The Directors have pleasure in presenting the 31^st Annual Report on the business and operations of the Fedbank Financial
Services Limited ("Fedfina" / "the Company") together with the Audited Financial Statements for the Financial Year ended
31^st March, 2026 ("year under review").

FINANCIAL HIGHLIGHTS

The key highlights of the Audited Financial Statements are presented in the table below:

Highlights of Performance

The total revenue of the Company for the financial year ended 31^st March, 2026 has increased to '' 2,22,661 Lakhs as against
'' 2,07,982 Lakhs for the previous year ended 31^st March, 2025. Similarly, Net Interest Income (NII) grew by 15% from '' 1,07,080
Lakhs in FY 2024-25 to '' 1,22,975 Lakhs in FY 2025-26. The revenue increased by 7% on the back of growth of 23% in loan
book during the year. The net profit of the Company increased by 53% to '' 34,360 Lakhs for the financial year ended 31^st March,
2026, as against '' 22,518 Lakhs for the financial year ended 31^st March, 2025. The Net worth of Company at the end of previous
financial year, i.e. 31^st March, 2025, was '' 2,54,736 Lakhs and closing Net worth as on 31^st March, 2026, was '' 2,92,610 Lakhs.

Growth in Business

As of 31^st March, 2026, the AUM increased by 27.5% compared to FY 2024-25, reaching '' 20,15,314 Lakhs while disbursements
improved by 67.18% to '' 31,41,014 Lakhs.

Over the past year, '' 2,43,265 Lakhs of the gold loan AUM was through co-lending, and the Company conducted portfolio sell-
down transactions totaling '' 2,57,933 Lakhs. At the end of the year, 12.1% of the AUM was off the books.

CREDIT RATING

The Company has obtained credit ratings from India Ratings & Research Private Limited, CARE Ratings Limited, CRISIL Limited
and ICRA Limited.

The details of all the credit ratings obtained as on 31^st March, 2026 are given below:

EXPANSION OF NETWORK

The Company has broadened its geographical presence by establishing new branches in different locations, thereby enhancing
accessibility for its customers. With the opening of 148 branches, the branch network has now reached to 757 branches as on
31^st March, 2026 across 17 states for different products and the break-up is as follows:

BUSINESS OVERVIEW

The Company has maintained a stable performance with a focus on credit quality and returns. Its strong parentage and robust
credit rating have enabled access to equity and debt on competitive terms. The Company offers a diversified range of products
catering to underpenetrated market segments, which have demonstrated growth potential. The Company has a dedicated
workforce of 5303 employees spread across 17 states and union territories.

There is no change in the nature of business of the Company for the year under review. Further information on the business
overview and outlook and state of the affairs of the Company is discussed in detail in the Management Discussion & Analysis
Report.

DIVIDEND

In view of the planned business growth, the Board deems
it proper to preserve the resources of the Company for its
activities and therefore, do not propose any dividend for the
financial year ended 31^st March, 2026.

DIVIDEND DISTRIBUTION POLICY

Since the Company is one of the top 1000 listed Companies
as per market capitalisation as on 31^st March, 2026 and
in accordance with the Regulation 43A of Securities and
Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015 (SEBI Listing Regulations),
the Dividend Distribution Policy is available on the website
of the Company athttps://www.fedfina.com/site/assets/
files/2898/dividend distribution policy.pdf

AMOUNT PROPOSED TO BE TRANSFERRED TO STATUTORY
RESERVES

The Board of Directors has proposed a transfer of '' 6,872
Lakhs to the Statutory Reserves maintained under Section
45IC of the RBI Act, 1934.

ASSET-LIABILITY MANAGEMENT

The Company follows a well-defined Asset Liability
Management (ALM) system, driven by Asset Liability
Committee (ALCO), to monitor efficiently and pursue
appropriate policy initiatives.

Liquidity positions are examined regularly across the
specified time buckets to assess and manage mismatches.
The ALM policy and practices of the Company are in line
with the regulatory guidelines, designed to protect
against liquidity as well as interest rate risk challenges
and to optimise cost of funds at all times to fund growth
requirements.

The Company maintains a robust ALM framework, overseen
by the ALCO, to ensure prudent monitoring and strategic
decision making. This system enables the Company to
effectively manage liquidity and interest rate risks while
aligning with business growth objectives.

Liquidity positions are reviewed regularly across defined time
buckets to identify and address any potential mismatches.
The Company’s ALM policy and practices are fully compliant
with regulatory guidelines and are structured to mitigate
liquidity and interest rate risks. In doing so, the Company
aims to optimise the cost of funds and support sustained
growth.

CHANGES IN CAPITAL STRUCTURE
Authorised Share Capital of the Company:

The Authorised Share Capital of the Company is
'' 10,00,00,00,000/- (Rupees One Thousand Crores only)
consisting of 99,00,00,000 (Ninety-nine Crores) equity

shares of '' 10/- (Rupees Ten) each and 1,00,00,000 (One
Crores) 0.01% non-cumulative redeemable preference
shares of face value '' 10 (Rupees Ten) each.

Issued, Subscribed and Paid-up Share Capital of the
Company:

The Issued, Subscribed and Paid-up share capital of the
Company changed from '' 3,72,71,68,540/- comprising of
37,27,16,854 Equity shares of face value of '' 10 each to
'' 3,74,20,61,010/- comprising 37,42,06,101 of Equity shares
of face value of '' 10 each.

The issued, subscribed and paid-up share capital increased
due to allotment of equity shares under the Employee Stock
Option Plan (ESOP) to eligible employees upon exercise
of vested options. During the year under review, 14,89,247
equity shares of face value of '' 10/- each were allotted
pursuant to exercise of stock options by the employees of
the Company under The Fedbank Financial Services Limited
- Employees Stock Option Plan 2018, as amended.

ISSUE OF DEBENTURES

During the period under review, the Board of Directors at their
Meeting held on 25^th August, 2025, approved the issuance of
Non-Convertible Debentures ("NCDs") up to '' 2,500 Crores,
in one or more tranches, on a private placement basis,
subject to the approval of the shareholders.

Pursuant to the aforesaid approval and approval of the
Shareholders obtained at the Annual General Meeting held on
29^th September, 2025, the Company, during the year, issued
and allotted the following Non-Convertible Debentures on a
private placement basis:

• 20,000 (Twenty Thousand) Rated, Listed, Senior,

Secured, Redeemable, Non-Convertible Debentures
having a face value of '' 1,00,000/- (Rupees One
Lakh only) each, aggregating up to '' 200,00,00,000/-
(Rupees Two Hundred Crore only), carrying a coupon of
7.29% p.a., allotted on 6^th January, 2026.

• 25,000 (Twenty-Five Thousand) Rated, Listed,

Unsecured, Subordinated, Redeemable, Non¬

Convertible Debentures having a face value of
'' 1,00,000/- (Rupees One Lakh only) each, aggregating
up to '' 250,00,00,000/- (Rupees Two Hundred and Fifty
Crores only), carrying a coupon of 8.85% p.a., allotted
on 24^th March, 2026; and

• 20,000 (Twenty Thousand) Rated, Listed, Unsecured,
Subordinated, Redeemable, Non-Convertible
Debentures having a face value of '' 1,00,000/-
(Rupees One Lakh only) each, aggregating up to
'' 200,00,00,000/- (Rupees Two Hundred Crores only),
carrying a coupon of 8.90% p.a., allotted on 24^th March,
2026.

MANAGEMENT DISCUSSION AND ANALYSIS ("MDA")

In compliance with the Regulation 34 of the SEBI Listing
Regulations, a separate section on Management Discussion
and Analysis which includes details on the state of affairs of
the Company forms part of this Annual Report.

CORPORATE GOVERNANCE

Corporate Governance has been an integral part of the way
the Company has been doing business since inception. The
Company believes that good Corporate Governance emerges
from the application of the best and sound management
practices and compliance with the laws coupled with
adherence to the highest standards of transparency and
business ethics.

The Company seeks to embed and sustain a culture that
will enable us to achieve our objectives through effective
corporate governance and enhance transparent engagement
with key stakeholders.

A separate report on Corporate Governance setting out the
governance structure, principal activities of the Board and its
Committees and the policies and practices that enable the
Board to fulfil its stewardship responsibilities together with
a Certificate from the Secretarial Auditor of the Company
confirming the compliances with the Corporate Governance
requirements as stipulated under SEBI Listing Regulations
forms part of this Annual Report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY
REPORTING (''BRSR'')

In compliance with Regulation 34(2)(f) of the SEBI Listing
Regulations, as applicable, the Business Responsibility
and Sustainability Report (BRSR) of the Company for the
financial year ended 31^st March, 2026, forms part of this
Annual Report as a separate report.

The BRSR provides a comprehensive overview of the
Company’s Environmental, Social, and Governance (ESG)
initiatives, disclosures, and performance. It reflects the
Company’s commitment to responsible and sustainable
business practices, aligned with the expectations of its
stakeholders and regulatory requirements.

EMPLOYEES STOCK OPTION SCHEME

The Company had formulated the Employees Stock Option
Scheme, 2018 ("ESOS, 2018"), duly approved by the
shareholders of the Company to enable its employees to
participate in the future growth and financial success of the
Company. The Company also intends to use this ESOS, 2018
to attract and retain talent in the organisation. The Employee
Stock Option Scheme was formulated in accordance with
the SEBI guidelines, as amended from time to time. The
eligibility and number of options to be granted to an employee
is determined on the basis of various parameters such as
scale, designation, performance, grades, period of service,
Company’s performance and such other parameters as may
be decided by the Nomination & Remuneration Committee
of the Board from time to time in its sole discretion.

Further, a scheme titled ''Fedbank Financial Services
Limited- Employees Stock Option Scheme, 2024’ ("ESOS
2024") in accordance with the Securities and Exchange
Board of India (Share Based Employee Benefits and Sweat
Equity) Regulations, 2021 for the benefit of employees
was approved by the Shareholders at the AGM held on 19^th
September, 2024.

During the year under review, 14,89,247 equity shares of face
value of '' 10/- each were allotted to employees pursuant to
exercise of stock options by the employees of the Company
under ESOS 2018.

Other statutory disclosures as required under Regulation
14 of Securities and Exchange Board of India (Share Based
Employee Benefits and Sweat Equity) Regulations, 2021 and
Rule 12 of the Companies (Share Capital and Debentures)
Rules, 2014 on ESOS is available on the website of the
Company athttps://fedfina.com/site/assets/files/181670/
disclosure pursuant to regulation 14 of sebi sbeb
regulations- 2021 as on march 31- 2026.pdf

NOMINATION AND REMUNERATION POLICY

The Company has formulated Nomination and Remuneration
Policy under the provisions of Section 178 of the Act and
SEBI Listing Regulations and the same is uploaded on the
website of the Company athttps://www.fedfina.com/site/
assets/files/2898/nomination remuneration policy.pdf.

The Company has also formulated Compensation Policy in
accordance with the RBI Circular dated 29^th April, 2022.

ALTERATION OF MEMORANDUM AND ARTICLES OF
ASSOCIATION

During the year under review, there were no changes in the
Memorandum and Articles of Association of the Company.
However, the Board of Directors of the Company have,
subject to the approval of the shareholders of the Company,
approved alteration of Articles of Association of the Company
which is given in the Notice of the 31^st AGM, being sent with
this Annual Report.

The existing Memorandum and Articles of Association of the
Company are in compliance with the applicable provisions of
the Companies Act, 2013 and SEBI Listing Regulations.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

The composition of the Board is in accordance with Section
149 of the Companies Act, 2013 and Regulation 17 of the

SEBI Listing Regulations with an optimum combination
of Executive, Non-executive and Independent Directors
including two women directors.

As on the date of this report, the Board of Directors of the
Company comprised of five (5) Independent Directors, one
(1) Non-Executive Non-Independent Chairman, two (2)
Nominee Directors and one (1) Managing Director & CEO
(MD & CEO).

The Company has a Non-executive Chairman who is not
related to the MD & CEO.

Changes in the Directorship

During the year under review and till the date of the Report,
following changes took place in the composition of the
Board of Directors of the Company:

Mr. Muralidharan Rajamani (DIN: 01690363) was appointed
as an Independent Director (Additional) of the Company with
effect from 24^th January, 2025, and his appointment was
subsequently approved by the shareholders on 16^th April,
2025 vide Special Resolution through Postal Ballot.

Mr. Maninder Singh Juneja (DIN: 02680016), Nominee
Director representing True North Fund VI LLP resigned from
the Board with effect from 14^th May, 2026 following the exit
of True North Fund VI LLP from the Company. He confirmed
that there were no other material reasons for his resignation.

Section 152 of the Act provides that unless the Articles
of Association provide for retirement of all directors at
every AGM, not less than two-third of the total number of
directors of a public company (excluding the Independent
Directors) shall be persons whose period of office is liable to
determination by retirement of directors by rotation, of which
one-third are liable to retire by rotation.

Accordingly, Mr. Harsh Dugar (DIN: 00832748) will retire by
rotation at the ensuing AGM and being eligible, has offered
himself for reappointment.

Changes in Key Managerial Personnel (KMP)

• Mr. Rajaraman Sundaresan ceased to be the Company
Secretary & Compliance Officer and KMP of the
Company from close of business hours on 31^st July,
2025 pursuant to completion of his term.

• Upon recommendation of Nomination and Remuneration
Committee, the Board at its meeting held on 28^th July,
2025 appointed Mr. Parthasarathy Iyengar as Company
Secretary & Compliance Officer and a KMP of the
Company with effect from 1^st August, 2025.

There were no other changes except as above in the
composition of the Board of Directors and KMP of the
Company during the year under review and as on the date
of this report.

BOARD MEETINGS HELD DURING THE YEAR

During the year under review, Board of Directors met 11
times and the gap between any two meetings did not exceed
one hundred and twenty days.

The dates on which the meetings were held are 23^rd April,
2025, 28^th April, 2025, 29^th April, 2025, 2^nd May, 2025, 28^th July,
2025, 25^th August, 2025, 17^th October, 2025, 7^th November,

2025, 15^th January, 2026, 26^th February, 2026 and 3^rd March,

2026.

Details of the meetings and attendance thereat forms part of
the Report on Corporate Governance.

DECLARATION FROM INDEPENDENT DIRECTORS

There were five (5) Independent Directors on the Board of the
Company as on 31^st March, 2026. The Independent Directors
have submitted declarations that they continue to fulfil the
criteria of independence laid down under Section 149 of
the Companies Act, 2013, Regulation 16 of SEBI Listing
Regulations and complied with the Code for Independent
Directors prescribed in Schedule IV to the Act.

The Independent Directors have confirmed that they are not
aware of any circumstance or situation, which exists or may
be reasonably anticipated, that could impair or impact their
ability to discharge their duties with objective judgement and
without any external influence.

In the opinion of the Board, the Independent Directors are
eminent persons and possess requisite qualifications,
integrity, expertise and experience in the relevant functional
areas.

All the Independent Directors have a valid registration in
the Independent Director’s databank of the Indian Institute
of Corporate Affairs as required under Rule 6(1) of the
Companies (Appointment and Qualification of Directors)
Rules, 2014.

INDEPENDENT DIRECTORS'' MEETING

Pursuant to the Act and SEBI Listing Regulations, the
independent directors must hold at least one meeting in
a financial year without attendance of Non-independent
directors and members of the Management. Accordingly,
meeting of independent directors of the Company was
convened on 25^th August, 2025, and was subsequently
adjourned due to paucity of time and concluded on
12^th September, 2025. The Independent Directors:

• noted the report of performance evaluation of the Board
and committees for the FY 2024-25;

• reviewed the performance of Non-independent
directors and the Board as a whole;

• reviewed the performance of the Chairman of the
Board, taking into account the views of executive and
Non-executive directors; and

• assessed the quality, quantity, and timeliness of flow of
information between the Company’s Management and
the Board that is necessary for the Board to effectively
and reasonably perform their duties.

Suggestions of the Independent Directors were noted by the
Board.

BOARD EVALUATION

The Company has defined a manner of evaluation as per
the provisions of the Act and SEBI Listing Regulations and
formulated a method for the evaluation of the performance
of the Board, its committees and individual Directors. The
annual evaluation of the performance of the individual
Directors (including the Chairman of the Board) was
conducted on parameters such as level of engagement
and contribution and independence of judgment - thereby
safeguarding the interests of the Company.

The performance evaluation of the Independent Directors
was carried out by the entire Board, excluding the director
being evaluated. The performance evaluation of the
Chairman, the Non-Independent Directors and Board as a
whole was carried out by the Independent Directors. The
Board also carried out annual performance evaluation of the
working of each of its Board constituted Committees.

All the Directors have confirmed that they satisfy the ''fit and
proper’ criteria in terms of the provisions of Master Direction-
Reserve Bank of India (Non-Banking Financial Companies-
Governance) Directions, 2025 as amended from time to time
and that they are not disqualified from being appointed/
re-appointed/continuing as Director in terms of Section
164(1) and (2) of the Act. None of the Directors of the
Company are disqualified and/or debarred as per the
applicable provisions of the Act and the Securities and
Exchange Board of India.

The Directors have expressed their satisfaction with the
evaluation process. The Board opined that the Board
Committees’ composition, structure, processes and
working procedures are well laid down and that the Board
Committees members have adequate expertise drawn from
diverse functions, industries and business and bring specific
competencies relevant to the Company’s business and
operations.

All Board members and senior management personnel have
affirmed compliance with the Company’s code of conduct
for the FY 2025-26.

COMMITTEES

Details on composition of various Committees of the
Board, terms of reference and number of meetings of the
Committees held are given in the Corporate Governance
Report which forms part of the Annual Report.

COMPLIANCE WITH THE SECRETARIAL STANDARDS

During the year under review, the Company has complied
with the applicable secretarial standards issued by the
Institute of Company Secretaries of India.

THE CHANGE IN THE NATURE OF BUSINESS, IF ANY

There was no change in the nature of business of the
Company during the financial year ended 31^st March, 2026.

HUMAN RESOURCE

The Company has always prided itself in being a people first
organisation. Our evolved digitised onboarding assisted us
in seamless joining for new joiners in different geographies
where we have expanded our presence. Our employee
strength has grown by 6.3% over the previous year, in line
with our business expansion plans. Our concentration
revolves around continuous growth, culture and a learning
experience. To nurture this talent, the Company has
implemented practices focused on skill enhancement
through regular training sessions, leadership development
programs, and a transparent performance management
system. Additionally, priority is given to maintaining a healthy
work-life balance for our employees, believing it enhances
their productivity and motivation.

1. Restart with Fedfina:

As part of our continued commitment to promoting
gender diversity and inclusion, the Company continued
the Restart with Fedfina initiative, to help women
professionals with career breaks an opportunity to
re-enter the workforce to rebuild their careers.

2. Digital Recruitment & In-house Background
Verification:

We have an in-house recruitment module with sole
purpose to automate the recruitment process, making
it more efficient and structured for the organisation. It
aims to minimise the TAT and enhance recruitment
experience for both interviewer and candidates by
providing a centralised platform.

We also have an Internal BGV to ensure that an
applicant''s background is thoroughly evaluated, that
there is no criminal history, and that the individual is the
best fit for the company. This process decreases BGV''s
costs, reduces dependency on external vendors, lowers
risks, prevents fraud, and ensures that the business
complies with legal requirements.

3. Apprentice Program:

This year we have on boarded over 400 apprentices
under National Apprenticeship Promotion Scheme

(NAPS) by the Government with an objective to develop
skilled workforce, enhance employability, and foster a
pipeline of talent for industries. They focus on providing
practical, on-the-job training alongside theoretical
learning, leading to nationally recognised qualifications
and increased career opportunities for apprentices.

4. Capability Building:

We are continuing our endeavours to build capabilities
across the organisation through our learning
interventions. Few of them are,

D.R.E.A.M. - A structured capability development
journey for Relationship Managers, focused on
strengthening sales effectiveness, customer
engagement, and overall business performance.

Gurukul Training, monthly learning sessions jointly
facilitated by Business, Quality and Credit teams to
reinforce product knowledge, process excellence, policy
understanding and the sharing of field best practices.

Story-Based Learning, a learning initiative that draws
lessons from renowned books and movies, making
leadership, teamwork, communication, and behavioural
concepts engaging and relatable.

Professional Skill Development Sessions - Learning
interventions focused on enhancing workplace
effectiveness through topics such as time management,
MS Office productivity, collaboration, communication,
and other essential professional skills.

ACE Assessments - Capability assessments
conducted across key business functions to benchmark
knowledge levels, identify learning priorities.

5. Leadership Development:

The Company is continuing to invest in building
leadership pipeline through various development
initiatives across levels.

Utkarsh Program, a structured leadership
development program for Area and Regional Business
Heads, designed to strengthen people leadership,
accountability, and business performance.

Compass, a capability-building initiative for people
managers focused on developing essential managerial
skills, enabling them to lead teams effectively, drive
performance, and create a positive team culture.

Leadership League Network, a CXO-led mentorship
and knowledge-sharing platform that provides

employees with an opportunity to engage directly with
senior leaders, gain business insights, and learn from
their leadership experiences.

Leadership Dialogues, an interactive speaker series
featuring accomplished industry leaders, aimed
at inspiring employees through conversations on
leadership, career growth, ownership, resilience, and
professional excellence.

6. Employee Experience & Engagement:

We continued to foster an engaging, inclusive and
collaborative workplace through various employee
engagement initiatives. Few of them are,

Sakhi@Fedfina, a dedicated platform for the
engagement and development of women employees,
featuring discussions and initiatives focused on
wellbeing, career growth, leadership, and personal
development. As part of this initiative, Power Within
Us brought together four of our women leaders to
share their journeys and inspire employees through
conversations on leadership, resilience, and growth on
this Women''s Day.

Fedfina Cricket League, an annual cricket tournament
that brings together employees of regional offices,
fostering camaraderie, teamwork, and a spirit of healthy
competition while strengthening cross-functional
relationships.

Employee Engagement Calendar, a year-round
calendar of engagement initiatives including festival
celebrations, competitions, recognition activities, and
team-building events aimed at strengthening employee
morale and workplace culture.

7. Employee Voice & Connection:

We continued to create regular opportunities for
listening, dialogue, and meaningful employee
interactions.

Mad • Sad • Glad, a structured team engagement
exercise that encourages employees to openly share
their positive experiences, concerns, and suggestions,
helping managers understand team sentiment and
identify opportunities for improvement.

Filter Kappi, an Informal leadership connect session
that provides employees with an open platform to
interact with senior leaders, exchange ideas, ask
questions, and strengthen organisational transparency.

8. Community & Social Impact:

We encouraged employees to contribute to meaningful
social causes through various volunteering initiatives,
including, Blood Donation Drives and Annapurna

Grain Drive, participation in TATA marathon to support
Cuddles Foundation.

PARTICULARS OF EMPLOYEES

Disclosures relating to remuneration and other details as
required in terms of the provisions of Section 197(12) of
the Act read with Rule 5(1) of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 are
given in Annexure I which forms part of this Report.

Further, in accordance with the provisions of Sections 197(12)
& 136(1) of the Act read with the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014,
the list pertaining to the names and other particulars of
employees drawing remuneration in excess of the limits set
out in the aforesaid Rules, is kept open for inspection during
working hours at the Registered Office of the Company and
the Report & Accounts as set out therein are being sent
to all the Members of the Company. Any Member, who is
interested in obtaining these, may write to the Company
Secretary at the Registered Office of the Company.

CAPITAL ADEQUACY

The Company''s capital adequacy ratio stood at 22.4% as on
31^st March, 2026 which is well above the threshold limit of
15% prescribed by the Reserve Bank of India. Tier-I Capital
ratio alone stood at a healthy 17.53%.

PUBLIC DEPOSITS

The Company is a Non-Deposit taking Systematically
Important NBFC and has not accepted public deposits
falling under purview of provisions of Section 73 of the Act
during the year. Hence the requirement of furnishing the
details in terms of Chapter V of the Companies Act, 2013 is
not applicable.

RISK MANAGEMENT POLICY

Risk management forms an integral part of our business.
The Company has a Board approved Enterprise Risk
Management Policy that lays down the overall framework
for identifying, assessing, measuring and monitoring
various elements of risk involved in the businesses and
for formulation of procedures and systems for mitigating
such risks. The main objective of this policy is to ensure
sustainable and prudent business growth. The Company has
defined the Risk Appetite Statement (RAS) for monitoring all
critical risks and ensuring compliance to the RAS.

The Risk Management Committee, a dedicated board-level
committee, plays a pivotal role in continuously reviewing,
approving, and refining our risk management policies and
procedures and governing framework for each type of
risk on a regular periodicity. The Committee monitors the
compliance of risk parameters and aggregate exposures
within the defined limits.

Directors have basis recommendation of Risk Management
Committee adopted ICAAP Policy and Framework with
the objective of ensuring availability of adequate capital to
support all risks in business and also to enable an effective
risk management system in the Company.

Additionally, the Company has Operational Risk Management
Policy with an objective to improve the effectiveness of
Operational Risk Management of the Company and enhance
its Operational Resilience.

The Company continues to invest in people, processes,
training and technology; so as to strengthen its overall Risk
Management Framework.

AUDITORS1. STATUTORY AUDITORS & THEIR REPORT

M/s. KKC & Associates LLP Chartered Accountants
(Firm Registration No. 105146W / W100621) were
appointed as Statutory Auditors of the Company by
the members of the Company for a term of three years

i.e. from the conclusion of 29^th Annual General Meeting
(AGM) held on 19^th September, 2024 till the conclusion
of the 32^nd Annual General Meeting.

M/s. KKC & Associates LLP Chartered Accountants,
(Firm Registration No. 105146W / W100621) have
confirmed that they have subjected themselves to
Peer Review process by the Institute of Chartered
Accountants of India ("ICAI") and hold valid certificate
issued by the Peer Review Board of ICAI.

Further, M/s. KKC & Associates LLP Chartered
Accountants, (Firm Registration No. 105146W /
W100621) conducted the statutory audit for
FY 2025-26. There are no qualifications, reservations,
adverse remarks or disclaimers made by the Statutory
Auditors in their Audit Report for FY 2025-26. The notes
to the accounts referred to in the Auditors’ Report are
self-explanatory and therefore do not call for any further
clarifications under Section 134(3) (f) of the Act. Your
Company continues to adopt best practices to ensure
a regime of financial statements with unmodified audit
opinion.

In accordance with the Reserve Bank of India (Non¬
Banking Financial Companies - Statutory Audit)
Directions, 2026 dated 31^st July, 2026 ("RBI Directions"),
Non-Banking Financial Companies (NBFCs) having an
asset size of '' 15,000 Crores or more as at the end of
the previous year are required to appoint joint statutory
auditors, comprising a minimum of two audit firms.

Pursuant to the said regulatory requirement and based
on the recommendation of the Audit Committee, the
Board of Directors has approved the appointment of

M/s. V Sankar Aiyar & Co., Chartered Accountants,
(Firm Registration No. 109208W) as one of the Joint
Statutory Auditors of the Company for a term of three
(3) consecutive financial years, commencing from the
conclusion of the 31^st Annual General Meeting (AGM)
and continuing until the conclusion of the 34^th AGM,
subject to the approval of the members at the ensuing
AGM.

M/s. V. Sankar Aiyar & Co., Chartered Accountants,
(Firm Registration No. 109208W) have confirmed their
eligibility and compliance with the provisions of Section
139 and Section 141 of the Companies Act, 2013, read
with the rules made thereunder, and have also affirmed
that they meet the criteria prescribed under the
Chartered Accountants Act, 1949 and the regulations
framed thereunder. They have further confirmed that
they are not disqualified from being appointed as Joint
Statutory Auditors of the Company.

Adoption of Policy for appointment of Statutory
Auditors

In compliance with the RBI Directions, the Company
has in place a Policy for appointment of Statutory
Auditors of the Company.

2. SECRETARIAL AUDITORS & THEIR REPORT

DKJ & Associates, Company Secretaries were appointed
as the Secretarial Auditors to conduct the Secretarial
Audit for the financial year ended 31^st March, 2026.
The Report of the secretarial auditors in the prescribed
Form MR-3 is set out in Annexure-II to this Report.
The Secretarial Audit Report does not contain any
qualifications, reservation or adverse remark.

FRAUD REPORTING

Pursuant to the Board approved ''Fraud Risk Management
and Fraud Investigation Policy’ of the Company, information
relating to all frauds are reported to the Audit Committee of
the Board on quarterly basis.

During the year under review, frauds detected have been
timely reported to the Audit Committee/Board as well as to
the Reserve Bank of India (RBI) amounting to '' 110 Lakhs.

Pursuant to the section 143(12) of the Companies Act, 2013,
no frauds were reported by the Auditors of the Company to
the Audit Committee during the year under review.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company believes that strong internal control system
and processes play a critical role in the health of the
Company. The Company has instituted adequate internal
control systems commensurate with the nature of its
business & size of operations. The Company’s well-defined

organisational structure, documented policy guidelines,
defined authority matrix and internal controls ensure
efficiency of operations, compliance with internal policies
and applicable laws and regulations as well as protection
of resources. The internal control system is supplemented
by internal audits, regular reviews by the management and
standard policies and guidelines which ensure reliability
of financial and all other records. The Company’s Internal
Audit department performed regular reviews of business
processes to assess the effectiveness & adequacy of the
internal control systems, compliance with policies and
procedures. The Company upholds strong governance
with a risk-based internal audit framework to identify and
mitigate operational risks efficiently.

All significant audit observations of the internal auditors and
follow up actions were duly reported to the Audit Committee.

INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY

Internal Financial Controls laid down by the Company is
a systematic set of controls and procedures to ensure
orderly and efficient conduct of its business including
adherence to the Company’s policies, safeguarding of
its assets, prevention and detection of frauds and errors,
accuracy and completeness of the accounting records and
timely preparation of reliable financial information. Internal
financial controls not only require the system to be designed
effectively but also to be tested for operating effectiveness
periodically.

During the year under review, the Company had engaged a
firm of Chartered Accountants to evaluate the internal
financial control framework and to test its operating
effectiveness. Based on the testing conducted by the
aforesaid firm, the Board is of the view that the Company
has laid down adequate internal financial controls
commensurate with the nature and size of its business
operations and these controls are adequate and operating
effectively and no material weaknesses have been observed.

RELATED PARTY TRANSACTIONS

All the related party transactions that were entered into
during the financial year were on arm’s length basis and in
the ordinary course of business.

The related party transactions were placed before the Audit
Committee on a quarterly basis. Transactions with related
parties, as per the requirements of Accounting Standards,
are disclosed in the notes to accounts annexed to the
financial statements.

All the related party transactions that were entered into
during the financial year were on arm’s length basis and
in ordinary course of business. There were no contracts or
arrangements entered into with related parties referred to in

Section 188(1) of the Act during FY 2025-26 and hence Form
AOC-2 is not required to be enclosed with Directors’ Report
in accordance with Rule 8(2) of the Companies (Accounts)
Rules, 2014.

The Related Party Transactions Policy has been hosted on
the website of the Company at:https://www.fedfina.com/
site/assets/files/2898/related party transactions policy.
pdf.

The Shareholders of the Company through Postal Ballot
Notice dated 28^th April, 2025, accorded their approval for
entering into and/or carrying out and/or continuing with
material related party transaction(s) with Federal Bank
Limited for FY 2025-26.

Further, the Shareholders of the Company through Postal
Ballot Notice dated 28^th April, 2026, accorded their approval
for entering into and/or carrying out and/or continuing with
material related party transaction(s) with Federal Bank
Limited for FY 2026-27 and till one year from the effective
date of passing of this resolution.

In order to align the approval process with the AGM cycle,
and to regularise shareholder approvals from one AGM to
the next instead of through postal ballot, and considering
that such approvals are valid for a period of one year under
the SEBI Listing Regulations, the Company is placing the
proposal for approval of members at the ensuing AGM. The
approval sought covers the entering into and/or carrying
out and/or continuing of material related party transactions
with Federal Bank Limited from the date of the 31^st Annual
General Meeting up to the date of the next Annual General
Meeting of the Company, for a period not exceeding fifteen
months.

MATERIAL CHANGES AND COMMITMENTS AFFECTING
THE FINANCIAL POSITION OF THE COMPANY THAT
OCCURRED BETWEEN THE END OF THE FINANCIAL
YEAR TO WHICH THIS FINANCIAL STATEMENT RELATE
TILL THE DATE OF THIS REPORT

No material changes and commitments affecting the
financial position of the Company have occurred between
the Financial year ended 31^st March, 2026 till the date of this
report.

PARTICULARS OF LOANS, GUARANTEES AND
INVESTMENTS UNDER SECTION 186 OF THE COMPANIES
ACT, 2013

The Company, being a NBFC registered with RBI, is exempted
from complying with the provisions of section 186 of the
Act related to loans made, guarantees given and securities
provided. However, the details of investments made by the
Company pursuant to the provisions of Section 186 (4) of
the Act are given in Note 9 to the Financial Statements.

DISCLOSURES UNDER SEXUAL HARASSMENT OF
WOMEN AT WORKPLACE (PREVENTION, PROHIBITION &
REDRESSAL) ACT 2013

The Company has Prevention of sexual harassment (POSH)
policy which is in line with the requirements of The Sexual
Harassment of Women at the Workplace (Prevention,
Prohibition and Redressal) Act, 2013. The Company is in
compliance with the constitution of Internal Complaints
Committee (ICC) to redress complaints received regarding
sexual harassment. All employees (permanent, contractual,
temporary, trainees) are covered under this policy.

The following is a summary of sexual harassment complaints
received and dealt with during the year 2025-26:

• No. of complaints received: 3

• No. of complaints disposed of: 3

• No. of cases pending for more than ninety (90) days: 0

DISCLOSURES UNDER MATERNITY BENEFITS ACT 1961

The Company affirms its compliance with the provisions
of the Maternity Benefit Act, 1961, as amended. We remain
committed to supporting our women employees and
ensuring a workplace environment that upholds their rights
and well-being. The Company has extended all applicable
benefits under the Act, including paid maternity leave,
medical bonuses, nursing breaks, and, where required,
creche facilities.

DETAILS OF GOLD LOAN AUCTIONS

Details of Gold auction conducted:

CORPORATE SOCIAL RESPONSIBILITY

The Company has a Corporate Social Responsibility (CSR)
Committee in place in accordance with section 135 of the
Act. The CSR Committee has formulated and recommended
to the Board, a Corporate Social Responsibility Policy ("CSR
Policy") indicating the activities to be undertaken by the
Company, which has been approved by the Board. The CSR
Policy is available on the Company’s website at https://
www.fedfina.com/site/assets/files/855002/corporate
social responsibilty policy.pdf. The Company has spent
'' 5,83,63,482/- on CSR activities during the year under
review.

The required disclosure as per Rule 8 of Companies
(Corporate Social Responsibility Policy) Rules 2014 is
attached as Annexure III to this report.

RBI GUIDELINES

The Reserve Bank of India (RBI) granted the Certificate
of Registration to the Company in August 2010 vide
Registration No. N-16.00187, to commence the business of
a non-banking financial institution without accepting public
deposits. The Company is categorised as NBFC in Middle
layer pursuant to Reserve Bank of India (Non-Banking
Financial Companies - Registration, Exemptions and
Framework for Scale Based Regulation) Directions, 2025
(as amended from time to time) and has complied with and
continues to comply with all the applicable regulations and
directions of the RBI.

ANNUAL RETURN

Pursuant to section 92 (1) of the Companies Act 2013,
the Annual Return for the financial year 2025-26 is placed
on the website of the Company (https://www.fedfina.com/
investors-relations/reports/other-disclosures-reports/)

PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE INFLOW/OUTFLOW,
ETC

The requirements of disclosure with regard to Conservation
of Energy and technology absorption in terms of Section
134 of the Companies Act, 2013, read with the Companies
(Accounts) Rules, 2014, are not applicable to the Company
as it does not engage in any manufacturing facility.

The Company continues to invest in cutting edge
technology, which has resulted in automation of the loan
lifecycle process along with building a scalable and modular
application architecture. Customer centricity is a key focus
area in the Company’s digital initiatives. Our customers
also benefit from the doorstep model of loan disbursal.
These investments along with leveraged national digital
enablers like IndiaStack, Aadhaar eKYC, helps us to drive
growth.

We continue to focus on data protection, infrastructure
upgradation and also ensure complete adherence to
RBI policies. Investments have also been made in next
generation security and network monitoring tools.

The Company had availed total External Commercial
Borrowing (ECBs) of USD 250 Mn (Including March 2025:
USD 30 Mn) for financing prospective borrower as per the
ECB guidelines issued by Reserve Bank of India ("RBI") from
time to time. The borrowing has a maturity of three years. In
terms of the RBI guidelines, borrowings have been swapped
into rupees and fully hedged for the entire maturity by way
of cross currency swaps. The Company has not borrowed
any Foreign Currency (USD) denominated Term Loan other
than rollover of existing foreign currency borrowing facility
(31^st March, 2025: Nil). Such FCNR borrowings are currently
carried at '' 6,250 Lakhs as at 31^st March, 2026 (31^st March,
2025: '' 1 1,250 Lakhs).

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 134 of the Companies Act, 2013, the
Directors confirm 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) such accounting policies have been selected and
applied them consistently and made judgments and
estimates that are reasonable and prudent so as to

give a true and fair view of the state of affairs of the
Company at 31^st March, 2026 and of the profit and loss
of the Company for the financial year ended on that
date;

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

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

(e) internal financial controls to be followed by the
Company have been laid down and that such internal
financial controls are adequate and were operating
effectively; and

Explanation. —For the purposes of this clause, the term
"internal financial controls" means the policies and
procedures adopted by the Company for ensuring the
orderly and efficient conduct of its business, including
adherence to company''s policies, the safeguarding
of its assets, the prevention and detection of frauds
and errors, the accuracy and completeness of the
accounting records, and the timely preparation of
reliable financial information;

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

OTHER DISCLOSURES

In terms of applicable provisions of the Act, the Company

discloses that during the year under review:

i. The Company has not issued any shares with
differential rights and hence no information as per
provisions of Section 43(a)(ii) of the Act read with Rule
4(4) of the Companies (Share Capital and Debenture)
Rules, 2014 is furnished.

ii. The Company has not issued any sweat equity shares
and hence disclosure as per provisions of Section 54(1)
(d) of the Act read with Rule 8(13) of the Companies
(Share Capital and Debenture) Rules, 2014 is not
provided.

iii. There were no instances of non-exercising of voting
rights in respect of shares purchased directly by
employees under a scheme hence no information
pursuant to Section 67(3) of the Act read with Rule
16(4) of Companies (Share Capital and Debentures)
Rules, 2014 is furnished.

iv. There are no significant and material orders passed by
the regulators or courts or tribunals that would impact
the going concern status of the Company and its future
operations.

v. The Company has not made any application nor any
proceedings are pending under the Insolvency and
Bankruptcy Code, 2016.

vi. There were no instances of one-time settlement for any
loans taken from the Banks or Financial Institutions.

vii. There were no amounts required to be transferred
to Investor Education and Protection Fund (IEPF)
pursuant to section 124 and 125 of the Companies Act,
2013 read with Rules made thereunder.

viii. The Company being, a Non-Banking Financial Company
is not required to maintain cost records and the
requirement of cost audit as prescribed under section
148(1) of the Act is not applicable to the Company.

ix. The Company does not have any subsidiary, joint
venture or associate Company.

CAUTIONARY NOTE

Certain statements in this Report may be forward-looking
and are stated as may be required by applicable laws and
regulations. Actual results may vary from those expressed or
implied, depending upon economic conditions, Government
policies and other incidental/related factors.

ACKNOWLEDGEMENT

The Board of Directors place on record sincere gratitude to
all employees for their unwavering dedication, resilience,
and collaborative spirit. With such a strong foundation
and shared vision, we are confident in our ability to drive
continued success in the years ahead.

The Directors would also like to place on record, their
gratitude for the cooperation and guidance received from all
the statutory bodies, especially the RBI. The Directors also
thank the shareholders, clients, vendors, investors, banks
and other stakeholders in placing their faith in the Company
and contributing to its growth.

For and on behalf of the Board of Directors of
Fedbank Financial Services LimitedShyam Srinivasan

Chairman of the Board
DIN: 02274773

Your Directors take pleasure in presenting the 29^th Annual Report on the business and operations of the Fedbank Financial Services Limited ("Fedfina") together with the Audited Financial Statements for the Financial Year ended 31^st March, 2024 ("year under review").

FINANCIAL HIGHLIGHTS

The key highlights of the Audited Financial Statements are presented in the table below:

Highlights of Performance

The successful launch of Initial Public Offer (IPO) of your Company marked a significant milestone in the Company’s journey of growth and development. The IPO debuted on both the Stock Exchanges namely National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) on 30^th November, 2023. With an IPO size of '' 109,226 Lakhs, it was oversubscribed by over 2.2 times, widening our investor base to over 2.5 Lakhs.

The total revenue of the Company for the financial year ended 31^st March, 2024 has increased to '' 1,62,300 Lakhs as against '' 1,21,467 Lakhs for the previous year ended 31^st March, 2023. Similarly, Net Interest Income (NII) grew by 27.29% from '' 63,801 Lakhs in FY 2022-23 to '' 81,212 Lakhs this year. The revenue increased by 34% on the back of growth of 22% in loan book during the year. The net profit of the Company increased by 36% to 24,470 Lakhs for the financial year ended 31^st March, 2024, as against '' 18,013 Lakhs for the financial year ended 31^st March, 2023. The Net worth of Company at the beginning of the financial year, i.e 1^st April, 2023 was '' 1,35,568 Lakhs and closing Net worth of Fedfina as on 31^st March, 2024, was '' 2,26,083 Lakhs.

Growth in Business

As of 31^st March, 2024, the AUM increased by 34% compared to FY 2022-23, reaching '' 12,19,188 Lakhs while disbursements improved by 26% to '' 13,57,828 Lakhs.

The net profit rose by 36% over the previous year, reaching '' 24,470 Lakhs.

Over the past year, '' 52,213 Lakhs of the gold loan AUM was through co-lending, and your Company conducted portfolio sell-down transactions totaling '' 1,46,089 Lakhs. At the end of the year, 18.7% of the AUM was off the books.

CREDIT RATING:

Your Company’s credit ratings has upgraded to AA / Stable by CARE ratings and India Ratings, while CRISIL assigned AA/Positive rating, boosting the confidence of our stakeholders at large.

BUSINESS OVERVIEW

Your Company is well positioned to achieve steady growth, enhance credit quality, and deliver higher returns. Company’s strong parentage and credit rating enables it to raise equity and debt on competitive terms. Your Company offers a range of products that have significant potential for growth in underpenetrated market segments. Your Company has a management team with over 20 years of experience and a dedicated workforce of 4,298 employees spread across 18 states and union territories.

There is no change in the nature of business of the Company for the year under review. Further information on the business overview and outlook and state of the affairs of the Company is discussed in detail in the Management Discussion & Analysis Report.

DIVIDEND

In view of the planned business growth, your Directors deem it proper to preserve the resources of the Company for its activities and therefore, do not propose any dividend for the financial year ended 31^st March, 2024.

DIVIDEND DISTRIBUTION POLICY

Since your Company is one of the top 1000 listed Companies as per market capitalisation as on 31^st March, 2024 and in accordance with the Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated and adopted a Dividend Distribution Policy, which was reviewed and approved by the Board and the same is available on the website of the Company at https:// www.fedfina.com/corporate-governance/

AMOUNT PROPOSED TO BE TRANSFERRED TO STATUTORY RESERVES:

Your Board of Directors have proposed a transfer of '' 4,894 Lakhs to the Statutory Reserves maintained under Section 45IC of the RBI Act, 1934.

ASSET-LIABILITY MANAGEMENT:

Your Company follows a well-defined Asset Liability Management (ALM) system, driven by Asset Liability Committee (ALCO), to monitor efficiently and pursue appropriate policy initiatives.

Liquidity positions are examined regularly across the specified time buckets to assess and manage mismatches. The ALM policy and practices of your Company are in line with the regulatory guidelines, designed to protect against liquidity as well as interest rate risk challenges and to optimise cost of funds at all times to fund growth requirements.

CHANGES IN CAPITAL STRUCTURE AND LISTING OF SHARES:

Authorised Share Capital of the Company:

The Authorised Share Capital of the Company is '' 1000,00,00,000/- (Rupees One Thousand Crores only) consisting of 99,00,00,000 (Ninety nine Crores) equity shares of '' 10/- (Rupees Ten) each and 1,00,00,000 (One Crore) 0.01% non-cumulative redeemable preference shares of face value '' 10 (Rupees Ten) each.

Issued, Subscribed and Paid-up Share Capital of the Company:

The Issued, Subscribed and Paid up share capital of the Company as on 31^st March, 2023 was '' 321,91,16,050/-divided into 32,19,1 1,605 equity shares of face value of '' 10 each.

During the year under review, 45,94,146 equity shares of face value of '' 10/- each were allotted to employees pursuant to exercise of stock options by the employees of the Company under Fedbank Financial Services Limited - Employees Stock Option Plan 2018, as amended. As a result, the Issued, Subscribed and Paid up share capital of the Company stood at '' 3,26,50,57,510/- divided into 32,65,05,751 equity shares of face value of '' 10 each.

Initial Public offer

During the year under review, the Company successfully launched an Initial Public Offer ("IPO") by way of fresh issue and Offer for Sale aggregating to '' 109,226 Lakhs. The Company alloted 4,28,81,148 equity shares to the eligible applicants on 29^th November, 2023. The equity shares of the Company were listed and trading of the equity shares commenced on 30^th November, 2023 on the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) after the IPO.

As on 31^st March, 2024, the Issued, Subscribed and Paid up share capital of the Company stood at '' 369,38,68,990/-divided into 36,93,86,899 equity shares of face value of '' 10 each.

ISSUE OF DEBENTURES

The Board of Directors at their meeting held on 26^th May, 2023, approved the issue of 10,000 (Ten Thousand) Rated, Listed, Unsecured, Redeemable, Sub-Ordinated, Fully Paid-Up, Non-Convertible Debentures of '' 1,00,000/- (Rupees One Lakh Only) each aggregating to '' 100,00,00,000/-(Rupees One Hundred Crores Only) with the Green Shoe Option of 10,000 (Ten Thousand) Rated, Listed, Unsecured, Redeemable, Sub-Ordinated, Fully Paid Up, Non-Convertible Debentures of Face Value of '' 1,00,000/- (Rupees One Lakh

Only) each, aggregating to '' 100,00,00,000/- (Rupees One Hundred Crores Only) on private placement basis (ISIN INE007N08023).

Further, The Board of Directors at their meeting held on 26^th June, 2023 approved the issue of 10,000 (Ten Thousand) Rated, Listed, Senior, Secured, Redeemable, fully paid-up, non-convertible debentures of '' 1,00,000/- (Rupees One

Lakh Only) Each, aggregating to '' 100,00,00,000/- (Rupees One Hundred Crores Only) on private placement basis (ISIN INE007N07041).

All the Non-Convertible Debentures issued by the Company are listed on BSE. The details of all the outstanding Nonconvertible Debentures as on 31^st March, 2024 are mentioned below:

MANAGEMENT DISCUSSION AND ANALYSIS (“MDA")

In compliance with the Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements), 2015 ("SEBI Listing Regulations"), a separate section on Management Discussion and Analysis which includes details on the state of affairs of the Company forms part of this Annual Report.

CORPORATE GOVERNANCE

Corporate Governance has been an integral part of the way your Company has been doing business since inception. The Company believes that good Corporate Governance emerges from the application of the best and sound management practices and compliance with the laws coupled with adherence to the highest standards of transparency and business ethics.

Your Company seeks to embed and sustain a culture that will enable us to achieve our objectives through effective corporate governance and enhance transparent engagement with key stakeholders.

A separate report on Corporate Governance setting out the governance structure, principal activities of the Board and its Committees and the policies and practices that enable the Board to fulfil its stewardship responsibilities together with a Certificate from the Secretarial Auditor of the Company regarding compliance of conditions of Corporate Governance as stipulated under SEBI Listing Regulations forms part of this Annual report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORTING (BRSR''):

The Ministry of Corporate Affairs, Government of India, came out with the ''National Voluntary Guidelines on Social,

Environmental and Economic Responsibilities of Business in July 2011. These guidelines contained certain principles that are to be adopted by companies as part of their business practices and reguires disclosures regarding the steps taken to implement these principles through a structured reporting format, viz. Business Responsibility Report. Pursuant to Regulation 34(2)(f) of SEBI Listing Regulations the requirement of submitting a Business Responsibility Report shall be discontinued after the financial year 2021 — 22 and thereafter, with effect from the financial year 202223, the top one thousand listed entities based on market capitalisation shall submit a Business Responsibility and Sustainability report in the format as specified by the SEBI from time to time. Since your Company is one of the top 1000 listed Companies as per market capitalisation as on 31^st March, 2024, this Annual Report includes a separate report on the Business Responsibility and Sustainability Report, which outlines the Company’s environmental, social and governance initiatives.

EMPLOYEES STOCK OPTION SCHEME:

The Company had formulated the Employees Stock Option Plan, 2018 (ESOP Scheme, 2018), duly approved by the shareholders of the Company to enable its employees to participate in the future growth and financial success of the Company. The Company also intends to use this ESOP Scheme, 2018 to attract and retain talent in the organisation. The ESOP Scheme, 2018 was formulated in accordance with the SEBI guidelines, as amended from time to time. The eligibility and number of options to be granted to an employee is determined on the basis of various parameters such as scale, designation, performance, grades, period of service, Company’s performance and such other parameters as may

be decided by the Nomination & Remuneration Committee of the Board from time to time in its sole discretion.

The Shareholders of the Company had approved the Employees Stock Option Plan, 2018 ("ESOP Scheme 2018") on 13^th November, 2018 with the overall ceiling of 1,54,05,405 stock options to be granted.

During the year under review, the ESOP Scheme 2018 was approved vide special resolution passed by the members in their Extra Ordinary General Meeting on 21^st July, 2023 to vary the exercise period in the interest of the employees of the Company. Subsequently, post listing of equity shares of the Company on 30^th November, 2023, BSE and NSE, in compliance with the regulatory requirements in terms of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, the ESOP Scheme 2018 was ratified by the members vide special resolution passed in the Extra Ordinary General meeting held on 22^nd February, 2024.

During the year under review, 45,94,146 equity shares of face value of '' 10/- each were allotted to employees pursuant to exercise of stock options by the employees of the Company under ESOP Scheme 2018.

Other statutory disclosures as required under Regulation 14 of Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 on ESOS are given in website of the Company at https://www.fedfina.com/investors-relations/overviews/ annual-report/?page=other-disclosures-reports

Your Company is also proposing to formulate a new scheme titled “Fedbank Financial Services Limited- Employees Stock Option Scheme, 2024" in accordance with the SEBI regulations for the benefit of employees. The said scheme was recommended/ approved by the Nomination & Remuneration Committee (NRC) and Board of Directors respectively subject to the approval of the Shareholders of the Company.

NOMINATION AND REMUNERATION POLICY

The Company has formulated Nomination and Remuneration Policy under the provisions of section 178 of the Act and SEBI Listing Regulations and the same is uploaded on the website of the Company at https://www. fedfina.com/corporate-governance/.

The Company has also formulated Compensation Policy in accordance with the RBI circular dated 29^th April, 2022

ALTERATION OF MEMORANDUM AND ARTICLES OF ASSOCIATION

During the year under review, there were no changes in the Memorandum of Association of the Company. However,

prior to the IPO, the Company had altered the Articles of Association of the Company ("AOA") in conformity to the SEBI regulations as amended vide special resolution in the Extra Ordinary General Meeting of the members held on 21^st July, 2023.

The Company had also altered its AOA vide special resolution at its 28^th AGM held on 27^th September, 2023 to align with the amendment brought out vide the Regulation 23(6) of Securities Exchange Board of India (Issue and Listing of Non-Convertible Securities) (Amendment) Regulations, 2023 dated 2^nd February, 2023.

Further, to align with the post-listing requirements stipulated by SEBI, the AOA was again amended by reinstating certain key clauses which survived post listing vide special resolution in the Extra Ordinary General Meeting of the members held on 22^nd February, 2024.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Your Company has a diverse and inclusive Board of Directors which endeavors to protect the interest of all the stakeholders.

The composition of the Board is in accordance with section 149 of the Companies Act, 2013 and Regulation 17 of the SEBI Listing Regulations with an optimum combination of Executive, Non-executive and Independent Directors including one woman director.

As on 31 ^st March, 2024, the Board of Directors of your Company comprised of four (4) Independent Directors, one (1) Non-executive Director, two (2) Nominee Directors and one (1) executive Director. The Company has a Nonexecutive Chairman who is not related to the MD & CEO.

• Appointment/re-appointment of Directors

During the year under review, Mr. Anil Kothuri (DIN: 00177945), Managing Director & CEO (MD & CEO) was re-appointed as MD & CEO for a further term of five years with effect from 11^th December, 2023 till 10^th December, 2028. The said re-appointment was approved by shareholders vide special resolution passed in the Annual General Meeting(''AGM'') held on 27^th September, 2023.

On the recommendation of the Nomination and Remuneration Committee, the Board of Directors appointed Mr. Sunil Satyapal Gulati(DIN: 00016990) and Mr. Ramesh Sundararajan (DIN: 10500779) as Additional Directors in the capacity of an Independent Director effective from 15^th March, 2024.

• Resignation of Directors

During the year under review, Mr. Peruvemba Ramachandran Seshadri had resigned from the

Directorship of the Company with effect from 22^nd August, 2023 due to his appointment as Managing Director & CEO in South Indian Bank by RBI. The Director has confirmed that there are no material reasons apart from the reasons given in his resignation letter.

As on the date of the report, Mr. Anil Kothuri, MD & CEO has tendered his resignation as MD & CEO of the Company on August 09, 2024 and the Board of Directors of the Company at their meeting held on August 09, 2024 had considered, noted and accepted his resignation and the effective date of resignation shall be 8^th November, 2024 after serving his entire notice period of 3 months from the date of his resignation.

Directors retirement by rotation

Mr. Shyam Srinivasan (DIN: 02274773), who retired by rotation and offered himself for re-appointment was reappointed in the AGM held on 27^th September, 2023.

In accordance with the provisions of section 152(6) of the Act and the Articles of Association of the Company, Mr. Anil Kothuri (DIN: 00177945), Managing Director & CEO is liable to retire by rotation and being eligible, offers himself for re-appointment at the ensuing AGM.

However, Mr. Anil Kothuri has tendered his resignation as MD & CEO of the Company on 9^th August, 2024 and the Board of Directors of the Company at their meeting held on 9^th August, 2024 had considered, noted and accepted his resignation. Further, as per the HR policy of the Company, the effective date of resignation of Mr. Anil Kothuri, MD & CEO after serving his entire notice period of 3 months from the date of his resignation shall be 8^th November, 2024. His re-appointment shall be subject to his tenure ending on 8^th November, 2024.

Apart from the aforesaid, there were no other changes in the composition of the Board of Directors and Key Managerial Personnel of the Company during the year under review.

Subsequently, additional changes that took place in composition of the Board of Directors from the financial year ended 31^st March, 2024 and as on the date of this report are as follows:

Mr. Ashutosh Khajuria ceased to be the Nominee Director representing The Federal Bank Limited on the Board of the Company after completion of his term of nomination on 30^th April, 2024.

Further, The Federal Bank Limited nominated Mr. Harsh Dugar(DIN: 00832748) as Nominee Director on the Board of the Company in place of Mr. Ashutosh Khajuria.

Based on the recommendation of the Nomination and Remuneration Committee and in accordance with the Articles of Association of the Company, the Board of Directors of the Company appointed Mr. Harsh Dugar as Nominee Director on the Board effective from 1^st May, 2024.

The members of the Company confirmed and approved these special resolutions pertaining to appointment of Mr. Sunil Satyapal Gulati and Mr. Ramesh Sundararajan as Independent Directors on 6^th June, 2024 by means of Postal Ballot, through remote e-voting only.

The appointment of Mr. Harsh Dugar as Nominee Director and continuation of Mr. Maninder Singh Juneja (DIN: 02680016) as Nominee Director in accordance with regulation 17 of SEBI Listing Regulations were also approved by the Shareholders of the Company through postal ballot on 6^th June, 2024.

BOARD MEETINGS HELD DURING THE YEAR

During the year under review, your Board of Directors met 18 times and the gap between any two meetings did not exceed one hundred and twenty days.

The dates on which the meetings were held are 28^th April, 2023, 8^th May, 2023, 26^th May, 2023, 21^st June, 2023, 17^th July, 2023, 19^th July 2023, 26^th July 2023, 8^th August, 2023, 5^th September, 2023, 6^th November, 2023, 15^th November, 2023, 16^th November, 2023, 21^st November, 2023, 23^rd November, 2023, 25^th November, 2023, 29^th November, 2023, 11th December, 2023 and 15^th January, 2024.

DECLARATION FROM INDEPENDENT DIRECTORS

There are four (4) Independent Directors on the Board of the Company. The Independent Directors have submitted declarations that they continue to fulfil the criteria of independence laid down under Section 149 of the Companies Act, 2013, Regulation 16 of SEBI Listing Regulations and complied with the Code for Independent Directors as prescribed in Schedule IV to the Act.

The Independent Directors have confirmed that they are not aware of any circumstance or situation, which exists or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.

In the opinion of the Board, the Independent Directors are eminent persons and possess requisite qualifications, integrity, expertise and experience in the relevant functional areas.

All the Independent Directors have a valid registration in the Independent Director''s databank of the Indian Institute of Corporate Affairs as required under Rule 6(1) of the Companies (Appointment and Qualification of Director) Fifth Amendment Rules, 2019.

BOARD EVALUATION

The Company has defined a manner of evaluation as per the provisions of the Act and SEBI Listing Regulations and formulated a method for the evaluation of the performance of the Board, its Committees and individual Directors. The annual evaluation of the performance of the individual Directors (including the Chairman of the Board) were conducted on parameters such as level of engagement and contribution and independence of judgment - thereby safeguarding the interests of the Company.

The performance evaluation of the Independent Directors were carried out by the entire Board, excluding the director being evaluated. The performance evaluation of the Chairman, the Non-Independent Directors and Board as a whole were carried out by the Independent Directors. The Board also carried out annual performance evaluation of the working of each of its Board constituted Committees.

Your Company has received declaration from each Director on fulfilling the fit and proper criteria in terms of the provisions of Master Direction - Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023 ("RBI NBFC Master Directions"). The Board of Directors has confirmed that all the existing Directors are fit and proper to continue to hold the appointment as Directors on the Board, as reviewed and recommended by the Nomination and Remuneration Committee on fit and proper criteria under RBI NBFC Master Directions.

The Directors have expressed their satisfaction with the evaluation process. The Board opined that the Board Committees’ composition, structure, processes and working procedures are well laid down and that the Board Committees members have adequate expertise drawn from diverse functions, industries and business and bring specific competencies relevant to the Company’s business and operations.

All Board members and senior management personnel have affirmed compliance with the Company’s code of conduct for the FY 2023-24.

COMMITTEES

Details on composition of various Committees of the Board, terms of reference and number of meetings of the Committees held are given in the Corporate Governance Report which forms part of the Annual Report.

COMPLIANCE WITH THE SECRETARIAL STANDARDS

During the year under review, the Company has complied with the applicable secretarial standards issued by the Institute of Company Secretaries of India.

THE CHANGE IN THE NATURE OF BUSINESS, IF ANY

There was no change in the nature of business of the Company during the financial year ended 31^st March, 2024.

As on the date of this report, the Company has received the Corporate Agent (Composite) license dated 10^th June, 2024 issued by Insurance Regulatory and Development Authority of India ("IRDAI") for soliciting life, general and health insurance ("Composite") as Corporate Agent under Insurance Regulatory and Development Authority of India (Registration of Corporate Agents) Regulations, 2015.

HUMAN RESOURCE - TALENT POOL - PERFORMANCE MANAGEMENT:

Your Company has been always prided itself in being a people first organisation. Our evolved digitised onboarding assisted us in seamless joining for new joiners in different geographies where we have expanded our presence. Our employee strength has grown by 19.2% as compared to the previous year in line with our expansion plans.

Our concentration revolves around continuous growth, culture and a learning experience. To nurture this talent, your Company have implemented practices focused on skill enhancement through regular training sessions, leadership development programmes, and a transparent performance management system. Additionally, it is given priority on healthy work-life balance for our employees, believing it enhances their productivity and motivation.

In continuation to our endeavor to promote Gender Diversity at workplace, your Company continue the Restart with Fedfina initiative to help women with career breaks to restart their career.

Women Leadership Program was launched where the women leaders participating in the program were from different industries, providing them an additional dimension towards their learning. The objective of the program is to equip our women employees in Manager and above grades to grow further as leaders. They went through a 3 months long transformational journey focused towards developing leadership mindset, strategic thinking and building an executive presence.

Further, Professional development policy is designed to empower our workforce with the skills and knowledge necessary for career advancement. Additionally, the well-

being of our employees through regular health checkups Is prioritised, ensuring their physical and mental health is diligently monitored.

PARTICULARS OF EMPLOYEES

Disclosures relating to remuneration and other details as required in terms of the provisions of Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure I which forms part of this Report.

Further, in accordance with the provisions of Sections 197(12) & 136(1) of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the list pertaining to the names and other particulars of employees drawing remuneration in excess of the limits set out in the aforesaid Rules, is kept open for inspection during working hours at the Registered Office of the Company and the Report & Accounts as set out therein are being sent to all the Members of the Company. Any Member, who is interested in obtaining these, may write to the Company Secretary at the Registered Office of the Company.

CAPITAL ADEQUACY

Your Company’s capital adequacy ratio stood at 23.46% as on 31^st March, 2024 which is well above the threshold limit of 15% prescribed by the Reserve Bank of India. Tier-I Capital ratio alone stood at a healthy 19.72%.

PUBLIC DEPOSITS

Your Company is a Non- Deposit taking Systematically Important NBFC and has not accepted public deposits falling under purview of provisions of section 73 of the Act during the year. Hence the requirement of furnishing the details in terms of Chapter V of the Companies Act, 2013 is not applicable.

RISK MANAGEMENT POLICY

Risk management forms an integral part of our business. Your Company has a Board approved Risk Management Policy that lays down the overall framework for identifying, assessing, measuring and monitoring various elements of risk involved in the businesses and for formulation of procedures and systems for mitigating such risks. The main objective of this policy is to ensure sustainable and prudent business growth.

The Risk Management Committee, a dedicated board-level committee, plays a pivotal role in continuously reviewing, approving, and refining our risk management policies and procedures and governing framework for each type of risk on a regular periodicity. The Committee monitors the

compliance of risk parameters and aggregate exposures within the defined limits.

Your Company continues to invest in people, processes, training and technology; so as to strengthen its overall Risk Management Framework.

Detailed discussion on risk management is disclosed in the Management Discussion and Analysis which forms part of this report.

AUDITORS:

1. STATUTORY AUDITORS & THEIR REPORT

M/s BSR & Co. LLP Chartered Accountants (Firm Registration No. 101248W / W- 100022) were appointed as Statutory Auditors of your Company at the Twenty sixth Annual General Meeting (AGM) held on 24^th September, 2021 for a tenure of three years till the conclusion of the Twenty ninth Annual General Meeting to be held for the year 2024.The Audit Report submitted by M/s BSR & Co. LLP, Chartered Accountants, for the financial year 2023-24 does not contain any qualification, reservation or adverse remark.

2. SECRETARIAL AUDITORS & THEIR REPORT

M/s. DM & Associates Company Secretaries LLP were appointed as the Secretarial Auditors to conduct the Secretarial Audit for the financial year ended 31^st March, 2024. The Report of the secretarial auditors in the prescribed Form MR-3 is set out in Annexure-II to this Report. The Secretarial Audit Report does not contain any qualifications, reservation or adverse remark except to the extent stated below:

The Bombay Stock Exchange Limited (BSE) vide their email dated 15^th December, 2023 imposed a fine of '' 1,53,400/- under Regulation 52(1) of the SEBI Listing Regulations applicable for debt listed companies for delayed submission of Unaudited Financial results for the quarter and half year ended 30^th September, 2023 beyond the prescribed timelines. The Company has paid the fine on 19^th December, 2023.

BSE vide their email dated 30^th October, 2023 imposed a fine of '' 11,800/- under Reg 60(2) of the SEBI Listing Regulations for delay in submission of notice of record date for repayment of debentures for I SI N INE007N07041. Further, the Company has submitted a waiver application to BSE in this regard which is currently under consideration by BSE.

The Reserve Bank of India, in exercise of powers conferred under section 58G(1)(b) read with section

58B (5) (aa) of the Reserve Bank of India Act, 1934 on 20^th September, 2023 imposed a monetary penalty of '' 8.80 Lakhs on the Company for delay in reporting of one fraud case through FMR-1 within the prescribed period. The Penalty amount of '' 8.80 Lakhs has been remitted to RBI Enforcement Department on 28^th September, 2023.

Management Response

Your Company’s equity shares have been listed on National Stock Exchange of India Limited (NSE) and on BSE Limited (BSE) on 30^th November, 2023 on account of completion of the Initial Public Offering ("IPO") of 7,80,42,871 equity shares of face value of '' 10 each at an issue price of '' 140 (issue price for employees was '' 130/-) per equity share, consisting of fresh issue of 428,81,148 equity shares amounting lo '' 60,000 Lakhs and through an offer for sale of 3,51,61,723 equity shares amounting to '' 49,226 Lakhs. The Company has Non-convertible Debentures listed on BSE. As a debt listed Company, pursuant to Regulation 52 of the SEBI Listing Regulations, your Company is required to submit quarterly financial results within 45 days from the end of the quarter. Due to the aforesaid IPO process, the submission of the unaudited limited review results for the quarter and half year ended 30^th September, 2023 has got delayed and is being submitted after 45 days, the period stipulated by Regulation 52 of the SEBI Listing Regulations, subsequent to the results being approved by the Board of Directors at its board meeting held on 11^th December, 2023.

The Company intimated the record date on 31^st August, 2023 instead of 30^th August, 2023 to BSE. The delay of one working day was purely unintentional miss out as the period was inadvertently calculated as 7 working days of the Company excluding the date of intimation and the date of meeting.

The fraud case occurred during the period when the Country was going through a COVID wave disrupting regular functioning of Sub-Registrar offices, restrictions on travel offices working with sub optimal capacity. The Pandemic also caused irregular and untimely access to the developer’s office for seeking further inputs for reconciling records etc. thus delaying the final conclusion of the fraud. The moment all the facts were in place to reach the conclusion, the fraud incident was immediately reported to RBI on 11^th May, 2021.

The observations made in the Secretarial Auditors report are self-explanatory and therefore do not call for any further comments.

FRAUD REPORTING

Pursuant to the Board approved ''Fraud Risk Management and Fraud Investigation Policy’ of the Company, the information relating to all frauds of '' 1 Lakhs and above are reported to the Board on quarterly basis.

During the year under review, the frauds detected and the same has been timely reported to the Audit Committee/ Board as well as to the Reserve Bank of I ndia (RBI) amounting to '' 321.84 Lakhs.

Pursuant to the section 143(2) of the Companies Act, 2013, no frauds were reported by the Auditors of the Company to the Audit Committee during the year under review.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company believes that strong internal control system and processes play a critical role in the health of the Company. Your Company has instituted adequate internal control systems commensurate with the nature of its business and size of operations. Your Company’s well-defined organisational structure, documented policy guidelines, defined authority matrix and internal controls ensure efficiency of operations, compliance with internal policies and applicable laws and regulations as well as protection of resources. The internal control system is supplemented by internal audits, regular reviews by the management and standard policies and guidelines which ensure reliability of financial and all other records. Your Company’s Internal Audit department performed regular reviews of business processes to assess the effectiveness and adequacy of the internal control systems, compliance with policies and procedures.

All significant audit observations of the internal auditors and follow up actions were duly reported to the Audit Committee.

INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY

Internal Financial Controls laid down by the Company is a systematic set of controls and procedures to ensure orderly and efficient conduct of its business including adherence to the Company’s policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information. Internal financial controls not only require the system to be designed effectively but also to be tested for operating effectiveness periodically.

During the year under review, your Company had engaged a firm of Chartered Accountants to evaluate the internal financial control framework and to test its operating effectiveness. Based on the testing conducted by the

aforesaid firm, the Board is of the view that the Company has laid down adequate internal financial controls commensurate with the nature and size of its business operations and these controls are adequate and operating effectively and no material weaknesses have been observed.

RELATED PARTY TRANSACTIONS

All the related party transactions that were entered into during the financial year were on arm’s length basis and in the ordinary course of business.

The related party transactions were placed before the Audit Committee on quarterly basis. Transactions with related parties, as per the requirements of Accounting Standards, are disclosed in the notes to accounts annexed to the financial statements.

Particulars of all contracts or arrangements with related parties referred to in sub-section (!) of section 188 in the prescribed form are provided in the form AOC-2 in accordance with the Rule 8 (2) of the Companies (Accounts), 2014 Rules. Form AOC-2 is set out in Annexure III to this report.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY THAT OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENT RELATE TILL THE DATE OF THIS REPORT:

No material changes and commitments affecting the financial position of the Company have occurred between the Financial year ended 31^st March, 2024 till the date of this report.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013

The Company, being a NBFC registered with RBI, is exempted from complying with the provisions of section 186 of the Act related to loans made, guarantees given and securities provided. However, the details of investments made by the Company pursuant to the provisions of Section 186 (4) of the Act are given in Note 9 to the Financial Statements.

DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT 2013

Your Company has Prevention of Sexual Harassment (POSH) policy which is in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. Your Company is in compliance with the constitution of Internal Complaints Committee (ICC) to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

The following is a summary of sexual harassment complaints received and dealt with during FY 2023-24:

• No. of complaints received: Nil

• No. of complaints disposed of: Not Applicable.

CORPORATE SOCIAL RESPONSIBILTY

The Company has a Corporate Social Responsibilty (CSR) Committtee in place in accordance with section 135 of the Act. The CSR Committee has formulated and recommended to the Board, a Corporate Social Responsibility Policy ("CSR Policy") indicating the activities to be undertaken by the Company, which has been approved by the Board. The CSR Policy is available on the Company’s website at https://www. fedfina.com/csr/. The Company has spent '' 3,10,06,228/-on CSR activities during the year under review.

The required disclosure as per Rule 8 of Companies (Corporate Social Responsibility Policy) Rules 2014 is attached as Annexure IV to this report.

RBI GUIDELINES:

The Reserve Bank of India (RBI) granted the Certificate of Registration to the Company in August 2010 vide Registration No. N-16.00187, to commence the business of a non-banking financial institution without accepting public deposits. Your Company is categorised as NBFC in Middle layer pursuant to Master Direction - Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023 and has complied with and continues to comply with all the applicable regulations and directions of the RBI.

VIGIL MECHANISM:

As per the provisions of Section 177(9) of the Companies Act, 2013, the Company is required to establish an effective Vigil Mechanism for Directors and employees to report genuine concerns. The Company as part of this has in place a Board approved "Whistle Blower Policy" to deal with the instances of fraud and mismanagement, if any. The said policy is available on the website of your Company at https://fedfina. com/corporate-governance/

This Vigil mechanism of the Company is overseen by the Audit Committee and provides adequate safeguard against victimisation of employees and also provide direct access to the Chairman of the Audit Committee.

Out of 18 complains received, 3 complaints were pertaining to vigil mechanism framework/policy. All the said complaints received were resolved.

Your Company affirms that no personnel has been denied access to the Audit Committee.

ANNUAL RETURN:

Pursuant to section 92 (1) of the Companies Act 2013, the Annual Return for the year 2023-24 is placed on the website of the Company fhttps://www.fedfina.com)

PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE INFLOW/OUTFLOW, ETC.

The requirements of disclosure with regard to Conservation of Energy and technology absorption in terms of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules 2014, are not applicable to the Company as it does not engage in any manufacturing activity.

Your Company is continued to invest in technology and digitisation to support various functions, including loan origination, credit underwriting, risk management, collections, customer service, and retention. Enabling measures by RBI and the Government of India, such as implementing IndiaStack, Aadhaar-based eKYC, and scaling up UPI, have helped transform digital infrastructure for the industry.

Our ''Phygital'' doorstep model blends digital and physical approaches, offering tailored services and ensuring continuous customer engagement. We prioritise data and system security and have invested in superior infra and support like next-generation firewall, 24x7 SOC (Security Operations Centre) and automated security tools.

No foreign exchange was earned or spent in terms of actual inflows or outflows during the year under review.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 134 of the Companies Act, 2013, the

Directors confirm that:

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

II. such accounting policies have been selected and applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31^st March, 2024 and the profits of the Company for the financial year ended on that date;

III. proper and sufficient care had been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

IV the annual accounts have been prepared on going concern basis; and

V. proper systems had been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

VI. internal financial controls to be followed by the company had been laid down and that such internal financial controls were adequate and operating effectively.

OTHER DISCLOSURES

In terms of applicable provisions of the Act, the Company

discloses that during the year under review:

i. The Company has not issued any shares with differential rights and hence no information as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.

ii. The Company has not issued any sweat equity shares and hence disclosure as per Section 54(1)(d) of the Act read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014 is not provided.

iii. There were no instances of non exercising of voting rights in respect of shares purchased directly by employees under a scheme hence no information pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014 is furnished.

iv. There are no significant and material orders passed by the regulators or courts or tribunals that would impact

the going concern status of the Company and its future operations.

v. The Company has not made any application nor any proceedings are pending under the insolvency and Bankruptcy Code, 2016.

vi. There were no instances of one-time settlement for any loans taken from the Banks or Financial Institutions.

vii. There were no amounts required to be transferred to Investor Education and Protection Fund (IEPF) pursuant to section 124 and 125 of the Companies Act, 2013 read with Rules made thereunder.

viii. The Company being, a Non-Banking Financial Company is not required to maintain cost records as prescribed under section 148(1) of the Act.

ix. The Company does not have any subsidiary, joint venture or associate Company.

x. The Company has shifted its registered office from one locality to another within the same city i.e. from ''Kanakia Wall Street, A Wing, 5^th Floor, Unit 511, Andheri Kurla Road, Chakala, Andheri East, Mumbai- 400093, Maharashtra’ to ''Unit no.: 1101, 11th Floor, Cignus, Plot No. 71A, Powai, Paspoli, Mumbai - 400 087, Maharashtra’ effective from 25^th April, 2024.

CAUTIONARY NOTE

Certain statements in this Report may be forward-looking and are stated as may be required by applicable laws and regulations. Actual results may vary from those expressed or implied, depending upon economic conditions, Government policies and other incidental/related factors.

EMPLOYEES RELATIONSHIP

The employees at all grades of the Company have extended their whole-hearted cooperation to the Company for the smooth conduct of the affairs of the Company and the employee relations of the Company have been cordial. Your Directors wish to place on record their deep sense of appreciation for all the employees whose commitment, cooperation, active participation, dedication and professionalism has made the organisation’s significant growth possible.

ACKNOWLEDGEMENT

Your Directors would like to place on record, their gratitude for the cooperation and guidance received from all the statutory bodies, especially the RBI. The Directors also thank the shareholders, clients, vendors, investors, banks and other stakeholders in placing their faith in the Company and contributing to its growth.

For and on behalf of the Board of Directors of Fedbank Financial Services Limited

Sd/-

Mr. Balakrishnan Krishnamurthy

Place: Mumbai Chairman of the Board

Date: 22^nd August, 2024 DIN: 00034031

The Directors present to you their Twenty-Eighth Annual Report along with IND AS audited financial statements of the Company for the Financial Year ended 31st March 2023.

STATE OF COMPANY''S AFFAIRS:

Your Company is a retail focused non-banking finance company promoted by The Federal Bank Limited. The Company has the second lowest cost of borrowing among the micro, small and medium enterprises, gold loan and MSME and gold loan peer set in India in FY 2022-23. As on 31st March, 2023, your Company had the third fastest Asset under Management (AUM) growth among NBFCs in the peer set in India with a three year CAGR of 33% during FY 2020-2023.

The AUM of the company has increased by 47%, from INR 6,18,720 Lakhs to INR 9,06,960 Lakhs which was mainly contributed by growth in Housing Finance portfolio by 72%, small ticket LAP by 50%. We have also grown our securitization partnerships during the year with other banks and NBFCs.

The portfolio of loans has grown by 41% over last year to INR 8,10,274 Lakhs.

Total revenue for your Company has grown from INR 88,364 Lakhs in FY22 to INR 1,21,467 Lakhs this year. Similarly, Net Interest Income (NII) grew by 34.53% from INR 47,424 Lakhs in FY22 to INR 63,801 Lakhs this year.

Operating expenses (including Impairment provision) grew from INR 39,678 Lakhs in FY22 to INR 48,413 Lakhs this year, and the Cost to Income ratio increased marginally Y-o-Y from 58.38% in FY22 to 58.61% this year.

The Net Profit for the year ended 31st March 2023 increased by 74% to INR 18,013 Lakhs from INR 10,346 Lakhs for the year ended 31st March 2022. The Return on Average Assets for the year ended 31st March 2023 improved by 42% to 2.45 % as against 1.72 % for the year ended 31st March 2022

The Net worth as at 31st March 2023 increased by 18% to INR 1,35,568 Lakhs as against INR 1,15,352 Lakhs as at 31st March 2022

As at 31st March 2023, aggregate borrowings of your Company stood at INR 7,13,583 Lakhs as compared to INR 5,01,684 Lakhs as at 31st March 2022.

NETWORK EXPANSION:

Your Company had expanded its geographical presence by reaching out to different locations and increased its footprint by opening new branches and making it more accessible to its customers. With the opening of 59 branches in FY 22-23, the branch network has now increased to 575 branches as on March 31, 2023 across various states for different products as follows:

OUTLOOK:

We have presence covering 16 states and union territories across India with a strong presence in southern and western geographies. Our wider presence across these states gives us the ability to meet the demand from these markets and customer categories.

We have done an investment in technology and plan to continue to invest in technology and digitization and to ensure our information technology systems continue to help us with across several functions, including loan origination, credit underwriting, risk management, collections, customer service and retention. We believe that such investments will help improve recoveries and reduce our operating expenses, cost of customer acquisition and credit costs over time.

Our strategies going ahead are listed below:

¦ Continue to deliver consistent and one of the industry leading return matrices building on past performance

¦ Focus on performance of our large branch network and extracting operating leverage

¦ Continue to invest in technology and digitization initiatives

¦ Continue to invest in talent and employee training to achieve industry leading productivity parameters

¦ Capitalize on our understanding of our customer as a foundation for customer retention and customer acquisition

DIVIDEND:

In view of the planned business growth, your Directors deem it proper to preserve the resources of the Company for its activities and therefore, do not propose any dividend for the financial year ended 31st March, 2023.

AMOUNT PROPOSED TO BE CARRIED TO RESERVES:

Your Board of Directors have proposed a transfer of INR. 3,602 Lakhs to the Statutory Reserve maintained under Section 45IC of the RBI Act, 1934.

ASSET-LIABILITY MANAGEMENT:

Your Company follows a well-defined Asset Liability Management system, driven by Asset Liability Committee (ALCO), to monitor efficiently and pursue appropriate policy initiatives.

Liquidity positions are examined regularly across the specified time- buckets to assess and manage mismatches. The Asset Liability Management policy and practices of your Company are in line with the regulatory guidelines; designed to protect against liquidity as well as interest rate risk challenges and to optimize cost of funds at all times to fund growth requirements.

CHANGES IN CAPITAL STRUCTURE:

Authorized Share Capital of the Company:

The Authorized Share Capital of the Company is INR 1000,00,00,000/- (Rupees One Thousand crores only) consisting of 99,00,00,000 (Ninety nine crores) equity shares of INR 10/- (Rupees Ten) each and 1,00,00,000 (One Crore) 0.01% non-cumulative redeemable preference shares of face value INR 10 (Rupees Ten) each.

Paid-up Share Capital of the Company:

The Paid up share capital of the Company as on March 31, 2022 was INR 321,51,76,050/- divided into 32,15,17,605 equity shares of INR 10 each.

During the financial year under review, 3,94,000 ESOP''s were exercised and allotted pursuant to the Fedbank Financial Services Limited Employees Stock Option Plan 2018, as amended.

Consequently, as at 31st March, 2023, the Issued, Subscribed and Paid up share capital of the Company stood at INR. 321,91,16,050/- divided into 32,19,11,605 Equity shares of face value of INR 10 each.

DEBENTURE TRUSTEES:

The details of Debenture Trustees as on March 31,2023 are mentioned below:

IDBI Trusteeship Services Limited

Asian Building, Ground Floor, 17, R. Kamani Marg,

Ballard Estate, Mumbai - 400 001

Email: [email protected]

Tel no.: 022-40807000

Beacon Trusteeship Limited

4C & D Siddhivinayak Chambers, Gandhi Nagar,

Opp MIG Cricket Club, Bandra East (E),

Mumbai - 400051

Email: [email protected] Tel No: 022-26558759

EMPLOYEES STOCK OPTION SCHEME:

With a view to appraise, motivate and reward the Employees for their past association and performance, your Company had formulated and implemented Fedbank Financial Services Limited-Employees Stock Option Plan 2018 ("ESOP Plan") in accordance with the provisions of The Companies Act, 2013 ("the Act"). The Nomination and Remuneration Committee of the Board, inter alia, administers and monitors the ESOP Plan in accordance with the applicable provisions of the Act.

Disclosures pertaining to ESOP Plan in terms of Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014 are detailed blow:

Detail of Stock options as on 31st March 2023:

1. Shareholders'' approval for grant of stock options : 1,54,05,405

2. Options granted to employees : 1,45,52,601

3. Options vested : 27,77,000

4. Options Fxercised

at INR 30/- grant price : 2,72,000

at INR 42.11/- grant price : 1,35,000

at INR 48/- grant price : 2,80,000

5. Total number of shares arising as a result of exercise of option : 6,87,000

6. Options lapsed : 2,81,250

7. Exercise Price INR : 30/-, 42.11/-, 48/-

8. variation of terms of options : None

9. Money realized by exercise of options : INR 2,72,84,850

10. Total number of options in force : 1,35,84,351

11. (i) Stock options held by Key Management Personnel (KMP) as on March 31,2023

1. Mr. Anil Kothuri , M.D. & CEO : 33,51,351

2. Mr. C.V. Ganesh, CFO : 9,40,000

3. Mr. S. Rajaraman, CS : 30,000

(ii) any other employee who receives a grant of options in any one year of option amounting to five percent or more of options granted during that year.- Nil

(iii) identified employees who were granted option, during any one year, equal to or exceeding one percent of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant;- Nil

Further Company has not made any bonus issue during the year. The Company has not issued shares with differential voting rights and sweat equity shares.

ii) No. of Meetings held during the year:

During the FY 2022-23, your Board of Directors met 14 times and the gap between any two meetings was less than one hundred and twenty days.

The dates on which the meetings were held are 28th April, 2022, 18th May, 2022, 24th May, 2022, 13th July, 2022, 12th August, 2022, 22nd August, 2022, 29th September, 2022, 13th October, 2022, 20th October, 2022, 11th November, 2022, 22nd December, 2022, 13th January, 2023, 10th February, 2023 and 28th March, 2023.

Audit Committee:

i) Composition:

The Composition of the Audit Committee as on March 31,2023 is as under:

The constitution of the Committee is in compliance with the regulatory requirements.

The Committee members are financially literate and have the necessary accounting and relevant financial technical management experience. During the year, all the recommendations of the Audit Committee were accepted by the Board.

*Terms of reference and role of the audit committee includes the matters specified under the Companies Act 2013. Broad terms of reference includes the following:

1. to oversee the financial reporting process;

2. to review financial results and related information and disclosure of its financial information to ensure that its financial statements are correct, sufficient and credible

3. to approve or modify any related party transactions, to review internal financial controls and risk management system,

4. to review and evaluate with the management

performance of statutory and internal auditors, effectiveness of audit process and adequacy of the internal control systems;

5. to review and monitor the statutory auditor''s

independence and performance, and effectiveness of audit process;

6. approval of payment to statutory auditors for any other services rendered by the statutory auditors of the Company

7. reviewing, with the management, the annual financial statements and auditor''s report thereon before submission to the Board for approval, with particular reference to:

(a) matters required to be included in the Director''s Responsibility Statement to be included in the Board''s report in terms of clause (c) of subsection 3 of Section 134 of the Companies Act as amended from time to time;

(b) changes, if any, in accounting policies and practices and reasons for the same;

(c) major accounting entries involving estimates based on the exercise of judgment by management;

(d) significant adjustments made in the financial statements arising out of audit findings;

(e) compliance with listing and other legal requirements relating to financial statements;

(f) disclosure of any related party transactions; and

(g) modified opinion(s) in the draft audit report.

8. reviewing, with the management, the quarterly, halfyearly before submission to the Board for approval;

9. reviewing, with the management, the statement of uses/ application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilised for purposes other than those stated in the offer document/ prospectus/ notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter. This also includes monitoring the use/ application of the funds raised through the proposed initial public offer by the Company;

10. approval or any subsequent modifications of transactions of the Company with related parties and

omnibus approval for subject to the conditions as may be prescribed, by the independent directors who are members of the Audit Committee;

11. scrutinising of inter-corporate loans and investments;

12. valuation of undertakings or assets of the Company, wherever it is necessary;

13. evaluation of internal financial controls and risk management systems;

14. establishing a vigil mechanism for directors and employees to report their genuine concerns or grievances;

15. reviewing the adequacy of internal audit function if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit;

16. discussing with internal auditors on any significant findings and follow up thereon;

17. reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board;

18. discussing with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;

19. looking into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors;

20. reviewing the functioning of the whistle blower mechanism;

21. approving the appointment of the chief financial officer or any other person heading the finance function or discharging that function after assessing the qualifications, experience and background, etc. of the candidate; and

22. carrying out any other function as may be decided by the Board and/or specified/provided under the Companies Act, the Listing Regulations or by any other regulatory authority.

23. reviewing the utilization of loans and/ or advances from/investment by the holding company in any subsidiary exceeding rupees 100 crore or 10% of the asset size of the subsidiary, whichever is lower including existing loans / advances / investments existing as per applicable law.

24. considering and commenting on rationale, cost-benefits and impact of schemes involving merger, demerger, amalgamation etc., on the Company and its shareholders.

The constitution of the Committee is in compliance with

the regulatory requirements.

Terms of reference of the Nomination & Remuneration

Committee includes the matters specified under the

Companies Act 2013. Broad terms of reference includes

the following:

1. To formulate the Nomination and Remuneration policy,

2. Identifying persons who qualify to become directors and ensure their fit and proper status, scrutinize the fit and proper declarations made and who may be appointed in senior management in accordance with the criteria laid down, and recommending to the Board their appointment and removal,

3. Carrying out evaluations of every director''s performance and ensuring the fit and proper status of proposed and existing directors and recommending to the Board a policy, relating to the remuneration of the directors, key managerial personnel, senior management and other employee as may deem fit;

4. To set criteria for determining qualifications, positive attributes and independence of a director,

5. To formulate criteria for evaluation of performance of the independent directors and the Board.

6. To evaluate for every appointment of an independent director, the balance of skills, knowledge and experience on the Board and on the basis of such evaluation, prepare a description of the role and capabilities required of an independent director. The person recommended to the Board for appointment as an independent director shall have the capabilities identified in such description.

For the purpose of identifying suitable candidates, the Committee may:

(i) use the services of an external agencies, if required;

(ii) consider candidates from a wide range of backgrounds, having due regard to diversity; and

(iii) consider the time commitments of the candidates.

7. Determining whether to extend or continue the term of appointment of the independent director, on the basis of the report of performance evaluation of independent directors;

8. Devising a policy on Board diversity;

9. Analysing, monitoring and reviewing various human resource and compensation matters;

10. Performing such functions as are required to be performed by the compensation committee under the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, as amended;

11. Framing suitable policies and systems to ensure that there is no violation, by an employee of any applicable laws in India or overseas, including:

(i) the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, as amended; or

(ii) the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market) Regulations, 2003, as amended.

12. Performing such other activities as may be delegated by the Board and/or specified/provided under the Companies Act, the SEBI Listing Regulations or by any other regulatory authority; and

13. Recommend to the Board, all remuneration, in whatever form, payable to senior management

ii) No. of Meetings held during the year:

During the FY 2022-2023, the Nomination & Remuneration Committee of the Board met 4 times on 25th April, 2022, 18th May, 2022, 31st May 2022 and 11th August, 2022

iv) Policy on Directors, KMPs & Other Employees Appointment & Remuneration including Criteria as per Section 178 of the Companies Act 2013:

The Nomination & Remuneration policy of your Company is to ensure an appropriate mix of executive and independent directors, so as to maintain the independence of the Board, and separate its functions of governance and management.

The Nomination and Remuneration Policy of the Company reflects a good focus on enhancing value and attracting and retaining quality staff members with requisite knowledge and excellence - both as Executive and Non-Executive Directors or KMP / Senior Management for achieving overall objectives of the Company.

Pursuant to the provisions of the Companies Act, 2013, a Policy on Appointment & Remuneration of Directors, Key Managerial Personnel, Senior Management and other employees has been formulated; including criteria for determining qualifications, positive attributes, independence of a Director and other matters as required under the said Act. The Nomination and Remuneration Committee also takes into account the fit and proper criteria for appointment of directors as stipulated by Reserve Bank of India.

The detailed Nomination and Remuneration Policy of the Company is placed on the website of the Company: https://www.fedfina.com

Corporate Social Responsibility (CSR) Committee:

In accordance with the provisions of Section 135 of the Companies Act, 2013 (the Act), the Board of Directors of the Company have constituted the Corporate Social Responsibility (CSR) Committee.

i) Composition:

The Composition of the CSR Committee as on March 31,2023 is as under:

The constitution of the Committee is in compliance with the regulatory requirements.

Terms of reference of the CSR Committee includes the matters specified under the Companies Act 2013. Broad terms of reference includes:

1. to formulate and recommend to the Board a Corporate Social Responsibility ("CSR") Policy which shall indicate the activities to be undertaken by the Company in areas or subject specified in Schedule VII of the Companies Act 2013;

2. to recommend the amount of expenditure to be incurred on the CSR Activities in line with the Schedule VII of the Companies Act, 2013;

3. to monitor CSR policy of the Company from time to time;

4. to institute a transparent monitoring mechanism for implementation of the CSR activities or projects or programs of the Company;

5. To perform such other duties and functions as the Board may require the CSR committee to undertake

to promote the CSR activities of the Company or as may be required under applicable laws

ii) No. of Meetings held during the year:

During the FY 2022-2023, the CSR Committee of the Board met once on 9th May, 2022.

iii) CSR Activities & Its Reporting:

The Company''s CSR Activities are guided and monitored by its CSR committee. The CSR policy of the Company provides a broad set of guidelines including intervention areas.

The Company believes that CSR is a way of creating shared value and contributing to social and environmental good.

Further Annual Report on Corporate Social Responsibility (CSR) Activities pursuant to clause (o) of sub-section (3) of section 134 of the Act and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014 is set out in Annexure-I.

Risk Management Committee: i) Composition:

The Composition of the Risk Management Committee as on March 31,2023 is as under:

The re-constitution of the Committee is in compliance with

the regulatory requirements.

Broad terms of reference of the Committee includes the

following:

1. To formulate and approve Company''s Risk Management Policy and procedures which shall include:

a) a framework for identification of internal and external risks specifically faced by the listed entity, in particular including financial, operational, sectoral, sustainability (particularly, ESG related risks), information, cyber security risks or any other risk as may be determined by the Committee.

b) measures for risk mitigation including systems and processes for internal control of identified risks.

c) business continuity plan.

2. To ensure and monitor appropriate methodology, processes and systems are in place to monitor and evaluate risks associated with the business of the Company;

3. To monitor and oversee implementation of the risk management policy, including evaluating the adequacy of risk management systems;

4. To periodically review the risk management policy, at least once in two years, including by considering the changing industry dynamics and evolving complexity;

5. To review portfolio and its delinquency at a product level and NPA Management

6. To evaluate the overall risks faced by the Company.

7. To monitor and evaluate liquidity risk faced by the Company.

8. To ensure adherence to liquidity risk management policies and procedure

9. To consider and review the Liquidity Risk Analysis and Monitoring measures.

10. To keep the board of directors informed about the nature and content of its discussions, recommendations and actions to be taken;

11. To recommend to the Board for the appointment of the Chief Risk Officer on such terms as may be approved by the Board.

12. To carry out such other functions as may be specified by the Board from time to time or specified/ provided the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, each as amended and/ or by any other regulatory authority.

ii) No. of Meetings held during the year:

During the FY 2022-2023, the Risk Management Committee of the Board met 5 times on 9th May, 2022, 11th August, 2022, 10th November, 2022, 22nd December, 2022 and 12th January, 2023.

IT Strategy Committee: i) Composition:

The Composition of the IT Strategy Committee as on March 31,2023 is as under:

Broad terms of reference of the Committee includes: to formulate, approve and implement various IT polices as required by the regulators of the Company.

ii) No. of Meetings held during the year:

During the FY 2022-2023, the IT Strategy Committee of the Board met three times on 9th May, 2022, 10th November, 2022 and 29th March, 2023.

Stakeholders Relationship Committee:

The Stakeholders'' Relationship Committee was constituted by our Board at their meeting held on January 11,2022. The scope and functions of the Stakeholder Relationship Committee are in accordance with Section 178 of the Companies Act, 2013 and the SEBI Listing Regulations.

i) Composition:

The Composition of the Stakeholders Relationship Committee as on March 31,2023 is as under:

Broad terms of reference of the Committee includes:

1. To consider and resolve the grievances of the security holders of the Company including complaints related to transfer/transmission of shares/securities, nonreceipt of annual report, non-receipt of declared dividends, issue of new/duplicate certificates, general meetings etc. and assisting with quarterly reporting of such complaints;

2. To review measures taken for effective exercise of voting rights by shareholders;

3. Giving effect to all transfer/transmission of shares and debentures, dematerialisation of shares and rematerialisation of shares, split and issue of duplicate/ consolidated share certificates, compliance with all the requirements related to shares, debentures and other securities from time to time;

4. To review adherence to the service standards adopted by the Company in respect of various services being rendered by the Registrar & Share Transfer Agent;

5. To review the various measures and initiatives taken by the Company for reducing the quantum of unclaimed dividends and ensuring timely receipt of dividend warrants/annual reports/statutory notices by the shareholders of the Company: and

6. Carrying out such other functions as may be specified by the Board from time to time or specified/

provided under the Companies Act, 2013 or the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, each as amended or by any other regulatory authority.

ii) No. of Meetings held during the year:

During the FY 2022-2023, the Committee of the Board met once on 9th May, 2022.

Capital Raising Committee:

The Composition of the Capital Raising Committee as on March 31,2023 is as under:

The constitution of the Committee is in compliance with

the regulatory requirements.

Broad terms of reference of the Committee includes:

1. to decide, in consultation with various advisors, various terms and conditions of the Offer, including size, timing, listing jurisdictions and securities to be offered in the Offer, and to make any amendments, modifications, variations or alterations thereto;

2. to consider and invite existing holders of securities of the Company to offer their securities for sale through the Offer and take all steps in connection with such offer for sale;

3. to appoint and enter into arrangements with various advisors or intermediaries to the Offer and to negotiate and finalise the terms of their appointment;

4. to make applications to, seek clarifications and obtain approvals from, if necessary, from various statutory or governmental authorities in connection with the Offer and accept on behalf of the Board such conditions and modifications as may be prescribed or imposed by any of them while granting such approvals, permissions and sanctions as may be required and wherever necessary;

5. to do all such deeds and acts as may be required to dematerialize the securities of the Company and to sign and/or modify, as the case may be, agreements and/or such other documents as may be required in connection thereof;

6. to authorise and approve the incurring of expenditure and payment of fees and expenses in connection with the Offer.

7. to finalize, settle, approve, adopt and file in consultation with the book running lead manager (BRLM) where applicable, the draft red herring prospectus, the red herring prospectus, the prospectus, the preliminary and final international wrap and any amendments, supplements, notices, addenda or corrigenda thereto, and take all such actions as may be necessary for the submission and filing of these documents including incorporating such alterations/corrections/ modifications as may be required by SEBI, RoC or any other relevant governmental and statutory authorities or in accordance with applicable laws;

8. to appoint and enter into and terminate arrangements with the BRLM(s), underwriters to the Offer, syndicate members to the Offer, brokers to the Offer, escrow collection bankers to the Offer, refund bankers to the Offer, registrars, legal advisors, auditors, and any other agencies or persons or intermediaries to the Offer and to negotiate, finalise and amend the terms of their appointment, including but not limited to the execution of the mandate letter with the BRLM(s) and negotiation, finalization, execution and, if required, amendment of the offer agreement with the BRLM(s);

9. to negotiate, finalise and settle and to execute and deliver or arrange the delivery of the draft red herring prospectus, the red herring prospectus, the prospectus, offer agreement, syndicate agreement, underwriting agreement, share escrow agreement,

cash escrow agreement, agreements with the registrar to the offer and all other documents, deeds, agreements and instruments whatsoever with the registrar to the Offer, legal advisors, auditors, stock exchange(s), BRLM(s) and any other agencies/ intermediaries in connection with the Offer with the power to authorise one or more officers of the Company to execute all or any of the aforesaid documents or any amendments thereto as may be required or desirable in relation to the Offer;

10. To seek, if required, the consent and/or waiver of the lenders of the Company, customers, parties with whom the Company has entered into various commercial and other agreements, all concerned government and regulatory authorities in India or outside India, and any other consents and/or waivers that may be required in relation to the Offer or any actions connected therewith;

11. to open and operate bank accounts in terms of the escrow agreement and to authorize one or more officers of the Company to execute all documents/ deeds as may be necessary in this regard;

12. to open and operate bank accounts of the Company in terms of Section 40(3) of the Companies Act, 2013, as amended, and to authorize one or more officers of the Company to execute all documents/deeds as may be necessary in this regard;

13. to accept and appropriate the proceeds of the Offer in accordance with the applicable laws;

14. to approve code of conduct as may be considered necessary by the Capital Raising Committee or as required under applicable laws, regulations or guidelines for the Board, officers of the Company and other employees of the Company;

15. to approve the implementation of any corporate governance requirements that may be considered necessary by the Board or the Capital Raising Committee or as may be required under the applicable laws or the SEBI Listing Regulations and listing agreements to be entered into by the Company with the relevant stock exchanges, to the extent allowed under law;

16. To issue receipts/allotment letters/confirmation of allotment notes either in physical or electronic mode representing the underlying Equity Shares in the capital of the Company with such features and attributes as may be required and to provide for the tradability and free transferability thereof as per market practices and regulations, including listing on one or more stock exchange(s), with power to authorize one or more officers of the Company to sign all or any of the afore stated documents;

17. To authorize and approve notices, advertisements in relation to the Offer in consultation with the relevant intermediaries appointed for the Offer;

18. to do all such acts, deeds, matters and things and execute all such other documents, etc., as may be deemed necessary or desirable for such purpose, including without limitation, to finalise the basis of allocation and to allot the shares to the successful allottees as permissible in law, issue of allotment letters/confirmation of allotment notes, share certificates in accordance with the relevant rules, in consultation with the BRLM(s);

19. to make applications for listing of the Equity Shares in one or more stock exchange(s) for listing of the Equity Shares and to execute and to deliver or arrange the delivery of necessary documentation to the concerned stock exchange(s) in connection with obtaining such listing including without limitation, entering into listing agreements and affixing the common seal of the Company where necessary;

20. to settle all questions, difficulties or doubts that may arise in regard to the Offer, including such issues or allotment, terms of the IPO, utilisation of the IPO proceeds and matters incidental thereto as it may deem fit;

21. to submit undertaking/certificates or provide clarifications to the SEBI, Registrar of Companies, and the relevant stock exchange(s) where the Equity Shares are to be listed;

22. to negotiate, finalize, settle, execute and deliver any and all other documents or instruments and to do or cause to be done any and all acts or things as the Capital Raising Committee may deem necessary, appropriate or advisable in order to carry out the purposes and intent of this resolution or in connection with the Offer and any documents or instruments so executed and delivered or acts and things done or caused to be done by the said Capital Raising Committee shall be conclusive evidence of the authority of the said Capital Raising Committee in so doing;

23. To delegate any of its powers set out under 1 to 22 hereinabove, as may be deemed necessary and permissible under applicable laws to the officials of the Company;

24. To approve suitable policies on insider trading, whistleblowing, risk management, and any other policies as may be required under the SEBI Listing Regulations or any other applicable laws;

25. deciding, negotiating and finalizing the pricing and all other related matters regarding the Pre-IPO Placement, including the execution of the relevant documents with the investors in consultation with the BRLM(s) and in accordance with applicable laws;

26. Taking on record the approval of the Selling Shareholders for offering their Equity Shares in the Offer for Sale;

27. To withdraw the draft red herring prospectus or the red herring prospectus or to decide not to proceed

with the Offer at any stage in accordance with applicable laws and in consultation with the BRLM(s);

28. To appoint, in consultation with the BRLM(s), the registrar and other intermediaries to the Offer, in accordance with the provisions of the SEBI regulations and other Applicable Laws including legal counsels, banks or agencies concerned and entering into any agreements or other instruments for such purpose, to remunerate all such intermediaries/agencies including the payments of commissions, brokerages, etc. and to

terminate any agreements or arrangements with such intermediaries/ agents.

29. To fix date and time to convene the general meetings of the Shareholders of the Company as and when required.

ii) No. of Meetings held during the year:

During the FY 2022-2023, the Capital Raising Committee of the Board met Four (4) times on 31st May, 2022, 13th October, 2022, 18th October, 2022 and 24th November, 2022.

POST MEETING MECHANISM:

The important decisions taken at the Board/Board Committee Meetings are communicated to the concerned department/division.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Mr. Anil Kothuri, MD & CEO retired by rotation and was reappointed in accordance with the provisions of Section 152(6) of the Companies Act, 2013 and the Articles of Association of the Company, in the 27th Annual General Meeting (AGM) held on August 5, 2022.

Mr. Peruvemba Ramachandran Seshadri was appointed by the Board of Directors on August 12, 2022 as Additional Director in the capacity of Independent Director. There were no other changes in the composition of the Board of Directors and Key Managerial Personnel of the Company during the year under review.

In accordance with the provisions of section 152(6) of the Act and the Articles of Association of the Company, Mr. Shyam Srinivasan, Non executive Director is proposed to retire by rotation and being eligible offers himself for re-appointment at the forthcoming AGM. Necessary resolution for this purpose is being proposed in the Notice of the ensuing Annual General Meeting for approval by the members.

Mr. Anil Kothuri, MD & CEO is proposed to be re-appointed as Managing Director for a term of 5 years with effect from December 11,2023 at the forthcoming AGM.

Mr. Peruvemba Ramachandran Seshadri has relinquished his directorship on the Board of the Company vide his letter of resignation dated August 22, 2023 due to his appointment as Managing Director & CEO in South Indian Bank by RBI.

SEPARATE MEETING OF THE INDEPENDENT DIRECTORS:

During the year under review, the Independent Directors met once on 26th May, 2022. The said Meeting was conducted without the presence of the Non-Executive Non-Independent Directors or the members of the management.

DECLARATION FROM INDEPENDENT DIRECTORS:

All the three Independent Directors have given declarations that they meet the criteria of independence laid down under Section 149 of the Companies Act, 2013 and complied with the Code for Independent Directors prescribed in Schedule IV to the Act.

As on 31st March, 2023, the following Non-Executive Directors are Independent in terms of Section 149(6) of the Companies Act, 2013:

1. Mr. Balakrishnan Krishnamurthy (DIN: 00034031)

2. Mrs. Gauri Rushabh Shah (DIN:06625227)

3. Mr. Peruvemba Ramachandran Seshadri (DIN: 07820690)

In the opinion of the Board, the Independent Directors are persons with integrity, expertise and experience in the relevant functional areas.

Requirements of online proficiency self-assessment test in terms of Rule 6(4) of The Companies (Appointment and Qualifications of Directors) Rules, 2014 has been fulfilled by the Independent Directors.

THE CHANGE IN THE NATURE OF BUSINESS, IF ANY:

There was no change in the nature of business of the Company during the financial year ended 31st March, 2023.

BOARD EVALUATION:

Pursuant to the provisions of the Companies Act, 2013, evaluation of the performance of individual Directors (including the Chairman of the Board) were conducted on parameters such as level of engagement and contribution and independence of judgment - thereby safeguarding the interests of the Company. Evaluation sheet in form of questionnaire were circulated for undertaking performance evaluation.

The performance evaluation of the Independent Directors were carried out by the entire Board, excluding the director being evaluated. The performance evaluation of the Chairman, the Non-Independent Directors and Board as a whole were carried out by the Independent Directors. The Board also carried out annual performance evaluation of the working of each of its Board constituted Committees.

Your Company has received undertaking and declaration from each Director on fit and proper criteria in terms of the provisions of Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 "RBI NBFC Master Directions". The Board of Directors has confirmed that all existing Directors are fit and proper to continue to hold the appointment as Directors on the Board, as reviewed and recommended by the Nomination and Remuneration Committee on fit and proper criteria under RBI NBFC Master Direction.

The Directors have expressed their satisfaction with the evaluation process. The Board opined that the Board Committees'' composition, structure, processes and working procedures are well laid down and that the Board Committees members have adequate expertise drawn from diverse functions, industries and business and bring specific competencies relevant to the Company''s business and operations.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES:

The Company does not have any subsidiary, joint venture or associate Company.

HUMAN RESOURCE - TALENT POOL -PERFORMANCE MANAGEMENT:

Fedfina has always prided itself in being a people first organization. Our concentration revolves around continuous growth, culture and a learning experience.

Our evolved digitized onboarding assisted us in seamless joining for new joiners in different geographies where we have expanded our foot prints. Our employee strength has grown 25% from the previous year.

Keeping in mind the delivery of our plan in these volatile and dynamic environment we continue to tap and nurture our internal talent pool and enable them in all means which could help them become future ready in these times of dynamic and volatile environment. In line with this, we introduced the 2nd batch of "Leadership Excellence and Acceleration Program" (LEAP) which aims at development of identified High Potential Employees through focused interventions and thus help build a talent pipeline.

In continuation to our endeavor to promote Gender Diversity at workplace, we launched Restart with Fedfina-To help women with career breaks; restart their career.

Further, we actively invest in improving the wellness quotient of our employees via ongoing Employee Wellness initiatives like monthly Wellness Leaves for female staff to support them through any health related challenges, Family Friday - a provision where they get more time to spend with their family.

In line with our commitment to contribute to the sustainable economic development by working with the society at large, we have been actively engaging in CSR activities.

PARTICULARS OF EMPLOYEES:

The provisions specified in section 197 of the Companies Act 2013 read with Rule 5(2) and rule 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are not applicable to us.

CAPITAL ADEQUACY:

Your Company''s capital adequacy ratio stood at 17.94% as on March 31, 2023 which is well above the threshold limit of 15% prescribed by the Reserve Bank of India. Tier-I Capital ratio alone stood at a healthy 15.09%.

PUBLIC DEPOSITS:

Your Company is Non- Deposit taking Systematically Important NBFC and has not accepted public deposits during the year under review in terms of Chapter-V of the Companies Act, 2013.

RISK MANAGEMENT POLICY:

Your Company has a Board approved Risk Management Policy that lays down the overall framework for identifying, assessing, measuring and monitoring various elements of risk involved in the businesses and for formulation of procedures and systems for mitigating such risks. The main objective of this policy is to ensure sustainable and prudent business growth.

The function is supervised by a Board constituted Risk Committee which reviews the asset quality and portfolio composition on a regular basis. Any product policy programs are duly approved by this Committee.

Your Company has adopted and laid down operating procedures and guidelines to mitigate operational and fraud risks in its business lines.

Your Company continues to invest in people, processes, training and technology; so as to strengthen its overall Risk Management Framework.

AUDITORS:

1. STATUTORY AUDITORS & THEIR REPORT

M/s BSR & Co. LLP, Chartered Accountants (Firm Registration No. 101248W / W- 100022) were appointed as Statutory Auditors of your Company at the Twenty sixth Annual General Meeting (AGM) held on September 24, 2021 for a tenure of three years till the conclusion of the Twenty ninth Annual General Meeting to be held for the year 2024. The Audit Report submitted by M/s BSR & Co. LLP, Chartered Accountants, for FY 2022- 2023 does not contain any qualification, reservation or adverse remark.

2. SECRETARIAL AUDITORS & THEIR REPORT

M/s. DM Associates Company Secretaries LLP were appointed as the Secretarial Auditors to conduct the Secretarial Audit for the financial year ended March 31,2023. The Report of the secretarial auditors in the prescribed Form MR-3 is set out in Annexure-II to this Report. The Secretarial Audit Report does not contain any qualifications, reservation or adverse remark except to the extent stated below:

The Bombay Stock Exchange Limited (BSE) vide their email dated October 31,2022, imposed a fine of INR 2,08,860/- for non-compliance with Regulation 50(2) for delay in furnishing intimation about meeting of shareholders or holders of non-convertible securities and Regulation 53(2) for non-submission of annual report within the period prescribed (which was duly paid on January 3, 2023). We were informed that the Company vide its email dated November 7, 2022,

submitted to BSE asserting that Regulation 50(2) had been duly complied with and there had been no noncompliance by the Company since the date of holding of 27th Annual General Meeting of the Company was intimated to the exchange on July 14, 2023 which was not later than the date of commencement of dispatch of notices to the members. We were further informed that the Company had submitted a waiver application to BSE for the fine levied under Regulation 53(2) which is currently under consideration with BSE.

Management Response

The observations made in the Secretarial Auditors report are self-explanatory and therefore do not call for any further comments.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Your Company believes that strong internal control system and processes play a critical role in the health of the Company. Your Company has instituted adequate internal control systems commensurate with the nature of its business & size of operations. Your Company''s well-defined organizational structure, documented policy guidelines, defined authority matrix and internal controls ensure efficiency of operations, compliance with internal policies and applicable laws and regulations as well as protection of resources. The internal control system is supplemented by internal audits, regular reviews by the management and standard policies and guidelines which ensure reliability of financial and all other records. Your Company''s Internal Audit department performed regular reviews of business processes to assess the effectiveness & adequacy of the internal control systems, compliance with policies and procedures.

All significant audit observations of the internal auditors and follow up actions were duly reported and discussed at the Audit Committee.

INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY:

Internal Financial Controls laid down by the Company is a systematic set of controls and procedures to ensure orderly and efficient conduct of its business including adherence to the Company''s policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information. Internal financial controls not only require the system to be designed effectively but also to be tested for operating effectiveness periodically.

During the year, your Company had engaged a firm of Chartered Accountants to evaluate the internal financial control framework and to test its operating effectiveness. Based on the testing conducted by the aforesaid firm, the Board is of the view that the Company has laid down adequate internal financial controls commensurate with the nature and size of its business operations and these

controls are adequate and operating effectively and no material weaknesses have been observed.

RELATED PARTY TRANSACTIONS:

All the related party transactions that were entered into during the financial year were on arm''s length basis and in ordinary course of business.

All related party transactions are placed before the Audit Committee on quarterly basis. Transaction with related parties, as per the requirements of Accounting Standards, are disclosed in the notes to accounts annexed to the financial statements.

Particulars of contracts or arrangements with related parties referred to in sub-section (1) of section 188 in the prescribed form are provided in the form AOC-2 in accordance with the rule 8 (2) of the Companies (Accounts), 2014 Rules. Form AOC-2 is set out in Annexure-III.

FRAUD REPORTING:

Pursuant to the Board approved ''Fraud Risk Management and Fraud Investigation Policy'' of the Company, information relating to all frauds of INR. 1 Lakh and above are reported promptly to the Board and quarterly reviews are placed before the Board for their information.

During the year under review, the frauds detected and the same has been timely reported to the Audit Committee/ Board as well as to the Reserve Bank of India (RBI) amounting to INR 1767.05 lakhs.

Pursuant to the provisions of the Companies Act, 2013, no frauds were reported by the Auditors of the Company to the Audit Committee during the year under review.

MAJOR EVENTS DURING THE YEAR AND MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY AND THE DATE OF THE REPORT:

Your Company had filed Draft Red Herring Prospectus ("DRHP") dated February 18, 2022 with SEBI. The Company received the letter dated May 6, 2022 from the National Stock Exchange and BSE Limited respectively granting in-principle approvals to issue equity shares through Initial Public Offering("IPO"). Your Company received final observations from SEBI pursuant to their letter dated May 13, 2022 which was valid for a period of 12 months i.e. till May 12, 2023.

Further, the Board of Directors vide resolution dated May 17, 2023 had approved not to proceed with the IPO due to the expiry of the validity of the SEBI final observations on May 12, 2023 and on account of prevailing market conditions and other commercial and strategic considerations.

Further, the Company at its Extra-ordinary General Meeting ("EGM") held on July 21,2023 has passed special resolution approving the fresh issue of Equity Shares through IPO upto INR 1,000 crores and Alteration of Articles of Association to this effect.

Further, the Board of Directors vide resolution dated July 26, 2023 approved the DRHP. The Company has re-filed Draft Red Herring Prospectus ("DRHP") dated July 26, 2023 with SEBI. The final observations from SEBI are awaited as on the date of this report.

The Company at its EGM held on July 21, 2023 has also passed special resolution for adoption of amended the Employee Stock Option Plan, 2018 (ESOP, 2018) to vary the Exercise Period in the interest of the employees.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013:

Pursuant to the provisions related to loans made, guarantees given and securities provided do not apply to the Company. Pursuant to the provisions of Section 186 (4) of the Act, the details of investments made by the Company are given in the Notes to the Financial Statements.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:

There are no significant and material orders passed by the regulators or courts or tribunals that would impact the going concern status of the Company and its future operations.

COMPLIANCE WITH THE SECRETARIAL STANDARDS AND SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015:

The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively.

The applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to ''Meetings of the Board of Directors'' and ''General Meetings'', respectively, have been duly complied by your Company.

The Company has complied with applicable provisions of SEBI (Listing Obligations and Disclosure requirements) Regulations, 2015. All Board members and senior management personnel have affirmed compliance with the Company''s code of conduct for the FY 2022-23.

The Company, being a high value debt listed entity, the corporate governance requirements pursuant to the regulations 16 to regulations 27 of SEBI (Listing Obligations and Disclosure requirements) Regulations, 2015 are

applicable on comply or explain basis till March 31,2024. The Company is currently in the process of implementing the same and the Company shall comply with all the said regulations from April 1,2024.

DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT 2013 READ WITH RULES:

The Company has an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of

Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. Your Company is in compliance with the constitution of Internal Complaints Committee (ICC) to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

The following is a summary of sexual harassment complaints received and dealt with during the year 2022-23:

¦ No. of complaints received: Nil

¦ No. of complaints disposed of: Not Applicable.

RBI GUIDELINES:

The Reserve Bank of India (RBI) granted the Certificate of Registration to the Company in August 2010 vide Registration No. N-16.00187, to commence the business of a non-banking financial institution without accepting public deposits. Your Company has complied with and continues to comply with all the applicable regulations and directions of the RBI. Details of auctions conducted during the year under review are set out below:

VIGIL MECHANISM:

As per the provisions of Section 177(9) of the Companies Act, 2013, the Company is required to establish an effective Vigil Mechanism for Directors and employees to report genuine concerns. The Company as part of this has in place a Board approved "Policy on Vigil Mechanism" to deal with the instances of fraud and mismanagement, if any. The said policy is available on the website of your Company at https://www.fedfina.com

This Vigil mechanism of the Company is overseen by the Audit Committee and provides adequate safeguard against victimisation of employees and also provide direct access to the Chairman of the Audit Committee in exceptional circumstances.

Your Company affirms that no personnel has been denied access to the Audit Committee.

Out of 5 complains received, 3 complaints pertained to vigil mechanism framework/policy and the same were resolved.

ANNUAL RETURN:

Pursuant to section 92 (1) of the Companies Act 2013, the Annual Return for the year 2022-23 is uploaded on the website of the Company (https://www.fedfina.com)

MAINTAINENCE OF COST RECORDS

The Company being, a Non Banking Financial Company is not required to maintain cost records as prescribed under section 148 (1) of the Act.

PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE INFLOW/OUTFLOW, ETC.:

The requirements of disclosure with regard to Conservation of Energy and technology absorption in terms of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules 2014, are not applicable to the Company; as it does not own any manufacturing facility.

However, the Company makes all efforts towards conservation of energy, protection of environment and ensuring safety as follows:

1) Installation of LED (Light emitting diode) in branches / offices.

2) Creating environmental education / awareness for employees through electronic / digital form on ways and means conserve electricity and other natural resources.

3) Minimizing Air Condition usage

4) Shutting of lights when not in use.

Technology is at the forefront of operations of the company with relentless focus on improving customer service, process automations, robust risk management and enhancing digital footprint. We have integrated systems that spans from origination to loan management to financial statements to client servicing. All our core applications are on Cloud enabling both scale and sustenance. Technology forms the bedrock of providing multi-channel experience covering App, Web, Social and Physical. We have made significant investments in

upgrading our architecture aimed at being nimble and support business growth.

We are committed to continue investments in Technology to make us future ready and improve operational efficiencies. We have been recognized with several awards that stands testimony on the efforts undertaken and support in our pursuit of superior differentiation with customers and competition alike.

No foreign exchange was earned or spent in terms of actual inflows or outflows during the year under review.

DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to Section 134 of the Companies Act, 2013, the Directors confirm that:

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

II. such accounting policies have been selected and applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31,2023 and the profits of the Company for the financial year ended on that date;

III. proper and sufficient care had been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

IV. the annual accounts have been prepared on going concern basis; and

V. proper systems had been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGEMENT:

Your Directors would like to place on record, their gratitude for the cooperation and guidance received from all the statutory bodies, especially the RBI. The Directors also thank the shareholders, clients, vendors, investors, banks and other stakeholders in placing their faith in the Company and contributing to its growth.

EMPLOYEES RELATIONSHIP:

The employees at all grades of the Company have extended their whole-hearted cooperation to the Company for the smooth conduct of the affairs of the Company and the employee relations of the Company have been cordial. Your Directors wish to place on record their deep sense of appreciation for all the employees whose commitment, cooperation, active participation, dedication and professionalism has made the organization''s significant growth possible.

CAUTIONARY NOTE:

Certain statements in this Report may be forward-looking and are stated as may be required by applicable laws and regulations. Actual results may vary from those expressed or implied, depending upon economic conditions, Government policies and other incidental/related factors.