and Sustainability Report describing the initiatives undertaken by the Bank from environmental, social and governance perspective is separately attached as part of the Annual Report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS

During the year under review, no significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and Bank''s operation in future.

DISCLOSURES UNDER GREEN INFRA BONDS

Green bond issuances in India have steadily increased over the past few years since the first issuance by YES BANK in February 2015, making India among the top ten largest green bond markets globally, with extensive participation from many corporates and financial institutions. Post the successful first Green Bond of YES BANK which raised '' 1,000 crore (equivalent to USD 160 million) in February 2015 and witnessed a strong demand from leading investors, YES BANK subsequently raised two other green bonds. In August 2015, the Bank raised '' 315 crore (equivalent to USD 50 million) through the issue of Green Bonds to International Finance Corporation (IFC) on a private placement basis, the first investment by IFC in an Emerging Markets Green Bond issue in the world through the first offshore rupee denominated bond or "Green Masala Bond". Moving ahead with its conviction towards Climate Finance, YES BANK has raised '' 330 crore (equivalent to USD 50 million) in December 2016, through an issue of a 7-year Green Infrastructure Bonds to FMO, the

Dutch Development Bank, on a private placement basis. This is FMO''s 1st investment in a Green Bond issued by a bank in India.

The amount raised through all these issuances, are used to finance Green Infrastructure Projects, in whole, or in part, as per ''Eligible Projects'' outlined in the Bank''s internal guidelines for adherence to Green Bond Principles. The proceeds are managed through MIS-based asset tagging which tracks green bonds investments. The unutilised proceeds are invested in G-Secs. KPMG, India has provided limited assurance on conformity of the use of proceeds, process for evaluation and selection of projects, management of proceeds and reporting of these green bonds to Green Bond Principles (GBP) 2021.

The GBP are voluntary guidelines, developed by the International Capital Markets Association, for broad use by the market that recommend transparency and disclosure, and promote integrity in the development of the Green Bond market. They have the following four key components and the bank showcases its adoption below:

• Use of Proceeds: The proceeds raised by the bank are used in eligible project categories and include all projects funded in whole, or in part, in the fields of renewable and clean energy projects including Wind, Solar, Biomass, Hydropower and other such projects

• Process for Evaluation and Selection of Eligible Projects: The bank''s process starts with interactions with potential borrowers to understand the overall aspects of the project and a preliminary confirmation against the eligibility criteria. The evaluation moves to risk assessment for confirmation of the eligibility, post which further documentation is sought as per the Bank''s policies and GBP

• Management of Proceeds: Green Bond allocations to eligible projects are tracked by the bank through an MIS based asset tagging system. The unallocated proceeds, if any, are placed in liquid instruments

• Reporting: The bank''s communication to investors through an annual update includes:

- List of projects to which proceeds have been allocated to, with brief description including amounts disbursed, installed capacity

- Summary of Environment and Social ("E&S") impacts associated with projects, if any

- Information on investment of unallocated proceeds in liquid instruments

The temporary unallocated proceeds ('' 315 crore of '' 315 crore bond issued in August 2015) are allocated in Government Securities and will be allocated back to eligible projects, when available.

The assurance statement issued by KPMG India is attached herewith as Annexure 4.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The disclosures required to be made under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 on the conservation of energy, technology absorption and Foreign exchange earnings and outgo are given as Annexure 5.

ANNUAL RETURN

Pursuant to Section 92(3) and Section 134(3)(a) of the Companies Act, 2013, the Bank has placed a copy of the Annual Return in the prescribed Form MGT-7 as at March 31, 2023 on its website at https://www.yesbank. in/about-us/investors-relation/financial-information/ annual-reports.

COMPLIANCE WITH SECRETARIAL STANDARDS

The Board of Directors affirm that the Bank has complied with the applicable Secretarial Standards issued by the Institute of Companies Secretaries of India SS-1 and SS-2 respectively relating to Meetings of the Board, its Committees and the General Meetings.

PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE

The Bank has Zero tolerance towards any act on the part of any executive which may fall under the ambit of ''Sexual Harassment'' at workplace and is fully committed to uphold and maintain the dignity of every women executive working in the Bank. The Policy regarding Prevention & Prohibition of Sexual Harassment at Workplace provides for protection against sexual harassment of women at workplace and for prevention and redressal of complaints. Also, in its endeavor to spread awareness on the aforementioned policy and ensure compliance by all the executives, the Bank has implemented a plan of action to disseminate the information and train the executives on the policy under the ambit of ''Gender Respect and Commitment to Equality ("GRACE") program.

The Bank has complied with provisions relating to the constitution of Internal Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH).

Number of cases filed and their disposal under Section 22 of the POSH is as follows:

Particulars

No. of Complaints

Number of Complaints carried forward from last year (FY22)

01

Number of Complaints filed during the Financial Year (FY23)

20

Number of Complaints disposed of during the Financial Year (FY23)

15

Number of Complaints pending as on the end of the Financial Year (FY23)

6*

investigation in the matter of pending cases has been completed and further action is in progress which will be completed within the statutory timelines.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(5) of the

Companies Act, 2013, it is hereby confirmed that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

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

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

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

(e) the directors, had laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and

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

ACKNOWLEDGEMENT

Your Directors take this opportunity to express their deep and sincere gratitude to the customers of the Bank for their confidence and patronage, as well as to the

Reserve Bank of India, Securities and Exchange Board of India, Government of India, and other Regulatory Authorities for their cooperation, support and guidance. Your Directors would like to express a deep sense of appreciation for the commitment shown by the employees in supporting the Bank. We would also like to thank all our valued partners, vendors and stakeholders who have played a significant role in continuing to support the Bank.


Mar 31, 2022

Your Director''s are pleased to present the Eighteenth Annual Report on the business and operations of the Bank together with the audited financial statements (standalone as well as consolidated) for the financial year ended March 31, 2022.

BUSINESS OVERVIEW

FY 2021-22 was the second year of the new journey of YES Bank under the new management post the Yes Bank Limited Reconstruction Scheme, 2020 ("Scheme") which was implemented in March 2020. The first year was the year of rebuilding the Bank while this year has been the year of growing the Bank. The Directors are pleased to inform the shareholders that the Bank''s Total Assets in FY 2021-22 crossed '' 3 lakh Crore, deposits at nearly '' 2 lakh Crore and CASA ratio at 31%.

The Bank is on a transformation journey and has emerged as a re-energised, recapitalised and recalibrated organisation, by leveraging on a unique opportunity to learn from past challenges and become stronger, while continuing to fulfill its unwavering commitment towards its customers and stakeholders. The Bank is on track to achieve its Strategic Objectives and none of this would have been possible without the confidence reposed of the Bank''s customers, depositors and investors. The confidence of stakeholders has not only been seen through the improving financial performance of the Bank during the last year, but also through external validation in the form of Credit Rating upgrades, successful client win-backs and acquisition strategy, re-inclusion of the stock in marquee indices amongst others.

The Bank undertook multiple initiatives to grow the Bank''s business and launched tailored propositions for its customers -

• Continued to deepen customer relationship and wallet share for existing Bank customers, while focusing on attractive tailored propositions for new customers such as the newly launched Yes Private & YES Family programmes

• Enhanced digital customer sales and servicing model and enable remote interactions for key processes such as the launch of video KYC for account opening, WhatsApp Banking, remote payment service for merchants.

• Kickstarted and/or implemented many key initiatives in customer personalisation using Chatbots, data analytics, innovation in Cloud platforms, intelligent automation through robotics etc.

• Committed to reduce green-house gas emissions to net zero by 2030

• Ranked No. 2 amongst Large-Sized Banks in the Best places to work in India 2021 awards, conducted by AmbitionBox.com

• Among the 100 Best Emerging Market Performers as assessed by VE, part of Moody''s ESG

The Bank continued its efforts towards building a stronger retail franchise with contribution of retail advances compared to total advances, increased to 36% in FY 2021 -22 compared to 30% in FY 2020-21. Digitisation remains the Bank''s key pillar to grow the Retail, MSME and the Transaction Banking businesses. The Wholesale Bank has seen new sanctions/disbursements of '' 16,000 crore in FY2021-22 with focus on working capital financing to higher rated corporates. The Bank has significant presence within the new-age payments space with the highest market share of 43% in UPI transactions (by volume) in FY 2021-22.

STATE OF THE AFFAIRS OF THE BANK

The Bank''s fundamentals have strengthened and it has emerged from the crisis as a financially sound, well capitalised, well governed institution, with customer centricity and digital at the heart of its strategy. The Bank remains focused on its priorities and looks to continue this momentum onwards and upwards so that it can deliver on its strategic objectives while creating superior value for all its stakeholders.

Strategic Objectives for FY23 and Medium Term

1. CASA ratio at 35% for FY23 and > 40% in the medium term

2. Granular Advances: Retail/MSME to further improve by > 400 bps in FY23

3. Advances Growth of > 15% in FY23 of which Corporate growth of 10% and Medium Enterprises, SME and Retail to grow > 25%

4. Focused Stressed Assets Recoveries and Upgrades > '' 5,000 crore in FY23

5. ROA > 0.75% in FY23 and Medium term target of 1%-1.5%


BUSINESS OUTLOOK

• Corporate credit growth trajectory is expected to have an upshift on the back of significant increase in capex outlay in Union Budget with a sharp focus on public infrastructure as well as Production Linked Incentives (PLI) scheme announced for 13 key sectors by the government.

• Improved resilience of the banking system is likely to support stronger credit growth to MSME''s and retail segments. Home Loans will be a major driver of credit growth as demand for residential purchases is expected to continue growing. Unsecured Lending is also expected to see improvement as the segment will continue to be attractive on a risk-adjusted return basis.

• Overall, the Indian Banking Sector is well positioned to fund faster credit growth, with healthy capital buffers, high profitability metrics, and waning asset quality pressures. These factors together with a strong deposits growth augur well for the Banking sector.

• While, the above-mentioned are positive for the sector, there are also certain risks that could impact the sector, such as a fresh surge in COVID-19 cases on the back of new variants, continued geopolitical tensions that could impact many downstream sectors (some of which are already under pressure because of increased commodity prices); and, finally higher-than-expected slowdown in private consumption.

CHANGE IN THE NATURE OF BUSINESS

During the year under review, there has been no change in the nature of business of the Bank.

FINANCIAL PERFORMANCE (STANDALONE)

('' in million)

Particulars

April 01, 2021 to March 31, 2022

April 01, 2020 to March 31, 2021

Change

Deposits

1,971,917.33

1,629,466.42

342,450.91

Borrowings

722,045.84

639,490.85

82,554.99

Advances

1,810,519.91

1,668,929.94

141,589.97

Total Assets/Liabilities

3,182,202.25

2,735,427.65

446,774.60

Net Interest Income

64,978.54

74,286.02

(9,307.48)

Non Interest Income

32,624.69

30,116.94

2,507.75

Operating profit

29,159.29

46,482.81

(17,323.52)

Provisions and Contingencies

14,800.81

93,833.55

(79,032.74)

Profit before Tax

14,358.48

(47,350.74)

61,709.22

Provision for taxes

3,696.36

(12,728.47)

16,424.83

NET PROFIT

10,662.12

(34,622.27)

45,284.39

Add: Surplus/(Deficit) brought forward from last period

(108,719.60)

(68,973.88)

(39,745.72)

Amount available for appropriation

(98,057.48)

(103,596.15)

5,538.67

Appropriations

Statutory Reserve under Section 17 of the Banking Regulation Act, 1949

2,665.53

-

2,665.53

Capital Reserve

108.31

4,969.76

(4,861.45)

Investment Reserve

34.30

153.70

(119.40)

Investment Fluctuation Reserve

1,347.89

-

1,347.89

Surplus carried to Balance Sheet

(102,213.50)

(108,719.60)

6,506.10

Key Performance Indicators

Net Interest Margin

2.3%

2.8%

Return on Annual Average Assets

0.36%

(1.30%)

Return on Equity

3.19%

(11.42%)

Cost to Income Ratio

70.1%

55.5%

Net Profit for FY 2021-22 is '' 10,662 million as compared to loss of '' 34,622.27 million for the FY 2020-21. However the Bank''s operating profit decreased by 37.3% YoY on back of NII contraction and higher operating expenses. Further

Capital Adequacy Ratio of your Bank stood at 17.4% as at March 31, 2022 as compared to 17.5% as at March 31, 2021. CET-1 /Tier I Capital Ratio at 11.6% and Tier II Capital Ratio was 5.8% as at March 31, 2022.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report for the year under review as stipulated in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (''Listing Regulations'') is presented in a separate section forming part of the Annual Report.

- Compliance: The Compliance unit is responsible for tracking implementation of all regulatory circulars/communication, review of new products & processes from regulatory perspective, conducting compliance reviews to ensure adherence to regulatory guidelines and monitoring progress in rectification of significant deficiencies (if any) pointed out by regulators in inspection reports as well as implementation of recommendations made therein. This ensures that the overall Compliance Risk of the Bank is managed and mitigated.

- FCU & AML: The Fraud Containment Unit (FCU) is responsible for prevention and detection of internal and external frauds in the areas of Liabilities, Product and Support functions. The unit conducts transaction monitoring, forensic scrutiny, employee awareness trainings and vulnerability assessments to help achieve the said objective. The Anti Money Laundering Unit (AML) is responsible for identifying and reporting of suspicious transactions and other regulatory reports such as Cash Transaction Report, Cross Border Wire Transfer Report, Not for Profit Organisation Transaction report etc. as prescribed under PMLA Act/Regulators, across all Business segments of the Bank. The AML unit is equipped with qualified, trained and experienced staff, which monitors various transactions undertaken by customers with a view to combat financial crimes and prevents misuse of the accounts for money laundering.

- Third Line of Defence - The Bank''s Internal Audit Department independently reviews activities of the first two lines of defence based on a risk-based audit plan and methodology approved by the Audit Committee of the Board. Internal Audit Department provides independent assurance to the Audit Committee of the Board, top management and regulators regarding the effectiveness of the Bank''s governance and controls framework designed for risk mitigation.

The Board of Directors of the Bank has overall responsibility for Risk Management. The Board oversees the Bank''s Risk and related control environment, reviews and approves the policies designed as part of overseeing the Risk Management practices. The Board ensures that comprehensive policies, systems and controls are in place to identify, monitor and manage material risks at a Bank-

the Bank has provided '' 15,088.98 million towards non performing investments and non performing advances during the year.

Net Interest income (NII) of the Bank decreased by 12.5% to '' 64,978.54 million during FY 2021-22 as compared to '' 74,286.02 million during FY 2020-21. The Net Interest Margin (NIM) was 2.3% in FY 2021-22. Non interest income consists of fee, trade income and gain on sale of securities. Non interest income increased by 8.3% from '' 30,116.94 million in FY 2020-21 to '' 32,624.69 million in FY 2021-22.

Operating expenses increased by 18.2% from '' 57,920.15 million in FY 2020-21 to '' 68,443.94 million in FY 2021-22. The employee cost increased from '' 24,303.78 million in FY 2020-21 to '' 28,556.91 in FY 2021-22. Other operating cost increased by 18.65% from '' 33,616.37 million in FY 2020-21 to '' 39,887.03 million in FY 2021-22.

Provisions and contingencies (excluding provision for taxes) decreased by 84.2% from '' 93,833.55 million in FY 2020-21 to '' 14,800.81 million in FY 2021-22 mainly due to reduction in provision for non-performing advances as compared to provisions made in FY 2020-21. Please refer to the section on Financial and Operating Performance in the Management Discussion and Analysis for a detailed analysis of financial data.

DIVIDEND

During FY 2021-22, the Bank had not declared any dividend on equity shares. RBI vide circular dated April 22, 2021 allowed banks to pay dividend for the financial year ended March 31, 2021, subject to the quantum of dividend being not more than fifty percent of the amount determined as per the dividend payout ratio prescribed in the RBI guidelines. However, during FY 2020-21, the Bank had reported a loss and as a consequence to that the Bank had not declared any dividend.

TRANSFER TO RESERVES

As per requirement of RBI regulations, the Bank has transferred the following amounts to various reserves during Financial Year ended March 31, 2022:

Amount transferred to

Amount in '' million

Statutory Reserve

2,665.53

Capital Reserve

108.31

Investment Reserve

34.30

Investment Fluctuation Reserve

1,347.89

TRANSFER OF EQUITY SHARES, UNPAID/ UNCLAIMED DIVIDEND TO THE INVESTOR EDUCATION AND PROTECTION FUND

In accordance with the applicable provisions of the Companies Act, 2013 read with Rules made thereunder, during the FY 2021-22, the Bank has transferred to the credit of the Investor Education and Protection Fund (''IEPF'') administered by the Central Government, 27,588 number of equity shares and unpaid dividend amount of '' 1,881,000 which had remained unclaimed/ unpaid for a period of seven (7) consecutive years.

CAPITAL RAISING & CAPITAL ADEQUACY RATIO (CAR)

During FY 2021 -22 the Bank has not raised any capital.

The Bank has not issued any equity shares with differential voting rights during the year.

During the year under review, the Bank has issued 47000 equity shares of face value '' 2 each pursuant to the exercise of stock options aggregating to '' 94,000/-.

Post allotment of aforesaid equity shares, the issued, subscribed and paid up share capital of the Bank stands at '' 50,109,905,962 comprising of 25,054,952,981 equity shares of '' 2 each as on March 31, 2022.

Movement in Share Captial & Capital Adequacy Ratio (CAR)

('' in million)

Share Capital

As at March 31, 2022

As at March 31, 2021

Opening Share Capital

50,109.81

25,100.94

Addition due to exercise of Stock Option

0.09

-

Addition due to shares issued for QIP/FPO

-

25,008.87

Addition due to shares issued under Reconstruction scheme

-

-

Closing Share Capital

50,109.90

50,109.81

RISK MANAGEMENT FRAMEWORK

The Bank''s Enterprise Risk Management framework encompasses the following:

• Risk Governance Framework: The Bank has implemented an Enterprise Risk Governance framework to ensure non-silo based management and oversight of Risk. The Bank''s Risk Management philosophy is guided by the Three Lines of Defence:

- First Line of Defence - Business Management: Each business segment of the Bank has risk ownership and is responsible for assessment and management of risks and has the overall responsibility of the management and mitigation of the Risk. The segments are required to implement appropriate procedures to fulfil their risk governance responsibilities.

- Second Line of Defence - Independent functions: The Bank''s independent oversight functions, such as, Risk Management, Credit Underwriting, Compliance, Legal, Fraud Containment Unit, etc. set standards for management and oversight of risks, including compliance with applicable laws, regulatory requirements and policies.

- Risk Management: Risk Management team reporting into the Chief Risk Officer establishes policies and guidelines for risk assessment and management and contributes to controls and tools to manage, measure and mitigate risks faced by the Bank. Risk Management comprises units such as Enterprise Risk Market Risk, Operational Risk, Legal Risk, Information Security, Portfolio Analytics, Retail, SME & Rural Policy, Risk Secretarial Unit, etc which are responsible for independent review, monitoring and reporting of all risk control parameters and taking appropriate corrective actions where necessary. These units also ensure compliance to internal policies and regulatory guidelines.

- Credit Underwriting: The Credit Risk team reporting into the Chief Credit Risk Officer ensures an independent assessment of credit proposals and is responsible for monitoring the credit quality of the Bank''s portfolio and undertaking portfolio reviews. The Credit Risk team is a specialised function that is well staffed with individuals having the necessary experience as well as skillsets to provide a balanced view of credit proposals to the sanctioning authorities.

wide level, with clearly defined risk limits. The Board has laid down Risk Appetite Statement which articulates the quantum of risk the Bank is willing and able to assume in its exposures and business activities in pursuit of its strategic objectives and desired returns. The Board has also established policies governing risk management, such as, Credit Policy, Asset Liability Management Policy, Operational Risk Management Policy, Information Security Policy, Enterprise Risk Management Policy, Group Risk Management Policy, Model Risk & Governance Policy, Risk Based Pricing Policy, Stress Testing Policy, etc. which establish the Risk Appetite Framework within the overall Risk Appetite Statement.

The Board has put in place four Board level Committees which inter-alia pertain to Risk Management, viz. Risk Management Committee (RMC), Audit Committee (AC), Fraud, Willful Defaulters and Non Co-operative Borrowers Monitoring Committee (FWD & NCBMC) and Board Credit Committee (BCC) to deal with risk management practices, policies, procedures and to have adequate oversight on the risks faced by the Bank.

The Board Committees have set up various Executive level committees for oversight over specific risks.

1. Apex Management Committee

2. Enterprise Risk, Reputation Risk and Model Assessment Committee

3. Management Credit Committee

4. Executive Credit Committee

5. Asset & Liability Committee

6. Operational Risk Management Committee

7. Standing Committee on Customer Service

8. Fraud & Suspicious Transaction Monitoring Committee

9. Committee for Classification of Wilful Defaulters & Non-Cooperative Borrowers

10. Accountability Review Committee

11. Whistle Blower, Disciplinary and Internal Committee

12. Steering Committee for IFRS (IndAS)

13. Product Process Approval Committee

14. IT Steering Committee

15. Security Council

16. Stressed Asset Monitoring Committee

17. Sustainability Council

18. Fraud Identification Committee

19. Governing Body for IBU (IFSC Banking Unit)

These Committees review various aspects / key risks and ensure that the best-in-class frameworks are in place to oversee day-to-day management of underlying business activities, transactions and associated risks while dealing with internal and external stakeholders. Further, Risk events, potential threats, performance of the Bank vis-a-vis Risk Limits and Risk Appetite, Risk Profile dashboard covering key risk indicators, etc. are presented to these Committees, with periodic trends highlighted along with level and direction of risk. The Bank also conducts a detailed Internal Capital Adequacy Assessment Policy (''ICAAP'') review exercise at least on an annual basis to identify its Risk universe, review its Risk appetite in line with its business strategy as well as assess its internal controls and mitigation measures in place for the risks and capital requirements. The ICAAP document is approved by the RMC and the Board.

Additionally, in line with best Risk Governance practices, the Bank has segregated credit underwriting and risk management verticals. The underwriting vertical consisting of Credit Units is headed by the Chief Credit Risk Officer (CCRO) and the risk controls and policy vertical consisting of various independent control units is headed by the Chief Risk Officer (CRO). The CRO reports to the Risk Management Committee while the CCRO reports to the Managing Director & Chief Executive Officer.

DEPOSITS

Being a banking company, the disclosures required as per Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, 2014, read with Sections 73 and 74 of the Companies Act, 2013 are not applicable to your Bank.

AWARDS AND RECOGNITION

During the year under review, the Bank was recognised in various ways/by various institutions and some of the key awards presented to the Bank are listed below:

• Best Cash Management Project in India by the Asian Banker Banker''s Choice Awards

• CIO Circle of Excellence by CNBC TV18

• Best ERP Integration Initiative - Global Transaction Banking Innovation Awards 2021

• Most Innovative Transaction Banking Solution for Liquidity Management in COVID-19 - Global Transaction Banking Innovation Awards 2021

• Most Innovative Working Capital Solution in COVID-19 - Global Transaction Banking Innovation Awards 2021

• Best Cloud Adoption in Medium Bank Category by IBA

• Best IT Risk Management and Cyber Security Initiatives in Medium Bank Category by IBA

• India Domestic Transaction Banking Initiative of the Year award organised by Asian Banking and Finance

Included in the 100 Best Emerging Market Performers Ranking for its ESG practices, as assessed by V.E, part of Moody''s ESG Solutions

DIVERGENCE IN ASSET CLASSIFICATION AND PROVISIONING FOR NPAs

Based on the condition mentioned in RBI circular, no disclosure on divergence in asset classification and provisioning for NPAs is required with respect to RBI''s supervisory process for the year ended March 31, 2021.

SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS

As on March 31, 2022, the Bank had one wholly-owned subsidiary, YES Securities (India) Limited (''YSIL'').

During the year under review, the Bank divested its 100% stake in YES Asset Management (India) Limited (''YAMIL'') and YES Trustee Limited (''YTL''), the wholly owned subsidiaries of the Bank to GPL Finance and Investments Ltd ("GPL"), pursuant to share purchase agreement dated August 21, 2020. White Oak Investment Management Pvt Ltd. owns 99% of GPL. The ultimate beneficial owner of the GPL is Mr. Prashant Khemka who owns 99.99% of the White Oak Investment Management Pvt Ltd.

Accordingly, YAMIL and YTL ceased to be the Subsidiaries of the Bank effective from November 1, 2021.

The Bank does not have any material subsidiary, associate and joint venture company. There were no entities which became the Bank''s Subsidiaries, associates or joint ventures during the year.

Performance and Financial Position of YSIL is given in Management Discussion & Analysis which forms part of this Annual Report.

The brief details about business of the subsidiary is as under:

YES Securities (India) Limited (YSIL)

YES Securities (India) Limited (YSIL) offers retail, HNI and corporate customers a comprehensive range of products

and services, encompassing Wealth Broking, Investment Advisory, Investment Banking (including a dedicated Sustainable Investment Banking practice), Merchant Banking, Research and Institutional Equities services. YSIL is a SEBI registered Securities Broker holding membership of National Stock Exchange (NSE), Bombay Stock Exchange (BSE), Multi Commodity Exchange (MCX) & National Commodity & Derivatives Exchange (NCDEX). YSIL is also registered with SEBI as Category I Merchant Banker, Investment Adviser, Research Analyst as well as Depository Participant with CDSL.YSIL is also Sponsor & Investment manager to YSL Alternates Alpha plus Fund which is a SEBI registered Category III AIF.

The Consolidated Financial Statements of the Bank and its Subsidiary company for the Financial Year ended March 31, 2022 prepared in accordance with the requirement of Section 129(3) of the Companies Act, 2013 shall be laid before the ensuing AGM and it forms part of this Annual Report.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of Financial Statements of subsidiary company of the Bank in Form AOC-1 forms part of the Annual Report. The Financial Statements of the subsidiary of the Bank are available on the website of the Bank (www.yesbank.in). Financials of Bank and its subsidiary shall also be available for inspection by members or trustees of the holders of any debentures/bonds of the Bank at its Registered office.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Bank has implemented adequate procedures and internal controls which provide reasonable assurance regarding reliability of financial reporting and preparation of financial statements. The Bank also ensures that internal controls are operating effectively. There is utmost attention accorded to Internal Financial Controls at both, the highest levels at Management as well as the Audit Committee of the Board. There is no material weakness in the Bank''s framework with respect to Internal Financial Controls over Financial Reporting and the Bank shall continue to review its overall control framework on an ongoing basis to ensure robustness and effectiveness of its controls.

into individually or taken together with the previous transactions during the financial year with related parties, which were not in the ordinary course of business of the Bank, nor were there any transactions with related parties, which were not at arm''s length basis. Accordingly, the disclosure in Form AOC-2 is not applicable to the Bank for the year under review. Suitable disclosure as required by the Accounting Standards (AS-18) has been made in the notes to the Financial Statements.

Prior omnibus approval for normal banking transactions is also obtained from the Audit Committee for the related party transactions which are repetitive in nature as well as for the normal banking transactions which cannot be foreseen and accordingly the required disclosures are made to the Committee for their approval.

The policy on dealing with Related Party Transactions as approved by the Audit Committee and the Board of Directors is uploaded on the website of the Bank and can be accessed at https://www.yesbank.in/pdf/policies_ pdf6.

DIRECTORS & KEY MANAGERIAL PERSONNEL

During the FY 2021 -22, the Bank co-opted Mr. Atul Malik and Ms. Rekha Murthy as Non-Executive Directors (''NEDs'') with effect from August 30, 2021 and Mr. Sharad Sharma as NED with effect from November 1, 2021 in accordance with Clause 5 (5) of the Scheme read with Memorandum and Articles of Association of the Bank.

Further, pursuant to the powers conferred under sub-section (1) of Section 36AB of the Banking Regulation Act, 1949 the Reserve Bank of India has vide its order dated March 17, 2022 extended the term of appointment of Mr. Rama Subramaniam Gandhi and Mr. Ananth Narayan Gopalakrishnan as Additional Directors on the Board of the Bank for a period of one-year w.e.f. March 26, 2022 to March 25, 2023 or till further orders, whichever is earlier.

During the FY 2021-22, there have been no changes in the Directors and Key Managerial Personnel of the Bank other than the above.

STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS

Pursuant to the Scheme through which the existing Board has been constituted, none of the Directors are designated as Independent Directors. Hence, the Bank is not required to obtain declarations under Section 149(6) and 149(7) of the Companies Act, 2013 and Regulation 16(1 )(b) and Regulation 25(8) of the Listing Regulations.

MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE BANK

There are no material changes and commitments, affecting the financial position of the Bank which has occurred between the end of the financial year of the Bank i.e. March 31, 2022 and the date of the Directors'' Report i.e. May 06, 2022.

ESTIMATION OF UNCERTAINTIES RELATING TO THE GLOBAL HEALTH PANDEMIC FROM COVID-19

The outbreak of the COVID-19 pandemic had led to a nation-wide lockdown in April-May 2020. This was followed by localised lockdowns in areas with a significant number of COVID-19 cases. In FY 2021-22, India witnessed two more waves of the COVID-19 pandemic and the reimposition of localised/regional lock-down measures in certain parts of the country. Currently, while the number of new COVID-19 cases have reduced significantly and the Government of India has withdrawn most of the COVID-19 related restrictions, however, the extent to which the COVID-19 pandemic will continue to impact the Bank''s results will depend on ongoing as well as future developments, which are uncertain.

RATINGS OF VARIOUS DEBT INSTRUMENTS

The Credit Rating and change/revision in the Credit Ratings for various debt instruments issued by the Bank from time to time are provided in the Corporate Governance Report forming part of the Annual Report.

LOANS, GUARANTEES OR INVESTMENTS IN SECURITIES

Pursuant to Section 186(11) of the Companies Act, 2013, loans made, guarantees given or securities provided or acquisition of securities by a Banking company in the ordinary course of its business are exempted from disclosure requirements under Section 134(3) (g) of the Companies Act, 2013.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

There were no materially significant transactions with related parties including directors, key managerial personnel, subsidiaries or relatives of the Directors during the financial year which could lead to a potential conflict of interest between the Bank and these parties. The details of the transactions with related parties, if any, were placed before the Audit Committee from time to time. There were no material transactions entered

However, given the present composition of the Board, wherein presently there are six Non- Executive Directors viz. Mr. Sunil Mehta, Mr. Mahesh Krishnamurti, Mr. Atul Bheda, Mr. Atul Malik, Ms. Rekha Murthy and Mr. Sharad Sharma appointed/co-opted pursuant to the Scheme, not holding any substantial interest in the share capital nor having any pecuniary relationship with the Bank and meet the criteria of independence, accordingly necessary declarations were obtained from them, confirming that they meet the criteria of independence as required under the relevant provisions of Companies Act, 2013 and Listing Regulations.

STATEMENT REGARDING OPINION OF THE BOARD WITH REGARD TO INTEGRITY, EXPERTISE AND EXPERIENCE (INCLUDING THE PROFICIENCY) OF THE INDEPENDENT DIRECTORS APPOINTED DURING THE YEAR

None of the Directors appointed under the Scheme are designated as Independent Directors, therefore furnishing of the statement regarding opinion of the board with regard to integrity, expertise and experience (including the proficiency) of the independent directors is not applicable.

NUMBER OF MEETINGS OF THE BOARD AND IT''S VARIOUS COMMITTEES

The details of Meetings of Board and Committees held during the year, attendance of Directors at the meetings and constitution of various Committees of the Board are included separately in the Corporate Governance Report, which forms part of the Annual Report.

PERFORMANCE EVALUATION OF THE BOARD

The Bank has laid down, criteria for performance evaluation of the Directors including Chairman, Managing Director & CEO, Board Level Committees and Board as a whole as well as the evaluation process for the same, in line with the provisions of the Companies Act, 2013, Listing Regulations and SEBI Guidance Note on the Board Evaluation dated January 05, 2017. The present Board of Directors of the Bank was constituted in accordance with the Scheme, wherein two Board Members are the Additional Directors appointed by the RBI pursuant to Section 36AB of Banking Regulation Act, 1949. As per the RBI letter No. DoR.PSBD.No. 325/16.05.004/ 2020-21 dated August 24, 2020, Additional Directors appointed by RBI are not subject to performance evaluation and the SBI Nominee Directors also have opted out from the process. Given the present composition of the Board under the Scheme, the Bank was not required to

mandatorily comply with the stipulated procedure of Performance Evaluation for FY 2021-22. However, as a matter of good governance, the Board has carried out the Performance Evaluation of the Directors, excluding the Additional Directors appointed by RBI and the SBI Nominee Directors, for the Financial Year 2021-22, in an appropriate manner. The Board has also carried out performance evaluation of Board as Whole and its Committees.

POLICY ON APPOINTMENT OF DIRECTORS

The Board of Directors of the Bank had formulated and adopted policy on "Board Diversity and Fit & Proper Criteria and Succession Planning" for appointment of Directors on the Board of the Bank and succession planning. The details of the same have been included in the Report on Corporate Governance forming part of this Annual Report.

REMUNERATION POLICY

The Board of Directors of the Bank had formulated and adopted policies for Remuneration of Directors including the Chairman of the Bank. The details of the same are made available on the Bank''s website and can be accessed at https://www.yesbank.in/ pdf/board_ kmp_sr_mgmt_remuneration_policy_pdf.

Further, the Bank has a separate Total Rewards Policy articulated in line with relevant RBI guidelines which interalia deals with the Compensation & Benefits of the Managing Director & CEO and the Whole-time Directors.

EMPLOYEE REMUNERATION

(a) The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this report. In terms of Section 136 of the Companies Act, 2013, the same would be available for inspection during working hours at the Registered Office of the Bank till the date of Annual General Meeting. A copy of this statement may be obtained by the Members by writing to the Company Secretary of the Bank.

(b) The ratio of the remuneration of each Director and employees of the Bank as required under the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure 1 to the Report.

Markets Green Bond issue in the world. The bonds are for a tenor of 10 years. IFC paid for the placement using the proceeds from the first Green Masala Bond programme, that aimed at raising capital in the offshore rupee market

• December 2016: YES BANK has raised '' 330 Crore, through an issue of a 7-year Green Infrastructure Bonds to FMO, the Dutch Development Bank, on a private placement basis. This is FMO''s 1st investment in a Green Bond issued by a bank in India. FMO has paid for the placement using the proceeds from their sustainability bonds issued in 2015

The amount raised is used to finance Green Infrastructure Projects as per ''Eligible Projects'' outlined in the Bank''s internal guidelines that are in adherence to the Green Bond Principles (GBP). For FY 2021-22, KPMG, India has provided limited assurance on conformity of the use of proceeds, process for evaluation and selection of projects, management of proceeds and reporting of these green bonds to GBP 2021.

The GBP are voluntary guidelines, developed by the International Capital Markets Association, for broad use by the market that recommend transparency and disclosure, and promote integrity in the development of the Green Bond market. They have the following four key components and the bank showcases its adoption below:

• Use of Proceeds: The proceeds raised by the bank are used in eligible project categories and include all projects funded in whole, or in part, in the fields of renewable and clean energy projects including Wind, Solar, Biomass, Hydropower and other such projects

• Process for Evaluation and Selection of Eligible Projects: The Bank''s process starts with interactions with potential borrowers to understand the overall aspects of the project and a preliminary confirmation against the eligibility criteria. The evaluation moves to risk assessment for confirmation of the eligibility, post which further documentation is sought as per the Bank''s policies and GBP

• Management of Proceeds: Green Bond allocations to eligible projects are tracked by the Bank through an MIS based asset tagging system. The unallocated proceeds, if any, are placed in liquid instruments

• Reporting: The bank''s communication to investors through an annual update includes:


EMPLOYEES STOCK OPTION SCHEME

Your Bank has instituted Stock Option Plans to enable its employees to participate in your Bank''s future growth and financial success. Your Bank provides its employees a platform for participating in important decision making and instilling long term commitment towards future growth of the Bank by way of rewarding them through Stock Options. In terms of Total Rewards Policy of the Bank, employees are granted options as part of Annual Performance Review process based on their performance as well as to ensure their retention, and to hire the best talent for its senior management and key positions. The detailed disclosures as stipulated under Regulation 14 of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 is hosted on the website of the Bank at https://www.yesbank.in/about-us/ corporate-governance.

CORPORATE GOVERNANCE

The Bank is committed to follow best Corporate Governance practices and adheres to the Corporate Governance requirements set by the Regulators under the applicable laws/regulations. In line with the foregoing, the Bank has adopted a Code of Corporate Governance which acts as a guide to the Bank and the Board on the best practices in the Corporate Governance.

A separate section on Corporate Governance standards followed by the Bank and the relevant disclosures, as stipulated under Listing Regulations, Companies Act, 2013 and rules made thereunder forms part of the Annual Report.

A Certificate from M/s. Bhandari & Associates, Practicing Company Secretaries, conforming compliance by the Bank to the conditions of Corporate Governance as stipulated under Listing Regulations, is annexed to the Report on Corporate Governance, which forms part of the Annual Report.

VIGIL MECHANISM /WHISTLE- BLOWER POLICY

In line with the provisions of Listing Regulations, the Companies Act, 2013 and the principles of good governance, the Bank has devised and implemented a vigil mechanism, in the form of ''Whistle-Blower Policy''. The policy devised is also aligned to the recommendations of Protected Disclosure Scheme for Private Sector and Foreign Banks, instituted by RBI. Detailed information on the Vigil Mechanism of the Bank is provided in the Report on the Corporate Governance which forms part of the Annual Report.

CORPORATE SOCIAL RESPONSIBILITY

In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Bank has constituted Corporate Social Responsibility (''CSR'') Committee and statutory disclosures with respect to the CSR Committee and Annual Report on CSR Activities forms part of this Report as Annexure 2. The CSR Policy is available on the website of the Bank and can be accessed at https://www.yesbank.in/ pdf/ybl_corporate_social_responsibility_policy.

AUDITORS & REPORTS OF THE AUDITORS

A. Statutory Auditors

In terms of the Guidelines issued by the Reserve Bank of India (''RBI'') vide Circular No. DoS.CO.ARG/ SEC.01/08.91.001/2021-22 dated April 27, 2021, the Members of the Bank at the 17th Annual General Meeting held on August 27, 2021 had approved the amendment in the tenure and terms of appointment of M/s. M. P. Chitale & Co., Chartered Accountants (ICAI Firm Registration No. 101851W) to hold office from the conclusion of the Sixteenth Annual General Meeting until the conclusion of the Nineteenth Annual General Meeting of the Bank to be held in the year 2023 who shall act as Joint Auditors of the Bank for the remainder of the revised term, and also approved the appointment of M/s. Chokshi & Chokshi LLP, Chartered Accountants, (ICAI Firm Registration No. 101872W/ W100045), as Joint Statutory Auditors of the Bank to hold office from the conclusion of the Seventeenth Annual General Meeting until the conclusion of the Twentieth Annual General Meeting of the Bank to be held in the year 2024 subject to approval by RBI on an annual basis.

There were no qualifications, reservation or adverse remarks made by the Statutory Auditors in the Auditor''s Report for Financial Year 2021 -22.

B. Secretarial Auditors and Secretarial Audit Report

Pursuant to Section 204 of the Companies Act, 2013, M/s. Bhandari & Associates, Practicing Company Secretaries, Mumbai were appointed as Secretarial Auditors of the Bank to conduct the secretarial audit for the FY 2021-22. The Bank provided all assistance and facilities to the Secretarial Auditors for conducting their audit. The Report of Secretarial Auditors for the FY 2021-22 is annexed to this report as Annexure 3. There are no observations, reservations or adverse remarks in the Secretarial Audit Report for FY 2021 -22.

MAINTENANCE OF COST RECORDS

Being a Banking Company, the Bank is not required to maintain cost records as per sub-section (1) of Section 148 of the Companies Act, 2013.

REPORTING OF FRAUDS BY THE AUDITORS

During the Financial Year 2021-22, pursuant to Section 143(12) of the Companies Act, 2013, neither the Statutory Auditors nor the Secretarial Auditors of the Bank have reported any instances of frauds committed in the Bank by its officers or its employees.

BUSINESS RESPONSIBILITY REPORT

As stipulated in Listing Regulations, the Business Responsibility Report describing the initiatives undertaken by the Bank from environmental, social and governance perspective is separately attached as part of the Annual Report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS

During the year under review, no significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and Bank''s operation in future.

DISCLOSURES UNDER GREEN INFRA BONDS

Green Bonds have emerged as a mainstream financing mechanism for providing structured finances to vital clean energy and are playing a pivotal role in realisation of India''s renewable energy potential. Since the maiden issuance by YES BANK, the Green Bonds market has witnessed a steady growth, with isuuances of USD 6.8 billion in 2021, alone. Driven by the commitment of mobilising USD 5 billion towards climate action by 2020, as taken during Paris Accord, YES BANK has issued three green bonds:

• February 2015: YES BANK issued India''s first-ever Green Infrastructure Bonds, raising an amount of '' 1,000 crore. This 10 year tenor bond witnessed strong demand from leading investors including Insurance companies, Pension & Provident Funds, Foreign Portfolio Investors, New Pension Schemes and Mutual Funds

• August 2015: YES BANK raised '' 315 crore through the issue of Green Infrastructure Bonds to International Finance Corporation on a private placement basis which is the first investment by IFC in an Emerging

- List of projects to which proceeds have been allocated to, with brief description including amounts disbursed, installed capacity

- Summary of Environment and Social (E&S) impacts associated with projects, if any

- Information on investment of unallocated proceeds in liquid instruments

Impacts

Through financing solar and wind power plants, these bonds strengthen India''s energy security while reducing fossil fuel dependency. These bonds have been crucial in financing climate change mitigation with avoidance of emissions of CO2, SO2, NOx and other air pollutants associated with fossil fuel based energy generation. Estimated CO2 emission reductions are shared along with project details.

Baseline Database for the Indian Power Sector User Guide Version 17.0 dated October 2021'' (published by the Central Electricity Authority of India) along with other relevant factors such as project PLF/CUF estimates, installed project capacity, resultant annual unit generation etc.

The temporary unallocated proceeds ('' 315 Cr of '' 315 Cr bond issued in August 2015) are allocated in Government Securities and will be allocated back to eligible projects, when available.

The assurance statement issued by KPMG India is attached herewith as Annexure 4

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The disclosures required to be made under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 on the conservation of energy, technology absorption and Foreign exchange earnings and outgo are given as Annexure 5.

ANNUAL RETURN

Pursuant to Section 92(3) and Section 134(3)(a) of the Companies Act, 2013, the Bank has placed a copy of the Annual Return in the prescribed Form MGT-7 as at March 31, 2022 on its website at https://www.yesbank. in/about-us/investors-relation/financial-information/ annual-reports.

COMPLIANCE WITH SECRETARIAL STANDARDS

The Board of Directors affirm that the Bank has complied with the applicable Secretarial Standards issued by the Institute of Companies Secretaries of India SS-1 and SS-2 respectively relating to Meetings of the Board, its Committees and the General Meetings.

PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE

The Bank has Zero tolerance towards any act on the part of any executive which may fall under the ambit of ''Sexual Harassment'' at workplace and is fully committed to uphold and maintain the dignity of every women executive working in the Bank. The Policy regarding Prevention & Prohibition of Sexual Harassment at Workplace provides for protection against sexual harassment of women at workplace and for prevention and redressal of complaints. Also, in its endeavour to spread awareness on the aforementioned policy and ensure compliance by all the executives, the Bank has implemented a plan of action to disseminate the information and train the executives

on the policy under the ambit of ''Gender Respect and Commitment to Equality'' (GRACE) programme.

The Bank has complied with provisions relating to the constitution of Internal Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH).

Number of cases filed and their disposal under Section 22 of the POSH is as follows:

Particulars

No. of Complaints

Number of complaints carried forward from last year

01

Number of complaints filed during the financial year

15

Number of complaints disposed of during the financial year

15

Number of complaints pending as on the end of the financial year

01*

*The case is being investigated within the stipulated timeline.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(5) of the

Companies Act, 2013, it is hereby confirmed that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

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

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

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

(e) the directors, had laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and

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


ACKNOWLEDGMENT

Your Directors take this opportunity to express their deep and sincere gratitude to the customers of the Bank for their confidence and patronage, as well as to the Reserve Bank of India, Securities and Exchange Board of India, Government of India, and other Regulatory Authorities for their cooperation, support and guidance.

Your Directors would like to express a deep sense of appreciation for the commitment shown by the employees in supporting the Bank. We would also like to thank all our valued partners, vendors and stakeholders who have played a significant role in continuing to support the Bank.



Mar 31, 2021

Your Directors are pleased to present the Seventeenth Annual Report on the business and operations of the Bank together with the audited financial statements (standalone as well as consolidated) for the financial year ended March 31,2021.

BUSINESS OVERVIEW

FY 2020-21 was the first year of the new journey of YES Bank under the new management post the Yes Bank Limited Reconstruction Scheme, 2020 (''Scheme") which was implemented in March 2020.

The new Board and management were entrusted with the responsibility of rebuilding the institution which had seen a sharp drop in deposits, customer trust and also had to face the consequences of the pandemic. The Bank had embarked on a transformation journey to emerge as a re-energized, recapitalized and recalibrated organization, by leveraging on a unique opportunity to learn from past challenges and become stronger, while continuing to fulfill its unwavering commitment towards its customers and stakeholders. The steps the Bank took included constant dialogue and deliberations with the regulators to timely resolve outstanding issues (for e.g. Special Liquidity Facilities from the Reserve Bank of India (RBI) as per requirement, de-classification of erstwhile Promoters with due regulatory approvals etc.), revamp of the Governance and Controls structure, identification and deepdiving into the quality of the loan book to recognize and provision for stress transparently and proactively, empowering and reinforcing trust and faith amongst the 21,000 strong workforce to work as one team again to rebuild the Bank in the face of the full blown impact of a Global Pandemic. These initiatives and efforts were critical to win back the confidence of the Bank''s stakeholders and investor community; and the resounding success of the FPO (one of the largest public capital raises in the history of Indian Capital markets) is a strong endorsement of stakeholder belief in the Bank''s management, business plan and strategy. The confidence of stakeholders has not only been seen through the improving financial performance of the Bank during the last year, but also through external validation in the form of Credit Rating upgrades, successful client win-backs and acquisition strategy, re-inclusion of the stock in marquee indices and increase in FII shareholding amongst others.

The Bank also undertook multiple initiatives to stabilize the Bank''s operations in the wake of COVID-19, while at the same slowly and selectively launching tailored propositions for its customers.

» Deepened customer relationship and wallet share for existing Bank customers, while focusing on attractive tailored propositions for new customers such as the newly launched Yes Premia program and Loan in Seconds

» Improved existing customer offering by re-vamping the Yes Online and Corporate Net banking platforms by making them more user friendly

» Enhanced digital customer sales and servicing model and enable remote interactions for key processes such as the launch of video KYC for account opening, WhatsApp Banking, remote payment service for merchants

» Kickstarted and/or implemented many key initiatives in customer personalization using Chatbots, data analytics, innovation in Cloud platforms, intelligent automation through robotics etc.

» The Bank also launched a massive brand building campaign "Zimmedari se Tayyari" which has gained significant digital traction and has been listed amongst the Top 10 ads on YouTube by ET Brand Equity.

The Bank continued its efforts towards building a stronger retail franchise with contribution of retail advances compared to total advances, increased to ~30 % in FY 2020-21 compared to 24% in FY 201920. Digitisation remains the Bank''s key pillar to grow the Retail, MSME and the Transaction Banking business. The Corporate advances have also started to pick up with focus on working capital financing to high rated corporates. The Bank believes that the legacy corporate stress has been adequately provided for in FY 2020-21. The Bank has significant presence within the new-age payments space with the highest market share of ~40.6% in UPI transactions (by volume) in FY 2020-21.

STATE OF THE AFFAIRS OF THE BANK

FY 2020-21 was a crucial milestone for the Bank in its onward journey, as the Bank battles the social and economic impact of COVID-19 on its operating model and simultaneously re-invents itself into a stronger, redefined organization. The Bank''s fundamentals continue to be strong and the Bank has emerged from the crisis as a financially sound, well capitalized, well governed institution, with customer centricity and digital at the heart of its strategy. The Bank remains focused on its priorities and looks to continue this momentum onwards and upwards so that it is able to deliver on its strategic objectives while creating superior value for all its stakeholders.

Key near term strategic objectives that the Bank has achieved and will further strengthen:

1. Rebuild capital, liabilities and liquidity buffers

2. Cost optimisation

3. Stronger governance and underwriting frameworks

4. Focused stressed assets resolution

Medium term

1. Stable liability mix and lower cost of funds: CASA Ratio>40%

2. Granular advances: Retail/MSME>60%

3. Corporate flows and cross sell through Transaction Banking

4. ROA>1% by FY23 and ROA>1.5% by FY25

BUSINESS OUTLOOK

For the new financial year, shareholders may expect the following:

» Infrastructure and growth push by the Government to provide the right impetus for a sustainable credit opportunity in the economy » Market share improvement for banks with strong parentage » Enhanced usage of digital as a key enabler in customer experience » Structural shift in household savings from physical to financial assets

FINANCIAL PERFORMANCE (STANDALONE)

('' in million)

Particulars

April 1, 2020 to March 31, 2021

April 1, 2019 to March 31, 2020

Change

Deposits

1,629,466.42

1,053,639.43

575,826.99

Borrowings

639,490.85

1,137,905.03

(498,414.18)

Advances

1,668,929.94

1,714,432.94

(45,503.00)

Total Assets/Liabilities

2,735,427.65

2,578,269.23

157,158.43

Net Interest Income

74,286.02

68,052.31

6,233.70

Non Interest Income

33,407.21

34,414.94

(1,007.73)

Operating profit

49,773.07

35,175.14

14,597.93

Provisions and Contingencies

97,123.81

327,584.34

(230,460.53)

Profit before Tax

(47,350.74)

(292,409.20)

245,058.46

Provision for taxes

(12,728.47)

(65,259.44)

52,530.97

Net Profit/(Loss) from Ordinary Activities after tax

(34,622.27)

(227,149.76)

192,527.49

Extraordinary income (net of tax)- Tier 1 write down

-

62,969.45

(62,969.45)

NET PROFIT

(34,622.27)

(164,180.31)

129,558.04

('' in million)

Particulars

April 1, 2020 to March 31, 2021

April 1, 2019 Change to March 31,

2020

Add: Surplus/(Deficit) brought forward from last period

(68,973.88)

107,595.60 (176,569.48)

Amount available for appropriation

(103,596.15)

(56,584.71) (47,011.43)

Appropriations

Statutory Reserve under section 17 of the Banking Regulation Act, 1949

-

- -

Capital Reserve

4,969.76

6,655.51 (1,685.75)

Investment Reserve

153.70

147.23 6.47

Investment Fluctuation Reserve

-

- -

Dividend and Dividend Tax paid

-

5,586.43 (5,586.43)

Surplus carried to Balance Sheet

(108,719.60)

(68,973.88) (39,745.73)

Key Performance Indicators (excluding Tier 1 write down

Net Interest Margin

2.8%

2.2%

Return on Annual Average Assets

-1.30%

-7.11%

Return on Equity

-11.42%

-113.13%

Cost to Income Ratio

53.78%

65.67%

Your Bank posted Net Loss of ''34,622.27 million in FY 2020-21 as compared to a loss of ''164,180.31 million for FY 2019-20 mainly due to higher provisioning. Net Interest income (NII) of the Bank increased by 9.2% to ''74,286.02 million during FY 2020-21 as compared to ''68,052.31 million during FY 2019-20. The Net Interest Margin (NIM) was 2.8% in FY 2020-21. Your Bank posted a healthy operating profit growth of 41.5% to ''49,773.07 million. Appropriations from the Net Profit have been effected as per the table given above. Please refer to the section on Financial and Operating Performance in the Management Discussion and Analysis for a detailed analysis of financial data.

DIVIDEND

The Reserve Bank of India (''RBI'') through circular dated April 22, 2021 allowed banks to pay dividend on equity shares from the profits for the financial year ended March 31,2021, subject to the quantum of dividend being not more than fifty percent of the amount determined as per the dividend payout ratio prescribed in the paragraph 4 of the RBI circular dated May 4, 2005. However, during FY 2021, the Bank has reported a loss and as consequence to that the Bank has not declared any dividend.

The RBI, vide notification dated December 4, 2020, stated that in view of the ongoing stress and heightened uncertainty on account of COVID-19, the banks should continue to conserve capital to support the economy and absorb losses. The notification also stated that in order to further strengthen the banks'' balance sheets, while at the same time support lending to the real economy, banks shall not make any dividend payment on equity shares from the profits pertaining to the financial year ended March 31,2020.

As required under Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") the dividend policy of your Bank is available on the Bank''s website at the link: https://www.yesbank.in/pdf/dividend_policy_pdf.

TRANSFER TO RESERVES

As per requirement of RBI regulations, the Bank has transferred the following amounts to various reserves during Financial Year ended March 31,2021:

Amount transferred to

'' million

Statutory Reserve (The Bank incurred a net loss of ''34,622.27 million in FY 2020-21) Capital Reserve Investment Reserve

4,969.76

153.70

TRANSFER OF EQUITY SHARES UNPAID/ UNCLAIMED DIVIDEND TO THE INVESTOR EDUCATION AND PROTECTION FUND

In accordance with the applicable provisions of the Companies Act, 2013 read with Rules made thereunder, during the FY 2020-21, the Bank has transferred to the credit of the Investor Education and Protection Fund (''IEPF'') administered by the Central Government, 29,797 number of equity shares and unpaid dividend amount of ''1,366,140.00, which had remained unclaimed/ unpaid for a period of seven (7) consecutive years.

CAPITAL RAISING & CAPITAL ADEQUACY RATIO (CAR)

During FY 2020-21 the Bank has successfully completed capital raising of ''150,000.00 million by way of Further Public Offering (''FPO'') by issue and allotment of 12,504,433,750 equity shares of face value of ''2 each at a price of ''12 per Equity Share for cash (discount of ''1 per Equity Share was offered for employee reservation portion).

The Issue was made through book building process in accordance with regulation 129(1) of the SEBI ICDR Regulations.

The Bank has not issued any equity shares with differential voting rights during the year.

During the year under review, the Bank has not issued any shares pursuant to the exercise of stock options. Movement in Share Capital

('' in million)

Share Capital

As at

As at

March 31, 2021

March 31, 2020

Opening Share Capital

25,100.94

4,630.07

Addition due to exercise of Stock Option

-

8.76

Addition due to shares issued for QIP/FPO

25,008.87

462.11

Addition due to shares issued under Reconstruction scheme

-

20,000.00

Closing Share Capital

50,109.81

25,100.94

With the above capital raise, Capital Adequacy Ratio of your Bank significantly improved to 17.5% as at March 31, 2021 as compared to 8.5% as at March 31, 2020. CET-1 ratio comfortable stood at 11.2%, Tier I Capital Ratio at 11.3% and Tier II Capital Ratio was 6.2% as at March 31,2021.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report for the year under review as stipulated in Listing Regulations is presented in a separate section forming part of the Annual Report.

RISK MANAGEMENT FRAMEWORK

The Bank''s Enterprise Risk Management framework encompasses the following:

» Risk Governance Framework: The Bank has implemented an Enterprise Risk Governance framework to ensure non-silo based management and oversight of Risk. The Bank''s Risk Management philosophy is guided by the Three Lines of Defence:

- First Line of Defence - Business Management: : Each business segment of the Bank has risk ownership and is responsible for assessment and management of risks and has the overall responsibility of the management and mitigation of the Risk. The segments are required to

- Second Line of Defence - Independent functions: The Bank''s independent oversight functions, such as, Risk Management, Credit Underwriting, Compliance, Legal, Fraud Containment Unit, etc. set standards for management and oversight of risks, including compliance with applicable laws, regulatory requirements and policies.

• Risk Management: Risk Management establishes policies and guidelines for risk assessment and management and contributes to controls and tools to manage, measure and mitigate risks faced by the Bank. Risk Management comprises units such as Enterprise Risk, Credit Risk Policy Unit, Market Risk, Operational Risk, Legal Risk, Information Security, Portfolio Analytics Unit, Retail, SME & Rural Policy Unit and Portfolio Management Unit which are responsible for independent review, monitoring and reporting of all risk control parameters and taking appropriate corrective actions where necessary. These units also ensure compliance to internal policies and regulatory guidelines.

• Credit Underwriting: The Credit team ensures an independent assessment of credit proposals and is responsible for monitoring the credit quality of the Bank''s portfolio and undertaking portfolio reviews.

• Compliance: The Compliance unit is responsible for tracking implementation of all regulatory circulars/communication, review of new products & processes from regulatory perspective, conducting compliance reviews to ensure adherence to regulatory guidelines and monitoring progress in rectification of significant deficiencies (if any) pointed out by regulators in inspection reports as well as implementation of recommendations made therein. This ensures that the overall Compliance Risk of the Bank is managed and mitigated.

• FCU & AML: The Fraud Containment Unit (FCU) is responsible for prevention and detection of internal and external frauds in the areas of Liabilities, Product and Support functions. The unit conducts transaction monitoring, forensic scrutiny, employee awareness trainings and vulnerability assessments to help achieve the said objective. The Anti Money Laundering Unit (AML) is responsible for identifying and reporting of suspicious transactions and other regulatory reports such as Cash Transaction Report, Cross Border Wire Transfer Report, Not for Profit Organisation Transaction report etc as prescribed under PMLA Act/Regulators, across allBusiness segments of the Bank. The AML unit is equipped with qualified, trained and experienced staff, which monitors various transactions undertaken by customers with a view to combat financial crimes and prevents misuse of the accounts for money laundering.

- Third Line of Defence - The Bank''s Internal Audit function independently reviews activities of the first two lines of defence based on a risk-based audit plan and methodology approved by the Audit Committee of the Board. Internal Audit provides independent assurance to the Board, the Audit Committee, senior management and regulators regarding the effectiveness of the Bank''s governance and controls framework designed for risk mitigation.

The Board of Directors of the Bank has overall responsibility for Risk Management. The Board oversees the Bank''s Risk and related control environment, reviews and approves the policies designed as part of overseeing the Risk Management practices. The Board ensures that comprehensive policies, systems and controls are in place to identify, monitor and manage material risks at a Bank-wide level, with clearly defined risk limits. The Board has laid down Risk Appetite Statement which articulates the quantum of risk the Bank is willing and able to assume in its exposures and business activities in pursuit of its strategic objectives and desired returns. The Board has also established policies governing risk management, such as, Credit Policy, Asset Liability Management Policy, Operational Risk Management Policy, Information Security Policy, Enterprise Risk Management Policy, Group Risk Management Policy, Model Risk & Governance Policy, Risk Based Pricing Policy, Stress Testing Policy, etc. which establish the Risk Appetite Framework within the overall Risk Appetite Statement.

The Board has put in place four Board level Committees which inter-alia pertain to Risk Management, viz. Risk Management Committee (RMC), Audit Committee (AC), Fraud, Willful Defaulters and Non Co-operative Borrowers Monitoring Committee (FWD & NCBMC) and Board Credit Committee (BCC) to deal with risk management practices, policies, procedures and to have adequate oversight on the risks faced by the Bank.

The Board Committees have set up various Executive level committees for oversight over specific risks.

1. Apex Management Committee

2. Enterprise Risk, Reputation Risk and Model Assessment Committee

3. Management Credit Committee

4. Executive Credit Committee

5. Asset & Liability Management Committee

6. Operational Risk Management Committee

7. Standing Committee on Customer Service

8. Fraud & Suspicious Transaction Monitoring Committee

9. Committee for Classification of Willful Defaulters & Non Co-operative Borrowers

10. Accountability Review Committee

11. Whistle Blower, Disciplinary and Internal Committee

12. Steering Committee for IFRS (Ind AS)

13. Product Process Approval Committee

14. IT Steering Committee

15. Security Council

16. Stressed Asset Monitoring Committee

17. Sustainability Council

18. Fraud Investigation Committee

These Committees review various aspects / key risks and ensure that the best-in-class frameworks are in place to oversee day-to-day management of underlying business activities, transactions and associated risks while dealing with internal and external stakeholders. Further, Risk events, potential threats, performance of the Bank vis-a-vis Risk Limits and Risk Appetite, Risk Profile dashboard covering key risk indicators, etc. are presented to these Committees, with periodic trends highlighted along with level and direction of risk. The Bank also conducts a detailed Internal Capital Adequacy Assessment Policy (''ICAAP'') review exercise to identify its Risk universe, review its Risk appetite in line with its business strategy as well as assess its internal controls and mitigation measures in place for the risks and capital requirements. The ICAAP document is approved by the RMC and the Board.

Additionally, in line with best Risk Governance practices, the Bank has segregated credit underwriting and risk management verticals. The underwriting vertical consisting of Credit Units is headed by the Chief Credit Officer (CCO) and the risk controls and policy vertical consisting of various independent control units is headed by the Chief Risk Officer (CRO). The CRO reports to the Risk Management Committee while the CCO reports to the MD&CEO.

DEPOSITS

Being a banking company, the disclosures required as per Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, 2014, read with Sections 73 and 74 of the Companies Act, 2013 are not applicable to your Bank.

DIVERGENCE IN ASSET CLASSIFICATION AND PROVISIONING FOR NPAs

In terms of the RBI circular no. DBR.BP.BC.No.32/21.04.018/2018-19 dated April 1, 2019, Banks are required to disclose the divergences in asset classification and provisioning consequent to RBI''s annual supervisory process in their notes to accounts to the financial statements, wherever either or both of the following conditions are satisfied: (a) the additional provisioning for NPAs assessed by RBI exceeds 10 per cent of the reported profit before provisions and contingencies for the reference period and (b) the additional Gross NPAs identified by RBI exceed 15 per cent of the published incremental Gross NPAs for the reference period. Based on the above, no disclosure on divergence in asset classification and provisioning for NPAs is required with respect to RBI''s annual supervisory process for FY 2019-20.

Disclosure on Complaints

The Bank became aware in September 2018 through communications from stock exchanges of anonymous whistleblower complaints alleging irregularities in the Bank''s operations, potential conflict of interest of the founder / former MD & CEO and allegations of incorrect NPA classification. The Bank conducted an internal enquiry of these allegations, which was carried out by management and supervised by the Board of Directors. The enquiry resulted in a report that was reviewed by the Board in November 2018. Based on further inputs and deliberations in December 2018, the Audit Committee of the Bank engaged an external firm to independently examine the matter. In April 2019, the Bank had received the phase 1 report from the external firm and based on further review/ deliberations had directed a phase 2 investigation from the said firm. In February 2020, the Bank has received the final phase 2 report from the said external firm. The Bank has taken this report to the Audit Committee. As advised by the Audit Committee, the Bank has reviewed and carried out remediation actions across areas of process, design, policy and control related issues highlighted in the report including conducting forensic audits for few of the identified borrower accounts. The forensic audits for remaining accounts are in the process. Basis guidance from the ACB during the year, further action has been taken and a comprehensive note was put up to the Board on January 15, 2021 for closure of the report. The Board expressed satisfaction with the review carried out and approved the closure of the review of the anonymous complaints received by the Bank in September / December 2018. Exposure to such borrower accounts are recognized as NPA and commensurately provided.

Further, the Bank received forensic audit reports on certain borrower groups commissioned by other consortium bankers, which gave more information regarding the above mentioned allegations and

has filed complaints with the law enforcement agencies. Also, Law Enforcement Agencies (LEAs) -the Enforcement Directorate (ED), the Central Bureau of Investigations (CBI) and the Serious Fraud Investigation Office (SFIO) have launched investigations into some aspects of transactions of the founder / former MD & CEO, and alleged links with certain borrower groups. LEAs are investigating allegations of money laundering, fraud and nexus between the founder / former MD & CEO and certain loan transactions. The investigation continues to be carried out by the various law enforcement agencies. There are no claims made by any whistleblower or other parties against the Bank in this matter. The Bank does not foresee any substantial financial impact on the Bank arising out of these investigations.

SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS

As on March 31, 2021, the Bank had three wholly-owned subsidiaries, YES Securities (India) Limited (''YSIL''), YES Asset Management (India) Limited (''YAMIL'') and YES Trustee Limited (''YTL'').

The Bank does not have any material subsidiary, associate and joint venture company.

Performance and Financial Position of YSIL, YAMIL and YTL is given in Management Discussion & Analysis which forms part of this Annual Report.

The brief details about business of the subsidiaries are as under:

YES Securities (India) Limited (YSIL)

YES Securities (India) Limited (YSIL) offers retail, HNI and corporate customers a comprehensive range of products and services, encompassing Wealth Broking, Investment Advisory, Investment Banking (including a dedicated Sustainable Investment Banking practice), Merchant Banking, Research and Institutional Equities services. YSIL is a SEBI registered Stock Broker holding membership of National Stock Exchange (NSE), Bombay Stock Exchange (BSE), Multi Commodity Exchange (MCX) & National Commodity & Derivatives Exchange (NCDEX). YSIL is also a SEBI-registered Category I Merchant Banker, Investment Adviser and Research Analyst.

YES Asset Management (India) Limited (YAMIL) & YES Trustee Limited (YTL)

YES Asset Management (India) Limited (YAMIL) and YES Trustee Limited (YTL) were incorporated as wholly owned subsidiaries on April 21, 2017 and May 3, 2017, respectively to carry on mutual fund business.

On August 21,2020, YBL entered into a definitive agreement to sell its 100% stake in YAMIL and YTL to GPL Finance and Investments Ltd ("Purchaser"). White Oak Investment Management Pvt Ltd. owns 99% of the Purchaser. The ultimate beneficial owner of the Purchaser is Mr. Prashant Khemka who owns 99.99% of the White Oak Investment Management Pvt Ltd. The transaction is expected to be completed in FY 2021-22.

YAMIL currently has 3 schemes and the average AUM for FY 2020-21 was ''95.04 crores.

The Consolidated Financial Statements of the Bank and its Subsidiaries prepared in accordance with the requirement of Section 129(3) of the Companies Act, 2013 shall be laid before the ensuing AGM and it forms part of this Annual Report.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of Financial Statements of subsidiaries in Form AOC-1 forms part of the Annual Report. The Financial Statements of the subsidiaries of the Bank are available on the website of the Bank (www.yesbank.in). Financials of Bank and its subsidiaries shall also be available for inspection by members or trustees of the holders of any debentures/bonds of the Bank at its Registered office.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Bank has implemented adequate procedures and internal controls which provide reasonable assurance regarding reliability of financial reporting and preparation of financial statements. The Bank also ensures that internal controls are operating effectively.

MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE BANK

Except as disclosed below, there are no material changes and commitments, affecting the financial position of the Bank which has occurred between the end of the financial year of the Bank i.e. March 31,2021 and the date of the Directors'' Report i.e. June 10, 2021.

UNCERTAINTY ESTIMATIONS OWING TO THE GLOBAL HEALTHCARE CRISIS

The SARS-CoV-2 virus responsible for COVID-19 started spreading across the globe and India in March 2020, which has contributed to a significant decline and volatility in global and Indian financial markets and a significant decrease in global and local economic activities. Due to outbreak of the

COVID-19 pandemic, the country had witnessed lockdowns across India, imposed by the Indian government from March 2020. Subsequently, the national lockdown was lifted by the government, but regional lockdowns continue to be implemented in areas with a significant number of COVID-19 cases. The current second wave of Covid-19 pandemic, where the number of new cases has increased significantly in India, has resulted in re-imposition of localised/regional lockdown measures in various parts of the country.

RBI issued guidelines on COVID-19 Regulatory Packages under which, the Bank granted a moratorium of three months (further extended by three months) on the payment of all instalments and / or interest, as applicable, falling due between March 1,2020 and August 31,2020. For all such accounts where the moratorium was granted, the asset classification shall remain stand still during the moratorium period (i.e. the number of days past-due shall exclude the moratorium period for the purposes of asset classification under the Income Recognition, Asset Classification and Provisioning norms) has been retained based on the overdue status as at February 29, 2020.

The Supreme Court, in a public interest litigation (Gajendra Sharma Vs. Union of India & Anr), through its interim order dated September 3, 2020 had directed that accounts which were not declared as NPA till August 31,2020 shall not be declared as NPA till further orders. Accordingly, the Bank did not classify any account which was not NPA as of August 31,2020 as per the RBI IRAC norms, as NPA after August 31, 2020. The Bank had made contingency provision of ''2,683 crore till December 31, 2020. The interim order granted to not declare accounts as NPA stood vacated on March 23, 2021 vide the judgement of the Hon''ble SC in the matter of Small Scale Industrial Manufacturers Association vs. UOI & Ors. and other connected matters. Further in accordance with the instructions in paragraph 5 of the RBI circular dated April 07, 2021 issued in this connection, the Bank has classified such borrower accounts as per the extant IRAC norms with effect from September 1,2020 and utilised the above contingency provisions towards provision on these accounts.

Refer Financial Statement - 18.5.1 and Notes to Accounts disclosure 18.6.24 for offerings under COVID package in line with the extant regulatory guidelines and Disclosure under COVID19 Regulatory Package.

Further, the Bank is closely monitoring the potential impact of COVID on its borrowers and is engaging with them for suitable resolutions and relaxations in line with RBI guidelines.

RATINGS OF VARIOUS DEBT INSTRUMENTS

The Credit Rating and change/revision in the Credit Ratings for various debt instruments issued by the Bank from time to time are provided in the Corporate Governance Report forming part of the Annual Report.

LOANS, GUARANTEES OR INVESTMENTS IN SECURITIES

Pursuant to Section 186(11) of the Companies Act, 2013, loans made, guarantees given or securities provided or acquisition of securities by a Banking company in the ordinary course of its business are exempted from disclosure requirements under Section 134(3) (g) of the Companies Act, 2013.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

There were no materially significant transactions with related parties including promoters, directors, key managerial personnel, subsidiaries or relatives of the Directors during the financial year which could lead to a potential conflict with the interest between the Bank and these parties. The details of the transactions with related parties, if any, were placed before the Audit Committee from time to time. There were no material individual transactions with related parties, which were not in the ordinary course of business of the Bank, nor were there any transactions with related parties, which were not at arm''s length basis. Accordingly, the disclosure in Form AOC-2 is not applicable to the Bank for the year under review. Suitable disclosure as required by the Accounting Standards (AS-18) has been made in the notes to the Financial Statements.

Prior omnibus approval for normal banking transactions is also obtained from the Audit Committee for the related party transactions which are repetitive in nature as well as for the normal banking transactions which cannot be foreseen and accordingly the required disclosures are made to the Committee for their approval.

The policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions as approved by the Audit Committee and the Board of Directors is uploaded on the website of the Bank and can be accessed at https://www.yesbank.in/pdf/policies_pdf6.

DIRECTORS & KEY MANAGERIAL PERSONNEL

During the FY 2020-21, Mr. Partha Pratim Sengupta and Mr. SwaminathanJanakiraman, Non-Executive Directors, nominated by State Bank of India resigned from the directorship of the Bank w.e.f. July 24, 2020 and October 28, 2020 respectively. In place of resigned directors, Mr. Vadalur Subramanian Radhakrishnan and Mr. Ravindra Pandey were appointed as SBI Nominee Directors on the Board of the Bank w.e.f. July 31,2020 and November 3, 2020 respectively. Their nomination on the Board will be valid till such period as per the Scheme or January 31,2023 and June 30, 2022, respectively.

As you are aware, pursuant to the Yes Bank Reconstruction Scheme, 2020 ("Scheme") nomination made by State Bank of India and Order passed by RBI under Banking Regulation Act, 1949 (BR Act)

the new Board of Directors was constituted with effect from March 26, 2020. As per the Scheme, the members of the Board, other than the additional directors (appointed by RBI u/s 36AB of BR Act), shall continue in office for a period of one year, or until an alternate Board is constituted by reconstructed bank in accordance with the procedure laid down in its memorandum and articles of association, whichever is later. Accordingly, necessary process has already been initiated by the Bank for identifying directors with appropriate skill sets and expertise on the Board of the Bank for constitution of the alternate Board. The appointment of directors will be subject to required approvals, including approval of the members.

Key Managerial Personnel

During the year, Mr. Niranjan Banodkar was appointed as Chief Financial Officer (''CFO'') and Key Managerial Personnel w.e.f. January 1,2021 in place of Mr. Anurag Adlakha CFO and Key Managerial Personnel who has assumed the role of Chief Human Resources Officer (''CHRO'') of the Bank.

Mr. Prashant Kumar continues to be the MD & CEO of the Bank as per the Scheme notified by the Ministry of Finance, Government of India under Notification No. G.S.R. 174(E) dated March 13, 2020.

Mr. Shivanand Shettigar continued to act as Company Secretary and the Key Managerial Personnel.

STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS

Pursuant to the Scheme through which the new Board was appointed, none of the Directors are designated as Independent Directors. Hence, the Bank is not required to obtain declarations under Section 149(6) and 149(7) of the Companies Act, 2013 and Regulation 16(1)(b) and Regulation 25(8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (''Listing Regulations'').

However, given the present composition of the Board, wherein presently there are three NonExecutive Directors viz. Mr. Sunil Mehta, Mr. Mahesh Krishnamurti and Mr. Atul Bheda, appointed pursuant to the Scheme, not holding any substantial interest in the share capital nor having any pecuniary relationship with the Bank and meets the criteria of independence, accordingly necessary declarations were obtained from them, confirming that they meet the criteria of independence.

STATEMENT REGARDING OPINION OF THE BOARD WITH REGARD TO INTEGRITY, EXPERTISE AND EXPERIENCE (INCLUDING THE PROFICIENCY) OF THE INDEPENDENT DIRECTORS APPOINTED DURING THE YEAR

None of the Directors appointed under the Scheme are designated as Independent Directors, therefore the statement regarding opinion of the board with regard to integrity, expertise and experience (including the proficiency) of the independent directors is not applicable.

FAMILIARIZATION PROGRAMS FOR INDEPENDENT DIRECTORS

The programs undertaken for familiarizing the Independent Directors are disclosed in detail in the Corporate Governance Report, which forms part of the Annual Report.

NUMBER OF MEETINGS OF THE BOARD AND IT''S VARIOUS COMMITTEE

The details of Board meetings held during the year, attendance of Directors at the meetings and constitution of various Committees of the Board are included separately in the Corporate Governance Report, which forms part of the Annual Report.

PERFORMANCE EVALUATION OF THE BOARD

The Bank has laid down criteria for performance evaluation of the Directors including Chairman, Managing Director & CEO, Board Level Committees and Board as a whole as well as the evaluation process for the same, in line with the provisions of the Companies Act, 2013, Listing Regulations and SEBI Guidance Note on the Board Evaluation dated January 5, 2017. The present Board of Directors of the Bank was constituted in accordance with the Scheme, wherein two Board Members are the Additional Directors appointed by the RBI pursuant to Section 36AB of Banking Regulation Act, 1949. As per the RBI letter No. DoR.PSBD.No.325/16.05.004/ 2020-21 dated August 24, 2020, Additional Directors appointed by RBI are not subject to performance evaluation. Given the present composition of the Board under the Scheme, the Bank was not required to mandatorily comply with the stipulated procedure of Performance Evaluation for FY 2020-21. However, as a matter of good governance, the Board decided for carrying out the Performance Evaluation of the Directors, excluding the Additional Directors appointed by RBI, for the Financial Year 2020-21, in an appropriate manner.

Accordingly, the process for carrying out the performance evaluation of the members of the Board, the Board Level Committees and the Board as a whole was initiated by the Bank post completion of FY 202021 and the Board of Directors had deliberations and also had informal interactions in this regard. The performance evaluation process would be completed in due course.

POLICY ON APPOINTMENT OF DIRECTORS

The Board of Directors of the Bank had formulated and adopted policy on "Board Diversity and Fit & Proper Criteria and Succession Planning" for appointment of Directors on the Board of the Bank and succession planning. The details of the same have been included in the Report on Corporate Governance forming part of this Annual Report.

REMUNERATION POLICY

The Board of Directors of the Bank had formulated and adopted policies for Remuneration of Employees of the Bank, Remuneration of Directors including the Chairman of the Bank. The details of the same are made available on the Bank''s website and can be accessed at https://www.yesbank.in/ pdf/board_kmp_sr_mgmt_remuneration_policy_pdf.

EMPLOYEE REMUNERATION

(a) The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this report. In terms of Section 136 of the Companies Act, 2013, the same would be available for inspection during working hours at the Registered Office of the Bank till the date of Annual General Meeting. A copy of this statement may be obtained by the Members by writing to the Company Secretary of the Bank.

(b) The ratio of the remuneration of each Director and employees of the Bank as required under the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure 1 to the Report.

EMPLOYEES STOCK OPTION SCHEME

Your Bank has instituted Stock Option Plans to enable its employees to participate in your Bank''s future growth and financial success. In terms of compensation and benefit policy of the Bank, employees are granted options as part of Annual Performance Review process based on their performance

as well as to ensure their retention, and to hire the best talent for its senior management and key positions. The Employee Stock Option Scheme was amended as approved by the members of the Bank at the previous annual general meeting held on September 10, 2020 and the Stock Exchanges i.e National Stock Exchange and BSE Limited have granted necessary approval for such amendment on November 24, 2020 and January 06, 2021 respectively. The details of Employee Stock Option Schemes and related statutory disclosures are provided in Annexure 2 to this report.

CORPORATE GOVERNANCE

The Bank is committed to follow best Corporate Governance practices and adheres to the Corporate Governance requirements set by the Regulators under the applicable laws/regulations. In line with the foregoing, the Bank has adopted a Code of Corporate Governance which acts as a guide to the Bank and the Board on the best practices in the Corporate Governance.

A separate section on Corporate Governance standards followed by the Bank and the relevant disclosures, as stipulated under Listing Regulations, Companies Act, 2013 and rules made thereunder forms part of the Annual Report.

A Certificate from M/s. Bhandari & Associates, Practicing Company Secretaries, conforming compliance by the Bank to the conditions of Corporate Governance as stipulated under Listing Regulations, is annexed to the Report on Corporate Governance, which forms part of the Annual Report.

VIGIL MECHANISM

In line with the provisions of Listing Regulations, the Companies Act, 2013 and the principles of good governance, the Bank has devised and implemented a vigil mechanism, in the form of ''Whistle-Blower Policy''. The policy devised is also aligned to the recommendations of Protected Disclosure Scheme for Private Sector and Foreign Banks, instituted by RBI. Detailed information on the Vigil Mechanism of the Bank is provided in the Report on the Corporate Governance which forms part of the Annual Report.

CORPORATE SOCIAL RESPONSIBILITY

In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Bank has constituted Corporate Social Responsibility (''CSR'') Committee and statutory disclosures with respect to the CSR Committee and Annual Report on CSR Activities forms part of this Report as Annexure 3. The CSR Policy is available on the website of the Bank and can be accessed at https://www.yesbank.in/pdf/ybl_corporate_social_responsibility_policy.

AUDITORS & REPORTS OF THE AUDITORS

A. Statutory Auditors

In terms of Section 139 of the Companies Act, 2013, M/s M P Chitale & Co., Chartered Accountants (ICAI Firm Registration Number 101851W), were appointed as statutory auditors of the Bank for a period of four years from the conclusion of 16th AGM till the conclusion of 20th AGM of the Bank, subject to the annual approval of the Reserve Bank of India (RBI).

Further, in terms of the RBI Guidelines for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of CommercialBanks (excluding RRBs), UCBs and NBFCs (including HFCs) dated April 27, 2021, in order to protect the independence of the auditors/audit firms, entities will have to appoint the SCAs/SAs for a continuous period of three years, subject to the firms satisfying the eligibility norms each year. Further, the audit firms which have already completed tenure of 1 year with any entity may be permitted to complete the balance tenure only, i.e. 2 years and for Entities with asset size of ''15,000 crore and above as at the end of previous year, the statutory audit should be conducted under joint audit of a minimum of two audit firms [Partnership firms/Limited Liability Partnerships (LLPs)].

Thus in terms of the aforesaid RBI Guidelines, M/s M P Chitale & Co., Chartered Accountants (ICAI Firm Registration Number 101851W) will be eligible to hold office only up to the 19th AGM subject to fulfillment of eligibility norms on an annual basis.

Accordingly, the Board of Directors has recommended to RBI the appointment of M/s M P Chitale & Co., Chartered Accountants (ICAI Firm Registration Number 101851W) as the Statutory Auditors of the Bank for a period of two years from the conclusion of 17th AGM till the conclusion of 19th AGM, at the ensuing AGM and their appointment will be subject to approval by RBI on an annual basis under above-mentioned RBI circulars.

Further the Board of Directors has recommended to RBI names of seven Audit firms in the order of preference, wherein M/s. Chokshi & Chokshi LLP, Chartered Accountants, (ICAI Firm Registration No. 101872W /W100045), as the first preference for appointment as Joint Statutory Auditors of the Bank, for a period of three years from the conclusion of 17th AGM till the conclusion of the 20th AGM, at the ensuing AGM and their appointment will be subject to approval by RBI on an annual basis under above-mentioned RBI circulars.

Qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report

The Report given by the Statutory Auditors on the Financial Statements of the Bank for the financial year ended on March 31, 2021 forms part of this Annual Report. The auditors of the Company have given an unmodified opinion as mentioned in the Auditors'' Report.

The audit report for the Financial Year ended March 2020 was qualified because of material uncertainty related to Going Concern. The opinion was predicted on a significant decline in Bank''s deposit base, credit downgrades resulting in partial prepayment of foreign currency debt linked to external credit rating, breaches in liquidity ratios and RBI mandated Capital ratios.

During the current year, the Bank raised capital of ''150,000 million through FPO in July 2020. As a consequence, Bank''s capital ratio stands at 17.5% as on March 31, 2021 as against a minimum requirement of 10.875%. Further, Bank has increased its deposit position by 54.7% to ''1,629,466 million while also improving the LCR well in excess of the minimum regulatory thresholds.

Given the capital raise, reinforced capital buffers, strong growth in deposit base, the Banks'' compliance with regulatory ratios and expanding customer and branch network, the audit report for FY 2020-21 is not modified.

Also, no offence of fraud was reported by the Auditors of the Bank.

B. Secretarial Auditors and Secretarial Audit Report

Pursuant to Section 204 of the Companies Act, 2013, M/s. Bhandari & Associates, Practicing Company Secretaries, Mumbai were appointed as Secretarial Auditors of the Bank to conduct the secretarial audit for the FY 2020-21. The Bank provided all assistance and facilities to the Secretarial Auditors for conducting their audit. The Report of Secretarial Auditors for the FY 2020-21 is annexed to this report as Annexure 4. There are no observations, reservations or adverse remarks in the Secretarial Audit Report.

MAINTENANCE OF COST RECORDS

Being a Banking Company, the Bank is not required to maintain cost records as per sub-section (1) of Section 148 of the Companies Act, 2013.

BUSINESS RESPONSIBILITY REPORT

As stipulated in Listing Regulations, the Business Responsibility Report describing the initiatives undertaken by the Bank from environmental, social and governance perspective is separately attached as part of the Annual Report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS

During the year under review, no significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and Bank''s operation in future.

DISCLOSURES UNDER GREEN INFRA BONDS

Green Bonds have emerged as a mainstream financing mechanism for providing structured finances to vital clean energy and are playing a pivotal role in realization of India''s renewable energy potential. Since the maiden issuance by YES BANK, the Green Bonds market has witnessed a steady growth and is currently pegged at over USD 10 billion. Driven by the commitment of mobilizing USD 5 billion towards climate action by 2020, as taken during Paris Accord, YES BANK has issued three green bonds:

» February 2015: The Bank issued India''s first-ever Green Infrastructure Bonds, raising an amount of INR 1000 crore. This 10 year tenor bond witnessed strong demand from leading investors including Insurance companies, Pension & Provident Funds, Foreign Portfolio Investors, New Pension Schemes and Mutual Funds

» August 2015 : The Bank raised INR 315 crore through the issue of Green Infrastructure Bonds to International Finance Corporation ("IFC") on a private placement basis which is the first investment by IFC in an Emerging Markets Green Bond issue in the world. The bonds are for a tenor of 10 years. IFC paid for the placement using the proceeds from the first Green Masala Bond program, that aimed at raising capital in the offshore rupee market

» December 2016: The Bank has raised INR 330 crore, through an issue of a 7-year Green Infrastructure Bonds to FMO, the Dutch Development Bank, on a private placement basis. This is FMO''s 1st investment in a Green Bond issued by a bank in India. FMO has paid for the placement using the proceeds from their sustainability bonds issued in 2015

The amount raised was used to finance Green Infrastructure Projects as per ''Eligible Projects'' outlined in the Bank''s internal guidelines that are in adherence to the Green Bond Principles (GBP). For FY 2020-21, KPMG, India has provided limited assurance on conformity of the use of proceeds, process for evaluation and selection of projects, management of proceeds and reporting of these green bonds to GBP 2018.

The GBP are voluntary guidelines, developed by the International Capital Markets Association, for broad use by the market that recommend transparency and disclosure, and promote integrity in the development of the Green Bond market. They have the following four key components and the bank showcases its adoption below:

» Use of Proceeds: The proceeds raised by the bank are used in eligible project categories and include all projects funded in whole, or in part, in the fields of renewable and clean energy projects including Wind, Solar, Biomass, Hydropower and other such projects.

» Process for Evaluation and Selection of Eligible Projects: The Bank''s process starts with interactions with potential borrowers to understand the overall aspects of the project and a preliminary confirmation against the eligibility criteria. The evaluation moves to risk assessment for confirmation of the eligibility, post which further documentation is sought as per the Bank''s policies and GBP.

» Management of Proceeds: Green Bond allocations to eligible projects are tracked by the Bank through an MIS based asset tagging system. The unallocated proceeds, if any, are placed in liquid instruments.

» Reporting: The bank''s communication to investors through an annual update includes:

• List of projects to which proceeds have been allocated to, with brief description including amounts disbursed, installed capacity

• Summary of Environment and Social (E&S) impacts associated with projects, if any

• Information on investment of unallocated proceeds in liquid instruments

Impacts

Through financing solar and wind power plants, these bonds strengthen India''s energy security while reducing fossil fuel dependency. These bonds have been crucial in financing climate change mitigation with avoidance of emissions of CO2, SO2, NOx and other air pollutants associated with fossil fuel based energy generation. Estimated CO2 emission reductions are shared along with project details.

List of projects against which green bonds proceeds have been allocated as on 31st March, 2021 is provided below:

Proceeds Utilization* Against Bond Issuance Size of INR 1,000 Cr (February 2015)

Sr.

No.

Project

Location

Description

Total Fund Based Utilization, INR Cr

Estimated** positive E&S impacts - CO2 Emission Reduction (tCO2e / yr)

Known significant negative E&S Impacts

1

Maharashtra

31.5 MW wind energy project

97.46

45,910.90

None

2

Telangana

42 MW solar energy project

120.23

66,312.86

None

3

Karnataka

40 MW solar energy project

141.31

79,736.44

None

Proceeds Utilization* Against Bond Issuance Size of INR 1,000 Cr (February 2015)

Sr.

No.

Project

Location

Description

Total Fund Based Utilization, INR Cr

Estimated** positive E&S impacts - CO2 Emission Reduction (tCO2e / yr)

Known significant negative E&S Impacts

4

Telangana

48 MW solar energy project

42.70

81,224.12

None

5

Madhya

Pradesh

92 MW wind energy project

117.64

1,69,921.78

None

6

Rajasthan

50.4 MW wind energy project

86.04

1,00,045.59

None

7

Madhya

Pradesh

27.3 MW wind energy project

43.62

55,660.26

None

8

Madhya

Pradesh

29.4 MW wind energy project

75.49

59,941.82

None

9

Telangana

50 MW solar energy project

152.23

97,124.75

None

10

Telangana

3.26 MW rooftop solar installation across 9 locations

6.96

3678.54

None

11

Maharashtra

15 MW wind energy project

25.72

27,778.75

None

12

Maharashtra

10 MW wind energy project

21.44

19,424.95

None

13

Gujarat

8.75 MW wind energy project

46.02

16,996.83

None

14

Maharashtra

9 MW wind energy project

12.57

17,482.45

None

15

Andhra Pradesh & Rajasthan

105 MW & 50.4 MW wind energy project

10.57

3,01,863.72

None

Proceeds Utilization* Against Bond Issuance Size of INR 330 Cr (December 2016)

Sr.

No.

Project

Location

Description

Total Fund Based Utilization, INR Cr

Estimated** positive E&S impacts - CO2 Emission Reduction (tCO2e / yr)

Known significant negative E&S Impacts

1

Gujarat

30 MW wind energy project

35.79

59,337.09

None

2

Rajasthan

300 MW solar energy project

71.74

4,62,361.56

None

3

Madhya

Pradesh

66 MW wind energy project

202.25

1,32,824.17

None

4

Maharashtra

6.25 MW wind energy project

10.00

9,397.51

None

5

Karnataka

9.6 MW wind energy project

10.15

9825.94

None

6

Andhra

Pradesh

100 MW wind energy project

0.07

1,59,500.33

None

* The temporary unallocated proceeds (INR 315 Cr of bond Issued In August 2015) have been Invested In Government Securities. In bilateral discussion with investor for allocation to eligible projects.

** The total CO2 emission reduction for individual projects have been calculated based on the methodology outlined in the document ''CO2 Baseline Database for the Indian Power Sector User Guide Version 15.0 dated December 2019'' (published by the Central Electricity Authority of India) along with other relevant factors such as project PLF/CUF estimates, installed project capacity, resultant annual unit generation etc.

The assurance statement issued by KPMG India is attached as Annexure 5 to this report.

STATUTORY DISCLOSURES

The disclosures required to be made under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 on the conservation of energy, technology absorption and Foreign exchange earnings and outgo are given as Annexure 6.

ANNUAL RETURN

Pursuant to Section 92(3) and Section 134(3)(a) of the Companies Act, 2013, the Company has placed a copy of the Annual Return as at March 31,2021 on its website at https://www.yesbank.in/about-us/ investors-relation/financial-information/annual-reports.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, it is hereby confirmed that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;


COMPLIANCE WITH SECRETARIAL STANDARDS

The Board of Directors affirm that the Bank has complied with the applicable Secretarial Standards issued by the Institute of Companies Secretaries of India (SS1 and SS2) respectively relating tc Meetings of the Board, its Committees and the General Meetings.

PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE

The Bank has Zero tolerance towards any act on the part of any executive which may fall under the ambit of ''Sexual Harassment'' at workplace and is fully committed to uphold and maintain the dignity o every women executive working in the Bank. The Policy regarding Prevention & Prohibition of Sexua Harassment at Workplace provides for protection against sexual harassment of women at workplace and for prevention and redressal of complaints. Also, in its endeavour to spread awareness on the aforementioned policy and ensure compliance by all the executives, the Bank has implemented e plan of action to disseminate the information and train the executives on the policy under the ambil of ''Gender Respect and Commitment to Equality'' (GRACE) program.

The Bank has complied with provisions relating to the constitution of Internal Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH)

Number of cases filed and their disposal under Section 22 of the POSH is as follows:

Particulars

No. of Complaints

Number of complaints carried forward from last year

2

Number of complaints filed during the financial year

10

Number of complaints disposed of during the financial year

11

Number of complaints pending as on the end of the financial year

1

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the loss of the Bank for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

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

(e) the directors, had laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and

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

ACKNOWLEDGMENT

Your Directors take this opportunity to express their deep and sincere gratitude to the customers of the Bank for their confidence and patronage, as well as to the Reserve Bank of India, Securities and Exchange Board of India, Government of India, and other Regulatory Authorities for their cooperation, support and guidance. Your Directors would like to express a deep sense of appreciation for the commitment shown by the employees in supporting the Bank. The Directors would also like to thank all our valued partners, vendors and stakeholders who have played a significant role in continuing to support the Bank.

For and on behalf of the Board of Directors YES BANK LIMITED

Prashant Kumar Sunil Mehta

Managing Director & CEO Chairman

(DIN No: 07562475) (DIN No: 00065343)

Place: Mumbai Date: June 10, 2021


Mar 31, 2019

Directors Report

To the Members,

Your Directors are pleased to present the Fifteenth Annual Report on business and operations of the Bank together with the audited financial statements (consolidated as well as standalone) for the year ended March 31, 2019.

BUSINESS OVERVIEW AND OUTLOOK

The Bank showed continued acceleration and momentum in building a strong retail franchise with retail advances growing 62.3% Y-o-Y in Financial Year (FY) 2018-19 to now comprise 16.7% of total advances. Consequent to the Bank's retail focus, the branch network stood at 1,120 branches and 1,456 ATMs (including Bunch Note Acceptors) as on March 31, 2019. Digitization remains a key focus area for the Bank to further grow the Retail/MSME segments as well as the Transaction Banking business. The Bank already dominates the new age payments space with the highest market share in UPI P2M transactions with ~8x growth in Volumes in FY 2018-19.

Superior structuring capabilities in the Corporate Segment remains an area of Strength and the Bank will continue to leverage this in a calibrated manner as it embarks upon a compliance led culture with a prudent accounting policy.

STATE OF THE AFFAIRS OF THE BANK

FY 2018-19 was a significant year in the Bank's lifecycle when the Bank successfully navigated through leadership transition. The Reserve Bank of India (RBI) in September 2018, intimated that Mr. Rana Kapoor may remain the MD & CEO of the Bank till January 31, 2019. In addition, over the following months, there were changes in the Bank's Directorate including the Chairman of the Bank.

In response to this, the Board of Directors rose to the challenge and successfully completed the process of appointment of a new MD & CEO within the stipulated time provided by the RBI. The Directors whole heartedly welcome Mr. Ravneet Singh Gill as the new MD & CEO who has joined the Bank on March 1, 2019. The Board express its full faith that he will take the Bank to newer heights in this environment which is filled with numerous challenges as well as opportunities.

Further, the Board of Directors have also strengthened itself through, appointment of Mr. Brahm Dutt as the Chairman of the Bank, and appointment of four new Board members who are doyens in their chosen field of expertise and have a rich experience in the Industry which can benefit the Bank: Mr. Uttam Prakash Agarwal (ex-President ICAI), Mr. Thai Salas Vijayan (Ex IRDAI& LIC Chairman), Mr. Maheswar Sahu (Ex Additional Chief Secretary, Govt. of Gujarat) and Mr. Anil Jaggia (Ex CIO, HDFC Bank).

Further, the Indian Partners viz. Mr. Rana Kapoor and Ms. Madhu Kapur, Ms. Shagun Kapur Gogia& Mr. Gaurav Kapur have inter-se agreed and jointly recommended the names of Mr. Ravindra Kumar Khanna and Ms. Shagun Kapur Gogia as their representative directors on the Board of the Bank. Accordingly, the Board of the Bank at its meeting held on April 26, 2019, approved the appointment of Mr. Ravinder Kumar Khanna and Ms. Shagun Kapur Gogia as Additional (Non-Executive Non-independent) Indian Partners' Representative Directors, on the Board of the Bank w.e.f. April 26, 2019.

Most importantly, through this transition phase, the business of the Bank continued its momentum as evident from sustained growth in balance sheet with 18.7% Y-o-Y growth in advances during FY 2018-19 and 13.4% Y-o-Y growth in Deposits. Even Revenue and Profitability parameters showed resilience with 26.8% Y-o-Y growth in Net Interest Income and 5.0% Y-o-Y growth in Pre Provision Operating Profit.

Another important focus area during FY 2018-19 for the Bank was assuring the stakeholders regarding the Bank's Asset Quality. Steps towards this include:

1. No disclosure requirements under the RBI regulations on disclosures of divergences in asset classification and provisioning, pursuant to the conclusion of its FY 2017-18 RBI Annual Supervisory Process.

2. The Bank has proactively created contingency Provision of about Rs.21,000 million during the year, pursuant to a review of the Bank's credit portfolio.

3. Providing proactive disclosures with respect to exposures to sensitive sectors and below investment grade assets as well as other details such as outstanding SMA 2 proportion to total advances.

YES BANK also successfully raised Non-Convertible, Redeemable, Unsecured, BASEL III compliant Tier II Bonds worth Rs.30,420 million during Q2 FY 2018-19. At the time of issue, CARE had assigned a rating of 'CARE AAA (Outlook: Stable) and India Ratings had assigned a rating of 'IND AA+' (Outlook: Stable). Currently, CARE has assigned a rating of 'CARE AA+' (Outlook: Credit watch with developing implications) w.e.f. November 28, 2018 and India Ratings has assigned a rating of 'IND AA+' (Outlook: Negative) w.e.f. November 2, 2018.

On February 18, 2019, the Bank successfully completed the repurchase of the Medium-Term Note (MTN) Program amounting to USD 122,854,000 out of USD 150 million at a fixed price of 94.25% of the Face Value of the Notes. The MTN is listed on the London Stock Exchange International Securities Market (LSE ISM), the Singapore

Exchange Securities Trading Limited (SGX) and the India International Exchange IFSC at GIFT City, Gandhinagar.

Further information on the Business overview and outlook and State of the affairs of the Bank is discussed in detail in the Management Discussion & Analysis section of the Annual Report.

There is no change in the nature of business of the Bank for the year under review.

FINANCIAL PERFORMANCE (STANDALONE)

 

 

Rs. in million

Particulars

April 1, 2018 to March 31, 2019

April 1, 2017 to March 31, 2018

Deposits

2,276,101.82

2,007,381.48

Borrowings

1,084,241.09

748,935.81

Advances

2,414,996.02

2,035,338.63

Total Assets/Liabilities

3,808,261.65

3,124,456.03

Net Interest Income

98,090.31

77,370.59

Non-Interest Income

45,901.53

52,238.34

Operating profit

81,349.07

77,481.13

Provisions and Contingencies

57,775.60

15,538.04

Profit before Tax

23,573.47

61,943.09

Provision for taxes

6,370.68

19,697.46

Net Profit

17,202.79

42,245.64

Add: Surplus/(Deficit) brought forward from last period

103,753.02

79,333.92

Amount available for appropriation

120,955.80

121,579.55

Appropriations

 

 

Statutory Reserve under Section 17 of the Banking Regulation Act, 1949

4,300.70

10,561.41

Capital Reserve

1,010.10

659.65

Investment Reserve

6.71

-

Investment Fluctuation Reserve

539.07

-

Dividend and Dividend Tax paid

7,503.64

6,605.48

Surplus carried to Balance Sheet

107,595.60

103,753.02

Key Performance Indicators

Net Interest Margin

3.20%

3.50%

Return on Annual Average Assets

0.50%

1.60%

Return on Equity

6.53%

17.67%

Cost to Income Ratio

43.50%

40.22%

The Bank posted Net Revenues (Net Interest Income and other income) of Rs,143,991.84 million and Net Profit of Rs.17,202.79 million for FY 2018-19. The Net Revenues and Net Profit for FY 2017-18 was Rs.129,608.93 million and Rs.42,245.63 million respectively. Appropriations from the Net Profit have been effected as per the table given above. Please refer to the section on Financial and Operating Performance in the Management Discussion and Analysis for a detailed analysis of financial data.

DIVIDEND

The Bank is rewarding its shareholders by way of consecutive cash dividends. The Board of Directors have recommended Dividend at a rate of Rs.2 per equity share (100%) for the year ended March 31, 2019 subject to approval of the Shareholders at the 15th Annual General Meeting as against Rs.2.70 per equity share (135%) of Rs.2 each for the previous year ended March 31, 2018. This dividend shall be subject to tax on dividend to be paid by the Bank. The details about the Dividend Policy of the Bank have been provided in the Report on Corporate Governance forming part of this Annual Report.

TRANSFER TO RESERVES

As per requirement of RBI Regulations, the Bank has transferred the following amounts to various reserves during Financial Year ended March 31, 2019:

 

Rs. in million

Amount transferred to

Amount

Statutory Reserve

4,300.70

Capital Reserve

1,010.10

Investment Reserve

6.71

Investment Fluctuation Reserve

539.07

CAPITAL RAISING & CAPITAL ADEQUACY RATIO (CAR)

During the FY 2018-19, the Bank has issued 1 2,065,794 equity shares of Rs.2 each pursuant to the exercise of stock options aggregating to Rs.24.13 million.

Post allotment of aforesaid equity shares, the issued, subscribed and paid up share capital of the Bank stands at Rs. 4,630.07 million comprising of 2,315,033,039 equity shares of Rs.2 each as on March 31, 2019.

The Bank has not issued any equity shares with differential voting rights during the year.

During the year, the Bank has raised Non-convertible Redeemable Unsecured Basel III compliant Tier II Bonds of Rs.30,420 million.

The Bank is well capitalized with a Capital Adequacy Ratio of 16.5% as at March 31, 2019; of which Tier I Capital Ratio was 11.3% and Tier II Capital Ratio was 5.2%.

DEPOSITS

Being a banking company, the disclosures required as per Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, 2014, read with Sections 73 and 74 of the Companies Act, 2013 are not applicable to the Bank.

AWARDS AND RECOGNITIONS

During the year under review, the Bank was recognized in various ways/by various institutions and some of the key awards presented to the Bank are listed below:

A YES BANK won the 'Product Innovation of the Year' Award among 100+ financial services companies at International Finance Corporation's (IFC Washington's) Global SME Finance Awards.

A YES BANK became first Indian Bank to join 'Natural Capital Coalition' - a global multi-stakeholder collaboration, wherein the bank will integrate natural capital thinking into its strategy & operations.

A YES BANK was honored at the 20th edition of the coveted global award, The Asset Triple A Country Awards 2018 with 'Best New Bond India' for launching the largest debut international bond issuance, priced at the tightest spread over US treasuries by an Indian bank since 2008.

A YES BANK won the coveted 'Golden Peacock Award For Sustainability' - 2018.

A YES BANK was honored with the runner-up award at the 30th Qualtech Qimpro Award in the Continuous Improvement category, winning in the Qualtech Qimpro Awards for the third year in a row.

A YES BANK was felicitated by Business France and Indo-French Chamber of Commerce and Industry for 'Promoting & Facilitating Indo-French Bilateral Relations'.

A YES BANK won the SKOCH Editor's Choice Award for 'YES Rewardz' Loyalty Program at the 55th SKOCH Summit.

A YES BANK was adjudged Global winner in Payments at the 'Technology Project Awards-2018', a prestigious award recognizing innovation in financial technology instituted by The Banker, a London-based leading global financial publication promoted by The Financial Times (FT).

A YES BANK has the highest number of its facilities under environment management system ISO 14001:2015 certification ambit in the BFSI Sector, leading the BFSI sector globally with the highest number of ISO 14001 certified green facilities. This extraordinary global achievement by an Indian bank comes on the back of YES BANK'S unmatched commitment to environmental Sustainability.

A YES BANK became the only Indian bank to be selected in the Dow Jones Sustainability Indices (DJSI) Emerging Markets for the fourth year in a row (2015-2018) o ~3,500 companies invited. The Bank was selected among 50 banks (from 267 banks) out of the 13 invited Indian banks, The Bank is the only

Indian Bank to make it to the index of 93 companies from 14 countries included in the DJSI Emerging Markets Index (EMI). The 2018 Index became effective as of September 24, 2018.

A YES BANK was adjudged winner for outstanding performance in Instant Payment Products (UPI + IMPS + BHIM + USSD), at the National Payments Excellence Awards (NPCI) 2017 hosted by National Payments Corporation of India (NPCI) in May 2018.

A YES BANK was selected in FTSE4Good Emerging Index, for the second consecutive year. FTSE Russell benchmarks ~USD 12.5 trillion in assets across 80 countries and 98% of the investable global market. YES BANK received an ESG Rating which is above the required index inclusion threshold for emerging economies (2.2) and developed markets (3.5) reiterating YBL's ESG leadership with its global peers. The Bank was selected among 87 banks from emerging markets including Itau Unibanco Holdings, Brazil& SBERBANK, Russia.

A YES BANK was recognized with three Gold Awards at the India Content Leadership Award- 2018 for compelling Marketing & Corporate Communication initiatives for its flagship Fintech start-up Business Innovation Program, YES FINTECH and for successfully running CFO Insights, a magazine read widely by Chief Financial Officers (CFOs).

A YES BANK was recognized with the 'Best Implementation of Digital Payments' award at the 4th edition of prestigious BW Businessworld Digital India Summit & Awards 2018.

A YES BANK was adjudged as the 'Best Bank in India' for Payments, Blockchain Initiative, API Initiative, Financial Supply chain Management Deal, Trade Finance Deal, Automation Application and Trade Finance at The Asian Banker Transaction Banking Awards 2018.

A YES BANK recognized with the Best Technology Bank of the Year, Best use of Data& Analytics for Business Outcome and the Most Customer-Centric Bank using Technology Awards in the Medium Size Banks category at the Indian Banks' Association (IBA) Banking Technology Innovation Awards.

A YES BANK applauded as Winner in 'Innovation in Data Science' at the 9th edition of Aegis Graham Bell Award 2018, for the industry-first project 'Yes EEE (Engage Enrich Excel)'.

A YES BANK has been selected by Global Finance magazine as Best Debt Bank in Asia Pacific for deals announced/completed in 2018

Accolades for Small & Medium Enterprises Financing:

A YES BANK was awarded 'SME Bank of the Year -India' in the Asian Banking & Finance Retail Banking Awards, Singapore in July 2018.

A YES BANK was adjudged as the 'Best Bank in India for Small and Medium-Sized Enterprises (SMEs)' at the Asiamoney Best Bank Awards 2018 and 2019.

A YES BANK was recognized as the 'Best Banking Solutions provider for SMEs' at Engineering Export Promotion Council (EEPC India) 48th Northern Region Awards for Export Excellence, Dehradun.

Multiple recognitions for CSR practices:

A YES BANK was adjudged as winner in 'Excellent CSR for Women Empowerment' category of Social Footprints Awards 2018 for YES BANK'S innovative blended finance facility, aimed at promoting environmentally sustainable livelihood among women salt farmers in Gujarat.

A YES BANK was adjudged the winner in 'Safe Drinking Water' category of Social Footprints Awards 2018 for successful implementation of Water ATMs and Water Health Centers under Water and Livelihood project in India.

A YES BANK received 'CSR Excellence Award' for its first-of-its-kind MSME CSR project 'Say YES to Sustainable MSMEs in India' at the Apex India Awards.

EMPLOYEES STOCK OPTION SCHEME

The Bank has instituted Stock Option Schemes to enable its employees to participate in the Bank's future growth and financial success. The Bank provides its employees a platform for participating in important decision making and instilling long-term commitment towards future growth of the Bank by way of rewarding them through Stock Options. In terms of compensation and benefit policy of the Bank, employees are granted options as part of Annual Performance Review process based on their performance as well as to ensure their retention, and to hire the best talent for its senior management and key positions.

The Bank has from time to time granted Stock Options to its employees under the following Employee Stock Option Plans viz.,

A Joining Employee Stock Option Plan II (JESOP II); A Joining Employee Stock Option Plan III (JESOP III);

A YBL ESOP (consisting of two sub-schemes JESOPIV / PESOP I);

A YBL JESOP V/ PESOP II (Consisting of three sub schemes JESOP V/ PESOP II / PESOP II-2010); and

A YBL Employee Stock Option Scheme, 2018 (YBL ESOS 2018) [Consisting of YBL Joining Employee Stock Option Plan, 2018 (JESOP 2018); YBL Performance Employee Stock Option Plan, 2018 (PESOP 2018); and YBL MD & CEO (New) Stock Option Plan, 2019 (MD & CEO Plan 2019).

JESOP II and JESOP III were in force for employees joining the Bank up to March 31, 2006 and March 31, 2007 respectively. Grants under PESOP II had been discontinued w.e.f. January 20, 2010. Grants under YBL ESOP and YBL JESOP V / PESOP II had been discontinued w.e.f. June 12, 2018 pursuant to coming into effect of YBL ESOS 2018. However, any options already granted under the above mentioned plans would be valid in accordance with the terms & conditions mentioned in the plans.

Options under all the aforesaid plans are granted for a term of 10 years (inclusive of the vesting period) and are settled with equity shares being allotted to the beneficiary upon exercise.

In accordance with the various Employee Stock Option Plans/Schemes of the Bank as mentioned above, the Employees can exercise the options granted to them from time to time as per the below vesting schedule:

ESOP Plan JESOP II

Exercise period 50% after 3 years and balance after 5 years from the Grant date

JESOP III

50% after 3 years and balance after 5 years from the Grant date

JESOP IV

50% after 3 years and balance after 5 years from the Grant date

JESOP V

50% after 3 years and balance after 5 years from the Grant date

PESOP I

25% after each year from the Grant date

PESOP II

30%, 30% & 40% after each year from the Grant date

PESOP II - 2010

30%, 30% & 40% each year, from end of 3rd year from the Grant date

JESOP 2018

50% after 3 years and balance after 5 years from the Grant date

PESOP 2018

30%, 30% & 40% each year, from end of 3rd year from the Grant date

MD & CEO Plan 2019

20%, 30% & 50% each year, from end of 1st year from the Grant date

Effective from June 13, 2018, all new options have been granted under the YBL ESOS 2018 (which inter-a/ia consists of JESOP 2018, PESOP 2018 and MD & CEO Plan 2019). The YBL ESOS 2018 and plans formulated thereunder are in compliance with the SEBI (Share Based Employees Benefits) Regulations, 2014 as amended from time to time. Source of shares are primary in nature, since the Bank has been issuing new equity shares upon exercise of options.

No stock options were issued to the Directors of the Bank except Mr. Ravneet Singh Gill, MD & CEO of the Bank.

Various details including option movement during the year under aforementioned Schemes/ Plans, i.e. JESOP II, JESOP III, YBL ESOP, YBL JESOP V/PESOP II and YBL ESOS 2018 respectively are as follows:

 

YBL ESOP

YBL JESOP V/ PESOP II

YBL ESOS 2018

Date of Shareholders' Approval

JESOP II July 24, 2006

JESOP III July 24, 2006

YBL ESOP (JESOP IV) August 29, 2007

YBL ESOP (PESOP I) August 29, 2007

YBL JESOP V September 18, 2008*

YBL PESOP II September 18, 2008*

YBL PESOP II-2010 September 18, 2008*

JESOP 2018 June 12, 2018

YBL PESOP 2018 June 12, 2018

YBL MD & CEO PLAN 2019 June 12, 2018

Total Number of Options approved

25,000,000

25,000,000

25,000,000

25,000,000

47,500,000

76,140,000

101,360,000

2,00,00,000

4,00,00,000

1,50,00,000

Total Number of options outstanding at the beginning of the period

-

-

6,250

247,375

15,956,850

2,276,650

43,733,310

 

 

-

Total No. of Options granted (during FY 2018-19)

-

-

-

-

522,500

-

100,000

417,500

265,000

5,000,000

The Pricing Formula

Refer Note 1

Refer Note 1

Refer Note 1

Refer Note 1

Refer Note 1

Refer Note 1

Refer Note 1

Refer Note 1

Refer Note 1

Refer Note 1

Options Vested (during FY 2018-19)

-

-

-

-

2,530,751

 

5,499,330

-

-

-

Options Exercised (during FY 2018-19)

-

-

3,500

122,000

2,797,274

1,523,050

7,619,970

-

-

-

Total No. of shares arising as a result of exercise of option

 

 

3,500

122,000

2,797,274

1,523,050

7,619,970

-

-

-

Options lapsed/ forfeited (during FY 2018-19)

-

-

2,750

-

844,750

-

2,338,200

-

-

 

Total No. of Options outstanding at the end of the year

 

 

 

125,375

12,837,326

753,600

33,875,140

417,500

265,000

5,000,000

Total No. of Options exercisable at the end of the year

 

 

 

125,375

3,901,451

753,600

17,822,290

-

-

-

Variation of terms of Options

Refer Note 2

Refer Note 2

Refer Note 2

Refer Note 2

Refer Note 3

Refer Note 3

Refer Note 3

Refer Note 2

Refer Note 2

Refer Note 2

Money realized by exercise of Options (during FY 2018-19) (in Rs.)

 

 

80,290

3,415,088

297,015,481

38,502,666

614,457,888

-

-

-

Total No. of Options in force

 

 

 

125,375

12,837,326

753,600

33,875,140

417,500

265,000

5,000,000

Total No. of Options granted to:

 

 

 

(i) Senior Management Personnel (AMP)

-

-

-

-

Refer Sub table 1

-

Refer Sub table 1

Refer Sub table 1

Refer Sub table 1

Refer Sub table 1

(ii) Any other employee who received a grant in any one year of options, amounting to 5% or more of options granted during that year

 

 

 

 

Refer Sub-table 2

-

 

-

Refer Sub table 2

Refer Sub table 2

(iii) Identified employees who are granted options, during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Diluted Earnings Per Share (EPS) of the Bank after considering the effect of potential equity shares on account of exercise of Options

 

 

 

 

Rs.7.38/-

 

 

 

 

 

Impact of the difference between the Intrinsic Value of the Options and the Fair Value of the Options on Profits and on EPS

The Bank has charged Nil amount, being the intrinsic value of the stock options granted for the year ended March 31, 2019 and March 31, 2018. Had the Bank adopted the Fair Value method (based on Black- Scholes pricing model), for pricing and accounting of options, net profit after tax would have been lower by Rs.375.18 millions (Previous year: Rs. 414.98 millions), the basic earnings per share would have been Rs.7.29 (Previous year: Rs.18.24) per share instead of Rs.7.45 (Previous year: Rs.18.43) per share and diluted earnings per share would have been Rs.7.22 (Previous year: Rs.17.88) per share instead of Rs.7.38 (Previous year: Rs.18.06) per share.

 

 

 

 

 

 

 

 

 

Weighted average price of the shares exercised during the year (in Rs.)

-

-

22.94

-

106.18

25.28

80.64

 

 

 

Weighted average fair values of the outstanding options (in Rs)

-

-

-

29.77

179.61

29.77

142.30

 

 

231.15

 

*The option under the scheme were increased subsequently from 1 crore to 3 crores and finally to 4.5 crores by the shareholders' approval dated September 3, 2009 and June 28, 2011 respectively. The Securities and Exchange Board of India ('SEBI') has prescribed two methods to account for stock grants; namely (i) the intrinsic value method; (ii) the fair value method. The Bank adopts the intrinsic value method to account for the stock options it grants to the employees. The Bank also calculates the fair value of options at the time of grant, using Black-Scholes pricing model with the following assumptions:

(a) the weighted-average values of share price, exercise price, expected volatility, expected option life, expected dividends, the risk-free interest rate and any other inputs to the model;

(b) the method used and the assumptions made to incorporate the effects of expected early exercise;

(c) how expected volatility was determined, including an explanation of the extent to which expected volatility was based on historical volatility; and

(d) whether and how any other features of the option grant were incorporated into the measurement of fair value, such as a market condition.

 

March 31, 2019

Risk free Interest Rate

6.29%-9.23%

Expected life

1.5 yrs - 7.5 yrs

Expected Volatality**

25.01%-48.72%

Expected dividends

1.50%

**Expected volatility is average volatility for expected life of the option.

Note 1: Being the closing price of the Equity Shares on the stock exchange with the highest trading volumes on the last working day prior to the date of grant.

Note 2: There is no variation in the terms of the options during the Financial Year ended March 31, 2019.

Note 3: The Shareholders of the Bank by way of Postal Ballot on January 17, 2015 had approved certain modifications in terms of YBL JESOP V / PESOP II Scheme (consisting of three sub-schemes JESOP V / PESOP II / PESOP 11-2010).

Sub-table 1: Following are the total number of stock options that have been granted to Senior Management Personnel ("AMP") of the Bank and its subsidiaries during the financial year ended March 31, 2019:

Scheme

Name of Employees

Designation

Options granted

Grant Price

YBL PESOP 2018

Akash Prasad

Group President

100,000

384.35

YBL JESOP 2018

Amar Kirti Ambani

President

25,000

192.35

YBL JESOP 2018

Anand Deva Priya

President

30,000

384.35

YBL JESOP 2018

Ashish Joshi

Senior President

60,000

200.85

YBL JESOP 2018

Binoj Vasu

Senior President

50,000

200.85

PESOP II- 2010

Mahesh Rajaraman

Group President

50,000

313.05

PESOP II - 2010

Neeraj Dhawan

Senior Group President

50,000

313.05

JESOP V

Raj Ahuja

Senior Group President

400,000

313.05

YBL PESOP 2018

Rajiv Anand

Group President

150,000

384.35

YBL MD & CEO PLAN 2019

Ravneet Singh Gill

MD & CEO

5,000,000

231.15

YBL JESOP 2018

Sai Venkataramana Kosuri

Senior President

35,000

192.35

YBL PESOP 2018

Vikash Modi

Senior President

15,000

192.35

YBL JESOP 2018

Vikram Mago

President

25,000

200.85

YBL JESOP 2018

Vineet Dhar

Group President

100,000

192.35

Sub-table 2: Following are the details of the employees to whom 5% or more of options were granted during the financial year ended March 31, 2019.

Scheme JESOP V

Name of Employees Raj Ahuja

Designation Senior Group President

Options granted 400,000

Grant Price 313.05

YBL PESOP 2018

Rajiv Anand

Group President

150,000

384.35

YBL MD & CEO PLAN 2019

Ravneet Singh Gill

MD & CEO

5,000,000

231.15

None of the employees were granted options equal to or exceeding 1% of the issued capital of the Bank at the time of grant during FY 2018-19.

DIVERGENCE IN ASSET CLASSIFICATION AND PROVISIONING FOR NPAS

In terms of the RBI circular no. DBR.BP.BC.No.32/ 21.04.018/2018-19 dated April 1, 2019, the banks are required to disclose the divergences in asset classification and provisioning consequent to RBI's annual supervisory process in their notes to accounts to the financial statements, wherever either or both of the following conditions are satisfied: (a) the additional provisioning for NPAs assessed by RBI exceeds 10 per cent of the reported profit before provisions and contingencies for the reference period and (b) the additional Gross NPAs identified by RBI exceed 15 per cent of the published incremental Gross NPAs for the reference period. Based on the above, no disclosure on divergence in asset classification and provisioning for NPAs is required with respect to RBI's annual supervisory process for FY2018-19.

SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES

As on March 31, 2019, the Bank had three wholly-owned subsidiaries, YES Securities (India) Limited ('YSIL'), YES Asset Management (India) Limited ('YAMIL') and YES Trustee Limited ('YTL').

The Bank does not have any material subsidiary, associate and joint venture company.

Performance and Financial Position of Subsidiary Companies

YES Securities (India) Limited (YSIL)

YES Securities (India) Limited or YSIL, the Bank's wholly-owned capital markets intermediary, completed five years of operations in FY 2018-19. YSIL, today, offers retail, HNI and corporate customers a comprehensive range of products and services, encompassing Investment Banking (including a dedicated Sustainable Investment Banking practice), Merchant Banking, Wealth Broking, Advisory, Research and Institutional Equities services.

YSIL is a SEBI* registered Stock Broker holding membership of National Stock Exchange (NSE), Bombay Stock Exchange (BSE) and Multi Commodity Exchange (MCX). YSIL is also a SEBI-registered Category I Merchant Banker, Investment Adviser and Research Analyst.

*Securities and Exchange Board of India

Wealth Broking

In FY 2018-19, YSIL's Wealth Broking business continued to enhance its product and service proposition to offer customers a more comprehensive investment management experience. YSIL offers a best-in-class 3-in-1 proposition in major cities across India. Its online trading platform (available on web and mobile app) witnessed consistent growth in client transaction volumes further complementing the growing engagement between high net-worth clients and the dedicated dealing desk.

In FY 2018-19, YSIL took significant strides in achieving the long-term vision of establishing itself as a research-backed and client-centric multi-asset wealth solutions provider. YSIL has set up a strong product team with expertise across asset classes - Equity, Derivatives, Debt, Advisory/Fund Management, Commodities, Currency, as well as a dedicated team focusing on developing digital products. During the year, YSIL also significantly strengthened its research credentials and expanded its research coverage universe across fundamental, thematic and technical insights.

Investment Banking

The Investment Banking team provides Mergers and Acquisition (M&A) and Capital Advisory services to large and mid-market corporate and financial sponsor clients through key products such as Mergers & Acquisition Advisory and Private Equity fund-raising.

YSIL's highly-experienced teams offer expertise across a variety of sectors including Food and Agribusiness; Media and Entertainment; Consumer Markets; Infrastructure and Engineering, Procurement and Construction (EPC), Banking, Financial Services and Insurance (BFSI), Internet & E-commerce, Industrials and Logistics to corporate clients.

Merchant Banking: YSIL's Merchant Banking practice has a strong focus on capital market activities offering a comprehensive bouquet of products including Initial Public Offerings (IPO), Qualified Institutional Placements (QIP), Rights Issues, Open Offer, Buyback, Delisting and other advisory services. During FY 2018-19, the highly-experienced team successfully engaged with leading Indian companies as a fund-raising partner and trusted advisor for their capital market requirements.

Institutional Sales & Trading

FY 2018-19 was a significant year as institutional brokerage rose 57 % over FY 2017-18. The team successfully secured empanelment as broker across major Asset Management and Insurance companies. Besides, backed by improved client service, execution excellence and superior research, the team succeeded in reactivating transaction activity from valued institutional clients. YSIL has proactively engaged and ideated with clients' on capital market insights, corporate road shows and regular research inputs.

As on March 31, 2019, YSIL is empaneled with 30 institutions.

YES Trustee Limited (YTL) & YES Asset Management (India) Limited (Yamil)

YES BANK Limited has incorporated YES Asset Management (India) Limited on April 21, 2017 and YES Trustee Limited on May 3, 201 7 as wholly owned subsidiaries for the mutual fund business.

YAMIL was granted an approval by Securities and Exchange Board of India ("SEBI") on July 3, 2018 to act as an Asset Management Company / Investment Manager to YES Mutual Fund.

YAMIL pursues to combine its investors' and stakeholders' interests and bring out the optimum solutions for its investors. Towards the same, YAMIL has launched its First Mutual Fund Scheme "YES Liquid Fund", NFO which was open from January 2, 2019 to January 16, 2019. The NFO has received extremely good response. Further, Average Assets Under Management (AAUM) of YES Mutual Fund for the period from January 16, 2019 to March 31, 2019 stood at Rs.2000.12 crore.

YES Mutual Fund is presently focusing on tailoring liquidity management solutions for Corporates, HNI's and

Retail investors. It had further received SEBI's approval to launch an Ultra Short-Term Fund and YES Overnight Fund.

YTL is acting as a Trustee Company to YES Mutual Fund (YMF). It will provide trusteeship services to all the funds launched by YMF.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of Financial Statements of subsidiaries in Form AOC-1 forms part of the Annual Report. The Financials of the subsidiaries of the Bank are available on the website of the Bank (www.yesbank.in). Any member who is desirous to have a copy of the annual accounts of the subsidiaries may write to the Company Secretary of the Bank. Financials of Bank and its subsidiaries shall also be available for inspection by members or trustees of the holders of any debentures of the Bank at its Registered office.

RATINGS OF VARIOUS DEBT INSTRUMENTS

During the year under review, the Bank had raised Rs.30,420 million by way of issue of rated listed unsecured Tier II Bonds in the nature of Debenture. This instrument has been rated by rating agencies namely Credit Analysis and Research ('CARE') and India Ratings & Research Pvt. Ltd. ('India Ratings'), A Fitch Group Company. The details of the instrument as well as the ratings are as below:

A The Bank issued 30,420 Rated Listed Non-Convertible Redeemable Unsecured Basel III Compliant Tier II bonds in the form of Debentures issued on Private Placement basis of Face Value of Rs.10,00,000/- each fully paid up aggregating to Rs.30,420 million on September 14, 2018 and the issue was rated by CARE and India Ratings. At the time of issue, CARE had assigned a rating of 'CARE AAA (Outlook: Stable) and India Ratings had assigned a rating of 'IND AA+' (Outlook: Stable). Currently, CARE has assigned a rating of 'CARE AA+' (Outlook: Credit watch with developing implications) w.e.f. November 28, 2018 and India Ratings has assigned a rating of 'IND AA+' (Outlook: Negative) w.e.f. November 2, 2018.

The Credit Rating and change/revision in the Credit Ratings for various debt instruments issued by the Bank from time to time are provided in the Corporate Governance Report forming part of the Annual Report.

BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL

Appointments/Re-appointments: Mr. Ravneet Singh Gill

The Board of Directors of the Bank on January 24, 2019, basis recommendation of the Nomination & Remuneration

Committee (N&RC) appointed Mr. Ravneet Singh Gill as an Additional Director w.e.f. the date of his taking charge and to hold office up to the date of the ensuing Annual General Meeting (AGM). In the said meeting the Board also appointed Mr. Ravneet Singh Gill as the Managing Director and Chief Executive Officer (MD & CEO) of the Bank for a period of three (3) years commencing from the date of his taking charge as MD & CEO, on the terms & conditions as approved by the RBI and as may be further decided by the Board of Directors from time to time, subject to necessary sanctions and approvals from the RBI and the Shareholders of the Bank, as may be applicable. Mr. Ravneet Singh Gill took charge as MD & CEO of the Bank w.e.f. March 1, 2019. The Bank has received a notice in writing from a member proposing the candidature of Mr. Ravneet Singh Gill as MD & CEO on the Board of the Bank. Further, the N&RC and Board of Directors of the Bank have also recommended the appointment of Mr. Ravneet Singh Gill as MD & CEO, not liable to retire by rotation, to the Shareholders at the ensuing AGM.

Mr. Ajai Kumar

Mr. Ajai Kumar, Non-Executive Non-independent Director, was appointed as an Interim MD & CEO of the Bank on January 29, 2019, to hold office as an Interim MD & CEO for a period from February 1, 2019 to February 28, 2019. The Bank had received approval from RBI on January 30, 2019 for appointment of Mr. Ajai Kumar as an Interim MD& CEO. Further, resolution for ratification of appointment and remuneration of Mr. Ajai Kumar as Interim MD & CEO is proposed to be passed at the ensuing AGM.

Dr. Pratima Sheorey

Dr. Pratima Sheorey was appointed as an Additional Director (Independent) on the Board of the Bank w.e.f. April 26, 2018 and was appointed as an Independent Director by the Shareholders at the 14th AGM of the Bank held on June 12, 2018.

Mr. Rentala Chandrashekhar

Mr. Rentala Chandrashekhar was appointed as an Additional Director (Independent) on the Board of the Bank w.e.f. April 26, 2018 and was appointed as an Independent Director by the Shareholders at the 14th AGM of the Bank held on June 12, 2018.

Mr. Uttam Prakash Agarwal

Mr. Uttam Prakash Agarwal was appointed as an Additional Director (Independent) on the Board of the Bank w.e.f. November 14, 2018, to hold office upto the date of ensuing AGM. The Bank has received a notice in writing from a member proposing the candidature of Mr. Uttam Prakash Agarwal as an Independent Director on the Board of the Bank. Further, the N&RC and Board of Directors of the Bank have also recommended the appointment of Mr. Uttam Prakash Agarwal as an Independent Director, not liable to retire by rotation, to the Shareholders at the ensuing AGM.

Mr. Thai Salas Vijayan

Mr. Thai Salas Vijayan was appointed as an Additional Director (Independent) on the Board of the Bank w.e.f. December 3, 2018, to hold upto the date of ensuing AGM. The Bank has received a notice in writing from a member proposing the candidature of Mr. Thai Salas Vijayan as an Independent Director on the Board of the Bank. Further, the N&RC and Board of Directors of the Bank have also recommended the appointment of Mr. Thai Salas Vijayan as an Independent Director, not liable to retire by rotation, to the Shareholders at the ensuing AGM.

Mr. Maheswar Sahu

Mr. Maheswar Sahu was appointed as an Additional Director (Independent) on the Board of the Bank w.e.f. January 24, 2019, to hold upto the date of this AGM. The Bank has received a notice in writing from a member proposing the candidature of Mr. Maheswar Sahu as an Independent Director on the Board of the Bank. Further, the N&RC and Board of Directors of the Bank have also recommended the appointment of Mr. Maheswar Sahu as an Independent Director, not liable to retire by rotation, to the Shareholders at the ensuing AGM.

Mr. Anil Jaggia

Mr. Anil Jaggia was appointed as an Additional Director (Independent) on the Board of the Bank w.e.f. January 24, 2019, to hold office upto the date of this AGM. The Bank has received a notice in writing from a member proposing the candidature of Mr. Anil Jaggia as an Independent Director on the Board of the Bank. Further, the N&RC and Board of Directors of the Bank have also recommended the appointment of Mr. Anil Jaggia as an Independent Director, not liable to retire by rotation, to the Shareholders at the ensuing AGM.

Mr. Ravinder Kumar Khanna

Mr. Ravinder Kumar Khanna was appointed on the Board as Additional (Non-Executive Non-independent), Indian Partners' Representative Director w.e.f. April 26, 2019. The Bank has received a notice in writing from a member proposing the candidature of Mr. Ravinder Kumar Khanna as a Director on the Board of the Bank. Further, the N&RC and Board of Directors of the Bank have also recommended the appointment of Mr. Ravinder Kumar Khanna as a Non-Executive Non-independent Director, not liable to retire by rotation, to the Shareholders at the ensuing AGM.

Ms. Shagun Kapur Gogia

Ms. Shagun Kapur Gogia was appointed on the Board as Additional (Non-Executive Non-independent), Indian Partners' Representative Director w.e.f. April 26, 2019. The Bank has received a notice in writing from a member proposing the candidature of Ms. Shagun Kapur Gogia as a Director on the Board of the Bank. Further, the N&RC and Board of Directors of the Bank have also recommended the appointment of Ms. Shagun Kapur Gogia as a Non-Executive Non-independent Director, not liable to retire by rotation, to the Shareholders at the ensuing AGM.

Mr. Subhash Chander Kalia

Mr. Subhash Chander Kalia was appointed as an Additional Director (Non-Executive Non-independent) on the Board of the Bank w.e.f. April 3, 2018 and was appointed as a Non-Executive Non-independent Director by the Shareholders at the 14th AGM of the Bank held on June 12, 2018.

In terms of Section 152 of the Companies Act, 2013, Mr. Subhash Chander Kalia, Non-Executive Non-independent Director, being liable to retire by rotation, shall retire at the ensuing AGM and being eligible for re-appointment, offers himself for re-appointment.

Lt. General (Dr.) Mukesh Sabharwal (Retd.)

The term of office of Lt. General (Dr.) Mukesh Sabharwal (Retd.), as an Independent Director, will expire on June 13, 2019. The Bank has received a notice in writing from a member proposing the candidature of Lt. General (Dr.) Mukesh Sabharwal (Retd.) as an Independent Director on the Board of the Bank. Further, the N&RC and Board of Directors of the Bank have also recommended the re-appointment of Lt. General (Dr.) Mukesh Sabharwal (Retd.), as an Independent Director of the Bank for a second term upto April 24, 2020 (i.e. completion of eight years in the Bank as permissible under the Banking Regulation Act, 1949) or such other extended term as may be approved by RBI, subject to maximum 5 years of second term as provided under Companies Act, 2013, not liable to retire by rotation, to the Shareholders of the Bank at the ensuing AGM.

Mr. Brahm Dutt

The term of office of Mr. Brahm Dutt, as an Independent Director, will expire on June 13, 2019. The Board of Directors of the Bank, basis the recommendation of the N&RC and approval of RBI, had appointed Mr. Brahm Dutt, Independent Director, as Part-Time Chairman of the Bank. Mr. Brahm Dutt took charge as Part-Time Chairman of the Bank w.e.f. January 11, 2019 pursuant to approvals received from RBI and will hold the office as Part-Time Chairman of the Bank till January 10, 2022.

The Bank has received a notice in writing from a member proposing the candidature of Mr. Brahm Dutt as an Independent Director on the Board of the Bank. The N&RC and Board of Directors of the Bank have also recommended the re-appointment of Mr. Brahm Dutt, as an Independent Director of the Bank for the second term, not liable to retire by rotation, to the Shareholders of the Bank at the ensuing AGM and he shall hold office till January 10, 2022 (i.e. tenure as Part-Time Chairman of the Bank). A resolution for taking on record the RBI approval for appointment of Mr. Brahm Dutt and approval of remuneration as Part-Time Chairman of the Bank is proposed to the Shareholders at the ensuing AGM.

The relevant details including profiles of Mr. Ravneet Singh Gill, Mr. Ajai Kumar, Mr. Uttam Prakash Agarwal, Mr. Thai Salas Vijayan, Mr. Maheswar Sahu, Mr. Anil Jaggia, Mr. Ravinder Kumar Khanna, Ms. Shagun Kapur Gogia, Mr. Subhash Chander Kalia, Lt. General (Dr.) Mukesh Sabharwal (Retd.) and Mr. Brahm Dutt are included separately in the Notice of AGM and Report on Corporate Governance of the Bank forming part of the Annual Report.

Retirements/Cessations: Mr. Saurabh Srivastava

In terms of RBI letter dated January 28, 2016 & March 28, 2018, Mr. Saurabh Srivastava completed his tenure as Director of the Bank on April 22, 2018.

Ms. Debjani Ghosh

Ms. Debjani Ghosh, Independent Director has resigned from the office of the Director w.e.f. April 26, 2018, due to her pre-occupation with full time engagement as President of National Association of Software and Services Companies (NASSCOM).

Mr. Ashok Chawla

Mr. Ashok Chawla, Non-Executive (Independent) Part-Time Chairman of the Bank, had resigned from the directorship of the Bank w.e.f. November 14, 2018, mentioning that during the current transition period, the Bank would need a Chairman who could devote more time and attention.

Mr. Vasant Gujarathi

Mr. Vasant Gujarathi, Independent Director, had resigned from the directorship of the Bank w.e.f. November 14, 2018, due to his personal commitments.

Mr. Rentala Chandrashekhar

Mr. Rentala Chandrashekhar, Independent Director of the Bank, resigned from the directorship of the Bank w.e.f. November 19, 2018, citing that he was deeply concerned about the recent developments at the Bank and dismayed at the manner in which they have been dealt with and it is more distressing that all this should have been occurred during a critical transition period when tact, wisdom and purposeful, well-considered actions were called for and the resulting situation arising from recent development and their handling is not conducive to the discharge of his duties.

The Board places on record its sincere appreciation and thanks for the valuable contributions made by Mr. Ashok Chawla as Part-Time Chairman of the Bank and Mr. Saurabh Srivastava, Ms. Debjani Ghosh, Mr. Vasant Gujarathi and Mr. Rentala Chandrashekhar as Independent Directors of the Bank.

Mr. Rana Kapoor

Mr. Rana Kapoor demitted office as MD & CEO of the Bank w.e.f. the close of business hours on January 31, 2019 upon completion of RBI approved term.

The Board places on record its sincere appreciation and thanks for the valuable services and leadership of Mr. Rana Kapoor as MD& CEO of the Bank. The Bank over the last fourteen and half years of performance, has demonstrated track record of consistent delivery of business and financial outcomes across all critical parameters such as Capital Adequacy, Profitability, Steady Growth and look forward to carry on the excellent performance under the leadership of Mr. Ravneet Singh Gill.

Key Managerial Personnel

Mr. Ravneet Singh Gill, MD & CEO, Mr. Raj Ahuja, Group Chief Financial Officer and Mr. Shivanand R. Shettigar, Group Company Secretary of the Bank are the Key Managerial Personnel as per the provisions of the Companies Act, 2013 and rules made thereunder.

During the year under review, Mr. Rana Kapoor demitted office as MD & CEO and Key Managerial Personnel of the Bank in terms of the provisions of Section 203 of the Companies Act, 2013 w.e.f. close of business hours on January 31, 2019. Further, Mr. Ajai Kumar was appointed as an Interim MD & CEO and Key Managerial Personnel in terms of the provisions of Section 203 of the Companies Act, 2013 for the period commencing from February 1, 2019 to February 28, 2019. Mr. Ravneet Singh Gill took charge as MD & CEO and Key Managerial Personnel of the Bank in terms of the provisions of Section 203 of the Companies Act, 2013 for a period of three (3) years, w.e.f. March 1, 2019 to February 28, 2022.

Mr. Raj Ahuja was appointed as the Group Chief Financial Officer and Key Managerial Personnel in terms of the provisions of Section 203 of the Companies Act, 2013 w.e.f. April 3, 2018.

DECLARATION BY INDEPENDENT DIRECTORS

The Bank has received necessary declarations from each Independent Director under Section 149(6) and 149(7) of the Companies Act, 2013 and Regulation 16(1)(b) and Regulation 25(8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ('Listing Regulations'), that they meet the criteria of independence laid down thereunder.

FAMILIARIZATION PROGRAMS FOR INDEPENDENT DIRECTORS

The various programs were undertaken for familiarizing the Independent Directors which are disclosed in detail in the Corporate Governance Report, which forms part of the Annual Report.

NUMBER OF THE MEETINGS OF THE BOARD AND COMMITTEES

Regular meetings of the Board and its Committees are held to discuss and decide on various business policies, strategies, financial matters and other businesses. The schedule of the Board/Committee meetings to be held in the forthcoming financial year is circulated to the Directors in advance to enable them to plan their schedule for effective participation in the meetings. Due to business exigencies, the Board has also been approving several proposals by circulation from time to time.

The Board met thirteen (13) times during the FY 2018-19 viz. on April 3, 2018, April 26, 2018, June 12, 2018, June 13, 2018, July 26, 2018, August 28, 2018, September 25, 2018, October 25, 2018, December 13, 2018, January 9, 2019, January 24, 2019, January 29, 2019 and March 14, 2019.

Additionally, several Committee meetings were held during the year including Audit Committee and Risk Monitoring Committee Meetings, which met nine (9) and six (6) times respectively during the year.

Detailed information on the meetings of the Board and its Committees are included in the Report on Corporate Governance, which forms part of the Annual Report.

COMMITTEES OF THE BOARD

The Bank has the following twelve (12) Board level Committees which have been established in compliance with the requirements of the business and relevant provisions of applicable laws and statutes:

1. Audit Committee;

2. Risk Monitoring Committee;

3. Board Credit Committee;

4. IT Strategy Committee;

5. Corporate Social Responsibility Committee;

6. Nomination and Remuneration Committee;

7. Capital Raising Committee;

8. Stakeholders Relationship Committee;

9. Fraud Monitoring Committee;

10. Service Excellence, Branding and Marketing Committee

11. Board Committee on Willful Defaulters & Non-operative Borrowers; and

12. Committee of Independent Directors.

The details with respect to the composition, terms of reference, number of meetings held, etc. of these Committees are given in the report on Corporate Governance which forms part of the Annual Report.

CORPORATE SOCIAL RESPONSIBILITY

In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Bank has established Corporate Social Responsibility ('CSR') Committee and statutory disclosures with respect to the CSR Committee and an Annual Report on CSR Activities forms part of this Report as Annexure 1. The CSR Policy as recommended by the CSR Committee and as approved by Board is available on the website of the Bank and can be accessed at https://www.yesbank.in/pdf/ ybl_corporate_social_responsibility_policy.

PERFORMANCE EVALUATION OF THE BOARD

The Bank has laid down criteria for performance evaluation of the Directors including Chairman, MD & CEO, Board Level Committees and Board as a whole as well as the evaluation process for the same, in line with the provisions of the Companies Act, 2013, Listing Regulations and SEBI Guidance Note on the Board Evaluation dated January 5, 2017.

The performance evaluation of the members of the Board, the Board Level Committees and Board as a whole was carried out on April 25 and 26, 2019. Additional information on the Board Evaluation Process forms part of the Report on Corporate Governance.

CORPORATE GOVERNANCE

Corporate Governance is an ethically driven business process that is committed to values aimed at enhancing an organization's brand and reputation. This is ensured by taking ethical business decisions and conducting business with a firm commitment to values, while meeting stakeholders' expectations. Further, Corporate Governance is based on the principles of conducting the business with all integrity, fairness, and transparency with all the transactions, making the necessary disclosures and decisions, complying with the laws of the land, accountability and responsibility towards the stakeholders and commitment of conducting the business in an ethical manner. Your Board functions as trustees of the shareholders and seeks to ensure that the long-term economic value for its shareholders is achieved while balancing the interest of all the stakeholders. The Bank is committed to achieve the highest standards of Corporate Governance and also adheres to the Corporate Governance requirements set by the Regulators/applicable laws. In line with the foregoing, the Bank has adopted a Code of Corporate Governance which acts as a guide to the Bank and the Board on the best practices in the Corporate Governance.

A separate section on Corporate Governance standards followed by the Bank and the relevant disclosures, as stipulated under Listing Regulations, Companies Act, 2013 and rules made thereunder forms part of the Annual Report.

A Certificate from M/s. Mehta & Mehta, Practicing Company Secretaries, conforming compliance by the Bank to the conditions of Corporate Governance as stipulated under Listing Regulations, is annexed to the Report on Corporate Governance, which forms part of the Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report for the year under review as stipulated in Listing Regulations is presented in a separate section forming part of the Annual Report.

VIGIL MECHANISM

In line with the provisions of Listing Regulations, the Companies Act, 2013 and the principles of good governance, the Bank has devised and implemented a vigil mechanism, in the form of 'Whistle-Blower Policy'. The policy devised is also aligned to the recommendations of Protected Disclosure Scheme for Private Sector and Foreign Banks, instituted by RBI. Detailed information on the Vigil Mechanism of the Bank is provided in the Report on the Corporate Governance which forms part of the Annual Report.

RISK MANAGEMENT FRAMEWORK

The Bank's Enterprise Risk Management framework encompasses the following:

A Risk Governance Framework: The Bank has implemented an Enterprise Risk Governance framework to ensure non-silo based management and oversight of Risk. The Bank's Risk Management philosophy is guided by the Three Lines of Defence Principle:

A First Line of Defence - Business Management: Each business segment of the Bank has risk ownership and is responsible for assessment and management of risks and has the overall responsibility of the management and mitigation of the Risk. The segments are required to implement appropriate procedures to fulfil their risk governance responsibilities.

A Second Line of Defence - Independent functions: The Bank's independent oversight functions, such as, Risk Management, Compliance, Legal, Fraud Containment Unit, etc. set standards for management and oversight of risks, including compliance with applicable laws, regulatory requirements and policies.

A Risk Management: Risk Management establishes policies and guidelines for risk assessment and management and contributes to controls and tools to manage, measure and mitigate risks faced by the Bank.

A Compliance: The Compliance unit manages adherence to applicable laws and regulatory guidelines.

A Legal: The Legal Risk Management division of the Bank undertakes various activities including advising business and operational management, acting as an independent control function while facilitating business, ensuring legal compliance, assisting the Board and Committees of the Board regarding analysis of laws and regulations, regulatory matters, disclosure matters, and potential risks and exposures on key litigation and transactional matters.

A Finance: The Finance vertical provides key data and consultation to facilitate sound decisions in support of the objectives of the Bank and the business verticals. Finance serves as an independent control function advising business management and establishing policies or processes to manage risk. It has overall responsibility for managing the Bank's balance sheet and the Bank's liquidity and interest rate risk.

A FCU & AMI: The Fraud Containment Unit (FCU) is responsible for prevention and detection of internal and external frauds in the areas of Liabilities, Product and Support functions. The unit conducts transaction monitoring, forensic scrutiny, employee awareness trainings and vulnerability assessments to help achieve the said objective. The Anti Money Laundering Unit (AML) is responsible for identifying and reporting of suspicious transactions as prescribed under PMLA Act/Regulators, across all Business segments of the Bank. The AML unit is equipped with qualified, trained and experienced staff, which monitors various transactions undertaken by customers with a view to combat financial crimes and prevents misuse of the accounts for money laundering.

A Third Line of Defence - Internal Audit: The Bank's Internal Audit function independently reviews activities of the first two lines of defence based on a risk-based audit plan and methodology approved by the Audit Committee of the Board. Internal Audit provides independent assurance to the Board, the Audit Committee, senior management and regulators regarding the effectiveness of the Bank's governance and controls designed for risk mitigation framework.

The Board of Directors of the Bank has overall responsibility for Risk Management. The Board oversees the Bank's Risk and related control environment, reviews and approves the policies designed as part of overseeing the Risk Management practices. The Board ensures that comprehensive policies, systems and controls are in place to identify, monitor and manage material risks at a Bank-wide level, with clearly defined risk limits. The Board has laid down a Risk Appetite framework which articulates the quantum of risk the Bank is willing and able to assume in its exposures and business activities in pursuit of its strategic objectives and desired returns. The Board has also established policies governing risk management, such as, Enterprise Risk Management Policy, Reputation Risk Management Policy, Group Risk Management Policy, Credit Policy, ALM Policy, Model Risk & Governance Policy, etc.

The Board has put in place five Board level Committees which inter-a/ia pertain to Risk Management, viz. Risk Monitoring Committee (RMC), Audit Committee of the Board (ACB), Fraud Monitoring Committee (FMC), Board Committee on Wilful Defaulters & Non-Cooperative Borrowers (BCWD & NCB) and Board Credit Committee (BCC) to deal with risk management practices, policies, procedures and to have adequate oversight on the risks faced by the Bank.

The Board Committees have set up various Executive level committees for oversight over specific risks.

1. Management Credit Committee;

2. Executive Credit Committee;

3. Retail and Business Banking Credit Committee;

4. Model Assessment Committee;

5. Asset & Liability Management Committee;

6. Investment & Financial Markets Management Committee;

7. Operational Risk Management Committee;

8. Outsourcing Management Committee;

9. Business Continuity Management Committee;

10. Security Council;

11. Product Process Approval Committee;

12. Fraud & Suspicious Transaction Monitoring Committee;

13. Whistle-Blower Committee;

14. Enterprise Risk Management & Capital Management Committee;

15. Strategy Management Committee;

16. Reputation Risk Management Committee;

17. Standing Committee on Customer Service;

18. IT Steering Committee;

19. Steering Committee for IFRS (Ind AS);

20. RBS - Reporting Oversight Committee;

21. Apex Management Committee;

22. Staff Accountability Committee; and

23. Committee for Classification of Wilful Deafulters;

Risk events, potential threats, performance of the Bank vis-a-vis Risk Limits and Risk Appetite, Risk Profile dashboard covering key risk indicators, etc. are presented to these Committees, with Q-o-Q/Y-o-Y trends highlighted, with level and direction of risk. The Bank also conducts a detailed Internal Capital Adequacy Assessment Policy ('ICAAP') review exercise to identify its Risk universe, internal controls and mitigation measures in place for the risks and capital requirements for identified risks. The ICAAP findings are presented to the RMC and the Board.

The Risk Management Unit is headed by the Chief Risk Officer ('CRO') who leads the Credit Risk (Underwriting) Unit, General Legal Counsel and other Risk Units. The CRO reports to the MD & CEO. The CRO is responsible to ensure an effective implementation of an enterprise wide risk management framework through various risk policies, processes, limits and controls that enable prompt risk identification, accurate risk measurement and effective risk mitigation. CRO is also responsible for risk compliance and monitoring as well as reviewing and presenting various risk reports, policies and dashboards to RMC and Board.

The Risk Management Unit in the Bank is designed to establish an effective Enterprise Risk Management (ERM) framework for the Bank to ensure sustainable business growth with stability and to promote a proactive approach in identification, assessment, management and reporting of risks associated with business. The Risk Management Unit enables the Bank to successfully meet its business and financial goals, while maintaining effective Board and management oversight on Risk and Control parameters.

A Risk Appetite: The Bank's Risk Appetite statement details the level of aggregate risk that the Bank is willing to undertake and successfully manage in pursuit of its business goals.

A Risk Management: The Bank follows a standardized methodology of identification and assessment of material risks, implementation of internal controls and mitigation measures, ongoing quality reporting and monitoring of risks.

A Capital Management and Risk-based Capital allocation and performance measurement: The

Bank ensures deployment of capital within the organization based on risk tolerance, economic constraints, stakeholder needs and ensuring risk-based capital allocation and performance measurement.

LOANS, GUARANTEES OR INVESTMENTS IN SECURITIES

Pursuant to Section 186(11) of the Companies Act, 2013, loans made, guarantees given or securities provided or acquisition of securities by a Banking company in the ordinary course of its business are exempted from disclosure requirements under Section 134(3) (g) of the Companies Act, 2013.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

There were no materially significant transactions with related parties including promoters, directors, key managerial personnel, subsidiaries or relatives of the Directors during the financial year which could lead to a potential conflict with the interest between the Bank and these parties. The details of the transactions with related parties, if any, were placed before the Audit Committee from time to time. There were no material individual transactions with related parties, which were not in the ordinary course of business of the Bank, nor were there any transactions with related parties, which were not on arm's length basis. Accordingly the disclosure in Form AOC-2 is not applicable to the Bank for the year under review. Suitable disclosure as required by the Accounting Standards (AS-18) has been made in the notes to the Financial Statements.

Prior omnibus approval for normal banking transactions is also obtained from the Audit Committee for the related party transactions which are repetitive in nature as well as for the normal banking transactions which cannot be foreseen and accordingly the required disclosures are made to the Committee for their approval.

The policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions as approved by the Audit Committee and the Board of Directors is uploaded on the website of the Bank and can be accessed at https://www.yesbank.in/about-us/corporate-governance.

CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to Section 129(3) of the Companies Act, 2013, a consolidated financial statement of the Bank along with its Subsidiaries i.e. YES Securities (India) Limited, YES Asset Management (India) Limited and YES Trustee Limited has been prepared in the same form and manner as that of the Bank which shall be laid before the ensuing AGM along with the laying of the Bank's Financial Statement under Section 129(2) i.e. Standalone Financial Statement of the Bank.

Further, pursuant to the provisions of Accounting Standard (AS-21), the Consolidated Financial Statements notified under Section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 issued by the Ministry of Corporate Affairs, the Consolidated Financial Statements of the Bank along with its subsidiaries for the year ended March 31, 2019 forms part of the Annual Report.

INTERNAL FINANCIAL CONTROLS SYSTEMS AND THEIR ADEQUACY

The Bank has implemented adequate procedures and internal controls which provide reasonable assurance regarding reliability of financial reporting and preparation of financial statements. The Bank also ensures that internal controls are operating effectively.

AUDITORS

A. Statutory Auditors

The Members of the Bank at the 12th Annual General Meeting held on June 7, 2016, have approved the appointment of M/s. B S R & Co. LLP, Chartered Accountants as Statutory Auditors of the Bank for a period of four (4) years, subject to the approval of the RBI, to hold office from the conclusion of the 1 2th AGM till the conclusion of 16th AGM of the Bank to be held in the year 2020, subject to ratification of their appointment by the Members at every AGM. Accordingly, RBI had approved the appointment of M/s. B S R & Co., LLP as Statutory Auditors of the Bank for FY 2018-19, which was also ratified by the Shareholders in the 14th AGM of the Bank held on June 12, 2018.

Further, in terms of Companies (Amendment) Act, 2017 notified w.e.f May 7, 2018, the requirement of Section 139(1) of Companies Act, 2013 stands omitted and the ratification of appointment of the Statutory Auditor at every AGM is not required. The Bank has received the consent from the Auditors and confirmation to the effect that they are not disqualified to be appointed as the Auditors of the Bank in terms of the provisions of the Companies Act, 2013 and rules made thereunder. Accordingly, the Board of Directors has recommended to RBI to seek its approval for appointment of M/s. B S R & Co. LLP, Chartered Accountants as Statutory Auditors of the Bank for FY 2019-20.

The Report given by the Auditors on the financial statements of the Bank forms part of this Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report. Also, no offence of fraud was reported by the Auditors of the Bank.

B. Secretarial Auditors and Secretarial Audit Report

Pursuant to Section 204 of the Companies Act, 2013, the Bank had appointed M/s. BMP& Associates, Practicing Company Secretaries, Mumbai as its Secretarial Auditors to conduct the secretarial audit of the Bank for the FY 2018-19. The Bank provided all assistance and facilities to the Secretarial Auditors for conducting their audit. The Report of Secretarial Auditors for the FY 2018-19 is annexed to this report as Annexure 2. There are no observations, reservations or adverse remarks in the Secretarial Audit Report.

BUSINESS RESPONSIBILITY REPORT

As stipulated in Listing Regulations, the Business Responsibility Report describing the initiatives undertaken by the Bank from environmental, social and governance perspective is attached as part of the Annual Report.

MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE BANK

There are no material changes and commitments, affecting the financial position of the Bank which has occurred between the end of the financial year of the Bank i.e. March 31, 2019 and the date of the Directors' Report i.e. April 26, 2019.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS

During the year under review, no significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and Bank's operation in future.

MAINTENANCE OF COST RECORDS

Being a Banking Company, the Bank is not required to maintain cost records as per sub-section (1) of Section 148 of the Companies Act, 2013.

POLICY ON APPOINTMENT OF DIRECTORS

The Board of Directors of the Bank had formulated and adopted policy on "Board Diversity and Fit & Proper Criteria and Succession Planning" for appointment of Directors on the Board of the Bank and succession planning. The details of the same have been included in the Report on Corporate Governance forming part of this Annual Report.

REMUNERATION POLICY

The Board of Directors of the Bank had formulated and adopted policies for Remuneration of Employees of the Bank, Remuneration of Directors including the Chairman of the Bank. The details of the same are made available on the Bank's website and can be accessed at https://www.yesbank.in/about-us/corporate-governance.

EMPLOYEE REMUNERATION

(a) The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this report. In terms of Section 136 of the Companies Act, 2013, the same is open for inspection during working hours at the Registered Office of the Bank. A copy of this statement may be obtained by the Members by writing to the Company Secretary of the Bank.

(b) The ratio of the remuneration of each Director and employees of the Bank as required under the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report as Annexure 3.

ANNUAL RETURN

Pursuant to the provisions of Section 134(3)(a) and Section 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return of the Bank as at March 31, 2019 is uploaded on the website of the Bank and can be accessed at https://www.yesbank.in/about-us/corporate-governance

DISCLOSURES UNDER GREEN INFRA BONDS

Since the maiden issuance by YES BANK in 2015, Green Bonds have emerged as an innovative instrument for financing climate action in India. Over the past few years, the Green Bonds market has witnessed a steady growth and is currently pegged at over USD 7 billion. Green Bonds are playing a pivotal role towards the realization of ambitious climate targets that India pledged during Paris Accord in 2015. Driven by its commitment of mobilizing USD 5 billion towards climate action by 2020, as taken during Paris Accord, YES BANK has issued three green bonds:

A February 2015: YES BANK issued India's first-ever Green Infrastructure Bonds, raising an amount of no billion. This 10 year tenor bond witnessed strong demand from leading investors including Insurance companies, Pension & Provident Funds, Foreign Portfolio Investors, New Pension Schemes and Mutual Funds.

A August 2015: YES BANK raised Rs.3.15 billion through the issue of Green Infrastructure Bonds to International Finance Corporation on a private placement basis which is the first investment by IFC in an Emerging Markets Green Bond issue in the world. The bonds are for a tenor of 10 years. IFC paid for the placement using the proceeds from the first Green Masala Bond program that aimed at raising capital in the offshore rupee market.

A December 2016: YES BANK has raised Rs.3.30 billion, through an issue of a 7-year Green Infrastructure Bonds to FMO, the Dutch Development Bank, on a private placement basis. This is FMO's first Investment in a Green Bond issued by a bank in India. FMO has paid for placement using the proceeds from their sustainability bonds issued in 2015.

The amount raised is used to finance Green Infrastructure Projects as per 'Eligible Projects' outlined in the Bank's internal guidelines that are in adherence to the Green Bond Principles (GBP). For FY 2018-19, KPMG, India has provided limited assurance on conformity of the use of proceeds, process for evaluation and selection of projects, management of proceeds and reporting of these green bonds to GBP 2018.

The GBP are voluntary guidelines, developed by the International Capital Markets Association, for broad use by the market that recommend transparency and disclosure, and promote integrity in the development of the Green Bond market. They have the following four key components and the bank showcases its adoption below:

A Use of Proceeds: The proceeds raised by the Bank are used in eligible project categories and include all projects funded in whole, or in part, in the fields of renewable and clean energy projects including Wind, Solar, Biomass, Hydropower and other such projects.

A Process for Evaluation and Selection of Eligible Projects: The Bank's process starts with interactions with potential borrowers to understand the overall aspects of the project and a preliminary confirmation against the eligibility criteria. The evaluation moves to risk assessment for confirmation of the eligibility, post which further documentation is sought as per the Bank's policies and GBP.

A Management of Proceeds: Green Bond allocations to eligible projects are tracked by the Bank through an MIS based asset tagging system on a quarterly basis. The unallocated proceeds, if any, are placed in liquid instruments (Government Securities) on a quarterly basis.

A Reporting: The Bank's communication to investors through an annual update includes:

A List of projects to which proceeds have been allocated to, with brief description including amounts disbursed, installed capacity

A Summary of Environment and Social (E&S) impacts associated with projects, if any

A Information on investment of unallocated proceeds in liquid instruments.

Impacts

Through financing solar and wind power plants, these bonds strengthen India's energy security while reducing fossil fuel dependency. These bonds have been crucial in financing climate change mitigation with avoidance of emissions of CO2, SO2, NOX and other air pollutants associated with fossil fuel based energy generation. Estimated CO2 emission reductions are shared along with project details.

List of projects against which green bonds proceeds have been allocated as on March 31, 2019 is provided below:

 

Proceeds Utilization* Against Bond Issuance Size of Rs.1,000 crore (February 2015)

Sr. No.

Project Location

Description

Total Fund Based Utilization, Rs. crore (as on March 31, 2018)

Estimated** positive E&S impacts - CO2 Emissions Reduction (tCO2 / yr)

Known significant negative E&S Impacts

1.

Maharashtra

31.5 MW wind energy project

121.32

45,756.09

None

2.

Andhra Pradesh

10 MW solar energy project

18.61

18,183.66

None

3.

Madhya Pradesh

12 MW wind energy project

38.48

28,595.27

None

4.

Karnataka

50 MW solar energy project

94.44

92,588.38

None

5.

Telangana

15 MW solar energy project

9.29

20,945.42

None

6.

Telangana

143 MW solar energy project

189.74

2,90,199.61

None

7.

Telangana

15 MW solar energy project

9.29

11,731.39

None

8.

Telangana

42 MW solar energy project

11.42

73,189.22

None

9.

Rajasthan & Andhra Pradesh

155.4 MW wind energy project

231.20

2,55,734.57

None

10.

Karnataka

40 MW solar energy project

174.92

83,390.64

None

11.

Karnataka

21 MW wind energy project

56.57

48,758.60

None

12.

Karnataka

32 MW solar energy project

48.25

63,870.91

None

 

Proceeds Utilization* Against Bond Issuance Size of Rs.315 crore (August 2015)

Sr. No.

Project Location

Description

Total Fund Based Utilization, Rs. crore (as on March 31, 2018)

Estimated** positive E&S impacts - CO2 Emissions Reduction (tCO2 / yr)

Known significant negative E&S Impacts

1.

Andhra Pradesh

100 MW wind energy project

141.92

2,83,508.64

None

2.

Telangana

30 MW solar energy project

89.72

52,278.02

None

3.

Telengana

5 MW solar energy project

22.63

9,625.44

None

 

Proceeds Utilization* Against Bond Issuance Size of Rs.330 crore (December 2016)

Sr. No.

Project Location

Description

Total Fund Based Utilization, Rs. crore (as on March 31, 2018)

Estimated** positive E&S impacts - CO2 Emissions Reduction (tCO2 / yr)

Known significant negative E&S Impacts

1.

Gujarat

30 MW wind energy project

40.87

68,677.52

None

2.

Telangana

50 MW solar energy project

6.32

89,207.46

None

3.

Karnataka

40 MW solar energy project

188.60

85,215.53

None

4

Rajasthan

300 MW solar energy project

111.85

4,52,391.80

None

* For the Green Bonds which have been fully utilized, the cumulative lending to the projects which received the proceeds may exceed the issuance size. The temporary unallocated proceeds (Rs.60.73 crore of Rs.315 crore bond issued in August 2015) have been invested in Government Securities and will be allocated back to eligible projects, when available.

The assurance statement issued by KPMG India is attached as Annexure 4 to this report.

STATUTORY DISCLOSURES

The disclosures required to be made under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 on the conservation of energy, technology absorption and Foreign exchange earnings and outgo are given as under:

A. Conservation of Energy

I. The steps taken or impact on Conservation of Energy:

A The Bank has been migrating to LED lighting in phases. In present financial year we have replaced 3,592 LED units, which has a potential for annual energy saving of 20775 KW.

A The Bank is in the process of phasing out air-conditioning systems that use ozone depleting coolants, and in the current reporting cycle, the Bank has initiated the process to replace all air conditioners that are more than 10 years old with energy efficient (star rated) systems that use eco-friendly coolants and thus reducing its environmental footprint, which have potential saving of 10 to 15%.

A The Bank is in the process of phasing out signage's using tube light with energy efficient LED's which have potential saving of 20 to 25%. In FY 2018-19, it has been completed across 70 branches.

A YES BANK'S energy management initiatives aim at reducing 15-20% energy consumption by introducing Energy management system, wherein the consumption will be monitored centrally using IOT.

II. The steps taken by the Bank for utilizing alternate sources of Energy:

The Bank has explored the potential of using alternate sources of energy by installing 5KVA solar system at Pune Bundh garden branch, which has a potential to generate 7,200 units annually. The Bank would continue to explore alternative sources of energy in future.

III. The Capital Investment on Energy Conservation Equipments:

Rs.4.25 crore spent in present financial year (including AC retrofitting, LED projects at corporate offices and branch locations).

B. Technology Absorption

I. Efforts Toward Technology Absorption

The advancements in Information Technology (IT) have led to accelerated development in newer technologies, resulting in higher demand for digital solutions to create alternative banking products that deliver customer delight through a better service delivery framework.

Since inception, YES BANK has been at the forefront of technology innovation and adoption, and will

continue its focus on technology. This will enable the Bank to build a more secure, resilient, and seamless way of interacting and transacting for customers. It will further enforce YES BANK'S endeavors to become a technology-led company in the business of banking.

During FY 2018-19, several new initiatives were completed successfully, as well as systems were upgraded to latest versions to support the growing needs of the Bank. The key Bank-wide projects completed during FY 2018-19 were:

A Right Sourcing Strategy: YES BANK has successfully completed transitions of end user support system, IT infrastructure management and business applications maintenance, among others from total outsourcing arrangements to Right Sourcing operating model. This ensures retention of key technology talent and a more efficient use of partners. The model further entails the use of an optimal mix of insourcing and outsourcing of staff to support and maintain technology assets like business applications and IT infrastructure.

A YES RAPIDO: A truly modern, state-of-the-art, lightweight workflow management solution having a front-end using Progressive Web Apps has been implemented by the Bank. YES Rapido leverages the power of Cloud technologies like Kubernetes and micro services to make it one of the most agile and resilient technologies. This digital fabric solution will form a critical part of furthering digital transformation objectives of the Bank.

A YES Genie: YES Genie leverages the Bank's efforts to consolidate all its customer data (transactions, interactions, behavioral attributes and so on) into the Big Data platform (Hadoop) as its Enterprise Datawarehouse technology. It is built using Modern Application Architecture (the state-of-the-art Microservice Mesh using Kubernetes, Google Istio and other latest technologies). As part of the first phase, YES Genie creates a single view of customers across all banking relationships with the Bank. Besides, it allows a call-to-action enablement to assist in delivering services.

A YES Bank Datathon: This initiative was launched with the objective of crowd sourcing ideas and building an augmented data science team for the Bank. In the first edition, YES BANK received an overwhelming response with over 6,000+ applications. The key outcomes of the YES BANK Datathon's 1st edition were building data model prototypes for the Next Best Action model (predicting a next-best action of a customer/user), Anomaly Detection model for POS terminals to ensure higher service levels and a Recommender model for relationship managers to identify priority customers.

A API Banking: YES BANK has undertaken tremendous strides to ensure a stronger connect with its customers and ensure a seamless experience when transacting and/ or making basic enquiries. Currently, it has more than 850 customers on API Banking and this continues to grow at a healthy pace. This product offering is replicated across Enterprise Technology Architecture and the API first' philosophy is being imbibed by the Bank's technology team.

A Awards and accolades: YES BANK won multiple awards at the prestigious Indian Banking Association Awards 2018-19. The Bank was recognized with - Best use of customer-centric technology solution - Winner and Best Technology Bank 2019- Runner Up, Best use of Analytics for superior Customer experience - Runner Up.

II. Proposed New Projects

There is a healthy pipeline of exciting new initiatives, which will enable YES BANK to deliver world-class digital-first customer service in both assisted and self-help mode.

A Retail Net-Banking Upgrade: A completely refreshed and revamped Retail Net-Banking platform is expected to be launched in FY 2019-20. It has been built using state-of-the-art security framework and using concepts of the Modern Technology architecture.

A Unified Cash Management and Corporate Net-Banking Solution: A robust Core System is critical to deliver a superior experience to all corporate customers of the Bank. The new solution will enable a more seamless and straight-through processed environment for customer transactions. This will also be scaled up further to ensure it promptly address the needs and expectations of customers and growing business volumes.

A Extend Cloud-based Use cases: YES BANK plans to use Cloud infrastructure extensively to ensure that the power of FutureTech is being leveraged across all levels of the Bank.

A Apollo Program for OSD Technology Transformation: With a vision to position YES BANK as the most 'Customer Centric' Bank in the services segment and focus on the end-to-end Operation Service Delivery (OSD) Technology Transformation with Digital Solutions, Apollo Program will review, re-imagine and/or re-engineer every Business Operations Process, keeping customer at the forefront with the objective to ensure Efficiency, Productivity, Risk Management, and Compliance.

A Rural Retail Banking: The Bank is building a comprehensive mobility platform to create a paperless banking experience and become the preferred banker in rural and semi-urban geographies.

III. In case of Imported Technology (imported during the last three years reckoned from the beginning of the financial year):

Details of Technology Imported

Year of Import

Whether the Technology been fully absorbed

If not fully absorbed, areas where absorption has not taken place, and the reasons thereof

Software Tokens for Net Banking, Implementation fees and delivery of Branded Software Tokens

Aug-14

Yes

NA

Enabling Radius licenses for 10,000 concurrent users (SMS/E-mail, OATH, software tokens) on existing setup

Sep-15

Yes

NA

Master Data Management licenses

Nov-15

Yes

NA

Cisco Wan Stack for Branch WAN Architecture Revamp

Dec-16

Yes

NA

Upgradation of Murex 2.11 to Murex 3.1

Apr-17

Yes

NA

Cisco CUCM

Dec-17

Yes

NA

Portwise Nexus Hybrid Access Gateway

Oct-18

Yes

NA

Palo Alto Firewall

Feb-19

Yes

NA

C. Foreign Exchange Earnings and Outgo

The Foreign Exchange earned in terms of actual inflows during the year and the Foreign Exchange outgo during the year in terms of actual outflows.

During the year ended March 31, 2019 the Bank earned Rs.37,897.01 million and spent Rs.17,396.41 million in foreign currency. This does not include foreign currency cash flows in derivatives and foreign currency exchange transactions.

COMPLIANCE WITH SECRETARIAL STANDARDS

The Board of Directors affirm that the Bank has complied with the applicable Secretarial Standards issued by the Institute of Companies Secretaries of India (SS1 and SS2) respectively relating to Meetings of the Board, its Committees and the General Meetings.

PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE

The Bank has Zero tolerance towards any act on the part of any executive which may fall under the ambit of 'Sexual Harassment' at workplace, and is fully committed to uphold and maintain the dignity of every women executive working in the Bank. The Policy regarding Prevention & Prohibition of Sexual Harassment at Workplace provides for protection against sexual harassment of women at workplace and for prevention and redressal of complaints. Also, in its endeavor to spread awareness on the aforementioned policy and ensure compliance by all the executives, the Bank has implemented a plan of action to disseminate the information and train the executives on the policy under the ambit of 'Gender Respect and Commitment to Equality' (GRACE) program.

The Bank has complied with provisions relating to the constitution of Internal Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH).

Number of cases filed and their disposal under Section 22 of the POSH is as follows:

Particulars Number of complaints pending as on the beginning of the financial year

Numbers 1

Number of complaints filed during the financial year

10

Number of complaints pending as on the end of the financial year

2

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, it is hereby confirmed that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit of the Bank for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

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

(e) the directors, had laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and

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

ACKNOWLEDGMENT

Your Directors take this opportunity to express their deep and sincere gratitude to the customers of the Bank for their confidence and patronage, as well as to the Reserve Bank of India, Securities and Exchange Board of India, Government of India, and other Regulatory Authorities for their cooperation, support and guidance. Your Directors would like to express a deep sense of appreciation for the commitment shown by the employees in supporting the Bank in its continued robust performance on all fronts. In the Bank's 15th year of Institutional Excellence, the Directors would also like to thank all our valued partners, vendors and stakeholders who have played a significant role in the continued Business Excellence achieved by the Bank. Your Directors would also like to thank the employees for their continued support as the Bank evolves as the "Professionals' Bank of India" with a vision of "BUILDING INDIA'S FINEST QUALITY LARGE BANK OF THE WORLD IN INDIA".

For and on behalf of the Board of Directors

Ravneet Singh Gill

Brahm Dutt

Managing Director & CEO

Chairman

(DIN: 00091746)

(DIN: 05308908)

Place: Mumbai

 

Date: April 26, 2019

 

Annexure 1

THE ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES

A brief outline of the Bank's CSR policy, including overview of projects or programs proposed to be undertaken:

YES BANK'S CSR POLICY:

Through its Responsible Banking ethos, YES BANK has created stakeholder value by implementing projects based on unique models with scalable and sustainable impact. Guided by its Corporate Social Responsibility ('CSR') policy, the bank has delivered internal and external positive socio-environmental impact by following a unique approach.

APPROACH TOWARDS CSR:

A Promote principles of social responsibility and inclusive growth through awareness and support.

A Invest in socially and environmentally responsible activities to create positive impact.

A Engage with stakeholders to further the sustainability agenda of the bank and empower with knowledge.

A Collaborate with likeminded institutions and forge partnerships towards addressing the needs of the stakeholders.

A Monitor the environmental and social investment of YES BANK Limited through structured governance and transparent performance indicators.

YES BANK'S FOCUS AREAS UNDER CSR:

1. Livelihood security and enhancement

(a) Education

(b) Skills/Employability training

2. Healthcare and Social welfare

3. Environment Sustainability

4. Arts/Sports and culture

OVERVIEW OF ACTIVITIES:

In line with the CSR policy and in accordance of Schedule VII of the Companies Act, 2013, YES BANK undertook unique initiatives during the year which positively impacted lives. The initiatives for FY 2018-19 focused on scaling up projects that were launched over the last four years with an objective to deliver on exponential impact and creating sustainable CSR models.

The key initiatives undertaken during the year were in-line with YBL's CSR focus areas under umbrella program #YES S.T.A.R.T (Sustainable Transformation through Alliances, Relationships and Technology) including:

A Livelihood and Water Security

A Employability and Entrepreneurship

A Environmental Sustainability

A Media for Social Change

A Awareness and educating communities on environmental and social topics of national importance

WEB-LINK TO THE CSR POLICY:

https://www.yesbank.in/pdf/ybl_corporate_social_ responsibility_policy

COMPOSITION OF CSR COMMITTEE:

YES BANK recognizes its responsibility towards the society and environment in which it operates and accordingly has worked towards CSR and Sustainable Development focusing on the 'Triple Bottom line' ethos since its inception. YES BANK'S Corporate Social Responsibility Committee monitors the CSR activities on a periodic basis.

Members of the committee as on March 31, 2019:

1. Mr. Maheswar Sahu (Chairman), Independent Director

2. Dr. Pratima Sheorey, Independent Director

3. Lt. General (Dr.) Mukesh Sabharwal (Retd.), Independent Director

4. Mr. Ravneet Singh Gill, Managing Director& CEO

AVERAGE NET PROFIT BEFORE TAX OF THE BANK FOR LAST THREE FINANCIAL YEARS:

Rs.4,779 crore

PRESCRIBED CSR EXPENDITURE (TWO PER CENT OF THE AMOUNT AS ABOVE)

Rs.95.58 crore

DETAILS OF CSR SPENT DURING THE FINANCIAL YEAR:

(a) Total amount to be spent for the financial year: Rs.95.58 crore.

The Bank has spent Rs.53.78 crore during FY 2018-19.

(b) Amount unspent, if any: Rs.41.8 crore.

(c) Manner in which the amount spent during the financial year is detailed below:

Sr. No.

CSR project or activity identified

Sector in which the project is covered

Projects or programs (1) Local area or other (2) Specify the State and district where projects or Programs was undertaken

Amount outlay (budget) project or program-wise

Amount spent on the projects or programs Subheads: (1) Direct expenditure on projects or programs (2) Overheads

Cumulative Expenditure upto the Reporting Period

Amount spent: Direct or through implementing agency

1

Livelihood and Water Security

• Making available safe drinking water • Livelihood enhancement

Delhi/NCR, Goa, Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan

25 crore

12.40 crore

47.01 crore

Direct Ammada Trust YES Foundation National Skills Foundation of India

2

Say YES to Sustainable MSMEs in India

• Ensuring environment sustainability • Promoting preventive healthcare • Promoting education

Delhi/NCR, Gujarat, Haryana, Karnataka, Madhya Pradesh, Maharashtra, Punjab, Rajasthan, Tamil Nadu, Telangana, West Bengal

12 crore

1.90 crore

12.29 crore

Direct Foundation for MSME Clusters (FMC) Entrepreneurship Development Institute of India (EDII)

3

YES STEADY (Skills Training and Enhancement for Development of Youth)

• Promoting education • Livelihood enhancement • Ensuring environment sustainability

Pan India

13 crore

4.83 crore

19.57 crore

Direct Deshpande Foundation Villgro Innovations Foundation

4

Natural Capital Initiatives

• Ensuring environment sustainability • Promoting education

Pan India

21 crore

3.16 crore

9.18 crore

Direct

5

YES COMMUNITY

• Promoting education • Livelihood enhancement • Promoting preventive healthcare • Ensuring environment sustainability

Pan India

7 crore

6.99 crore

30.58 crore

Direct

6

Support to YES Foundation

• Promoting education

Pan India

22 crore

22 crore

58.56 crore

YES Foundation

7

Expenditure on administrative over-heads

 

 

 

2.50 crore

8.69 crore

 

 

 

 

 

TOTAL

53.78 crore

185.88 crore

 

REASONS FOR NOT SPENDING PRESCRIBED CSR EXPENDITURE:

YES BANK, since inception has believed in creating sustained value for its stakeholders, through its Responsible Banking ethos, by contributing positively towards economic development and socio-environmental objectives, thus playing a larger role in India's overall sustainable development.

In FY 2018-19, with focus on impact & scale, the Bank extensively worked on areas of national importance like Livelihood & Water Security, Employability & Entrepreneurship, Environmental Sustainability and Social Transformation. During the year, the Bank provided access to safe and clean drinking water, to over 1 lakh lives every day, across 330 railway stations, in partnership with Indian Railways. This project, since FY 2015-16, has provided access to safe and clean drinking water, to nearly 10 crore lives covering 1,005 railway stations, across Maharashtra, Gujarat, Madhya Pradesh, Rajasthan, Goa and Karnataka.

Given the criticality of MSME sector to India's low carbon & sustainable economy, the Bank, since 2015, extensively worked with 49,000 MSMEs, sensitizing on energy efficiency, circular economy, financial literacy and occupational health& safety of its workers. The Bank's unique flagship community engagement initiative was instrumental in building awareness and educating communities on financial literacy, Swachh Bharat, environmental conservation and creation of a carbon sink, through tree plantations, touching 2 lakh lives through the year.

As a public trust institution, being a responsible corporate citizen is a part of YES BANK'S core values. With prudence it has been undertaking and investing in CSR projects that are unique, scalable and sustainable, continuously

delivering large scale impact. This year the Bank has spent Rs.53.78 crore (1.13%) vis-a-vis budgeted Rs.95.58 crore (2%), towards CSR as per Section 135 of the Companies, Act, 2013. While the percentage is lower than stipulated 2%, the actual amount spent this fiscal is higher than last year. The reason for lower spend, is on account of factors like milestone based project level disbursement to implementation partners, delays in permissions from local authorities and implementation schedule in this fiscal, inability of implementation partners to scale-up projects and quality of proposals to undertake new projects. YES BANK is highly committed to India's developmental agenda and over the next year, is determined towards increasing its CSR impact, supplemented by its continued focus on sustainable development and responsible banking. The Bank would explore additional projects to take into account any shortfall that may occur.

YES BANK stands committed to sustainable finance, which it believes is the key to unlocking India's potential and achieving sustainable developmental goals. In-line with its COP 21 commitment, the Bank has been successful in mobilizing USD 5 billion from 2015 to 2019, towards projects with positive environmental impact through lending, investing and raising capital. The Bank continued to work extensively on livelihood enhancement programs especially with women, and financial inclusion with migrants. While these interventions are beyond the ambit of the definition of CSR under the Companies Act, 2013, it has supplemented the Bank's objectives, in creating a larger and deeper socio-economic impact.

The CSR Committee confirms that the implementation and monitoring of CSR Policy, is in compliance with CSR objectives and Policy of the Bank.

Ravneet Singh Gill

Maheswar Sahu

Managing Director & CEO

Chairman - CSR Committee

(DIN: 00091746)

(DIN: 00034051)

Annexure 2

FORM NO. MR-3

Secretarial Audit Report

For the financial year ended March 31, 2019

[Pursuant to Section 204(1) of the Companies Act, 2013 and Rule No.9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]

To,

The Members,

YES BANK Limited

YES Bank Tower, IFC - II,

15th Floor, Senapati Bapat Marg,

Elphinstone (W),

Mumbai 400 013

We have conducted the Secretarial Audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by YES BANK Limited (hereinafter called the 'Bank') for the audit period covering the financial year ended on March 31, 2019 (the 'audit period'). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate actions and practices/statutory compliances and expressing our opinion thereon.

Based on our verification of the Bank's books, papers, minute books, forms and returns filed and other records maintained by the Bank and also the information provided by the Bank, its officers, agents and authorized representatives during the conduct of Secretarial Audit, We hereby report that in our opinion, the Bank has, during the audit period covering the financial year ended on March 31, 2019, complied with the statutory provisions listed hereunder and also that the Bank has proper Board-processes and compliance-mechanism in place to the extent in the manner and subject to the reporting made hereinafter:

We have examined the books, papers, minute books, forms and returns filed and other records maintained by the Bank for the financial year ended on March 31, 2019 according to the provisions of:

1. The Companies Act, 2013 (the 'Act') and the Rules made thereunder;

2. The Securities Contracts (Regulation) Act, 1956 ('SCRA') and the rules made thereunder;

3. The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;

4. The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 ('SEBI Act'):-

(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;

(b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;

(c) The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014;

(d) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;

(e) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Act and dealing with client;

(f) The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ('SEBI LODR');

5. The following other laws as applicable specifically to the Bank:

(a) The Banking Regulation Act, 1949 and Notifications and Circulars issued by the Reserve Bank of India ('RBI') from time to time ('BR Act');

(b) Securities and Exchange Board of India (Merchant Bankers) Regulation, 1992;

(c) Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996;

(d) Securities and Exchange Board of India (Bankers to an Issue) Regulations, 1994.

We have also examined compliance with the applicable clauses of Secretarial Standards issued by The Institute of Company Secretaries of India related to the Board meetings and General Meetings.

During the audit period, the Bank has complied with the provisions of the Act, Rules, Regulations, Standards and Circulars as mentioned above.

During the period under review, provisions of the following Act/Regulations though specified in the format of Form No. MR-3, were not applicable to the Bank:

1. The following Regulations and Guidelines prescribed under the SEBI Act-(a) The Securities and Exchange Board of India

(Issue of Capital and Disclosure Requirements) Regulations, 2009;

(b) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; and

(c) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998.

2. Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings.

We further report that -

A The Board of Directors of the Bank is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act, SEBI LODR and BR Act.

A Adequate notice is given to all the Directors to schedule the Board Meetings (including Board Level Committees), Agenda and detailed notes on the

Agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

A Decisions at the meetings of the Board of Directors of the Bank (including the Board Level Committees), and the resolutions approved through circulations, were carried through on the basis of majority. There were no dissenting views by any member of the Board of Directors during the period under review.

We further report that there are adequate systems and processes in the Bank commensurate with the size and operations of the Bank to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

We further report that during the audit period:

(a) The Bank has Allotted 1,20,65,794 (One Crore Twenty Lakh Sixty Five Thousand Seven Hundred and Ninety Four) equity shares of face value of Rs.2/-each under ESOP Schemes of the Bank.

(b) The Bank has received final license from SEBI for Custodian of Securities Business.

(c) The Bank has received certain Show Cause Notices from the Regulatory Authorities which have been placed before the Audit Committee and/or the Board of Directors of the Bank and suitable actions have been taken by the Bank in compliance with the relevant Regulations.

(d) Pursuant to the approval granted by Reserve Bank of India, the Bank has exercised Call Option and redeemed following Bonds/Debentures as given below:

Instrument Type Tier I perpetual Bonds

Allotment Date June 27, 2008

Maturity Date Perpetual

Amount $ 5 million

Tenor (Years) Perpetual

Call Option Date June 27, 2018

Upper Tier II Bonds

June 27, 2008

June 27, 2023

$ 80 million

15

June 27, 2018

Upper Tier II Bonds

September 15, 2008

September 15, 2023

Rs.200 Crores

15

September 15, 2018

Tier I Perpetual Bond

February 21, 2009

Perpetual

Rs.115 crores

Perpetual

February 21, 2019

Tier I Perpetual Bond

March 9, 2009

Perpetual

Rs.39 crores

Perpetual

March 9, 2019

(e) The Bank has received SEBI approval to launch Mutual fund business dated July 4, 2018. This approval is subsequent to the Reserve Bank of India's approval granted to YES BANK to sponsor a Mutual Fund followed by SEBI's in-principle approval received subsequently.

(f) The Bank has raised USD 400 million through syndicated loan facility dated September 11, 2018, borrowed out of the Bank's IFSC Banking Unit (IBU) in Gujarat International Finance Tec City (GIFT) and will be utilized to support the IBU's growing business.

(g) The Capital Raising Committee of the Board of the Bank ("CRC") on September 11, 2018, has approved the issue of rated, listed , non-convertible, redeemable, unsecured, BASEL III compliant Tier II Bonds, in the nature of debentures ("Debentures"), of Rs10.00,000 each aggregating upto Rs.3,000 crore with Green Shoe Option of upto Rs.1,000 crore. Out of that 30,420 Debentures of Rs.10,00,000 each aggregating to Rs.3,042 crore were issued and allotted by the CRC on September 17, 2018, on private placement basis.

(h) The Bank has changed its registered office from 9th floor, Nehru Centre, Discovery of India, Dr. Annie Besant Road, Worli, Mumbai - 400 018 to YES BANK Tower, IFC-II, 15th floor, Senapati Bapat Marg, Elphinstone (W), Mumbai - 400 013.

(i) The Bank on November 14, 2018 has acquired 29,28,504 equity shares, constituting 12.99% of the paid up share capital, having nominal value of Rs.10/- per share of Valecha Engineering Ltd, pursuant to invocation of pledge on the said equity shares subsequent to default by promoters group companies in credit facility provided by Bank.

(J) The Bank on November 14, 2018 has acquired 2,30,655 equity shares constituting 30.00% of the paid up share capital, having nominal value of Rs.100/- per share of Valecha Engineering Ltd, pursuant to invocation of pledge on the said equity shares subsequent to default by promoters group companies in credit facility provided by Bank.

(k) Name of Registrar and Transfer Agent of the Bank has been changed from 'Karvy Computershare Private Limited' to 'Karvy Fintech Private Limited' with effect from November 17, 2018.

(I) The Bank on November 27, 2018 has acquired 4,591,123 equity shares resulting in aggregating holding of 4,655,884 equity shares (including initial holding of 64,761 equity shares of Dion Global Solutions Limited held by YES Bank before acquisition of 4,591,123 equity shares) constituting 14.446971 % of the paid up share capital, having nominal value of Rs.10 per share of Dion Global Solutions Limited, pursuant to invocation of pledge on the said equity shares subsequent to default by Dion Global Solutions Ltd. In repayment of credit facilities sanctioned by Bank.

(m) The Bank has sold 12,337,323 equity shares having nominal value of Rs.10/- each constituting 2.1279% of the paid up share capital of Fortis Healthcare Limited, in various tranches last being on December 18, 2018 resulting into a change in holding of the Bank by more than 2% of the total shareholding of FHL, from last disclosure made by the Bank on March 15, 2018.

(n) The Bank on January 3, 2019 has sold 29,28,504 equity shares of Valecha Engineering Limited having nominal value of Rs.10/- each, constituting 12.99824% of the paid up share capital of VEL, resulting into a change in holding of the Bank by more than 2% of total shareholding of VEL, from the last disclosure made by the Bank on November 14, 2018. Post sale of above mentioned shares in VEL stands NIL as on January 3, 2019.

(o) The Bank on January 3, 2019 has sold 2,30,655 equity shares constituting 30.00% of the paid up share capital, having nominal value of Rs.100/- per share of Valecha Investment Pvt Ltd, which were acquired by way of invocation of pledge by the Bank. Post sale of above mentioned shares in VIPL stands NIL as on January 3, 2019.

(p) RBI under Section 47A of the Banking Regulation Act, 1949 has levied aggregate penalty of no million on Bank for non-compliance of Regulatory directions observed during assessment of implementation of SWIFT - related operational controls dated March 5, 2019.

(q) The unclaimed dividend amount due to be transferred to the Investor Education and Protection Fund (IEPF) during the year ended March 31, 2019 has been transferred without any delay.

 

For BNP & Associates

 

Company Secretaries

 

B. Narasimhan

 

Partner

 

FCS 1303/CPNo. 10440

Place: Mumbai

 

Date: April 26, 2019

 

ANNEXURE I TO THE SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDED MARCH 31, 2019

To,

The Members,

YES Bank Limited

Our Secretarial Audit Report of even date is to be read along with this letter.

1. The compliance of provisions of all laws, rules, regulations, standards applicable to YES BANK Limited (the 'Bank') is the responsibility of the management of the Bank. Our examination was limited to the verification of records and procedures on test check basis for the purpose of issue of the Secretarial Audit Report.

2. Maintenance of secretarial and other records of applicable laws is the responsibility of the management of the Bank. Our responsibility is to issue Secretarial Audit Report, based on the audit of the relevant records maintained and furnished to us by the Bank, along with explanations where so required.

3. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the secretarial and other legal records, legal compliance mechanism and corporate conduct. The verification was done on test check basis to ensure that correct facts as reflected in secretarial and other records produced to us. We believe that the processes and practices we followed, provides a reasonable basis for our opinion for the purpose of issue of the Secretarial Audit Report.

4. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Bank.

5. Wherever required, we have obtained the management representation about the compliance of laws, rules and regulations and major events during the audit period.

6. The Secretarial Audit Report is neither an assurance as to the future viability of the Bank nor of the efficacy or effectiveness with which the management has conducted the affairs of the Bank.

 

For BNP & Associates

 

Company Secretaries

 

B. Narasimhan

 

Partner

 

FCS 1303 /CP No. 10440

Place: Mumbai

 

Date: April 26, 2019

 

Annexure 3

The ratio of the remuneration of each director to the median employee's remuneration and other details in terms of sub-section 12 of Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

Sr. No.

Requirements

Disclosure

I..

The ratio of the remuneration of each director to the median remuneration of the employees for the financial year

Ashok Chawla 2.4x

 

Ex-MD & CEO - Rana Kapoor 82.8x

 

Brahm Dutt 0.9x

 

Interim MD & CEO - Ajai Kumar 1.9x

 

MD & CEO - Ravneet Singh Gill 7.6x

II.

The percentage increase in remuneration of each Director, CFO, CEO, CS in the financial year

Ex-MD & CEO - Rana Kapoor 21.2%

MD & CEO - Ravneet Singh Gill

Interim MD & CEO - Ajai Kumar

CFO

CS 30.9%

Ashok Chawla

Brahm Dutt

Notes: 1. Mr. Rana Kapoor demitted the office as MD & CEO w.e.f. the close of business hours on January 31, 2019 2. Mr. Ajai Kumar was appointed as Interim MD & CEO w.e.f. February 1, 2019 to February 28, 2019. 3. Mr. Ravneet Singh Gill took charge as MD & CEO w.e.f. March 1, 2019. 4. Mr. Ashok Chawla resigned w.e.f. November 14, 2018. 5. Mr. Brahm Dutt was appointed as Part-Time Chairman w.e.f. January 11, 2019.

III.

The percentage increase in the median remuneration of employees in the financial year

The median remuneration of the employees in the financial year was increased by 12.00%. The calculation of % Increase in Median Re-muneration is done based on comparable em-ployees. For this we have excluded employees who were not eligible for any increment.

IV.

The number of permanent employees on the rolls of the Bank

There were 21,136 employees as on March 31, 2019

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

Not Applicable to the Bank, as all the employees are considered under Managerial role.

VI.

Affirmation that the remuneration is as per the remuneration policy of the Bank

Yes, it is confirmed

General Notes (GN):

1. Remuneration in case of MD & CEO is regulated by RBI guidelines.

2. The Remuneration for the purpose of this table is defined as "Total Cost to the Company (TCC) + Approved Bonus" for all the employees except for KMPs. KMPs remuneration is as per the Form 16 (on an annualized basis) excluding stock option exercised since it does not form part of TCC.

Annexure 4

INDEPENDENT ASSURANCE STATEMENT

To the management of Yes Bank Limited, Yes Bank Tower, IFC-2, 15th Floor, Senapati Bapat Marg, Elphistone (W), Mumbai - 400 013, Maharashtra, India.

Introduction

We were engaged by Yes Bank Limited ('Issuer') to undertake an independent review of the following green bonds:

A Green bonds for Rs.1000 crores issued on February 24, 2015

A Green bonds for Rs.315 crores issued on August 5, 2015

A Green bonds for Rs.330 crores issued on December 29, 2016

Our responsibility was to provide "limited assurance" on conformance of the aforementioned green bonds and the accompanying report "Disclosures under Green Infrastructure Bonds for FY 2018-19" with the Green Bond Principles, 2018 during the Financial Year (FY) 2018-19.

Assurance Standards

We conducted our engagement in accordance with requirements of 'Limited Assurance' as per International Federation of Accountants' (IFAC) International Standard on Assurance Engagements [ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information].

Assurance scope and level of assurance

Our scope of assurance included information on material aspects of the green bond during FY 2018-19 based on the requirements of the Green Bond Principles, 2018 as listed below:

A Use of Proceeds

A Process for Project Evaluation and Selection

A Management of Proceeds

A Reporting

Specific limitations and exclusions

Our assurance process was subject to the following limitations as we have not been engaged to:

A Determine which, if any, recommendations should be implemented

A Provide assurance on information outside the defined reporting boundary and period

A Verify the Issuer's financial statements & economic performance

A Verify the Issuer's statements that describe expression of opinion, belief, aspiration, expectation, aim or future intention and national or global socio-economic and environmental aspects provided by the Issuer.

Work undertaken

We planned and performed our work to obtain all the evidence, information and explanations that we considered necessary to obtain a meaningful level of assurance in relation to the above scope. The procedures we performed, which are set out in detail below, were based on our professional judgment and included, as appropriate, inquiries, observation of processes performed, inspection of documents, analytical procedures, evaluating the appropriateness of quantification methods and reporting policies and agreement or reconciliation with underlying records. We believe that the procedures we have performed and the evidence we have obtained are sufficient and appropriate to provide a basis for our limited assurance conclusion.

To reach our conclusion we:

A Checked the Issuer's Green Bond Framework that includes processes, systems and controls in place for management of bond proceeds; investment areas for green bond proceeds and intended types of temporary investment instruments for the management of unallocated proceeds;

A Read sections of the bond disclosure documentation that also support the objects of the green bond issue, investment areas for proceeds and intended types of temporary investment instruments for the management of unallocated proceeds;

A Conducted interviews with management and key staff responsible for the green bond to understand how the processes, systems and controls defined in the Green Bond Framework have been implemented in the financial year;

A Checked the list of projects to which bond proceeds have been allocated in the financial year and their conformance with the criteria defined in the Green Bond Framework;

A Confirmed the amount of bond proceeds allocated to projects at the end of each quarter in the financial year through examination of a sample set of statements of accounts;

A Confirmed the allocation of unallocated bond proceeds to government securities at the end of each quarter in the financial year through examination of statements from Financial Management team of the Issuer; and

A Recalculated estimated carbon dioxide emission reductions from projects using information collected by the Issuer.

Conclusions

The following conclusion is based on the work performed and evidence obtained and the scope of our assurance engagement described above.

Nothing has come to our attention to suggest that the green bonds issued in February 2015, August 2015 and December 2016 by the Issuer and the accompanying report "Disclosures under Green Infrastructure Bonds for FY 2018-19" are not, in all material respects, conforming to the requirements of the Green Bond Principles, 2018, during FY 2018-19.

Independence

The assurance was conducted by a multidisciplinary team including professionals with suitable skills and experience in auditing environmental, social and economic information in line with the requirements of ISAE 3000 standard. Our work was performed in compliance with the requirements of the IFAC Code of Ethics for Professional Accountants, which requires, among other requirements, that the members of the assurance team (practitioners) as well as the assurance firm (assurance provider) be independent of the assurance client, in relation to the scope of this assurance engagement. The Code also includes detailed requirements for practitioners regarding integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. We have systems and processes in place to monitor compliance with the Code and to prevent conflicts regarding independence. We apply ISQC 1 and comply with the applicable independence and other ethical requirements of the lESBA code.

Management's responsibility

The Management of the Issuer is responsible for ensuring that the Issuer and their green bond complies with the requirements of the Green Bond Principles, 2018. This responsibility includes designing, implementing and maintaining systems and processes relevant for the management of green bond proceeds.

The Management of the Issuer is also responsible for preventing and detecting fraud and for identifying and ensuring that Issuer complies with laws and regulations applicable to its activities.

Our responsibility

Our responsibility is to report in the form of an independent limited assurance conclusion in relation to the above scope based on the procedures performed and the evidence obtained. We conducted our engagement with a multidisciplinary team which included professionals with suitable skills and experience in auditing environmental, social and economic information in line with the requirements of ISAE 3000 standard.

This assurance report is made solely to Issuer in accordance with the terms of our engagement, which include agreed arrangements for disclosure. Our work has been undertaken so that we might state to Issuer those matters we have been engaged to state in this assurance report and for no other purpose. Our assurance report should not be regarded as suitable to be used or relied on by any party wishing to acquire rights against us other than Issuer for any purpose or in any context. Any party other than Issuer who obtains access to our assurance report or a copy thereof and chooses to rely on our assurance report (or any part thereof) will do so at its own risk. To the fullest extent permitted by law, we accept or assume no responsibility and deny any liability to any party other than Issuer for our work, for this independent limited assurance report, or for the conclusions we have reached.

 

Manpreet Singh

 

Director

 

KPMG India

Date: April 10, 2019

 

 


Mar 31, 2018

To the Members,

The Directors are pleased to present the Fourteenth Annual Report on business and operations of your Bank together with the audited accounts for the year ended March 31, 2018.

BUSINESS OVERVIEW AND OUTLOOK

Your Bank had another year of highly satisfactory business and financial outcomes in Financial Year (‘FY’) 2017-18 with a net profit of ''42,246 million which is an increase of 26.9% from FY 2016-17. Your Bank showed continued acceleration and momentum in building a strong liability franchise with CASA ratio at 36.5% at the end of FY 2017

18. Your Bank’s Retail Assets Product Suite has also built significant traction and Digitization remains a key focus to further grow the Retail and MSME book. Your Bank’s branch network stood at 1,100 branches and 1,724 ATMs (including Bunch Note Acceptors) as on March 31, 2018.

STATE OF THE AFFAIRS OF THE BANK

FY 2017-18 was a significant year in your Bank’s lifecycle wherein your Bank raised incremental growth capital aggregating to ''124,150 million through various instruments, thus, demonstrating its ability to raise capital across products and cycles. Of this amount, your Bank raised an aggregate of ''70,000 million via Basel III compliant Tier 2 bonds and ''54,150 million via Basel III compliant AT1 bonds.

Your Bank was the first bank in India to commence operations at International Financial Services Centre (‘IFSC’) at GIFT City, Gujarat (‘IBU’). In FY 2017-18, your Bank’s IFSC Business Unit (‘IBU’) balance sheet size crossed USD 2.5 billion as on March 31, 2018 on the back of significant momentum from specialized knowledge sectors.

On February 06, 2018, your Bank successfully completed issuance of its maiden USD 600 million bond issuance in the international debt markets under its USD 1 billion Medium Term Note (MTN) programme which was the largest debut international bond issuance by an Indian bank including the lowest spread. The tenor of the bond is 5 years with a rating of Baa3 by Moody’s Investors Service. The Bond is listed on the London Stock Exchange International Securities Market (LSE ISM), the Singapore Exchange Securities Trading Limited (SGX) and the India

International Exchange IFSC at GIFT City, Gandhinagar. The proceeds are being used to fund your Bank’s IFSC Banking Unit (IBU) in Gift City and expand IBU’s rapidly growing business opportunities.

Your Bank raised USD 150 million long tenor loan from Overseas Private Investment Corporation (‘OPIC’), the U.S. Government’s development finance institution, and Wells Fargo to increase lending to MSMEs in India. USD 50 million of the financing is being specifically used to expand support to women-owned businesses, while another USD 50 million is being used for financing MSME businesses in low-income states. This was the third such transaction between OPIC and your Bank after the first transaction of USD 265 million OPIC facility in 2016, towards MSME financing in India.

Your Bank entered into a USD 400 million co-financing programme with the European Investment Bank (‘EIB’) to

increase lending to renewable energy power generation across India, with special focus on construction of new solar plants and wind farms across the country. This novel initiative, where EIB will lend USD 200 million to your Bank for 15 years for on-lending to the renewable sector is EIB’s first partnership with your Bank and is also EIB’s first-of-its-kind financing agreement for renewable energy in Asia. This demonstrates another milestone in your Bank’s leadership as India’s pre-eminent ‘Green Bank’. The highly successful transaction showcases continued trust and enthusiasm of Global multilaterals and Finance Institutions in partnering with your Bank.

In November 2017, your Bank successfully closed a 5 year Syndicated loan facility led by CTBC Bank, Bank of Taiwan, Mega International Commercial Bank and Land Bank of Taiwan, which saw participation from 17 banks. The syndication which closed at USD 250 million, saw a total subscription of USD 355 million and ranks amongst the largest bank participation in a Taiwan loan transaction. This is your Bank’s second such strategic loan syndication transaction in Taiwan after a successful maiden transaction in 2016 for a 5 year, USD 130 million syndicated loan.

Your Bank raised its maiden one year Samurai loan in a syndication led by Bank of Tokyo Mitsubishi UFJ, Ltd. (MUFG). The issue was successfully closed with oversubscription and saw total participation of JPY 16.5 billion (~USD 150 million) across 8 banks.

Further information on the Business overview and outlook and State of the affairs of your Bank is discussed in detail in the Management Discussion & Analysis section.

There is no change in the nature of business of your Bank for the year under review.

FINANCIAL PERFORMANCE (STANDALONE)

Rs, in million

Particulars

April 01, 2017 to March 31, 2018

April 01, 2016 to March 31, 2017

Deposits

2,007,381.48

1,428,738.57

Borrowings

748,935.81

386,066.73

Advances

2,035,338.63

1,322,626.77

Total Assets/Liabilities

3,124,456.03

2,150,599.18

Net Interest Income

77,370.59

57,973.07

Non-Interest Income

52,238.34

41,567.57

Operating profit

77,481.13

58,375.23

Provisions and Contingencies

15,538.04

7,934.05

Profit before Tax

61,943.09

50,441.18

Provision for taxes

19,697.45

17,140.21

Net Profit

42,245.64

33,300.96

Add: Surplus/(Deficit) brought forward from last period

79,333.92

55,446.80

Amount available for appropriation

121,579.56

88,747.77

APPROPRIATIONS

Statutory Reserve under Section 17 of the Banking Regulation Act, 1949

10,561.41

8,325.24

Capital Reserve

659.65

1,083.00

Investment Reserve

-

-

Proposed Dividend and Tax thereon*

6,605.48

-

Adjustment to earlier year dividend and tax thereon

-

5.61

Surplus carried to Balance Sheet

103,753.02

79,333.91

KEY PERFORMANCE INDICATORS

Net Interest Margin

3.5%

3.4%

Return on Annual Average Assets

1.6%

1.8%

Return on Equity

17.7%

21.5%

Cost to Income Ratio

40.2%

41.4%

* The Bank has sub-divided each equity share having face value of Rs,10 per share into five equity shares having a face value of Rs,2 per share. The sub-division of equity shares has been approved by shareholders. The record date for the sub-division was September 22, 2017. Per share information mentioned above reflects the effect of sub-division for each of period presented.

Your Bank posted Net Revenue (Net Interest Income and other income) of Rs,129,608.93 million and Net Profit of Rs,42,245.64 million for FY 2017-18. The Net Revenue and Net Profit for FY 2016-17 were Rs,99,540.64 million and Rs,33,300.96 million, respectively. Appropriations from the Net Profit have been effected as per the table given above. Please refer to the section on Financial and Operating Performance in the Management Discussion and Analysis for a detailed analysis of financial data.

DIVIDEND

Your Bank is rewarding its shareholders by way of consecutive cash dividends, considering the consistent financial performance of your Bank and promising future prospects while retaining capital to maintain a healthy Capital Adequacy Ratio and to support future growth. In view of the excellent financial performance of your Bank and in continuance of the earlier trends of cash dividends, the Board of Directors have recommended Dividend at a rate of Rs,2.70 per equity share having face value of Rs,2 each (135%) for the year ended March 31, 2018 for approval by the Shareholders at the 14th Annual General Meeting (Rs,12 per equity share having face value of Rs,10 each (120%) for the previous year ended March 31, 2017). This dividend shall be subject to tax on dividend to be paid by the Bank. The dividend proposed is in line with the Dividend Policy of the Bank. The details about the Dividend Policy of the Bank has been provided in the Report on Corporate Governance forming part of this Annual Report.

On September 08, 2017, the shareholders of the Bank had approved the sub-division of each equity share having a face value of Rs,10 into five equity shares having a face value of ''2 each through postal ballot. The record date for the sub-division was September 22, 2017.

TRANSFER TO RESERVES

As per requirement of RBI regulations, the Bank has transferred the following amount to various reserves during Financial Year ended March 31, 2018:

Rs, in million

Amount transferred to

Amount

Statutory Reserve

10,561.41

Capital Reserve

659.65

Investment Reserve

-

CAPITAL RAISING & CAPITAL ADEQUACY RATIO (CAR)

During FY 2017-18, with a view to encourage wider participation of small investors by making Equity Shares of the Bank affordable, your Bank had sub-divided the erstwhile Face value of Equity Shares of Rs,10 (Rupees Ten only) each, fully paid into a smaller denomination of Rs,2 (Rupees Two only) per Equity Share fully paid up.

During the FY 2017-18, your Bank has issued 2,05,38,180 equity shares of Rs,2 each pursuant to the exercise of stock options aggregating to''4,10,76,360, out of which 15,40,740 equity shares were of the face value of ''10 each, issued prior to sub-division of the equity shares of the Bank, which were later converted into 77,03,700 equity shares of ''2 each and 1,28,34,480 equity shares of ''2 each were issued post sub-division of equity shares of the Bank.

Post allotment of aforesaid equity shares, the issued, subscribed and paid up share capital of your bank stands at ''4,606 million comprising of 2,302,967,245 equity shares of ''2 each as on March 31, 2018.

Your Bank has not issued any equity shares with differential voting rights during the year.

During the year, the bank has raised ''70,000 million by way of issue of non-convertible, redeemable, Basel III Compliant Tier 2 bonds and ''54,150 million by way of issue of Basel III compliant Additional Tier 1 bonds. Further, the Bank has raised USD 600 million (''38,975 million) by way of issue of fixed rate medium term note in international debt market under its USD 1 billion Medium Term Note Programme.

In line with the RBI circular on Capital Adequacy Framework, your Bank has computed capital charge for operational, market & credit risk and its Capital Adequacy Ratio as per Basel III accord as at March 31, 2018.

Your Bank is well capitalized with a Capital Adequacy Ratio of 18.4% as on March 31, 2018, of which Tier 1 Capital Ratio was 13.2% and Tier 2 Capital Ratio was 5.2%.

DEPOSITS

Being a banking company, the disclosures required as per Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, 2014, read with Sections 73 and 74 of the Companies Act, 2013 are not applicable to your Bank.

AWARDS AND RECOGNITIONS

During the year under review, your Bank was recognized in various ways/by various institutions and some of the key awards presented to the Bank are listed below:

YES BANK was awarded the ‘Best Bank for SMEs in India’ at the Asiamoney Best Banks Awards 2018

YES BANK was awarded ‘Bank of the Year - India 2017’ by The Banker Magazine, part of the Financial Times group, UK (twice in last three years)

YES BANK was awarded Best Bank in India in the Asiamoney Corporate Client Choice Survey 2017 and Recognized as Best Bank in India for CSR in the Asiamoney Awards 2017

YES BANK was awarded the ‘APAC Leader in Digital Transformation’ in ‘White Label Products and Bank-as-a-Service’ category at the Financial Insights Innovation Awards 2017, Singapore

YES BANK was awarded the Karlsruhe Sustainable Finance Award 2017 in the ‘Best Innovation in Sustainable Financial Products & Services’ category, for its innovative blended finance facility, aimed at promoting environmentally sustainable livelihood among women salt farmers in Gujarat, India

YES BANK was recognized in the Gartner Excellence Awards for its Big Data Analytics use cases

YES SECURITIES recognized as ‘India’s Best Investment Bank’ by Global Finance magazine

YES BANK was recognized as the ‘Fastest Growing Mid-Sized Bank’ at Business Today Best Bank Awards

YES BANK was awarded in the ‘Fastest Growing MidSized Bank’ Category at BW Business world Magna Award

YES BANK was awarded for innovation in Block chain product (supply chain vendor financing) and YES ENGAGE at the Finnoviti Award 2018

YES BANK was awarded as ‘The Extraordinaire -Brand’ at the Brand Vision Summit 2018

YES BANK was ranked first for Sustainability Performance & Sustainability Reporting at the Indian Chamber of Commerce Corporate Governance & Sustainability Vision Awards 2018

YES BANK was awarded ‘Accelerator of the Year’ for YES FINTECH by the India Fintech Awards 2017

- YES BANK was awarded at the 29th Qualtech Prize for Improvement and Innovation in the BFSI Industry for use of Data Analytics by Qimpro Consultants

- YES BANK was adjudged the ‘Global Winner’ in the Supply Chain Finance category and was also adjudged as Transaction Bank of the Year for Asia Pacific at The Banker Transaction Banking Awards 2017

- YES BANK was awarded Best Bank in India - CSR in the Asiamoney Country Awards 2017, Hong Kong

- YES BANK was one of the highest gainers in rankings in the prestigious The Banker 1000 Rankings in 2017 of Largest Banks of the World and 2017 edition of Forbes Global 2000 List of World’s Largest Companies

- Rose 129 places to #271 World Ranking in ‘The Banker 1000 Rankings’

- Rose 493 places to #1239 World ranking in ‘Forbes Global 2000 List’. Continues to be amongst the youngest Banks in this list.

- YES BANK won two awards at The Asset Triple A Asia Infrastructure Awards 2017

- Renewable energy deal of the year - Solar (Overall), for Sepset Construction Limited loan facility, in which YES BANK acted as the Lead Arranger

- Project finance/Renewable energy deal of the year

- Solar, India, for Sepset Construction Limited in which YES BANK acted as the Lead Arranger

- YES BANK was awarded Celent Model Bank 2017 Award for Payments Product for API Banking, in Boston. YES BANK was the first Bank to introduce ‘API Banking’ service in India

- YES BANK was adjudged the ‘Best Trade Finance Bank in India’ at The Asian Banker Transaction Banking Awards 2017, for the 3rd year in a row

- YES BANK was awarded the ‘Best Digital Payments System by Banks for Smart Cities’ during the Smart City Conclave 2017 in Chandigarh

- YES BANK was awarded Golden Peacock award for Corporate Social Responsibility 2017

- YES BANK was awarded Golden Peacock National Training Award 2018

EMPLOYEES STOCK OPTION SCHEME

On September 22, 2017, pursuant to the approval of shareholders, your Bank has sub-divided the equity shares having face value of ''10 each fully paid up into five equity shares having face value of ''2 each fully paid up. All shares and per share information in the table given below are restated to reflect the effect of sub-division for each of the periods presented.

Your Bank has instituted Stock Option Plans to enable its employees to participate in your Bank’s future growth and financial success. Your Bank provides its employees a platform for participating in important decision making and instilling long-term commitment towards future growth of the Bank by way of rewarding them through Stock Options. In terms of compensation and benefit policy of the Bank, employees are granted options as part of Annual Performance Review process based on their performance as well as to ensure their retention, and to hire the best talent for its senior management and key positions.

The Bank has Four Employee Stock Option Schemes in operation viz.:

Joining Employee Stock Option Plan II (JESOP II);

Joining Employee Stock Option Plan III (JESOP III);

YBL ESOP (consisting of two sub schemes JESOP IV/

PESOP I); and

YBL JESOP V/PESOP II (consisting of three sub

schemes JESOP V/ PESOP II/PESOP II -2010).

The Employee Stock Option Plans are administered by the Nomination & Remuneration Committee of the Board of the Bank. The details of vesting of various schemes are as follows:

ESOP Schemes

Vesting Period

JESOP II

50% at the end of 3rd year and balance at the end of 5th year from the Grant date.

JESOP III

50% at the end of 3rd year and balance at the end of 5th year from the Grant Date.

JESOP IV

50% at the end of 3rd year and balance at the end of 5th year from the Grant date.

JESOPV

50% at the end of 3rd year and balance at the end of 5th year from the Grant Date.

PESOPI

25% at the end of each year from the Grant Date.

PESOP II

30%, 30% & 40% at the end of 1st year,

2nd year and 3rd year respectively from the Grant Date.

PESOP II - 2010

30%, 30% & 40% at the end of 3rd year,

4th year and 5th year respectively from the Grant Date.

During the year, all new grants have been made in YBL JESOP V and PESOP II - 2010 and grant under PESOP

- II has been discontinued w.e.f. January 20, 2010. The schemes are in compliance with the SEBI (Share based Employees benefits) Regulations, 2014. Source of shares are primary in nature, since your Bank has been issuing new equity shares upon exercise of options.

Options under all the aforesaid plans are granted for a term of 10 years (inclusive of the vesting period) and are settled with equity shares being allotted to the beneficiary upon exercise.

No stock options were issued to the Directors of your Bank.

Various details including option movement during the year under Schemes i.e. JESOP II, JESOP III, YBL ESOP and YBL JESOP V / PESOP II respectively are as follows:

YBL ESOP

YBL JESOP V/ PESOP II

JESOP II

JESOP III

YBL ESOP (JESOP IV)

YBL ESOP (PESOP I)

YBL JESOP V

YBL PESOP II

YBL PESOP II - 2010

Date of Shareholders Approval

July 24,

July 24,

August 29,

August 29,

September 18,

September 18,

September 18, 20081

2006

2006

2007

2007

2008*

2008*

Total Number of Options approved

25,000,000

25,000,000

25,000,000

25,000,000

47,500,000

76,140,000

101,360,000

Total Number of options outstanding at the Beginning of the period

-

-

367,300

664,825

20,247,650

5,030,675

59,106,665

Total No. of Options granted (during FY 2017-18)

-

-

-

-

1,697,500

-

3,847,500

The Pricing Formula

Refer Note 1

Refer Note 1

Refer Note 1

Refer Note 1

Refer Note 1

Refer Note 1

Refer Note 1

Options Vested (during FY 2017-18)

-

-

-

-

649,900

-

5,328,100

Options Exercised (during FY 2017-18)

-

-

335,550

263,450

4,611,800

2,754,025

12,573,355

Total No. of shares arising as a result of exercise of option

-

-

335,550

263,450

4,611,800

2,754,025

12,573,355

Options lapsed / Forfeited (during FY 2017-18)

-

-

25,500

154,000

1,376,500

-

6,647,500

Total No. of options outstanding at the end of the year

-

-

6,250

247,375

15,956,850

2,276,650

43,733,310

Total No. of options exercisable at the end of the year

-

-

6,250

247,375

2,271,100

2,276,650

15,889,560

Variation of terms of options

Refer Note 2

Refer Note 2

Refer Note 2

Refer Note 2

Refer Note 2

Refer Note 2

Refer Note 2

Money realized by exercise of Options (during FY 2017-18) (in ^)

-

-

12,108,830

9,188,143

356,917,936

65,074,379

935,364,414

(i) Total No. of Options granted to Senior Management Personnel (SMP)

-

-

-

-

-

-

Refer Sub-table 1

(ii) Any other employee who received a grant in any one year of options,

Refer

Refer

amounting to 5% or more of options granted during that year

Sub-table 2

Sub-table 2

(iii) Identified employees who are granted options, during any one year

Nil

Nil

Nil

Nil

Nil

Nil

Nil

equal to or exceeding 1% ofthe issued capital (excluding outstanding

warrants and conversions) ofthe Company at the time of grant

Diluted Earnings Per Share (EPS) of the Bank after considering the

18.06

effect of potential equity shares on account of exercise of Options

Impact of the difference between the Intrinsic Value ofthe Options and

The Bank has charged Nil amount, being the intrinsic value of the stock options granted for the year ended March 31, 2018 and

the Fair Value ofthe Options on Profits and on EPS

March 31, 2017. Had the Bank adopted the Fair Value method (based on Black- Scholes pricing model), for pricing and accounting ol options, net profit after tax would have been lower by ?414.98 million (Previous year: ^464.49 million), the basic earnings per share would have been ?18.24 (Previous year: ^15.56) per share instead of ^18.43 (Previous year: ^15.78) per share; and diluted earnings per

share would have been ?17.88 (Previous year: ^15.14) per share instead of ^18.06 (Previous year: ^15.35) per share.

Weighted average price of the shares exercised during the year (in ?)

-

-

36.09

34.88

77.39

23.63

74.39

Weighted average fair values of the outstanding options (in ^)

-

-

22.94

28.89

164.32

26.77

133.97

March 31, 2018

Risk free Interest Rate

6.29%-9.23%

Expected life

1.5 yrs - 7.5 yrs

Expected Volatility**

25.01%-48.72%

Expected dividends

1.20%

**Expected volatility is average volatility for expected life of the option.

Note 1: Being the closing price of the Equity Shares on the stock exchange with the highest trading volumes on the last working day prior to the date of grant.

Note 2: There is no variation in the terms of the options during the Financial Year ended March 31, 2018.

Sub-table 1: Following are the total number of stock options that have been granted to Senior Management Personnel (‘SMP’) during the financial year ended March 31, 2018:

Scheme

Name of Employees

Designation

Options granted

Grant Price

PESOP II 2010

Amit Sanan

Group President

50000

351.05

PESOP II 2010

Amit Shah

Senior President

75000

351.05

PESOP II 2010

Arun Agrawal

Group President

125000

351.05

PESOP II 2010

Aseem Gandhi

Senior President

75000

351.05

PESOP II 2010

Ashish Agarwal

Senior Group President

375000

351.05

PESOP II 2010

Devamalya Dey

Senior Group President

37500

351.05

PESOP II 2010

Jyoti Prasad Ratho

Senior President

50000

351.05

PESOP II 2010

Kumar Padhmanabhan

Senior Group President

125000

351.05

PESOP II 2010

Lata Dave

Senior President

100000

351.05

PESOP II 2010

Namita Vikas

Group President

25000

351.05

PESOP II 2010

Niranjan Banodkar

Senior President

62500

351.05

PESOP II 2010

Pralay Mondal

Senior Group President

175000

351.05

PESOP II 2010

Preeti Sinha

Senior President

25000

351.05

PESOP II 2010

Punit Malik

Group President

125000

351.05

PESOP II 2010

Rajat Mehta

Senior President

37500

351.05

PESOP II 2010

Shubhada Rao

Group President

25000

351.05

PESOP II 2010

Vinod Bahety

Group President

150000

351.05

Sub-table 2: Following are the details of the employees who have received the grant of options amounting to 5% or more of options granted during the financial year ended March 31, 2018.

Scheme

Name of Employees

Designation

Options granted*

Grant Price

JESOP V

Ajay Rajan

Group President - YES BANK Ltd.

300000

311.65

PESOP II 2010

Ashish Agarwal

Senior Group President - YES BANK Ltd.

375000

351.05

JESOPV

Prasanth Prabhakaran

CEO & Senior President, Brokerage

- YES Securities (India) Ltd.

300000

344.15

JESOPV

Prasun Kumar Sikdar

Group President - YES BANK Ltd.

175000

311.65

JESOPV

Sandeep Prabhani

COO & Senior President - YES Asset Management (India) Ltd.

100000

311.65

PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARY COMPANIES

As on March 31, 2018, your Bank had three wholly owned Subsidiaries, YES Securities (India) Limited (‘YSIL’), YES Asset Management (India) Limited (‘YAMIL’) and YES Trustee Limited (‘YTL’).

YES SECURITIES (INDIA) LIMITED (YSIL)

YES Securities (India) Limited successfully completed its fourth full financial year of operations on March 31, 2018.

During FY 2017-18, YSIL earned a total revenue of ''718.58 million against ''637.90 million in the previous year. YSIL earned a profit of ''133.01 million in FY 2017-18.

YSIL has two business segments namely Retail Broking and Investment Banking & Merchant Banking, which are explained as under:

Broking

YSIL continued to offer a best-in-class 3-in-1 account proposition supported by the Bank, and leveraged the Bank’s branch network coverage to further strengthen its presence in the 10 focus cities - Mumbai, NCR, Bengaluru, Chennai, Hyderabad, Kolkata, Chandigarh, Pune, Ahmadabad and Jaipur. During the year, YSIL continued to invest in people, technology and processes to provide the Bank’s valued customers a superior investment experience, both online and through a competent team of dealers.

YSIL’s web and mobile investment platform saw consistent growth in client transaction volumes leading to record daily average turnover (DAT) metrics throughout the year. YSIL’s Research desk continues to deliver solid fundamental and technical views and is closely followed by clients for its in-depth coverage.

Product Launches

1. Systematic Value Subscription Plan (S-VSP): Volume-linked advance brokerage plans geared towards long-term wealth creation by investing in direct equities through SIP route

2. YES Selectus: Portfolio Investment Advisory product offered to wealth-category clients

3. YES NRML: Leveraged product for high-volume traders

Investor Education Initiative(s) - YES MasterClass:

Multi-city events where experts from respected financial services institutions deliver investor education and investment-related insights to existing and potential customers.

In FY 2017-18, YES Master Class travelled to over 5 cities and addressed 700 financial enthusiasts and investors.

Further, in FY 2017-18, YSIL continued to build its Institutional Broking capabilities and secured empanelment as a Broker with several leading institutional and corporate clients.

Investment Banking

The Investment Banking team provides M&A and Capital Advisory services to large and mid-market corporate and financial sponsor clients through key products such as Mergers & Acquisition Advisory and Private Equity fund-raising.

YSIL’s highly-experienced teams offer expertise across a variety of sectors including Food & Agribusiness, Media & Entertainment, Consumer Markets, Infrastructure & EPC, BFSI, Internet & E-commerce, Industrials and Logistics.

Further, YSIL’s Sustainable Investment Banking (SIB) practice focuses on providing advisory services exclusively in the areas of Sustainability, Clean Technology, Renewable Energy, Environmental Services and Education.

YSIL’s Investment Banking team closed marquee M&A and fund raising transactions during the year under review. Some of the representative transactions consummated by the team include:

Exclusive strategic & financial advisor for sale of North Country Mall

Strategic & financial advisor to Signature Global for raising growth capital from KKR

Exclusive strategic & financial advisor to Massive Restaurant and Everstone Capital for raising funds from Gaja Capital

Exclusive strategic & financial advisor to Travel News Service for stake sale to Future Retail

Exclusive strategic & financial advisor to Bhilwara Energy for sale of 83 MW wind assets

Merchant Banking:

YSIL’s Merchant Banking practice provides Capital Market products such as Initial Public Offerings (IPO), Qualified Institutional Placements (QIP), Public Debt Offerings, Rights Issues and other structured offerings to leading Indian companies at each stage of the capital life-cycle.

In FY 2017-18, the Merchant Banking team completed 15 transactions across ticket sizes and instrument types with an aggregate fund raise of over ''250 billion, including 2 of the Top 3 Equity fund raises for the year. Some of the representative transactions consummated by the team during the year under review include:

- Book Running Lead Manager to the IPO of New India Assurance

- Seller’s Broker to the OFS of NTPC

- Lead Manager to the QIP of Union Bank of India

- Book Running Lead Manager to the IPO of Reliance Nippon Life Asset Management

YES ASSET MANAGEMENT (INDIA) LIMITED (YAMIL) & YES TRUSTEE LIMITED (YTL)

YES BANK Limited has incorporated YES Asset Management (India) Limited on April 21, 2017 and YES Trustee Limited on May 03, 2017 as wholly owned subsidiaries for the proposed mutual fund business. The final approval from SEBI for the mutual fund is awaited.

YTL will be the legal owner of the property of the Mutual Fund (with the beneficial ownership vesting in the unit holders of the Mutual Fund) and will hold the same in trust for the benefit of the unit holders of the Mutual Fund.

YAMIL has been appointed as the Investment Manager of the Mutual Fund by the YTL vide duly signed and executed Investment Management Agreement between them.

The Financials of the subsidiaries of the Bank are available on the website of the Bank (www.yesbank. in). Any member who is desirous to have a copy of the annual accounts of the subsidiaries may write to the Company Secretary of the Bank. Financials of Bank and its subsidiaries shall also be available for inspection by members or trustees of the holders of any debentures of the Bank at its Registered office.

RATINGS OF VARIOUS DEBT INSTRUMENTS

During the year under review, your Bank has raised ''124,150 million by way of issue of rated listed unsecured Bonds in the nature of Debentures and USD 600 million by way of issue of senior unsecured fixed rate notes under its maiden USD 1 billion Medium Term Notes (‘MTN’) Programme. These instruments have been rated by various rating agencies namely Moody’s Investors Service, ICRA Limited (‘ICRA’) and India Ratings & Research Pvt. Ltd. (‘India Ratings’), a Fitch Group Company, etc. The details of the instruments as well as their ratings are as below:

i. Your Bank issued 25,000 Rated Listed Non Convertible Redeemable Unsecured Basel III Compliant Tier 2 bonds in the form of Debentures issued on Private Placement basis of Face Value of ''10,00,000 each fully paid up aggregating to ''25,000 million on September 29, 2017 and the issue was rated by ICRA and India Ratings. ICRA assigned a rating of ‘ICRA AA (hyb)’ with a Positive Outlook and India Ratings assigned a rating of ‘IND AA ’ with a Stable Outlook.

ii. Your Bank issued 15,000 Rated Listed Non Convertible Redeemable Unsecured Basel III Compliant Tier 2 bonds in the form of Debentures issued on Private Placement basis of Face Value of ''10,00,000 each fully paid up aggregating to ''15,000 million on October 03, 2017 and the issue was rated by ICRA and India Ratings. ICRA assigned a rating of ‘ICRA AA (hyb)’ with a Positive Outlook and India Ratings assigned a rating of ‘IND AA ’ with a Stable Outlook.

iii. Your Bank issued 54,150 Perpetual Subordinated Unsecured Basel III Compliant Additional Tier 1 Bonds in the nature of Debentures issued on Private Placement basis of Face Value of ''10,00,000 each fully paid up aggregating to ''54,150 million on October 18, 2017 and the issue was rated by ICRA and India Ratings. ICRA assigned a rating of ‘ICRA AA (hyb)’ with a Positive Outlook and India Ratings assigned a rating of ‘IND AA’ with a Stable Outlook.

iv. Your Bank issued 30,000 Rated Listed Non Convertible Redeemable Unsecured Basel III Compliant Tier 2 bonds in the form of Debentures issued on Private Placement basis of Face Value of ''10,00,000 each fully paid up aggregating to ''30,000 million on February 22, 2018 and the issue was rated by ICRA and India Ratings. ICRA assigned a rating of ‘ICRA AA (hyb)’ with a Positive Outlook and India Ratings assigned a rating of ‘IND AA ’ with a Stable Outlook.

v. Your Bank established a USD 1 billion MTN Programme during the FY 2017-18 which was listed on India INX’s Global Securities Market (‘GSM’), London Stock Exchange International Securities Market (‘LSE ISM’) and the Singapore Exchange Securities Trading Limited (‘SGX’). Your Bank has drawn down USD 600 million under the MTN Programme. The MTN Programme of the Bank was rated by Moody’s Investors Service which has assigned a rating of ‘Baa3’ with a Stable Outlook to the notes of the Bank.

BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL

APPOINTMENTS MR. SUBHASH CHANDER KALIA

Mr. Subhash Chander Kalia was appointed as an Additional Director on the Board of the Bank on April 03, 2018, to hold office as Non-Executive Non-Independent Director upto the date of ensuing Annual General Meeting (‘AGM’). Mr. Kalia was earlier associated with the Bank as Strategic Advisor. Your Bank has received a notice in writing from a member proposing the candidature of Mr. Kalia as Director on the Board of the Bank. Further, the Nomination and Remuneration Committee (‘N&RC’) and Board of Directors of the Bank have also recommended the appointment of Mr. Kalia as Non-Executive Non Independent Director, liable to retire by rotation, to the Shareholders at the ensuing AGM.

MR. RENTALA CHANDRASHEKHAR

Mr. Rentala Chandrashekhar was appointed as an Additional Director on the Board of the Bank on April 26, 2018, to hold office upto the date of ensuing AGM. Your Bank has received a notice in writing from a member proposing the candidature of Mr. Chandrashekhar as Director on the Board of the Bank. Further, the N&RC and Board of Directors of the Bank have also recommended the appointment of Mr. Chandrashekhar as an Independent Director to the Shareholders at the ensuing AGM.

Dr. PRATIMA SHEOREY

Dr. Pratima Sheorey was appointed as an Additional Director on the Board of the Bank on April 26, 2018, to hold office upto the date of ensuing AGM. Your Bank has received a notice in writing from a member proposing the candidature of Dr. Sheorey as Director on the Board of the Bank. Further, the N&RC and Board of Directors of the Bank have also recommended the appointment of Dr. Sheorey as an Independent Director to the Shareholders at the ensuing AGM.

The relevant details including profiles of Mr. Subhash Chander Kalia, Mr. Rentala Chandershekar and Dr. Pratima Sheorey are included separately in the AGM Notice and report on Corporate Governance forming part of this Annual Report.

RE-APPOINTMENTS MR. AJAI KUMAR

In terms of Section 152 of the Companies Act, 2013, Mr. Ajai Kumar, Non-Executive Non-Independent Director, being liable to retire by rotation, shall retire at the ensuing AGM and being eligible for re-appointment, offers himself for re-appointment.

MR. RANA KAPOOR

Mr. Rana Kapoor has been serving as the Managing Director & CEO of the Bank since September 01, 2004, in accordance with the provisions of the Articles of Association (‘AOA’) of the Bank, recommendation of N&RC and the Board of Directors and with the approval of the Reserve Bank of India (‘RBI’) and Members, from time to time. His current tenure as MD & CEO of the Bank as approved by the RBI and Members (as approved by the Members at the AGM held on June 06, 2015) is valid upto August 31, 2018.

The Board of Directors at their meeting held on April 26, 2018 based on the provisions of the AOA and recommendation of N&RC, have decided to recommend the re-appointment of Mr. Rana Kapoor as MD & CEO with effect from September 01, 2018 for a period of three (3) years to the Members of the Bank for approval, subject to approval of RBI.

CESSATIONS Mr. SAURABH SRIVASTAVA

Mr. Saurabh Srivastava, Independent Director of the Bank, on April 22, 2018 completed his tenure as Director on the Board of the Bank in terms of RBI approval dated January 28, 2016 and March 28, 2018. Accordingly, Mr. Srivastava ceased to be Director on the Board of the Bank.

Ms. DEBJANI GHOSH

Ms. Debjani Ghosh, Independent Director of the Bank, has tendered her resignation from the directorship of the Bank on April 26, 2018 with immediate effect, due to her preoccupation on account of her joining the NASSCOM as President.

The Board places on record its sincere appreciation for the valuable services rendered by Mr. Saurabh Srivastava and Ms. Debjani Ghosh during their tenure as Directors of the Bank.

KEY MANAGERIAL PERSONNEL

Mr. Rana Kapoor, MD & CEO, Mr. Raj K. Ahuja, Group Chief Financial Officer and Mr. Shivanand R. Shettigar, Company Secretary of the Bank are the Key Managerial Personnel as per the provisions of the Companies Act, 2013 and rules made thereunder.

Mr. Raj K. Ahuja was appointed as Chief Financial Officer (‘CFO’) and Key Managerial Personnel, and was designated as Group CFO of the Bank w.e.f. April 03, 2018 in compliance with RBI circular dated May 18, 2017 which inter-alia prescribed minimum qualification for CFO of the Banks. Mr. Rajat Monga ceased to be the CFO and Key Managerial Personnel in terms of the provisions of Section 203 of the Companies Act, 2013 with effect from April 03, 2018. Mr. Rajat Monga is continuing with his other important responsibilities in the Bank.

DECLARATION BY INDEPENDENT DIRECTORS

The Bank has received necessary declarations from each Independent Director under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations’), that they meet the criteria of independence laid down there under.

FAMILIARIZATION PROGRAMS FOR INDEPENDENT DIRECTORS

Various programs were undertaken for familiarizing the Independent Directors which are disclosed in detail in the Corporate Governance Report, which forms part of this Annual Report.

NUMBER OF MEETINGS OF THE BOARD

Regular meetings of the Board are held to discuss and decide on various business policies, strategies, financial matters and other businesses. The schedule of the Board/Committee meetings to be held in the forthcoming financial year is circulated to the Directors in advance to enable them to plan their schedule for effective participation in the meetings. Due to business exigencies, the Board has also been approving several proposals by circulation from time to time.

The Board met Eight (8) times during the Financial Year 2017-18 viz. on April 19, 2017, April 20, 2017, May 09, 2017 (for business strategy), June 06, 2017, July 26, 2017, October 26, 2017, November 29, 2017 and January 18, 2018.

Additionally, several Committee meetings were held during the year including Audit Committee and Risk Monitoring Committee Meetings, which met six (6) times during the year.

Detailed information on the meetings of the Board and its Committees are included in the report on Corporate Governance, which forms part of this Annual Report.

COMMITTEES OF THE BOARD

The Bank has following twelve (12) Board level Committees, which have been established in compliance with the requirements of the business and relevant provisions of applicable laws and statutes:

1. Audit Committee

2. Risk Monitoring Committee

3. Board Credit Committee

4. IT Strategy Committee

5. Corporate Social Responsibility Committee

6. Nomination and Remuneration Committee

7. Capital Raising Committee

8. Stakeholders Relationship Committee

9. Fraud Monitoring Committee

10. Service Excellence, Branding and Marketing Committee

11. Board Committee on Willful Defaulters & Non Cooperative Borrowers

12. Committee of Independent Directors.

The details with respect to the composition, terms of reference, number of meetings held, etc. of these Committees are given in the report on Corporate Governance which forms part of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Bank has established Corporate Social Responsibility (‘CSR’) Committee and statutory disclosures with respect to the CSR Committee and an Annual Report on CSR Activities forms part of this Report as Annexure 1. The CSR Policy as recommended by the CSR Committee and as approved by Board is available on the website of the Bank at https://www.yesbank.in/pdf/ybl_corporate_ social_responsibility_policy

PERFORMANCE EVALUATION OF THE BOARD

Your Bank has laid down criteria for performance evaluation of the Directors including Chairman and MD & CEO, Board Level Committees and Board as a whole as well as the evaluation process for the same, in line with the provisions of the Companies Act, 2013, Listing Regulations and SEBI Guidance Note on the Board Evaluation dated January 05, 2017.

The performance evaluation of the members of the Board, the Board Level Committees and Board as a whole was carried out on April 25 and 26, 2018. Additional information on the Board Evaluation Process forms part of the Report on Corporate Governance.

CORPORATE GOVERNANCE

Corporate governance is an ethically driven business process that is committed to values aimed at enhancing an organization’s brand and reputation. This is ensured by taking ethical business decisions and conducting business with a firm commitment to values, while meeting stakeholders’ expectations. Further, Corporate governance is based on the principles of conducting the business with all integrity, fairness, and being transparent with all the transactions, making the necessary disclosures and decisions, complying with the laws of the land, accountability and responsibility towards the stakeholders and commitment of conducting the business in an ethical manner. Your Board functions as trustees of the shareholders and seeks to ensure that the long-term economic value for its shareholders is achieved while balancing the interest of all the stakeholders. Your Bank is committed to achieve the highest standards of Corporate Governance and also adheres to the Corporate Governance requirements set by the Regulators/ applicable laws. In line with the foregoing, your Bank has adopted a Code of Corporate Governance which acts as a guide to the Bank and the Board on the best practices in the Corporate Governance.

A separate section on Corporate Governance standards followed by your Bank and the relevant disclosures, as stipulated under Listing Regulations, Companies Act, 2013 and rules made there under forms part of this Annual Report.

A Certificate from M/s. Mehta & Mehta, Practicing Company Secretaries, conforming compliance by the Bank to the conditions of Corporate Governance as stipulated under Listing Regulations, is annexed to the Report on Corporate Governance, which forms part of this Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report for the year under review as stipulated in Listing Regulations is presented in a separate section forming part of this Annual Report.

VIGIL MECHANISM

In line with the provisions of Listing Regulations, the Companies Act, 2013 and the principles of good governance, the Bank has devised and implemented a vigil mechanism, in the form of ‘Whistle Blower Policy’. The policy devised is also aligned to the recommendations of Protected Disclosure Scheme for Private Sector and Foreign Banks, instituted by Reserve Bank of India. Detailed information on the Vigil Mechanism of the Bank is provided in the Report on the Corporate Governance which forms part of this Annual Report.

RISK MANAGEMENT FRAMEWORK

The Bank’s Enterprise Risk Management framework encompasses the following:

Risk Governance Framework: The Bank has implemented an Enterprise Risk Governance framework to ensure non-silo based management and oversight of Risk. The Bank’s Risk Management philosophy is guided by the Three Lines of Defence Principle

- First Line of Defence - Business Management: Each business segment of the Bank has risk ownership and is responsible for assessment and management of risks and has the overall responsibility of the management and mitigation of the Risk. The segments are required to implement appropriate procedures to fulfil their risk governance responsibilities.

- Second Line of Defence - Independent functions: The Bank’s independent oversight functions, such as, Risk Management, Compliance, Legal, Fraud Containment Unit, etc. set standards for management and oversight of risks, including compliance with applicable laws, regulatory requirements and policies.

- Risk Management: Risk Management establishes policies and guidelines for risk assessment and management and contributes to controls and tools to manage, measure and mitigate risks faced by the Bank.

- Compliance: The Compliance vertical manages adherence to applicable laws and regulatory guidelines.

- Legal: The Legal Risk Management division of the Bank undertakes various activities including advising business and operational management, acting as an independent control function while facilitating business, ensuring legal compliance, assisting the Board and Committees of the Board regarding analysis of laws and regulations, regulatory matters, disclosure matters, and potential risks and exposures on key litigation and transactional matters.

- Finance: The Finance vertical provides key data and consultation to facilitate sound decisions in support of the objectives of the Bank and the business verticals. Finance serves as an independent control function advising business management and establishing policies or processes to manage risk. It has overall responsibility for managing the Bank’s balance sheet and the Bank’s liquidity and interest rate risk.

- FCU & AML: The Fraud Containment Unit is responsible for prevention and detection of internal and external frauds in the areas of Liabilities, Product and Support functions. The unit conducts transaction monitoring, forensic scrutiny, employee awareness trainings and vulnerability assessments to help achieve the said objective. The Anti Money Laundering Unit is responsible for identifying and reporting of suspicious transactions as prescribed under PMLA Act/ Regulators, across all Business segments of the Bank. The AML unit is equipped with qualified, trained and experienced staff, which monitors various transactions undertaken by customers with a view to combat financial crimes and prevents misuse of the accounts for money laundering.

- Third Line of Defence - Internal Audit: The Bank’s Internal Audit function independently reviews activities of the first two lines of defence based on a risk-based audit plan and methodology approved by the Audit Committee of the Board. Internal Audit provides independent assurance to the Board, the Audit Committee, senior management and regulators regarding the effectiveness of the Bank’s governance and controls designed for risk mitigation framework.

The Board of Directors of the Bank has overall responsibility of Risk Management. The Board oversees the Bank’s Risk and related control environment, reviews and approves the policies designed as a part of overseeing the Risk Management practices. The Board ensures that comprehensive policies, systems and controls are in place to identify, monitor and manage material risks at a Bank-wide level, with clearly defined risk limits. The Board has laid down a Risk Appetite framework which articulates the quantum of risk the Bank is willing and able to assume in its exposures and business activities in pursuit of its strategic objectives and desired returns. The Board has also established policies governing risk management, such as, Enterprise Risk Management Policy, Reputation Risk Management Policy, Group Risk Management Policy, Credit Policy, ALM Policy, Model Risk & Governance Policy, etc.

The Board has put in place five Board level committees which inter-alia pertain to Risk Management, viz. Risk Monitoring Committee (RMC), Audit Committee (ACB), Fraud Monitoring Committee (FMC), Board Committee on Wilful Defaulters & Non-Cooperative Borrowers (BCWD&NCB) and Board Credit Committee (BCC) to deal with risk management practices, policies, procedures and to have adequate oversight on the risks faced by the Bank.

The Board Committees have set up various Executive level Committees for oversight over specific risks.

1. Management Credit Committee

2. Executive Credit Committee

3. Retail and Business Banking Credit Committee

4. Model Assessment Committee

5. Asset & Liability Management Committee

6. Investment & Financial Markets Management Committee

7. Operational Risk Management Committee

8. Outsourcing Management Committee

9. Business Continuity Management Committee

10. Security Council

11. Product Process Approval Committee

12. Fraud & Suspicious Transaction Monitoring Committee

13. Whistle Blower Committee

14. Enterprise Risk Management & Capital Management Committee

15. Strategy Management Committee

16. Reputation Risk Management Committee

17. Standing Committee on Customer Service

18. IT Steering Committee

19. Steering Committee for IFRS (Ind AS)

20. RBS - Reporting Oversight Committee

21. Apex Management Committee

22. Staff Accountability Committee

Risk events, potential threats, performance of the Bank vis-a-vis Risk Limits and Risk Appetite, Risk Profile dashboard covering key risk indicators, etc. are presented to these Committees, with QoQ/YoY trends highlighted, with level and direction of risk. The Bank also conducts a detailed Internal Capital Adequacy Assessment Policy (‘ICAAP’) review exercise to identify its Risk universe, internal controls and mitigation measures in place for the risks and capital requirements for identified risks. The ICAAP findings are presented to the RMC and the Board.

The Risk Management Unit is headed by the Chief Risk Officer (‘CRO’) who leads the Credit Risk (Underwriting) Unit, General Legal Counsel and other Risk Units. The CRO reports to the MD&CEO. The CRO is responsible to ensure an effective implementation of an enterprise wide risk management framework through various risk policies, processes, limits and controls that enable prompt risk identification, accurate risk measurement and effective risk mitigation. CRO is also responsible for risk compliance and monitoring as well as reviewing and presenting various risk reports, policies and dashboards to RMC and Board.

The Risk Management Unit in the Bank is designed to establish an effective Enterprise Risk Management (ERM) framework for the Bank to ensure sustainable business growth with stability and to promote a proactive approach in identification, assessment, management and reporting of risks associated with business. The Risk Management Unit enables the Bank to successfully meet its business and financial goals, while maintaining effective Board and management oversight on Risk and Control parameters.

- Risk Appetite: The Bank’s Risk Appetite statement details the level of aggregate risk that the Bank is willing to undertake and successfully manage in pursuit of its business goals.

- Risk Management: The Bank follows a standardized methodology of identification and assessment of material risks, implementation of internal controls and mitigation measures, ongoing quality reporting and monitoring of risks.

- Capital Management and Risk-based Capital Allocation and Performance Measurement: The

Bank ensures deployment of capital within the organization based on risk tolerance, economic constraints, stakeholder needs and ensuring risk-based capital allocation and performance measurement.

LOANS, GUARANTEES OR INVESTMENTS IN SECURITIES

Pursuant to Section 186(11) of the Companies Act, 2013, loans made, guarantees given or securities provided or acquisition of securities by a Banking company in the ordinary course of its business are exempted from disclosure requirements under Section 134(3) (g) of the Companies Act, 2013.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

There were no materially significant transactions with related parties including promoters, directors, key managerial personnel, subsidiaries or relatives of the Directors during the financial year which could lead to a potential conflict with the interest between the Bank and these parties. The details of the transactions with related parties, if any, were placed before the Audit Committee from time to time. There were no material individual transactions with related parties, which were not in the ordinary course of business of the Bank, nor were there any transactions with related parties, which were not on arm’s length basis. Accordingly AOC-2 is not applicable to the Bank. Suitable disclosure as required by the Accounting Standards (AS18) has been made in the notes to the Financial Statements.

Prior omnibus approval for normal banking transactions is also obtained from the Audit Committee for the related party transactions which are of repetitive nature as well as for the normal banking transactions which cannot be foreseen and accordingly the required disclosures are made to the Committee for their approval.

The policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions as approved by the Audit Committee and the Board of Directors is uploaded on the website of the Bank and the link for the same is https://www.yesbank.in/about-us/ corporate-governance

CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to Section 129(3) of the Companies Act, 2013, a Consolidated Financial Statement of the Bank along with its subsidiaries i.e. YES Securities (India) Limited, YES Asset Management (India) Limited and YES Trustee Limited has been prepared in the same form and manner as that of the Bank, which shall be laid before the ensuing AGM along with the laying of the Bank’s Financial Statement under Section 129(2) i.e. Standalone Financial Statement of the Bank.

Further, pursuant to the provisions of Accounting Standard (‘AS’) 21, Consolidated Financial Statements notified under Section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 issued by the Ministry of Corporate Affairs, the Consolidated Financial Statements of the Bank along with its subsidiaries for the year ended March 31, 2018 forms part of this Annual Report.

INTERNAL FINANCIAL CONTROLS SYSTEMS AND THEIR ADEQUACY

Your Bank has implemented adequate procedures and internal controls which provide reasonable assurance regarding reliability of financial reporting and preparation of financial statements. The Bank also ensures that internal controls are operating effectively.

DIVERGENCE IN ASSET CLASSIFICATION AND PROVISIONING FOR NPAs

As part of the Risk Based Supervision (RBS) exercise for FY 2016-17 concluded in October 2017, the RBI has pointed out certain retrospective divergence in the Bank’s asset classification and provisioning as on March 31, 2017. In conformity with the RBI circulars DBR. BP.BC.NO.63/21.04.018/2016-17 issued on April 18,

2017, SEBI circular issued on July 18, 2017 and as per the approval from the Board of Directors at its Meeting held on October 26, 2017, the detailed table outlining divergences in asset classification and provisioning is provided in the schedule 18 - note number 18.5.6.3 -Significant accounting policies and notes forming part of the accounts for the year ended March 31, 2018.

AUDITORS

(A) STATUTORY AUDITORS AND THEIR REPORT

The Members of the Bank at the 12th Annual General Meeting held on June 07, 2016, have approved the appointment of M/s. B S R & Co. LLP, Chartered Accountants as Statutory Auditors of the Bank for a period of 4 years, subject to the approval of the Reserve Bank of India, to hold office from the conclusion of the 12th AGM till the conclusion of 16th AGM of the Bank to be held in 2020, subject to ratification of their appointment by the Members at every AGM. Accordingly, appointment of M/s. B S R & Co. LLP, Chartered Accountants, as a Statutory Auditors of the Bank is required to be ratified by the Members at ensuing AGM of the Bank, subject to the annual approval of the Reserve Bank of India. The Bank has received the consent from the Auditors and confirmation to the effect that they are not disqualified to be appointed as the Auditors of the Bank in terms of the provisions of the Companies Act, 2013 and rules made there under. Accordingly, the Board of Directors has recommended the ratification of appointment of M/s. B S R & Co. LLP, Chartered Accountants, as the Statutory Auditors of the Bank, to hold office from the conclusion of the ensuing AGM till the conclusion of the 15th AGM, to the Members for their approval.

The Report given by the Auditors on the financial statements of the Bank forms part of this Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report. Also, no offence of fraud was reported by the Auditors of the Bank.

(B) SECRETARIAL AUDITORS AND SECRETARIAL AUDIT REPORT

Pursuant to Section 204 of the Companies Act, 2013, your Bank had appointed M/s. BNP & Associates, Practicing Company Secretaries, Mumbai as its Secretarial Auditors to conduct the secretarial audit of the Bank for the FY 2017-18. The Bank provided all assistance and facilities to the Secretarial Auditors for conducting their audit. The Report of Secretarial

Auditors for FY 2017-18 is annexed to this report as Annexure 2. There are no observations, reservations or adverse remarks in the Secretarial Audit Report.

BUSINESS RESPONSIBILITY REPORT

As stipulated in Listing Regulations, the Business Responsibility Report describing the initiatives undertaken by the Bank from environmental, social and governance perspective is attached and forms part of this Annual Report.

MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE BANK

There are no material changes and commitments, affecting the financial position of the Bank which has occurred between the end of the financial year of the Bank i.e. March 31, 2018 and the date of the Directors’ Report i.e. April 26, 2018.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS

During the year under review, no significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and Bank’s operation in future.

POLICY ON APPOINTMENT OF DIRECTORS

The Board of Directors of the Bank had formulated and adopted policy on ‘Board Diversity and Fit & Proper Criteria and Succession Planning’ for appointment of Directors on the Board of the Bank and succession planning. The details of the same have been included in the Report on Corporate Governance forming part of this Annual Report.

REMUNERATION POLICY

The Board of Directors of the Bank had formulated and adopted policies for Remuneration of Employees of the Bank, Remuneration of Directors including the Chairman of the Bank. The details of the same have been included in the Report on Corporate Governance forming part of this Annual Report.

EMPLOYEE REMUNERATION:

(a) The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this report. In terms of Section 136 of the Companies Act, 2013, the same is open for inspection during working hours at the Registered Office of your Bank. A copy of this statement may be obtained by the members by writing to the Company Secretary of your Bank.

(b) The ratio of the remuneration of each Director to the median remuneration of the employees of the Bank and other details in terms of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report as Annexure 3.

EXTRACTS OF ANNUAL RETURN

Pursuant to the provisions of Section 134(3)(a) and Section 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extracts of the Annual Return as at March 31, 2018, forms part of this report as Annexure 4.

DISCLOSURES UNDER GREEN INFRASTRUCTURE BONDS

Since the first issuance by Your Bank in February 2015, green bond issuances in India are witnessing a steady growth, making India one of the top ten largest green bond markets globally. These instruments are playing a pivotal role in the realization of India’s renewable energy potential and towards achieving its globally committed target of 175 GW of renewable capacity by 2022. Your Bank has issued three green bonds:

February 2015: Your Bank issued India’s first-ever Green Infrastructure Bonds, raising an amount of ''1000 crore. This 10 year tenor bond witnessed strong demand from leading investors including Insurance companies, Pension & Provident Funds, Foreign Portfolio Investors, New Pension Schemes and Mutual Funds.

- August 2015: Your Bank raised Rs,315 crore through the issue of Green Infrastructure Bonds to International Finance Corporation on a private placement basis which is the first investment by IFC in an Emerging Markets Green Bond issue in the world. The bonds are for a tenor of 10 years. IFC paid for the placement using the proceeds from the first Green Masala Bond program, that aimed at raising capital in the offshore rupee market.

- December 2016: Your Bank has raised Rs,330 crore, through an issue of a 7-year Green Infrastructure Bonds to FMO, the Dutch Development Bank, on a private placement basis. This is FMO’s first Investment in a Green Bond issued by a bank in India. FMO has paid for placement using the proceeds from their sustainability bonds issued in 2015.

The amount raised is used to finance green infrastructure projects as per ‘Eligible Projects’ outlined in the Bank’s internal guidelines that were put in place in adherence to Green Bond Principles by international capital market association. KPMG, India has provided assurance on the internal tracking method and the allocation of funds of green bonds for FY 2017-18.

GREEN BOND PRINCIPLES (GBP)

The Green Bond Principles are voluntary process guidelines intended for broad use by the market that recommend transparency and disclosure, and promote integrity in the development of the Green Bond market. The GBP has the following four key components that your Bank has adopted:

Use of Proceeds: The proceeds raised are used in eligible project categories and include all projects funded in whole, or in part, in the fields of renewable and clean energy projects including Wind, Solar, Biomass, Hydropower and other such projects.

Process for Evaluation and Selection of Eligible Projects: The process includes interactions with potential borrowers to understand the overall aspects of the project and a preliminary comparison against the eligibility criteria. Post preliminary consideration, based on the merits of the project, the evaluation moves to the risk team which assesses it and confirms the eligibility of the project. Further documentation is sought as per the Bank’s policies and GBP.

- Management of Proceeds: Green Bond allocations to eligible projects are tracked through an MIS based asset tagging system on a quarterly basis. The unallocated proceeds, if any, are placed in liquid instruments (Government Securities) on a quarterly basis.

Reporting: Communication to investors through an annual update includes:

List of projects to which Green Bond proceeds have been allocated to with brief description including amounts disbursed and installed capacity

Summary of Environmental and Social (E&S) impacts associated with these projects, if any

Information on investment of unallocated proceeds in liquid instruments

IMPACTS

The proceeds of the green bonds have been utilized in augmenting solar and wind energy capacities, with a significant impact of avoidance of emissions of CO2, SO2 and NOx apart from other air pollutants associated with energy generation. Estimated CO2 emission reductions are shared along with project details. Through financing solar and wind power plants, these bonds contribute to a positive environmental impact and also strengthen India’s energy security by reducing fossil fuel dependency.

List of projects against which green bonds proceeds have been allocated as on March 31, 2018 is provided below: Proceeds Utilization Against Bond Issuance Size of Rs,1,000 crore (February 2015)

Sr.

No.

Project Location

Description

Total Fund Based Utilization, Rs, crore (as on March 31, 2018)

Estimated2 positive E&S impacts - CO2Emissions Reduction (tCO2 / yr)

Known significant negative E&S Impacts

1

Madhya Pradesh

12 MW wind energy project

42.74

21,410.66

None

2

Telangana

15 MW solar energy project

9.66

26,953.59

None

3

Telangana

15 MW solar energy project

9.66

26,953.59

None

4

Andhra Pradesh

10 MW solar energy project

1.24

17,241.84

None

5

Maharashtra

31.5 MW wind energy project

130.54

66,324.86

None

6

Karnataka

50 MW solar energy project

20.70

94,073.31

None

7

Telangana

143 MW solar energy project

142.48

2,49,460.44

None

8

Telangana

42 MW solar energy project

84.79

83,070.33

None

9

Andhra Pradesh & Rajasthan

155.4 MW wind energy project

239.70

3,57,426.16

None

10

Karnataka

40 MW solar energy project

115.00

86,555.90

None

11

Madhya Pradesh

250 MW solar energy project

1.00

4,92,140.83

None

12

Karnataka

46.2 MW wind energy project

2.91

1,11,340.52

None

13

Karnataka

40 MW solar energy project

23.00

64,265.81

None

823.42*

16,97,217.84

Proceeds Utilization Against Bond Issuance Size of Rs,315 crore (August 2015)

Sr.

Project Location

No.

Description

Total Fund Based Utilization, Rs, crore (as on March 31, 2018)

Estimated** positive E&S impacts - CO2 Emissions Reduction (tCO2 / yr)

Known significant negative E&S Impacts

1 Andhra Pradesh

100 MW wind energy project

214.62

2,26,621.55

None

2 Telangana

30 MW solar energy project

1.85

59,335.95

None

3 Telangana

5 MW solar energy project

6.53

7,610.43

None

223.00*

2,93,567.93

Proceeds Utilization Against Bond Issuance Size of Rs,330 crore (December 2016)

Sr.

No.

Project Location

Description

Total Fund Based Utilization, Rs, crore (as on March 31, 2018)

Estimated** positive E&S impacts - CO2Emissions Reduction (tCO2 / yr)

Known significant negative E&S Impacts

1

Telangana

20 MW solar project

100.13

42,719.85

None

2

Gujarat

30 MW wind energy project

142.00

69,001.19

None

3

Telangana

50 MW solar energy project

9.14

86,420.61

None

4

Telangana

10 MW solar energy project

50.27

21,359.93

None

5

Rajasthan

50 MW solar energy project

15.45

98,893.25

None

6

Telangana

10 MW solar energy project

13.01

21,359.93

None

330.00

3,39,754.76

Total CO2 Emissions Reduction (tCO2 / yr)

23,30,540.53

* The shortfall (of Rs,176.58 crore and Rs,92 crore in allocation of proceeds of Rs,1000 crore bond issued in February 2015 and Rs,315 crore bond issued in August 2015 respectively) is due to the repayment of disbursement. The temporary unallocated proceeds have been invested in Government Securities and will be allocated back to new eligible projects.

STATUTORY DISCLOSURES

The disclosures required to be made under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 on the conservation of energy, technology absorption and Foreign exchange earnings and outgo are given as under:

(A) CONSERVATION OF ENERGY

Environmental stewardship in the financial sector - ISO 14001:2015 Environmental Management System (EMS) certification for the Bank embarked on the 5th year

Your Bank, since inception, has embedded concept of Natural Capital as one of its core values. The Bank has one of the largest Renewable Energy lending portfolios among private sector banks, and is the first Indian bank to be ISO 14001 certified for Environmental Management System and was the first Bank globally to migrate to the latest ISO 14001:2015 version of the standard in 2017 is the first Indian signatory to the Natural Capital Finance Alliance, is recognized as a Climate Disclosure Leader, and drives environmental sustainability initiatives as its CSR focus.

In line with its commitment to achieve internal natural resource consumption efficiencies and minimizing its carbon footprint, your Bank completed phase V of the certification in the reporting period and has 744 locations, including 688 metro-urban branches, 50 rural branches, 4 corporate offices and YES Securities certified as per ISO 14001:2015 standard, the highest number for certified facilities for any BFSI organization in India.

The Bank’s Environmental Management Policy, revised in 2016, outlines the Bank’s commitment to achieve a 10% reduction in its carbon emissions intensity annually through organization-wide environment management initiatives and employee engagement.

With digitization as a key focus area, your Bank’s environment management policy highlights stronger commitment to environment protection and commitment to source renewable energy for greening the Bank’s operation with strategic objectives to -

- Improve key resource efficiency, such as usage of electricity, fossil fuel, paper and water with Digitization of processes

- Conserve natural resources by adopting the ‘3-R’ (reduce, reuse and recycle) approach towards prevention of pollution and disposal of waste, especially electronic waste, in line with regulatory requirements or industry best practices

- Explore renewable energy sourcing for greening the Bank’s operations and adopt green building principles

- Set, monitor and review the overall Environmental Management System (EMS) objectives and targets on an ongoing basis towards achieving continuous improvement in environmental performance on digital platform ‘Resustain’

Promote ‘green procurement’ to influence strategic suppliers sustainable sourcing of product and services

- Integrate energy and environmental considerations in the design of new infrastructural facilities

Your Bank has undertaken environmental mitigation initiatives by aggressive awareness creation around electricity, paper, water and diesel conservation in day-to-day activities through Bank-wide circulation of resource conservation mailers, signage and posters. Periodical trainings on Environmental Management System through comprehensive e-learning module, workshops, and involvement of employees in idea generation and implementation is ensured.

I. THE STEPS TAKEN OR IMPACT ON CONSERVATION OF ENERGY

» The Bank has been migrating to LED lighting in phases. As on March 31, 2018, 4,403 LED lights have been installed at 66 new branch locations and 2 corporate locations with an investment of Rs,51.22 lakh, with a potential saving of 3,19,217.5 kwh of energy consumption and Rs,31.8 lakh in monetary savings annually

» Similarly power factors at branches are being monitored above 0.9 with the help of capacitor bank and monitoring panels are installed and reduce risk of penalty levied by DISCOMs

» The Bank is in the process of phasing out air-conditioning systems that use ozone depleting coolants, and in the current reporting cycle, the Bank initiated replacement of all air conditioners that are more than 10 years old, with systems that use eco-friendly coolants

- The air conditioning replacement model has been developed with a criteria for replacing old models with an energy consumption of 1.6 - 1.8 times of peak load and temperature control with dedicated AHU units for centralized AC systems

- Retrofit solutions for HVAC systems which have a potential saving of 10% to 15% would be incorporating in a phased manner over a 2 year period. Maintaining AC temperature above 250 Celsius at all times has helped the Bank to achieve 3% saving of hourly kwh consumptions

- 100% of YES BANK branches are issued Petro cards for procurement of diesel, which has resulted into enhanced transparency, reduced wastages and cost saving of 2% over last financial year

- YES BANK’s energy management initiatives aim at reducing 15-20% energy consumption by 2020 from sustainable facility management

II. THE STEPS TAKEN BY THE BANK FOR UTILIZING ALTERNATE SOURCES OF ENERGY

Your Bank has explored the potential of using alternate sources of energy through open access and your Bank would continue to explore alternative sources of energy in future.

III. THE CAPITAL INVESTMENT ON ENERGY CONSERVATION EQUIPMENTS

Rs,3.45 crore upto present financial year (AC retrofitting, LED Tube lights and signages project at corporate offices and branch locations)

(B) TECHNOLOGY ABSORPTION

(I) THE EFFORTS MADE TOWARDS TECHNOLOGY ABSORPTION

Information Technology (IT) is a critical enabler of business transformation and growth and needs to play a fundamentally distinctive role as it partners with the business. IT-enabled businesses, enrich products and innovation and foster customer-led growth. As a new generation Bank, your Bank has deployed ‘Technology’ as a Strategic Business enabler - to build a distinct competitive advantage and to achieve superior standards of Customer Service.

Your Bank has recognized this and has committed to investing in Technology adopting an A-R-T (Alliances, Relationships, and Technology) approach where-in the Bank has identified the need of the current times and pain points of the customers, concluding on these as a set of opportunities without compromising on security to ensure that the customers carry out their banking needs and services with ease.

The vision of the Business & Digital Technology Solutions Group (BDTS) at your Bank remains the same ‘To make life simpler for our customers and colleagues’. Working on its strategy which is broken into two parts i.e. ‘Run the Bank’ to continue work on Initiatives which are needed to keep the banks operations running effectively and ‘Build The Bank’ BDTS keeps a laser-sharp focus on transformation initiatives to meet the Vision of the Group and your Bank. During the current FY, many new initiatives were completed successfully as well as systems were upgraded to latest versions to support the growing needs of your Bank. Few of the key projects which were Bank-wide during the year are listed below:

YES asap! - Mobile App

Chatbot

ROBOTICS CoE including Robotics Process Automations (RPA)

- PI-CONTROL™ Platform

- YES ROBOT - AI Enabled Banking Assistant Debit Card and ATM System Upgrade

- YESFXOnline (Credence) - Direct Customer Dealing (DCD) Module

YES MSME Mobile App - on iOS and Android platforms

- Enhanced Wealth Management System (WMS)

- ‘Samsung Pay’ for YES BANK Credit Cards

- Unified Customer Experience Portal (UCXP)

- Hadoop - Analytical Campaign Application

- Hadoop - Merchant Funded Discounts

- Sales Portfolio Management System

- GEM e-PBG Module (Government e-Marketplace)

- Newgen Platform

- Notiva Application

- Puratech channel finance

- CRIF Highmark - Connect Tool for Retail Assets for CIBIL reporting

- RESUSTAIN (A Digital Platform for Environmental and CSR Reporting)

New Application on ISB; Ganaseva for catering to JLG

- Y-COLORS (Yes Corporate Loan Originating System)

Bharat Bill Payment System (Customer Operating Unit)

- Kaizala implementation for YES BANK Employees (Enterprise Commutation)

For more details on Information Technology and its key initiatives, please refer to the Management Discussion and Analysis section of this Annual Report.

(II) THE BENEFITS DERIVED LIKE PRODUCT IMPROVEMENT, COST REDUCTION, PRODUCT DEVELOPMENT OR IMPORT SUBSTITUTION

Technology has responded by being true strategic partnerof Business. Many first mover implementations have provided business, long lasting advantages and have also won many accolades and awards for the Bank. For instance, first Industry initiative Merchant Funded Offer Program with key USPs like Analytical driven personalized offers for customer basis their profile, Real-time analytical tracking of transactions and communication (SMS and Push Notification) to customers about the Cash back eligibility, Completely automated process right from tracking transactions to settlement.

Innovations like YES ROBOT, Chatbot integration with YES PAY Mobile Wallet, YES asap! - Mobile App enabling account opening of Individual Savings Accounts (SA), RESUSTAIN; A Digital Platform for Environmental and CSR Reporting, ‘Samsung Pay’ for YES BANK Credit Cards helps the products and sales teams to offer superior products and services.

Your Bank has evaluated and implemented cutting edge technologies like virtualization, cloud computing & social media and continues to invest in best-in-class IT systems and practices, and to ensure that its technology platform becomes a strategic business tool for building a competitive advantage. Apart from product development, product improvement & effective cost management, technology has also played a major role in customer acquisition & ensuring high level of service delivery & customer excellence. Your Bank has also been able to cater to Financial Inclusion needs through its award winning and globally recognized technology solution platform which offers doorstep banking services.

(III) IN CASE OF IMPORTED TECHNOLOGY (IMPORTED DURING THE LAST THREE YEARS RECKONED FROM THE BEGINNING OF THE FINANCIAL YEAR)

Details of Technology Imported

Year of Import

Whether the Technology been fully absorbed

If not fully absorbed, areas where absorption has not taken place, and the reasons thereof

Software Tokens for Net Banking, Implementation fees and delivery of Branded Software Tokens

Aug-14

Yes

NA

Enabling Radius licenses for 10,000 concurrent users (SMS/Email, OATH, software tokens) on existing setup

Sep-15

Yes

NA

Master Data Management licenses

Nov-15

Yes

NA

Cisco WanStack for Branch WAN Architecture Revamp

Dec-16

Yes

NA

Up gradation of Murex 2.11 to Murex 3.1

Apr-17

Yes

NA

Cisco CUCM

Dec-17

Yes

NA

(C) FOREIGN EXCHANGE EARNINGS AND OUTGO

The Foreign Exchange earned in terms of actual inflows during the year and the Foreign Exchange outgo during the year in terms of actual outflows.

During the year ended March 31, 2018 your Bank earned Rs,10,307.25 million and spent Rs,7,865.59 million in foreign currency. This does not include foreign currency cash flows in derivatives and foreign currency exchange transactions.

NUMBER OF CASES FILED, IF ANY, AND THEIR DISPOSAL UNDER SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.

As a responsible organization, your Bank strives to foster a safe and respectful work environment. The Bank has Zero tolerance towards any action on the part of any executive which may fall under the ambit of ‘Sexual Harassment’ at workplace, and is fully committed to uphold and maintain the dignity of every women executive working in the Bank. The

Policy regarding Prevention & Prohibition of Sexual Harassment at Workplace provides for protection against sexual harassment of women at workplace and for prevention and redressal of complaints. Also, in its endeavour to spread awareness on the aforementioned policy and ensure compliance by all the executives, the Bank has implemented a plan of action to disseminate the information and train the executives on the policy under the ambit of ‘Gender Respect and Commitment to Equality’ (GRACE) program.

Particulars

Numbers

Number of complaints pending as on the beginning of the financial year

3

Number of complaints filed during the financial year

9

Number of complaints pending as on the end of the financial year

1

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(5) of the

Companies Act, 2013, it is hereby confirmed that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit of the Bank for that period;

(c) t he directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

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

(e) the directors, had laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and

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

ACKNOWLEDGMENT

Your Directors take this opportunity to express their deep and sincere gratitude to the customers of the Bank for their confidence and patronage, as well as to the Reserve Bank of India, Securities and Exchange Board of India, Government of India, and other Regulatory Authorities for their cooperation, support and guidance. Your Directors would like to express a deep sense of appreciation for the commitment shown by the employees in supporting the Bank in its continued robust performance on all fronts. The Bank has been following the A.R.T. - Alliances, Relationships and Technology led approach to Banking. Taking the approach further, your Bank is embracing ‘Future: Now’ by bringing the future to the present through various process, product & service innovations, thereby, fast forwarding the Bank into the future. In line with this philosophy, the Directors would also like to thank all our valued partners, vendors and stakeholders who have played a significant role in the continued Business Excellence achieved by the Bank. Your Directors would also like to thank the employees for their continued support as the Bank evolves as the ‘Professionals’ Bank of India’ with a vision of ‘BUILDING THE FINEST QUALITY LARGE BANK OF THE WORLD IN INDIA’.

For and on behalf of the Board of Directors

Rana Kapoor Ashok Chawla

Managing Director & CEO Non-Executive

(DIN No. 00320702) (Independent) Chairman

(DIN No. 00056133)

Place: Mumbai

Date: April 26, 2018


Mar 31, 2017

DIRECTORS’ REPORT

To the Members,

The Directors are pleased to present the Thirteenth Annual Report on business and operations of your Bank together with the audited accounts for the year ended March 31, 2017.

BUSINESS OVERVIEW AND OUTLOOK

Your Bank performed well in Financial Year (‘FY’) 2016-17 with a net profit of '' 33,300.96 million which is an increase of 31.1% from FY 2015-16. Your Bank showed continued acceleration and momentum in building a strong liability franchise with CASA ratio at 36.3% at the end of FY 2016-17. Your Bank has also completed its Retail Assets Product Suite and remains focused on increasing diversification in advances by growing the Retail and SME book. In terms of Human Capital strength, your Bank has achieved a significant milestone in FY 2016-17 by crossing the 20,000 mark.

Your Bank''s branch network stood at 1,000 branches and 1,800 ATMs (including Bunch Note Acceptors) as on March 31, 2017. Your Bank is also in the process of commissioning its single largest National Centralized Operations Management & Service Delivery facility in Ambattur, Chennai. Your Bank has adopted an Alliances, Relationships & Technologies - ART'' approach to Banking by building strong relationships with firms across multiple domains including Fintech, Responsible Banking, Human Capital and leveraging their innovations to provide a superior Banking experience.

STATE OF THE AFFAIRS OF THE BANK

FY 2016-17 was a significant year in your Bank''s lifecycle. Your Bank continued on its consistent performance with Profit after Tax (‘PAT’) growing to '' 33,300.96 million from '' 25,394.47 million showing a Y-o-Y growth of 31.1%.

On March 31, 2017, your Bank successfully issued 32,711,000 Equity shares by way of Qualified Institutions Placement at a price of '' 1,500.00 per equity share aggregating to '' 49,066.50 million (approx. USD 750 million) resulting in dilution of 7.2% on the expanded capital base. The Bank''s Total Capital Adequacy has increased to 17.0 % & Tier I Capital to 13.3%, ensuring that the Bank is well positioned for growth. Further, during FY 2016-17, your Bank raised '' 30,000 million of Basel III Compliant Additional Tier-1 (ATT) Bonds through private placement. The Bonds were listed on the BSE Limited and its proceeds qualify for Basel III Tier-I Capital. The Bonds have been rated as CARE AA (Stable Outlook) by Credit Analysis and Research Limited (‘CARE’), ICRA AA (Hyb), Stable by ICRA Limited (‘ICRA’) and IND AA (Stable Outlook) by India Ratings & Research - A Fitch Group Company (‘India Ratings’).

Your Bank continued its leadership in Green Infrastructure Bonds and raised Rs,3,300 million (approx. USD 50 million equivalent) through an issue of a 7-year Green Infrastructure Bonds to FMO, the Dutch Development Bank, on a private placement basis. FMO invested in your Bank''s bonds through FMO''s own sustainable bonds. This was FMO''s 1st investment in a Green Bonds in India. This was the third such green bond issuance by your Bank after the highly successful maiden issuance of Rs,10,000 million (USD 160 million equivalent) in February 2015 followed by Rs,3,150 million (USD 50 million equivalent) private placement to International Finance Corporation (‘IFC’), Washington in August 2015.

Your Bank also successfully raised Rs,21,350 million of Senior Long-term Infrastructure Bonds. The issue was rated ICRA AA by ICRA and CARE AA by CARE.

Your Bank signed an MoU for a USD 50 million loan from IFC, Washington, to be used exclusively to lend to women-owned businesses. This project is part of the Women Entrepreneurs Opportunity Facility (‘WEOF''), the first-of-its-kind global facility dedicated to expanding access to capital for approximately 100,000 women entrepreneurs.

Your Bank was the first bank in India to commence the operations at International Financial Services Centre (‘IFSC’) at GIFT City, Gujarat (‘IBU’). Setting up of an IFSC in India has been the vision of Hon''ble Prime Minister of India, as this would be a major game changer for the financial services sector in India. In FY 2016-17, your Bank''s IFSC gained significant momentum as a specialized knowledge sectors focussed IBU of YES BANK and has reached the milestone of USD 1 billion balance sheet size as on March 31, 2017. A banking unit at GIFT IFSC (IBU) is equivalent to a foreign branch and is a significant development in overall augmentation of your Bank''s business model whereby your Bank will be in a position to provide comprehensive solutions for its client''s foreign currency banking requirements. The opening of an IBU has boosted YES BANK''s Cross Border Trade offerings, External Commercial Borrowings, Foreign Currency loans/syndications and offshore M&A funding business among others. With the

Govt. of India announcing various incentives, to propel the growth of IFSC, this will provide further impetus to your Bank''s operations in GIFT City.

Further information on the Business overview and outlook and State of the affairs of your Bank is discussed in detail in the Management Discussion & Analysis section.

There is no change in the nature of business of your Bank for the year under review.

FINANCIAL PERFORMANCE (STANDALONE)

Rs,in million

Particulars

April 1, 2016 to March 31, 2017

April 1, 2015 to March 31, 2016

Deposits

1,428,738.57

1,117,195.33

Borrowings

386,066.73

316,589.77

Advances

1,322,626.77

982,099.27

Total Assets/Liabilities

2,150,599.18

1,652,634.12

Net Interest Income

57,973.07

45,667.23

Non-Interest Income

41,567.57

27,121.47

Operating profit

58,375.23

43,024.98

Provisions and Contingencies

7,934.05

5,363.01

Profit before Tax

50,441.18

37,661.98

Provision for taxes

17,140.21

12,267.51

Net Profit

33,300.96

25,394.47

Add: Surplus/(Deficit) brought forward from last period

55,446.80

42,200.51

Amount available for appropriation APPROPRIATIONS

88,747.77

67,594.97

Statutory Reserve under Section 17 of the Banking Regulation Act, 1949

8,325.24

6,348.62

Capital Reserve

1,083.00

734.83

Investment Reserve

-

-

Proposed Dividend and Tax thereon*

-

5,061.52

Adjustment to earlier year dividend and tax thereon

5.61

3.21

Surplus carried to Balance Sheet KEY PERFORMANCE INDICATORS

79,333.91

55,446.80

Net Interest Margin

3.4%

3.4%

Return on Annual Average Assets

1.8%

1.7%

Return on Equity

21.5%

19.9%

Cost to Income Ratio

41.4%

40.9%

* Bank has not accounted for proposed dividend as a liability as at March 31, 2017 as per revised Accounting Standard (AS) 4 ‘Contingencies and Events occurring after the Balance sheet date''. Proposed Dividend was however accounted for as a liability as at March 31, 2016 in line with the existing accounting standard applicable at that time.

Your Bank posted Net Revenues (Net Interest Income and other income) of Rs,99,540.64 million and Net Profit of Rs,33,300.96 million for FY 201617. The Net Revenues and Net Profit for FY 2015-16 was Rs,72,788.70 million and Rs,25,394.47 million respectively. Appropriations from the Net Profit have been made as per the table given above. Please refer to the section on Financial and Operating Performance in the Management Discussion and Analysis for a detailed analysis of financial data.

DIVIDEND

Your Bank is rewarding its shareholders by way of consecutive cash dividends considering the consistent financial performance of your Bank and promising future prospects while retaining capital to maintain a healthy Capital Adequacy Ratio and to support future growth. In view of the excellent financial performance of your Bank and in continuance of the earlier trends of cash dividends, the Board of Directors have recommended Dividend at a rate of Rs,12 per equity share of Rs,10 each for the year ended March 31, 2017 for approval by the Shareholders at the 13th Annual General Meeting as against Rs,10 per equity share for the previous year ended March 31, 2016. This dividend shall be subject to tax on dividend to be paid by the Bank. This reflects our confidence in your Bank''s ability to consistently grow earnings over time.

TRANSFER TO RESERVES

As per requirement of RBI regulations, the Bank has transferred the following amounts to various reserves during Financial Year ended March 31, 2017:

Rs,in million

Amount transferred to

Amount

Statutory Reserve

8,325.24

Capital Reserve

1,083.00

Investment Reserve

-

CAPITAL RAISING & CAPITAL ADEQUACY RATIO (CAR)

During the financial year ended March 31, 2017, your Bank has successfully completed capital raising by way of Qualified Institutions Placement (‘QIP’) raising Rs,49,066.50 million by issuing 32,711,000 equity shares of Rs,10 each at an issue price of Rs,1,500 per equity share including premium of Rs,1,490 per equity share. The Bank accreted Rs,48,239.39 million (net of share issue expenses of Rs,500 million) as premium, on account of QIP. The Bank also issued 3,243,172 shares pursuant to the exercise of stock option aggregating to Rs,1,010.12 million. Overall, 35,954,172 equity shares were issued by your Bank during financial year.

Post allotment of equity shares as aforesaid, the issued, subscribed and paid-up share capital of your Bank stands at Rs,4,564,858,130 comprising of 456,485,813 equity shares of Rs,10 each as on March 31, 2017.

Your Bank has not issued any equity shares with differential voting rights during the year.

During the year, your Bank raised Rs,30,000 million through private placement by issue of 9.50% Listed Rated Perpetual Subordinated Unsecured BASEL

III compliant Additional Tier I Bonds in the Form of Debentures. Your Bank has also issued Rs,24,650 million through infrastructure bonds.

In line with the RBI circular on Capital Adequacy Framework, your Bank has computed capital charge for operational, market and credit risk and its Capital Adequacy Ratio as per Basel III accord as at March 31, 2017.

Your Bank is well capitalized with a Capital Adequacy Ratio of 17.0% as at March 31, 2017; of which Tier I Capital Ratio was 13.3% and Tier II Capital Ratio was 3.7%.

DEPOSITS

Being a banking company, the disclosures required as per Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, 2014, read with Sections 73 and 74 of the Companies Act, 2013 are not applicable to your Bank.

AWARDS AND RECOGNITIONS

During the year under review, your Bank was recognized in various ways/by various institutions and some of the key awards presented to the Bank are listed below:

O YES BANK has been recognized as the ‘Best MidSized BankRs,in the 21st edition of the Business Today - KPMG India''s Best Banks study. This is the 8th year in a row, where YES BANK has been awarded by Business Today in its annual Banking survey for growing robustly, embracing technology, innovating and reaching out to people at the bottom of the pyramid.

O YES BANK has been adjudged as Asia''s Best Bank for Corporate Social Responsibility at the Euro money Excellence Awards 2016 held in Hong Kong.

O YES BANK has been adjudged the Best Bank in Asia Pacific for Payments and Collections by Global Finance, a leading international business magazine headquartered in New York.

O YES BANK won the award for The Best Technology Bank of the Year in the medium banks category, at the Indian Banks'' Association''s (IBA) Banking Technology Awards 2017, in Mumbai.

- YES BANK won 2 awards at The Asset Triple A Asia Infrastructure Awards 2016, Hong Kong:

- Best Energy/Renewable Energy Deal - Solar, India for Porbandar Solar Power Rs,1,260 million non-convertible debentures, in which YES BANK acted as sole underwriter.

- Best Green Bond Facility within highly commended category in India, for IFC''s Rs,3,150 million green infrastructure bonds on the back of YES BANK''s domestic green bond issuance.

- YES BANK made its maiden entry into the Forbes Global 2,000 List of World''s Top Companies 2016. YES BANK was the youngest Indian Company on the Forbes 2,000 List and also one of the youngest Banks in the World on this prestigious list.

- YES BANK was recognized among India''s Best BFSI Brands by Economic Times Best BFSI Brands 2016.

- YES BANK received multiple awards at The Asian Banker Awards 2016:

- Best Trade Finance Bank in India;

-Best Corporate Payments Project in India for API Banking implementation for Snapdeal, one of India''s leading e-commerce players.

YES BANK received the Best Bank (midsized) Award for Cyber Defence from RBI Governor Dr. Raghuram Rajan at the IDRBT Banking Technology Excellence Awards 2016.

YES BANK was adjudged Strongest Bank in India (by balance sheet) - 2015 by The Asian Banker, Hong Kong. This is the 4th time in the last 5 years that YES BANK has been recognized at these global awards.

- YES BANK has been adjudged the Global winner in ‘Payments'' Category by The Banker magazine, London (part of the Financial Times Group) at The Banker Transaction Banking Awards 2016.

- YES BANK won the Porter Prize 2016 for Leveraging Unique Activities. The citation recognizes YES BANK''s outstanding performance in the industry and to recognize its effective rendering of activities across the value chain that created competitive advantage.

- YES BANK has won Ethical Corporation Responsible Business Award 2016, London in the ‘Most Effective Domestic Community Investment'' category for its program on providing Access to Clean & Safe Drinking Water.

- YES BANK was the sole Indian Bank to be recognized by Global Finance magazine as part of its Digital Banks of Distinction Awards 2016 in the Corporate/Institutional Banking Category.

- YES School of Banking (the Learning & Development unit of YES BANK) has been awarded dual international certification in ISO 9001:2008 and ISO 29990:2010, making it the first Learning & Development function in the Indian banking sector to be recognized by this highest level of quality management system.

- YES BANK has won the Reuters Most Accurate Forecaster Award for 2016 for the Indian economy for providing most accurate predictions of economic indicators in Reuters Poll in January 2016.

- YES BANK received the Commendation Certificate for Significant Achievement in Environment Management at the CII ITC Sustainability Awards 2016 for innovative approaches, including policy and practice, to reduce the Bank''s environmental impact in December, 2016.

- YES BANK was conferred the SKOCH Resilient India Award (Gold) for Innovative Methods of Training in Bancasurrance at the 48th SKOCH Summit in December, 2016 in New Delhi.

- YES BANK won the Good Corporate Citizen Award 2016 in the ‘Banking and Financial Companies'' category by Bombay Chamber of Commerce and Industry for manifesting corporate social responsibility towards civic communities and operational excellence, and embedding social and economic dimensions of sustainability in programmes and practices in October, 2016.

- YES BANK won the prestigious ‘Golden Peacock Award for Sustainability, 2016'', for its nature, scope, and effectiveness of social and economic dimension of sustainability programs and practices, at the Institute of Director''s 16th London Global Convention on Corporate Governance and Sustainability held in London in December, 2016.

- YES BANK was awarded Certificate of Appreciation in Environment Excellence at the 10th Environment Partnership Summit and Environment Excellence Award 2016 in Service Industry category by Indian Chamber of Commerce, Kolkata in December, 2016.

- YES BANK''s Sustainability Report was Highly Commended as Asia''s Best Integrated Report at the Asia Sustainability Reporting Awards 2016 by CSR Works International, Singapore in November, 2016.

EMPLOYEES STOCK OPTION SCHEME

Your Bank has instituted Stock Option Plans to enable its employees to participate in your Bank''s growth and financial success. Your Bank provides its employees a platform for participating in important decision making and instilling long term commitment towards growth of the Bank by way of rewarding them through Stock Options. In terms of the Compensation and Benefit Policy of the Bank, employees are granted options as part of Annual Performance Review process based on their performance as well as to ensure their retention, and to hire the best talent for its senior management and key positions.

The Bank has Four Employee Stock Option Schemes in operation viz:

- Joining Employee Stock Option Plan II (JESOP II); O Joining Employee Stock Option Plan III (JESOP III); O YBL ESOP (consisting of two sub schemes JESOP IV/PESOP I); and O YBL JESOP V/PESOP II (consisting of three sub schemes JESOP V/PESOP II/ PESOP II -2010).

The Employee Stock Option Plans are administered by the Nomination & Remuneration Committee of the Board of the Bank.

The details of vesting of various schemes are as follows:

ESOP Schemes

Vesting Period

JESOP II

50% at the end of 3rd year and balance at the end of 5th year from the Grant date.

JESOP III

50% at the end of 3rd year and balance at the end of 5th year from the Grant Date.

JESOP IV

50% at the end of 3rd year and balance at the end of 5th year from the Grant date.

JESOP V

50% at the end of 3rd year and balance at the end of 5th year from the Grant Date.

PESOP I

25% at the end of each year from the Grant Date.

PESOP II

30%, 30% & 40% at the end of 1st year, 2nd year and 3rd year respectively from the Grant Date.

PESOP II - 2010

30%, 30% & 40% at the end of 3rd year, 4th year and 5th year respectively from the Grant Date.

During the year, all new grants have been made in YBL JESOP V and YBL PESOP II - 2010 and grants under PESOP-II has been discontinued w.e.f. January 20, 2010. The Schemes are in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014. Source of shares are primary in nature, since your Bank has been issuing new equity shares upon exercise of options.

Options under all the aforesaid plans are granted for a term of 10 years (inclusive of the vesting period) and are settled with equity shares being allotted to the beneficiary upon exercise.

No stock options were issued to the Directors of your Bank.

Various details including option movement during the year under Schemes i.e. JESOP II, JESOP III, YBL ESOP and YBL JESOP V/PESOP II respectively are as follows:

YBL ESOP

YBL JESOP V/PESOP II

Particulars

JESOP II

JESOP III

YBL ESOP (JESOP IV )

YBL ESOP (PESOP 1)

YBL JESOP V

YBL PESOP II

YBL PESOP -II 2010

Date of Shareholders Approval

July 24,

July 24,

August 29,

August 29,

September

September

September

2006

2006

2007

2007

18, 2008*

18, 2008*

18, 2008*

Total No. of Options approved

5,000,000

5,000,000

5,000,000

5,000,000

9,500,000

15,228,000

20,272,000

Total No. of options outstanding at the Beginning of the period

-

13,000

119,768

214,465

4,456,232

1,138,135

13,384,420

Total No. of Options granted (during FY 2016-17)

-

-

-

-

821,500

-

872,050

The Pricing Formula

Refer Note

Refer Note

Refer Note

Refer Note

Refer Note

Refer Note

Refer Note

1

1

1

1

1

1

1

Options Vested (during FY 2016-17)

-

-

-

-

850,700

-

2,766,750

Options Exercised (during FY 2016-17)

-

13,000

46,308

81,500

957,727

132,000

2,012,637

Total No. of shares arising as a result of exercise of option

-

13,000

46,308

81,500

957,727

132,000

2,012,637

Options lapsed/ Forfeited (during FY 2016-17)

-

-

-

-

270,475

-

422,500

Total No. of options exercisable at the end of the year

-

-

73,460

132,965

751,030

1,006,135

3,388,833

Total No. of options outstanding at the end of the year

-

-

73,460

132,965

4,049,530

1,006,135

11,821,333

Variation in terms of options

Refer Note

Refer Note

Refer Note

Refer Note

Refer Note

Refer Note

Refer Note

2

2

2

2

2

2

2

Money realized by exercise of Options (during FY 2016-17) (in ?)

-

1,195,775

10,655,180

13,964,718

313,328,858

15,880,648

655,099,337

(i) Total No. of Options granted to Senior Management Personnel (SMP)

Nil

Nil

Nil

Nil

50,000 (as per Sub-table 1)

Nil

170,500 (as per Sub-table 1)

(ii) Any other employee who received a grant in any one year of options, amounting to 5% or more of options granted during that year

Nil

Nil

Nil

Nil

(as per Sub-table 2)

Nil

(as per Sub-table 2)

YBL ESOP

YBL JESOP V/PESOP II

Particulars

JESOP II JESOP III YBL ESOP YBL ESOP (JESOP IV) (PESOP 1)

YBL PESOP

YBL JESOP V YBL PESOP II

-II 2010

(iii) Identified employees who are

Nil Nil Nil Nil

Nil Nil Nil

granted options, during any one year

equal to or exceeding 1% of the issued

capital (excluding outstanding warrants

and conversions) of the Company at the

time of grant

Diluted Earnings Per Share (‘EPS’) of

76.77

the Bank after considering the effect of

potential equity shares on account of

exercise of Options

Impact of the difference between the

The Bank has charged Nil amount, being the intrinsic value of the stock options granted for the year

Intrinsic Value of the Options and the

ended March 31, 2017 and March 31, 2016. Had the Bank adopted the Fair Value method (based on

Fair Value of the Options on Profits and

Black- Scholes pricing model), for pricing and accounting of options, net profit after tax would have

on EPS

been lower by ? 464.49 million (Previous year: ? 414.23 million), the basic earnings per share would have been ? 77.79 (Previous year: ? 59.63) per share instead of ? 78.89 (Previous year: ? 60.62) per share; and diluted earnings per share would have been ? 75.70 (Previous year: ? 58.34) per share

instead of ? 76.77 (Previous year: ? 59.31) per share.

Weighted average Share/ Exercise Price

91.98 230.09 171.35

327.16 120.31 325.49

of the shares exercised during the year

(in?)

Weighted average fair values/price of

179.62 164.59

655.93 125.24 522.41

the outstanding options (in ?)

* The options under the scheme were increased subsequently from I crore to 3 crores and finally to 4.5 crores by the shareholders’ approval dated September 3, 2009 and June 28, 2011 respectively.

The Securities and Exchange Board of India (‘SEBI’) has prescribed two methods to account for stock grants; namely (i) the intrinsic value method; (ii) the fair value method. The Bank adopts the intrinsic value method to account for the stock options it grants to the employees. The Bank also calculates the fair value of options at the time of grant, using Black-Scholes pricing model with the following assumptions:

March 31, 2017

Risk free interest rate

6.29%-9.23%

Expected life

1.5 yrs-7.5 yrs

Expected volatility**

25.01%-50.67%

Expected dividends

1.5%

"Expected Volatility is the last one year average volatility.

Note 1: Being the closing price on the stock exchange with the highest trading volumes on the last working day prior to the date of grant. Note 2: There is no variation in the terms of the options during the Financial Year ended March 31, 2017.

Sub-table 1: Following are the total number of stock options that have been granted to Senior Management Personnel (SMP) during the financial year ended March 31, 2017:

Scheme

Name of Employee

Designation

Options Granted

Grant Price (?)

JESOP V

Amit Sanan

Group President

50,000

1,254.70

PESOP II -

2010

Amit Shah

Senior President

15,000

1,254.70

PESOP II -

2010

Ashish Agarwal

Senior Group President

50,000

1,254.70

PESOP II -

2010

Akash Suri

President

15,000

1,254.70

PESOP II -

2010

Rajat Mehta

Senior President

15,000

1,254.70

PESOP II -

2010

Aseem Gandhi

Senior President

25,000

1,254.70

PESOP II -

2010

Neelesh Sarda

Senior President

15,000

1,254.70

PESOP II -

2010

Punit Malik

Group President

15,000

1,254.70

PESOP II -

2010

Shubhada Rao

Group President

7,500

1,254.70

PESOP II -

2010

Niranjan Banodkar

Senior President

13,000

1,254.70

Sub-table 2: Following are the details of the employee who have received a grant of options amounting to 5% or more of options granted during the financial year ended March 31, 2017.

Scheme

Name of Employee

Designation

Options Granted

Grant Price

JESOP 5

Bhadresh Pathak

Senior President

50000

865.05

JESOP 5

Sai Giridhar

Senior President

50000

1117.60

JESOP 5

Taranbir Singh

Senior President

45000

1254.70

JESOP 5

Amit Sanan

Group President

50000

1254.70

PESOP II

- 2010

Ashish Agarwal

Senior Group President

50000

1254.70

PESOP II

- 2010

Lata Dave

Senior President

50000

1254.70

SUBSIDIARY COMPANY

As on March 31, 2017, your Bank has one Subsidiary, YES Securities (India) Limited (‘YSIL’).

PERFORMANCE AND FINANCIAL POSITION OF YSIL

YSIL successfully completed its fourth full financial year of operations in March 31, 2017.

During FY 2016-17, YSIL earned a total revenue of Rs,637.90 million against Rs,244.51 million in the previous year. YSIL earned a profit of Rs,97.89 million in FY 2016-17.

YSIL has two business segments namely Retail Broking and Investment Banking & Merchant Banking, which are explained as under:

RETAIL BROKING:

In keeping with the Bank''s customer-centric approach to developing product and service solutions, YSIL''s Retail Broking business offers the Bank''s growing base of retail and wealth category customers a strong 3-in-1 account proposition, a comprehensive portfolio of investment products and a robust online, mobile and call-n-trade execution platform. YSIL customers benefit from the convenience of a streamlined banking and investment experience that links a Current/ Savings Account and a Demat account from your Bank, and a Trading account from YSIL.

During the FY 2016-17, YSIL''s Retail Broking business further sharpened its long term strategy of building a formidable wealth-focused franchise in line with the broader wealth management strategy of the Bank. To enhance client stickiness and deepen relationships, YSIL made enhancements to its product and service proposition such as launch of Equity SIP, online subscription to IPOs, deployment of a dedicated HNI dealing desk and introduction of value-linked brokerage plans. YSIL''s average monthly retail trading volume grew by 130% to Rs,4,440 million in FY 2016-17. Retail Broking revenue increased to Rs,45.65 million translating to a year-on-year growth of 118%.

Additionally, YSIL proactively assisted its clients to invest in new products like Government of India’s Sovereign Gold Bonds and the CPSE ETF. During the year, YSIL’s Retail Research desk was acknowledged by Zee Business with India’s Best Market Analyst Award in the Initial Public Offerings (‘IPO’) category.

INVESTMENT BANKING & MERCHANT BANKING

The Investment Banking team provides M&A and Capital Advisory services to large and mid-market corporate and financial sponsor clients through key products such as Mergers & Acquisition advisory and Private Equity fund-raising.

The Merchant Banking team provides Capital Market products such as Initial Public Offerings (IPO), Qualified Institutions Placements (QIP), Public Debt Offerings, Rights Issues and other structured offerings to leading Indian companies at each stage of the capital life-cycle.

YSIL’s highly-experienced teams offer expertise across a variety of sectors including Food & Agri business, Media & Entertainment, Internet & E-Commerce, Consumer Markets, Infrastructure & EPC, BFSI, Industrials and Logistics to corporate clients. YSIL’s Investment and Merchant Banking businesses closed 22 transactions in FY 2016-17. Some of the representative transactions consummated by the team during the year under review include:

- Exclusive strategic and financial advisor to Travel Food Services Private Limited for divesting 49% stake to SSP Group plc;

- Exclusive strategic and financial advisor to

Fonroche Energie for sale of its 22.3 MW solar plant to Hinduja Group;

- Book Running Lead Manager to the Rs,11.0 billions IPO of Varun Beverages Limited;

- Book Running Lead Manager to the Rs,7.5 billions QIP of Bharat Financial Inclusion (erstwhile SKS Microfinance Limited);

- Lead Manager to the Rs,70 billions public issue of NCDs of Indiabulls Housing Finance Limited;

- Lead Manager to Rs,30 billions public issue of NCDs of Reliance Home Finance Limited;

- Lead Manager to Rs,140 billions public issue of NCDs of Dewan Housing Finance Corporation Limited.

RATINGS OF VARIOUS DEBT INSTRUMENTS:

During the year under review, your Bank issued Rs,54,650 million rated listed unsecured Bonds in the nature of Debentures. These Bonds were rated by various rating agencies namely, Credit Analysis and Research Limited (‘CARE’), by ICRA Limited (‘ICRA’) and India Ratings & Research Pvt. Ltd. (‘India Ratings’) - A Fitch Group Company etc. and Bond details as well as the ratings were as under:

i. Your Bank issued 21,350 Senior Unsecured Listed Rated Redeemable Long-Term Bonds in the nature of Debentures of a Face Value of Rs,10,00,000/- each aggregating to Rs,21,350 million on September 30, 2016 and the issue was rated by CARE and by ICRA. CARE assigned a rating of ‘CARE AA ; Stable’ and ICRA assigned a rating of ‘ICRA AA ; Stable’.

ii. Your Bank issued 30,000 Rated listed unsecured perpetual subordinated Basel III compliant Additional Tier I (AT-1) bonds in the nature of Debentures of a Face Value of Rs,10,00,000/- each aggregating to Rs,30,000 million on December 23,

2016 and the issue was rated by CARE, ICRA and

India Ratings. CARE assigned a rating of ‘CARE AA; Stable'', ICRA assigned a rating of ‘ICRA AA (hyb); Stable'' and India Ratings assigned a rating of ‘IND AA; Stable''.

iii. Your Bank issued 3,300 Rated Listed Unsecured Redeemable Long-Term Bonds in the nature of Debentures "Green Infrastructure Bonds” of a Face Value of Rs,10,00,000/- each aggregating to Rs,3,300 million on December 29, 2016 rated by CARE, ICRA and by India Ratings. CARE assigned a rating of ‘CARE AA ; Stable'', ICRA assigned a rating of ‘ICRA AA ; Stable'' and India Ratings assigned a rating of ‘IND AA ; Stable''.

BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL

APPOINTMENT:

APPOINTMENT OF MR. ASHOK CHAWLA AS NON-EXECUTIVE PART-TIME CHAIRMAN OF THE BANK:

Mr. Ashok Chawla was appointed as Additional Director on the Board on March 5, 2016 and subsequently was appointed by the Shareholders as an Independent Director on June 7, 2016 for a period of five years. Further, RBI vide it''s letter dated August 12, 2016 had approved the appointment including terms of appointment of Mr. Ashok Chawla as Non-Executive Part-time Chairman of the Bank for three (3) years from the date of his taking charge. Accordingly, Mr. Ashok Chawla took charge as Non-Executive Part-time Chairman of the Bank effective from October 30, 2016 for a period of 3 years.

The relevant details including profile of Mr. Ashok Chawla is included separately in the Notice calling the 13th Annual General Meeting of the Shareholders.

CESSATIONS:

MR. AJAY VOHRA

Mr. Ajay Vohra, Independent Director of the Bank, completed his tenure of eight years as Director of the Bank and hence, in terms of the provisions of Regulation 10A (2-A) of the Banking Regulation Act 1949, has vacated his office with effect from April 28, 2016. Accordingly, Mr. Ajay Vohra ceased to be Director of the Bank with effect from April 28, 2016.

MS. RADHA SINGH:

Ms. Radha Singh was appointed as Director on the Board of the Bank on April 29, 2008. Further, she was appointed as Non-Executive Part-time Chairperson of the Bank on October 30, 2014 for a period of two years and has completed her tenure as Non-Executive Part-time Chairperson of the Bank in terms of RBI approval dated August 01, 2014 as on October 29, 2016 and accordingly ceased to be Director on the Board of the Bank at the close of business on October 29, 2016.

MR. M. R. SRINIVASAN AND MR. DIWAN ARUN NANDA:

Mr. M. R. Srinivasan, Non-Executive Non-Independent Director and Mr. Diwan Arun Nanda, Independent Director of the Bank, on October 22, 2016 completed their tenure as Directors on the Board of the Bank in terms of RBI approval dated March 04, 2015. Accordingly, Mr. M. R. Srinivasan and Mr. Diwan Arun Nanda ceased to be Directors on the Board of the Bank at the close of business hours on October 22, 2016.

The Board places on record its appreciation for the valuable services rendered by Mr. Ajay Vohra, Ms. Radha Singh, Mr. M. R. Srinivasan and Mr. Diwan Arun Nanda during their tenure as Directors of the Bank.

Considering the above changes, your Bank has Seven (7) Directors consisting of Five (5) Independent Directors, One (1) Non-Executive Director and Managing Director & Chief Executive Officer (‘MD & CEO’).

RETIREMENT BY ROTATION

In terms of Section 152 of the Companies Act, 2013, Mr. Ajai Kumar, Non-Executive Non-Independent Director being liable to retire by rotation, shall retire at the ensuing AGM and being eligible for re-appointment, offers himself for re-appointment.

KEY MANAGERIAL PERSONNEL

Mr. Rana Kapoor, MD & CEO, Mr. Rajat Monga, Chief Financial Officer and Mr. Shivanand R. Shettigar, Company Secretary of the Bank are the Key Managerial Personnel as per the provisions of the Companies Act, 2013 and rules made there under.

None of the Key Managerial Personnel has resigned or appointed during the year under review.

DECLARATION BY INDEPENDENT DIRECTORS

The Bank has received necessary declarations from each independent director under Section 149(7) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”), that they meet the criteria of independence laid down in the Companies Act, 2013 and Listing Regulations.

FAMILIARIZATION PROGRAMS FOR INDEPENDENT DIRECTORS

The various programs undertaken for familiarizing Independent Directors with the functions and procedures of the Bank are disclosed in the Corporate Governance Report, which forms part of this Annual Report.

NUMBER OF MEETINGS OF THE BOARD

Regular meetings of the Board are held to discuss and decide on various business policies, strategies, financial matters and other businesses. The schedule of the Board/Committee meetings to be held in the forthcoming financial year is circulated to the Directors in advance to enable them to plan their schedule for effective participation in the meetings. Due to business exigencies, the Board has also been approving several proposals by circulation from time to time.

The Board met five (5) times during the Financial Year 2016-17 viz. on April 26 & 27, 2016, June 7, 2016, July 27, 2016, October 20, 2016 and January 19, 2017. Additionally, several Committee meetings were held during the year including Audit Committee meeting, which met six (6) times during the year.

Detailed information on the meetings of the Board and its committees are included in the report on Corporate Governance, which forms part of this Annual Report.

COMMITTEES OF THE BOARD

The Bank has 12 Committees of the Board which have been established as a part of the best corporate governance practices and are in compliance with the requirements of the relevant provisions of applicable laws and statutes.

The Bank has following Committees of the Board:

- Audit Committee

- Risk Monitoring Committee

- Board Credit Committee

- IT Strategy Committee

- Corporate Social Responsibility Committee

- Nomination and Remuneration Committee

- Stakeholders Relationship Committee

- Fraud Monitoring Committee

- Service Excellence, Branding and Marketing Committee

- Board Committee on Willful Defaulters & Non-Cooperative Borrowers

- Capital Raising Committee

- Committee of Independent Directors

The details with respect to the compositions, powers, roles, terms of reference, etc. of these committees are given in the report on Corporate Governance which forms part of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE:

In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Bank has established Corporate Social Responsibility (‘CSR’) Committee and statutory disclosures with respect to the CSR Committee and an Annual Report on CSR Activities forms part of this Report as Annexure 1. The CSR Policy as recommended by the CSR Committee and as approved by Board is available on the website of the Bank. https://www.yesbank.in/pdf/ybl_corporate_ social_responsibility_policy

PERFORMANCE EVALUATION OF THE BOARD

In terms of the provisions of the Companies Act, 2013 and Listing Regulations, your Bank has laid down criteria for performance evaluation of Directors, Chairperson, MD & CEO, Board Level Committees and Board as a whole and also the evaluation process for the same. The Bank has further aligned its Board Evaluation Framework in line with the Guidance Note on the Board Evaluation issued by SEBI vide circular dated January 05, 2017.

The performance of the members of the Board, the Board level committees and Board as a whole were evaluated at the meeting of the Committee of the Independent Directors, the Board of Directors and respective Committees held on April 18 & 19, 2017. Additional information on the performance evaluation of the Board forms part of the Report on Corporate Governance.

CORPORATE GOVERNANCE

Corporate governance is an ethically driven business process that is committed to values aimed at enhancing an organization’s brand and reputation. This is ensured by taking ethical business decisions and conducting business with a firm commitment to values, while meeting stakeholders’ expectations. Your Board functions as trustees of the shareholders and seeks to ensure that the long-term economic value for its shareholders is achieved while balancing the interest of all the stakeholders. Your Bank is committed to achieve the highest standards of Corporate Governance and also adheres to the Corporate Governance requirements set by the Regulators/applicable laws. Accordingly, your Bank has adopted a Code of Corporate Governance which will act as a guide to the Bank and the Board on the best practices in the Corporate Governance.

A separate section on Corporate Governance standards followed by your Bank and the relevant disclosures, as stipulated under Listing Regulations, Companies Act, 2013 and rules made there under forms part of the Annual Report.

A Certificate from M/s. BNP & Associates, Practicing Company Secretaries, conforming compliance to the conditions of Corporate Governance as stipulated under Listing Regulations, is annexed to the Report on Corporate Governance, which forms part of the Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report for the year under review as stipulated in Listing Regulations is presented in a separate section forming part of the Annual Report.

VIGIL MECHANISM

In line with the provisions of Listing Regulations, the Companies Act, 2013 and the principles of good governance, the Bank has devised and implemented a vigil mechanism, in the form of "Whistle Blower Policy”. The policy devised is also aligned to the recommendations of Protected Disclosure Scheme for Private Sector and Foreign Banks, instituted by Reserve Bank of India. Detailed information on the Vigil Mechanism of the Bank is provided in the Report on the Corporate Governance which forms part of the Annual Report.

RISK MANAGEMENT FRAMEWORK

- The Risk Architecture of the Bank is based on Three Lines of Defense principle as given below:

- First Line of Defense - Business Management: Each business segment of the Bank has risk ownership and is responsible for assessment and management of risks and has the overall responsibility of the management and mitigation of the Risk. The segments are required to implement appropriate procedures to fulfill their risk governance responsibilities.

- Second Line of Defense - Independent Control functions: The Bank''s independent control functions, such as, Compliance, Risk Management, Fraud Containment Unit, Legal, etc. set standards for management and oversight of risks, including compliance with applicable laws, regulatory requirements and policies.

- Risk Management: Risk Management establishes policies and guidelines for risk assessment and risk management and contributes to controls and tools to manage, measure and mitigate risks faced by the Bank.

- Compliance: The Compliance vertical manages adherence to applicable laws and regulatory guidelines.

- Legal: The Legal Risk Management (LRM) division of the Bank undertakes various activities including advising business and operational management, acting as an independent control function while facilitating business, ensuring legal compliance, assisting the Board and Committees of the Board regarding analysis of laws and regulations, regulatory matters, disclosure matters, and potential risks and exposures on key litigation and transactional matters.

- Finance: The Finance vertical provides key data and consultation to facilitate sound decisions in support of the objectives of the Bank and the business verticals. Finance serves as an independent control function advising business management and establishing policies or processes to manage risk. It has overall responsibility for managing the Bank''s balance sheet and the Bank''s liquidity and interest rate risk.

- FCU: The Fraud Containment Unit is an integral part of the bank''s Audit & Management Governance function and is primarily responsible for prevention of frauds in the areas of Retail Liabilities, Support functions and all other businesses. The unit is responsible for transaction monitoring, alert generation, forensic scrutiny of newly opened accounts, mystery shopping, creating employee awareness, instituting a formal reward and recognition platform for fraud identification, training, and conducting periodic Fraud Vulnerability Assessments of various products and processes. Fraud Risk Management for the assets business is carried out by a separate Risk Containment Unit under the Chief Risk Officer.

- Third Line of Defense - Internal Audit: The Bank''s Internal Audit function independently reviews activities of the first two lines of defense based on a risk-based audit plan and methodology approved by the Audit Committee of the Board. Internal Audit provides independent assurance to the Board, the Audit Committee of the Board, senior management and regulators regarding the effectiveness of the Bank''s governance and controls designed for risk mitigation and to enhance the Bank''s compliance and control.

- The Board of Directors of the Bank has overall responsibility for Risk Management. The Board oversees the Bank''s Risk and related control environment, reviews and approves the policies designed as part of overseeing the Risk Management practices. The Board ensures that comprehensive policies, systems and controls are in place to identify, monitor and manage material risks at a Bank-wide level, with clearly defined risk limits. The Board has laid down a Risk Appetite framework which articulates the quantum of risk the Bank is willing and able to assume in its exposures and business activities in pursuit of its strategic objectives and desired returns. The Board has also established policies governing risk management, such as, Enterprise Risk Management Policy, Reputation Risk Policy, Credit Policy, ALM Policy, etc. In order to maintain oversight on risk management, the Board approves the annual Internal Capital Adequacy Assessment Process (ICAAP) and reviews the Bank’s Stress Testing framework and the periodic stress testing results.

- The Board has put in place five Board level committees which inter alia pertain to Risk Management, viz. Risk Monitoring Committee (RMC), Audit Committee (AC), Fraud Monitoring Committee (FMC), Board Committee on willful Defaulters & Non-Cooperative Borrowers (BCWD & NCB) and Board Credit Committee (BCC) to deal with risk management practices, policies, procedures and to have adequate oversight on the risks faced by the Bank.

- The Board Committees have set up various management committees for oversight over specific risks.

- Enterprise Risk Management & Capital Management Committee

- Management Credit Committee

- Executive Credit Committee

- Asset & Liability Management Committee

- Investment & Financial Market Management Committee

- Operational Risk Management Committee O Outsourcing Management Committee O Security Council

- Product Process Approval Committee

- Fraud & Suspicious Transaction Monitoring Committee

- Reputation Risk Management Committee

- Standing Committee on Customer Service

- IT Steering Committee

- Steering Committee for IFRS (Ind AS)

- Whistle Blower Committee

- Model Assessment Committee

- Risk events, potential threats, performance of the Bank vis-a-vis Risk Limits and Risk Appetite, Risk Profile dashboard covering key risk indicators, etc. are presented to these Committees, with QoQ/YoY trends highlighted, with level and direction of risk. The Chief Risk Officer (‘CRO’) is responsible for the overall Risk Governance and Supervision, on a day to day basis. CRO ensures an effective implementation of an enterprise wide risk management framework and risk culture through various risk policies, processes, thresholds, controls and continuous training and awareness programmes that enable prompt risk identification, accurate risk measurement and effective risk mitigation. CRO also ensures risk compliance and monitoring as well as reviewing and presenting information to the RMC and the Board.

- The Risk Management Department under the CRO is delegated with responsibilities of managing the risk - including risk assessment, measurement, control and reporting - by the Risk Monitoring Committee of the Board. The Risk Management Department consists of various teams such as Credit Risk Unit, General Legal Counsel and Risk Control Units. Credit Risk Unit is responsible for evaluating, rating and underwriting credit under respective Credit Risk Heads. Risk Control Units such as Market Risk, Operational Risk, Enterprise Risk, Information Security, Portfolio Analytics Unit,

Credit Risk Control Unit, Credit Mid Office, Credit Intelligence & Analytics and Risk Containment Unit are responsible for independent review, monitoring and reporting of all risk control parameters and take appropriate corrective actions where necessary. These units under the supervision of Chief Risk Control Officer are also responsible for ensuring compliance to internal policies and regulatory guidelines.

LOANS, GUARANTEES OR INVESTMENTS IN SECURITIES

Pursuant to Section 186(11) of the Companies Act, 2013, loans made, guarantees given or securities provided or acquisition of securities by a Banking company in the ordinary course of its business are exempted from disclosure requirements under Section 134(3)(g) of the Companies Act, 2013.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All related party transactions that were entered during the financial year were in the ordinary course of the business of the Bank and were on arm''s length basis. There were no materially significant related party transactions entered by the Bank with Promoters, Directors, Key Managerial Personnel or other persons which may have a potential conflict with the interest of the Bank.

All Related Party Transactions are placed before the Audit Committee for approval. Prior omnibus approval for normal banking transactions is also obtained from the Audit Committee for the related party transactions which are of repetitive nature as well as for the normal banking transactions which cannot be foreseen and accordingly the required disclosures are made to the Committee on quarterly basis in terms of the approval of the Committee.

The policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions as approved by the Audit Committee and the Board of Directors is uploaded on the website of the Bank and the link for the same is https://www.yesbank.in/about-us/corporate-governance.

Since all related party transactions entered into by the Bank were in the ordinary course of business and were on an arm''s length basis, form AOC-2 is not applicable to the Bank.

CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to sub-section (3) of Section 129 of the Companies Act, 2013, the Bank has prepared a consolidated financial statement of the Bank and also of its Subsidiary, YES Securities (India) Limited, in the same form and manner as that of the Bank which shall be laid before the ensuing 13th Annual General Meeting of the Bank along with the Bank''s Financial Statement under sub-section (2) of Section 129 i.e. Standalone Financial Statement of the Bank.

Further, pursuant to the provisions of Accounting Standard (‘AS'') 21, Consolidated Financial Statements notified under Section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 issued by the Ministry of Corporate Affairs, the Consolidated Financial Statements of the Bank along with its subsidiary for the year ended March 31, 2017 forms part of the Annual Report.

INTERNAL FINANCIAL CONTROLS SYSTEMS AND THEIR ADEQUACY

Your Bank has implemented adequate procedures and internal controls which provide reasonable assurance regarding reliability of financial reporting and preparation of financial statements. The Bank also ensures that internal controls are operating effectively.

AUDITORS

(A) STATUTORY AUDITORS

The Members of the Bank at the 12th Annual General Meeting held on June 07, 2016, have approved the appointment of M/s. B S R & Co. LLP, Chartered Accountants as Statutory Auditors of the Bank for a period of 4 years, subject to the approval of the Reserve Bank of India, to hold office from the conclusion of the 12th AGM till the conclusion of 16th AGM of the Bank to be held in 2020, subject to ratification of the appointment by the Members at every AGM. Accordingly, appointment of M/s. B S R & Co. LLP, Chartered Accountants, as a Statutory Auditors of the Bank is required to be ratified by the Members at 13th AGM, subject to the approval of the Reserve Bank of India. The Bank has received the consent from the Auditors and confirmation to the effect that they are not disqualified to be appointed as the Auditors of the Bank in terms of the provisions of the Companies Act, 2013 and rules made there under. Accordingly, the Board of Directors has recommended the ratification of appointment of M/s. B S R & Co. LLP, Chartered Accountants, as the Statutory Auditors of the Bank, to hold office from the conclusion of the ensuing AGM till the conclusion of the 14th AGM on remuneration to be decided by the Board or Committee thereof, to the Members for approval.

(B) SECRETARIAL AUDITORS AND SECRETARIAL AUDIT REPORT

Pursuant to Section 204 of the Companies Act, 2013, your Bank had appointed M/s. Mehta & Mehta, Practicing Company Secretaries, Mumbai as its Secretarial Auditors to conduct the secretarial audit of the Bank for the FY 2016-17. The Bank provided all assistance and facilities to the Secretarial Auditors for conducting their audit. The Report of Secretarial Auditors for the FY 2016-17 is annexed to this report as Annexure 2.

SECRETARIAL AUDITORS’ OBSERVATIONS IN SECRETARIAL AUDIT REPORT AND DIRECTORS’ EXPLANATION THERETO:

1. In respect of appointment of woman Director as required under Rule 3 of the Companies (Appointment and Qualification of Directors) Rule, 2014 and Regulation 17(1)(a) of Listing Regulations. (Similar observation has been made in the Certificate on Compliance with Conditions of Corporate Governance issued by M/s. BNP & Associates, Company Secretaries).

Ms. Radha Singh, who was on the Board of the Bank for last 8 years, retired from the Board of the Bank at the close of business on October 29, 2016. In fact, she had been the Chairperson of the Bank from October 30, 2014 till October 29, 2016. The Bank has always recognized the importance of appointing directors with diverse educational background, functional expertise, experiences and skill set, to ensure optimum Board Diversity, including gender diversity, in fullest conformity with the stipulated regulations. The Bank is in the process of identifying a suitable woman candidate in her place. Being a banking company, the proposed director is required to satisfy the prescriptions contained in the Banking Regulation Act, 1949; the "fit and proper” criteria prescribed by Reserve Bank of India and the internal policies of Bank on ‘Board Diversity, Fit & Proper Criteria and Succession Planning''. In view of the above, the process has taken slightly more time than expected. Nevertheless, the Board and the Nomination and Remuneration Committee of the Board is in the process of appointing a woman director at the earliest.

2. In respect of compliance with the requirements of Regulation 29(1) (d) of Listing Regulations in respect of the Board Meeting held on April 27, 2016.

The Board approval for capital raising up to USD 1 billion, inter alia, by way of QIP was first obtained at the Board meeting held on April 22, 2015 in line with the extant Regulations (subject to final approval of the Shareholders), subsequently approved by the shareholders'' at the AGM held on June 06, 2015 which was in the public domain, when the Board of the Bank met on April 27, 2016. Hence, there was no intention on the part of the Bank to deviate from the Listing Regulations since the resolution passed by the Board of Directors at their meeting held on April 27, 2016 was essentially a continuation/reiteration of the existing Board and Shareholders'' approvals obtained in 2015 for raising of capital for the Bank, inter alia, by way of QIP. However, the Bank has made required intimation to Stock Exchanges in October 2016 before the Board considered the proposal for reiteration and re-endorsement of the resolution passed by the Board of Directors at its meeting held on April 27, 2016 and as approved by the Shareholders at the 12th Annual General Meeting held on June 07, 2016 for capital raising by way of QIP and other permitted mode.

BUSINESS RESPONSIBILITY REPORT

As stipulated in Listing Regulations, the Business Responsibility Report describing the initiatives taken by the Bank from environmental, social and governance perspective is attached as part of the Annual Report.

MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE BANK

There are no material changes and commitments, affecting the financial position of the Bank which has occurred between the end of the financial year of the Bank i.e. March 31, 2017 and the date of the Directors’ report i.e. April 19, 2017.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS

During the year under review, no significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and Bank’s operation in future.

POLICY ON APPOINTMENT OF DIRECTORS

The Board of Directors of the Bank had formulated and adopted Policy on ‘Board Diversity and Fit & Proper Criteria and Succession Planning’ for appointment of Directors on the Board of the Bank and succession planning. The details of the same have been included in the Report on Corporate Governance, which is forming part of the Annual Report.

REMUNERATION POLICY

The Board of Directors of the Bank had formulated and adopted policies for Remuneration of Employees of the Bank, Remuneration of Directors including the Chairperson of the Bank. The details of the same have been included in the Report on Corporate Governance, which is forming part of the Annual Report.

EMPLOYEE REMUNERATION:

(a) The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this report. In terms of Section 136 of the Companies Act, 2013, the same is open for inspection during working hours at the Registered Office of your Bank. A copy of this statement may be obtained by the members by writing to the Company Secretary of your Bank.

(b) The ratio of the remuneration of each Director to the median remuneration of the employees of the Bank and other details in terms of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report as Annexure 3.

EXTRACTS OF ANNUAL RETURN

Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extracts of the Annual Return as at March 31, 2017, forms part of this report as Annexure 4.

DISCLOSURES UNDER GREEN INFRA BONDS

Green infrastructure bonds have emerged as a mainstream financing mechanism for providing structured finances to vital clean energy, and are playing a pivotal role in realization of India’s renewable energy potential and achieving the globally committed target of 175 GW of additional capacity installation by 2022. Green bond issuances in India have steadily increased over the past two years since the first issuance by your Bank in February 2015, making India among the top ten largest green bond markets globally, with extensive participation from many corporate and financial institutions.

Post the successful first Green Bond of YES Bank which raised '' 10,000 million (equivalent to USD 160 million) in February 2015 and witnessed a strong demand from leading investors, your Bank further strengthened the green bond market by subsequently raising two other green bonds. In August 2015, the Bank raised '' 3,150 million (equivalent to USD 49.4 million) through the issue of Green Bonds to International Finance Corporation (‘IFC’) on a private placement basis, the first investment by IFC in an Emerging Markets Green Bond issue in the world through the first offshore rupee dominated bond or "Green Masala Bond.”

Moving ahead with its conviction towards Climate Finance, YES Bank has raised '' 3,300 million (equivalent to USD 50 million) in September 2016, through an issue of a 7-year Green Infrastructure Bonds to FMO, the Dutch Development Bank, on a private placement basis. This is FMO’s 1st Investment in a Green Bond issued by a bank in India. The issuance is unique owing to its innovative financing structure. FMO, the Dutch Development Bank has used the proceeds of sustainability bonds raised by them to invest in this third green bond issued by your Bank.

The amount raised through all of these issues, are used to finance Green Infrastructure Projects as per ‘Eligible Projects'' outlined in the Bank''s internal guidelines for adherence to Green Bond Principles. KPMG, India has provided assurance on the use of proceeds for the first two green bonds for FY 2015-16. A third-party assurance provider would be providing the Assurance Services this year, on the use of proceeds in accordance with the Green Bond principles.

GREEN BOND PRINCIPLES

The Green Bond Principles (‘GBP’) are voluntary process guidelines intended for broad use by the market that recommend transparency and disclosure, and promote integrity in the development of the Green Bond market. The Principles provide issuers guidance on the key components involved in launching a credible Green Bond; they aid investors by promoting availability of information necessary to evaluate the environmental impact of their Green Bond investments; and they assist underwriters by moving the market towards standard disclosures which will facilitate transactions. The GBP emphasize transparency and accuracy which may be increasingly used for strategic decision making by investors. The GBP has the following four key components that YES BANK has adopted:

- Use of proceeds;

- Process to identify, evaluate and select eligible projects;

- Management of proceeds; and O Reporting.

USE OF PROCEEDS

The proceeds raised through the issue of these bonds/ debentures are used in eligible project categories to enhance the long-term resources for funding infrastructure projects and include all projects funded in whole, or in part, in the fields of renewable and clean energy projects including generation from sources such as Wind, Solar, Biomass, Hydropower and other such projects. Wind, Solar, Hydro and Biomass projects sanctioned post the closure of debenture subscription only (February 24, 2015 for '' 10,000 million issue, August 05, 2015 for '' 3,150 million issue, and September 26, 2016 for '' 3,300 million issue) are considered for the allocation of the proceeds from Green Bonds.

PROCESS FOR EVALUATION AND SELECTION OF ELIGIBLE PROJECTS

Along with the Bank''s credit policy that provides guidance for the identification, formulation and appraisal of projects, the Bank has formally adopted an Environment and Social Policy which governs its lending decisions. The Project evaluation process follows from the interactions with potential borrower to understand the overall aspects of the project and a comparison against the eligibility criteria. Post preliminary consideration, based on the merits of the project, the evaluation moves to the risk team which assesses it and conveys opinion on detailed due-diligence, if required. The eligibility of the project is thus confirmed and further documentation is sought as per the Bank''s policies and Green Bond Principles.

MANAGEMENT OF PROCEEDS

The process for management of proceeds has been updated this year, to an MIS based asset tagging which tracks green bonds investments on a quarterly basis. The unallocated proceeds, if any, are placed in temporary instruments on a quarterly basis.

REPORTING

Communication to investors through an annual update would include information on allocation of proceeds:

O List of projects to which Green Bond proceeds have been allocated;

Renewable

Energy

Category

Project Location

Brief Project Details*

Estimated** positive E&S impacts - CO2 Emission Reduction (tCO2 / yr)

Known significant negative E&S Impacts

Wind

Maharashtra

31.5 MW capacity wind energy project

67,129

None

Wind

MP & Gujarat

24 MW capacity wind energy project

49,297

None

Wind

Andhra Pradesh

100 MW capacity wind energy project

229,368

None

Wind

Karnataka

51 MW capacity wind energy project

126,581

None

Wind

MP & Gujarat

12 MW capacity wind energy project

21,670

None

Solar

Andhra Pradesh

50 MW capacity solar energy project

115,497

None

Solar

Telangana

15 MW capacity solar energy project

27,280

None

Solar

Telangana

15 MW capacity solar energy project

27,280

None

Solar

Punjab

150 MW capacity solar energy project

224,661

None

Solar

Andhra Pradesh

10 MW capacity solar energy project

17,451

None

Solar

Madhya Pradesh

20 MW capacity solar energy project

32,180

None

Solar

Tamil Nadu

216 MW capacity solar energy project

347,544

None

Solar

MP & Gujarat

30 MW capacity solar energy project

57,770

None

Solar

Telangana

48 MW capacity solar energy project

78,916

None

Solar

Karnataka

50 MW capacity solar energy project

95,214

None

Solar

Telangana

143 MW capacity solar energy project

252,484

None

Solar

Andhra Pradesh

50 MW capacity solar energy project

115,497

None

Solar

Maharashtra

40 MW capacity solar energy project

73,603

None

Solar

Andhra Pradesh

50 MW capacity solar energy project

115,497

None

Solar

Telangana

30 MW capacity solar energy project

56,409

None

Solar

Telangana

5 MW capacity solar energy project

7,703

None

Solar

Telangana

50 MW capacity solar energy project

87,468

None

Solar

Rajasthan

50 MW capacity solar energy project

100,092

None

* The total annual generation of units is based on total installed capacity of the project and project PLF/CUF data provided by the borrower.

** The total CO2 emission reductions have been estimated based on potential total annual generation of units and grid emission factors and calculated through the use of CDM Methodological tool: Tool to calculate the emission factor for an electricity system'' Version 05.0.

- Brief description of these projects including installed capacity and annual generation of renewable energy (wherever applicable);

- Summary of environmental and social impacts associated with these projects, if any;

- Types of temporary investment instruments for the balance of unallocated proceeds.

The proceeds from Green Bonds have been allocated to the following eligible projects:

STATUTORY DISCLOSURES

The disclosures required to be made under sub-section (3)(m) of Section 134 of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 by your Bank are given as under:

(A) CONSERVATION OF ENERGY

- Environmental stewardship in the financial sector

- ISO 14001:2015 Environmental Management System certification for the Bank embarked on the 4th year

Benchmarking continual improvement and exponential growth in the Indian Banking space, your Bank has achieved significantly in internal natural resource consumption efficiencies and minimizing its carbon footprint. In the FY 2016-17 YES BANK became the FIRST BANK GLOBALLY to migrate to the latest ISO 14001:2015 Environment Management System (‘EMS’) standard within one year of its release.

The re-certification to the new standard is based on the Bank’s new Environmental Management Policy released in 2016 which entails achieving internal natural resource consumption efficiencies and firmly outlines the Bank’s commitment to achieve a minimum of 10% reduction in its carbon emissions intensity through broad-level actions. Your Bank has enhanced the scope of its EMS to 444 metro urban branch locations and included Retail Asset operation into the certification program. The Bank’s Environment Management Policy highlights greater commitments to environment protection and commitment to source renewable energy for the greening the Bank’s operation.

Your Bank aims to enhance the scope of certification to the subsidiary unit YES Securities (India) Limited as per the revised ISO 14001:2015 compliance in the coming financial year. Environmental Mitigation Initiatives such as aggressive awareness creation around electricity, paper, water, diesel conservation in

day-to-day activities through wide circulation of resource conservation mailers, signage and posters, Periodical trainings on Environmental Management System through comprehensive e-learning module, workshops, involvement of employees in ideas generation and their implementation.

(I) THE STEPS TAKEN OR IMPACT ON CONSERVATION OF ENERGY;

Your Bank’s energy management initiatives over a period of 2 years will aim at reducing 18 - 20% energy consumption from sustainable facility management

- Installations of IoT based energy monitoring system which helps in dynamic monitoring of consumption across facilities and result in 5 to 7% savings. The pilot study conducted over 10 branches was successful. We would target metro urban branches for implementation in FY 2017-18. In a second level pilot, we have achieved between 8-12% drop in energy consumption in FY 2016-17.

- Similarly Power factors at branches are being monitored above 0.9 with the help of capacitor bank and power factor monitoring panels are installed to reduce financial risk of penalty levied by DISCOMs.

- The air conditioning replacement model has been developed with a criteria for replacing old models with an energy consumption of 1.6 -1.8 times of peak load and temperature control with dedicated AHU units for centralized AC systems are being carried out.

- Retrofit solutions for HVAC systems which has a potential saving of 10 to 15%. we will be incorporating some of the solutions in a phased manner over a period of 2 years. Maintaining AC temperature above 250 Celsius all the time has helped the bank to achieve 3% saving of hourly kWh consumptions.

- Incorporation of LED lighting in some of our facilities, has a huge potential and will be taken up for implementation in all of our facilities in phased manner. So far 3128 nos. of LED lights in 136 new branches have been installed with a potential saving of 2,26,780 kWh of energy consumption and approx '' 2.26 million of saving.

- 92% of YES Bank branches are issued Petro cards for procurement of diesel, which has resulted into enhanced transparency, reduce wastages and cost saving of 15-20% over last financial year.

(II) THE STEPS TAKEN BY THE BANK FOR UTILIZING ALTERNATE SOURCES OF ENERGY: Your Bank has explored the potential of using alternate sources of energy through open access and your Bank would continue to explore alternative sources of energy in future.

(III) THE CAPITAL INVESTMENT ON ENERGY CONSERVATION EQUIPMENTS: Rs,5.02 million up to present Financial Year (IoT based Energy monitoring pilot project, LED Tube lights project at IFC, Mumbai).

(B) TECHNOLOGY ABSORPTION

(I) THE EFFORTS MADE TOWARDS TECHNOLOGY ABSORPTION:

Technology is a key enabler and core facilitator to the key goals of your Bank and is identified as one of the strategic pillars of the Bank. Since inception your Bank has been at the forefront of leveraging technology to provide better products and services to its customers. Your Bank is a truly differentiated Financial Institution with world-class, state-of-the-art technology. All departments

within the Bank use Information Technology (IT) to deliver superior products and services to the customers.

Your Bank has adopted innovative modern technology and best in class international banking practices in respect of governance frameworks to ensure that it renders the highest standards of service quality and operational excellence to its customers. As a new generation Bank, your Bank has deployed "Technology” as a Strategic Business enabler to build a distinct competitive advantage and to achieve Superior standards of Customer Service. The technology architecture and the innovative IT Outsourcing structure has enabled your Bank to achieve high standards of Customer Service at comparatively lower cost structures.

Your Bank has moved towards service oriented architecture by implementing Enterprise Service Bus (‘ESB’). An ESB is a Web-services-capable infrastructure that supports intelligently directed communication and mediated relationships among loosely coupled and decoupled business components. The service oriented architecture assists your Bank’s large customers and e-commerce firms, who are technology-driven or require time sensitive processing to consume your Bank’s ESB services for their payment and receivables.

With a view to support new initiatives, innovations and ensure customer delight, your Bank has successfully executed a major upgrade of the Core Banking System perhaps the only Bank in India, that has executed a Core Banking Upgrade project of this size and complexity including both Retail and Corporate parts of the business, with a Big Bang Cutover approach. Your Bank has also upgraded various systems and platforms as also implemented new systems and platforms. Your Bank has implemented virtualization in its data centers, to ensure its IT Infrastructure is highly resilient and usage is optimized. As a result, your Bank has reduced its carbon footprint.

The Bank has embarked upon implementing Virtual Desktop Infrastructure (‘VDI’). VDI refers to the process of running a user desktop inside a virtual machine that resides on a server in the data centre It''s a powerful form of desktop virtualization because it enables fully personalized desktops for each user with all the security and simplicity of centralized management. VDI will help us in streamlining management and costs by consolidating and centralizing the desktops while delivering end-users mobility. This will enable access to virtual desktops anytime, from anywhere, on any device. This means a more centralized, efficient client environment that is easier to maintain and able to respond more quickly to the changing needs of the user and business.

Your Bank is at the forefront on the next-generation payments system like Unified Payments Interface (‘UPI’), a simplified and robust payments system being operated by National Payments Corporation of India (NPCI). Leveraging capabilities of the UPI platform like Phone-linked payments, any-bank account debit and 1-click 2 factor authentication - to deliver a superior user experience to customers. We aim to have the widest range of offerings in the digital payments space by covering multiple use cases either directly via our own branded offering or via strategic partnerships with industry leaders, start-up forums, start-ups etc., to emerge as a thought and business leader in the Indian payments space leveraging the capabilities provided by UPI and move toward the era of a ‘less-cash'' India.

Your Bank has launched the SIMsePAY, a unique innovation that allows any account holder to do money transfers, pay utility bills and other mobile banking services, without the need for smart phones or internet. SIMsePAY is a wafer-thin sticker which can be stuck on any type of SIM card of any Telco service provider - Standard, Micro and Nano. This sticker installs a SIM Tool Kit (STK) based app which can be accessed by the consumer on ANY mobile phone without the need for internet connectivity. The SIMsePAY is linked to a Prepaid Wallet which can be loaded by the consumer to perform various types of transactions. The transactions are performed using a patented encrypted SMS technology to communicate with the servers of the Bank.

Your Bank has also upgraded its Mobile Banking App for seamless customer experience. YES Mobile comes packed with a host of exciting features that enable you to truly bank On-The-Go. From simplified login through your fingerprint to transfer funds to pay all your bills in one go or experience the all new augmented reality to locate a YES Branch nearby. YES Mobile Banking App comes with over 85 services offering to YES Bank customers Anytime, Anywhere Banking.

Your Bank has launched Corporate mobile banking App which will provide an OMNI Channel online banking experience to our corporate clients. It will enable them to view and authorize transaction requests initiated on ‘Corporate Net Banking'' on their mobile devices even when they are travelling or are out of office. The App would allow decisions to be made on the move, eliminating process bottlenecks due to unavailability of the decision makers and facilitating faster turnaround times.

Your Bank has implemented a multi-nodal Block chain transaction to fully digitize vendor financing for Bajaj Electricals. Your

Bank will leverage IBM Watson Conversation, a cloud-based cognitive service, to enhance the digital experience of partners, corporate clients and developers collaborating with them on the integrated Block chain

- API Banking platform. Capitalizing on the efficiency and security features of Block chain, your Bank has used the Hyper ledger Fabric supported by IBM to design a vendor financing solution which allows Bajaj Electricals (anchor client) to digitize the process for discounting and disbursal of funds to its vendors by integrating seamlessly with YES BANK’s systems. The solution will also facilitate an automated debit from Bajaj Electricals’ account by YES BANK. The business logic and rules are captured in a smart contract (Chain Code) developed by Cateina Technologies. The key business advantages and highlights of this block chain implementation for vendor financing include:

- The entire process cycle for bill discounting reduces from four days (owing to manual intervention and transit) to almost real-time;

- Transparency to all parties through block chain’s shared public ledger;

- End-to-end digital process eliminating paper trail & manual intervention;

- The entire transaction history of a particular vendor is recorded and is immutable through block chain;

- The transaction status along with details are seamlessly transmitted to Bajaj Electricals’ Enterprise Resource Planning;

- Seamless integration with existing API Banking implementation by YES BANK using IBM’s Enterprise Service Bus (IIB), API management and Data power solution. This integration offers automated processing of transactions with almost zero manual intervention. YES BANK was the 1st Bank in India to launch API Banking services, which was also in collaboration with IBM in 2015;

- Use of a permission block chain with flexibility to add other participants later;

- Use of superior Crypto key to offer state-of-the-art security for both documents and transactions on the block chain.

(II) THE BENEFITS DERIVED LIKE PRODUCT IMPROVEMENT, COST REDUCTION, PRODUCT DEVELOPMENT OR IMPORT SUBSTITUTION:

Technology has responded by being true strategic partner with business. Many first mover implementations have provided business, long lasting advantages, as also won many accolades and awards for the Bank. One of the finest direct banking platforms, first bank in India to offer two factor authentication, single PIN access to all electronic channels, Wi-Fi branches are some of the examples.

Innovations like API Banking, ‘Bank in a BOX’ , Money Monitor (aggregation of customer accounts of all types across 11,000 institutions globally), Mobile Money Services, dual factor authentication, one view of customer relationship and most advanced voice enabled IVR helps the products and sales teams to offer superior products and services.

Your Bank has evaluated and implemented cutting edge technologies like virtualization, cloud computing and social media to invest in the best in class IT systems and practices, and in order to ensure that its technology platform becomes a strategic business tool for building a competitive advantage.

Apart from product development, product improvement & effective cost management, technology has also played a major role in customer acquisition & ensuring high level of service delivery & customer excellence. Your Bank has also been able to cater to Financial Inclusion needs through its award winning and globally recognized technology solution platform which offers doorstep banking services.

(III) IN CASE OF IMPORTED TECHNOLOGY (IMPORTED DURING THE LAST THREE YEARS RECKONED FROM THE BEGINNING OF THE FINANCIAL YEAR):

Details of Technology Imported

Year of Import

Whether the Technology been fully absorbed

If not fully absorbed, areas where absorption has not taken place, and the reasons thereof

Port wise Authentication Platform (Por twise Authentication Server Access Manager - 10,000 concurrent users)

Mar-14

Yes

NA

Software Tokens for Net Banking, Implementation fees and delivery of Branded Software Tokens

Aug-14

Yes

NA

Enabling Radius licenses for 10,000 concurrent users (SMS/Email, OATH, software tokens) on existing setup

Sep-15

Yes

NA

Master Data Management licenses

Nov-15

Yes

NA

Cisco Wan Stack for Branch WAN Architecture Revamp

Dec-16

No

Delivery is still expected

(IV) YOUR BANK HAS NOT INCURRED ANY EXPENDITURE ON RESEARCH AND DEVELOPMENT DURING THE YEAR UNDER REVIEW.

(C) FOREIGN EXCHANGE EARNINGS AND OUTGO-

The Foreign Exchange earned in terms of actual inflows during the year and the Foreign Exchange outgo during the year in terms of actual outflows.

During the year ended March 31, 2017 the Bank earned '' 4,566.02 million and spent '' 5,102.38 million in foreign currency. This does not include foreign currency cash flows in derivatives and foreign currency exchange transactions.

NUMBER OF CASES FILED, IF ANY, AND THEIR DISPOSAL UNDER SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.

As a responsible organization, the Bank strives to foster a safe and respectful work environment. The Bank has Zero tolerance towards any action on the part of any executive which may fall under the ambit of "Sexual Harassment” at workplace, and is fully committed to uphold and maintain the dignity of every women executive working in the Bank. The Policy regarding Prevention & Prohibition of Sexual Harassment at Workplace provides for protection against sexual harassment of women at workplace and for prevention and redressal of complaints. Also, in its Endeavour to spread awareness on the aforementioned policy and ensure compliance by all the executives, the Bank has implemented a plan of action to disseminate the information and train the executives on the policy under the ambit of ‘Gender Respect And Commitment to Equality’ (GRACE) program.

Particulars

Numbers

Number of complaints pending as on the beginning of the financial

One*

year

Number of complaints filed during the financial year

Ten

Number of complaints pending as on the end of the financial year

Three

* The open complaint as on the end of the FY 2015-16 has been resolved

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, it is hereby confirmed that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit of the Bank for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

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

(e) the directors, had laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and

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

ACKNOWLEDGMENT

Your Directors take this opportunity to express their deep and sincere gratitude to the customers of the Bank for their confidence and patronage, as well as to the Reserve Bank of India, Securities and Exchange Board of India, Government of India and other Regulatory Authorities for their cooperation, support and guidance. Your Directors would like to express a deep sense of appreciation for the commitment shown by the employees in supporting the Bank in its continued robust performance on all fronts. The Bank has followed the A.R.T. - Alliances, Relationships and Technology led approach to Banking, and in line with this philosophy, the Directors would also like to thank all our valued partners, vendors and stakeholders who have played a significant role in the continued Business Excellence achieved by the Bank. Your Directors would also like to thank the employees for their continued support as the Bank evolves as the "Professionals’ Bank of India” with a vision of "Building the Finest Quality Bank of the World in India by 2025 .”

For and on behalf of the Board of Directors

Rana Kapoor Ashok Chawla

Managing Director & CEO Non-Executive

(DIN No. 00320702) (Independent) Part-time

Chairman (DIN No. 00056133)

Place: Mumbai

Date: April 19, 2017


Mar 31, 2015

To the Members,

The Directors are pleased to present the Eleventh Annual Report on business and operations of your Bank together with the audited accounts for the year ended March 31, 2015.

Business Overview and Outlook

Your Bank performed well in Financial Year (FY) 2014-15 with a net profit ofRs. 2,005 Crores which is an increase of 24% from FY 2013-14. Your Bank posted robust growth in advances and deposits while gradually increasing diversification and granularity as reflected in higher contribution of Retail and SME advances and CASA Deposits. Your Bank has also successfully completed its Version 2.0 journey over the last 5 years, growing from a small sized bank and emerged as a meaningful entrant into the Large Bank transforming into a high quality, world-class institution in Indian banking amidst periods of global and domestic downturn. In terms of Human CapitaL strength, your Bank has achieved a significant milestone in FY 2014-15 crossing the 10,000 mark.

Given the overall optimism and the fact that the Indian economy is set to receive a major impetus owing to prudent policy reforms, your Bank is geared up to capitalize on this momentum with a renewed vigour and enthusiasm and establish itself as the ''Finest Large Bank'' in the country.

Your Bank has also now achieved a critical mass and momentum in terms of state-of-the-art branch network with 630 branches and 1,190 ATMs across all 29 states and 7 Union Territories of India. Your Bank has invested significantly in offering ''Digital Banking'' services via various channels while continuing to ramp up the existing branch network. We believe that the future of Banking lies in establishing a ''DIGICAL - Digital Physical infrastructure which consists of a fine bLend of offline and onLine channeLs employing innovation and technology combined with the effectiveness of human touch points as a means of customer service excellence.

State of the Affairs of the Bank

FY 2014-15 was a significant year in your Bank''s LifecycLe. Your Bank continued on its consistent performance with PAT growing to '' 2,005 Crores from '' 1,617 Crores resulting in a Y-o-Y growth of 24%.

In FY 2014-15, your Bank raised over USD 1.2 Billion in equity and long term debt by partnering with marquee global investors who have reposed tremendous faith in your Bank''s consistent performance and robust business model. On May 30, 2014, your Bank successfully closed a gLobaL USD 500 MiLLion OuaLified Institutions Placement (OIP) which was the FIRST significant capitaL raising by an Indian Company post formation of the new government. The Global OIP was oversubscribed 5 times with a demand of USD 2.5 billion from investors across USA, UK, Europe and Asia.

Your Bank also raised a USD 422 Million Dual Currency Loan in October, 2014 which received commitment from 21 Banks across USA, Europe, Africa, Middle East, Far East and Australia. More recently, in December, your Bank received a USD 200 Million Unsecured Loan from the Asian Development Bank which will be used to finance working capitaL and investment Loans targeted towards small farm households and rural women in Self Help Groups (SHGs). In February 2015, your Bank issued India''s 1st ever Green Infrastructure Bonds raising an amount of USD 160 Million (Rs. 1,000 Crores). The issue launched for '' 500 Crores plus green shoe option witnessed strong demand from leading investors including Insurance companies, Pension & Provident Funds, Foreign Portfolio Investors, New Pension Schemes and Mutual Funds, resulting in a total subscription of '' 1,000 Crores.

Further information on the Business overview and outlook and State of the affairs of the Bank is discussed in detail in the Management Discussion & Analysis.

There is no change in the nature of business of the Bank for the year under review.

Financial Performance

('' in Crores)

April 1, 2014 to April 1, 2013 to Particulars March 31, 2015 March 31, 2014

Deposits 91,176 74,192

Borrowings 26,220 21,314

Advances 75,550 55,633

Total Assets/Liabilities 136,170 109,016

Net Interest Income 3,488 2,716

Non Interest Income 2,046 1,722

Operating profit 3,250 2,688

Provisions and Contingencies 339 362

Profit before Tax 2,910 2,326

Provision for taxes 905 709

Net Profit 2,005 1,617

Add: Surplus/(Deficit) brought forward from last period 3,207 2,338

Amount available for appropriation5,213 3,955

Appropriations

Statutory Reserve under section 17 of the Banking Regulation Act, 1949 501 404

Capital Reserve 26 4

Investment Reserve 12 -

Proposed Dividend and Tax thereon 453 338

Adjustment to earlier year dividend and tax thereon 0 2

Surplus carried to Balance Sheet 4,220 3,207

Key Performance Indicators

Net Interest Margin 3.2% 2.90%

Return on Annual Average Assets 1.6% 1.60%

Return on Equity 19.0% 25.00%

Cost to Income Ratio 41.3% 39.40%

Your Bank posted Net Revenues (Net Interest Income and other income) of Rs.5,534 Crores and Net Profit of Rs.2,005 Crores for the FY 2014-15. The Net Revenues and Net Profit for the Financial. Year 2013-14 was Rs.4,437 Crores and Rs.1,617 Crores respectively. Appropriations from the Net Profit have been effected as per the tabLe given above. Please refer to the section on Financial and operating Performance in the Management Discussion and AnaLysis for a detaiLed anaLysis of financial data.

Dividend

Your Bank is rewarding its shareholders by way of consecutive cash dividends considering the consistent financial performance of your bankand promising future prospects while retaining capital to maintain a healthy Capital Adequacy Ratio and to support future growth. In view of the exceLLent financial performance of your Bank and in continuance of the earlier trends of cash dividends, the Board of Directors have recommended Dividend at a rate of Rs.9 per equity share for approval by the shareholders at the 11th Annual General Meeting.

Transfer to Reserves

As per requirement of RBI regulations, the Bank has transferred the following amounts to various reserves during Financial Year ended March 31, 2015-

Amount transferred to Amount in '' Crores

Statutory Reserve 501

Capital Reserve 26

Investment Reserve 12

Capital Raising & Capital Adequacy Ratio (CAR)

The Bank had raised CapitaL through OuaLified Institutional Placements (QIP) in the month of May 2014 and had received a tremendous response to the QIP, raising USD 500 Million (Rs.2,942 Crores) at a rate of Rs.550 per share. Your Bank has utilized the proceeds of the issue of equity shares under QIP for enhancing the Solvency, Capital Adequacy Ratio and for general Corporate Purposes.

The paid-up capital of your Bank has increased to Rs.417.74 Crores as at March 31, 2015 from Rs.360.63 Crores as at March 31, 2014, post raising of funds by way of QIP and exercise of employee stock options during the FY 2014-15.

Your Bank has not issued any equity shares with differential voting rights during the year.

Your Bank also raised Rs.1,000 Crores by way of ''Green Infra Bonds'' during the FY 2014-15.

In line with the RBI circular on Capital Adequacy Framework, your Bank has computed capital charge for operational, market and credit risk and its Capital Adequacy Ratio as per Basel III accord as at March 31, 2015.

Your Bank is well capitalized with a Capital Adequacy Ratio of 15.6% as at March 31, 2015 of which Tier I Capital Ratio was 11.5% and Tier II Capital Ratio was 4.1%.

Deposits

Being a banking company, the disclosures required as per Rule 8(5)(v)&(vi) of the Companies (Accounts) Rules, 2014, read with Section 73 and 74 of the Companies Act, 2013 are not applicable to your Bank.

Awards and Recognitions

During the year under review, your Bank was recognized in various ways/by various institutions and some of the awards presented to the Bank are listed below:

Your Bank has won the ''Excellence in Social Media'' and ''Best Initiative in Financial Inclusion'' Awards at the Retail Banker International Asia Trailblazer Awards 2015

Your Bank was adjudged as ''Most Promising Brand'' at the Economic Times Most Promising Brands Awards at Mumbai, 2015

Your Bank was adjudged runner-up in the ''Most Imminent Bank'' category by Outlook Money at Mumbai, 2015

Your Bank won the ''Best Private Sector Bank'' at the FPCIL Money Today Best Banks Awards, 2015

Your Bank was ranked 2nd Globally for ''Customer Engagement through Social Media'' at International Best Practice Competition, Abu Dhabi

Your Bank was awarded the prestigious AIMA RK Swamy High Performance Brand Award 2014 in Delhi in February 2015

Your Bank was awarded at the FINNOVITI Awards - 2015 - for ''Incentivizing Customers by Offering Discount Coupons on ATMs''

Your Bank has received the ''Newgen Innovation Award FY 2014-15'' - Workfl.ow automation for Trade Finance & Account opening processes

Your Bank was recognized by the Business Today KPMG India''s Best Banks 2014 as Consistent Performer and for Best Asset Quality among Large Sized Banks.

Your Bank has received multiple awards including ''Winner'' in the Mid Sized Category for ATMs & ''Special Award for Innovation in IMPS'' from NPCI.

Your Bank has received the Best Transaction Bank for Payments Award at The Banker Transaction Banking Awards 2014 in London. Your Bank was the only bank globally to have been awarded in this category in 2014.

Your Bank was awarded the Best Asset Quality (Private Sector) award at the Dun & Bradstreet Banking Awards, 2014 held in Mumbai

Your Bank has been awarded the ''Best Performer in Account Growth Rate - Rising DP'' at the NSDL Star Performers Awards 2014

Your Bank has received the ''Global Performance Excellence Award -2014'' in the Services Category by Asia Pacific OuaLity Organisation (APOO) in Chicago, Illinois, USA. Your Bank has been declared as ''World Class Organisation'' (top category award) amongst 11 other organizations around the world. Your Bank is the only Indian bank to win this prestigious global award.

Your Bank has received the Bombay Chamber Good Corporate Citizen Award 2013-14. Your Bank was awarded in the ''Banks and Financial Institutions'' category by the Bombay Chamber of Commerce and Industry (BCCI)

Your Bank has received Golden Peacock

Environment Management Award 2014 in the Banking (financial) Category at the 16th WorLd Congress on Environment Management, New Delhi.

Your Bank has received the Outstanding

Sustainable Project Financing Award at the prestigious Karlsruhe Sustainable Finance Awards, Germany, 2014. This is the 2nd year in a row that Your Bank has received this global recognition.

Your Bank has won the MasterCard Payment Innovation Awards 2014 under three of the total nine categories. Your Bank won these recognitions for introducing innovative Payment programs that present effective and convenient solutions to valued customers.

Employees Stock Option Scheme

Your Bank has instituted Stock Option Plans to enable its employees to participate in your Bank''s future growth and financial success. Your Bank provides its employees a platform for participating in important decision making and instilling long term commitment towards future growth of the Bank by way of rewarding them through Stock Options. The Stock Option Schemes also enable the Bank to hire the best talent for its senior management and key positions. The Bank has implemented five EmpLoyee Stock Option Schemes viz. Joining Stock Option Plan I (JSOP I), Joining Employee Stock Option Plan II (JESOP II), Joining Employee Stock Option Plan III (JESOP III), YBL ESOP (consisting of two sub schemes JESOP IV/PESOP I) and YBL JESOP V/PESOP II (Consisting of three sub schemes JESOP V/ PESOP II/ PESOP II -2010).

The Employee Stock Option Plans are administered by the Nomination & Remuneration Committee of the Board (earlier known as Board Remuneration & Human Capital Management Committee) of the Bank.

Sub-table 1: Any other employee who received a grant in any one year of options, amounting to 5% or more of options granted during that year under YBL JESOP V

Name of Employee Options granted

Jyoti Prasad Ratho 50,000

Kanwar Vivek 50,000

Manish Agarwal 30,000

Preeti Sinha 30,000

Aseem Gandhi 100,000

Neelesh Sarda 100,000

Sub-table 2: Any other employee who received a grant in any one year of options, amounting to 5% or more of options granted during that year under YBL PESOP II 2010

Name of Employee Options granted

Ashish Agarwal 150,000

Sanjay Palve 200,000

Subsidiary Company

As on March 31, 2015, your Bank has one Subsidiary, YES Securities (India) Limited (YSIL).

Performance and Financial Positions of YSIL

YES Securities (India) Limited successfully completed its first fuLL financial year of operations in March 2015. As on March 31, 2015, YSIL has 14,420 clients. Clients are offered 3 products from the group - A Current/ Savings Account and a Demat account from your Bank, and a Trading account from YSIL. With a view to provide customers with mobile access to its services, YSIL has launched the YES INVEST mobile application for smart phones - Android, Apple and Blackberry Systems. During the FY 2014-15, YSIL has earned a total revenue of Rs.443 Lakhs as against Rs.54 Lakhs in the previous year. YSIL has incurred a loss of Rs.793 Lakhs in FY 2014- 15 as compared to loss of Rs.652 Lakhs in FY 2013-14. YSIL monthly trading turnover has increased from Rs.10 Crores in April 2014 to approx Rs.290 Crores in March 2015. Further, Brokerage income has grown from Rs.0.32 Lakhs in April 2014 to Rs.44 Lakhs in March 2015. The overall trading volume from the institutional segment for the year ended March 31, 2015 was Rs.343 Crores.

Directors

Your Bank has Ten (10) Directors consisting of Seven (7) Independent Directors, Two (2) Non-executive Directors and Managing Director & Chief Executive Officer (MD & CEO) as on March 31, 2015.

Independent and Non-Independent Non-Executive Directors

In terms of the definition of''Independence'' of Directors as prescribed under Clause 49 of the Listing Agreement entered with Stock Exchanges and Section 149(6) of the Companies Act,2013 and based on the confirmation / disclosures received from the Directors, the following Non-Executive Directors are Independent Directors:-

1. Mr. Ajay Vohra

2. Lt. Gen. (Retd.) Mukesh Sabharwal

3. Mr. Diwan Arun Nanda

4. Mr. Ravish Chopra

5. Mr. Brahm Dutt

6. Mr. Vasant V. Gujarathi

7. Mr. Saurabh Srivastava

Woman Director

In terms of the provisions of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, a company shall have at least one Woman Director on the Board of the company. Your Bank has Ms. Radha Singh as Director on the Board of the Bank since April 2008, who is presently the Chairperson of the Bank.

Managing Director & Chief Executive Officer (MD & CEO)

Mr. Rana Kapoor has been serving as the Managing Director & CEO of the Bank since September 1, 2004, with the approval of Reserve Bank of India (RBI) and the shareholders, from time to time.

The Board of Directors of the Bank at their meeting held on April 22, 2015 has approved the re-appointment of Mr. Rana Kapoor as MD & CEO subject to the approval of the shareholders and the Reserve Bank of India. Accordingly, the approval of shareholders is being sought for his re-appointment as MD & CEO of the Bank for a period of 3 years subject to RBI approval.

Appointments/Resignations from the Board of Directors

During the year under review, Lt. Gen. (Retd.) Mukesh Sabharwal, Mr. Ravish Chopra, Mr. Brahm Dutt, Mr. Saurabh Srivastava and Mr. Vasant V. Gujarathi, were appointed as Independent Directors by the shareholders for a term of five (5) years.

Ms. Radha Singh was appointed as an Independent Director for a period of Two (2) years. Subsequently, pursuant to the recommendations of the Board of Directors of the Bank, the RBI approved the appointment of Ms. Radha Singh as the Non-Executive Part-Time Chairperson of the Bank for a period of two (2) years from the date of her taking charge i.e. from October 30, 2014 which was subsequently taken on record by the shareholders by way of Postal Ballot including approval of terms of appointment. In terms of the aforesaid approvals, she is continuing as the Non-Executive Part- time Chairperson of the Bank and she is also eligible for remuneration including sitting fee. Accordingly, she is a Non-Executive Non-Independent Director of the Bank with effect from October 30, 2014.

The proposal for appointment of Mr. Ajay Vohra and Mr. Diwan Arun Nanda, as Independent Directors is being placed before the shareholders for approval, the relevant details are forming part of the AGM notice.

There were no resignation of Directors during the year.

Appointments/Resignations of the Key Managerial Personnel

Mr. Rana Kapoor, MD & CEO; Mr. Rajat Monga, Chief Financial Officer and Mr. Shivanand R. Shettigar, Company Secretary of the Bank are the Key Managerial Personnel as per the provisions of the Companies Act, 2013 and were aLready in office before the commencement of the Companies Act, 2013.

None of the Key Managerial Personnel has resigned or appointed during the year under review.

Directors Retiring by Rotation

In terms of Section 152 of the Companies Act, 2013, Mr. M. R. Srinivasan being Longest in the office shaLL retire at the ensuing AGM and being eligible for re-appointment, offers himself for re-appointment.

Number of Meetings of the Board

Regular meetings of the Board are held to discuss and decide on various business policies, strategies and other businesses. The schedule of the Board/Committee meetings to be heLd in the forthcoming financial year is being circulated to the Directors in advance to enable them to plan their schedule for effective participation in the meetings. Due to business exigencies, certain business decisions are taken by the Board through circulation from time to time.

The Board met four (4) times during the FY 2014-15 viz. on April 23, 2014, July 23, 2014, October 30, 2014 and January 14, 2015. Detailed information on the meetings of the Board are included in the report on Corporate Governance, which forms part of this Annual Report.

Additionally, several committee meetings were held including Audit Committee meeting, which met six (6) times during the year.

Committees of the Board

The Bank has several committees which have been established as a part of the best corporate governance practices and are in compliance with the requirements of the relevant provisions of applicable laws and statutes.

The Bank has following Committees of the Board:

Audit Committee

Fraud Monitoring Committee

Risk Monitoring Committee

Board Credit Committee

Service Excellence, Branding and Marketing Committee

IT Strategy Committee

Nomination and Remuneration Committee

Stakeholders Relationship Committee

Corporate Social Responsibility Committee

Capital Raising Committee

Committee of Independent Directors

The details with respect to the compositions, powers, roles, terms of reference, etc. of relevant committees are given in details in the ''Report on Corporate Governance'' of the Bank which forms part of this Annual Report.

Corporate Social Responsibility Committee

In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules 2014, the Bank has established Corporate Social Responsibility (CSR) Committee and statutory disclosures with respect to the CSR Committee and an Annual Report on CSR Activities forms part of this Report as Annexure 1.

Performance Evaluation of the Board

The Nomination and Remuneration Committee at its meeting held on October 29, 2014 and the Board of Directors at its meeting held on October 30, 2014 respectively, had laid down criteria for performance evaluation of Directors, Chairperson, MD & CEO, Board Level Committees and Board as a whole and also the evaluation process for the same.

The statement indicating the manner in which formal annual evaluation of the Directors, the Board and Board level Committees are given in detail in the report on Corporate Governance, which forms part of this Annual Report.

The performances of the members of the Board, the Board level Committees and the Board as a whole were evaluated at the meeting of the Committee of Independent Directors and the Board of the Directors held on April 22, 2015.

Corporate Governance

Your Bank is committed to achieve the highest standards of Corporate Governance and adheres to the Corporate Governance requirements set by the Regulators/applicable laws. Accordingly, your Board functions as trustees of the shareholders and seeks to ensure that the long term economic value for its shareholders is achieved while balancing the interest of all the stakeholders.

A separate section on Corporate Governance standards followed by your Bank, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is enclosed as an Annexure to this report. The report on Corporate Governance also contains certain disclosures required under the Companies Act, 2013.

A Certificate from M/s. Mehta and Mehta, Practicing Company Secretaries, conforming compliance to the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement, is annexed to this Report.

Management Discussion and Analysis

The Management Discussion and Analysis Report for the year under review as stipulated under Clause 49 of the listing agreement with the Stock Exchanges in India is presented in a separate section forming part of this Annual Report.

Vigil Mechanism

The Bank has implemented a Whistle Blower Policy pursuant to which Whistle Blowers can raise concerns reLating to ReportabLe Matters (as defined in the policy) such as breach of YES BANK Code of Conduct, fraud, bribery, corruption, employee misconduct, illegality, health & safety, environmental issues and wastage/ misappropriation of bank funds/assets, etc. Further, the mechanism adopted by the Bank encourages the Whistle Blower to report genuine concerns or grievances and provides for adequate safeguards against victimization of Whistle Blower who avail of such mechanism and also provides for direct access to the Chairman of the Audit Committee, in exceptional cases. The functioning of the Vigil mechanism is reviewed by the Audit Committee from time to time. None of the Whistle Blowers have been denied access to the Audit Committee of the Board. The details of the Whistle Blower Policy are explained in the Report on Corporate Governance and also available on the website of the Bank (www.yesbank.in).

Risk Management Policy

Your Bank has Board approved various Risk Management Policies and an Internal Capital Adequacy Assessment (ICAAP) Policy wherein all material risks faced by the Bank (PiLLar l&ll risks) are identified and assessed. For each of the Risks identified in the ICAAP, corresponding controls are assessed and policies and procedure are put in place for monitoring, mitigating and reporting risk on a periodic basis.

Loans, Guarantees or Investments in Securities

Pursuant to Section 186(11) of the Companies Act, 2013 loans made, guarantees given or securities provided or acquisition of securities by a Banking company in the ordinary course of its business are exempted from disclosure in the Annual Report.

Contracts or Arrangements with Related Parties

AU related party transactions that were entered during the financial year were in the ordinary course of the business of the Bank and were on arm''s Length basis. There were no materiaLLy significant reLated party transactions entered by the Bank with Promoters, Directors, Key Managerial Personnel or other persons which may have a potential conflict with the interest ofthe Bank.

Considering the nature of the industry in which the Bank operates, transactions with reLated parties ofthe Bank are in the ordinary course of business speciaLLy w.r.t. banking transactions which are aLso on arms'' Length basis. ALL such ReLated Party Transactions are pLaced before the Audit Committee for approvaL, wherever appLicabLe. Prior omnibus approvaL for normaL banking transactions is aLso obtained from the Audit Committee forthe reLated party transactions which are of repetitive nature as weLL as for the normaL banking transactions which cannot be foreseen and accordingly the required disclosures are made to the Committee on quarterLy basis in terms of the approvaL of the Committee.

The poLicy on materiaLity of ReLated Party Transactions and aLso on deaLing with ReLated Party Transactions as approved by the Audit Committee and the Board of Directors is upLoaded on the website of the Bank and the Link for the same is (http://www.yesbank.in/ investor-reLations/corporate-governance.htmL).

Since all related party transactions entered into by the

Bank were in the ordinary course of business and were on an arm''s Length basis, form AOC-2 is not appLicabLe to the Bank.

Consolidated Financial Statements

Pursuant to Section 129 ofthe Companies Act,2013,the Bank has prepared a consolidated financiaL statement of the Bank and aLso of its Subsidiary, YES Securities (India) Limited, in the same form and manner as that of the Bank which shaLL be Laid before the ensuing 11th AnnuaL GeneraL Meeting of the Bank aLong with the Laying of the Bank''s FinanciaL Statement under sub-section (2) of Section 129 i.e. StandaLone FinanciaL Statement ofthe Bank.

Further, pursuant to the provisions of Accounting Standard (AS'') 21, Consolidated FinanciaL Statements notified under section 133 of the Companies Act 2013, read together with RuLe 7 ofthe Companies (Accounts) RuLes 2014 issued by the Ministry of Corporate Affairs, the Consolidated FinanciaL Statements of the Bank aLong with its subsidiary for the year ended March 31, 2015 form part of this AnnuaL Report.

Internal Financial Control Systems and their Adequacy

Your Bank had Laid down set of standards, processes and structure which enabLes to impLement internaL financiaL controL across the organisation and ensure that the same are adequate and operating effectively.

Auditors

(a) Statutory Auditors

M/s. S. R. BatLiboi & Co, LLP, Chartered Accountants, wiLL retire at the conclusion of the forthcoming AnnuaL GeneraL Meeting and are eLigibLe for re-appointment, subject to the approvaL of the Reserve Bank of India. The Bank has received the consent from the Auditors and confirmation to the effect that they are not disqualified to be appointed as the Auditors of the Bank in terms of the provisions of the Companies Act 2013 and ruLes made thereunder. Accordingly, the Board of Directors has recommended the re-appointment of M/s. S. R. BatLiboi & Co, LLP, Chartered Accountants, as the Statutory Auditors ofthe Bank to hoLd office from the ensuing AGM tiLL the conclusion of the next AGM on remuneration to be decided by the Board or Committee thereof to the shareholders for approvaL.

(b) Secretarial Auditors and Secretarial Audit Report

Pursuant to Section 204 ofthe Companies Act 2013, your Bank had appointed M/s BNP & Associates, Practicing Company Secretaries, Mumbai as its Secretarial Auditors to conduct the secretarial audit ofthe Bank for the FY 2014-15. The Bank provided aLL assistance and facilities to the Secretarial Auditor for conducting their audit. The Report of Secretarial Auditor for the FY 2014-15 is annexed to this report as Annexure 2.

There is no Audit Qualifications in the Statutory Auditors Report and in the Secretarial Audit Report as annexed elsewhere in this Annual Report.

Business Responsibility Report

The Securities and Exchange Board of India through its circular CIR/CFD/DIL/8/2012 dated August 13, 2012, has mandated the top 100 listed entities, based on the market capitalization on BSE Limited and National Stock Exchange of India Limited as at March 31, 2012, to include the Business Responsibility Report (BRR) as part of the Annual Report. Accordingly, your Bank''s Business Responsibility Report has been included in this Annual Report.

Material Changes and Commitment Affecting Financial Position of the Bank

There are no material changes and commitments, affecting the financial position of the Bank which has occurred between the end of the financial year of the Bank i.e. March 31, 2015 and the date of the Directors'' report i.e. April 22, 2015.

Employee Remuneration

(A) The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this report. In terms of Section 136 of the Companies Act, 2013 the same is open for inspection at the Registered Office of your Bank. Copies of this statement may be obtained by the members by writing to the Company Secretary of your Bank.

(B) The ratio of the remuneration of each director to the median employee''s remuneration and other details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report as Annexure 3.

Statutory Disclosures

(1) The disclosures to be made under sub-section (3) (m) of Section 134 of the Companies Act 2013 read with Rule (8)(3) of the Companies (Accounts) Rules, 2014 by your Bank are explained as under:

(A) Conservation of Energy

Environmental stewardship in the financial sector - ISO 14001:2004 Environmental Management System (EMS) certification for the Bank ISO 14001:2004 which is world''s leading Environmental Management System certification is rare in the BFSI space with only a few international banks achieving it. In line with its commitment to achieve internal naturaL resource consumption efficiencies and minimizing its carbon footprint, your Bank became the first commercial bank in India to achieve the ISO 14001:2004 certification in 2013 getting 12 of its Locations certified. In FY 2014-15, 67 additional sites across India were certified making a totaL of 79 Locations ISO 14001:2004 certified incLuding 76 major cluster hub Branches and 3 corporate offices. The certification enabLes the Bank to rigorously measure, manage and report its carbon footprint and is a proactive step towards mitigating adverse impact on the environment.

(i) the steps taken or impact on conservation of energy;

LED tube lights project at Corporate Office at IndiabuLLs Finance Centre (IFC), Mumbai: The conventional (T5) tube lights were replaced with LED lights in IFC. The installation of 2714 LED tube lights will lead to a saving of 196,765 KWhr of energy per year.

Installation of Global Positioning System (GPS) in office runners: GPS tracking devices were installed in two wheelers across National Capital Region (NCR) region in phases to track the km running on actual & save on fuel cost.

(ii) the steps taken by the Bank for utilizing alternate sources of energy: Your Bank has explored the potential of using alternate sources of energy through pilot projects which may be considered for implementation in future and your Bank would continue to explore alternative sources of energy in future.

(iii) the capital investment on energy conservation equipments: '' 38.11 Lakhs (LED Tube lights project at IFC, Mumbai)

(B) Technology Absorption

(i) The efforts made towards technology absorption;

Technology is a key enabler and core facilitator to the key goaLs of your Bank and is identified as one of the strategic pillars of the Bank. Since inception your Bank has been at the forefront of leveraging technology to provide better products and services to its customers. Your Bank is a truly differentiated Financial Institution with world-class, state-of-the-art technology. All departments within the Bank use IT to deliver superior products and services to the customers, including innovations like Money Monitor, Mobile Banking, One view of customer relationship and most advanced voice enabled IVR.

Your Bank has adopted innovative modern technology and best in class international banking practices in respect of governance frameworks - to ensure that it renders the highest standards of service quality and operational excellence to its customers. As a new generation Bank, your Bank has deployed ''Technology'' as a Strategic Business enabler - to build a distinct competitive advantage and to achieve Superior standards of Customer Service. The technology architecture and the innovative IT Outsourcing structure has enabled your Bank to achieve high standards of Customer Service at comparatively lower cost structures.

(ii) the benefits derived like product improvement, cost reduction, product development or import substitution;

Technology has responded by being true strategic partner with business. Many first mover implementations have provided business, long lasting advantages, as also won many accolades and awards for the Bank. One of the finest direct banking pLatforms, first bank in India to offer two factor authentication, single PIN access to all electronic channels, Wi-Fi branches are some of the examples.

Innovations like Money Monitor (aggregation of customer accounts of all types across 11,000 institutions globally), Mobile Money Services, dual factor authentication, one view of customer relationship and most advanced voice enabled IVR helps the products and sales teams to offer superior products and services.

Your Bank has evaluated and implemented cutting edge technologies like virtualization, cloud computing and social media to invest in the best in class IT systems and practices, and in order to ensure that its technology platform becomes a strategic business tool for building a competitive advantage.

Apart from product development, product improvement & effective cost management, technology has also played a major role in customer acquisition & ensuring high level of service delivery & customer excellence. Your Bank has also been able to cater to Financial Inclusion needs through its award winning and globally recognized technology solution platform which offers doorstep banking services.

(C) Foreign Exchange Earnings and Outgo

The Foreign Exchange earned in terms of actual, inflows during the year and the foreign exchange outgo during the year in terms of actual, outflows.

During the year ended March 31, 2015, the Bank earned Rs.78.10 Crores and spent Rs.265.20 Crores in foreign currency. This does not incLude foreign currency cash flows in derivatives and foreign currency exchange transactions.

(2) No significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and Bank''s operations in future.

(3) Number of cases filed, if any, and their disposal under Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Your Bank has Zero tolerance towards any action on the part of any executive which may fall under the ambit of ''Sexual Harassment'' at workplace, and is fully committed to uphold and maintain the dignity of every women executive working in the Bank. The Policy provides for protection against sexual harassment of women at workplace and for prevention and redressal of such complaints.

(4) No stock options were issued to the Directors'' of your Bank.

Extracts of Annual Return

Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Companies Act 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014 the extracts of the Annual Return as at March 31, 2015 forms part of this report as Annexure 4.

Directors'' Responsibility Statement

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, it is hereby confirmed that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit of the Bank for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

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

(e) the directors had Laid down internaL financial controls to be followed by the Bank and that such internaL financial controLs are adequate and were operating effectively; and

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

Acknowledgement

Your Directors take this opportunity to express their deep and sincere gratitude to the customers of the Bank for their confidence and patronage, as weLL as to the Reserve Bank of India, Securities and Exchange Board of India, Government of India and other Regulatory Authorities for their co-operation, support and guidance. Your Directors would like to express a profound sense of appreciation for the commitment shown by the employees in supporting the Bank in its continued robust performance on all fronts. Your Directors would also like to thank the employees for their continued support as the Bank evolves as the ''Professionals'' Bank of India'' with a vision ''To be the Finest Quality Bank of the World in India by 2020''.

For and on behalf of the Board of Directors

Rana Kapoor Radha Singh

Managing Director & CEO Non-Executive Part-time

(DIN No: 00320702) Chairperson

(DIN No: 02227854)

Place: Mumbai Date : April 22, 2015


Mar 31, 2014

The Directors have the pleasure in presenting the Tenth Annual Report on business and operations of your Bank together with the audited accounts for the year ended March 31, 2014.

Financial performance (Rs. in crore)

Particulars April 1, 2013 to April 1, 2012 to March 31, 2014 March 31, 2013

Deposits 74,192 66,956

Borrowings 21,314 20,922

Advances 55,633 47,000

Total Assets/Liabilities 109,016 99,104

Net Interest Income 2,716 2,219

Non-Interest Income 1,722 1,257

Operating Profit 2,688 2,142

Provisions and Contingencies 362 216

Profit before Tax 2,326 1,926

Provision for Taxes 709 625

Net Profit 1,617 1,301

Add: Surplus/(Deficit) brought forward from last period 2,338 1,658

Amount available for appropriation 3,956 2,959

appropriations

Statutory reserve under Section 17 of the Banking 404 325 Regulations Act, 1949

Capital Reserve 4 35

Investment Reserve - 10

Proposed Dividend and Tax thereon 338 250

Adjustment to earlier year Dividend and Tax thereon 2 1

Surplus carried to the Balance Sheet 3,207 2,338

key performance indicators

Net Interest Margin 2.9% 2.9%

Return on annual average assets 1.6% 1.5%

Return on Equity 25.0% 24.8%

Cost-to-Income ratio 39.4% 38.4%

Your Bank posted net revenues (Net Interest Income and other income) of Rs. 4,438 crore and Net Profit of C 1,617 crore for the Financial Year 2013-14. The Net Revenues and Net Profit for the Financial Year 2012- 13 was C 3,476 crore and C 1,301 crore respectively. Appropriations from the Net Profit have been effected as per the table given above. Please refer to the section on FINANCIAL AND OPERATING PERFORMANCE in the Management Discussion and Analysis for a detailed analysis of financial data.

Dividend

In view of the excellent financial performance of your Bank and encouraging future outlook as well as the objective of rewarding shareholders with cash dividends while retaining capital to maintain a healthy Capital Adequacy Ratio, to support future growth, the Board of Directors have recommended Dividend at a rate of C 8/- per equity share for approval by the shareholders at the 10th Annual General Meeting.

capital Raising & capital adequacy Ratio (caR)

The paid-up capital of your Bank has increased to C 360.63 Crore as at March 31, 2014 from C 358.62 Crore as at March 31, 2013, post exercise of employee stock options during the Financial Year 2013-14.

Your Bank also raised a sum of C 280 Crore by way of Additional Tier I perpetual bonds during the Financial Year 2013-14. Your Bank has utilised the proceeds of the issue of Additional Tier I Perpetual Bonds for strengthening the Capital Adequacy Ratio (CAR), enhancing the long-term capital resources and its regular business activities.

In line with the RBI circular on Capital Adequacy Framework, your Bank has computed capital charge for operational, market and credit risk and its Capital Adequacy Ratio as per Basel III accord as at March 31, 2014.

Your Bank is well capitalised with a Capital Adequacy Ratio of 14.4% as at March 31, 2014; of which Tier I Capital Ratio was 9.8% and Tier II Capital Ratio was 4.6%.

employees'' Stock Option Scheme

Your Bank has instituted Stock Option Plans to reward and retain employees and to enable them to participate in your Bank''s future growth and financial success. The Stock Option Schemes also enable the Bank to hire the best talent for its senior management and key positions. The Bank has five Employee Stock Option Schemes viz. Joining Stock Option Plan I (JSOP I), Joining Employee Stock Option Plan II (JESOP II), Joining Employee Stock Option Plan III (JESOP III), YBL ESOP (consisting of two sub schemes JESOP IV/PESOP I) and YBL JESOP V/PESOP II (Consisting of three sub schemes JESOP V/ PESOP II/PESOP II-2010).

The Employee Stock Option Plans are administered by the Board Remuneration & Human Capital Management Committee (earlier known as Board Remuneration Committee) of the Bank.

The details of the grants under JSOP I, JESOP II, JESOP III, YBL ESOP (JESOP IV/PESPOP I) and YBL JESOP V/ PESOP II/PESOP II-2010 respectively are as follows:

JSOP I, JESOP II, JESOP III, YBL ESOP (JESOP IV)

Total no. of options grant- Nil Nil Nil Nil ed (during FY 2013-14)

The pricing formula At par Being the Being the closing Being the closing closing price price on the price on the stock on the stock stock exchange exchange with the exchange with with the highest highest trading the highest trading volumes volumes on the trading volumes on the last last working day on the last working day prior to the date working day prior to the date of grant prior to the of grant date of grant

Options vested (during FY - - - 257,250 2013-14)

Options exercised (during 8,750 7,700 23,700 405,012 FY 2013-14)

Total no. of shares arising 8,750 7,700 23,700 405,012 as a result of exercise of option

Options lapsed/ forfeited - - - 400 (during FY 2013-14)

YBL ESOP YBL ESOP YBL ESOP YBL ESOP (JESOPI) V II 2010

Total no. of options grant- 3,750 1,020,600 Nil 3,373,500 ed (during FY 2013-14)

The pricing formula Being the Being the Being the Being the closing closing price closing price closing price price on the stock on the stock on the stock on the stock exchange with the exchange with exchange exchange highest trading the highest with the with the volumes on the last trading highest trad- highest trad- working day prior to volumes ing volumes ing volumes the date of grant on the last on the last on the last working day working day working day prior to the prior to the prior to the date of grant date of grant date of grant

Options vested (during FY 2013-14) 116,750 932,125 - 958,500

Options exercised (during 358,025 317,075 510,925 380,150 FY 2013-14)

Total no. of shares arising 358,025 317,075 510,925 380,150 as a result of exercise of option

Options lapsed/ for feited - 720,680 - 845,000 (during FY 2013-14)

JSOP I, JESOP II, JESOP III, YBL ESOP (JESOP IV)

Variation of terms of There is There is no There is no There is no varia- options no vari- variation in the variation in the tion in the terms ation in terms of the terms of the op- of the options the terms options during tions during the during the Finan- of the the Financial Financial Year cial Year ended options Year ended ended March 31, March 31, 2014. during March 31, 2014. the Finan- 2014. cial Year ended March 31, 2014.

Money realised by exercise 87,500 639,205 21,72,840 633,26,319.90 of options (during FY 2013-14) (inRs.)

Total no. of options in 251,250 275,800 32,600 329,613 force

Total no. of options grant- Nil Nil Nil Nil ed to: (during FY 2013-14)

(i) Total no. of options granted to Senior Man- agement Personnel (SMP)



YBL ESOP YBL ESOP YBL ESOP YBL ESOP (JESOPI) V II 2010

Variation of terms of There is no There is no There is no There is no variation options variation in variation in variation in in the terms of the the terms of the terms of the terms of options during the the options the options the options Financial Year ended during the during the during the March 31, 2014. Financial Year Financial Year Financial Year ended March ended March ended March 31, 2014 31, 2014 31, 2014

Money realised by exercise of options 592,27,491.25 658,54,227 659,40,493 102,374,395 (during FY 2013-14) (in Rs.)

Total no. of options in 591,975 50,421,75 18,102,75 12,136,350 force

Total no. of options grant ed to: (during 3,750 1,020,600 Nil 3,373,500 FY 2013-14)

(i) Total no. of options granted to Senior Man- agement Personnel (SMP)



JSOP I, JESOP II, JESOP III, YBL ESOP (JESOP IV)

(ii) Any other employee who received a grant in any one year of options, amounting to 5% or more of options granted during that year

(iii) Identified employees NA NA NA NA who are granted options, during any one year equa to or exceeding 1 % of the ssued capital (excluding outstanding warrants and conversions) of the Company at the time of the grant

Diluted Earnings Per Share (EPS) of the Bank after considering the effect of potential Equity Shares on account of exercise of options



YBL ESOP YBL ESOP YBL ESOP YBL ESOP (JESOPI) V II 2010

(ii) Any other employee who received a grant in any one year of options, amounting to 5% or more of options granted during that year NitinSane- Sanjay Palve 60,000 -300,000 Abhay Sapru -60,000 Narendra Kumar Dixit- 75,000 Akshay Sap- ru- 90,000 Abhishek A Bhagat- 60,000

(iii) Identified employees NA NA NA NA who are granted options, during any one year equa to or exceeding 1 % of the ssued capital (excluding outstanding warrants and conversions) of the Company at the time of the grant

Diluted Earnings Per Share (EPS) of the Bank after considering the effect of potential Equity Shares on account of exercise of options 44.35



JSOP I, JESOP II, JESOP III, YBL ESOP (JESOP IV)

Impact of the difference The Bank has charged nil, being the intrinsic value of the stock options granted for the year ended March 31, 2014. Had the Bankad- between the intrinsic val- opted the ''Fair Value'' method (based on Black- Scholes pricing model), for pricing and accounting of options, net profit after tax would ue of the options and the have been lower by Rs. 341,904 thousands, the basic earnings per share would have been Rs. 43.97 per share instead of Rs. 44.92 per share; fair value of the options and diluted earnings per share would have been Rs. 43.42 per share instead of Rs. 44.35 per share, on profits and on EPS

Weighted average price 10.00 83.01 91.68 156.36 of the shares exercised during the year (in Rs.)

Weighted average fair 10.00 86.47 91.89 194.59 values of the outstanding options (in Rs.)

YBL ESOP YBL ESOP YBL ESOP YBL ESOP (JESOPI) V II 2010

Weighted average price 165.43 207.69 129.06 269.30 of the shares exercised during the year (in Rs.)

Weighted average fair 174.68 315.92 128.50 328.15 values of the outstanding options (in Rs.)

The Securities and Exchange Board of India (SEBI) has prescribed two methods to account for stock grants namely (i) the intrinsic value method; (ii) the fair value method. The Bank adopts the intrinsic value method to account for the stock options it grants to the employees. The Bank also calculates the fair value of options at the time of grant, using Black-Scholes pricing model with the following assumptions:

March 31, 2014

Risk free interest rate 4.96% - 9.11 %

Expected life 1.5 yrs - 7.5 years

Expected volatility 25.01% - 82.76%

Expected dividends 1.13% - 1.50%

Subsidiary company

As on March 31, 2014, your Bank had one Subsidiary, YES Securities (India) Limited (YSIL).

The Ministry of Corporate Affairs (MCA), Government of India vide the General Circular No. 2/2011 dated February 8, 2011 has granted general exemption under Section 212(8) of the Companies Act, 1956 to Companies from attaching the accounts of their subsidiaries in their annual reports subject to fulfillment of certain conditions prescribed in the Circular. Pursuant to the above Circular, the Board of Directors of the Bank at its meeting held on April 23, 2014 passed the necessary resolution granting the requisite approvals for not attaching the balance sheet, profit & loss account, report of the board of directors and report of the auditors thereon of the subsidiary company to the accounts of the Bank. The Bank will make available the copies of annual accounts of the subsidiary company and related detailed information to the shareholders of the Bank seeking the same. The annual accounts of the subsidiary company will also be kept for inspection by any shareholder at the Registered Office of the Bank and that of the subsidiary company.

Further, pursuant to the provisions of Accounting Standard AS-21 prescribed under the Companies (Accounting Standards) Rules, 2006 and the Listing Agreement as prescribed by the Securities and Exchange Board of India, the Consolidated Financial Statements of the Bank along with its subsidiary for the year ended March 31, 2014 form part of this Annual Report.

Directors

In accordance with the provisions of the Companies Act, 1956, Lt. Gen (Retd.) Mukesh Sabharwal and Ms. Radha Singh, Directors shall retire by rotation at the ensuing Annual General Meeting. Mr Brahm Dutt was appointed as an additional director by the Board at its meeting held on July 24, 2013, and Mr. Saurabh Srivastava and Mr. Vasant V Gujarathi were appointed as additional directors by the Board at its meeting held on April 23, 2014 and they hold office up to the conclusion of the ensuing Annual General Meeting. Further appointment of Mr. Ravish Chopra has been proposed as an Independent Director.

The Bank has received notices in writing pursuant to Section 160 of the Companies Act, 2013 from members along with deposits of C 1,00,000 signifying their intention to propose the candidature of Mr. Brahm Dutt, Mr. Saurabh Srivastava and Mr. Vasant V Gujarathi as Independent Directors of the Bank at the ensuing Annual General Meeting of the Bank. Further, pursuant to sections 149, 152 of the Companies Act, 2013 and Section 10A (2A) of the Banking Regulation Act, 1949, approval of the shareholders has been sought for the appointment of Lt. Gen (Retd.) Mukesh Sabharwal as Independent Director not liable to retire by rotation for a period of five years, Ms. Radha Singh as Independent Director not liable to retire by rotation for a period of two years, and Mr. Ravish Chopra, Mr. Brahm Dutt, Mr Saurabh Srivastava and Mr. Vasant V Gujarathi as Independent Directors not liable to retire by rotation for a period of five years.

Mr. Rana Kapoor, with the prior approval of Reserve Bank of India (RBI), was appointed as the Bank''s Managing Director & CEO for an initial period of 5 years w.e.f. September 1, 2004. Thereafter, he was re-appointed from time to time, for further tenures, pursuant to approvals of the RBI. As per the latest approval of RBI, the tenure of Mr. Kapoor''s re- appointment as Managing Director & CEO of the Bank is up to August 31, 2015. Approval of members is sought for the re-appointment of Mr. Rana Kapoor as Managing Director & CEO of the Bank at the ensuing Annual General Meeting as per details provided in the Notice.

The brief resume and details of Directors who are to be appointed/re-appointed are furnished in the Notice for the Annual General Meeting.

corporate governance

Your Bank is committed to achieving the highest standards of Corporate Governance. Accordingly, your Board functions as trustees of the shareholders and seeks to ensure that the long term economic value for its shareholders is achieved while balancing the interest of all the stakeholders.

A separate section on Corporate Governance standards followed by your Bank, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is enclosed as an Annexure to this Report.

A Certificate from the Practicing Company Secretaries, M/s. Mehta and Mehta, conforming compliance with the conditions of Corporate Governance as stipulated under Clause 49, is attached to this Report.

auditors

M/s. S. R. Batliboi & Co, LLP, Chartered Accountants, will retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment, subject to the approval of the Reserve Bank of India. Members are requested to consider their re- appointment on a remuneration to be decided by the Board or Committee thereof for the ensuing Financial Year i.e. 2014-15.

Statutory Disclosures

The statement containing particulars of employees as required under Section 217 (2A) of the Companies Act, 1956 forms part of this report. In terms of Section 219(1)(b)(iv) of the Companies Act, 1956 the same is open for inspection at the Registered Office of your Bank. Copies of this statement may be obtained by the members by writing to the Company Secretary of your Bank.

The provisions of Section 217(1)(e) of the Companies Act, 1956 relating to conservation of energy and technology absorption do not apply to your Bank. Your Bank is constantly pursuing its goal of technological upgradation in a cost efficient manner for delivering quality customer service.

Business Responsibility Report

The Securities and Exchange Board of India through its circular CIR/CFD/DIL/8/2012 dated August 13, 2012, has mandated the top 100 listed entities, based on the market capitalization on BSE Limited and National Stock Exchange of India Limited as at March 31, 2012, to include the Business Responsibility Report (BRR) as part of the Annual Report. Accordingly, your Bank''s Business Responsibility Report has been enclosed to this Report.

Management Discussion and analysis

Management Discussion and Analysis Report for the year under review as stipulated under Clause 49 of the listing agreement with the Stock Exchanges in India is presented in a separate section forming part of this Annual Report.

corporate Social Responsibility (cSR)

Your Bank has fairly understood its responsibility towards the society and environment in which it operate and accordingly had been working towards CSR and Sustainable Development focusing on the ''Triple Bottomline'' ethos'' since its inception. Further, in terms of Section 135 of the Companies Act, 2013, the Bank has constituted Corporate Social Responsibility Committee to monitor the CSR activities of the Bank in terms of the provisions of the Act.

Directors'' Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to the Directors'' Responsibility Statement, it is hereby confirmed that:

(I) in the preparation of the accounts for the Financial Year ended March 31, 2014 the applicable accounting standards have been followed along with proper explanation relating to material departures;

(II) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as at March 31, 2014 and of the profit of the Bank for the year under review;

(III) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities; and

(IV) the Directors have prepared the annual accounts of the Bank on a ''going concern'' basis.

Acknowledgements

Your Directors take this opportunity to express their deep and sincere gratitude to the customers of the Bank for their confidence and patronage, as well as to the Reserve Bank of India, Government of India and Regulatory Authorities for their co-operation, support and guidance. Your Directors would like to express a profound sense of appreciation for the commitment shown by the employees in supporting the Bank in its endeavour towards becoming the ''BEST QUALITY BANK OF THE WORLD IN INDIA''. Your Directors would also like to express their gratitude to the members for their trust and support.



For and on behalf of the Board of Directors

Rana kapoor M R Srinivasan

Managing Director Non-Executive Chairman and CEO

place : Mumbai

Date : April 23, 2014


Mar 31, 2013

To the Members,

The Directors are pleased to present the Ninth Annual Report of your Bank, together with the audited Balance Sheet, Profit & Loss Account and the report on business and operations of the Bank for the year ended March 31, 2013.

Financial Performance

(Rs. in crore)

April 1, 2012 to April 1, 2011 to Particulars March 31, 2013 March 31, 2012

Deposits 66,956 49,152

Borrowings 20,922 14,156

Advances 47,000 37,989

Total Assets/Liabilities 99,104 73,626

Net Interest Income 2,219 1,616

Non Interest Income 1,257 857

Operating profit 2,142 1,540

Provisions and Contingencies 216 90

Profit before Tax 1,926 1,450

Provision for taxes 625 473

Net Profit 1,301 977

Add: Surplus/(Deficit) brought forward from last period 1,658 1,115

Amount available for appropriation 2,959 2,092

Appropriations

Statutory Reserve under section 17 of the Banking Regulation Act, 1949 325 244

Capital Reserve 35 25

Investment Reserve 10 -

Proposed Dividend and Tax thereon 251 164

Surplus carried to Balance Sheet 2,338 1,659

Key Performance Indicators

Net Interest Margin 2.9% 2.8%

Return on Annual Average Assets 1.5% 1.5%

Return on Equity 24.8% 23.1%

Cost to Income Ratio 38.4% 37.7%

Non Interest Income to Net Revenues 36.2% 34.7%

Your Bank has posted net revenues (Net Interest Income and other income) of Rs. 3,476 crore and Net Profit of Rs. 1,301 crore for the Financial Year 2012-13. Net Revenues and Net Profit for the Financial Year 2011-12 were Rs. 2,473 crore and Rs. 977 crore respectively. Appropriations from the Net Profit have been effected as per the table on the earlier page. Please refer to the section on FINANCIAL AND OPERATING PERFORMANCE in the Management Discussion and Analysis for a detailed analysis of financial data.

Dividend

In view of the steady financial performance of your Bank and encouraging future outlook, the Board of Directors have recommended Dividend at a rate of Rs. 6/- per equity share. This will ensure increasing dividend for the shareholders while at the same time retaining capital to maintain a healthy capital adequacy ratio.

Capital Raising & Capital Adequacy Ratio (CAR)

The paid-up capital of your Bank increased to Rs. 358.62 crore as at March 31, 2013 from Rs. 352.99 crore as at March 31, 2012, post exercise of employee stock options during the Financial Year 2012-13.

Your Bank also raised a sum of Rs. 140 crore by way of Tier I perpetual bonds, Rs. 704.10 crore by way of Upper Tier II capital and Rs. 1059.70 crore by way of Lower Tier II subordinated bonds during the Financial Year 2012- 13. Your Bank has utilised the proceeds of the issue of Tier I Perpetual Bonds and Upper & Lower Tier II capital for strengthening the Capital Adequacy Ratio (CAR), for enhancing the long-term capital resources and its regular business activities.

In line with the RBI circular on Capital Adequacy Framework, your Bank has computed capital charge for operational, market and credit risk and its Capital Adequacy Ratio as per Basel II accord as at March 31, 2013.

Your Bank is well capitalised with a Capital Adequacy Ratio (as per Basel II) of 18.3% as at March 31, 2013; of which Tier I Capital Ratio was 9.5% and Tier II Capital Ratio was 8.8%.

Employees Stock Option Scheme

Your Bank has instituted Stock Option Plans to hire, reward and retain employees and to enable them to participate in your Bank''s future growth and financial success. The Bank has five Employee Stock Option Schemes viz. Joining Stock Option Plan I (JSOP I), Joining Employee Stock Option Plan II (JESOP II), Joining Employee Stock Option Plan III (JESOP III), YBL ESOP (consisting of two sub schemes JESOP IV/PESOP I) and YBL JESOP V/ PESOP II (Consisting of three sub schemes JESOP V/ PESOP II/PESOP II -2010).

The Employee Stock Option Plans are administered by the Board Remuneration Committee of the Bank.

The details of the grants under JSOP I, JESOP II, JESOP III, YBL ESOP and YBL JESOP V/PESOP II/PESOP II -2010 respectively are as follows:

i) Risk free interest rate 4.96% - 8.83%

ii) Expected life 1.50 yrs - 7.51 yrs

iii) Expected volatility 29.21% - 82.76%

iv) Expected dividends 1.13% - 1.50%

Directors

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Bank, Mrs. Radha Singh and Mr. Ajay Vohra shall retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

Mr. S. L. Kapur has completed the tenure approved by the Reserve Bank of India as Non Executive Chairman of the Board on April 26, 2012. Further, Mr. Wouter Kolff, Independent Director, Mr. Bharat Patel, Independent Director, Mr. S. L. Kapur, Promoter Nominee, Non Independent Director and Mr. Arun K. Mago, Independent Director, have completed the maximum permissible period of eight years prescribed under Section 10A (2A) of the Banking Regulation Act, 1949 and retired from the Board of Directors during the financial year 2012-13. Your Directors place on record their appreciation of the valuable contribution made by the aforesaid Directors in the evolution of the Bank and its growth and development.

The Board at its meeting held on October 23, 2012 appointed Mr. Ravish Chopra, Mr. Diwan Arun Nanda and Mr. M.R. Srinivasan as Additional Director(s) of the Bank. They hold office up to the date of the forthcoming Annual General Meeting and are eligible for appointment.

Corporate Governance

Your Bank is committed to achieving the highest standards of Corporate Governance. Accordingly, your Board functions as trustees of the shareholders and seeks to ensure that the long term economic value for its shareholders is achieved while balancing the interest of all the stakeholders.

A separate section on Corporate Governance standards followed by your Bank, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is enclosed as an Annexure to this report.

Auditors

M/S. S.R. Batliboi & Co., LLP Chartered Accountants will retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment, subject to the approval of the Reserve Bank of India. Members are requested to consider their re-appointment on a remuneration to be decided by the Board or Committee thereof for the ensuing Financial Year i.e. 2013-14.

Statutory Disclosures

The statement containing particulars of employees as required under Section 217 (2A) of the Companies Act, 1956 forms part of this report. In terms of Section 219(1) (b)(iv) of the Act, the same is open for inspection at the Registered Office of your Bank. Copies of this statement may be obtained by the members by writing to the Company Secretary of your Bank.

The provisions of Section 217(1)(e) of the Companies Act, 1956 do not apply to your Bank. Your Bank is constantly pursuing its goal of technological upgradation in a cost efficient manner for delivering quality customer service.

Directors'' Responsibility Statement_

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to the Directors'' Responsibility Statement, it is hereby confirmed that:

(i) in the preparation of the accounts for the Financial Year ended March 31, 2013 the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as at March 31, 2013 and of the profit of the Bank for the year under review;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities; and

(iv) the Directors have prepared the annual accounts of the Bank on a ''going concern'' basis.

Acknowledgement

Your Directors take this opportunity to express their deep and sincere gratitude to the customers of the Bank for their confidence and patronage, as well as to the Reserve Bank of India, Government of India and Regulatory Authorities for their co-operation, support and guidance. Your Directors would like to express a deep sense of appreciation for the commitment shown by the employees in supporting the Bank in its endeavour to create the BEST QUALITY BANK OF THE WORLD IN INDIA. Your Directors would also like to express their gratitude to the members for their trust and support.

For and on behalf of the Board of Directors

Rana Kapoor Radha Singh

Managing Director & CEO Independent Director

Lt. Gen. (Retd.) M. R. Srinivasan

Mukesh Sabharwal Non Independent Director

Independent Director

Place: Mumbai

Date: April 17, 2013


Mar 31, 2011

The Directors have pleasure in presenting the Seventh Annual Report of your Bank together with the audited Balance Sheet, Profit and Loss Account and the report on business and operations of the Bank for the year ended March 31, 2011.

Financial Performance

(Rs. in crore)

Particulars April 1, 2010 April 1, 2009 to March 31, 2011 to March 31, 2010

Deposits 45,939 26,799

Borrowings 6,691 4,749

Advances 34,364 22,193

Total Assets-Liabilities 59,007 36,382

Net Interest Income 1,247 788

Non-Interest Income 623 576

Operating Profit 1,190 864

Provisions and Contingencies 98 137

Profit before Tax 1,092 727

Provision for taxes 365 249

Net Profit 727 478

Add: Surplus-(Defcit) brought forward from last period 673 406

Amount available for appropriation 1,400 884

Appropriations

Statutory Reserve under Section 17 of the Banking Regulation Act, 1949 182 119

Capital Reserve 2 32

Investment Reserve - -

Proposed Dividend and Ta x thereon 101 60

Surplus carried to Balance Sheet 1,115 673

Key Performance Indicators

Net Interest Margin 2.9% 3.1%

Return on Annual Average Assets 1.5% 1.6%

Return on Equity 21.1% 23.7%

Cost to Income Ratio 36.3% 36.7%

Non-Interest Income to Net Revenues 33.3% 42.2%

Your Bank posted net revenues (Net Interest Income and Other Income) of Rs. 1,870 crore and Net Profit of Rs. 727 crore for the Financial Year 2010-11. Net Revenues and Net Profit for the Financial Year 2009-10 was Rs. 1,364 crore and Rs. 478 crore respectively. Appropriations from the Net Profit have been effected as per the table on the earlier page. Please refer to the section on Financial and Operating Performance in Management Discussion and Analysis for a detailed analysis of financial data.

Dividend

In view of the excellent financial performance of your Bank and encouraging future outlook as well as the objective of rewarding shareholders with cash dividends while retaining capital to maintain a healthy Capital Adequacy Ratio, to support future growth, the Board of Directors have recommended a Dividend at a rate of Rs. 2.50-- per equity share.

Capital Raising and Capital Adequacy Ratio (CAR)

The paid-up capital of your Bank increased to Rs. 347.15 crore as at March 31, 2011 from Rs. 339.67 crore as at March 31, 2010, post exercise of 74,79,855 employee stock options during the Financial Year 2010-11.

Your Bank also raised a sum of Rs. 225 crore by way of Tier I Perpetual Bonds, Rs. 640 crore by way of Upper Tier II capital and Rs. 306.40 crore by way of Lower Tier II Subordinated Bonds during the Financial Year 2010-11. Your Bank has utilised the proceeds of the issue of Tier I Perpetual Bonds and Upper & Lower Tier II capital to augment the long-term capital resources and to enhance the CAR for successfully implementing its growth plans.

In line with the RBI circular on Capital Adequacy Framework, your Bank has computed capital charge for operational, market and credit risk and its CAR as per Basel II accord as at March 31, 2011.

Your Bank is well capitalised with a CAR (as per Basel II) of 16.50 % as at March 31, 2011; of which Tier I Capital Ratio was 9.65% and Tier II Capital Ratio was 6.85%.

Employees Stock Option Scheme

Your Bank has instituted Stock Option Plans to reward and retain employees and to enable them to participate in your Banks future growth and financial success. The Stock Option Schemes also enable the Bank to hire the best talent for its senior management and key positions. The Bank has fve Employee Stock Option Schemes viz. Joining Stock Option Plan I (JSOP I), Joining Employee Stock Option Plan II (JESOP II), Joining Employee Stock Option Plan III (JESOP III), YBL ESOP (consisting of two sub schemes JESOP IV-PESOP I) and YBL JESOP V-PESOP II (Consisting of three sub schemes JESOP V- PESOP II-PESOP II -2010).

The Employee Stock Option Plans are administered by the Board Remuneration Committee of the Bank.

Directors

Mr. Sipko Schat, Nominee Director of Rabobank had resigned from the Board of Directors of the Bank with effect from June 22, 2010 on account of partial dilution of holding by Rabobank and consequently his alternate, Mr. Berend Du Pon was also deemed to vacate offce simultaneously.

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Bank, Mr. Wouter Kolff and Mr. Bharat Patel shall retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

Corporate Governance

Your Bank is committed to achieving the highest standards of Corporate Governance. Accordingly, your Board functions as trustees of the shareholders and seeks to ensure that the long-term economic value for its shareholders is achieved while balancing the interest of all the stakeholders.

A separate section on Corporate Governance standards followed by your Bank as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is enclosed as an Annexure to this report.

Auditors

M-s. B S R & Co., Chartered Accountants will retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment, subject to the approval of the Reserve Bank of India. Members are requested to consider their re-appointment on a remuneration to be decided by the Board or Committee thereof for the ensuing Financial Year i.e. 2011-12.

Statutory Disclosures

The statement containing particulars of employees as required under Section 217 (2A) of the Companies Act, 1956 forms part of this report. In terms of Section 219(1)(b)(iv) of the Act, the same is open for inspection at the Registered Offce of your Bank. Copies of this statement may be obtained by the members by writing to the Company Secretary of your Bank.

The provisions of Section 217(1)(e) of the Companies Act, 1956 do not apply to your Bank. Your Bank is constantly pursuing its goal of technological upgradation in a cost effcient manner for delivering quality customer service.

Directors Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to the Directors Responsibility Statement, it is hereby confrmed that:

(I) in the preparation of the accounts for the Financial Year ended March 31, 2011, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(II) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as at March 31, 2011 and of the Profit of the Bank for the year under review;

(III) the Directors have taken proper and suffcient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities; and

(IV) the Directors have prepared the annual accounts of the Bank on a going concern basis.

Acknowledgement

Your Directors take this opportunity to express their deep and sincere gratitude to the customers of the Bank for their confdence and patronage, as well as to the Reserve Bank of India, Government of India and Regulatory Authorities for their co-operation, support and guidance. Your Directors would like to express a deep sense of appreciation for the commitment shown by the employees in supporting the Bank in its endeavour to create the BEST QUALITY BANK OF THE WORLD IN INDIA. Your Directors would also like to express their gratitude to the members for their trust and support.

For and on behalf of the Board of Directors

Rana Kapoor S. L. Kapur Managing Director & CEO Non-Executive Chairman

Place: Mumbai Date: April 20, 2011


Mar 31, 2010

The Directors have pleasure in presenting the Sixth Annual Report of your Bank together with the audited Balance Sheet, Profit & Loss Account and the report on business and operations of the Bank for the year ended March 3 1,2010.

Financial Performance

(R.s. in crores)

Particulars April 1,2009 to April 1,2008 to March 31,2010 March 31 2009

Deposits 26,799 16,169

Borrowings 4,749 3,702

Advances 22,193 12,403

Total Assets/Liabilities 36,382 22,901

Net Interest Income 788 509

Non Interest Income 576 437

Operating profit 864 528

Provisions and Contingencies 137 62

Profit before Tax 727 466

Provision for taxes 249 162

Net Profit 478 304

Add: Surplus/(Deficit) brought forward from last period 406 245

Amount available for appropriation 884 549

Appropriations

Statutory Reserve under Section 17 of the 119 76 Banking Regulation Act, 1949

Capital Reserve 32 67

Investment Reserve

Proposed Dividend and Tax thereon 6 0

Surplus carried to Balance Sheet 673 406

Key Performance Indicators

Net Interest Margin 3.1 % 2.9%

Return on Annual Average Assets 1.6% 1.5%

Return on Equity 23.7% 20.6%

Cost to Income Ratio 36.7% 44.2%

Non Interest Income to Net Revenues 42.2% 46.2%

Your Bank posted net revenues (Net Interest Income and other income) of Rs. 1,364 crore and Net Profit of Rs. 478 crore for the Financial Year 2009-10. Net Revenues and Net Profit for the Financial Year 2008-09 was Rs. 946 crore and Rs. 304 crore respectively. Appropriations from the Net Profit have been effected as per the table on the earlier page. Please refer to the section on FINANCIAL AND OPERATING PERFORMANCE in Management Discussion and Analysis for a detailed analysis of financial data.

Dividend

In view of the excellent financial performance of your Bank and encouraging future outlook as well as the objective of rewarding shareholders with cash dividends while retaining capital to maintain a healthy Capital Adequacy Ratio, to support future growth, the Board of Directors have recommended maiden Dividend at a rate of Rs. 1.50/- per equity share.

Capital Raising & Capital Adequacy Ratio (CAR)

The Members of the Bank at their Fifth Annual General Meeting held on September 3, 2009 had approved the issuance of the equity shares to Qualified Institutions Buyers under Qualified Institutions Placement (QIP).The Bank had launched the QIP in the month of January 2010 and had received a tremendous response to the issue, raising US$225 Million (Rs. 1033.88 crore) at a rate of Rs 269.50 per share. Your Bank has utilised the proceeds of the issue of equity shares under QIP for enhancing the solvency, Capital Adequacy Ratio and for general corporate purposes.

The paid-up capital of your Bank increased to Rs. 340 crore as at March 3 1,2010 from Rs. 297 crore as at March 31,2009, post exercise of 43,25,630 employee stock options and allotment of 3,83,62,709 equity shares under Qualified Institutions Placement during the Financial Year 2009-10.

Your Bank also raised a sum of Rs. 82 crore by way of Tier I perpetual bonds, Rs. 93 crore by way of UpperTier II capital and Rs. 560 crore by way of LowerTier II subordinated bonds during the Financial Year 2009-10. Your Bank has utilised the proceeds of the issue of Tier I Perpetual Bonds and Upper & Lower Tier II capital to augment the long-term capital resources and to enhance the Capital Adequacy Ratio (CAR) for successfully implementing its growth plans.

In line with the RBI circular on Capital Adequacy Framework your Bank has computed capital charge for operational, market and credit risk and its Capital Adequacy Ratio as per Basel II accord as at March 31, 2010.

Your Bank is well capitalised with a Capital Adequacy Ratio (as per Basel II) of 20.6% as at March 31, 2010; of which Tier I Capital Ratio was 12.9% and Tier II Capital Ratio was 7,7%. The rating profile of your Banks exposure has resulted in an overall reduction in the risk weighted assets of your Bank and an improved Capital Adequacy Ratio under Basel (II) accord (20.6%) as compared to Basel (I) accord (17.3%) as at March 31, 2010. As at March 31, 2009, the Capital Adequacy Ratio of the Bank was 16.6% as per Basel II accord.

Employees Stock Option Scheme

Your Bank has instituted Stock Option Plans to reward and retain employees and to enable them to participate in your Banks future growth and financial success. The Stock Option Schemes also enable the Bank to hire the best talent for its senior management and key positions. The Bank has five Employee Stock Option Schemes viz. Joining Stock Option Plan I (JSOP I), Joining Employee Stock Option Plan II (JESOP II), Joining Employee Stock Option Plan III (JESOP lll),YBL ESOP (consisting of two sub schemes JESOP IV/PESOP I) and YBL JESOP V/PESOP II (Consisting of two sub schemes JESOP V/ PESOP II).

The Employee Stock Option Plans are administered by the Board Remuneration Committee of the Bank.

The details of the grants/allocations under JSOP I, JESOP II, JESOP III.YBL ESOP andYBLJESOPV/PESOP II respectively are as follows:

Directors

The Board, on nomination by the Indian Promoter; Mr Rana Kapoor, has appointed Mr S. L Kapur, currently a Director of the Bank as a Non Executive Part Time Chairman of the BankThe appointment is w.e.f. April 27, 2010.The approval of Members in this regard is being sought at the ensuing Annual General Meeting of the BankThe Reserve Bank of India vide its letter DBOD No. 14882/29.47.001 /2009-10 dated February 25,2010 has approved the appointment of Mr S. L Kapur as the Non Executive Part time Chairman of the Bank for a period of I (one) year

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Bank, Ms. Radha Singh and Mr Ajay Vohra shall retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

Corporate Governance

Your Bank is committed to achieving the highest standards of Corporate Governance. Accordingly, your Board functions as trustees of the shareholders and seeks to ensure that the long- term economic value for its shareholders is achieved while balancing the interest of all the stakeholders.

A separate section on Corporate Governance standards followed by your Bank as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is enclosed as an Annexure to this report.

Auditors

M/s. B S R & Co, Chartered Accountants will retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment, subject to the approval of the Reserve Bank of India. Members are requested to consider their re-appointment on a remuneration to be decided by the Board or Committee thereof for the ensuing Financial Year i.e. 2010-11.

Statutory Disclosures

The statement containing particulars of employees as required under Section 217 (2A) of the Companies Act, 1956 forms part of this report. In terms of Section 2l9(l)(b)(iv) of the Act, the same is open for inspection at the Registered Office of your Bank. Copies of this statement may be obtained by the members by writing to the Company Secretary of your Bank.

The provisions of Section 217( I )(e) of the Companies Act, 1956 do not apply to your Bank. Your Bank is constantly pursuing its goal of technological upgradation in a cost efficient manner for delivering quality customer service.

Directors Responsibility Statement

Pursuant to the requirement under Section 2I7(2AA) of the Companies Act, 1956, with respect to the Directors Responsibility Statement, it is hereby confirmed that:

(I) in the preparation of the accounts for the Financial Year ended March 31,2010 the applicable accounting standards have been followed along with proper explanation relating to material departures;

(II) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as at March 31,2010 and of the profit of the Bank for the year under review;

(III) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities; and

(VI) the Directors have prepared the annual accounts of the Bank on agoing concern basis.

Acknowledgement

Your Directors take this opportunity to express their deep and sincere gratitude to the customers of the Bank for their confidence and patronage, as well as to the Reserve Bank of India, Government of India and Regulatory Authorities for their co-operation, support and guidance,Your Directors would like to express a deep sense of appreciation for the commitment v shown by the employees in supporting the Bank in its endeavour to create the BEST QUALITY BANK OF THE WORLD IN INDIA.Your Directors would also like to express their gratitude to the members for their trust and support.

For and on behalf of the Board of Directors

Rana Kapoor Bharat Patel S.L. Kapur Arun K. Mago Managing Director & CEO Director Non Executive Chairman Director

Place: Mumbai Date: April 27,2010

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