Notes to Accounts of Home First Finance Company India Ltd.

Mar 31, 2025

5.2 Impairment assessment Definition of default

The Company considers a financial instrument as defaulted and considers it as Stage 3 (credit-impaired) for expected credit loss (ECL) calculations, when the assets become more than 90 days past due on its contractual payments and these assets continue to be classified as Stage 3 till the entire overdues are received, in accordance with the RBI guidelines and the ECL Policy.

Exposure at default

The exposure at default (EAD) represents the gross carrying amount of the financial instruments subject to the impairment calculation, addressing both the customer''s ability to increase its exposure while approaching default and potential early repayments too.

Probability of default

Probability of default (PD) represents the likelihood of default over a defined time horizon.

Loss given default

Loss given default (LGD) has been calculated by taking into account the recovery experience across the Company''s loan accounts post default. The recoveries netted off by expenses incurred for recovery, are tracked and discounted to the date of default using the interest rate.

Significant increase in credit risk

The Company continuously monitors all assets subjected to ECL. In order to determine whether an instrument or a portfolio of instruments is subject to 12 months ECL or Lifetime ECL, the Company assesses whether there has been a significant increase in credit risk since initial recognition. The Company considers an exposure to have significantly increased in credit risk when contractual payments are more than 30 days past due and/ or when the accounts have been restructured under the RBI ''Resolution Framework - 2.0: Resolution of COVID-19 related stress of Individuals and Small Businesses'' Guidelines. The Company also assesses if there has been a significant increase in credit risk by considering qualitative factors for increased risk of default for a financial asset.

When estimating ECLs on a collective basis for a group of similar assets, the Company applies the

same principles for assessing whether there has been a significant increase in credit risk since initial recognition.

Grouping financial assets measured on a collective basis

As explained above, the Company calculates ECL on a collective basis on the following broad asset classes:

- Home loans

- Loan against property

- Commercial loan

- Construction finance

Risk assessment model

The Company has designed and operates its risk assessment model that factors in both quantitative as well as qualitative information on the loans and the borrowers. The model uses historical empirical data to arrive at factors that are indicative of future credit risk and segments the portfolio on the basis of combinations of these parameters into smaller homogenous portfolios from the perspective of credit behaviour.

The Company considers qualitative factors and creates additional provisions in relation to specific borrowers over and above the ECL model based on the evaluation of the expected cash flows.

Co llateral

The Company holds collateral to mitigate credit risk associated with financial assets that are measured at amortised cost. The main types of collateral include residential and commercial properties.

Assets possessed under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

Loan Portfolio includes gross loans amounting to '' 439.43 million (31 March 2024: '' 261.33 million), out of which '' 20.38 million (31 March 2024: '' 21.00 million) pertains to retained portion of loans from the assigned portfolio, against which the Company has taken possession of the properties und er Secu ritisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and held such properties for disposal.

The Company has outstanding 2,800 debentures (31 March 2024: 2,800 debentures) at a face value of ''1.00 million which are unlisted and secured against the first pari-passu charge (along with banks, financial institutions and other lenders which provide credit facilities to the issuer) by way of hypothecation on the Company''s present and future receivables and book debts, cash and cash equivalents and investments, as may be identified by the Company on a time to time basis.

( i ) All borrowings are secured against the loan assets, investments, cash and cash equivalents and bank balances other than cash and cash equivalents of the Company to the extent of required asset cover as per sanctioned terms.

(ii) The repayment of the borrowing is done in monthly, quarterly and half - yearly instalment as per the sanctioned terms.

(iii) The Company has not made any default in repayment of instalments due over the reporting year.

(iv) Bank guarantees of '' 340.00 million and '' 10.00 million for term loans from NHB is provided by Axis Bank Limited and Central Bank of India (31 March 2024: '' 340.00 million and '' 10.00 million) respectively on behalf of the Company to NHB. Total outstanding balance as at 31 March 2025 for such term loans is ''1,677.37 million (31 March 2024: '' 2,468.75 million).

(v) Borrowings in India includes outstanding foreign currency borrowings amounting to '' 3,343.44 million (31 March 2024: '' 4,442.95 million) for which the Company has entered in to forward contracts to hedge the foreign currency risk.

iii. Terms, rights, preferences and restrictions attached to shares Equity shares:

The Company has only one class of equity share having face value of ''2 per share. Each holder of equity share is entitled to one vote per share. The dividend proposed, if any, by the board of directors is subject to the approval of shareholders in the ensuing general meeting. In the event of liquidation of the Company, the holder of equity shares will be entitled to receive any of the remaining assets of the Company.

iv. Issue ofbonus shares or buyback ofshares

The Company has not issued/ allotted any shares pursuant to contracts without payment being received in cash, nor issued any bonus shares nor there has been any buyback of shares during five years immediately preceding 31 March 2025.

v. For details of shares reserved for issue under the employee stock option plan (ESOP) of the Company and shares exercised under ESOP, refer note 40.

21.2 Statutory reserve

As per Section 29C of National Housing Bank Act (NHB), 1987, the Company is required to transfer at least 20% of its net profits every year to a reserve before any dividend is declared. For this purpose, any Special Reserve created by the Company under Section 36(1)(viii) of the Income Tax Act, 1961 is considered to be an eligible transfer. Thus, during the year ended 31 March 2025 and 31 March 2024, the Company has transferred to Statutory Reserve, an amount arrived in accordance with Section 29C of the NHB Act, 1987.

21.3 Securities premium

Securities premium is credited when shares are issued at premium. It can be used to issue bonus shares, to provide for premium on redemption of shares or debentures, share issue related expenses like underwriting costs etc. in

accordance with Section 52 of the Companies Act, 2013.

21.4 Stock options outstanding account

Share options outstanding account is created as required by Ind AS 102 ''Share Based Payments'' on the Employee stock option schemes operated by the Company for its employees.

21.5 Retained earnings

Retained earnings represents the amount of accumulated earnings of the Company.

21.6 Remeasurements of defined benefit plans

Remeasurements of defined benefit plans r e p r e s e n t s c h a n g e o n a c c o u n t o f remeasurement of the net defined benefit liabilities comprising of actuarial gain/ loss.

21.7 Cash flow hedge reserve

Cash flow hedge reserve represents changes in the fair value of derivative financial instruments which are designated as effective hedges.

1. The transactions disclosed above are excluding GST. Remuneration includes amount of incentives paid during the year ended 31 March 2025 and 31 March 2024.

2. The transactions disclosed above are in the ordinary course of business and on an arms'' length basis.

3. During the year ended 31 March 2025, 3,00,000 employee stock options amounting to '' 35.17 million were exercised (31 March 2024: 10,000 options amounting to '' 1.17 million). The cost of options granted for the year ended 31 March 2025 is '' 38.98 million (31 March 2024: '' 11.27 million).

34 Capital management

The Company''s capital management strategy is to effectively determine, raise and deploy capital to cover risk inherent in business and meeting the capital adequacy requirements of the Reserve Bank of India (RBI). The same is done through a combination of equity and/ or short term/ long term debt as may be appropriate. The Company determines the amount of capital required on the basis of operations and capital expenditure. The adequacy of the Company''s capital is

monitored using, among other measures, the regulations issued by the R BI.

The capital structure is monitored on the basis of net debt to equity and maturity profile of overall debt portfolio. The Company''s policy is in line with Master Direction - Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021 which currently permits HFCs to borrow up to 12 times of their net owned funds ("NOF"). Refer note 51 for Capital to risk-weighted assets ratio (CRAR).

Loan covenants

define capital structure requirements. Breach in meeting these financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any borrowing in the reporting year.

35.2 Fair value hierarchy

The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the Indian Accounting standard.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, units of mutual funds (open ended) and traded bonds that have quoted price. Open-ended mutual funds are valued at Net Asset Value (NAV) declared by respective fund house and are classified under Level 1.

Level 2: The fair value of financial instruments that are

not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2, this level of hierarchy includes financial assets, measured using inputs other than quoted prices included within Level 1 that are observable for the asset, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: This level of hierarchy includes financial instruments measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

There have been no transfers amongst the levels of hierarchy during the year ended 31 March 2025 and 31 March 2024.

35.4 Financial assets and liabilities measured at amortised cost at each reporting date

1. The carrying value of excess interest strip receivable, bank deposits, debt securities and borrowings represents its fair value.

2. Further, the carrying value of cash and cash equivalents, investments in government securities, receivables, other financial assets, trade payables and other financial liabilities are considered to be approximately equal to the fair value due to their short term maturities.

3. Substantial amount of loans and borrowings are at a floating rate of interest and the carrying amount of these are considered to be approximately equal to their fair value.

4. Debt securities are at a floating rate of interest and hence, the carrying value is equal to the fair value.

For carrying value and fair value of investments in mutual funds and derivative financial instruments, refer note 35.3.

35.5 Valuation techniques

The fair value of the financial assets and liabilities is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair value s:

Derivative financial instruments - The fair value is determined as the present value of future expected cashflows based on observable yield curves and/ or forward exchange rates on the reporting date. The fair valuation is classified as level 2 in the fair value hierarchy since the inputs are observable but are not quoted prices.

36 Financial risk management

The Company is exposed to certain financial risks namely credit risk, liquidity risk and market risk i.e. interest risk, foreign currency risk and price risk. The Company''s primary focus is to achieve better predictability of financial markets and minimise potential adverse effects on its financial performance by effectively managing the risks on its financial assets and liabilities.

The principal objective in Company''s risk management processes is to measure and monitor the various risks associated with the Company and to follow policies and procedures to address such risks. The Company''s risk management framework is driven by its Board and its subcommittees including the Audit Committee, the Asset Liability Management Committee and the Risk Management Committee. The Company gives due importance to prudent lending practices and have implemented suitable measures for risk mitigation, which include verification of credit history from credit information bureaus, personal verification o f a customer''s business and residence, valuation of collateral, technical and legal verifications, conservative loan to value, and required term cover for insurance.

A Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. For the Company, liquidity risk arises from obligations on account of financial liabilities - borrowings, trade payables and other financial liabilities. The Company manages liquidity risk by maintaining adequate cash reserves by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

B Market risk

( i ) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign currency rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily towards principal and interest payments at a future date on the foreign currency borrowings and certain vendors in trade payables.

I n order t o minimise any adverse impact on the financial performance of the Company, the Company enters in to forward contracts and cross currency interest rate swaps to hedge the foreign currency risk in such a manner that it results in fixed determinate outflows in the functional currency and as such there would be no significant impact of movement in foreign currency rates on the Company''s profit before tax and equity.

(ii) Interest rate risk

factors. In order to manage interest rate risk, the Company seeks to optimise borrowing profile between short-term and long-term loans. The liabilities are categorised into various time buckets based on their maturities and the Asset Liability Management Committee supervise an interest rate sensitivity report periodically for assessment of interest rate risks.

37 Credit risk management Credit quality of assets

Credit risk is the risk that the Company will incur a loss because the counterparty might fail to discharge their contractual obligations. The Company has a comprehensive framework for monitoring credit quality of its retail and other loans primarily based on number of days past due.

The Company manages credit risks by using a set of credit procedures and guidelines, laid down in the credit risk policy, to ensure effective credit risk management and health of the portfolio. The adherence to the policy and various processes is monitored and appraised in the credit committee meetings on a quarterly basis. The

policy is amended periodically to ensure compliance with the guidelines of the RBI as well as other regulatory bodies.

We have implemented a structured credit approval process, including multi-step customer verification and comprehensive credit risk assessment, which encompasses analysis of relevant quantitative and qualitative information to ascertain the credit worthiness of a potential customer. As part of our multi-step customer verification, we have established a process by which separate set of verifications are conducted by a customer relationship manager and customer service officer to ensure the quality of customers acquired as well as eliminate misuse of borrowing practices.

Portfolio quality, credit limits, collateral quality and credit exposure limits are regularly monitored at various levels.

The Company considers a financial instrument as defaulted and considers it as Stage 3 (credit-impaired) for expected credit loss (ECL) calculations, when the assets become more than 90 days past due on its contractual payments and these assets continue to be classifed as Stage 3 till the entire overdues are received from the borrower, in accordance with the RBI guidelines and the ECL Policy.

The Company evaluates the credit risk on its receivables from assigned portfolio and creates a provision for expected credit loss, refer note 7. The expected credit loss on the underlying assigned portfolio is used to determine the provision for expected credit loss on the excess interest strip receivable.

The following table sets out information about credit quality of loans measured at amortised cost based on the staging of the loans. The amount represents gross carrying amount. (Refer note 5 - Loans for detailed disclosure on gross carrying value and ECL amount on loans).

38 Transfers of assets Assignment deal:

The Company has sold some loans measured at amortised cost as per assignment deals during the year. As per the terms of these deals, since substantial risk and rewards related to these assets were transferred to the buyer, the assets have been derecognised from the Company''s balance sheet.

The management has evaluated the impact of assignment transactions done during the year for its business model. Based on the future business plan, the Company''s business model remains to hold the assets for collecting contractual cash flows. The table below summarises the carrying amount of the derecognised financial assets measured at amortised cost and the gain on derecognition, per type of asset.

b. The Company has not acquired any loan which is either not in default or stressed during the year ended 31 March 2025 and 31 March 2024.

c. The Company has not transferred any stressed loan during the year ended 31 March 2025 and 31 March 2024.

39 Employee benefits

(A) Defined benefit obligation

The Company has an unfunded defined benefit plan i.e.,

Gratuity, for its employees. Under the gratuity plan every employee who has completed at least five years of service gets a gratuity on departure at 15 days of salary for each year of service.

Contribution to gratuity fund (unfunded scheme)

In accordance with Indian Accounting Standard 19 ''Employee benefits'', actuarial valuation was done in respect of the aforesaid defined benefit plan of gratuity based on the following assumptions:

Interest rate risk: The risk of government security yields falling due to which the corresponding discount rate used for valuing liabilities falls. Such a fall in discount rate will result in a larger value placed on the future benefit cash flows whilst computing the liability and thereby requiring higher accounting provisioning.

Longevity risk: Longevity risks arises when the quantum of benefits payable under the plan is based on how long the employee lives post cessation of service with the company. The gratuity plan provides the benefit in a lump sum form and since the benefit is not payable as an

annuity for the rest of the lives of the employees, there is no longevity risk.

Salary risk: The gratuity benefits under the plan are related to the employee''s last drawn salary. Consequently, any unusual rise in future salary of the employee raises the quantum of benefit payable by the company, which results in a higher liability for the company and is therefore a plan risk for the company.

Asset liability matching risk: The Company faces asset liability matching risk as to the matching cashflow as it has to pay the gratuity benefits on pay as you go basis.

(B) Defined contribution plan

The Company contributes towards provident fund for employees which is the defined contribution plan for qualifying employees. Under this Scheme, the Company is required to contribute specified percentage of the payroll cost to fund the benefits. The Company recognised '' 52.35 million (31 March 2024: '' 40.37 million) for provident fund contributions in the statement of profit and loss.

(C) Compensated absence expenses

The Company has accounted for provision for compensated absences. An employee is eligible to carry forward 30 to 90 days of leaves basis their work location to the next period from the balance leaves pending utilisation; however these leaves are non-encashable. Provision for compensated absence for current year is '' 3.39 million (31 March 2024: '' 2.50 million).

41 Segment information41.1 Operating segment

The Company''s main business is financing by way of loans towards affordable housing segment in India. All other activities of the Company revolve around the main business. As such, there are no separate reportable segments, as per the Indian Accounting Standard (Ind AS) 108 on ''Segment Reporting''. Accordingly, the amounts appearing in the financial statements relate to the Company''s single business segment.

41.2 Entity wide disclosures

No revenue from transactions with a single external customer or counterparty amounted to 10% or more of the Company''s total revenue in the year ended 31 March 2025 and 31 March 2024.

The Company operates in single geography i.e. India and therefore geographical information is not required to be disclosed separately

42 Lease disclosure

Where the Company is the lessee:

The Company has entered into agreements for taking its office premises under leave and license arrangements. These agreements are for tenures between 1 year and 9 years and majority of the agreements are renewable by mutual consent on mutually agreeable terms, lease rentals have an escalation ranging between 3% to 15%. Leases for which the lease term is less than 12 months have been accounted as short term leases.

The Company undertakes the following activities in the

nature of Corporate social responsibility (CSR):

a. Promoting education, including special education and employment enhancing vocational skills, especially among children, women, and elderly;

b. Promoting health care, including preventive health care and sanitation;

c. Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources;

d. Promoting digital literacy, building importance of saving, and instilling future planning skills among students.

Notes:

1. No amount has been spent by the Company for the construction/ acquisition of any new asset relating to CSR during the year ended 31 March 2025 and 31 March 2024.

2. There have been no related party transactions during the year ended 31 March 2025 and 31 March 2024 in respect of CSR activities.

44 Contingent liabilities and commitments There are no Contingent Liabilities as on 31 March 2025 (31 March 2024: Nil).		('' in million)
	As at	As at
	31 March 2025	31 March 2024
Commitments - Undisbursed amount of housing and other loans	15,094.55	11,902.36

45 Disclosures required under the RBI Resolution Framework - 2.0: Resolution of COVID-19 related stress of Individuals and Small Businesses dated 05 May 2021 with reference to disclosures stated under Format-B prescribed in the Resolution Framework - 1.0.

47 Disclosures required under Master Direction - Reserve Bank of India (Non-Banking Finance Company -Scale Based Regulation) Directions, 2023
Requirements	Response
NBFCs shall put up to the Board of Directors, at regular intervals, the progress made in putting in place a progressive risk management system and risk management policy and strategy followed by the NBFC.	The Company has put in place a risk management policy and periodic updates are presented to the Risk Management Committee.
NBFCs shall put up to the Board of Directors, at regular intervals, conformity with corporate governance standards viz., in composition of various committees, their role and functions, periodicity of the meetings and compliance with coverage and review functions, etc.	The Company has put up to the Board of Directors'' confirmity with corporate governance standards compliance.
48 The Company is not a declared wilful defaulter by any bank or financial Institution or other lender, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India, during the year ended 31 March 2025 and 31 March 2024. The Company does not have any transactions 50 with the companies struck off under section 248 of Companies Act, 2013 or section 560 of Companies Act, 1956 during the year ended 31 March 2025 and 31 March 2024. 49 On 11 April 2025, the Company has, by way of	Qualified Institutions Placement in accordance with SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, alloted 1,28,86,597 equity shares of face value of '' 2 per share at a price of '' 970 per share, aggregating to '' 12,500 million. Registration of charges or satisfaction with Registrar of Companies (ROC) There has been no delay in registration or satisfaction of charges with ROC beyond the statutory date during the year ended 31 March 2025 and 31 March 2024.

ii. No proceedings have been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder, as at 31 March 2025 and 31 March 2024.

iii. The Company has a process whereby periodically all long-term contracts (including derivative contracts) are assessed for material

foreseeable losses. The Company reviews and ensures that adequate provision as required under any law/ accounting standards for material foreseeable losses on such long-term contracts (including derivative contracts) has been made in the books of account. There were no such contracts for which there were any material foreseeable losses for the year ended 31 March 2025.

53 The Company has taken borrowings from banks and financial institutions and utilised them for the specific purpose for which they were taken as at the Balance sheet date. Unutilised funds as at 31 March 2025 and 31 March 2024 are held by the Company in the form of investments and bank deposits till the time the utilisation is made subsequently.

54 There have been no transactions which have not been recorded in the books of accounts, that have been surrendered or disclosed as income during the year ended 31 March 2025 and 31 March 2024, in the tax assessments under the Income Tax Act, 1961. There have been no previously unrecorded income and related assets which were to be properly recorded in the books of account during the year ended 31 March 2025 and 31 March 2024.

55 As a part of normal lending business, the Company grants loans and advances on the basis of security / guarantee provided by the borrower/ co-borrower. These transactions are conducted after exercising proper due diligence. Other than the transactions described above,

a. No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding (whether recorded in writing or otherwise), that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

b. No funds have been received by the Company from any persons(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding (whether recorded in writing or otherwise), that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Parties ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

56 The Company has not traded or invested in Crypto currency or Virtual Currency during the year ended 31 March 2025 and 31 March 2024.

58.6 Institutional set-up for liquidity risk management

The Company''s Board of Directors monitors all the risks, including liquidity risk. Governance structure, policies and risks limits are prescribed by the Board.

Board Constituted Asset Liability Committee (ALCO) ensures effective asset-liability management, market risk management, liquidity and interest rate risk management and also adherence to risk tolerance/ limits set up by the Board. ALCO provides guidance and directions in terms of interest rate, liquidity, funding sources, and investment of surplus funds.

The Risk Management Committee constituted by the Board of Directors is primarily responsible for the effective supervision, evaluation, monitoring and review of various aspects and types of risks, including liquidity risk, faced by the Company.

Further, as per guidelines issued by the RBI, HFCs are required to maintain the Liquidity Coverage Ratio (LCR), to maintain liquidity buffers to withstand potential liquidity disruptions by ensuring that it has sufficient High Quality Liquid Assets (HQLA) to survive any acute liquidity stress scenario lasting for 30 days. As per the guidelines, the weighted values of the net cash flows are calculated after the application of respective haircuts for HQLA and considering stress factors on inflows at 75% and outflows at 115%.

For all non-deposit taking HFCs with an asset size of ''5,000 crore and above, but less than '' 10,000 crore, there is a phased transition towards meeting the minimum LCR, with the requirement as on 01 December 2021 being 30%. Thereafter, the requirement increases from 01 December 2022 onwards in a graded manner. The Company has put in place a liquidity risk management framework so as to adhere to the said LCR guidelines and applicable timelines.

59 Disclosure on Liquidity Coverage Ratio (LCR) in accordance with RBI circular No. RBI/2020-21/73 DOR.FIN.HFC.CC.No.102/ 03.10.136/ 2020-21 dated 17 February 2021 and RBI circular No. RBI/DNBR/2016-17/45 Master Direction DNBR.PD.008/03.10.119/ 2016-17 dated 01 September 2016

The RBI vide Circular No. RBI/2020-21/73 DOR.FIN.HFC.CC.No.120/03.10.1 36/2020-21 dated 17 February 2021 issued guidelines on maintenance of Liquidity Coverage Ratio (LCR) for HFCs.

The objective of the LCR is to promote resilience in the liquidity risk profile of HFCs. This is done by ensuring that the Company has an adequate stock of unencumbered high-quality liquid assets (HQLA) that can be converted easily and immediately into cash to meet its liquidity needs for a 30 calendar day liquidity stress scenario. Further, the guidelines required all non-deposit taking HFCs with an asset size of '' 5,000 crore and above, but less than ''10,000 crore, to maintain minimum LCR of 30% as on December 2021, to be gradually increased to 100% by December 2025. The Company''s Board approved Asset Liability Management (ALM) Policy covers its Liquidity Risk Management policies and processes, stress testing, contingency funding plan, maturity profiling, Currency Risk, Interest Rate Risk and Liquidity Risk Monitoring Tools.

The Company regularly reviews the maturity position of assets and liabilities and liquidity buffers, and ensures maintenance of sufficient quantum of High Quality Liquid Assets, most of which is in the form of government securities as at 31 March 2025 and 31 March 2024.

The main drivers of LCR are:

Outflows comprises of:

a) All the contractual debt repayments and interest payments

b) Expected operating expense Inflows comprises of:

a) Expected receipt (scheduled EMIs) from all loans

b) Liquid investment in the form of unencumbered fixed deposits with banks which are not forming part of High Quality Liquid Assets

c) Sanctioned and undrawn lines of credits.

For concentration of funding sources, refer 58 on disclosure on liquidity risk.

To hedge the interest rate risk and foreign currency risk on foreign currency borrowings, the Company enters into derivative transactions.

65.3 Disclosures on Risk Exposure in Derivatives A. Qualitative Disclosure

The Company manages various risks associated with the lending business, including liquidity risk, foreign exchange risk, interest rate risk and counterparty risk. To manage these risks, the Company has Board approved policies and framework, including the Risk Management Policy and ALCO Policy, which sets limits

for exposures on currency, interest rates and other parameters. The Company manages its currency risk and enters in to derivative contracts in accordance with the guidelines prescribed therein.

Liquidity risk and Interest rate risk arising out of maturity mismatch of assets and liabilities are managed through regular monitoring of maturity profiles. The currency risk and interest rate risk on borrowings is actively managed mainly through

derivative financial instruments by entering in to forward contracts and cross currency interest rate swaps. Counter party risk is reviewed periodically to

ensure that exposure to various counter parties is well diversified and is within the limits fixed by the Risk Management Committee.

81 There was no penalty imposed by any regulator/ supervisor/ enforcement authority on the Company during the year ended 31 March 2025 and 31 March 2024.

Mar 31, 2024

Impairment assessment

The references below show where the Company''s impairment assessment and measurement approach is set out in these notes.

Definition of default

Exposure at default

The exposure at default (EAD) represents the gross carrying amount of the financial instruments subject to the impairment calculation, addressing both the client''s ability to increase its exposure while approaching default and potential early repayments too.

To calculate the EAD for a Stage 1 loan, the Company assesses the possible default events within 12 months for the calculation of the 12 months ECL. For Stage 2 financial assets, the exposure at default is considered for events over the lifetime of the instruments.

Probability of default

Probability of default (PD) represents the likelihood of default over a defined time horizon.

Loss given default

Significant increase in credit risk

The Company continuously monitors all assets subject to ECL. In order to determine whether an instrument or a portfolio of instruments is subject to 12 months ECL or Lifetime ECL, the Company assesses whether there has been a significant increase in credit risk since initial recognition. The Company considers an exposure to have significantly increased in credit risk when contractual payments are more than 30 days past due and/ or when the accounts have been restructured under the RBI ''Resolution Framework - 2.0: Resolution of COVID-19 related stress of Individuals and Small Businesses'' Guidelines.

When estimating ECLs on a collective basis for a group of similar assets, the Company applies the same principles for assessing whether there has been a significant increase in credit risk since initial recognition.

Grouping financial assets measured on a collective basis

As explained above, the Company calculates ECL on a collective basis on the following broad asset classes:

- Home loans

- Loan against property

- Commercial loan

- Construction finance Risk assessment model

The Company considers qualitative factors and creates additional provisions in relation to specific borrowers

over and above the ECL model based on the evaluation of the expected cash flows.

Collateral

The Company holds collateral to mitigate credit risk associated with financial assets that are measured at amortised cost. The main types of collateral include residential and commercial properties.

Assets possessed under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

Loan Portfolio includes gross loans amounting to '' 261.33 million (31 March 2023: '' 169.18 million), out of which '' 21.00 million (31 March 2023: '' 27.57 million) pertains to retained portion of loans from the assigned portfolio, against which the Company has taken possession of the properties under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and held such properties for disposal. The value of assets possessed against these loans is '' 411.38 million (31 March 2023: '' 312.56 million). Value of repossessed assets for loans written off is '' 52.16 million (31 March 2023: '' 35.12 million).

* The notional amounts are not indicative of either the market risk or credit risk. Notional amounts of the respective currencies have been converted using exchange rates as at the balance sheet date.

Hedging activities and derivatives

The Company is exposed to currency risk on its outstanding foreign currency borrowing amounting to '' 4,442.95 million (31 March 2023: Nil) which is primarily mitigated using derivative financial instruments. Refer note 14 (v) and note 33 for foreign currency risk disclosures.

The management has identified enterprises which qualify under the definition of micro enterprises and small enterprises, as defined under Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. Accordingly, the disclosure in respect of amount payable to such enterprises as mentioned below is based on information received and available with the Company and relied upon by the statutory auditors.

The Company has outstanding 2,800 debentures (31 March 2023: 2,800 debentures) at a face value of ''1.00 million which are unlisted and 700 debentures as at 31 March 2023 at a face value of '' 1.00 million which were listed on wholesale debt segment of BSE; and secured against the first pari-passu charge (along with banks, financial institutions and other lenders which provide credit facilities to the issuer) by way of hypothecation on the Company''s present and future receivables and book debts, cash and cash equivalents and investments, as may be identified by the Company on a time to time basis.

( i ) All borrowings are secured against the loan assets, investments, cash and cash equivalents and bank balances

other than cash and cash equivalents of the Company to the extent of required asset cover as per sanctioned terms.

(ii) The repayment of the borrowing is done in monthly, quarterly and half - yearly instalment as per the sanctioned terms.

(iii) The Company has not made any default in repayment of instalments due over the reporting year.

(iv) Bank guarantees of '' 340.00 million and '' 10.00 million for term loans from NHB is provided by Axis Bank Limited and Central Bank of India (31 March 2023: '' 340.00 million and '' 10.00 million) respectively on behalf of the Company to NHB. Total outstanding balance as at 31 March 2024 for such term loans is '' 2,468.75 million (31 March 2023: '' 3,406.65 million).

(v) Borrowings in India includes outstanding foreign currency borrowings amounting to '' 4,442.95 million (31 March 2023: Nil) for which the Company has entered in to forward contracts to hedge the foreign currency risk.

iii. Terms, rights, preferences and restrictions attached to shares

Equity shares:

The Company has only one class of equity share having face value of '' 2 per share. Each holder of equity share is entitled to one vote per share. The dividend proposed, if any, by the board of directors is subject to the approval of shareholders in the ensuing general meeting. In the event of liquidation of the Company, the holder of equity shares will be entitled to receive any of the remaining assets of the Company.

iv. Issue of bonus shares or buyback of shares

The Company has not issued / allotted any shares pursuant to contracts without payment being received in cash, nor issued any bonus shares nor there has been any buyback of shares during five years immediately preceding 31 March 2024.

v. For details of shares reserved for issue under the employee stock option plan (ESOP) of the Company and shares exercised under ESOP, refer note 37.

19.2 Statutory reserve

As per Section 29C of National Housing Bank Act (NHB), 1987, the Company is required to transfer at least 20% of its net profits every year to a reserve before any dividend is declared. For this purpose, any Special Reserve created by the Company under Section 36(1)(viii) of the Income Tax Act, 1961 is considered to be an eligible transfer. Thus, during the year ended 31 March 2024 and 31 March 2023, the Company has transferred to Statutory Reserve, an amount arrived in accordance with Section 29C of the NHB Act, 1987.

19.3 Securities premium

Securities premium is credited when shares are issued at premium. It can be used to issue bonus

shares, to provide for premium on redemption of shares or debentures, share issue related expenses like underwriting costs etc. in accordance with Section 52 of the Companies Act, 2013.

19.4 Stock options outstanding account

Share options outstanding account is created as required by Ind AS 102 ''Share Based Payments'' on the Employee stock option schemes operated by the Company for its employees.

19.5 Retained earnings

Retained earnings represents the amount of accumulated earnings of the Company.

19.6 Other Comprehensive Income

Remeasurement of the net defined benefit liphilifip^; rnmnrkp prfi ip rip I crpin/ ln<^

31 Capital management

monitored using, among other measures, the regulations issued by the RBI.

The capital structure is monitored on the basis of net debt to equity and maturity profile of overall debt portfolio. The Company''s policy is in line with Master Direction - Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021 which currently permits HFCs to borrow up to 12 times of their net owned funds ("NOF"). Refer note 48 for Capital to risk-weighted assets ratio (CRAR).

Loan covenants

32.2 Fair value hierarchy

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2, this level of hierarchy includes financial assets, measured using inputs other than quoted prices included within Level 1 that are observable for the asset, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

There have been no transfers amongst the levels of hierarchy during the year ended 31 March 2024 and 31 March 2023.

32.4 Financial assets and liabilities measured at amortised cost at each reporting date

The carrying value of loans given, excess interest strip receivable, bank deposits and borrowings represents its fair value. Further, the carrying value of cash and cash equivalents, investments in government securities, other financial assets, trade payables and other financial liabilities are considered to be approximately equal to the fair value due to their short term maturities.

The above mentioned financial assets and liabilities are classified under level 1 of the fair valuation hierarchy, refer note 32.1.

32.5 Valuation techniques

Loans - The fair value of floating rate loans are deemed to be equivalent to the carrying value.

Borrowings (including debt securities) - The fair value of fixed rate borrowings is determined by discounting expected future contractual cash flows using current market interest rates charged for similar new loans and the carrying value approximates the fair value. The fair value of floating rate borrowings are deemed to be equivalent to the carrying value.

33 Financial risk management

The Company is exposed to certain financial risks namely credit risk, liquidity risk and market risk i.e.

interest risk, foreign currency risk and price risk. The Company''s primary focus is to achieve better predictability of financial markets and minimise potential adverse effects on its financial performance by effectively managing the risks on its financial assets and liabilities.

The principal objective in Company''s risk management processes is to measure and monitor the various risks associated with the Company and to follow policies and procedures to address such risks. The Company''s risk management framework is driven by its Board and its subcommittees including the Audit Committee, the Asset Liability Management Committee and the Risk Management Committee. The Company gives due importance to prudent lending practices and have implemented suitable measures for risk mitigation, which include verification of credit history from credit information bureaus, personal verification of a customer''s business and residence, valuation of collateral, technical and legal verifications, conservative loan to value, and required term cover for insurance.

A Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. For the Company, liquidity risk arises from obligations on account of financial liabilities - borrowing, trade payables and other financial liabilities. The Company manages liquidity risk by maintaining adequate cash reserves by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

Notes:

(I) Debt securities and borrowings (other than debt securities) carry adjustment of unamortised processing fee (EIR).

(ii) Other financial liabilities exclude liability pertaining to lease liabilities covered under Indian accounting standard 116 (31 March 2024: '' 169.00 million; 31 March 2023: '' 147.73 million).

B Market risk ( i ) Foreign currency risk

In order to minimise any adverse impact on the financial performance of the Company, the Company enters in to forward contracts to hedge the foreign currency risk in such a manner that it results in fixed determinate outflows in the functional currency and as such there would be no significant impact of movement in foreign currency rates on the Company''s profit before tax. .....

(ii) Interest rate risk

inflation and other factors. In order to manage interest rate risk, the Company seeks to optimise borrowing profile between short-term and long-term loans. The liabilities are categorised into various time buckets based on their maturities and Asset Liability Management Committee supervise an interest rate sensitivity report periodically for assessment of interest rate risks.

34 Credit risk management Credit quality of assets

The Company managers credit risks by using a set of credit procedures and guidelines, laid down in the credit risk policy, to ensure effective credit risk management and health of the portfolio. The adherence to the policy and various processes is monitored and appraised in the credit committee meetings on a quarterly basis. The policy is amended periodically to ensure compliance with the guidelines of the RBI as well as other regulatory bodies.

Portfolio quality, credit limits, collateral quality and credit exposure limits are regularly monitored at various levels.

The Company considers a financial instrument as defaulted and considers it as Stage 3 (credit-impaired) for expected credit loss (ECL) calculations, when the assets become more than 90 days past due on its contractual payments and these assets continue to be classifed as Stage 3 till the entire overdues are received, in accordance with the RBI guidelines and Board approved ECL Policy.

The following table sets out information about credit quality of loans measured at amortised cost based on days past due information. The amount represents gross carrying amount. (Refer note 4 - Loans for detailed disclosure on gross carrying value and ECL amount on loans).

35 Transfers of assets Assignment deal:

b. The Company has not acquired any loan not in default during the year ended 31 March 2024 and 31 March 2023.

c. The Company has not transferred or acquired any stressed loan during the year ended 31 March 2024 and 31 March 2023.

36 Employee benefits

(A) Defined benefit obligation

The Company has an unfunded defined benefit plan i.e.,

Gratuity, for its employees. Under the gratuity plan every employee who has completed at least five years of service gets a gratuity on departure at 15 days of salary for each year of service.

Contribution to gratuity fund (unfunded scheme)

In accordance with Indian Accounting Standard 19 ''Employee benefits'', actuarial valuation was done in respect of the aforesaid defined benefit plan of gratuity based on the following assumptions:

the benefit in a lump sum form and since the benefit is not payable as an annuity for the rest of the lives of the employees, there is no longevity risk.

Code on Social Security, 2020

The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the Company towards Provident Fund and Gratuity. The Ministry of Labour and Employment had released draft rules thereunder on 13 November 2020. The Company will assess the impact and its evaluation once the subject rules are notified. The Company will give appropriate impact in its financial statements in the period in which the Code becomes effective and the related rules to determine the financial impact are published.

(B) Defined contribution plan

The Company contributes towards provident fund for employees which is the defined contribution plan for qualifying employees. Under this Scheme, the Company is required to contribute specified percentage of the payroll cost to fund the benefits. The Company recognised '' 40.37 million (31 March 2023: '' 33.16 million) for provident fund contributions in the statement of profit and loss.

The Company has recognised '' 2.29 million (31 March 2023: '' 1.77 million) for National Pension Scheme contributions in the statment of profit and loss.

(C) Compensated absence expenses

The Company has accounted for provision for compensated absences from 01 April 2019. An employee is eligible to carry

forward 30 to 90 days of leaves basis their work location to the next period from the balance leaves pending utilisation; however these leaves are non-encashable. Provision for compensated absence for current year is '' 2.50 million (31 March 2023: '' 2.25 million).

37.2 Vesting condition:

a) ESOP 2012: All options under this scheme have been fully vested.

b) ESOP II:

Management option: Vesting will be in two parts for Tranche 1, Tranche 2, Tranche 3 - 66% will be performance plus time based which will vest in 6 equal instalments; and 34% will be vested as follows:

37.3 Contractual life

ESOP 2012: The contractual life (vesting period plus exercise period) ranges from 11 to 14 years i.e. vesting period ranging from 1 to 4 years and exercise period of 10 years from the date of vesting of the option. In case of resignation/ termination of any employee, the exercise period shall be 6 months from the last working day of the employee.

ESOP II: The contractual life (vesting period plus exercise period) ranges from 11 to 16 years i.e. vesting period ranging from 1 to 6 years and exercise period of 10 years from the date of vesting of the option. In case of resignation/ termination of any employee, the

exercise period shall be 6 months from the last working day of the employee.

ESOP 2021: The contractual life (vesting period plus exercise period) ranges from 4 to 7.3 years i.e. vesting period ranging from 1 to 4.3 years and exercise period of 3 years from the date of vesting of the option. In case of resignation/ termination of any employee, the exercise period shall be 6 months from the last working day of the employee.

Method of settlement: ESOP 2012, ESOP II and ESOP 2021 is to be settled through issue of equity shares.

38 Segment information38.1 Operating segment

38.2 Entity wide disclosures

No revenue from transactions with a single external customer or counterparty amounted to 10% or more of the Company''s total revenue in the year ended 31 March 2024 and 31 March 2023.

The Company operates in single geography i.e. India and therefore geographical information is not required to be disclosed separately.

39 Lease disclosureWhere the Company is the lessee:

The Company has entered into agreements for taking its office premises under leave and license arrangements. These agreements are for tenures between 1 year and 9 years and majority of the agreements are renewable by mutual consent on mutually agreeable terms, lease rentals have an escalation ranging between 5% to 15%. Leases for which the lease term is less than 12 months have been accounted as short term leases.

The Company undertakes the following activities in the

nature of Corporate social responsibility (CSR):

a. Promoting education, including special education and employment enhancing vocational skills, especially among children, women, and elderly;

b. Promoting health care, including preventive health care and sanitation;

c. Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources;

d. Promoting digital literacy, building importance of saving, and instilling future planning skills among students.

Notes:

1. No amount has been spent by the Company for the construction/ acquisition of any new asset during the year ended 31 March 2024 and 31 March 2023.

2. There have been no related party transactions during the year ended 31 March 2024 and 31 March 2023 in respect of CSR activities.

41 Contingent liabilities and commitments There are no Contingent Liabilities as on 31 March 2024 (31 March 2023: Nil).		('' in million)
	As at	As at
	31 March 2024	31 March 2023
Commitments - Undisbursed amount of housing and other loans	11,902.36	10,194.53

43 The Company does not hold any immovable property as on 31 March 2024 and 31 March 2023. All the lease agreements are duly executed in favour of the Company for properties where the Company is the lessee.

44 No proceedings have been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder, as at 31 March 2024 and 31 March 2023.

45 The Company is not a declared wilful defaulter by any bank or financial Institution or other lender, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of

India, during the year ended 31 March 2024 and 31 March 2023.

46 The Company does not have any transactions with the companies struck off under section 248 of Companies Act, 2013 or section 560 of Companies Act, 1956 during the year ended 31 March 2024 and 31 March 2023.

47 Registration of charges or satisfaction with Registrar of Companies (ROC)

There has been no delay in registration or satisfaction of charges with ROC beyond the statutory date during the year ended 31 March 2024 and 31 March 2023.

49 The Company has borrowings from banks and financial institutions on the basis of security of receivables and current assets and the quarterly returns filed by the Company with the banks and financial institutions are in accordance with the books of accounts of the Company for the respective quarters with no material discrepancies.

50 The Company has taken borrowings from banks and financial institutions and utilised them for the specific purpose for which they were taken as at the Balance sheet date. Unutilised funds as at 31 March 2024 and 31 March 2023 are held by the Company in the form of investments till the time the utilisation is made subsequently.

51 There have been no transactions which have not been recorded in the books of accounts, that have been surrendered or disclosed as income during the year ended 31 March 2024 and 31 March 2023, in the tax assessments under the Income Tax Act, 1961. There have been no previously unrecorded income and related assets which were to be properly recorded in the books of account during the year ended 31 March 2024 and 31 March 2023.

52 As a part of normal lending business, the Company grants loans and advances on the basis of security / guarantee provided by the borrower/ co-borrower. These transactions are conducted after exercising proper due diligence.

Other than the transactions described above,

a. No funds have been advanced or loaned or invested by the Company to or in any other

person(s) or entity(ies) including foreign entities ("Intermediaries") with the understanding that the Intermediary shall lend or invest in a party identified by or on behalf of the Company (Ultimate Beneficiaries);

b. No funds have been received by the Company from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly, lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

53 The Company has not traded or invested in Crypto currency or Virtual Currency during the year ended 31 March 2024 and 31 March 2023.

54 The Company has used an accounting software for maintaining its books of account for the year ended 31 March 2024 which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software. Further, there is not any instance of the audit trail feature being tampered with.

As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from 01 April 2023, reporting under Rule 11 (g) of the Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per the statutory requirements for record retention is not applicable for the year ended 31 March 2024.

56 Disclosure on Liquidity Risk in accordance with RBI circular No. RBI/2019-20/88 DOR.NBFC (PD) CC. No.102/03.10.001/2019-20 dated 04 November 2019 on Liquidity Risk Management Framework for NonBanking Financial Companies (NBFCs) including Core Investment Companies and RBI circular No. RBI/2020-21/60 DOR.NBFC (HFC).CC.No.118/03.10.136/2020-21 dated 22 October 2020 for regulatory framework for Housing Finance Companies (HFCs)

#Significant counterparty is defined in RBI Circular RBI/2019-20/88 DOR.NBFC (PD) CC.No.102/03.10.001/ 2019-20 dated 04 November 2019 on Liquidity Risk Management Framework for Non-Banking Financial Companies and Core Investment Companies. Accordingly, the Company has considered lenders with more than 1% of total outstanding borrowing as significant counterparties.

*Borrowings amount excludes the interest accrued but not due.

**Total liabilities has been computed as sum of all liabilities (balance sheet figure) less equity share capital and other equity.

56.2 Top 20 large deposits

Not applicable. The Company is registered with National Housing Bank to carry on the business of housing finance institution without accepting public deposits.

*Significant instrument/ product is as defined in RBI Circular RBI/2019-20/88 DOR.NBFC (PD)CC.No.102/ 03.10.001/2019-20 dated 04 November 2019 on Liquidity Risk Management Framework for NonBanking Financial Companies and Core Investment Companies.

**Total liabilities has been computed as sum of all liabilities (balance sheet figure) less equity share capital and other equity.

56.6 Institutional set-up for liquidity risk management

The Company''s Board of Directors monitors all the risks, including liquidity risk. Governance structure, Policies and risks limits are prescribed by the Board.

For all non-deposit taking HFCs with an asset size

of '' 5,000 crore and above, but less than '' 10,000 crore, there is a phased transition towards meeting the minimum LCR, with the requirement as on 01 December 2021 being 30%. Thereafter, the requirement increases from 01 December 2022 onwards in a graded manner. The Company has put in place a liquidity risk management framework so as to adhere to the said LCR guidelines and applicable timelines.

57 Disclosure on Liquidity Coverage Ratio (LCR) in accordance with RBI circular No. RBI/2020-21/73 DOR.FIN.HFC.CC.No.102/03.10.136/ 2020-21 dated 17 February 2021 and RBI circular No. RBI/DNBR/2016-17/45 Master Direction DNBR.PD.008/03.10.119/ 2016-17 dated 01 September 2016 The RBI vide Circular No. RBI/2020-21/73 DOR.FIN.HFC.CC.No.120/03.10.1 36/2020-21 dated 17 February 2021 issued guidelines on maintenance of Liquidity Coverage Ratio (LCR) for HFCs.

approved Asset Liability Management (ALM) Policy covers its Liquidity Risk Management policies and processes, stress testing, contingency funding plan, maturity profiling, Currency Risk, Interest Rate Risk and Liquidity Risk Monitoring Tools.

Note: Loan Portfolio includes gross loans amounting to '' 261.33 million (31 March 2023: '' 169.18 million), out of which ''21.00 million (31 March 2023: '' 27.57 million) pertains to retained portion of loans from the assigned portfolio, against which the Company has taken possession of the properties under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and held such properties for disposal. The value of assets possessed against these

loans is '' 411.38 million (31 March 2023: '' 312.56 million). Value of repossessed assets for loans written off is '' 52.16 million (31 March 2023: '' 35.12 million).

**Current investment means an investment which is by its nature readily realizable and is intended to be held for not more than one year from the date on which such investment is made.

63.3 Disclosures on Risk Exposure in Derivatives

A. Qualitative Disclosure

The Company manages various risks associated with the lending business, including liquidity risk, foreign exchange risk, interest rate risk and counterparty risk.

To manage these risks, the Company has Board approved policies and framework, including the Risk Management Policy and ALCO Policy, which sets limits for exposures on currency, interest rates and other parameters. The Company manages its currency risk and enters in to derivative contracts in accordance with the guidelines prescribed therein.

Liquidity risk and Interest rate risk arising out of maturity mismatch of assets and liabilities are managed through regular monitoring of maturity profiles. The currency risk on borrowings is actively managed mainly through derivative financial instruments by entering in to forward

contracts. Counter party risk is reviewed periodically to ensure that exposure to various counter parties is well diversified and is within the limits fixed by the Risk Management Committee.

76 Breach of covenants

The Company has complied with the financial covenants under the terms of major borrowing facilities throughout the year ended 31 March 2024 and 31 March 2023.

Mar 31, 2023

4.2 Impairment assessment

The references below show where the Company''s impairment assessment and measurement approach is set out in these notes.

Definition of default

Exposure at default

Probability of default

Probability of default (PD) represents the likelihood of default over a defined time horizon.

Lossgiven default

Loss given default (LGD) has been calculated by taking into account the recovery experience across the Company''s loan accounts post default. The recoveries are tracked and discounted to the date of default using the interest rate.

Significant increase in credit risk

The Company continuously monitors all assets subject to ECL. In order to determine whether an instrument or a portfolio of instruments is subject to 12 months ECL or Lifetime ECL, the Company assesses whether there has been a significant increase in credit risk since initial recognition. The Company considers an exposure to have significantly increased in credit risk when contractual payments are more than 30 days past due and/or when the accounts have been restructured under the RBI ''Resolution Framework - 2.0: Resolution of COVID-19 related stress of Individuals and Small Businesses'' Guidelines.

Grouping financial assets measured on a collective basis

As explained above, the Company calculates ECL on a collective basis on the following asset classes:

- Home loans

- Loan against property

- Commercial loan

- Construction finance Risk assessment model

Collateral

The Company holds collateral to mitigate credit risk associated with financial assets. The main types of collateral include residential and commercial properties. The collateral presented relates to instruments that are measured at amortised cost.

Assets possessed under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

Loan Portfolio includes gross loans amounting to '' 141.61 million (31 March 2022: '' 160.27 million) against which the Company has taken possession of the properties under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and held such properties for disposal. The value of assets possessed against these loans is ''159.04 million (31 March 2022: ''172.51 million). Value of repossessed assets for loans written off is '' 35.12 million (31 March 2022: ''25.06 million).

The Company has outstanding 700 debentures (31 March 2022: 1,690 debentures) at a face value of ''1.00 million which are listed on wholesale debt segment of BSE and 2,800 debentures (31 March 2022: Nil) at a face value of ''1.00 million which are unlisted; and secured against the first pari-passu charge (along with banks, financial institutions and other lenders which provide credit facilities to the issuer) by way of hypothecation on the Company''s present and future receivables and book debts, cash and cash equivalents and liquid investments, as may be identified by the Company on a time to time basis.

(ii) The repayment of the borrowing is done in monthly, quarterly, half - yearly and annual instalment as per the sanctioned terms.

(iii) The Company has not made any default in repayment of instalments due over the reporting year.

(iv) Bank guarantees of '' 340.00 million and '' 10.00 million for term loans from NHB is provided by Axis Bank Limited and Central Bank of India (31 March 2022: '' 340.00 million and '' 10.00 million) respectively on behalf of the Company to NHB. Total outstanding balance as at 31 March 2023 for such loans is '' 3,406.65 million (31 March 2022: '' 4,392.60 million).

iii. Terms, rights, preferences and restrictions attached to sharesEquity shares:

The Company has only one class of equity share having face value of '' 2 per share. Each holder of equity share is entitled to one vote per share. The dividend proposed, if any, by the board of directors is subject to the approval of shareholders in the ensuing general meeting. In the event of liquidation of the Company, the holder of equity shares will be entitled to receive any of the remaining assets of the Company.

iv. Issue of bonus shares or buyback of shares

The Company has not issued / allotted any shares pursuant to contracts without payment being received in cash, nor issued any bonus shares nor there has been any buyback of shares during five years immediately preceding 31 March 2023.

v. For details of shares reserved for issue under the employee stock option plan (ESOP) of the Company and shares exercised under ESOP, refer note 35.

17.2 Statutory reserve

As per Section 29C of National Housing Bank Act (NHB), 1987, the Company is required to transfer at least 20% of its net profits every year to a reserve before any dividend is declared. For this purpose, any Special Reserve created by the Company under Section 36(1)(viii) of the Income Tax Act, 1961 is considered to be an eligible transfer. Thus, during the year ended 31 March 2023 and 31 March 2022, the Company has transferred to Statutory Reserve, an amount arrived in accordance with Section 29C of the NHB Act, 1987.

17.3 Securities premium

Securities premium is credited when shares are issued at premium. It can be used to issue bonus

shares, to provide for premium on redemption of shares or debentures, share issue related expenses like underwriting costs etc. in accordance with Section 52 of the Companies Act, 2013.

17.4 Stock options outstanding account

The stock option outstanding account is used to recognise grant date fair value of options issued to employees under the Company''s stock option schemes.

17.5 Retained earnings

Retained earnings represents the amount of accumulated earnings of the Company.

17.6 Other Comprehensive Income

Remeasurement of the net defined benefit liabilities comprise actuarial gain/ loss.

29 Capital management

The Company''s capital management strategy is to effectively determine, raise and deploy capital to cover risk inherent in business and meeting the capital adequacy requirements of the Reserve Bank of India (RBI). The same is done through a mix of either equity and / or combination of short term / long term debt as may be appropriate. The Company determines the amount of capital required on the basis of operations and capital expenditure. The adequacy of the Company''s capital is monitored using, among other measures, the regulations issued by the RBI.

The capital structure is monitored on the basis of net debt to equity and maturity profile of overall debt portfolio. The Company''s policy is in line with Master Direction - Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021 which currently permits HFCs to borrow up to 12 times of their net owned funds ("NOF"). Refer note 46 for Capital to risk-weighted assets ratio (CRAR).

The Company has complied in full with all its externally imposed capital requirements over the reported periods.

Loan covenants

30.2 Fair value hierarchy

Notes forming part of the financial statements

30.4 Financial assets and liabilities measured at amortised cost at each reporting date

The above mentioned financial assets and liabilities are classified under level 1 of the fair valuation hierarchy.

30.5 Valuation techniques

Loans - The fair value of floating rate loans are deemed to be equivalent to the carrying value.

Borrowings (including debt securities) - The fair value of debt securities is determined by discounting expected future contractual cash flows using current market interest rates charged for similar new loans and the carrying value approximates the fair value. The fair value of floating rate borrowings are deemed to be

equivalent to the carrying value.

During the years mentioned above, there have been no transfers amongst the levels of hierarchy.

31 Financial risk management

The principal objective in Company''s risk management processes is to measure and monitor the various risks associated with the Company and to follow policies and procedures to address such risks. The Company''s risk management framework is driven by its Board and its subcommittees including the Audit Committee, the Asset Liability Management Committee and the Risk Management Committee. The Company gives due importance to prudent lending practices and have implemented suitable measures for risk mitigation, which include verification of credit history from credit information bureaus, personal verification of a customer''s business and residence, valuation of collateral, technical and legal verifications, conservative loan to value, and required term cover for insurance.

A Liquidity risk

financial liabilities. The Company manages liquidity risk by maintaining adequate cash reserves by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

Notes:

(i) Debt securities and borrowings (other than debt securities) carry adjustment of unamortised processing fee (EIR).

(ii) Other financial liabilities exclude liability pertaining to lease liability covered under Indian accounting standard - 116 (31 March 2023: ''147.73 million; 31 March 2022: ''118.08 million).

(iii) Amounts repayable on demand are included in ''within 1 year''.

B Market risk

( i ) Foreign currency risk

There were no foreign currency exposure as at 31

March 2023 and 31 March 2022.

(ii) Interest rate risk

The Company is subject to interest rate risk, since the rates of loans and borrowings might fluctuate over the tenure of instrument. Interest rates are highly sensitive to many factors beyond control, including the monetary policies of the Reserve Bank of India, deregulation of the financial sector in India, domestic and international economic and political conditions, inflation and other factors. In order to manage interest rate risk, the Company seeks to optimise borrowing profile between short-term and long-term loans. The liabilities are categorised into various time buckets based on their maturities and Asset Liability Management Committee supervise an interest rate sensitivity report periodically for assessment of interest rate risks.

32 Credit risk management Credit quality of assets

The Company manage credit risks by using a set of credit procedures and guidelines, laid down in our credit risk policy, to ensure effective credit risk management and health of our portfolio. The

adherence to the policy and various process is monitored and appraised in credit committee meetings on a quarterly basis. The policy is amended periodically to ensure compliance with the guidelines of the RBI as well as other regulatory bodies.

Notes forming part of the financial statements

process by which separate set of verifications are conducted by a customer relationship manager and customer service officer to ensure the quality of customers acquired as well as eliminate misuse of borrowing practices.

Portfolio quality, credit limits, collateral quality and credit exposure limits are regularly monitored at various levels.

The Company considers a financial instrument as defaulted and considers it as Stage 3 (credit-impaired) for expected credit loss (ECL) calculations, when the assets become more than 90 days past due on its contractual payments and these assets continue to be classifed as Stage 3 till the entire overdues are received, in accordance with the RBI guidelines and Board approved ECL Policy.

33 Transfers of assets Assignment deal:

b. The Company has not acquired any loan not in default during the year ended 31 March 2023 and 31 March 2022.

c. The Company has not transferred or acquired any stressed loan during the year ended 31 March 2023 and 31 March 2022.

34 Employee benefits

(A) Defined benefit obligation

The Company has an unfunded defined benefit plan i.e.,

Gratuity, for its employees. Under the gratuity plan every employee who has completed at least five years of service gets a gratuity on departure at 15 days of salary for each year of service.

Contribution to gratuity fund (unfunded scheme)

In accordance with Indian Accounting Standard 19 ''Employee benefits'', actuarial valuation was done in respect of the aforesaid defined benefit plan of gratuity based on the following assumptions:

Code on Social Security, 2020

The Indian Parliament has approved the Code on Social Security, 2020 which subsumes the Provident Fund and the Gratuity Act and rules thereunder. The Ministry of Labour and Employment also released draft rules thereunder on 13 November 2020 and has invited suggestions from stakeholders which are under active consideration by the Ministry. The Company will evaluate the rules, assess the impact, if any, and account for the same, once the rules are notified and become effective.

B. Defined contribution plan

payroll cost to fund the benefits. The Company recognised ''33.16 million (31 March 2022: '' 26.93 million) for provident fund contributions in the statement of profit and loss.

The Company has recognised '' 1.77 million (31 March 2022: '' 0.58 million) for NPS contributions in the statment of profit and loss.

C. Compensated absence expenses

The Company has accounted for provision for compensated absences from 1 April 201 9. An employee is eligible to carry forward 30 to 90 days of leaves basis their work location to the next period from the balance leaves pending utilisation; however these leaves are non-encashable. Provision for compensated absence for current year is '' 2.25 million (31 March 2022: '' 2.00 million).

35.3 Contractual life

Method of settlement: ESOP 2012, ESOP II and ESOP 2021 is to be settled through issue of equity shares.

36 Segment information

36.1 Operating segment

36.2 Entity wide disclosures

No revenue from transactions with a single external customer or counterparty amounted to 10% or more of the Company''s total revenue in the year ended 31 March 2023 and 31 March 2022.

The Company operates in single geography i.e. India and therefore geographical information is not required to be disclosed separately.

37 Lease disclosure

Where the Company is the lessee:

The Company has entered into agreements for taking its office premises under leave and license arrangements. These agreements are for tenures between 1 year and 9 years and majority of the agreements are renewable by mutual consent on mutually agreeable terms, lease rentals have an escalation ranging between 5% to 15%. Leases for which the lease term is less than 12 months have been accounted as short term leases.

The Company undertakes the following activities in the

nature of Corporate social responsibility (CSR):

a. Promoting education, including special education and employment enhancing vocational skills, especially among children, women, and elderly;

b. Promotion of health care, including preventive health care and sanitation;

c. Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare,

agroforestry, conservation of natural resources.

Notes:

1. No amount has been spent by the Company for the construction/ acquisition of any new asset during the year ended 31 March 2023 and 31 March 2022.

2. There have been no related party transactions during the year ended 31 March 2023 and 31 March 2022 in respect of CSR activities.

39 Contingent liabilities and commitments

There are no Contingent Liabilities as on 31 March 2023 (31 March 2022: Nil).

(''in million)

As at

31 March 2023

As at

31 March 2022

Commitments - Undisbursed amount of housing and other loans

1 0,19 4.5 3

7,451.68

41 The Company does not hold any immovable property as on 31 March 2023 and 31 March 2022. All the lease agreements are duly executed in favour of the Company for properties where the Company is the lessee.

42 No proceedings have been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder, as at 31 March 2023 and 31 March 2022.

43 The Company is not a declared wilful defaulter by any bank or financial institution or other lender, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India, during the year ended 31 March 2023 and 31 March 2022.

44 The Company does not have any transactions with the companies struck off under section 248 of Companies Act, 2013 or section 560 of Companies Act, 1956 during the year ended 31 March 2023 and 31 March 2022.

45 Registration of charges or satisfaction with Registrar of Companies (ROC)

There has been no delay in registration of charges or satisfaction with ROC beyond the statutory date during the year ended 31 March 2023.

47 The Company has borrowings from banks and financial institutions on the basis of security of current assets and the quarterly returns filed by the Company with the banks and financial institutions are in accordance with the books of accounts of the Company for the respective quarters.

48 The Company has taken borrowings from banks and financial institutions and utilised them for the specific purpose for which they were taken as at the Balance sheet date. Unutilised funds as at 31 March 2023 are held by the Company in the form of deposits till the time the utilisation is made subsequently.

49 There have been no transactions which have not been recorded in the books of accounts, that have been surrendered or disclosed as income during the year ended 31 March 2023 and 31 March 2022, in the tax assessments under the Income Tax Act, 1961. There have been no previously unrecorded income and related assets which were to be properly recorded in the books of account during the year ended 31 March 2023 and 31 March 2022.

50 As a part of normal lending business, the Company grants loans and advances on the basis of security / guarantee provided by the borrower/ co-borrower. These transactions are conducted after exercising proper due diligence.

Other than the transactions described above,

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

The Company has not traded or invested in Crypto currency or Virtual Currency during the year ended 31 March 2023 and 31 March 2022.

51 Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company w.e.f. 01 April 2023.

53 Public disclosure on Liquidity Risk of Home First Finance Company India Limited as on 31 March 2023 in accordance with RBI circular No. RBI/2019-20/88 DOR.NBFC (PD) CC. No.1 02/03.1 0.001/201 9-20 dated 04 November 2019 on Liquidity Risk Management Framework for Non-Banking

Financial Companies (NBFCs) including Core Investment Companies and RBI circular No. RBI/2020-21/60 DOR.NBFC (HFC).CC. No.118/ 03.10.136/2020-21 dated 22 October 2020 for regulatory framework for Housing Finance Companies (HFCs)

#Significant counterparty is defined in RBI Circular RBI/2019-20/88 DOR.NBFC (PD) CC.No. 102/ 03.10.001/ 2019-20 dated 04 November 2019 on Liquidity Risk Management Framework for Non-Banking Financial Companies and Core Investment Companies. Accordingly, the Company has considered lenders with more than 1% of total outstanding borrowing as significant counterparties.

* Borrowings amount excludes the interest accrued but not due

**Total liabilities has been computed as sum of all liabilities (balance sheet figure) less equities and other equities.

53.2 Top 20 large deposits

Not applicable. The Company is registered with National Housing Bank to carry on the business of housing finance institution without accepting public deposits.

53.6 Institutional set-up for liquidity risk management

The Company''s Board of Directors monitors all the risks, including liquidity risk. Governance structure, Policies and risks limits are prescribed by the Board.

For all non-deposit taking HFCs with an asset size of '' 5,000 crore and above, but less than '' 10,000 crore, there is a phased transition towards meeting the minimum LCR, with the requirement as on 01 December 2021 being 30%. Thereafter, the requirement increases from 01 December 2022 onwards in a graded manner. The Company has put in place a liquidity risk management framework so as to adhere to the said LCR guidelines and applicable timelines.

54 Disclosure on Liquidity Coverage Ratio (LCR) of Home First Finance Company India Limited as on 31 March 2023 in accordance with RBI circular No. RBI/2020-21/73 DOR.FIN. HFC.CC. No.102 /03.10.136/2020-21 dated 17 February 2021 and RBI circular No. RBI/DNBR/2016-17/45 Master Direction DNBR.PD.008/ 03.10.119/ 2016-17 dated 01 September 2016

The RBI vide Circular No. RBI/2020-21/73 DOR.FIN.HFC.CC.No.120/03.10.1 36/2020-21 dated 17 February 2021 issued guidelines on maintenance of Liquidity Coverage Ratio (LCR) for HFCs.

taking HFCs with an asset size off 5,000 crore and above, but less than f 10,000 crore, to maintain minimum LCR of 30% as on December 2021, to be gradually increased to 100% by December 2025. The Company''s Board approved Asset Liability Management (ALM) Policy covers its Liquidity Risk Management policies and processes, stress testing, contingency funding plan, maturity profiling, Currency Risk, Interest Rate Risk and Liquidity Risk MonitoringTools.

The Company was not required to comply with the guidelines on LCR in line with the RBI Directions as at 31 March 2022. The daily average LCR for the quarter ended 30 June 2022 and the quarter ended 30

September 2022 was 93% and 130% respectively, as against the minimum LCR of 30% mandated by the RBI. The daily average LCR for the quarter ended 31 December 2022 and the quarter ended 31 March 2023 was 161% and 157% respectively, as against the minimum LCR of 50% mandated by the RBI w.e.f. 01 December 2022.

Note: Loan Portfolio includes gross loans amounting to '' 141.61 million (31 March 2022: '' 160.27 million) against which the Company has taken possession of the properties under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and held such properties for disposal. The value of assets possessed against these

loans is '' 159.04 million (31 March 2022: ''172.51 million). Value of repossessed assets for loans written off is '' 35.12 million (31 March 2022: '' 25.06 million).

**Current investment means an investment which is by its nature readily realizable and is intended to be held for not more than one year from the date on which such investment is made.

64.5 Net Profit or Loss for the period, prior period items and changes in accounting policies

The Company does not have any prior period items / change in accounting policies during the current year other than disclosed in financials.

64.6 Revenue Recognition

There have been no circumstances in which revenue recognition has been postponed

pending the resolution of significant uncertainties.

64.7 Consolidated Financial Statements (CFS):

The Company does not have any subsidiary, associate or joint venture accordingly CFS is not applicable.

79 There has been no divergence in asset classification and provisioning requirements as assessed by NHB during the year ended 31 March 2023 and 31 March 2022.

80 Figures for the previous year have been regrouped/ re-arranged wherever considered necessary to confirm to the figures presented in the current year.

Mar 31, 2022

4.2 Impairment assessment

The references below show where the Company''s impairment assessment and measurement approach is set out in these notes.

Definition of default

The Company considers a financial instrument as defaulted and considers it as Stage 3 (credit-impaired) for expected credit loss (ECL) calculations, when the assets become equal to or more than 90 days past due on its contractual payments. These assets continue to be classifed as Stage 3 till the entire overdues are received, in accordance with RBI guidelines and the ECL Policy. The probability of default is an estimate of the likelihood of default over a given time horizon. A default may only happen at a certain time over the assessed period, if the facility has not been previously derecognised and is still in the portfolio.

Exposure at default

To calculate the EAD for a Stage 1 loan, the Company assesses the possible default events within 12 months for the calculation of the 12 months ECL. For Stage 2 and Stage 3 financial assets, the exposure at default is considered for events over the lifetime of the instruments.

Probability of default

Probability of default (PD) represents the likelihood of default over a defined time horizon.

Loss given default

LGD has been calculated by taking into account the recovery experience across the Company''s loan accounts post default. The recoveries are tracked and discounted to the date of default using the interest rate.

Significant increase in credit risk

The Company continuously monitors all assets subject to ECL. In order to determine whether an instrument or a portfolio of instruments is subject to 12 months ECL or Lifetime ECL, the Company assesses whether there has been a significant increase in credit risk since initial recognition. The Company considers an exposure to have significantly increased in credit risk when contractual payments are more than 30 days past due and when the accounts have been restructured under the RBI ''Resolution Framework - 2.0: Resolution of COVID-19 related stress of Individuals and Small Businesses'' Guidelines.

Grouping financial assets measured on a collective basis

As explained above, the Company calculates ECL on a collective basis on the following asset classes:

- Home loans

- Loan against property

- Commercial loan

- Construction finance

Risk assessment model

Collateral

Assets possessed under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

Loan Portfolio includes gross loans amounting to '' 160.27 million (31 March 2021: ''2.57 million) against which the Company has taken possession of the properties under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and held such properties for disposal. The value of assets possessed against these loans is '' 172.51 million (31 March 2021: '' 2.43 million). Value of repossessed assets for loans written off is '' 25.06 million (31 March 2021: '' 10.14 million).

*With respect to assignment deals, Company has created an interest receivable strip, with corresponding credit to statement of profit and loss for the year, which has been computed by discounting excess interest spread to present value.

** Other receivables as at 31 March 2021 included '' 144.85 million (including unutilised IPO proceeds) pertaining to expenses incurred towards securities offering which was receivable from the public offer account (escrow account) on settlement of all the expenses incurred towards the initial public offer, which has been utilised and settled during the year ended 31 March 2022.

The Company has issued 1,690 debentures (31 March 2021: 2,400 debentures) at a face value of ''1.00 million which are listed on wholesale debt segment of BSE; and secured against the first pari-passu charge (along with banks, financial institutions and other lenders which provide credit facilities to the Issuer) by way of hypothecation on Company''s present and future receivables and book debts, cash and cash equivalents and liquid investments, as may be identified by the Company.

Notes:

(i) All borrowings are secured against the loan assets, investments, cash and cash equivalents and bank balances other than cash and cash equivalents of the Company to the extent of required asset cover as per sanctioned terms.

(ii) The repayment of the borrowing is done in monthly, quarterly, half - yearly and annual instalment as per the sanctioned terms.

(iii) The Company has not made any default in repayment of instalments due over the reporting year.

(iv) Bank guarantees of ? 340.00 million and ? 10.00 million for term loans from NHB is provided by Axis Bank and Central Bank of India (31 March 2021: ? 340.00 million and ? 10.00 million) respectively on behalf of Company to NHB. Total outstanding balance as at 31 March 2022 for such loans is ?4,392.60 million (31 March 2021: ?5,755.30 million).

iii. Terms, rights, preferences and restrictions attached to sharesEquity shares:

The Company has only one class of equity share having face value of '' 2 per share. Each holder of equity share is entitled to one vote per share. The dividend proposed, if any, by the board of directors is subject to the approval of shareholders in the ensuing general meeting. In the event of liquidation of the Company, the holder of equity shares will be entitled to receive any of the remaining assets of the Company.

iv. Issue of bonus shares or buyback of shares

The Company has not issued / allotted any shares pursuant to contracts without payment being received in cash, nor issued any bonus shares nor there has been any buyback of shares during five years immediately preceding 31 March 2022.

v. For details of shares reserved for issue under the employee stock option plan (ESOP) of the Company and shares exercised under ESOP, refer note 35.

vii. The Company has done a private placement /preferential allotment of 2,240,639 equity shares to Orange Clove Investments B.V (Orange Clove) (an affiliate of Warburg Pincus) on 15 October 2020, for a consideration of '' 334.726 per share (i.e. having face value of '' 2 and premium of '' 332.726) aggregating to approximately '' 750.00 million. Pursuant to the Share Subscription and Purchase Agreement (SSPA), Orange Clove purchased 18,810,719 equity shares from the existing shareholders in the month of October 2020 and further, on receipt of RBI approval, additionally purchased 4,140,444 equity shares from the existing shareholders in the month of January 2021. As at 31 March 2022, Orange Clove holds 28.75% (31 March 2021: 28.82%) of the paid up equity share capital of the Company.

viii. Initial public Offer

The Company has completed its Initial Public Offer (IPO) of 22,272,556 equity shares of face value of '' 2 each at an issue price of '' 518.00 per share, consisting of fresh issue of 5,115,830 equity shares and an offer for sale of 17,156,726 equity shares by the selling shareholder. The equity shares of the Company were listed on BSE limited ("BSE") and National Stock Exchange of India Limited ("NSE") on 03 February 2021.

Out of the fresh issue of '' 2,650.00 million, the net proceeds of ''2,540.38 million (post estimated offer expenses amounting to '' 97.18 million) had been utilised towards augmenting the capital

base to meet the capital requirements during the year ended 31 March 2021 and a balance of '' 12.44 million remained unutilised, which was maintained in IPO-Public Offer Account (escrow account) as at 31 March 2021.

During the year ended 31 March 2022, the net proceeds of ''14.42 million (post actual offer expenses amounting to '' 95.20 million out of the total IPO proceeds) has been utilised towards augmenting the capital base to meet the capital requirements.

* During the year ended 31 March 2021, addition in securities premium includes the premium received from IPO of '' 2,639.77 million reduced by the Company''s share of IPO related expenses of '' 90.07 million (net of GST of '' 7.11 million).

17.2 Statutory reserve

As per Section 29C of National Housing Bank Act (NHB), 1987, the Company is required to transfer at least 20% of its net profits every year to a reserve before any dividend is declared. For this purpose, any Special Reserve created by the Company under Section 36(1)(viii) of the Income Tax Act, 1961 is considered to be an eligible transfer. Thus, during the year ended 31 March 2022 and 31 March 2021, the Company has transferred to Statutory Reserve, an amount arrived in accordance with Section 29C of the NHB Act, 1987.

17.3 Securities premium

Securities premium is credited when shares are issued at premium. It can be used to issue bonus shares, to provide for premium on redemption of

shares or debentures, share issue related expenses like underwriting costs etc. in accordance with Section 52 of the Companies Act 2013.

17.4 Stock options outstanding account

The stock option outstanding account is used to recognise grant date fair value of options issued to employees under the Company''s stock option schemes.

17.5 Retained earnings

Retained earnings represents the amount of accumulated earnings of the Company.

17.6 Other Comprehensive Income

Remeasurement of the net defined benefit liabilities comprise actuarial gain/ loss.

Notes:

1. The transactions disclosed above are excluding GST.

2. The KMPs are covered under the Company''s gratuity policy, compensated absences provision and ESOP scheme along with other eligible employees of the Company. Proportionate amount of gratuity expenses,

provision for compensated absences and ESOP expenses are not included in the aforementioned disclosures as it cannot be separately ascertained.

29 Capital management

The Company''s capital management strategy is to effectively determine, raise and deploy capital to cover risk inherent in business and meeting the capital adequacy requirements of the Reserve Bank of India (RBI). The same is done through a mix of either equity and / or combination of short term / long term debt as may be appropriate. The Company determines the amount of capital required on the basis of operations and capital expenditure. The adequacy of the Company''s capital is monitored using, among other measures, the regulations issued by the RBI.

The capital structure is monitored on the basis of net debt to equity and maturity profile of overall debt portfolio. The Company''s policy is in line with Master Direction - Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021 which currently permits HFCs to borrow up to 12 times of their net owned funds ("NOF"). Refer Note 49 for Capital to risk-weighted assets ratio (CRAR).

The Company has complied in full with all its externally imposed capital requirements over the reported periods.

Loan covenants

In order to achieve the overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets the financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breach in meeting these financial covenants would permit the

bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any borrowing in the reporting year.

Loan covenants mainly include minimum CRAR of 12%, the ratio of total outstanding liability to total net worth to be less than or equal to 12 times etc.

* Other financial liabilities exclude liability pertaining to lease liability covered under Indian accounting standard - 116 (31 March 2022: '' 118.08 million; 31 March 2021: '' 82.20 million).

30.2 Fair value hierarchy

Level 1: Level 1 hierarchy includes financial

instruments measured using quoted prices. For example, listed equity instruments that have quoted market price.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Open-ended mutual funds are valued at Net Asset Value (NAV) declared by respective fund house and are classified under Level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.

30.4 Financial assets and liabilities measured at amortised cost at each reporting date

The carrying value of loans given, interest strip receivable, bank deposits and borrowings represents its fair value. Further, the carrying value of cash and cash equivalents, other financial assets, trade payables and other payables and other financial liabilities are considered to be approximately equal to the fair value due to their short term maturities.

The above mentioned financial assets and liabilities are classified under level 2 of the fair valuation hierarchy.

30.5 Valuation techniques

Loans - The fair value of floating rate loans are deemed to be equivalent to the carrying value.

Borrowings (including debt securities) - The fair value of debt securities is determined by discounting expected future contractual cash flows using current market interest rates

charged for similar new loans and the carrying value approximates the fair value. The fair value of floating rate borrowings are deemed to be equivalent to the carrying value.

During the years mentioned above, there have been no transfers amongst the levels of hierarchy.

31 Financial risk management

and its subcommittees including the Audit Committee, the Asset Liability Management Committee and the Risk Management Committee. The Company gives due importance to prudent lending practices and have implemented suitable measures for risk mitigation, which include verification of credit history from credit information bureaus, personal verification of a customer''s business and residence, valuation of collateral, technical and legal verifications, conservative loan to value, and required term cover for insurance.

A Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. For the Company, liquidity risk arises from obligations on account of financial liabilities -borrowing, trade payables and other financial liabilities. The Company manages liquidity risk by maintaining adequate cash reserves by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

Notes: (i) Debt securities and borrowings (other than debt securities) do not carry adjustment of unamortised processing fee (EIR). (ii) Other financial liabilities exclude liability pertaining to lease liability covered under Indian accounting standard - 116 (31 March 2022: ''118.08 million; 31 March 2021: '' 82.20 million). (iii) Amounts repayable on demand are included in ''within 1 year''.

B Market risk

( i ) Foreign currency risk

There were no foreign currency exposure as at

31 March 2022 and 31 March 2021.

(ii) Interest rate risk

The Company is subject to interest rate risk, since the rates of loans and borrowings might fluctuate over the tenure of instrument. Interest rates are highly sensitive to many factors beyond control, including the monetary policies of the Reserve Bank of India, deregulation of the financial sector in India, domestic and international economic and political conditions, inflation and other factors. In order to manage interest rate risk, the Company seeks to optimise borrowing profile between short-term and longterm loans. The liabilities are categorised into various time buckets based on their maturities and Asset Liability Management Committee supervise an interest rate sensitivity report periodically for assessment of interest rate risks.

32 Credit risk management

Credit quality of assets

The Company manage credit risks by using a set of credit procedures and guidelines, laid down in our credit risk policy, to ensure effective credit risk management and health of our portfolio. The adherence to the policy and various process is monitored and appraised in credit committee meetings on a quarterly basis. The policy is amended periodically to ensure compliance with the guidelines of the RBI as well as other regulatory bodies.

customer verification, we have established a process by which separate set of verifications are conducted by a customer relationship manager and customer service officer to ensure the quality of customers acquired as well as eliminate misuse of borrowing practices.

Portfolio quality, credit limits, collateral quality and credit exposure limits are regularly monitored at various levels.

The following table sets out information about credit quality of loans and investments measured at amortised cost based on days past due information. The amount represents gross carrying amount. (Refer note 4 - Loans for detailed disclosure on gross carrying value and ECL amount on loans).

33 Transfers of assetsAssignment deal:

The Company has sold some loans measured at amortised cost as per assignment deals during the year. As per the terms of these deals, since substantial risk and rewards related to these

assets were transferred to the buyer, the assets have been derecognised from the Company''s balance sheet.

The management has evaluated the impact of assignment transactions done during the year for its business model. Based on the future business plan, the Company''s business model

remains to hold the assets for collecting contractual cash flows. The table below summarises the carrying amount of the derecognised financial assets measured at amortised cost and the gain on derecognition, per type of asset.

b. The Company has not acquired any loan not in default during the year ended 31 March 2022.

c. The Company has not transferred or acquired any stressed loan during the year ended 31 March 2022.

34 Employee benefits

(A) Defined benefit obligation

The Company has an unfunded defined benefit plan i.e., Gratuity, for its employees. Under the gratuity plan every employee who has completed

at least five years of service gets a gratuity on departure at 15 days of salary for each year of service.

Contribution to gratuity fund (unfunded scheme)

In accordance with Indian Accounting Standard 19 ''Employee benefits'', actuarial valuation was done in respect of the aforesaid defined benefit plan of gratuity based on the following assumptions:

the benefit in a lump sum form and since the benefit is not payable as an annuity for the rest of the lives of the employees, there is no longevity risk.

Code on Social Security, 2020

B. Defined contribution plan

The Company recognised '' 26.93 million (31 March 2021: '' 22.07 million) for provident fund contributions in the statement of profit and loss.

The Company has recognised '' 0.58 million (31 March 2021: Nil) for NPS contributions in the statment of profit and loss.

C. Compensated absence expenses

The Company has accounted for provision for compensated absences from 1 April 2019. An employee is eligible to carry forward 30 to 90 days of leaves basis their work location to the next period from the balance leaves pending utilisation; however these leaves are non-encashable. Provision for compensated absence for current year is '' 2.00 million (31 March 2021: '' 1.03 million).

35 Employee stock options

35.1 The Company has an Employee Share based payment scheme, under which grants were made as per details provided below:

The Board has granted 2,908,180 options, under the Employee Stock Option Scheme (ESOP) 2012 (ESOP I) and the Board Resolutions dated 14 March 2012, 25 March 2013, 19 March 2014, 30 March 2015 and 4 January 2016, which is in accordance with the provisions of the law and/or guidelines issued by the relevant authority applicable at the date of the grant. (Refer note 35.5(ii))

The Company has further issued 4,125,290 options under a new Policy termed as ESOP scheme II vide board resolution dated 28 February 2018 and 13 May 2019 which is in accordance with the provisions of the law and/or guidelines issued

by relevant authority applicable at the date of the grant. (Refer note 35.5(ii))

During the year ended 31 March 2022, the Company has approved 1,969,283 options under the Homefirst ESOP Scheme 2021 (ESOP 2021) via board resolution dated 25 October 2021 and shareholders'' special resolution dated 26 November 2021. The Board has granted 925,000 options via resolution dated 15 December 2021 under ESOP 2021, which is in accordance with the provisions of the law and/or guidelines issued by relevant authority applicable at the date of the grant.

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