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Directors Report of PNB Housing Finance Ltd.

Mar 31, 2023

Your directors welcome the Shareholders and take pleasure in presenting the 35^th Annual Report together with the Audited Standalone and Consolidated Financial Statements of the Company for the Financial Year ended March 31, 2023.

FINANCIAL RESULTS (CONSOLIDATED)

(J in crore)
Particulars	March 31 2023	March 31 2022
Total Income	6,529.66	6,200.73
Total expenditure	5,168.75	5,116.77
Profit before tax	1,360.91	1,083.96
Less: Provision for Tax
- Current year	87.78	249.15
- Deferred Tax	227.13	(1.67)
Profit After Tax	1,046.00	836.48
Other Comprehensive income (OCI)	77.06	97.30
Total Comprehensive income for the year	1,123.06	933.78
Transfer to Statutory / Special reserves	212.00	165.00
Balance carried to balance sheet	911.06	768.78

The standalone and the consolidated financial statements for the Financial Year ended March 31, 2023, forming part of this annual report, have been prepared in accordance with Ind AS notified under section 133 of the Companies Act, 2013 (''the Act'') and other relevant provisions of the National Housing Bank Act, 1987 as amended from time to time, the Master Directions Non-Banking Financial Company-Housing Finance Company (Reserve Bank) Directions, 2021 dated February 17, 2021 (''RBI Directions'') as amended from time to time and the RBI circular DOR.CRE.REC. No.60/03.10.001/2021-22 dated October 22, 2021 on "Scale Based Regulation (SBR), a revised regulatory framework for NBFCs.

The Net Interest Income for financial year 2023 stood at H2,345.54 crore as compared to H1,868.92 crore, registering an increase of 26% year on year. The Pre provision Operating Profit increased by 24% to H2,052.19 crore from H1,660.32 crore.

The Credit cost including write offs for financial year 2023 was H691.28 crore registering an increase of 20% year on year.

The Spread on loans for financial year 2023 stood at 2.81% as compared to 2.12%. Net Interest Margin for financial year 2023 stood at 3.73% as compared to 2.80%. Gross Margin, net of acquisition cost for financial year 2023, was at 4.06% as compared to 3.16%. Return on Assets for financial year 2023 was at 1.61% as compared to 1.24%. Return on Equity for financial year 2023 was at 9.98% as compared to 8.92%.

During the year, the Company has transferred a sum of H45.00 crore to Special Reserve and a sum of H167.00 crore to the Statutory Reserves.

Capital Adequacy Ratio (CRAR)

The Capital Adequacy Ratio (CRAR) as on March 31, 2023 was 24.43% (comprising Tier I capital of 22.40% and Tier II capital of 2.03%). The Reserve Bank of India (RBI) has prescribed minimum CRAR of 15% of total risk weighted assets.

DIVIDEND

In order to conserve capital, your directors have not recommended any dividend for the year (Previous year nil). The dividend distribution policy is available on the website of the Company and can be accessed at https://www. pnbhousing.com/investor-relations/corporate-governance .

RIGHTS ISSUE

The Board of Directors on March 9, 2022 had authorized the Company for Rights Issue up to H2,500 crore. On March 28, 2023 the Board approved issue of 9,06,81,828 fully paid-up Equity Shares each for amount aggregating up to H2,493.76 crore. The Board fixed issue price of H275 per fully paid-up Equity Share (including a premium of H265 per Equity Share).

The Record date for Rights share eligibility was April 05,

2023. The issue opened for subscription on April 13, 2023 and closed for subscription on April 27, 2023. The Board allotted 9,06,81,828 fully paid-up Equity Shares each for amount aggregating up to H2,493.76 crore. Pursuant to the allotment, the paid-up equity share capital of the Company has increased from H1,68,86,18,680 comprising of 16,88,61,868 fully paid-up Equity Shares of H10 each to H2,59,54,36,960 comprising of 25,95,43,696 fully paid-up Equity Shares of H10.

The promoter, PNB subscribed H498.75 crore as per RBI approval dated June 2, 2022. Post Rights issue, promoter''s shareholding in the Company is 28.15% (32.52% as on March 31, 2023).

Your Board wish to thank all the shareholders for the good response to the Rights issue, which was oversubscribed by around 1.21 times.

LENDING OPERATIONS

The Company is a Non-Banking Financial Company - Housing Finance Company (NBFC-HFC) and is engaged in financing purchase and construction of residential houses, loan against property and loan for other related purposes. All other activities revolve around the main business.

During the year, the Company has sanctioned loans amounting to H23,564 crore in respect of 71,839 loan applications, as compared to H17,495 crore in respect to 57,360 loan applications in the previous year, growth of 25% in number of loan applications sanctioned and 35% growth in loan sanctioned amount.

During the year, the Company has disbursed loans amounting to H14,965 crore as compared to H11,246 crore in the previous year, a growth of 33%.

During the year, the Company has accelerated growth with focus on retail loans which contributed 99% of total disbursements. The Company has built a separate affordable loan vertical called ''Roshni'' with dedicated sales, credit, collection, and operation. The target ticket size of a loan under Roshni is H15-17 lakh. The affordable loan segment presence was expanded to 82 branches/outreaches in more than 150 districts. This segment will be one of the focus areas going forward.

Company''s digital onboarding platform ACE was enhanced for improving distribution and customer experience. The Company has robust underwriting, monitoring, collection and risk management practices.

Loan Assets

Loan Assets as on March 31, 2023 were H59,273 crore as compared to H57,895 crore as on March 31, 2022 registering an increase of 2%. With focus on retail segment, during the year, the Company''s retail loan book has grown by 10% from H50,520 crore to H55,471 crore, whereas the corporate loan book has declined by 48% from H7,375 crore to H3,802 crore. The retail book constitutes around 94% of the Loan Assets as on March 31, 2023.

The Assets Under Management (including securitized loan book) as on March 31, 2023 were H66,617 crore as compared to H66,983 crore as at March 31, 2022, a decline of 1% YoY.

Further details on lending operations are provided in the Management Discussion and Analysis Report.

Asset Quality

The overall Gross Non-performing Assets (GNPAs), declined by 430 bps to 3.83% as on March 31, 2023 as compared to 8.13% as on March 31, 2022. The retail and corporate GNPAs declined to 2.57% and 22.25% respectively as on March 31, 2023 as compared to 3.89% and 37.13% respectively as on March 31, 2022.

The overall Net Non-performing Assets (NNPAs), declined to 2.76% as on March 31, 2023 as compared to 5.06% as on March 31, 2022. The retail and corporate NNPAs declined to 1.74% and 18.24% respectively as on March 31, 2023 as compared to 2.85% and 20.21% respectively as on March 31, 2022.

The overall ECL provision coverage as on March 31, 2023 was 2.42% (retail loans 1.74% and corporate loans 12.28%).

PMAY Subsidy

During the year, the Company disbursed subsidy under PMAY scheme in 11,424 accounts with a sanction value of H2,140.44 crore. The total subsidy transferred to the beneficiary accounts amounted to H296 crore.

DISTRIBUTION

During the year, the Company expanded its branch network to 189 branches/outreaches (including 82 affordable loan branches/outreaches) an increase from 137 branches/ outreaches (including 24 affordable loan branches/outreaches)

as on March 31, 2022. Majority of new branches were opened in tier II and tier III cities to expand affordable loan business.

The Company has 22 underwriting hubs for credit decision making.

BORROWINGS

The outstanding borrowings as on March 31, 2023 were H53,651 crore as compared to H53,005 crore as on March 31, 2022. During the year, the Company has raised fresh resources of H24,451 crore from multiple sources.

Details of market borrowings are provided in the Management Discussion and Analysis Report and Notes to Accounts.

The Company is in compliance with the provisions of Chapter XI of RBI Master Directions for issue of Non-Convertible Debentures on Private Placement basis. The Company has been regular in payment of principal and interest on the NonConvertible Debentures.

DEPOSITS

The Company has accepted public deposits as per RBI Directions as amended from time to time, erstwhile National Housing Bank Directions, 2010 and as per the provisions of the Act. The Company has paid/accrued interest on all the outstanding deposits on due dates. There has been no default on repayment of deposits or payment of interest thereon during the year.

The outstanding deposits (including accrued interest) as on March 31, 2023 were H17,247.90 crore (including intercorporate deposits of H1,722.54 crore) as against H17,687.05 crore (including inter-corporate deposits of H2,665.19 crore) outstanding as on March 31 2022, registering a decline of 2%. The Company has raised H6,068 crore of fresh deposits during the year.

The deposits of the Company have been rated AA (Outlook Stable) by CRISIL and CARE AA (Outlook Stable) by CARE.

Investment in SLR

The Company has maintained its Statutory Liquid Ratio (SLR) as stipulated under RBI Directions. The Company was having total SLR investments of H2,299.17 crore as on March 31, 2023. The Company has classified its SLR investments as per RBI Directions.

Unclaimed Deposits and NCDs

Out of the deposits which became due for repayment up to March 31, 2023, deposits worth H29.94 crore, including interest accrued and due relating to 1,575 depositors had not been claimed or renewed. The Depositors have been intimated regarding the maturity of their deposits with a request to either renew or claim the deposits and subsequent reminders have been sent.

Deposits remaining unclaimed for a period of seven years from the date they became due for payment have to be transferred to Investor Education and Protection Fund (IEPF) established by the Central Government under section 125 of the Act. During the year, the Company has transferred an amount of H14.13 lakh to IEPF. The concerned depositors can claim the deposit from the IEPF.

During the year, there was no NCDs unpaid, remaining unclaimed after its due date. The Company is not required to maintain debenture redemption reserve on privately placed NCDs.

CREDIT RATING

During the year, ICRA, CRISIL and India Ratings upgraded the Company''s rating outlook to ''Stable'' from ''Negative''.

The Company is rated AA ''Stable'' from all the major rating agencies i.e. CARE, CRISIL, ICRA and India Ratings.

The credit rating on deposits, term loans, NCDs and commercial paper and migration during the year is disclosed in the General Shareholder Information- Annexure to Director''s Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT, REPORT OF THE DIRECTORS ON CORPORATE GOVERNANCE AND BUSINESS RESPONSIBILITY REPORT

In accordance with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) and directions issued by the Reserve Bank of India, the Management Discussion and Analysis Report (MD&A) and the Report of the Directors on Corporate Governance form part of this report.

In accordance with the Listing Regulations, Business Responsibility and Sustainability Report (BRSR) also forms part of Annual Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The total amount allocated for CSR activities for financial year 2023 was H18.76 crore (including for PHFL Home Loans and Services Limited). Out of this, the amount spent was H11.76 crore on various CSR activities. A sum of H7.00 crore was transferred to Unspent CSR Account to carry out ongoing CSR activities.

Pehel Foundation (wholly owned subsidiary) is the implementation arm of the Company for CSR activities along with other partnering agencies.

During the year, the Company focused on healthcare initiatives to strengthen healthcare infrastructure across multiple locations, continued supporting projects for the welfare of construction workers, enabling access to formal education by strengthening school infrastructure, water conservation, livelihood generation for women and persons with disability.

Healthcare: Strengthening of Primary Health Centers, infrastructure at Community Health Centers, Eye Hospital, Govt. hospital for sick Newborn Care Unit, Operation of mobile medical care units, ambulance operation etc.

Education: Setting e-learning infrastructure in Govt. schools, STEM learning in Govt. schools, supported tribal school with digital learning, scholarship programs for the underprivileged, smart anganwadis, PNB Housing Finance Ki Paathshaala- a transformation project in Govt. School.

Environmental: Jal Khushhali, water conservation project, solar electrification in Govt. schools, providing safe drinking water in villages, setting community based sustainable drinking water systems, plastic waste management project.

Women Empowerment: Promoting women owned spice and snacks units, setting sanitary napkin manufacturing units, skill development of artisans in carpet sector, developed skill-based livelihoods of women.

The details are captured in Annexure 2 to Directors Report on CSR activities.

HUMAN RESOURCE

As on March 31, 2023 the Company had 1,690 full time employees on its rolls. There were 10 employees employed throughout the year, who were in receipt of remuneration of H1.02 crore or more per annum or receipt of remuneration of H8.5 lakh or more per month. The remuneration comprises salary, allowances, perquisites/ taxable value of perquisites, excluding perquisite value of ESOPs exercised and ex-gratia amount.

In accordance with the provisions of Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and particulars of the top ten employees in terms of remuneration drawn and of the aforesaid employees are set out in the annex to the Directors'' report. In terms of the provisions of Section 136(1) of the Act read with the rule, the Directors'' report is being sent to all Shareholders of the Company excluding the annexure. Any Shareholder interested in obtaining a copy of the annexure may write to the Company.

Further, disclosures on managerial remuneration are provided in Annexure 1 appended to the Directors'' Report. On-boarding of key positions and vacant positions at all levels across locations were made to ensure uninterrupted business operations.

The Learning and Development (L&D) team implemented a learning roadmap for employees on techno-functional and behavioural skills. The L&D team provided physical as well as virtual learning interventions for existing employees and new joinees.

Chief Financial Officer (CFO)

The Board appointed Mr Vinay Gupta as CFO with effect from October 26, 2022. Mr Kaushal Mithani was interim CFO from April 8, 2022 to August 23 2022 post resignation of Mr Kapish Jain as CFO with effect from April 7, 2022.

Prevention, Prohibition and Redressal of Sexual Harassment of Women at the Workplace

The Company has adopted a policy on prevention, prohibition and redressal of sexual harassment at the workplace. Members of the Internal Complaints Committee constituted by the Company are responsible for reporting and conducting inquiries pertaining to such complaints.

The Company on a regular basis sensitises its employees including subsidiary employees on the prevention of

sexual harassment at the workplace through workshops, group meetings, online training modules and awareness programmes. During the year, one complaint was received by the Committee, which is under investigation.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

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

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

In accordance with the provisions of Section 188 of the Act and rules made thereunder, the transactions with related parties are in the ordinary course of business and on an arm''s length pricing basis, the details of which are included in the notes forming part of the financial statements. The particulars of contracts or arrangements with related parties as prescribed in Form No. AOC-2 of the Companies (Accounts) Rules, 2014, are annexed to this report. Details of related party transactions are given in the Notes to Accounts. The Policy on Related Party Transactions is published elsewhere in the Annual Report and is also placed on the Company''s website at https://www.pnbhousing.com/investor-relations/ corporate-governance/

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

There is no information to disclose under the head ''Conservation of Energy and Technology Absorption'' given in the above rules since the Company is engaged in providing housing loans. However, the Company understands the importance of energy conservation for the environment and this is covered under Environment, Social and Governance (ESG) section.

There were no foreign exchange earnings, and the Company has incurred foreign exchange expenditure of H235.74 crore during the year primarily on account of interest on borrowings from external sources.

Business Continuity

The Company has a Business Continuity Plan (BCP), designed to minimise operational, financial, legal, reputational, and other material consequences arising from a disaster.

The Business Continuity & Disaster Recovery policy at PNB Housing Finance is developed with intent to prevent, contain, and respond to potential disruptions that may impact the continuity of business/support processes performed by PNB Housing Finance, along with ensuring safety of PNB Housing Finance employees.

We have implemented multi-layered controls for identification, prevention, detection, and response to various cyber security threats we face today. We have applied safeguards for protection of customer information. We have framed information security policy, cyber security policy and cloud security policy to support information security management system and to protect business information at network, endpoint, perimeter, application, and human layer.

MAINTENANCE OF COST RECORDS

Being a housing finance company, the Company is not required to maintain cost records as per sub-section (1) of Section 148 of the Act.

UNCLAIMED DIVIDEND

As on March 31, 2023, dividend amounting to H7.07 lakh had not been claimed by Shareholders of the Company. The Company has been informing these Shareholders to claim unclaimed dividend.

EMPLOYEES STOCK OPTION SCHEME & RSU SCHEME

During the year, 2,44,572 Equity Shares of H10 each were allotted on exercise of ESOP options under ESOP Scheme 2016 and 2018. Further, 12,691 Equity Shares of H10 each were allotted on exercise of RSUs under RSU Scheme 2020.

Grant of fresh ESOS & RSUs

During the year, the Nomination and Remuneration Committee has granted 14,78,559 ESOPs under ESOP Scheme 2016 and 2020.

(6,78,559 options were granted at H345.30, 25,000 options at H345.20, 5,75,000 options at H444.05 and 2,00,000 options at H431.20).

During the year, the Nomination and Remuneration Committee has granted 25,000 RSUs under RSU Scheme 2020 at H10 per option.

2021 and Shareholder''s resolutions has been obtained and will be available for inspection of the Shareholders at the ensuing Annual General Meeting (''AGM''). The Nomination and Remuneration Committee monitors the compliance of these Schemes. The disclosures as required under the regulations have been placed on the website of the Company at https:// www.pnbhousing.com/investor-relations/updates-events .

REGULATORY INTERVENTIONS

The RBI vide circular dated September 30, 2022 has classified PNB Housing Finance in Upper Layer (NBFC-UL) category under Scale Based Regulation (SBR) for NBFCs issued on October 22, 2021.

The Companies classified under NBFC-UL are required to implement a comprehensive scale based regulatory framework covering internal capital adequacy assessment process (ICAAP), common equity Tier I, leverage, differential standard asset provisioning, concentration of credit and investment, sensitive sector exposure, large exposure framework, restriction on loans to directors, their relatives and senior officers, enhanced disclosure in annual report, core financial services etc.

The RBI has issued following circulars under scale-based regulation (SBR) for NBFC-UL in Financial year 2022.

Compliance function and role of Chief Compliance Officer (April 11), restriction on loans and advances to directors and senior officers (April 19), capital requirements (April 19), large exposure framework (April 19), disclosure in financial statements-Notes to Accounts (April 19), compensation of KMPs and senior management (April 29) and provisioning for standard assets (June 06).

The Company has requisite policies in compliance with NBFC-UL requirements and is in compliance with the various circulars issued by RBI for NBFC-UL.

Regulatory Compliance

The Company has implemented RBI Directions as amended from time to time and other directions/guidelines prescribed by RBI regarding deposit acceptance, accounting standards, prudential norms for asset classification, income recognition, provisioning, capital adequacy, credit rating, corporate governance, information technology framework, fraud monitoring, concentration of investments, capital market exposure norms, guidelines on maintenance of Liquidity Coverage Ratio (LCR), transfer of loans and know your customer and anti-money laundering.

During the year, the Company has not made any application and no proceeding is pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016). The Company has not entered into one-time settlement for any loans availed from the Banks or Financial Institutions.

POLICIES AND CODES

During the year, the Company has revised its policies as required in terms of provisions of the Act, RBI Directions, Listing Regulations and Insider Trading Regulations issued by the SEBI and placed all the statutory policies on its website a1 https://www.pnbhousing.com/investor-relations/corporate-governance/

DIRECTORS

During the financial year, the Board on the recommendation of Nomination and Remuneration Committee made the following appointments of Directors.

a) Mr. Atul Kumar Goel (DIN: 07266897) was appointed Non-Executive Nominee Director with effect from April 28, 2022. The appointment was approved by the shareholders in the 34^th AGM on July 26, 2022. He is nominee of Punjab National Bank and is liable to retire by rotation.

b) Mr. Girish Kousgi (DIN: 08524205) was appointed Managing Director & CEO with effect from October

21, 2022. The appointment was approved by the shareholders through postal ballot on December 22, 2022 for a term of 4 years effective October 21, 2022.

He is not liable to retire by rotation.

c) Mr. Pavan Kaushal (DIN: 07117387) was appointed Independent Director with effect from October 27, 2022. The appointment was approved by the shareholders through postal ballot on December 22, 2022 for a term of 3 years effective October 27, 2022. He is not liable to retire by rotation.

d) Mr. Dilip Kumar Jain (DIN: 06822012) was appointed Non-Executive Nominee Director with effect from November 04, 2022. The appointment was approved by the shareholders through postal ballot on December

22, 2022. He is nominee of Punjab National Bank and is liable to retire by rotation.

During the year, following Directors have resigned from the Board or completed their term.

a) Mr Ashwani Kumar Gupta (DIN 00108678) completed his five years term as an Independent Director on

May 11, 2022.

b) Mr. Hardayal Prasad (DIN: 08024303) resigned as Managing Director & CEO with effect from October 20, 2022.

c) Mr Binod Kumar (DIN 07361689) resigned as NonExecutive Director with effect from October 21, 2022.

He was nominee of Punjab National Bank.

Your Board wishes to place on record its sincere appreciation for the contributions made by these directors on the Board and also on various Committees of the Board.

In accordance with the provisions of the Act and Articles of Association of the Company, Mr Sunil Kaul and Mr. Atul Kumar Goel will retire by rotation at the ensuing AGM. They are eligible for re-appointment and your Board recommends their re-appointment.

All the directors of the Company have confirmed that they satisfy the fit and proper criteria as prescribed under the applicable regulations and that they are not disqualified from being appointed as directors in terms of Section 164(2) of the Act. The Company has also received a certificate from the Practising Company Secretary confirming that none of the directors have been debarred or disqualified.

The Company has received necessary declaration from each Independent Director under Section 149(7) of the Act that he/ she meets the criteria of Independence laid down in the Act and Listing Regulations as amended.

The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience, and expertise. All the Independent Directors of the Company have registered their names with the data bank created for Independent Directors.

The details on the number of Board/ Committee Meetings held are provided in the Corporate Governance Report, which forms part of this report.

The evaluation of the Board, its committees and individual Directors was carried out in terms of the provisions of the Act and Listing Regulations. (Refer Corporate Governance Report).

STATUTORY AUDITORS

The Reserve Bank of India has issued Guidelines for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) on April 27, 2022.

The Shareholders in the 33^rd AGM have appointed M/s. T R Chadha & Co, LLP, Chartered Accountants (ICAI Firm Registration No. 006711N/N500028) and M/s. Singhi & Co., Chartered Accountants (ICAI Firm Registration No. 302049E) as the Joint Statutory Auditors of the Company for a period of three years from the conclusion of 33^rd Annual General Meeting till the conclusion of the 36^th AGM of the Company.

During the year, the Statutory Auditors were paid remuneration of H1.08 crore (The subsidiaries Statutory Auditor was paid remuneration of H0.09 crore). The remuneration pertains to fees for audit, internal financial control reporting, limited reviews, tax audits and taxation services, certifications and other matters and reimbursement of expenses.

In addition, the Statutory Auditors were paid fees in relation to the Rights Issue related services amounting to H0.65 crore (excluding applicable taxes).

During the year under review, the Statutory Auditors have not reported any matter under Section 143 (12) of the Act. Therefore, no details are required to be disclosed under Section 134 (3) (ca) of the Act.

The Statutory Auditors have confirmed that they continue to satisfy the eligibility norms and independence criteria as prescribed by RBI guidelines and the Companies Act, 2013.

SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Act, the Board has appointed M/s Chandrasekaran Associates, a firm of Company Secretaries in practice, to undertake the Secretarial Audit of the Company.

Secretarial Audit Report forms part to Directors Report as annexure. The Secretarial Compliance Report forms part of the Annual Report.

During the year, the Company has complied with applicable Secretarial Standards i.e. SS-1 and SS-2, relating to "Meetings of the Board of Directors" and "General Meetings", respectively.

DIRECTORS'' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(3)(c) of the Act and based on the information provided by the management, your directors state that:

a) In the preparation of annual accounts, the applicable accounting standards have been followed;

b) Accounting policies selected have been applied consistently. Reasonable and prudent judgements and estimates have been made so as to give a true and fair view of the state of affairs of the Company as on March 31, 2023 and of the profit of the Company for the year ended on that date;

c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

d) The annual accounts of the Company have been prepared on a going concern basis;

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

f) Systems to ensure compliance with the provisions of all applicable laws are in place and were adequate and operating effectively.

INTERNAL FINANCIAL CONTROL

The Company has put in place adequate policies and procedures to ensure that the system of internal financial control is commensurate with the size and nature of the Company''s business.

These systems provide a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes, safeguarding of assets of the Company, prevention and detection of frauds, accuracy and completeness of accounting records and ensuring compliance with Company''s policies.

EXTRACTS OF ANNUAL RETURN

The Annual Return in Form MGT-7 as on March 31, 2023 is available on the website of the Company at https://www. pnbhousing.com/investor-relations/annual-reports .

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS

During the year, there were no significant or material orders passed by the regulators or courts or tribunals that would impact the going concern status or operations of the Company in the future.

Settlement Order passed by SEBI

A settlement application was filed on Suo motto basis with SEBI on January 17, 2022 on behalf of the Company and its directors, in terms of the SEBI (Settlement Proceedings) Regulations, 2018 ("Settlement Regulations"), seeking settlement of all the matters that may arise in connection with Preferential Issue of Equity Shares for an aggregate amount of H4,000 crore, without admitting or denying the findings of fact or conclusions of law. Pursuant to completion of the requirements under the Settlement Regulations, SEBI has notified a Settlement Order dated July 18, 2022. The Company paid settlement amount of H72.76 lakh to SEBI including the legal expenses of H44.27 lakh.

PARTICULARS OF CONTRACT OR ARRANGEMENTS ENTERED MATERIAL CHANGES, DETAILS OF SUBSIDIARIES AND LITIGATIONS

There has been no material change or commitment, affecting the financial position of the Company which has occurred between the close of the Financial Year 2023 to which the financial statement relates and the date of the Report.

There has been no change in the nature of business of the Company.

PHFL Home Loans and Services Limited (PHFL)

PHFL is a wholly owned subsidiary and is the distribution arm for PNB Housing Finance, offering doorstep services to the prospective customers. The Subsidiary has trained workforce to source business for the loans and deposits offered by PNB Housing Finance.

During the year, the PHFL has sourced loan applications in respect of 74% of total loans disbursed by PNB Housing Finance. The annual accounts of PHFL are enclosed along with the Annual Accounts of PNB Housing Finance.

A report on the performance and financials of PHFL, as per Act and rules made thereunder (the "Act") is provided in Form AOC - 1 attached to the Consolidated Financial Statements forming an integral part of the Annual Report.

Pehel Foundation

It is a wholly owned non-profit subsidiary Company incorporated under Section 8 of the Act. It is an implementation arm to carry out various CSR activities of PNB Housing Finance and PHFL.

ACKNOWLEDGEMENTS

Ministry of Corporate Affairs, Registrar of Companies, Financial Intelligence Unit (India), the Stock Exchanges and the Depositories.

The Company acknowledges the role of all its key stakeholders - Shareholders, borrowers, channel partners, depositors, deposit agents, lenders and Registrar for their continued support.

The Directors express their appreciation for the dedication and commitment with which the employees of the Company at all levels have worked during the period.

For and on behalf of the Board

Girish Kousgi Atul Kumar Goel

Managing Director & CEO Non-Executive Director

Place: New Delhi Date: June 22, 2023

Mar 31, 2022

Your Directors welcome the Shareholders and take pleasure in presenting the 34^th Annual Report together with the Audited Standalone and Consolidated Financial Statements of the Company for the Financial Year ended March 31, 2022.

FINANCIAL RESULTS (CONSOLIDATED) ('' in crore)
	March 31, 2022	March 31, 2021
Total Income	6,200.73	7,624.08
Total expenditure	5,116.77	6,417.05
Profit before tax	1,083.96	1,207.03
Less: Provision for Tax
-Current year	249.15	413.25
-Deferred Tax	(1.67)	(136.12)
Profit After Tax	836.48	929.90
Other Comprehensive income (OCI)	97.30	(20.69)
Total Comprehensive income for the year	933.78	909.21
Transfer to Statutory / Special reserves	165.00	197.00
Balance carried to balance sheet	768.78	712.21

The standalone and the consolidated financial statements for the Financial Year ended March 31, 2022, forming part of this Annual Report, have been prepared in accordance with Ind AS notified under Section 133 of the Companies Act, 2013 (''the Act'') and other relevant provisions of the National Housing Bank Act, 1987 as amended from time to time and the Master Directions Non-Banking Financial CompanyHousing Finance Company (Reserve Bank) Directions, 2021 dated February 17, 2021 (''RBI Directions'') as amended from time to time.

During the year, the Company has earned a total income of ''6,200.73 crore as compared to ''7,624.08 crore in the previous year, recording decline of 18.67%. Total expenses, provisions and write offs during the year were ''5,116.77 crore as compared to ''6,417.05 crore in the previous year, a decline of 20.26%.

During the year, the Company has earned pre-provision operating profit of ''1,660.32 crore as compared to ''2,068.93 crore in the previous year, a decline of 19.75%.

During the year, the Company has earned a profit before tax of ''1,083.96 crore as compared to ''1,207.03 crore in the previous year, a decline of 10.20%. The profit after tax during the year was ''836.48 crore as compared to ''929.90 crore in the previous year, a decline of 10.05%.

During the year, the Company has transferred a sum of ''124.00 crore to Special Reserve and a sum of ''41.00 crore to the Statutory Reserves.

Capital Adequacy Ratio (CRAR)

The Capital Adequacy Ratio (CRAR) as on March 31,

2022 was 23.40% (comprising Tier I capital of 20.73% and Tier II capital of 2.67%). The Reserve Bank of India (RBI) has prescribed minimum CRAR of 15% of total risk weighted assets.

DIVIDEND

In order to preserve capital, your Directors have not recommended any dividend for the year (Previous year nil). The dividend distribution policy is available on the website of the Company and can be accessed at https://www. pnbhousing.com/investor-relations/corporate-governance .

COVID-19

The financial year ended March 31, 2022 was the second year since the outbreak of COVID-19. Economic and social disruptions continued with localized restrictions and lockdown as India witnessed a second wave of infections in April 21 and another wave from January to March 22.

LENDING OPERATIONS

The Company is a Non-Banking Financial Company-Housing Finance Company(NBFC-HFC) and is engaged in financing purchase and construction of residential houses, loan against property and loan for other related purposes. All other activities revolve around the main business.

During the year, the Company has sanctioned loans amounting to ''17,495 crore in respect of 57,360 loan applications, as compared to ''15,301 crore in respect to 50,454 loan applications in the previous year, growth of 14% in number of loan applications received and loan sanctioned amount.

During the year, the Company has disbursed loans amounting to ''11,246 crore as compared to ''10,445 crore in the previous year, growth of 8%.

Retail loans contributed 97% of total disbursements. The Company leveraged its expertise in mass housing and selfemployed category and focussed on affordable segment and expanded operations through its flagship product "Unnati''â, which caters to low and medium ticket retail loan segment. Company also operationalized Unnati dedicated branches and outreach network during the year. Unnati segment will continue to be one of the focus areas of lending.

Company is tying up with co-lending partners for business expansion. The Company is tying up with leading banks for co-lending business.

Loan Book

The Assets Under Management (AUM) (principal outstanding including principal overdue) as at March 31, 2022 were ''65,977 crore as compared to ''74,469 crore as at March 31, 2021 resulting in a decline of 11% YoY. Loan Asset as at March 31, 2022 were ''57,895 crore as compared to ''63,189 crore as on March 31, 2021 registering a decline of 8% which was mainly due to higher attrition of corporate loan portfolio. The corporate loan book declined by 39% during the financial year while retail loan book registered a decline of 1% during the same period.

Further details of lending operations are provided in the Management Discussion and Analysis Report.

Asset Quality

The Reserve Bank of India vide its circular dated November 12, 2021 has clarified that a loan account classified as NPA may be upgraded as standard asset only if entire arrears of principal and interest are paid by the borrower. Although, the Company had time upto September 30, 2022, to implement the circular, the Company has implemented the circular in Financial Year 2021 - 22 itself.

The overall gross non-performing assets as on March 31, 2022, as per IND AS were 8.12% as compared to 4.74% as on March 31, 2021 (Retail loans 3.89% vs 2.70% and corporate loans 37.13% vs 13.47%).

The overall ECL coverage has increased from 4.02% as on March 31, 2021 to 4.42% as on March 31, 2022 (Retail loans 1.99% vs 1.75% and corporate loans 21.02% vs 13.71%). The Company is carrying total ECL provision of '' 2,559 crore as on March 31, 2022.

PMAY Subsidy

During the year, the Company disbursed subsidy under PMAY scheme in 10,820 accounts with a sanction value of ''1,908 crore. The total subsidy transferred in the beneficiary accounts amounted to '' 276 crore.

DISTRIBUTION

During the year, the Company opened 24 new branches/ outreaches, majority in tier II and tier III cities to expand Unnati operations. As on March 31 2022, the Company has presence through 99 branches, 38 outreach locations, totalling to 137 distribution outlets. The Company also has 22 underwriting hubs for credit decision making. With emphasis on Unnati, the Company opened 3 more branches and 2 outreach centres in April 2022 resulting in a total of 29 dedicated Unnati locations by the end of April 2022.

The Company also focussed on its digital sourcing through Ace and the sourcing from the digital channel increased to 47% in Financial Year 2021-22 as compared to 19% in Financial Year 2020-21.

BORROWINGS

The outstanding borrowings as on March 31, 2022 were ''53,005 crore as compared to ''59,392 crore as on March 31, 2021. During the year, the Company has raised fresh resources of ''27,551 crore from multiple sources.

Details of market borrowings are provided in the Management Discussion and Analysis Report and notes to accounts.

The Company is in compliance with the provisions of RBI Directions and erstwhile Housing Finance Companies

issuance of Non-Convertible Debentures on private placement basis (NHB) Directions, 2014 and has been regular in payment of principal and interest on the NonConvertible Debentures.

DEPOSITS

The Company has raised ''7,233 crore of fresh deposits during the year. The outstanding deposits (including inter corporate deposits) as at March 31, 2022 were ''17,649 crore as against ''16,746 crore (including inter corporate deposits) outstanding last year, registering a growth of 5%.

The deposits of the Company have been rated FAA (Outlook Negative) by CRISIL and CARE AA (Outlook Stable) by CARE.

Investment in SLR

The Company has maintained its Statutory Liquid Ratio (SLR) as stipulated by RBI Directions. The Company is having total SLR investments of ''2,234.18 crore as on March 31, 2022. The Company has classified its SLR investments as per RBI Directions.

Unclaimed Deposits and NCDs

Out of the deposits, which became due for repayment up to March 31, 2022, deposits worth ''43.85 crore, including interest accrued and due relating to 2,328 depositors had not been claimed or renewed. The Depositors have been intimated regarding the maturity of their deposits with a request to either renew or claim the deposits and subsequent reminders have been sent.

Deposits remaining unclaimed for a period of seven years from the date they became due for payment have to be transferred to Investor Education and Protection Fund (IEPF). During the year, the Company has transferred an amount of ''38.11 lakh to IEPF established by the Central Government under section 125 of the Act. The concerned depositor can claim the deposit from the IEPF.

During the year, there was no NCDs unpaid after its due date or interest thereon, remaining unclaimed or un-paid after its due date. The Company is not required to maintain debenture redemption reserve on privately placed NCDs.

CREDIT RATING

The credit rating on deposits, term loans, NCDs and commercial paper and migration during the year is disclosed in the General Shareholder Information- Annexure-4 to Director''s Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT, REPORT OF THE DIRECTORS ON CORPORATE GOVERNANCE AND BUSINESS RESPONSIBILITY REPORT

In accordance with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") and directions issued by the Reserve Bank of India, the Management Discussion and Analysis Report (MD&A) and the Report of the Directors on Corporate Governance form part of this report.

In accordance with the Listing Regulations, the Business Responsibility Report (BRR) also forms part of Annual Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company undertakes its CSR activities through its dedicated arm, Pehel Foundation and other partnering agencies. During the year, the Company and its subsidiary have spent a sum of ''23.22 crore on various CSR activities. Out of total allocation for Financial Year 2021 -22, a sum of ''18.19 crore (''16.21 crore from PNB Housing and ''1.98 crore from PHFL) was transferred to Pehel Foundation to carry out CSR activities of PNB Housing and PHFL Home Loans and Services Limited ("PHFL").

In Financial Year 2021-22, the Company focused on healthcare initiatives to strengthen healthcare infrastructure across multiple locations. The Company continued supporting projects for the welfare of construction workers, enabling access to formal education by strengthening school infrastructure, water conservation, increasing green cover, enable access to clean drinking water, livelihood generation for women and persons with disability.

OUR CORE FOCUS AREAS WERE:

a. Healthcare:

Supported hospital facilities at various places, setting up of Oxygen Plant, through Pehel Foundation provided ambulances, upgraded infrastructure of Healthcare Centers by equipping them with modern healthcare equipment and improving civil infrastructure.

PEHEL Foundation provided 3D Printing and 3D Scanning devices in prosthetics and related areas to NIPMED, Chennai, which will impact the quality of life for individuals with missing limbs. Upgraded Blood Bank by providing automated blood screening devices for children with Thalassemia, setting up state of the art facility to offer advanced Ear & Hearing care services to address hearing and associated problems in people with hearing impairment.

b. Education:

Supported construction of a new campus to provide education and skill development for children, developed Remote Teaching units for online interactive classes in government schools, supported the operational cost of running schools, transformation of Government Schools into Smart Schools and supported Vanvasi Kalyan Ashram, for the upliftment of tribal girl students.

c. Environmental

Provided access to safe drinking water in villages, setting up community-level decentralized water ATMs for affordable safe drinking water in villages, development of pond structures in Villages, plantation of saplings, etc.

d. Welfare of Construction Workers

Provided high quality skill training in construction related trades, setting up of physical training centers, development of "Building Construction Excellence Lab" etc.

The details are captured in Annexure 2 to Directors Report on CSR activities.

HUMAN RESOURCE

As on March 31, 2022, the Company had a total of 1,425 full time employees on its rolls. There were 11 employees employed throughout the year, who were in receipt of remuneration of ''1.02 crore or more per annum or receipt of remuneration of ''8.5 lakh or more per month. The remuneration comprises salary, allowances, perquisites/ taxable value of perquisites including perquisite value of ESOPs exercised and ex-gratia amount.

During the year, timely on-boarding of vacant positions at all levels and across locations were made to ensure uninterrupted business operations.

During the Covid restrictions, the Learning and Development (L&D) team continued to provide virtual learning interventions and after easing of Covid restrictions, the team used both physical and technology based virtual learning interventions. The L&D implemented a learning roadmap for existing and new employees on techno-functional and behavioural skills.

In accordance with the provisions of Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and particulars of the top eleven employees in terms of remuneration drawn and of the aforesaid employees are set out in the annexure to the Directors'' Report. In terms of the provisions of Section 136(1) of the Act read with the rule, the Directors'' Report is being sent to all Shareholders of the Company excluding the annexure. Any Shareholder interested in obtaining a copy of the annexure may write to the Company.

Further, disclosures on managerial remuneration are provided in Annexure 1 appended to the Directors'' Report.

PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE

The Company on a regular basis sensitises its employees including subsidiary employees on the prevention of sexual harassment at the workplace through workshops, group meetings, online training modules and awareness programmes. During the year, one complaint was received by the committee, which was reviewed and actioned upon. There are no pending complaints with the committee as on March 31, 2022.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

In accordance with the provisions of Section 188 of the Act and rules made thereunder, the transactions entered with related parties are in the ordinary course of business and on an arm''s length pricing basis, the details of which are included in the notes forming part of the financial statements. The particulars of contracts or arrangements with related parties as prescribed in Form No. AOC-2 of the Companies (Accounts) Rules, 2014, is annexed to this report. Details of related party transactions are given in the notes to the financial statements. The Policy on Related Party Transactions is published elsewhere in the Annual Report and is also placed on the Company''s website at https://www. pnbhousing.com/investor-relations/corporate-governance/.

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

There is no information to disclose under the head ''Conservation of Energy and Technology Absorption'' given in the above rules since the Company is engaged in providing housing loans. However, the Company understands the importance of energy conservation for the environment and is covered under Environment, Social and Governance (ESG) section.

There were no foreign exchange earnings and the Company has incurred foreign exchange expenditure of ''89.91 crore during the year primarily on account of interest on borrowings from external sources viz ECB, ADB, IFC.

Business Continuity

The Company has a Business Continuity Plan (BCP), designed to minimise operational, financial, legal, reputational and other material consequences arising from a disaster.

The Business Continuity & Disaster Recovery policy at PNB Housing is developed with intent to prevent, contain, and respond to potential disruptions that may impact the continuity of business/support processes performed by PNB Housing, along with ensuring safety of PNB Housing employees.

MAINTENANCE OF COST RECORDS

Being a housing finance company, the Company is not required to maintain cost records as per sub-section (1) of Section 148 of the Act.

UNCLAIMED DIVIDEND

As at March 31, 2022, dividend amounting to ''7.22 lakh had not been claimed by Shareholders of the Company. The Company has been informing the Shareholders to claim unclaimed dividend.

EMPLOYEES STOCK OPTION SCHEME (ESOS)

During the year, 3,30,432 Equity Shares of ''10 each were allotted to the eligible employees on exercise of ESOP options under ESOP Scheme 2016 and 2018.

Grant of fresh ESOS

During the year, the Nomination and Remuneration Committee has granted 2,72,000 units under ESOP Scheme 2018 (As per ESOP Scheme 2018, 75,000 options were granted at ''588.10, 75,000 options at ''507.20, 22,000 options at ''644.70 and 1,00,000 options at ''690.35).

There has been no variation in the terms of the options granted under any of these schemes and all the schemes are in compliance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 as amended. The certificate from the Secretarial Auditors confirming that ESOS Schemes have been implemented in accordance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and Shareholders resolutions has been obtained and will be available for inspection of the Shareholders at the ensuing Annual General Meeting (''AGM''). The Nomination and Remuneration Committee monitors the compliance of these Schemes. The disclosures as required under the regulations have been placed on the website of the Company at https://www.pnbhousing.com/investor-relations/updates-events/.

REGULATORY INTERVENTIONS

The RBI on February 17, 2021 has notified Non-Banking Financial Company-Housing Finance Company (Reserve Bank) Directions, 2021 referred to as RBI Directions for Housing Finance Companies.

The RBI has also made applicable to HFCs its Master Directions on; Know Your Customer (KYC) Direction, 2016, Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016 and Information Technology Framework for the NBFC Sector dated June 08, 2017, as amended from time to time.

Regulatory Compliance

The Company has implemented/complied with the following new directions/ notifications/ circulars issued by RBI.

a. Guidelines on the appointment of Statutory Auditors (April 27, 2021).

b. Amendment in Master Directions on KYC (May 10, 2021).

c. Risk Based Internal Audit (June 11, 2021).

d. Guidelines on declaration of dividend by NBFCs (June 24, 2021).

e. Master Direction on (Transfer of Loan Exposure) Direction 2021 (September 24, 2021).

f. Master Direction on (Securitization of Standard Assets) Direction 2021 (September 24, 2021).

g. Revision in Prudential norms on income recognition, Asset classification and provisioning pertaining to advances (November 12, 2021).

RBI has also issued, Scale Based Regulatory Framework for NBFCs dated October 22, 2021, which are applicable from October 01, 2022. This is an integrated framework with respect to capital requirements, governance standards, prudential regulations.

The Company has been complying with various amendments made in Listing Regulations issued by Securities and Exchange Board of India during the year.

During the year, the Company has not made any application, or no proceeding is pending under the Insolvency and Bankruptcy Code, 2016. The Company has not entered into one-time settlement for any loans availed from the Banks or Financial Institutions.

POLICIES AND CODES

During the year, the Company has revised its statutory policies as required in terms of provisions of the Act,

RBI Directions, Listing Regulations and Insider Trading Regulations issued by the SEBI and placed all the statutory policies on its website at https://www.pnbhousing.com/ investor-relations/corporate-governance .

DIRECTORS

The Board on the recommendation of Nomination and Remuneration Committee made the following appointments of Directors.

a) Mr. Nilesh S Vikamsey (DIN: 00031213) was reappointed as an Independent Director for a five year term with effect from April 22, 2021.

b) Ms. Gita Nayyar (DIN: 07128438) was appointed as an Independent Director with effect from May 29, 2021.

c) Mr. Binod Kumar (DIN: 07361689) was appointed as Non-Executive Nominee Director with effect from January 12, 2022. He is nominee of Punjab National Bank. He is liable to retire by rotation.

d) Mr. Atul Kumar Goel (DIN: 07266897) was appointed as Non-Executive Nominee Director with effect from

April 28, 2022 subject to Shareholders'' approval. He is nominee of Punjab National Bank. He is liable to retire by rotation.

The following Directors have resigned from the Board or completed their term.

a) Mr. Rajneesh Karnatak (DIN: 08912491) resigned as Non-Executive Nominee Director on October 21,

2021 upon his elevation as Executive Director of Canara Bank.

b) Mr. CH SS Mallikarjuna Rao (DIN: 07667641) resigned as Non-Executive Nominee Director on January 31, 2022 upon his superannuation from Punjab National Bank.

c) Mr Ashwani Kumar Gupta (DIN 00108678) completed his five years term as an Independent Director on May 11, 2022.

Your Board wish to place on record its sincere appreciation for the significant contributions made by Mr. CH SS Mallikarjuna Rao as Chairman of the Board, Mr. Rajneesh Karnatak and Mr Ashwani Kumar Gupta as Directors on the Board and also on its various Committees.

During the year, the Shareholders vide general meeting dated June 22, 2021 have approved the appointment of Mr. Hardayal Prasad, Mr. Neeraj Madan Vyas, Mr. Sudarshan Sen, Mr. Kapil Modi, Ms. Gita Nayyar, Mr. Rajneesh Karnatak (ceased on October 21, 2021) and re-appointed Mr. Ramakrishnan Chandrasekaran, Mr. Nilesh S Vikamsey for a second term of five years. The Shareholders have also approved the appointment of Mr. Binod Kumar vide postal ballot dated April 08, 2022.

In accordance with the provisions of the Act and Articles of Association of the Company, Mr Neeraj Madan Vyas and Mr. Kapil Modi are liable to retire by rotation at the ensuing AGM. They are eligible for re-appointment.

The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise. All the Independent Directors of the Company have registered their names with the data bank created for Independent Directors.

The details on the number of Board/ Committee Meetings held are provided in the Corporate Governance Report, which forms part of this report as Annexure-3.

The evaluation of Board, its Committees and individual Directors was carried out in terms of the provisions of the Act and Listing Regulations. (Refer Corporate Governance Report).

STATUTORY AUDITORS

The Reserve Bank of India has issued a Guidelines for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) dated April 27, 2021.

Pursuant to the said RBI guidelines, M/s B R Maheshwari & Co LLP (ICAI Firm Registration no. 001035N), became ineligible to continue as the statutory auditors. They conducted Limited Review of the first quarter of Financial Year 2022. The Board wish to place on record its appreciation for the professional services rendered by them.

During the year, Statutory Auditors received a total remuneration of ''0.84 crore from the Company and its subsidiaries. The remuneration pertains to fees for audit, internal financial control reporting, limited reviews, tax audits, certifications, other matters and reimbursement of expenses.

During the year under review, the Statutory Auditors have not reported any matter under Section 143 (12) of the Act therefore no detail is required to be disclosed under Section 134 (3) (ca) of the Act.

The joint statutory auditors have confirmed that they continue to satisfy the eligibility norms and independence criteria as prescribed by RBI guidelines and the Companies Act, 2013.

SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Act, the Company has appointed M/s Chandrasekaran Associates a firm of Company Secretaries in practice to undertake the Secretarial Audit of the Company.

The Report on Secretarial Audit forms part as annexure to this Report. The Secretarial Compliance Report forms part of the Annual Report.

During the year, the Company has complied with applicable Secretarial Standards i.e. SS-1 and SS-2, relating to "Meetings of the Board of Directors" and "General Meetings", respectively.

DIRECTORS'' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(3)(c) of the Act and based on the information provided by the management, your directors state that:

a) In the preparation of annual accounts, the applicable accounting standards have been followed;

b) Accounting policies selected have been applied consistently. Reasonable and prudent judgements and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at March 31, 2022 and of the profit of the Company for the year ended on that date;

d) The annual accounts of the Company have been prepared on a going concern basis;

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

f) Systems to ensure compliance with the provisions of all applicable laws are in place and were adequate and operating effectively.

INTERNAL FINANCIAL CONTROL

The Company has put in place adequate policies and procedures to ensure that the system of internal financial control commensurate with the size and nature of the Company''s business.

EXTRACTS OF ANNUAL RETURN

The Annual Return in Form MGT-7 as at March 31, 2022 is available on the website of the Company at https://www. pnbhousing.com/investor-relations/annual-reports/.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS

During the year, there were no significant or material orders passed by the regulators or courts or tribunals that would impact the going concern status or operations of the Company in the future.

PARTICULARS OF CONTRACT OR ARRANGEMENTS ENTERED MATERIAL CHANGES, DETAILS OF SUBSIDIARIES AND LITIGATIONS

There has been no material changes and commitment, affecting the financial position of the Company which has occurred between the close of the Financial Year 2021-22 to which the financial statement relates and the date of the Report.

There has been no change in the nature of business of the Company.

PHFL HOME LOANS AND SERVICES LIMITED

The Company is a wholly owned subsidiary and is the distribution arm for PNB Housing, offering doorstep services to the prospective customers. The Company has trained workforce to sources business for the loans and deposits offered by PNB Housing.

During the year, the Company has sourced 74% of loan applications resulting into 71% of total loans disbursed by PNB Housing. The annual accounts of PHFL are enclosed along with the Annual Accounts of PNB Housing.

A report on the performance and financials of PHFL, as per Act and rules made thereunder is provided in Form AOC - 1 attached to the Consolidated Financial Statements forming an integral part of the Annual Report.

Pehel Foundation

It is a wholly owned non-profit subsidiary Company incorporated under Section 8 of the Act. It is an implementation arm to carry out various CSR activities of PNB Housing and PHFL.

EQUITY SHARE CAPITAL

The Board of Directors had announced a Preferential Issue to raise ''4,000 crore on May 31, 2021. The Preferential Issue was held up for more than 4 months due to the pending legal proceeding before the Securities Appellate Tribunal (SAT) and later Supreme Court of India. Since there was no visibility or certainty as to the timeline for judicial determination of the legal issues, the Board decided not to proceed with the Preferential Issue on October 14, 2021. Post the Board decision the Company withdrew its application from SAT and approached SEBI to close the matter.

The Board''s primary objective is to raise capital to support the growth of the Company. Therefore, the Board of Directors on March 09, 2022 has authorized the Company for Rights Issue up to ''2,500 crore. The promoter, Punjab National Bank has received Regulatory approval dated June 2, 2022 for its participation in the Rights Issue up to '' 500 crore.

ACKNOWLEDGEMENTS

The Directors place on record their gratitude for the support of various regulatory authorities including Reserve Bank of India, National Housing Bank, Securities and Exchange Board of India, Ministry of Housing and Urban Affairs, Ministry of Corporate Affairs, Registrar of Companies, Financial Intelligence Unit (India), the Stock Exchanges and the Depositories.

The Company acknowledges the role of all its key stakeholders - Shareholders, borrowers, channel partners, depositors, deposit agents and lenders for their continued support.

The Directors express their appreciation for the dedication and commitment with which the employees of the Company at all levels have worked during the period.

Finally, your directors express their gratitude to medical fraternity, other professionals and front-line workers who have worked throughout to save lives and to contain the spread of the pandemic.

For and on behalf of the Board

Hardayal Prasad Atul Kumar Goel

Managing Director & CEO Non-Executive Director

DIN: 08024303 DIN: 07266897

Place: New Delhi Date: June 14, 2022

Mar 31, 2019

Directors' Report

Your Directors welcome the shareholders and take pleasure in presenting the 31st Annual Report together with the Audited Standalone and Consolidated Financial Statements of the Company for the year ended March 31, 2019.

FINANCIAL RESULTS (CONSOLIDATED Ind AS)

Â	Â	(Rs in crores)
Â	March 31, 2019	March 31, 2018
Total Income	7683.22	5489.34
Total expenditure	5948.83	4254.76
Profit before tax	1734.39	1234.58
Less: Provision for Tax
-Current year	503.48	437.87
-Deferred Tax	39.39	-44.44
Profit After Tax	1191.52	841.15
Other Comprehensive income (OCI)	-102.33	-2.16
Total Comprehensive income for the year	1089.19	838.99
â¢ Transfer to Statutory / Special reserves	217.00	166.13
â¢ Dividend paid	150.71	99.95
â¢ Dividend distribution Tax paid	30.99	20.35
Balance carried to balance sheet	690.49	552.56

INCOME AND EXPENDITURE

The Company has drawn its annual accounts as per Indian Accounting Standards (lnd AS). Accordingly, the corresponding figures for the previous year have been revised. The principles of Ind AS are close to the International accounting standard, IFRS.

During the year, the Company has earned a total income of Rs.7,683.22 crores as compared to Rs. 5,489.34 crores in the previous year, recording a growth of 40%.

Total expenses, provisions and write offs during the year were Rs. 5,948.83 crores as compared to Rs.4,254.76 crores in the previous year, a growth of 40%.

PROFIT

During the year, the Company has earned a Profit before Tax of Rs.1,734.39 crores as compared to Rs.1,234.58 crores in the previous year, recording a growth of 40%.

The Profit after Tax during the year was Rs.1,191.52 crores as compared to Rs.841.15 crores in the previous year, a growth of 42%.

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs.9.00 per share same as was declared in the previous year.

LENDING OPERATIONS

During the year, the entire financial sector including Housing finance companies (HFCs) faced multiple challenges, mainly caused by tight liquidity and rising interest rate scenario. Earlier, the Industry witnessed major structural reforms in quick succession, such as implementation of Real Estate Regulation Act (RERA), the Goods & Services Tax (GST) and Indian Accounting Standards (lnd AS).

The financial year 2019 witnessed slowdown in credit growth due to liquidity crunch, rising cost of funds leading to curtailment of disbursements by many HFCs. The market for long term borrowings had almost dried up, which had put additional burden on corresponding cost of funds.

HFCs have limited pricing power to pass on the entire expansion in cost of funds to the customers, resulting in compression of spreads, and negative sentiments across the sector.

It is a matter of concern that despite favourable macro-economic situation, low mortgage to GDP penetration in India and strong fundamentals of the mortgage industry, HFCs are facing huge liquidity issues particularly long term funds, which are essential for mortgage business.

In spite of many of the competitors slowing down disbursements in un-planned manner, the Company has honoured all the disbursement commitments during the financial year.

Throughout the year, the Company maintained sufficient liquidity, despite some additional cost involved in maintaining the liquidity.

Due to adverse sentiment and high unsold inventory, the new project launches have slowed down. The supplies have been curtailed due to build-up of unsold inventory over the years. The sales of housing units in the top nine cities of Mumbai, Pune, Noida, Gurugram, Bengaluru, Chennai, Hyderabad, Kolkata and Ahmedabad witnessed a decline.

Affordable housing projects (mass housing) are picking up momentum. It is a period of stabilisation, right-sizing and right-pricing of new residential projects so as to enable the people to take benefit under the Pradhan Mantri Awas Yojana (PMAY), a Credit Linked Subsidy Scheme (CLSS) for the Middle-Income Group (MIG) and Lower Income Group (LIG).

In the interim budget, the government has proposed relief to real estate developers by extending tax rebate on the development of affordable housing until the next fiscal. A proposal was further announced where income tax exemption on notional rent for unsold properties were extended to 2 years from existing 1 year. The GST council has reduced the GST rate for under-construction properties from the present 12% to 5%. The GST rate for affordable housing category has been reduced to 1% from 8%.

Because of the various adverse developments during the financial year, the Company recorded a moderate growth in fresh loan disbursements.

During the year, the Company has sanctioned loans amounting to Rs.51,453 crores in respect of 1,11,656 loan applications as compared to Rs.55,582 crores in respect to 1,02,468 applications in the previous year, recording a growth of 9% in number of loan applications and decline of 7% in loan sanctioned amount.

During the year, the Company has disbursed loans amounting to Rs.36,079 crores as compared to Rs.33,195 crores in the previous year, recording a growth of 9%. Out of total disbursements, Rs. 24,731 crores loans were disbursed for housing and Rs.11,348 crores were disbursed for non-housing purposes.

The Company has built sufficient capabilities and competencies which are core to its unique operating model. With the likely improvement in market conditions and liquidity towards the second half of FY 2019-20 the Company is geared up for a better performance.

Loan Book

Loans outstanding (principal portion) as at March 31, 2019 were Rs.74,023 crores, recording a growth of 30% over the previous year.

The total Assets Under Management (AUM) as at March 31, 2019 were Rs.84,722 crores, recording a growth of 36% over the previous year.

During the year, the Company sold loans amounting to Rs.7,337 crores under the direct loan assignment route to different institutions.

Distribution

Over the last 7 years, the Company has expanded its distribution by opening 71 new branches taking the branch network from 31 branches as on March 31, 2013 to 102 branches as on March 31, 2019. In addition, the Company has opened outreach offices to support the branch network. The new branches nearly contribute 53% of the incremental retail disbursement, and 31% of the outstanding retail portfolio.

During FY 2018-19, the Company has opened 18 new branches, out of which 4 branches were opened in the existing locations and 14 branches were opened at new locations. As on March 31, 2019, the Company has presence through 102 branches, 29 outreach locations, totalling to 131 distribution outlets.

PHFL Home Loans and Services Limited

The Company has been floated as a distribution arm for PNB Housing, offering doorstep services to the prospective customers. It predominantly sources business for the products offered by PNB Housing. The Company has de-risked PNB Housing from excess dependence on outsourced business.

The Company contributes nearly 62% of the retail Business for PNB Housing. During the year, the Company has sourced loans worth Rs.16,494 crores for PNB Housing. The Financial Statements of PHFL are enclosed in the Consolidated Financial Statements of PNB Housing.

A report on the performance and financials of PHFL, as per Companies Act, 2013 and rules made thereunder (the "Act") is provided in Form AOC 1 attached to the Consolidated Financial Statements forming an integral part of the Annual Report.

Underwriting and Risk Management

The Company follows robust and contemporary practices. The scale of business has increased by enhancing productivity without compromising on the adherence and compliance to laid down processes. Our testimony of success of sourcing, underwriting, operations and collection processes lies in the Â fact that Company was the best amongst top 5 in terms of coincidental NPAs (Source: ICRA, September 2018).

Underwriting of loans is performed in specialised 23 hubs located across the country. These hubs have team of specialised underwriters, legal, technical and fraud control experts.

During the year, the Company has inducted various electronic and digital means in underwriting processes to make it more productive, efficient and optimum. These initiatives are called "Phygital" i.e. replacing the physical processes with digital means in part/full as well as to mitigate the inherent risk of fraud.

Some of the new initiatives taken during the year to strengthen credit risk management were;

â¢ Enhanced KYC verification using digital means.

â¢ Use of Hunter, a bureau developed anti-fraud check software to reduce manual intervention by Fraud Control team.

â¢ The Company has developed an in-house credit score card for salaried applicants. The model has been validated using acceptable statistical methodologies.

â¢ Reputed International Property Consultants empaneled for high ticket CF, large projects and new geographies. PropEquity usage was instituted for regular project monitoring and ground level diligence.

â¢ The Company introduced TQM (Total Quality Management) to streamline processes and bring in efficiencies.

â¢ Credit underwriting and technical teams were trained by a reputed empaneled expert on Valuation and Technical Analysis.

RECOVERY AND NON-PERFORMING LOANS

Despite the tough economic environment, the Company could maintain NPAs lower than the industry estimations. Company's portfolio management methodologies are designed for early identification of problematic loans at regular intervals through various qualitative and quantitative measures. The Company has created a multi layered, cross functional, participative review mechanism at various levels.

For financial year 2018-19, the Company has adopted principles of Ind AS replacing IGAAP. Under Ind AS, the provisions for impaired and non-impaired assets was done taking into account the expected changes in the credit quality of the borrower over a period and providing for expected losses up front (termed as Expected Credit Loss or ECL).

For ECL, the Company has adopted a statistical approach and has created models comprising credit and transaction variables. ECL has three broad components viz. Probability of default (PD), Exposure at Default (EAD) and Loss Given Default (LGD). For retail as well as Corporate Finance portfolio, PD / LGD computations are carried out at various sub segments.

The gross non-performing assets were Rs.354.87 crores i.e. 0.48% of the outstanding loans and net non-performing assets (after provision as per NHB Directions) were Rs.280.52 crores i.e. 0.38% of outstanding loans.

Provisions

The Company has continued to build sound provisions on its loan assets over the years. Besides provisions prescribed under the National Housing Bank Directions, 2010 for standard assets and provisions for non-performing assets, the Company has additionally provided "Provisions for 'Contingencies' to meet any contingencies in the future and to insulate the Balance Sheet from macro-economic uncertainties .

The Company is carrying a ECL provision of Rs.437.59 crores. The Company is also carrying a sum of Rs.156.54 crores as 'Steady State Provisions'.

RESOURCES

The entire financial sector faced liquidity concerns, particularly from the second half of the year. Raising of long term resources continues to be difficult as there are fewer investors for Non-Convertible Debentures (NCDs).

The 10-year benchmark G-Sec remained volatile in 2018 with yields ranging from 7.13% to 8.18% p.a. Due to tight liquidity, the Company has been maintaining liquidity required for 2-3 quarters.

In a difficult year, the Company continued to raise financial resources from multiple sources, both in domestic and international market. The Company maintained right resource mix and Asset Liability Management CALM) under the given circumstances. There was increased dependence on bank borrowings from domestic and from international sources through the ECB route.

During the year, the cost of borrowings have increased, however under the given circumstances, the Treasury has raised resources at most competitive cost to the Company. The total borrowings have increased from Rs.54,268 crores to Rs.72,362 crores.

The Company has raised fresh resources of Rs.30,858 crores during the year from multiple sources as under;

Term loans and overdraft from banks

The Company has raised term loans and other facilities from banks for Rs.17,514 crores during the year.

External Commercial Borrowings

The Company has raised INR equivalent of Rs.3,324 crores through ECB route from various banks during the year.

Refinance from National Housing Bank

The Company has raised refinance from National Housing Bank for Rs.3,500 crores during the year.

Non-Convertible Debentures (NCDs)

The Company has raised Rs.1,401 crores of secured NCDs through private placements during the year.

The Company has redeemed on maturity, secured NCDs of Rs.530 crores during the year.

Subordinate debt

The Company has raised subordinated debt of Rs.39.70 crores during the year. Based upon the balance term of maturity as on March 31, 2019 an amount of Rs.1,258.90 crores is considered as Tier II capital under NHB Directions for the purpose of computation of capital adequacy ratio.

The NCDs and subordinate debts issued by the Company are listed on the wholesale debt segment of National Stock Exchange.

DEPOSITS

The Company has raised Rs.5,923 crores of fresh deposits from public and through inter corporate deposits during the year. The outstanding deposits (including inter corporate deposits) as at March 31, 2019 were Rs.14,315 crores as against Rs.11,586 crores (including inter corporate deposits) outstanding last year, registering a growth of 24%.

Deposits are one of the major funding sources of the Company, contributing nearly 19% of the total loan assets. The deposits of the Company have been rated FAAA/Stable by CRISIL and CARE AAA by CARE, which means highest safety.

Deposit customers are core to the Company. The Company has a strong distribution network to reach its customers at doorstep. Company uses its state of art facility at NOIDA for delivery of deposit receipts, and other customer communication.

The Company has accepted public deposits as per the NHB Directions, 2010 and as per the provisions of the Companies Act, 2013. The Company has paid/accrued interest on all the outstanding deposits on due dates. There has been no default on repayment of deposits or payment of interest thereon during the year.

Unclaimed Deposits and NCDs

Out of the deposits, which became due for repayment up to March 31, 2019, public deposits worth Rs.74.73 crores, including interest accrued and due relating to 3,315 depositors had not been claimed or renewed. The Depositors have been intimated regarding the maturity of their deposits with a request to either renew or claim the deposits and subsequent reminders have been sent.

During the year, the Company has transferred an amount of Rs.14.45 lakhs to Investor Education and Protection Fund (IEPF) established by the Central Government under section 125 of the Companies Act, 2013. In terms of the said section, no claim would lie against the Company after transfer to IEPF.

As at March 31, 2019 there was no NCDs or interest thereon, remaining unclaimed or unpaid.

CREDIT RATING NCDs

During the year, different series of NCD issuances were rated. The outstanding ratings are; CARE AAA, India Rating AA+ (stable), ICRA AA+ (Negative) and CRISIL AA+ (stable). The rating indicates high safety.

Commercial Paper

CRISIL and CARE have rated commercial paper programme at A1+. The rating indicates highest safety.

CAPITAL ADEQUACY RATIO

The Capital Adequacy Ratio (CRAR) as on March 31, 2019 was 13.98% (comprising Tier I capital of 11.00% and Tier II capital of 2.98%). The NHB has prescribed minimum CRAR of 12% of total risk weighted assets.

Investment in SLR

The Company has maintained its Statutory Liquid Ratio (SLR) as stipulated by the NHB. The Company is having total SLR investments of Rs.1,360 crores as on March 31, 2019. The Company has classified its SLR investments as per NHB Directions, 2010.

HUMAN RESOURCES

In a turbulent year, the Company's focus was to hire and train human resources for the Company. The Company had opened 18 new branches. The HR and Training team along with respective functions took the primary responsibility to timely on board experienced resources across all new locations, impart functional and system training and develop them as a homogenous and productive resources for cross functional teams.

The Company also gave an opportunity to identify and develop the internal talent pool. Employees were given Â career enhancement opportunity by horizontal and vertical movements and were entrusted with higher functional responsibilities.

Many monetary and non-monetary rewards/benefits plans were started for the employees. In line with Company's core value of "People First", HR processes and initiatives were aligned for building a superior human capital and keeping the work force across levels engaged and motivated.

In line with Company's strategic objectives and future business requirement, it has been Company's endeavour to build homogenous teams having diverse educational background with fair gender mix.

As a cadre building exercise and with an aim to groom in house talent, Company had started with campus hiring program in 2015. A total of 162 MTs were hired over the last four batches. This ingrown talent has emerged as a managerial cadre pipeline for future geographical expansion as also a ready bench strength to mitigate separation risk. The fourth batch of 55 MTs was on boarded in the month of May 2018.

The Learning and Development (L&D) team is committed to assist in organisation's success, by enabling its people to perform, by enhancing their functional knowledge and upgrading their skills. L&D as a function is a critical talent management tool in building and retaining the talent pipeline. This gives a competitive advantage to the organisation.

The Company has offered Employees Stock Option Schemes (ESOPs) to its key employees and for other high performing mid-level employees, the Company has a Long Term Incentive Programme (LTIP). The Company also has various Rewards and Recognition Programmes (RIR) for the employees.

In the year 2018 the Company was again Certified as a Great Workplace for second year in a row by the Great Place to work institute.

As on March 31, 2019 the Company had a total of 1,609 full time employees on its rolls. There were 29 employees employed throughout the year, who were in receipt of remuneration of R.1.02 crores or more per annum.

The remuneration comprises salary, allowances, perquisites/ taxable value of perquisites including perquisite value of ESOPs exercised and ex-gratia amount. In accordance with the provisions of Rule 5.2 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of such employees are set out in annexure to the Directors' Report.

In terms of the provisions of section 136(1) of the Companies Act, 2013 read with the said rule, the Directors Report is being sent to all the shareholders excluding the annexure. Any shareholder interested in obtaining a copy of the said annexure may write to the Company.

Further disclosures on managerial remuneration are provided in annexure 1 appended to the Directors' Report.

CUSTOMER SERVICE AND TECHNOLOGY

The Company is servicing over 3.87 lakhs deposits and loan customers as on March 31, 2019. The family is growing every month. Significant steps were taken to enable multichannel experience to the new age customer. From a 'transaction led' model, the service platform moved to being 'engagement' led.

Several initiatives were taken for enhanced Customer Service as under;

â¢ The Company introduced the migration to TALISMA, a state of the art CRM system which offer services across the complete spectrum of channels like automated

IVR (interactive voice response), Web chat, SMS etc.

The Company is offering phone response and IVR services Â in 7 languages.

â¢ 1800 120 8800 is the Toll Free number for all customers.

â¢ [email protected] is the virtual address for the customers.

â¢ A loan customer can now request for subsequent disbursement by registering the request on line through the web or mobile portal.

â¢ Company has started digitising the loan and property documents and the soft copies are made available to the customers. This concept, similar to the digi locker, enables quick retrieval of document images.

â¢ The Company has Intelligent Mailing Solution for managing despatch of physical communication through a robotic folder and inserter.

The Company is using latest digitisation facility at NOIDA and Mumbai for digitisation of security documents of the customers where scanned documents are stored on dedicated private cloud.

The Company plans to introduce many more steps towards better customer services, which will bring efficiencies and standardisation.

AWARDS AND RECOGNITION

During the year, the Company has received following prestigious awards;

â¢ Conferred by Economic Times - Best Brands of India 2019 Award: Economic Times felicitated with best brand of India 2019 award for making the brand 'PNB Housing' a household name, a name to reckon with, a brand to be admired by across the country.

â¢ BFSI Innovation Tribe 2018: awarded by ET Edge for Fintech Innovative product iBOX. It is a blend of many fintech solutions, redefining the complete process of e-verification.

â¢ SKOCH award: awarded with the SKOCH award among top FINTECH projects in India.

â¢ Great Place to Work: PNB Housing has been again Certified as a Great Workplace second year in a row by the Great Place to work institute.

â¢ Trescon BIG 50 BFSI Leaders Award: felicitated as winner at the award ceremony for its technology transformation journey and future road map to go digital.

â¢ Best Stand-out IR' award: jointly received the 'Best Stand-out IR' award in the 'Large Cap' category by the prestigious IR Society of India in association with Bloomberg and BNY Mellon.

â¢ Most Promising Business Leaders of Asia 2019: the Managing Director was recognised as One of the 'Most Promising Business Leaders of Asia 2019' at the Economic Times' Asian Business Leaders Conclave in Hong Kong.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Construction industry is one of the largest in India employing most of the rural and urban poor. During the year, the Company has continued to invest towards the holistic development of construction workers and their immediate family members.

The Company in partnership with CREDAI conducts on-site and off-site training programs for construction workers. The partnership begun in 2015, since then Company has worked on skill up-gradation, in the trade for masonry, bar bending, painting, electrical, plumbing and shuttering.

The other area of focus has been ensuring quality education for the poor children. For the last four years, Company has been supporting the operational cost of running Bal Vihar School. Through this intervention Company has ensured not just formal education to the children but also invested in the overall development of the Bal Vihar's academic systems.

Company has also partnered with Vidya and South Delhi Municipal Corporation, a public private partnership project. The Company has helped to revamp the entire academic system in this school having 150 children.

In accordance with the provisions of section 135 of the Companies Act, 2013 and rules framed thereunder, the Company has constituted a CSR Committee that reviews the CSR policy, steers activities to be undertaken by the Company towards CSR activities, and formulate a monitoring mechanism to ensure implementation of projects and activities undertaken by the Company.

During the year, the Company has spent a sum of Rs.17.24 crores on various CSR activities. The annual report on CSR activities undertaken during the year forms part of annexure to the Board's Report.

PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE

REGULATORY COMPLIANCE

During the year, National Housing Bank (NHB) has issued guidelines on Information Technology Framework for HFCs. The focus of the IT framework is on IT governance, IT policy, Information & Cyber security, IT operations, IS audit and Business continuity planning. The Company has put in place a comprehensive IT system in line with the NHB Guidelines.

The NHB has issued comprehensive guidelines on reporting and monitoring of frauds. The Company has taken adequate measures for fraud control, monitoring and reporting of frauds.

The NHB has issued revised guidelines on "Know Your Customers & Anti Money Laundering measures for HFCs. The Company is taking steps to implement the revised guidelines.

The Company has been complying with all other guidelines and directions issued by the NHB. These include directions on Â asset classification, accounting standards, income recognition, provisioning, capital adequacy, concentration of credit/ investments, credit rating etc. as amended from time to time.

The Know Your Customer (KYO guidelines, Fair Practise Code and Anti Money Laundering (AML) standards as notified by the NHB are available on the Company's website. The Company has also adopted the model code of conduct for Direct Selling Agents and Guidelines for Recovery Agents as stipulated by NHB.

POLICIES AND CODES

During the year, the Company has revised following statutory policies as required in terms of Listing Obligation and Disclosure Requirement and Insider Trading Regulations issued by the SEBI and placed the revised policies on its website;

(i) Insider trading policy, CM) Related party policy, (iii) Whistle blower policy, Civ) Code of conduct for non-Executive Directors, (v) Code of conduct for Executive Directors and senior management (vi) Policy on determination of materiality (vii) Code and Practice for fair disclosure of UPSI and (viii) Policy on stationary control.

The other statutory policies placed on the website are;

(ix) Policy on preservation of documents, (x) Policy on archival of web disclosure, Cxi) Dividend distribution policy, (xii) Policy on familiarisation programme for independent directors and (xiii) Policy on Board diversity.

INVESTOR RELATION

During the year, the Company was added in the Morgan Stanley Composite Index (MSCI) India domestic small cap Index. MSCI is global index tracked by global funds as their portfolio benchmark. More than 20 research houses have initiated coverage on the Company.

Investor Presentation were updated every quarter to ensure that the updated information is available to the market participants.

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

There is no information to disclose under the head 'Conservation of Energy and Technology Absorption' given in the above rules since the Company is engaged in providing housing loans.

There were no foreign exchange earnings and the Company has incurred foreign exchange expenditure of Rs.169.40 crores during the year.

DIRECTORS

The Board appointed two additional directors on the Board of the Company. Mr. L V Prabhakar was appointed as Non-Executive Director with effect from August 9, 2018. Mr. Neeraj Vyas was appointed as an Independent Director on the Board with effect from April 15, 2019.

Mr L V Prabhakar is currently Executive Director of Punjab National Bank and carries with him over three decades of banking experience. Mr Neeraj Vyas is retired Deputy Managing Director and Chief Operating Officer (COO) from

State Bank of India. He has long experience in commercial banking and operations.

During the year, Mr. Jayant Kumar Dang resigned from the Board with effect from July 20, 2018.

The Company has received necessary declaration from each Independent Director under Section 149C7) of the Companies Act, 2013 (Act) that he/ she meets the criteria of independence laid down in the Act and SEBI (Listing Obligations and Disclosures Requirements), Regulations 2015.

Re-appointment of Directors

In accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company, Mr Sunil Kaul is liable to retire by rotation at the ensuing Annual General Meeting (AGM). He is eligible for re-appointment.

The Directors have also recommended second term of one year to Mr Shital Kumar Jain as per section 149 and 152 of the Companies Act, 2013.

The necessary resolutions and their profile for re-appointment has been included in the notice and in the explanatory statement of the notice convening the AGM.

Your directors recommend their re-appointment in the forthcoming AGM of the Company.

All the directors have confirmed that they are not disqualified from being re-appointed as directors in terms of Section 164 C2) of Companies Act, 2013.

PERFORMANCE EVALUATION AND ITS CRITERIA

Pursuant to the provisions of Section 178 of the Act, and Regulation 19 of Listing Regulations, performance evaluation of each Director, the Board as a whole, its Committees and the Chairman was carried out. A structured questionnaire was prepared for evaluating the performance of Directors, Board and its committees considering various factors.

COMMISSION TO INDEPENDENT DIRECTOR

The Company considers the time and efforts put in by the Independent Directors in deliberations at the Board/ Committee meetings. They are remunerated by way of sitting fees for attending the meetings and through commission, as approved by the Board and shareholders of the Company. Details of commission and sitting fees to the Independent Directors for the year ended March 31, 2019 are given in form MGT-9.

STATUTORY AUDITORS

Messrs B R Maheshwari& Co having registration no. 001035N were the Statutory Auditors for the financial year ended March 31, 2019. The report of Statutory Auditors on annual accounts is enclosed along with Directors' Report.

CORPORATE GOVERNANCE

The Company has been complying with the standards of corporate governance required under the Companies Act, 2013. The Board discharges the duties and responsibilities as required under the applicable statute(s) including the Companies Act. The Board lays strong emphasis on transparency, accountability, and integrity. The report on Corporate Governance is appended as a separate annexure to the Directors' Report.

A certificate from M/s B R Maheshwari & Co, Statutory Auditors regarding compliance of the conditions of Corporate Governance as stipulated under SEBI (Listing Obligation and Disclosure Requirement) Regulations, 2015 is also attached to the Corporate Governance Report.

DIRECTORS' RESPONSIBILITY STATEMENT

In terms of the provisions of section 134 (3) (c) of the Companies Act, 2013 the Board of Directors Report that;

i. In preparation of annual accounts, the applicable accounting standards have been followed.

ii. The Company has selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2019 and the profit and loss account for the year ended March 31, 2019.

iii. The Company has taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv. That the Company has prepared the accounts on a going concern basis.

v. The Company has laid down internal controls which are adequate and are operating effectively.

vi. The Company has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and are operating effectively.

INTERNAL FINANCIAL CONTROL

The Company has put in place adequate policies and procedures to ensure that the system of internal financial control commensurate with the size and nature of the Company's business.

EXTRACTS OF ANNUAL RETURN (FORM NO. MGT 9)

The details forming part of the extracts of the Annual Return in Form MGT-9 has been attached as part of Directors' Report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE

Since the Company is a housing finance company, the disclosure regarding particulars of loans given, guarantees given and security provided is exempt under the provisions of section 186(11) of the Companies Act, 2013.

The details of investments made by the Company are provided under note 7 forming part of Annual Accounts of the Company for the year ended March 31, 2019.

SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 the Company has appointed M/s Preeti Pahwa& Associates a firm of Company Secretaries in practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as annexure to this report.

PARTICULARS OF CONTRACT OR ARRANGEMENTS ENTERED, MATERIAL CHANGES, DETAILS OF SUBSIDIARIES AND LITIGATIONS

There has been no material changes and commitment, affecting the financial position of the Company which has occurred between the close of the financial year to which the financial statement relates and the date of the Report.

There has been no change in the nature of business of the Company. No material or significant order has been passed by the Regulator or Courts or Tribunals impacting the going concern status of the Company. The Company has a subsidiary "PHFL Home Loans and Services Limited", a distribution arm for PNB Housing, offering doorstep services to the prospective customers.

EMPLOYEES STOCK OPTION SCHEME (ESOS)

The Company had granted 20,50,000 stock options to 198 employees under ESOP 2018 Plan A and Plan B and 1,36,485 stock options to 38 employees under ESOP 2016 Plan B on July 27, 2018 at a grant price of Rs.1333.35 per option. The granted options will vest over a period of 4 years.

Refer note 23.8 of financial statements for detailed vesting schedule and other details.

During the year, 8,82,534 equity shares of Rs.10 each were allotted to the eligible employees on exercise of ESOP options as per ESOP Policy of the Company.

ACKNOWLEDGEMENTS

The Board of Directors thank the valued customers, shareholders, business partners and well- wishers for their wholehearted support.

The Board acknowledge with gratitude the advice, guidance and support of Government of India, Reserve Bank of India, National Housing Bank, Securities and Exchange Board of India, National Stock Exchange, Bombay Stock Exchange and other statutory bodies/departments.

The Directors place on record their appreciation and gratitude to Depositors, Debenture holders, shareholders, IFC, ADB, Bankers, Legal advisors, Merchant Bankers, Registrar and Transfer Agents of the Company for their continued confidence and contribution to the growth of the Company.

Finally, the Directors express their appreciation for the dedication and commitment with which the employees of the Company at all levels have worked during the period.

Â	For and on behalf of the Board
Dated: May 27, 2019	Chairman
Place: New Delhi	Â

Annexure to Directors' Report - 1

DISCLOSURES ON MANAGERIAL REMUNERATION:

Details of remuneration required under Section 19702) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided below:

1. The ratio of the remuneration of each director to the median remuneration of the employees of the Company for FY 2018-19: 25.9:1

Ratio of remuneration of each Director to the median employees' remuneration for FY 2018-19

Name	Designation	Ratio of remuneration to the median employees' remuneration
Mr. Sunil Mehta	Chairman & Non-Executive Director	_
Mr. L V Prabhakar	Non-Executive Director	Â
Mr. Sunil Kaul	Non-Executive Director	_
Mr. Shital Kumar Jain	Independent Director	_
Mr. Chandrasekaran Ramakrishnan	Independent Director	_
Mr. Gourav Vallabh	Independent Director	_
Mr. Nilesh Shivji Vikamsey	Independent Director	_
Mr. Ashwani Kumar Gupta	Independent Director	_
Mrs. Shubhalakshmi Panse	Independent Director	_
Mr. Sanjaya Gupta	Managing Director	25.9:1

2. Percentage increase in the remuneration of the Managing Director, Chief Financial Officer and Company Secretary, if any, in FY 2018-19;

Name	Designation	Increase in Fixed Remuneration (%)
Mr. Sanjaya Gupta	Managing Director	15%
Mr. Kapish Jain	Chief Financial Officer	Not Eligible
Mr. Sanjay Jain	Company Secretary & Head Compliance	15%

The performance linked bonus paid in FY 2018-19 to the Managing Director is Rs.1.00 crore and to the Company Secretary is Rs.12.48 lakhs.

There was no change in the sitting fees paid to the Non-Executive directors for attending meetings of board/committees.

3. The percentage increase in the median remuneration of employees in FY 2018-19 stood at 11.07%

4. The Company had 1,609 permanent employees as on March 31, 2019

5. Average percentile increase already made in salaries of employees other than managerial personnel in last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

The average increase in the remuneration of managerial personnel stood at 15% and non-managerial personnel was 11%

The average increase in the remuneration of both the managerial and non-managerial personnel was determined based on the overall performance of the Company and as per the remuneration policy. Further, the criteria for increasing salary of non-managerial personnel is based on an internal evaluation of Key Performance Indicators (KPIs), while for managerial personnel it is based on the remuneration policy as recommended by the Nomination & Remuneration Committee and approved by the Board of Directors.

The remuneration of key managerial personnel is based on the overall performance of the Company. The Company further reiterates that there were no exceptional circumstances which warranted an increase in managerial remuneration which was not justified by the overall performance of the Company.

Annexure to Directors' Report - 2

ANNUAL REPORT ON CORPORATE SOCIAL

RESPONSIBILITY (CSR) ACTIVITIES

1. A brief outline of the Company's CSR policy, including overview of projects or programmes proposed to be undertaken and a reference to the web-link to the CSR policy and projects or programmes. PNB Housing through its Corporate Social Responsibility initiatives aims to be a catalyst that enables the marginalised community to be empowered and self-reliant.

We have embodied the principles of corporate responsibility in our business philosophy and operations. In our journey so far, we have built a sustainable business model and created value for our stake holders. We are confident that we will be able to improve the lives of under privileged and reinforce our humble collective efforts towards nation building.

Our CSR Policy

The CSR policy of the Company ensures an effective and sustained CSR programme, which manifests in the form of a progressive, socially responsible and enlightened attitude. At a conceptual level, Company's policies on CSR are oriented towards stakeholder-participation approach, where the target groups are seen as stakeholders in the community.

The CSR policy of the Company is based on three guiding principles:

â¢ Sustainability

â¢ Transparency

â¢ Accountability

The CSR Policy of the Company is available on Company's website: http://www.pnbhousing.com/pdf/ CSR-policy-final.pdf

Our focus areas

Community which contributes significantly towards the mortgage sector and still remains at the bottom of the pyramid is of construction workers. Through our CSR initiative, we are committed to design and implement projects that work towards socio-economic upliftment of construction workers and their immediate families. In FY 2018-19 we continued strengthening our two key programmes for construction workers and their immediate family members. In partnership with CREDAI CSR Foundation, we have conducted construction workers skill development trainings pan India. With a commitment to ensure holistic care of the children of construction workers, we have established on-site day care centres.

While we remained committed towards empowerment of construction workers and their immediate families, we have also extended support towards following social issues.

â¢ Ensuring formal education to underprivileged children

â¢ Improving access to health care

â¢ Skilling of unemployed youth

â¢ Environment conservation.

2. The Composition of the CSR Committee:

1. Mr. R Chandrasekaran

2. Mr. L V Prabhakar

3. Mr. Ashwani Kumar Gupta

4. Mr. Sanjaya Gupta

The CSR committee has also constituted a CSR Executive Committee which works under the guidance of the CSR Committee of the Board to ensure effective implementation of the programs. The Managing Director oversees the working of the Executive Committee.

3. Average net profit of the Company for the last three financial years:

Â	Â	Â	Â	(Rs. in crores)
Â	FY 2015-16	FY 2016-17	FY 2017-18	Average
PBT	503.08	804.01	1279.09	862.05
Total CSR Expenses for FY 2018-19	Â	Â	Â	17.24

4. Details of CSR spent during the financial year:

a) Total amount to be spent during FY 2018-19: Rs.17.24 crores

b) Total amount spent during FY 2018-19: Rs.17.24 crores

c) Amount unspent, if any: NIL

d) Manner in which the amount was spent during the financial year is detailed below:

S. No.	CSR Project or activity identified	Sector in which the project is covered	Projects or Programs	Amount outlay (budget) project or program wise (Rs. in lakhs)	Amount spent on the project or programs Sub-heads: (1) Direct Expenditure on projects or programs (Rs. in lakhs) (2) overhead (Rs. in lakhs)	Cumulative expenditure up to the reporting period (Rs. in lakhs)	Amount spent: direct or through implementing agency
Project - Skill Training of Construction Workers
1	Promoting skill development for the construction workers Pan India	Skill development	An onsite/offsite training program for the upskilling of 10,500 construction workers Pan India	899.97	Direct Expenditure-768.54 Overhead-131.43	899.97	Implementing agency-"CREDAI CSR Foundation"
Â	Project - Day care centres for the children of Construction Workers						Â
2	Holistic day care centres for the children of construction workers ensuring education, health and nutrition for children under the age group 0-14 years	Promoting education and eradicating malnutrition	To support eighteen day care centres at construction sites in Delhi-NCR, Bangalore and Ahmedabad	157.64	Direct Expenditure-133.68 Overhead-23.96	157.64	Implementing agency- "Mobile Creches"
3	do	Promoting education and eradicating malnutrition	Supporting five day care centre at construction site in Pune	56.19	Direct Expenditure- 51.69 Overhead-4.50	56.19	Implementing agency- "Tara Mobile Creches Pune"
4	do	Promoting education and eradicating malnutrition	Supporting two day care centre at construction site in Mumbai	33.65	Direct Expenditure-30.00 Overhead-3.65	33.65	Implementing agency-"Mumbai Mobile Creches"
5	do	Promoting education and eradicating malnutrition	Supporting one day care centre at construction site in Faridabad	14.36	Direct Expenditure- 13.05 Overhead-1.31	14.36	Implementing agency-"Savera"
6	do	Promoting education and eradicating malnutrition	Supporting seven day care centres at construction sites in Hyderabad	46.36	Direct Expenditure- 46.36	46.36	Implementing agency- "Plan International-India Chapter"
7	Social security benefits	Promoting health and eradicating malnutrition	To ensure social security benefits to construction workers	8.00	Direct Expenditure- 7.52 Overhead- 0.48	8.00	Implementing agency- " Aajeevika Bureau"

Project - Supporting education of underprivileged children
8	Ensuring formal education to underprivileged children	Promoting education	Supporting the VIDYA -Bal Vihar and VIDYA-PTS Colony school with their school running cost	119.96 Direct Expenditure-108.62 Overhead-11.34	119.96 Implementing agency-'VIDYA Integrated Development for Youth and Adults"
9	Ensuring formal education to underprivileged children	Promoting education	Providing scholarship support to students pursuing higher education	33.23 Direct Expenditure- 29.50 Overhead- 3.73	33.23 Implementing agency-"Buddy4Study Foundation"
10	Promoting inclusive education	Promoting education	Teachers' training programme for government school teachers	3.00 Direct Expenditure- 2.30 Overhead- 0.70	3.00 Implementing agency - "Sri Aurobindo Society"
11	Enabling access to formal education	Promoting education	Supporting the construction of hostel for Tribal Girls in Pune	1.51 Direct Expenditure-1.51	1.51 Implementing agency-"Vanavasi Kalyan Ashram, Maharashtra"
12	Enabling education to girl child	Promoting education	Supporting the education for underprivileged children	1.00 Direct Expenditure-1.00	1.00 Implementing agency-"JM Financial Foundation"
Project - Improving access to Health Care
13	Enabling access to health care	Promoting health	To enhance infrastructure at Department of Neurosurgery and Department of Cardiothoracic surgery AIIMS Hospital	87.21 Direct Expenditure- 87.21	87.21 Direct Implementation
14	Enabling access to health care	Promoting health	To enhance infrastructure at Department of Neonatology, KGMU Hospital	26.17 Direct Expenditure- 26.17	26.17 Direct Implementation
15	Supporting health care	Promoting health	To support health and hygiene intervention for young adolescent girls in Uttar Pradesh	22.18 Direct Expenditure- 22.18	22.18 Implementing agency-progress Alternative"
16	Supporting health care	Promoting health	Supporting Cancer patient helpline and clinic in Delhi	32.00 Direct Expenditure- 31.15 Overhead-0.85	32.00 Implementing agency-"CanSupport"
17	Supporting health care	Promoting health	Supporting mental health intervention in Delhi	7.80 Direct Expenditure- 7.80	7.80 Implementing agency-"Sanjivini Society for Mental Health"
Â	Â	Project - Environment Conservation and Promoting Play			Â
18	Swach Bharat Abhiyan	Environment Conservation	To refurbish a park in partnership with Faridabad Municipal Corporation, Haryana	2.49 Direct Expenditure-2.49	2.49 Direct Implementation
19	Promoting Play	Restoring public spaces	Creating engaging and safe public play area	3.40 Direct Expenditure-3.40	3.40 Implementing agency-"End Poverty"

Project- Skilling of unemployed youth
20	Skilling of unemployed youth	Skill Development	To train unemployed youth in BFSI sector related trades and further create employment opportunity	10.00	Direct Expenditure- 9.00 Overhead- 1.00	10.00	Implementing agency-"Social Empowerment & Economic Development Society"
Project- Elderly Care
21	Supporting underprivileged elderlies	Elderly Care	Supported operational cost of an old age home in Delhi	13.36	Direct Expenditure- 12.38 Overhead- 0.98	13.36	Implementing agency-"Ayudham Society for Old and Infirm"
Â	Project- Sports for Development
22	Promoting sports	Sports for Development	Providing professional badminton training to the students in 20 government schools in Bangalore and Chennai	12.09	Direct Expenditure- 10.89 Overhead-1.20	12.09	Implementing agency-"SRF Foundation"
Â	Miscellaneous -Disaster Relief and PM Relief Fund						Â
23	Disaster Management	-	Kerala disaster relief work	4.47	Direct Expenditure -4.47	4.47	Direct Implementation
24	PM Relief Fund	Â	Â	41.95	Direct Expenditure - 41.95	41.95	Implementing agency-"Prime Ministers Relief Fund"
25	Administrative Overheads	-	-	-	-	86.21	-
Total	Â	Â	Â	Â	Â	1724.20	Â

5. Details of Implementing Agencies:

The Company has carried out its CSR initiatives primarily through non-profit organisations. During the year, grants were provided to 19 implementing agencies, out of which major ones are:

a) The CREDAI CSR Foundation (CCF): the CSR Â arm of Confederation of Real Estate Developers Associations' of India (CREDAI) is engaged in development and execution of social and charitable projects with focus on construction workers. In partnership with CCF, we have ensured skill training of 10,500 construction workers pan India.

b) Mobile Creches for Working Mothers Children (MO: since 1970 MC is providing creche services for children of migrant construction workers at urban construction sites. At the day care centres, MC ensures health, nutrition, learning, care and protection for children in the age group of birth to 14 years. In FY 2018-19 we have supported 18 such day care centres in Delhi-NCR, Ahmedabad and Bangalore and ensured holistic development to 2,500 children.

c) Mumbai Mobile Creches (MMC): since 1972, Mumbai Mobile Creches has been one of the few non-profit organisation specifically supporting the health, education and safety of children living at construction sites. MMC and PNB Housing have established 1 day care centres in Virar catering to 250 children and 1 centre in Jasai catering to 100 children.

d) Tara Mobile Creches Pune (TMCP): a non-profit organisation, set up in 2007. It ensures that migrant construction workers' children enjoy the right to safety, healthcare, education, recreation and participation. TMCP operates centres, or creches on construction sites in and around Pune. In FY 2018-19, in partnership with TMCP, we have established 5 day care centres in Pune and supported 1,500 children through our centres.

e) Plan India: it is a member of Plan International Federation. It is a nationally registered independent child development organisation. For over 35 years, 'Plan India' and its partners have improved the lives of millions of children by providing them access to protection, basic education, proper healthcare, a healthy environment, livelihood opportunities and participation in decisions which affect their lives.

In FY 2018-19 in partnership with Plan India, we have ensured holistic development to 500 children living at various construction sites in Hyderabad.

f) Vidya-lntegrated Development of Youths and Adults: is a registered not-for-profit organisation, started in 1985 at NT Delhi campus, for education and empowerment of underprivileged children, youth and women through micro-level intervention.

In partnership with Vidya, we have supported the operational cost of running two formal schools in Delhi and ensured formal education to 550 children.

g) Can Support: is a NGO working towards a caring and supportive society where people with cancer and their families live with dignity, hope and comfort. Can Support's mission is to enable these people to make informed choices while receiving appropriate physical, emotional, social and spiritual support. In partnership with Can Support, we are supporting the operational cost of running their helpline and cancer patient clinic and supported 4,700 patients and care givers.

h) Progress Alternative: established in 1997 the key goal of the organisation was to create awareness on the issues of health and hygiene amongst young girls living in the rural belt in and around Lucknow, Uttar Pradesh. In partnership with Progress Alternative, we are executing health programme in four villages. The programme at each village focuses on providing 'Reproductive and Child Health Training' (RCH) and awareness on the communicable and non - communicable diseases as well as awareness on social issues like disadvantages of early child marriage, family planning etc.

i) Social Empowerment & Economic Development Society (SEED): was pioneered with a vision to bring about social change for a more equitable society and provide improved access to opportunities for growth. The focus areas for SEEDS activities are Education, Skill Development & Livelihoods and Sustainable agriculture. Our CSR programme aims to impart training to unemployed youths in skills related to Banking, Financial Services and Insurance (BFSI) through a short duration vocational program and thus engaging them in a sustainable employment, resulting in poverty alleviation.

j) Aajeevika Bureau: we have collaborated with Aajeevika Bureau, a NGO to address the unique vulnerabilities of the workforce at two construction sites in Ahmedabad. It is an integrated approach to ensure social well-being of construction worker communities. The aim is to facilitate enrollment to provide social security benefit linkages to 1,000 workers.

k) Sri Aurobindo Society (SAS): is a global not for profit organisation working towards transforming education in government schools through 'Project Inclusion'. In FY 2018-19, we collaborated with SAS to support 'Rupantar' program under Project Inclusion. The program is focused on sensitisation training of school teachers and officials towards addressing mental health challenges faced by primary and upper-primary school students across three blocks of Uttar Pradesh-Baldeo, Vrindavan and Mathura. The program has been recognised by Government of Uttar Pradesh. The program is helping build capacity of over 3,000 teachers and officials to further support the everyday systemic challenges faced by children with special needs.

I) SRF Foundation: there is no dearth of talent in our country when it comes to sports. Yet due to societal barriers, this talent is left undiscovered and unsupported. We have partnered with SRF Foundation to work with the children in the government schools adopted by SRF foundation in Chennai and Bangalore, using sports as medium of empowerment.

m) PM National Relief Fund: in pursuance of an appeal by the then Prime Minister, Pt. Jawaharlal Nehru in January, 1948, the Prime Minister's National Relief Fund (PMNRF) was established with public contributions to assist displaced persons from Pakistan. The resources of the PMNRF are now utilised primarily to render immediate relief to families of those killed in natural calamities like floods, cyclones, earthquakes, etc. and to the victims of the major accidents and riots.

6. In case the Company has failed to spend 2% of the average net profit of the last 3 financial years or any part thereof, the Company shall provide the reasons for not spending the amount:

Not applicable

7. The CSR Committee hereby confirms that the implementation and monitoring of the CSR Policy is in compliance with the CSR objectives and policy of the Company.

Managing Director

Chairman of CSR Committee

Annexure to Directors' Report - 3

Form No. MGT- 9 Extract of Annual Return as on the financial year ended on March 31, 2019

(Pursuant to section 92(3) of the Companies Act, 2013 and rule 12 (1) of the Companies Management and Administration Rules, 2014)

1. REGISTRATION AND OTHER DETAILS:	Â
CIN	L65922DL1988PLC033856
Registration Date	November 11, 1988
Name of the Company	PNB Housing Finance Limited
Category/Sub Category of the Company	Housing Finance
Address of the registered office and contact details	9th Floor, Antriksh Bhawan, 22, K G Marg, New Delhi-110001 Tel: 011-23445200, Fax: 011-23736857
Whether Listed Company	Yes
Name, Address and Contact details of Registrar and Transfer Agent, if any	Link Intime India Private Ltd.C 101, 247 Park, L B S Marg, Vikhroli West, Mumbai 400 083 Ph.: +91 22 49186000, Fax: +91 22 49186060 E-mail:[email protected] Website:www.linkintime.co.in

2. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY:

All the business activities contributing 10% or more of the total turnover of the Company shall be stated:-

SI. No.	Name and description of main products/services	NIC code of the product/service	% of the total turnover of the Company
1	Financial Service Activities, Except Insurance and Pension Funding	64192	100%

3. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES

SI. No.	Name and address of the Company	CIN/GLN	Holding/Subsidiary/ Associate	' % of shares held	Applicable section
1.	PHFL Home Loans and Services Limited Flat No. 207 & 209, 2nd Floor Antriksh Bhawan, 22, Kasturba Gandhi Marg New Delhi - 110001	U67200DL2017PLC322468	Subsidiary Company	100%	2(87)
2.	Punjab National Bank Plot No. 4, Sector -10 Dwarka New Delhi -110075	-	Promoter Company	32.79%	-

4. SHAREHOLDING PATTERN (EQUITY SHARE CAPITAL BREAK UP AS PERCENTAGE OF TOTAL EQUITY)

Â i) Category-wise Share Holding

Â	No. of shares held at the beginning of the year (Demat.)		No. of shares held at the end of the year (Demat.)		% change during the year
Category of shareholder	Number	% age of shares	Number	% age of shares	Applicable section
A. PROMOTERS	Â	Â	Â	Â	Â
1) Indian	Â	Â	Â	Â	Â
a) Individual/ HUF	-	-	-	-	-
b) Central Govt	-	-	-	-	-
c) State Govt (s)	-	-	-	-	-
d) Bodies Corp.	-	-	-	-	-
e) Banks/FI	54914840	32.96	54914840	32.79	(0.17)*
0 Any Other	-	-	-	-	-
Sub-total (A)(1):-	54914840	32.96	54914840	32.79	(0.17)*
2) Foreign	Â	Â	Â	Â	Â
a) NRIs - Individuals	-	-	-	-	-
b) Other Individuals	-	-	-	-	-
c) Bodies Corp.	-	-	-	-	-
d) Banks/FI	-	-	-	-	-
e) Any Other....	-	-	-	-	-
Sub-total (A)2):-	-	-	-	-	-
Total shareholding of promoter (A)=(A)(1)+(AX2)	54914840	32.96	54914840	32.79	(0.17)
B. PUBLIC SHAREHOLDING	Â	Â	Â	Â	Â
1. Institutions	Â	Â	Â	Â	Â
a) Mutual Funds	10892178	6.54	12832055	7.66	1.12
b) Banks/FI	1596914	0.96	1511787	0.90	(0.06)
c) Central Govt	-	-	1060	0.00	0.00
d) State Govt(s)	-	-	-	-	-
e) Venture Capital Funds	-	-	-	-	-
0 Insurance Companies	-	-	-	-	-
g) Flls/ Foreign Portfolio Investors	27209948	16.33	33345828	19.91	3.58
h) Foreign Venture Capital Funds	-	-	-	-	-
I) Others (Alternate Investment Funds)	232534	0.14	558903	0.33	0.19
Sub total (B) (1):-	39931574	23.97	48249633	28.80	4.83
2. Non- Institutions	Â	Â	Â	Â	Â
a) Bodies Corp.	Â	Â	Â	Â	Â
i) Indian	2659201	1.60	2273155	1.36	(0.24)
ii) Overseas	-	-	-	-	-
Â	Â	Â	Â	Â	Â
b) Individuals	4770208	2.86	4722992	2.83	(0.03)
i) Individual shareholders holding nominal share capital upto Rs.1 lakhs	(10 shares in physical)	Â	(16 shares in physical)	Â	Â
ii) Individual shareholders holding nominal share capital in excess of Rs.1 lakhs	1118558	0.68	1385485	0.84	0.16
c) Others (specify)	Â	Â	Â	Â	Â
â¢ Trusts	54442	0.03	535874	0.32	0.29
â¢ Foreign Nationals	0	0	0	0.00	0.00
â¢ Hindu Undivided Family	360890	0.22	255290	0.15	(0.07)
â¢ Foreign Companies	62192300	37.33	54192300	32.36	(4.97)
â¢ Non Resident Indians (Non Repat)	96589	0.06	87214	0.05	(0.01)
â¢ Non Resident Indians (Repat)	252913	0.15	223752	0.13	(0.02)
â¢ Clearing Member	234967	0.14	522479	0.31	0.17
â¢ NBFCs registered with RBI	-	-	106002	0.06	0.06
Sub-total(B) (2):-	71740068	43.07	64304543	38.41	(4.66)
Total Public Shareholding (B) = (BX1) + (BX2)	111671642	67.04	112554176	67.21	0.17
(C) SHARES HELD BY CUSTODIAN FOR GDR & ADR	-	-	-	-	-
Grand Total (A+B+C)	166586482	100	167469016	100	-

*The percentage shareholding of Punjab National Bank has reduced pursuant to allotment of 882534 equity shares under Employee Stock Option Scheme.

ii. Shareholding of promoters:

Â	Â	Shareholding at the beginning of the year			No. of shares held at the end of the year (Demat.)
Sr. No.	Shareholder's Name Category of shareholder	No. of shares	% of total shares of the Co.	% of total shares encumbered/ pledged to total shares	No. of shares	% of total shares of the Co.	% of total shares encumbered/ pledged	% change in holding during the year
1	Punjab National Bank	54914840	32.96	-	54914840	32.79	-	(0.17%)*

* The percentage shareholding of Punjab National Bank has reduced pursuant to allotment of 882534 equity shares under Employee Stock Option Scheme

iii. Change in Promoters' shareholding

Sr. No.	Â	Shareholding at the beginning of the year		Cumulative shareholding during the year
Sr. No.	Â	No. of shares	% of the total shares of the Company	No. of shares	% of the total shares of the Company
1	At the beginning of the year	54914840	32.96	Â	Â
2	At the end of the year	Â	Â	54914840	32.79*

* The percentage shareholding of Punjab National Bank has reduced pursuant to allotment of 882534 equity shares under Employee Stock Option Scheme

iv. Shareholding pattern of top 10 shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):

Sr. No.	Name	Shareholding at the beginning of the year		No. of shares held at the end of the year (Demat.)			Cumulative shareholding during the year (April 1, 2018 to March 31, 2019)
Sr. No.	Name	No. of shares	% of the total shares of the Company	Increase / Date Decrease in shareholding		Reason	% of the total No. of shares of the shares Company
1	Quality Investment Holdings	62192300	37.33	-	-	-	Â	Â
Â	Â	Â	Â	11.05.2018	8000000	Sale	54192300	32.359
Â	Closing Balance	Â	Â	Â	Â	Â	54192300	32.359
2	General Atlantic Singapore Fund Fll PTE Ltd.	14199928	8.524	Â	Â	Â	Â	Â
Â	Â	Â	Â	20.04.2018	22000	Purchase	14221928	8.492
Â	Â	Â	Â	27.04.2018	139948	Purchase	14361876	8.575
Â	Â	Â	Â	04.05.2018	1364	Purchase	14363240	8.576
Â	Â	Â	Â	11.05.2018	2020956	Purchase	16384196	9.783
Â	Â	Â	Â	18.05.2018	191044	Purchase	16575240	9.897
Â	Â	Â	Â	25.05.2018	18000	Purchase	16593240	9.908
Â	Closing Balance	Â	Â	Â	Â	Â	16593240	9.908
3.	Aditya Birla Sun Life Trustee Private	4864462	2.920	Â
Â	Limited A/c Aditya Birla Sun Life	Â	Â	06.04.2018	(111590)	Sale	4752872	2.838
Â	Advantage Fund	Â	Â	13.04.2018	(25000)	Sale	4727872	2.823
Â	Â	Â	Â	20.04.2018	(51298)	Sale	4676574	2.792
Â	Â	Â	Â	11.05.2018	953124	Purchase	5629698	3.361
Â	Â	Â	Â	25.05.2018	51900	Purchase	5681598	3.392
Â	Â	Â	Â	08.06.2018	(12876)	Sale	5668722	3.384
Â	Â	Â	Â	13.07.2018	50000	Purchase	5718722	3.414
Â	Â	Â	Â	20.07.2018	107000	Purchase	5825722	3.478
Â	Â	Â	Â	27.07.2018	9700	Purchase	5835422	3.484
Â	Â	Â	Â	29.09.2018	46975	Purchase	5882397	3.512
Â	Â	Â	Â	05.10.2018	(61400)	Sale	5820997	3.475
Â	Â	Â	Â	12.10.2018	(102000)	Sale	5718997	3.415
Â	Â	Â	Â	19.10.2018	56900	Purchase	5775897	3.448
Â	Â	Â	Â	26.10.2018	449500	Purchase	6225397	3.717
Â	Â	Â	Â	02.11.2018	90500	Purchase	6315897	3.771
Â	Â	Â	Â	23.11.2018	(2100)	Sale	6313797	3.770
Â	Â	Â	Â	21.12.2018	55000	Purchase	6368797	3.803
Â	Â	Â	Â	04.01.2019	11000	Purchase	6379797	3.809
Â	Â	Â	Â	11.01.2019	50000	Purchase	6429797	3.839
Â	Â	Â	Â	15.02.2019	(42300)	Sale	6387497	3.814
Â	Â	Â	Â	22.02.2019	(7000)	Sale	6380497	3.810
Â	Â	Â	Â	29.03.2019	(8396)	Sale	6372101	3.804
Â	Closing Balance	Â	Â	Â	Â	Â	6372101	3.804

Sr.	Name	Shareholding at the beginning of the year		No. of shares held at the end of the year (Demat.)			Cumulative shareholding during the year (April 1, 2018 to March 31, 2019)
No.	Name	No. of shares	% of the total shares of the Company	Date	Increase / Decrease in shareholding	Reason	% of the total No. of shares of the shares Company
4.	Reliance Capital Trustee Co Ltd A/c-	1240881	0.741	Â	Â	Â	Â	Â
Â	Reliance Equity Hybrid Fund	Â	Â	13.04.2018	1981	Purchase	1242862	0.742
Â	Â	Â	Â	11.05.2018	1056674	Purchase	2299536	1.373
Â	Â	Â	Â	18.05.2018	413026	Purchase	2712562	1.619
Â	Â	Â	Â	25.05.2018	105000	Purchase	2817562	1.682
Â	Â	Â	Â	01.06.2018	8770	Purchase	2826332	1.687
Â	Â	Â	Â	15.06.2018	37684	Purchase	2864016	1.710
Â	Â	Â	Â	22.06.2018	12316	Purchase	2876332	1.717
Â	Â	Â	Â	30.06.2018	81517	Purchase	2957849	1.766
Â	Â	Â	Â	03.08.2018	(7212)	Sale	2950637	1.761
Â	Â	Â	Â	07.09.2018	(121993)	Sale	2828644	1.689
Â	Â	Â	Â	21.09.2018	C29542)	Sale	2799102	1.671
Â	Â	Â	Â	23.11.2018	C370023)	Sale	2429079	1.450
Â	Â	Â	Â	01.02.2019	958	Purchase	2430037	1.451
Â	Â	Â	Â	08.02.2019	12	Purchase	2430049	1.451
Â	Â	Â	Â	01.03.2019	C185826)	Sale	2244223	1.340
Â	Â	Â	Â	08.03.2019	C65366)	Sale	2178857	1.301
Â	Â	Â	Â	15.03.2019	C29543)	Sale	2149314	1.283
Â	Â	Â	Â	22.03.2019	(44157)	Sale	2105157	1.257
Â	Â	Â	Â	29.03.2019	507	Purchase	2105664	1.257
Â	Closing Balance	Â	Â	Â	Â	Â	2105664	1.257
5.	SBI Magnum Midcap Fund	198112	0.118	Â	Â	Â	Â	Â
Â	Â	Â	Â	20.04.2018	139312	Purchase	337424	0.201
Â	Â	Â	Â	27.04.2018	77731	Purchase	415155	0.247
Â	Â	Â	Â	11.05.2018	400000	Purchase	815155	0.486
Â	Â	Â	Â	25.05.2018	200000	Purchase	1015155	0.606
Â	Â	Â	Â	08.06.2018	200000	Purchase	1215155	0.725
Â	Â	Â	Â	15.06.2018	376000	Purchase	1591155	0.950
Â	Â	Â	Â	22.06.2018	167000	Purchase	1758155	1.049
Â	Â	Â	Â	06.07.2018	33900	Purchase	1792055	1.070
Â	Â	Â	Â	13.07.2018	41573	Purchase	1833628	1.094
Â	Â	Â	Â	03.08.2018	C29755)	Sale	1803873	1.077
Â	Â	Â	Â	10.08.2018	(13245)	Sale	1790628	1.069
Â	Â	Â	Â	24.08.2018	2602	Purchase	1793230	1.070
Â	Â	Â	Â	07.09.2018	55000	Purchase	1848230	1.103
Â	Â	Â	Â	14.09.2018	659825	Purchase	2508055	1.497
Â	Â	Â	Â	05.10.2018	C5200)	Sale	2502855	1.494
Â	Â	Â	Â	12.10.2018	176000	Purchase	2678855	1.599
Â	Â	Â	Â	19.10.2018	C21525)	Sale	2657330	1.586
Â	Â	Â	Â	26.10.2018	198575	Purchase	2855905	1.705
Â	Â	Â	Â	11.01.2019	18000	Purchase	2873905	1.716
Â	Â	Â	Â	22.02.2019	C176800)	Sale	2697105	1.610
Â	Â	Â	Â	01.03.2019	(100000)	Sale	2597105	1.550
Â	Â	Â	Â	08.03.2019	C84779)	Sale	2512326	1.500
Â	Â	Â	Â	15.03.2019	(128388)	Sale	2383938	1.423
Â	Â	Â	Â	22.03.2019	C89635)	Sale	2294303	1.370
Â	Â	Â	Â	29.03.2019	(477108)	Sale	1817195	1.085
Â	Closing Balance	Â	Â	Â	Â	Â	1817195	1.085
6.	Franklin Templeton Mutual Fund A/C	189380	0.113	Â	Â	Â	Â	Â
Â	Franklin India Equity Advantage Fund	Â	Â	11.05.2018	250000	Purchase	439380	0.262
Â	Â	Â	Â	25.05.2018	6451	Purchase	445831	0.266
Â	Â	Â	Â	01.06.2018	141738	Purchase	587569	0.350
Â	Â	Â	Â	08.06.2018	134893	Purchase	722462	0.431
Â	Â	Â	Â	15.06.2018	151273	Purchase	873735	0.521
Â	Â	Â	Â	07.09.2018	4379	Purchase	878114	0.524
Â	Â	Â	Â	14.09.2018	1790	Purchase	879904	0.525
Â	Â	Â	Â	12.10.2018	72828	Purchase	952732	0.568
Â	Â	Â	Â	26.10.2018	5000	Purchase	957732	0.571

Sr. No.	Name	Shareholding at the beginning of the year		No. of shares held at the end of the year (Demat.)			Cumulative shareholding during the year (April 1, 2018 to March 31, 2019)
Sr. No.	Name	No. of shares	% of the total shares of the Company	Date	Increase / Decrease in shareholding	Reason	No. of shares	% of the total shares of the Company
Â	Â	Â	Â	07.12.2018	70678	Purchase	1028410	0.614
Â	Â	Â	Â	11.01.2019	127580	Purchase	1155990	0.690
Â	Â	Â	Â	18.01.2019	72420	Purchase	1228410	0.733
Â	Â	Â	Â	25.01.2019	100000	Purchase	1328410	0.793
Â	Â	Â	Â	01.02.2019	78556	Purchase	1406966	0.840
Â	Â	Â	Â	08.02.2019	3796	Purchase	1410762	0.842
Â	Â	Â	Â	22.03.2019	100000	Purchase	1510762	0.902
Â	Â	Â	Â	29.03.2019	50000	Purchase	1560762	0.932
Â	Closing Balance	Â	Â	Â	Â	Â	1560762	0.932
7.	Malabar India Fund Limited	761967	0.457	Â	Â	Â	Â	Â
Â	Â	Â	Â	08.06.2018	92904	Purchase	854871	0.510
Â	Â	Â	Â	15.06.2018	127918	Purchase	982789	0.586
Â	Â	Â	Â	22.06.2018	72542	Purchase	1055331	0.630
Â	Â	Â	Â	30.06.2018	66340	Purchase	1121671	0.669
Â	Â	Â	Â	31.08.2018	C40000)	Sale	1081671	0.645
Â	Â	Â	Â	29.09.2018	40000	Purchase	1121671	0.669
Â	Â	Â	Â	05.10.2018	40000	Purchase	1161671	0.693
Â	Â	Â	Â	12.10.2018	719	Purchase	1162390	0.694
Â	Â	Â	Â	19.10.2018	1494	Purchase	1163884	0.695
Â	Â	Â	Â	26.10.2018	67787	Purchase	1231671	0.735
Â	Closing Balance	Â	Â	Â	Â	Â	1231671	0.735
8.	Rochdale Emerging Markets (Mauritius)	-		Â
Â	Â	Â	Â	30.06.2018	475387	Purchase	475387	0.283
Â	Â	Â	Â	06.07.2018	110001	Purchase	585388	0.349
Â	Â	Â	Â	13.07.2018	127457	Purchase	712845	0.425
Â	Â	Â	Â	24.08.2018	92289	Purchase	805134	0.480
Â	Â	Â	Â	31.08.2018	12624	Purchase	817758	0.488
Â	Â	Â	Â	29.09.2018	240000	Purchase	1057758	0.631
Â	Closing Balance	Â	Â	Â	Â	Â	1057758	0.631
9.	Auburn Limited	374100	0.223	Â	Â	Â	Â	Â
Â	Â	Â	Â	13.04.2018	660	Purchase	374760	0.223
Â	Â	Â	Â	15.06.2018	59100	Purchase	433860	0.259
Â	Â	Â	Â	29.09.2018	66000	Purchase	499860	0.298
Â	Â	Â	Â	05.10.2018	180000	Purchase	679860	0.406
Â	Â	Â	Â	12.10.2018	160000	Purchase	839860	0.501
Â	Â	Â	Â	26.10.2018	195000	Purchase	1034860	0.617
Â	Â	Â	Â	01.03.2019	20736	Purchase	1055596	0.630
Â	Closing Balance	Â	Â	Â	Â	Â	1055596	0.630
10.	BNP Paribas Arbitrage	15831	0.009	Â	Â	Â	Â	Â
Â	Â	Â	Â	06.04.2018	(15831)	Sale	0	0.000
Â	Â	Â	Â	30.06.2018	13600	Purchase	13600	0.008
Â	Â	Â	Â	10.08.2018	C13600)	Sale	0	0.000
Â	Â	Â	Â	05.10.2018	739556	Purchase	739556	0.441
Â	Â	Â	Â	12.10.2018	340207	Purchase	1079763	0.644
Â	Â	Â	Â	16.11.2018	C48405)	Sale	1031358	0.615
Â	Â	Â	Â	23.11.2018	C47223)	Sale	984135	0.587
Â	Â	Â	Â	30.11.2018	C643)	Sale	983492	0.587
Â	Â	Â	Â	01.02.2019	2681	Purchase	986173	0.588
Â	Â	Â	Â	08.02.2019	C27827)	Sale	958346	0.572
Â	Â	Â	Â	15.02.2019	(1533)	Sale	956813	0.571
Â	Â	Â	Â	01.03.2019	(1148)	Sale	955665	0.570
Â	Closing Balance	Â	Â	Â	Â	Â	955665	0.570
11.	United India Insurance Company Limited	897502	0.535	Â	Â	Â	Â	Â
Â	Closing Balance	Â	Â	Â	Â	Â	897502	0.53
12.	Motilal Oswal Multicap 35 Fund	4079871	2.436	Â	Â	Â	Â	Â
Â	Â	Â	Â	06.04.2018	(41871)	Sale	4038000	2.411
Â	Â	Â	Â	13.04.2018	C50000)	Sale	3988000	2.381
Â	Â	Â	Â	20.04.2018	7	Purchase	3988007	2.381
Â	Â	Â	Â	27.04.2018	C73429)	Sale	3914578	2.337

Sr. No.	Name	Shareholding at the beginning of the year		No. of shares held at the end of the year (Demat.)			Cumulative shareholding during the year (April 1, 2018 to March 31, 2019)
Sr. No.	Name	No. of shares	% of the total shares of the Company	Date	Increase / Decrease in shareholding	Reason	No. of shares	% of the total shares of the Company
Â	Â	Â	Â	11.05.2018	76123	Purchase	3990701	2.382
Â	Â	Â	Â	18.05.2018	38324	Purchase	4029025	2.405
Â	Â	Â	Â	01.06.2018	(357590)	Sale	3671435	2.192
Â	Â	Â	Â	08.06.2018	(127923)	Sale	3543512	2.115
Â	Â	Â	Â	22.06.2018	(218591)	Sale	3324921	1.985
Â	Â	Â	Â	30.06.2018	(415000)	Sale	2909921	1.737
Â	Â	Â	Â	06.07.2018	(21976)	Sale	2887945	1.724
Â	Â	Â	Â	13.07.2018	35	Purchase	2887980	1.724
Â	Â	Â	Â	03.08.2018	56409	Purchase	2944389	1.758
Â	Â	Â	Â	17.08.2018	(14343)	Sale	2930046	1.749
Â	Â	Â	Â	29.09.2018	(39943)	Sale	2890103	1.725
Â	Â	Â	Â	05.10.2018	(468007)	Sale	2422096	1.446
Â	Â	Â	Â	12.10.2018	(705280)	Sale	1716816	1.025
Â	Â	Â	Â	19.10.2018	(70)	Sale	1716746	1.025
Â	Â	Â	Â	09.11.2018	(923)	Sale	1715823	1.024
Â	Â	Â	Â	16.11.2018	20	Purchase	1715843	1.024
Â	Â	Â	Â	30.11.2018	(13100)	Sale	1702743	1.016
Â	Â	Â	Â	07.12.2018	(74864)	Sale	1627879	0.972
Â	Â	Â	Â	14.12.2018	(39771)	Sale	1588108	0.948
Â	Â	Â	Â	21.12.2018	(88428)	Sale	1499680	0.895
Â	Â	Â	Â	28.12.2018	(30626)	Sale	1469054	0.877
Â	Â	Â	Â	31.12.2018	2	Purchase	1469056	0.877
Â	Â	Â	Â	11.01.2019	(219437)	Sale	1249619	0.746
Â	Â	Â	Â	18.01.2019	(22883)	Sale	1226736	0.732
Â	Â	Â	Â	25.01.2019	(57079)	Sale	1169657	0.698
Â	Â	Â	Â	01.02.2019	(205897)	Sale	963760	0.575
Â	Â	Â	Â	08.02.2019	20	Purchase	963780	0.575
Â	Â	Â	Â	15.02.2019	(95302)	Sale	868478	0.518
Â	Â	Â	Â	22.02.2019	20	Purchase	868498	0.518
Â	Â	Â	Â	01.03.2019	(10235)	Sale	858263	0.512
Â	Â	Â	Â	08.03.2019	40	Purchase	858303	0.512
Â	Â	Â	Â	15.03.2019	(77905)	Sale	780398	0.466
Â	Â	Â	Â	22.03.2019	(147374)	Sale	633024	0.378
Â	Â	Â	Â	29.03.2019	(29254)	Sale	603770	0.360
Â	Closing Balance	Â	Â	Â	Â	Â	603770	0.360
13.	T. Rowe Price International Discovery Fund	1697678	1.019	Â
Â	Â	Â	Â	11.05.2018	236844	Purchase	1934522	1.155
Â	Â	Â	Â	31.08.2018	(30897)	Sale	1903625	1.136
Â	Â	Â	Â	07.09.2018	(241318)	Sale	1662307	0.992
Â	Â	Â	Â	14.09.2018	(484724)	Sale	1177583	0.703
Â	Â	Â	Â	21.09.2018	(314260)	Sale	863323	0.515
Â	Â	Â	Â	29.09.2018	(655636)	Sale	207687	0.124
Â	Â	Â	Â	05.10.2018	(207687)	Sale	0	0.000
Â	Closing Balance	Â	Â	Â	Â	Â	0	0
14.	Fidelity Investment Trust Fidelity	838105	0.503	Â
Â	International Discovery Fund	Â	Â	30.06.2018	(112835)	Sale	725270	0.433
Â	Â	Â	Â	06.07.2018	(59650)	Sale	665620	0.397
Â	Â	Â	Â	13.07.2018	(71600)	Sale	594020	0.354
Â	Â	Â	Â	12.10.2018	(594020)	Sale	0	0.000
Â	Closing Balance	Â	Â	Â	Â	Â	0	0
15.	Wasatch International Growth Fund	762620	0.458	Â
Â	Â	Â	Â	27.04.2018	(9868)	Sale	752752	0.449
Â	Â	Â	Â	25.05.2018	(47562)	Sale	705190	0.421
Â	Â	Â	Â	01.06.2018	(16439)	Sale	688751	0.411
Â	Â	Â	Â	08.06.2018	(33654)	Sale	655097	0.391
Â	Â	Â	Â	15.06.2018	(575607)	Sale	79490	0.047
Â	Â	Â	Â	22.06.2018	(79490)	Sale	0	0.000
Â	Closing Balance	Â	Â	Â	Â	Â	0	0

v. Shareholding of Directors and Key Management Personnel:

Sr. No.	Name	Shareholding at the beginning of the year		Date wise Increase / decrease in shareholding			Cumulative shareholding during the year (April 1, 2018 to March 31, 2019)
Sr. No.	Name	No. of shares	% of the total shares of the Company	Date	Increase / Decrease in shareholding	Reason	No. of shares	% of the total shares of the Company
1	Sanjaya Gupta, Managing Director	72073	0.04	Â	Â	Â	Â	Â
Â	Â	Â	Â	03.05.2018	133269	Allotment under ESOP	205342	0.07
Â	Â	Â	Â	08.05.2018	(72250)	Sale	133092	Â
Â	Closing Balance	Â	Â	Â	Â	Â	133092	Â
2.	Kapish Jain, Chief Financial Officer	19	0.00	-	-	-	19	0.00
3.	Sanjay Jain, Company Secretary & Head	0	0.00	Â	Â	Â	Â	Â
Â	Compliance	Â	Â	03.05.2018	15421	Allotment under ESOP	15421	0.00
Â	Â	Â	Â	25.05.2018	(10000)	Sale	5421	0.00
Â	Â	Â	Â	11.07.2018	(5421)	Sale	0	0.00
Â	Closing Balance	Â	Â	Â	Â	Â	0	0.00

5. INDEBTEDNESS

Indebtedness of the Company including interest outstanding/accrued but not due for payment

Â	Â	Â	Â	(Rs. in crores)
Â	Secured loans excluding deposits	Unsecured loans	Deposits	Total indebtedness
Indebtness at the beginning of the financial year	Â	Â	Â	Â
1. Principal amount	30,883.14	11,799.00	11,390.03	54,072.17
2. Interest due but not paid	-	-	-	-
3.lnterest accrued but not due	272.59	-	196.17	468.76
Total	31,155.73	11,799.00	11,586.20	54,540.93
Change in indebtedness during the financial year	18,662.71	-2,410.30	2,729.30	18,981.71
At the end of the financial year	Â	Â	Â	Â
1. Principal amount	48,657.84	9,388.70	14,097.61	72,144.15
2. Interest due but not paid	-	-	-	-
3. Interest accrued but not due	1,160.60	Â	217.89	1,378.49
Total	49,818.44	9,388.70	14,315.50	73,522.64

6. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A. Remuneration to Managing Director, Whole-time Directors and/or Manager:

SI. No.	Particulars of remuneration	Name of the Managing Director	Total amount (Rs.)
SI. No.	Particulars of remuneration	Mr. Sanjaya Gupta	Â
1	Gross Salary	Â	Â
Â	a) Salary (as per provisions contained in section 17(1) of the Income tax Act, 1961	Â	1,29,72,261
Â	b) Value of perquisites under section 17(2) of the Income tax Act, 1961	Â	-
Â	c) Profits in lieu of salary under section 17(3) of the Income tax Act, 1961	Â	-
2	Stock Option*	Â	Â
3	Sweat Equity	Â	-
4	Commission as % of profit	Â	-
5	Performance Bonus	Â	1,00,00,000
Â	Total (A)	Â	2,29,72,261
Â	Ceiling as per Act	Â	78,90,25,000

*Exclude value of perquisite on exercise of 1,33,269 stock options received during the year.

B. Remuneration to other directors

(I) Independent Directors

Particulars of remuneration	Mr. R Chandrasekaran	Mr. Shital Kumar Jain	Dr. Gourav Vallabh	Mr. Nilesh S Vikamsey	Mr. Ashwani Kumar Gupta	Mrs. Shubhalakshmi Panse	Total amount
Fee for attending Board/ Committee Meetings	6,40,000	8,90,000	7,00,000	6,20,000	9,10,000	5,30,000	42,90,000
Commission	15,00,000	15,00,000	15,00,000	15,00,000	12,50,000	10,00,000	82,50,000
Others	-	-	-	-	-		-
Total (i)	21,40,000	23,90,000	22,00,000	21,20,000	21,60,000	15,30,000	125,40,000
II) Other Non-executive directors (Paid to PNB for its nominee directors)				Â
Fee for attending Board/ Committee Meetings	Â	Â	Â	Â	Â	5,70,000	5,70,000
Commission	Â	Â	Â	Â	Â		-
Others	Â	Â	Â	Â	-		-
Total (ii)	Â	Â	Â	Â	Â	5,70,000	5,70,000
Total (B)=(i)+(ii)	Â	Â	Â	Â	Â	Â	131,10,000
Total Managerial Remuneration	Â	Â	Â	Â	Â	-	3,60,82,261
Overall Ceiling as per Act	Â	Â	Â	Â	Â	Â	173,58,55,000

i) Remuneration to key Managerial Personnel other than MD

Sr. No.	Particulars of remuneration	Key Managerial Personnel		Â
Sr. No.	Particulars of remuneration	Mr. Sanjay Jain, Company Secretary*	Mr. Kapish Jain, CFO	Total
1	Gross Salary	Â	Â	Â
Â	a) Salary (as per provisions contained in section 17(1) of the Income tax Act, 1961	43,73,324	79,58,678	1,23,32,002
Â	b) Value of perquisites under section 17(2) of the Income tax Act, 1961	-	-	-
Â	c) Profits in lieu of salary under section 17(3) of the Income tax Act, 1961	-	-	-
2	Stock Option*	Â	Â	Â
3	Sweat Equity	-	-	-
4	Commission as % of profit	-	-	-
5	Performance Bonus	12,48,048	Â	12,48,048
Â	Total	56,21,372	79,58,678	1,35,80,050

*Excludes value of perquisite on exercise of 15,421 stock options received during the year.

7. PENALTIES/PUNISHMENT/COMPOUNDING OF OFFENCES

Type		Section of the Companies Act	Brief description	Details of penalty/ punishment/ compounding fee	Authority (RD/NCLT/ Court)	Appeal made, if any (give details)
A.	COMPANY	Â	Â	Â	Â	Â
Â	Penalty	Nil	Nil	Nil	Nil	Nil
Â	Punishment	Nil	Nil	Nil	Nil	Nil
Â	Compounding	Nil	Nil	Nil	Nil	Nil
B.	DIRECTORS	Â	Â	Â	Â	Â
Â	Penalty	Nil	Nil	Nil	Nil	Nil
Â	Punishment	Nil	Nil	Nil	Nil	Nil
Â	Compounding	Nil	Nil	Nil	Nil	Nil
C.	OTHER OFFICERS IN DEFAULT	Â	Â	Â	Â	Â
Â	Penalty	Nil	Nil	Nil	Nil	Nil
Â	Punishment	Nil	Nil	Nil	Nil	Nil
Â	Compounding	Nil	Nil	Nil	Nil	Nil

Mar 31, 2018

The Directors welcome the shareholders and take pleasure in presenting the 30th Annual Report together with the Audited Standalone and Consolidated Financial Statements of the Company for the year ended March 31st, 2018.

Financial Results

(Rs. in crores)

	As at March 31st, 2018	As at March 31st, 2017
Profit before tax	1279.08	804.01
Less: Provision for Tax
-Current year	437.71	264.00
-Earlier years	(0.08)	-
-Deferred Tax	10.80	16.26
Profit After Tax	830.65	523.73
Add: Balance brought for-ward from the previous year	640.99	275.25
	1471.64	798.98
Appropriation of Profits
Transfer to Special Reserve (including u/s 29C of NHB Act, 1987)	166.13	105.60
Transfer to General Reserve	83.07	52.39
Dividend	99.95	-
Dividend distribution Tax	20.35	-
Balance carried to Balance Sheet	1102.14	640.99
	1471.64	798.98

Income and expenditure

During the year, the Company has earned a total income of RS.5,516.95 crores as compared to RS.3,907.85 crores in the previous year, recording a growth of 41%.

Total expenses, provisions and write offs during the year were RS.4,237.87 crores as compared to RS.3,103.84 crores in the previous year, a growth of 37%.

Dividend

Your Directors are pleased to recommend a dividend of RS.9.00 per share as compared to RS.6.00 per share for the previous year.

The dividend payout ratio including dividend distribution tax for the year ended March 31st, 2018 will be 21.88%.

Lending Operations

The year gone by was a challenging year. The impact of demonetization towards the fag end of FY2016-17 had its spill over effect in the first quarter of FY2017-18. Immediately thereafter, the goods and service tax (GST) law was implemented on July 1, 2017 to create a uniform tax structure.

The new tax system had a direct impact on home loan seekers and the entire real estate industry in India. Under the new tax structure, buying under construction properties attracts a net effective rate of 12% as against the earlier rate of around 5.5% (including value-added tax and service tax). The enhanced tax on home prices have pulled down consumer sentiment.

Towards the second half of the FY2017-18, the northward movement in the rate of interest had started. The market, however, continued with irrational pricing to overcome the challenges of sluggish credit growth.

The Company did not chase business to gain market share. The Company stuck to its DNA of controlled aggression, good governance and proven fundamentals to protect both spreads and growth without compromising on credit quality and underwriting processes.

The Government of India has implemented all the provisions of Real Estate Regulation Act, 2016 (RERA) from May 1, 2017. RERA aims to protect the interests of the consumers and investors by introducing a regime to regulate and improve the level of transparency and accountability in the sector.

The developers had three months to register their new and ongoing projects with their respective State Real Estate Regulatory Authority. In the transition phase of RERA implementation, the number of new launches were minuscule.

On the positive side, the Government is actively working on âHousing for allâ by year 2022 scheme to address demand and supply side constraints, which had affected the growth of the sector in the past. Under the pradhan mantri awas yojana (PMAY), a reformed credit linked subsidy scheme (CLSS) for the middle-income group (MIG) was implemented.

The CLSS for mid-income affordable housing has been extended by 15 months up to March 2019. The cabinet has approved increase in carpet area of houses eligible for interest subsidy under PMAY

The developers have started re-modelling their projects to fit into the norms of CLSS for mid segment housing. Tax incentives on housing loans for both principal and interest repayment coupled with subsidies under CLSS for economically weaker sections (EWS), lower income group (LIG) and middle income group (MIG) have improved affordability levels of the customers, who are the first time home buyers and this initiative is likely to boost demand.

During the year, the Company has sanctioned loans amounting to RS.55,582 crores in respect of 1,02,468 applications as compared to RS.32,225 crores in respect to 63,894 applications in the previous year, recording a growth of 72% in sanction amount. During the year, the Company has disbursed loans amounting to RS.33,195 crores as compared to RS.20,639 crores in the previous year, recording a growth of 61%. Out of total disbursements, RS.22,772 crores loans were disbursed for housing and RS.10,423 crores were disbursed for non-housing purposes.

Loan Book

Loans outstanding (principal portion) as at March 31, 2018 were RS.57,014 crores, recording a growth of 48% over the last year.

The total assets under management (AUM) as at March 31, 2018 were RS.62,252 crores, recording a growth of 50% over the previous year.

During the year, the Company sold loans amounting to RS.3,128 crores under loan assignment route to different institutions.

Distribution

Over the last 6 years, the Company has increased its share of business and grew to a position of being the 5th largest HFC by deepening presence in existing markets and expanding to new markets.

In this period, the Company has opened 53 branches, taking its branch network from 31 branches as on March 31, 2013 to 84 branches as on March 31, 2018.

In FY2017-18, the Company has opened 21 new branches, out of which 11 branches were opened in the existing locations and 10 branches were opened in the new locations. The new locations were; Salem, Trichy, Kozhikode, Mangalore, Mysore, Kalyan, Panvel, Aurangabad, Jamshedpur and Haridwar. As on March 31, 2018, the Company has presence through 84 branches, 35 outreach locations, totalling to 119 distribution outlets in 86 cities.

Sales and Distribution Subsidiary

One of the big initiatives for the year was incorporation of the sales subsidiary Company, âPHFL Home Loans and Services Limitedâ on August 22, 2017. The Company has been floated as a distribution arm for PNB Housing, offering doorstep services to the prospective customers.

PHFL would be predominantly sourcing business for the products offered by PNB Housing and it will also explore cross sell of other third party products like credit card, insurance, property solution based opportunities to arrive at an optimum efficiency level.

This initiative would help in containing personnel attrition, hire better quality sales force and create better job satisfaction among the employees. The operating structure of PHFL has been finalized and the manpower is being hired in a phased manner. In FY2017-18, PHFL has worked for part of the year. It would be fully operational in FY2018-19.

A report on the performance and financials of PHFL, as per Companies Act, 2013 and rules made thereunder (the âActâ) is provided in Form AOC 1 attached to the Consolidated Financial Statements forming an integral part of the Annual Report.

Underwriting and Risk Management

During the year, the Company implemented a comprehensive Enterprise Risk Management Policy along with functional level risk management policies covering; Integrated Risk Management Policy, Market Risk Policy, Assets Liability Management Policy, Stress Testing Policy, IT security policy and Credit Risk Policy.

The Company follows comprehensive underwriting process for all its loan products by using a well-trained manpower assisted by in-house teams from technical, legal and fraud control units. Throughout the year, the Company was consistent in honouring its commitment on timelines and arresting wastages. The Company is working on using various electronic and digital means in underwriting to make it more productive, efficient and optimum at the risk reward level.

The underwriting of loans is performed in specialized hubs located across the country. As on March 31, 2018, the Company has 21 loan processing hubs, 7 hubs in each zone viz. North, West and South Zones.

Recoveries and Non-Performing Loans

The Company has continued with a high class collection performance. The recovery teams were assisted by introduction of new technologies such as; the mobility application on mobile phones, a centralized dialler with priority setting logic, beside constant use of provisions of the SARFAESI Act, 2002.

The Company has also reduced the portion of doubtful assets in absolute terms and liquidated repossessed assets through tie-ups and on-line auction of properties.

The gross non-performing assets were RS.186.11 crores i.e. 0.33% of the outstanding loans (last year 0.22%) and net non-performing assets (after provision as per NHB Directions) were RS.143.81 crores i.e. 0.25% of outstanding loans (last year 0.15%).

Provisions

The Company has continued to build sound provisions on its loan assets over the years. Besides provisions prescribed under the National Housing Bank Directions, 2010 for standard assets and provisions for non-performing assets, the Company has additionally provided âProvisions for âContingenciesâ to meet any contingencies in the future and to strengthen the balance sheet.

As per NHB Directions, 2010, the Company is carrying a total provision of RS.281.00 crores towards standard loans and RS.42.30 crores towards nonperforming loans. The Company is also carrying a sum of RS.101.98 crores in âProvisions for Contingenciesâ.

Resources

Over the years, the Company has been raising financial resources from multiple sources, both within and outside the country. The Treasury has consistently ensured raising of resources at most competitive cost to the Company. The team has worked innovatively to supply financial resources at the right price and on time.

There were some new initiatives taken during the year for raising financial resources;

- The Company has raised funds through zero coupon bonds.

- The Company has raised long term and shortterm bank term loans linked to external benchmark.

- The Company is planning issuance of masala bonds of USD 1000 million over a period of time. The funds will be raised at a suitable time in the current financial year.

During the year, the Company has raised resources of RS.26,500 crores from various sources such as non-convertible debentures, deposits, bank term loans, NHB refinance and commercial paper.

The outstanding borrowings are a judicious mix of fixed and floating rate borrowings as well as money raised from international institutions.

Non-Convertible Debentures (NCDs)

The Company has raised RS.8,954 crores of secured NCDs through private placements in twelve series issued during the year.

The Company has redeemed on maturity, secured NCDs of Series XVI amounting to RS.300 crores on July 20, 2017, Series XVIII amounting to RS.600 crores on October 21, 2017 and Series XIX amounting to RS.300 crores on January 24, 2018.

The outstanding balance of NCDs as on March 31, 2018 was RS.22,325 crores as against RS.13,172 crores in the previous year.

Subordinate debt

The Company has not raised subordinated debt during the year. Based upon the balance term of maturity as on March 31, 2018 an amount of RS.1,359 crores is considered as Tier II capital under NHB directions for the purpose of computation of capital adequacy ratio.

The NCDs and subordinate debts issued by the Company are listed on the wholesale debt segment of National Stock Exchange.

External Commercial Borrowings

The Company has so far raised USD 250 million in ECB from two multilateral lending institutions viz. IFC and ADB under affordable housing scheme of RBI. The balance outstanding as on March 31, 2018 was USD 223.75 million.

Deposits

The outstanding deposits (including inter corporate deposits) as at March 31, 2018 were RS.11,586 crores as against RS.9,987 crores (including inter corporate deposits) outstanding last year, registering a growth of 16%.

The growth of deposits in FY2017-18 was sluggish but deposits continues to be one of the major funding sources of the Company, contributing nearly 20% of the total loan assets. The deposits of the Company have been rated FAAA/Stable by CRISIL and CARE AAA by CARE, which means highest safety.

The Company has worked on strengthening of its distribution arms and use of technology for better flow of deposits and improved customer service. During the year, the NHB has permitted auto renewal of deposits and has relaxed guidelines for pre-mature withdrawal of deposits.

The Company has accepted public deposits as per NHB Directions, 2010 and as per the provisions of the Companies Act, 2013. The Company has paid/accrued interest on all the outstanding deposits on due dates. There has been no default on repayment of deposits or payment of interest thereon during the year.

Unclaimed Deposits and NCDs

Out of the deposits, which became due for repayment up to March 31, 2018, public deposits of RS.53.21 crores, including interest accrued and due relating to 2,643 depositors had not been claimed or renewed. The depositors have been intimated regarding the maturity of their deposits with a request to either renew or claim the deposits and subsequent reminders have been sent.

During the year, the Company has transferred an amount of RS.7.86 lacs to Investor Education and Protection Fund (IEPF) established by the Central Government under section 125 of the Companies Act, 2013. In terms of the said section, no claim would lie against the Company after transfer to IEPF.

As at March 31, 2018 there was no NCDs or interest thereon, remaining unclaimed or unpaid.

The total outstanding borrowings as on March 31, 2018 were RS.54,268 crores with the following composition;

Credit Rating NCDs

During the year, different series of NCD issuances were rated. The outstanding ratings are; CARE AAA, India Rating AAA, ICRA AA (stable) and CRISIL AA (stable). The rating indicates high safety.

Commercial Paper

CRISIL and CARE have rated commercial paper programme at CARE A1 . The rating indicates highest safety.

Capital Adequacy Ratio

The capital adequacy ratio (CRAR) as on March 31, 2018 was 16.67% (comprising tier I capital of 12.75% and tier II capital of 3.92%). The NHB has prescribed minimum CRAR of 12% of total risk weighted assets.

Investment in SLR

The Company has maintained its statutory liquid ratio (SLR) as stipulated by the NHB. The Company is having total SLR investments of RS.1,161.55 crores as on March 31, 2018. The Company has classified its SLR investments as per NHB Directions, 2010.

Human Resources

Human capital is the core asset of the Company. In order to keep pace with business growth, the Company has consistently hired right mix of people for its various verticals, having requisite talent and sound background.

Throughout the year, the Company has worked towards harnessing the skills of its human capital across all functions. The learning and development team of the Company has conducted programmes to enhance functional knowledge and to upgrade skills. It is also helping the Company to build critical talent, which would give competitive advantage in delivering critical results.

The Company has introduced multiple organisational development initiative to reinforce performance driven culture through performance management system. As per the survey conducted by âGreat Place to Workâ, the overall score of the Company has improved compared to the last year. The Company has performed better under most of the parameters.

The Company has offered employees stock option schemes (ESOPs) to its key employees and for other high performing mid-level employees, the Company has a long term incentive programme (LTIP).

The young talent is the future of the Company. The Company has been regularly hiring management trainees from reputed campuses. So far, the two batches hired in 2015 and 2016 have been absorbed in various verticals after extensive training. The third batch of management trainees were hired in May 2017 and is presently undergoing training to be absorbed in FY2018-19.

As on March 31, 2018, the Company had a total of 1,290 full time employees on its rolls. There were 34 employees employed throughout the year, who were in receipt of remuneration of RS.1.02 crores or more per annum.

In terms of the provisions of section 136(1) of the Companies Act, 2013 read with the said rule, the Directors Report is being sent to all the shareholders excluding the annexure indicating the list of above mentioned employees.

Any shareholder interested in obtaining a copy of the said annexure may write to the Company.

Further disclosures on managerial remuneration are provided in annexure 1 appended to the Directorsâ Report.

Facility Management

During the year, the Company has added over 97,000 sq. ft. area, for building new offices across the country. The overall office space available with the Company as on March 31, 2018 has increased to 3.21 lac sq. ft.

Customer Service and Technology

Customer service is core to the Company. In this direction, the Company has taken a number of initiatives with a promise of providing omni channel experience to the customers.

Our âcustomer service operationsâ are now ISO 9001:2015 certified. The Company has introduced non-branch/alternate channels of communication, which customers can use to interact and transact seamlessly. Through mobile application, the users can get information on loans and deposits and can avail multiple other services. Through loan application tracker, customers can track the step by step status of loan application.

The Company has started digitization of documents. Customers can get their loan documents images on various digital interfaces i.e. mobile app and the web portal.

The Company has introduced intelligent mailing solution for managing dispatch of physical communication through a robotic folder and inserter.

The Company has been constantly investing in upgrading technology and in acquiring new technology. The Company has developed state of the art digitization facility at NOIDA and Mumbai for digitization of security documents of the customers where scanned documents are stored on dedicated private cloud.

The Company is moving from physical verifications of customerâs documents to e-verification to facilitate underwriting process.

The Company has moved to digitized vender servicing and all the payments are processed and made using digital platform.

These steps have brought in efficiencies and cost savings to the Company.

Awards and Recognition

During the year, the Company has received following prestigious awards;

- PNB Housingâs IPO was awarded âIPO of the Yearâ by Finance Monthly Magazine (M & A Award).

- Won bronze award at Outdoor Advertising Awards 2017 in the financial services category and recognized for the innovative outdoor campaign executed during the IPO.

- Conferred as âBest Housing Finance Company of the Yearâ at ET Now Banking, Financial Services and Insurance Awards.

- Recognized as âSymbol of Excellence in the BFSI Sectorâ at The Economic Times Best BFSI Brands 2018.

- Awarded âHousing Finance Company of the Yearâ at the 10th Annual Estate Awards.

- Conferred as âLeading Housing Finance Company 2017â at National Awards for Best Housing Finance Companies.

- Awarded for âExcellence in Customer Relationâ at GIHED CREDAI Property Show 2017.

- Honored in the field of âIT Securityâ at CSO 100 Awards, organized by CSO 100 Award and IDG Security.

- Penguin based animated TV commercial has bagged the Gold Award at FICCIâs Best Animated Frames (BAF) Awards 2018.

Corporate Social Responsibility (CSR)

Companyâs CSR projects were aimed at empowering the underprivileged communities in education, skilling of construction workers and other projects.

The Company is running two major programmes; skilling of construction workers and day care centres for the children of construction workers. In FY2017-18, the Company has supported 32-day care centres and rolled out training programme to train nearly 8,000 construction workers. The workers were certified by Construction Skilling Council of India or Plumbing Council of India.

The Company in partnership with developers and NGOs, has established and supported day care centres at the construction sites for the children of construction workers. The programme was initiated with Mobile Creches and has now expanded to other partners to establish 32 new day care centres. In FY2017-18, the programme has reached out to nearly 3,500 children through its day care programme.

The Company has partnered with Vidya to support the operational cost of running two schools in Delhi providing formal education to 400 children coming from the underprivileged community.

During the year, the Company has spent a sum of RS.12.34 crores on various CSR activities. The annual report on CSR activities undertaken during the year forms part of annexure to the Boardâs Report.

Prevention, Prohibition and Redressal of Sexual Harassment of Women at the Workplace

Regulatory Compliance

During the year, National Housing Bank (NHB) has notified reduction in standard assets provisions on individual housing loans from 0.40% to 0.25% effective August 1, 2017. The NHB has also reduced risk weights on individual housing loans.

NHB has revised computation method of loan to value (LTV) ratio as a percentage with total outstanding in the account; âprincipal accrued interest other charges pertaining to the loanâ in numerator and the realizable value of the residential property mortgaged to the HFC in the denominator.

Accordingly, NHB has advised HFCâs to put in place a system for realistic valuation of properties. NHB guidelines state that the HFCâs need to have a Board approved policy for valuation of properties and annual valuations of NPAs. The Company has framed valuation policy effective January 1, 2018.

The other important guidelines issued by NHB were; valuation of investments and revised model code of conduct for direct selling agents (DSAs).

The Company has been complying with the guidelines and directions issued by the NHB on asset classification, accounting standards, income recognition, provisioning, capital adequacy, concentration of credit/ investments, credit rating etc. as amended from time to time.

The modified know your customer (KYC) guidelines, fair practice code and anti money laundering (AML) standards as notified by the NHB are available on the Companyâs website. The Company has also adopted the revised model code of conduct for direct selling agents and guidelines for recovery agents as stipulated by NHB.

Policies and Codes

As required in terms of Listing Obligation and Disclosure Requirement issued by the SEBI, the Company has adopted and placed following policies on its website;

(i) Insider trading policy, (ii) Related party policy, (iii) Whistle blower policy, (iv) Policy on preservation of documents, (v) Policy on archival of web disclosure, (vi) Dividend distribution policy, (vii) Policy on familiarization programme for independent directors, (viii) Policy on Board diversity, (ix) Code of conduct for non-Executive Directors, (x) Code of conduct for Executive Directors and senior management.

Investor Relations

During the year, the Company has entered into various indices viz BSE 200, Nifty 200, Nifty 500, Nifty Midcap 150, Nifty Mid Small Cap 400, Nifty Full Midcap 100 and Nifty Free float Midcap 100. The BSE has categorized PNB Housing script as Group âAâ from Group âBâ.

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

There is no information to disclose under the head âConservation of Energy and Technology Absorptionâ given in the above rules since the Company is engaged in providing housing loans. There were no foreign exchange earnings and the Company has incurred foreign exchange expenditure of RS.48.46 crores during the year.

Directors

Dr. Ram S Sangapure has resigned from the Board with effect from March 7, 2018 upon demitting the office of Executive Director in Punjab National Bank. Your Board wish to place on record his valuable contribution as member of the Board and on the Committees of the Board.

Mr. Sunil Mehta was appointed as Chairman and Non-executive Director of the Company with effect from May 12, 2017. Mr. Ashwani Kumar Gupta and Mrs. Shubhalakshmi Panse, were appointed as Independent Directors on the Board with effect from May 12, 2017 and July 7, 2017 respectively.

Mr. Jayant Kumar Dang was appointed as an Additional Director on the Board with effect from March 15, 2018. He has over 37 years of experience in banking, risk management, re-structuring, consulting etc. The Board recommends his appointment as an Independent Director in the forthcoming Annual General Meeting.

The necessary resolutions and his profile for reappointment has been included in the notice and in the explanatory statement of the notice convening the AGM.

The Company has received necessary declaration from each Independent Director under Section 149(7) of the Companies Act, 2013 (Act) that he/ she meets the criteria of independence laid down in the Act and SEBI (Listing Obligations and Disclosures Requirements), Regulations 2015.

Re-appointment of Directors

In accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company, Mr. Sunil Mehta is liable to retire by rotation at the ensuing Annual General Meeting (AGM). He is eligible for re-appointment. The necessary resolutions and his profile for reappointment has been included in the notice and in the explanatory statement of the notice convening the AGM.

Your directors recommend his re-appointment in the forthcoming AGM of the Company.

All the directors have confirmed that they are not disqualified from being re-appointed as directors in terms of Section 164 (2) of Companies Act, 2013.

Performance Evaluation and its Criteria

Commission to Independent Director

The Company considers the time and efforts put in by the Independent Directors in deliberations at the Board/ Committee meetings. They are remunerated by way of sitting fees paid for attending the meetings and through commission, as approved by the Board and shareholders of the Company. Details of commission and sitting fees paid to the Independent Directors for the year ended March 31st, 2018 are given in the form MGT-9.

Key Managerial Personnel

Mr. Jayesh Jain has resigned from the services of the Company as CFO with effect from January 6th, 2018. Mr. Kapish Jain was appointed by the Board as CFO with effect from February 9th, 2018.

Statutory Auditors

Messrs B R Maheshwari & Co LLP having registration no. 001035N were the Statutory Auditors for the financial year ended March 31st, 2018. The report of Statutory Auditors on annual accounts is enclosed along with Directorsâ Report.

Corporate Governance

A certificate from M/s B R Maheshwari & Co LLP, Statutory Auditors regarding compliance of the conditions of Corporate Governance as stipulated under SEBI (Listing Obligation and Disclosure Requirement) Regulations, 2015 is also attached to the Corporate Governance Report.

Directorsâ Responsibility Statement

In terms of the provisions of section 134 (3) (c) of the Companies Act, 2013 the Board of Directors Report that;

i. In preparation of annual accounts, the applicable accounting standards have been followed.

ii. The Company has selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as on March 31st, 2018 and the profit and loss account for the year ended March 31st, 2018.

iii. The Company has taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

iv. That the Company has prepared the accounts on a going concern basis.

v. The Company has laid down internal controls which are adequate and are operating effectively.

vi. The Company has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and are operating effectively.

Internal Financial Control

The Company has put in place adequate policies and procedures to ensure that the system of internal financial control commensurate with the size and nature of the Companyâs business.

Extracts of Annual Return (Form No. MGT 9)

The details forming part of the extracts of the Annual Return in Form MGT-9 has been attached as part of Directorsâ Report.

Particulars of loans, guarantees or investments made

The details of investments made by the Company are provided under note 12 and note 15 forming part of Annual Accounts of the Company for the year ended March 31st, 2018.

Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Companies Act, 2013 the Company has appointed M/s Preeti Pahwa & Associates a firm of Company Secretaries in practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as annexure to this report.

Particulars of contract or arrangements entered Material changes, details of subsidiaries and litigations

There has been no change in the nature of business of the Company. No material or significant order has been passed by the Regulator or Courts or Tribunals impacting the going concern status of the Company. The Company has a subsidiary âPHFL Home Loans and Services Limitedâ. The Company has been floated as a distribution arm for PNB Housing, offering doorstep services to the prospective customers

Acknowledgements

The Board of Directors thank the valued customers, shareholders, business partners and well-wishers for their wholehearted support.

The Directors place on record their appreciation and gratitude to depositors, debenture holders, shareholders, IFC, ADB, bankers, legal advisors, merchant bankers, registrar and transfer agents of the Company for their continued confidence and contribution to the growth of the Company.

Finally, the Directors express their appreciation for the dedication and commitment with which the employees of the Company at all levels have worked during the period.

For and on behalf of the Board

Dated: May 3, 2018 Sunil Mehta

Place: New Delhi Chairman

Mar 31, 2017

Directorsâ Report

The Directors welcome the extended family of shareholders and take pleasure in presenting the 29th Annual Report together with the Audited Accounts of the Company for the year ended March 31, 2017.

1. Financial Results

(Rs. in crores)

	As at March 31st, 2017	As at March 31st, 2016
Profit before tax	804.01	503.09
Less: Provision for Tax
- Current year	264.00	165.98
- Earlier years	-	1.35
- Deferred Tax	16.28	9.29
Profit After Tax	523.73	326.47
Add: Balance brought forward from the previous year	275.25	111.66
	798.98	438.13
Appropriation of Profits
Transfer to Special Reserve (including u/s 29C of NHB Act, 1987)	105.60	65.30
Transfer to General Reserve	52.39	48.97
Proposed Dividend	-	40.39
Dividend distribution Tax	-	8.22
Balance carried to Balance Sheet	640.99	275.25
	798.98	438.13

Income and expenditure

During the year, the Company earned total income of Rs.3907.85 crores as compared to Rs.2698.67 crores in previous year, recording a growth of 45%.

Total expenses, provisions and write offs during the year were Rs.3103.84 crores as compared to Rs.2195.58 crores in previous year, a growth of 42%.

Dividend

Your Directors are pleased to recommend a dividend of Rs.6.00 per share as compared to Rs.3.40 per share for the previous year.

The dividend payout ratio including dividend distribution tax for the year ended March 31, 2017 will be 22.84%.

Initial Public Offer

During the year under review, your Company completed its Initial Public Offering (IPO) of 3,87,19,309 equity shares of Rs.10/- each, aggregating to Rs.3,000 crores. The Issue constituted 23.37 % of the post issue paid-up equity share capital of the Company. The equity shares were offered at a price band of Rs.750/- to Rs.775/- and the Issue Price was fixed at Rs.775/per share. The issue price for the employees was fixed at Rs.700/- per share.

Your Directors would like to state with great pleasure that the public issue received an overwhelming response from the investor community and was subscribed by over 20 times, with the QIB portion getting oversubscribed by over 38 times, Non-Institutional portion by over 80 times and the Retail portion by over 1.33 times.

The shares were transferred to the successful allotees on November 3rd, 2016 and trading in shares commenced on November 7th, 2016 at the National Stock Exchange of India and the Bombay Stock Exchange.

Your Directors would like to sincerely thank the investing public, institutions, customers and business partners for their trust, faith and confidence in the Company and for making the issue a grand success.

Lending Operations

The year gone by was a year of challenges and opportunities. The biggest challenge on the domestic front was demonetisation of Rs.1000 and Rs.500 notes announced by the Prime Minister on November 8th, 2016. There was short term impact of demonetisation on the business operations in the third quarter but the Company was quick to recover its growth momentum in the fourth quarter. The quick remonetisation has thrown new opportunities for growth as more money has flown into the formal sector.

During the year, the Companyâs market position has further strengthened. The Company has maintained a healthy growth momentum in a tough economic environment. In terms of loan assets, the Company is the fifth largest Housing Finance Company in the country. With the right business model, governance structure, systems and operating framework to offer mark to market product proposition, Company is confident to deliver adequate shareholdersâ returns.

In order to cater to the mass housing segment, the Company has launched a new program âUnnati Home Loansâ to tap mass housing segment particularly in tier II and tier III cities. This initiative will give a boost to disbursements in affordable housing loan portfolio.

During the year, the Company has sanctioned loans amounting to Rs.32,225 crores in respect of 63,894 applications as compared to Rs.23,011 crores in respect to 43,040 applications in the previous year, recording a growth of 40% in sanction amount.

During the year, the Company has disbursed loans amounting to Rs.20,639 crores as compared to Rs.14,456 crores in the previous year, recording a growth of 43%. Out of total disbursements, Rs.14,192 crores loans were disbursed for housing and Rs.6,447 crores were disbursed for non housing purposes.

Loan Book

During the year, the Company sold loans amounting to Rs.3,377 crores under loan assignment route. This was necessitated to meet funding requirements in order to maintain a leverage of less than sixteen times of the net owned funds and also to meet requirements of capital to risk assets ratio (CRAR) as the Company awaited statutory approvals required for the IPO.

Loans outstanding (principal portion) as at March 31, 2017 were Rs.38,531 crores, recording a growth of 42% over the last year.

The total Assets Under Management (AUM) as at March 31, 2017 were Rs.41,491 crores, recording a growth of 51% over the previous year.

Distribution and Marketing

During the year, efforts were concentrated on further strengthening the distribution network by deepening presence in existing markets and expanding footprint in the new markets.

The Company has opened sixteen new branches during the year. These branches were opened in eleven existing locations and five new locations at Bhubaneshwar, Kanpur, Kolhapur, Rajkot and Madurai. As on March 31, 2017, Company has presence through 63 branches, 27 outreach locations, totalling to 90 distribution outlets in 60 cities.

Companyâs loan products are distributed through a strong in house team (RO Channel) and distribution tie-ups with the third parties (DMAs). The distribution channels only source loans and the Company has complete control over credit, legal and technical appraisals.

During the year, the Company focussed on both brand building and product promotion. The Company extensively used digital media for marketing and selectively used print, radio and television medium for brand building and product promotion. The Company participated in many exhibitions and fairs and for the first time, along with leading Developers of NCR sponsored âGhar Utsavâ, which was a huge success.

Sales and Distribution Subsidiary

Over the years, the in-house (RO Channel) has played a key role in sourcing of new business for the Company. The channel now brings almost 46% of new retail business. It is proposed to further strengthen the RO channel, by forming a wholly owned subsidiary of the Company with its employees engaged in the business of sourcing of loans and other allied services.

Underwriting

The Company has well qualified and trained underwriters who have significantly contributed in business expansion. They are ably supported by legal, technical and fraud control teams. As on March 31, 2017, the Company has eighteen loan processing hubs, seven of which are located at North Zone, five at West Zone and six at South Zone. These hubs perform credit underwriting, legal and technical appraisal of each retail loan.

Recoveries and Non-Performing Loans

The Company has built a robust recovery team across India, which is also supported by use of technology i.e. mobile application for loan recovery by the field teams. The Company has maintained low levels of delinquencies and NPAs.

The recovery performance is a reflection of robust underwriting quality, legal and technical appraisal of loans.

The gross non-performing assets were Rs.85.78 crores i.e. 0.22% of the outstanding loans (last year 0.22%) and net non-performing assets (after provision as per the NHB Directions) were Rs.59.00 crores i.e. 0.15% of outstanding loans (last year 0.14%).

Provisions

The Company has been building sound provisions on its loan assets over the years. These provisions are under the heads of standard assets provisions, provisions for non-performing assets, as prescribed under the National Housing Bank Directions, 2010. In addition, âProvisions for âContingenciesâ to meet any contingencies in the future and to strengthen the Balance Sheet.

As per the NHB Directions, 2010, the Company is carrying a total provision of Rs.193.97 crores towards standard loans and Rs.26.78 crores towards non-performing loans. The Company is also carrying a sum of Rs.39.48 crores in âProvisions for Contingenciesâ.

Resources

The Company has built a well-diversified borrowing mix of non-convertible Debentures (NCDs), refinance from NHB, Deposits, Commercial Papers and external commercial borrowings (ECB).

During the year, the Company has raised resources of Rs.25,627 crores from various sources.

The outstanding borrowings are a judicious mix of fixed and floating rate borrowings as well as money raised from international institutions; International Finance Corporation, Washington (IFC) and Asian Development Bank (ADB).

Secured Non-Convertible Debentures (NCDs)

The Company has raised Rs.4,592 crores of secured NCDs through private placements as under;

- 8.33% Series XXVII of Rs.300 crores, issued on June 1st, 2016.

- 8.47% Series XXVIII-A of Rs.1,464 crores, issued on July 1st, 2016.

- 8.65% Series XXVIII-B of Rs.753 crores, issued on July 1st, 2016

- 7.95% Series XXIX of Rs.800 crores, issued on September 19th, 2016.

- 7.91% Series XXX of Rs.250 crores, issued on September 29th, 2016.

- 7.46% Series XXXI of Rs.1,025 crores, issued on January 31st, 2017.

The company has redeemed on maturity, secured NCD of Series III amounting to Rs.100 crores on August 9th, 2016 and Series IV amounting to Rs.90 crores on March 30th, 2017.

The outstanding balance of secured NCDs as on March 31, 2017 was Rs.13,172 crores as against Rs.8,770 crores in the previous year.

Subordinate Debt

The Company has raised Rs.789 crores of unsecured subordinated debt through private placement of NCDs as under;

- 8.39% Series V of Rs.290 crores, issued on April 28th, 2016.

- 8.57% Series VI of Rs.499 crores, issued on July 26th, 2016.

The debt is subordinated to present and future senior indebtedness of the Company. Based upon the balance term of maturity as on March 31, 2017 an amount of Rs.1,399 crores is considered as tier II capital under the NHB Directions for the purpose of computation of capital adequacy ratio.

The NCDs and subordinate debts issued by the Company are listed on wholesale debt segment of the National Stock Exchange.

External Commercial Borrowings

During the year, the Company has raised External Commercial Borrowings (ECB) of USD 150 million from ADB for affordable housing scheme of the RBI.

The Company has so far raised USD 250 million in ECB from two multilateral lending institutions viz. IFC and ADB under affordable housing scheme of the RBI.

Deposits

Deposits are one of the major funding sources of the Company, contributing nearly 26% of the total loan assets. Over the last five years, the deposits have grown steadily with huge support from the depositors and deposit agents, who are instrumental in promoting Companyâs deposit products. The deposits of the Company have been rated FAAA/Negative by CRISIL and CARE AAA by CARE, which means highest safety.

Total outstanding deposits (including inter corporate deposits) as at March 31, 2017 were Rs.9,987 crores as against Rs.7,121 crores (including inter corporate deposits) outstanding last year, registering a growth of 40%.

Investment in SLR

The Company has maintained its Statutory Liquid Ratio (SLR) as stipulated by the NHB. The Company is having total SLR investments of Rs.961.55 crores as on March 31, 2017. The Company has classified its SLR investments as per the NHB Directions, 2010.

Unclaimed Deposits and NCDs

Out of the deposits, which became due for repayment up to March 31, 2017, public deposits of Rs.40.74 crores, including interest accrued and due relating to 2,541 depositors, had not been claimed or renewed. The Depositors have been intimated regarding the maturity of their deposits with request to either renew or claim the deposits and subsequent reminders have been sent.

During the year, the Company has transferred an amount of Rs.8.41 lakhs to Investor Education and Protection Fund (IEPF) established by the Central Government under section 125 of the Companies Act, 2013. In terms of the said section, no claim would lie against the Company after transfer to IEPF.

As at March 31, 2017 there was no NCDs or interest thereon, remaining unclaimed or unpaid.

The total outstanding borrowings as on March 31, 2017 were Rs.35,657 crores with the following composition;

Credit Rating NCDs

During the year, different series of NCD issuances were rated. The outstanding ratings are; CARE AAA, India Rating AAA, ICRA AA (outlook stable) and CRISIL AA (outlook negative). These ratings indicate high safety.

Commercial Paper

CARE has rated commercial paper program at CARE A1 . The rating indicates highest safety.

Capital Adequacy Ratio

The capital adequacy ratio (CRAR) as on March 31, 2017 was 21.62% (comprising Tier I capital of 16.48% and Tier II capital of 5.14%). The NHB has prescribed minimum CRAR of 12% of total risk weighted assets.

Human Resources

In line with Companyâs core value of âPeople Firstâ, the HR processes and initiatives were aligned for building a superior human capital and keeping the work force across levels engaged and motivated. Company has a young work force with an average age of 32 years, which is receding with induction of young talent and Management Trainees.

The Company had started with campus hiring program in 2015 as a cadre building exercise with an aim to groom in house talent. The first batch has already been absorbed and the second batch of 2016 will be absorbed in the current year. The recruitment of third batch has been completed and the on boarding will start from May 2017.

During the year, right mix of people with an objective to attract and on board best talent with sound background were hired across functions. Cross functional exposure and career enhancement opportunities were given to the internal talent pool.

The Company has introduced multiple organisational development initiative to reinforce performance driven culture through performance management system. All the eligible employees are taken through a detailed and diligent appraisal process based on which increments, incentives and promotions are given.

The Company undertakes various Learning and Development program for enhancing employeeâs functional knowledge and skills. After an extensive training need analysis at the beginning of the year, a detailed training calendar is prepared to strengthen required capability for achieving the organizational goals.

During the year, the Company was certified as a Great Place to Work by building a âHigh Trust, High Performance Cultureâ.

As on 31st March 2017, the Company had a total of 999 full time employees on its rolls. There were eight employees employed throughout the year, who were in receipt of remuneration of Rs.60 lakhs or more per annum. In accordance with the provisions of Rule 5.2 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of such employees are set out in annexure to the Directorsâ Report.

Further disclosures on managerial remuneration are provided in annexure appended to the Directorsâ Report.

Facility Management

The Company has standardized offices in look and feel and these offices are equipped with required facilities for the customers and for the employees. With the growth in business, all the old offices were either shifted to new and better locations in central business districts or were renovated.

During the year, the Company has added approximately 40,000 sq ft area in new and existing offices, taking the overall office space to 2.24 lac sq ft.

Technology

The Company had shifted all its operations to an integrated enterprise system solution (ESS) in FY 2015-16. During the year, few more upgradations were made in the ESS, major being, multiple reference rates, centralized banking through NACH, e-communication with the customers. The Company has also launched few new applications, such as, mobile application for the field collection team, v-connect for the business partners, mobile application for single window service to the customers.

Awards and Recognition

During the year, the Company has received following prestigious awards;

- PNB Housing was awarded for âExcellence in Financial Servicesâ at the Dainik Bhaskarâs India Pride Awards 2016-17.

- PNB Housing was recognized for âBrand Excellence in the NBFC categoryâ at The Economic Times Best BFSI Brands 2016.

- PNB Housing was recognised âCompany of the Yearâ award at the 9th Annual Estate Awards 2016 organized by Franchise India and ET Now.

- PNB Housing received award at the prestigious 7th CMO Asia Awards for âExcellence in Branding & Marketingâ.

- PNB Housing received the award, instituted by Learning & Organisational Development Roundtable, as a testament of the best practices followed by the Company while building new capabilities and leveraging human potential.

- PNB Housing awarded âCertificate of Meritâ as âHousing Finance Company of the Yearâ by CMO Asia at ABP News Presents Real Estate Awards.

- PNB Housing felicitated by International Finance Corporation (IFC) at the 2016 International Sustainable Finance Forum for its contribution in promoting green buildings initiative.

- PNB Housing accredited for the valuable contribution rendered to CREDAI Skilling program at the CREDAI Conclave 2017.

Corporate Social Responsibility (CSR)

Corporate Social Responsibility is an integral part of the governance and business practices at PNB Housing. Companyâs CSR projects are aimed at empowering the underprivileged communities in vital sectors such as education, skilling of construction workers under Kushal and many more projects that have made a meaningful impact in their lives and in their quest for a better future.

The Company has signed an MOU with CREDAI for upskilling of 4,500 construction workers towards our continued commitment to improve their lives.

In accordance with the provisions of section 135 of the Companies Act, 2013 and rules framed thereunder, the Company has constituted a CSR Committee that reviews the CSR policy, steers activities to be undertaken by the Company towards CSR, and formulate a monitoring mechanism to ensure implementation of projects and activities undertaken by the Company.

During the year, the Company has spent a sum of Rs.5.72 crores on various CSR activities and further an amount of Rs.3.24 crores is committed for various ongoing projects. The annual report on CSR activities undertaken during the year forms part of annexure to the Boardâs Report.

Regulatory Compliance

The Company has been complying with the guidelines and directions issued by the NHB on asset classification, accounting standards, income recognition, provisioning, capital adequacy, concentration of credit/investments, credit rating etc. as amended from time to time.

The modified know your customer (KYC) guidelines, Fair Practise Code and anti money laundering (AML) standards as notified by the NHB are available on the Companyâs website. The Company has also adopted the model code of conduct for Direct Selling Agents and Guidelines for Recovery Agents as stipulated by NHB.

During the year, the NHB has issued new directions on corporate governance called HFC-Corporate Governance (NHB) Directions 2016. The Company is in compliance with the new directions and has also made disclosures in the Annual Report as required under the notification. The NHB has issued a notification on Auditorsâ Report (NHB) Directions, 2016. The Statutory Auditors have submitted a report to the Board on the various items as required under the notification.

Prevention, Prohibition and Redressal of Sexual Harassment of Women at the Workplace

New Policies and Codes

During the year, the Company has adopted many new policies and codes, which were required in terms of Listing Obligation and Disclosure Requirement issued by the SEBI. These were; (i) Insider trading policy, (ii) Related party policy, (iii) Whistle blower policy, (iv) Policy on preservation of documents, (v) Policy on archival of web disclosure, (vi) Dividend distribution policy, (vii) Policy on familiarization program for independent directors, (viii) Policy on Board diversity, (ix) Code of conduct for non-Executive Directors, (x) Code of conduct for Executive Directors and senior management and (xi) Insider trading code. These policies and codes are available on the website of the Company.

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

There is no information to disclose under the head âConservation of Energy and Technology Absorptionâ given in the above rules since the company is engaged in providing housing loans. There were no foreign exchange earnings and the Company incurred foreign exchange expenditure of Rs.43.61 crores during the year.

Directors

Mrs. Usha Ananthasubramanian has resigned from the Board with effect from May 5th, 2017 after she was appointed MD and CEO of Allahabad Bank. Your Board wish to place on record the exemplary leadership she provided and her valuable contribution as Chairperson of the Board.

Mr. Devinjit Singh, non-executive director has resigned from the Board with effect from 26th May 2017. Your Board wish to place on record his role as member of the Board and his expert advice and guidance during the IPO as member of the IPO Committee of the Board.

During the year, Mr. Tejinder Singh Laschar, an independent director had resigned from the Board on January 12th, 2017. Your directors wish to place on record contribution made by him on the Board and on its various Committees.

Mr. Sunil Mehta, MD and CEO of Punjab National Bank was appointed Additional Director and Chairman of the Board with effect from May 12th, 2017.

Mr. Ashwani Kumar Gupta was appointed as Additional Director on the Board with effect from May 12th, 2017. He is a Chartered Accountant by qualification and has over three decades of experience in various fields.

Re-appointment of Directors

In accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company, Mr. Sunil Kaul is liable to retire by rotation at the ensuing Annual General Meeting (AGM). He is eligible for re-appointment.

The necessary resolutions and his profile for reappointment has been included in the notice and in the explanatory statement of the notice convening the AGM.

Your directors recommend his re-appointment in the forthcoming AGM of the Company.

All the directors have confirmed that they are not disqualified from being re-appointed as directors in terms of Section 164 (2) of Companies Act, 2013.

Statutory Auditors

Messrs B R Maheswari & Co having registration no. 001035N were the Statutory Auditors for the financial year ended March 31, 2017 who were appointed by the Comptroller and Auditor General of India. The report of Statutory Auditors on annual accounts is enclosed along with Directorsâ Report.

Corporate Governance

A certificate from B R Maheswari & Co. Statutory Auditors regarding compliance of the conditions of Corporate Governance as stipulated under SEBI (Listing Obligation and Disclosure Requirement) Regulations, 2015 is also attached to the Corporate Governance Report.

Directorsâ Responsibility Statement

In terms of the provisions of section 134 (3) (c) of the Companies Act, 2013 the Board of Directors Report that;

i. In preparation of annual accounts, the applicable accounting standards have been followed.

ii. The Company has selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2017 and the profit and loss account for the year ended March 31, 2017.

iv. That the Company has prepared the accounts on a going concern basis.

v. The Company has laid down internal controls which are adequate and are operating effectively.

vi. The Company has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and are operating effectively.

Extracts of Annual Return (Form No. MGT 9)

The details forming part of the extracts of the Annual Return in Form MGT-9 is given in annexure to the Directorsâ Report.

Secretarial Audit Report

Pursuant to the provisions of section 204 of the Companies Act, 2013 the Company has appointed M/s Preeti Pahwa & Associates a firm of Company Secretaries in practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as annexure to this report.

Particulars of loans, guarantees or investments made

The details of investments made by the Company are provided under note 12 and note 15 forming part of Annual Accounts of the Company for the year ended March 31, 2017.

Particulars of contract or arrangements entered Material changes, details of subsidiaries and litigations

Employees Stock Option Scheme (ESOS)

The ESOS Scheme of the Company was approved by the shareholders in the Extra General Meeting held on April 22nd, 2016. As per the scheme, 9,44,173 number of equity shares were allotted to 94 employees on May 11th, 2017 after the first anniversary of the scheme.

Modification in Articles of Association

The shareholders in the extra ordinary general meeting held on April 22nd, 2016 have approved modification in Articles of Association of the Company to align the new Articles with the provisions of new Companies Act, 2013 and SEBI (LODR), 2015.

The shareholders have also approved new Articles of Association of the Company, which have replaced the earlier Articles after listing of equity shares. The necessary formalities in this regard have been completed.

Acknowledgments

The Board of Directors thank the valued customers, shareholders, business partners and well-wishers for their wholehearted support.

The Directors place on record their appreciation and gratitude to Depositors, Debenture holders, IFC, ADB, Bankers, Legal advisors, Merchant Bankers, Registrar and Transfer Agents of the Company for their continued confidence and contribution to the growth of the Company and for making the IPO a grand success.

Finally, the Directors express their appreciation for the dedication and commitment with which the employees of the Company at all levels have worked during the period.

For and on behalf of the Board

Sunil Mehta

Chairman

Dated: May 27th, 2017

Place: New Delhi

Mar 31, 2016

Directorsâ Report to the Members

The Directors have the pleasure in presenting the 28th Annual Report together with the Audited Accounts of the company for the year ended 31st March, 2016.

1. Financial Performance (Rs. _{in crores})

	As on March 31st, 2016	As on March 31st, 2015
Profit/Loss before tax	503.09	295.77
Less: Provision for Tax
- Current year	165.98	89.80
- Earlier years	1.35	-
- Deferred Tax	9.29	9.86
Profit/Loss After Tax	326.47	196.11
Add: Balance brought for-ward from the previous year	111.66	11.50
	438.13	207.61
Appropriation of Profits
Transfer to Special Reserve (including u/s 29C of the NHB Act, 1987)	65.30	39.25
Transfer to General Reserve	48.97	25.00
Proposed Dividend	40.39	24.10
Dividend distribution Tax	8.22	4.91
CSR Activities	-	2.69
Balance carried to Balance Sheet	275.25	111.66
	438.13	207.61

INCOME

During the year, the Companyâs revenue from operations was Rs. 2,696.59 crores as compared to Rs.1,776.73 crores in previous year, recording a growth of 52%. Out of total revenue, interest income on loans was Rs.2,460.03 crores, a growth of 54%, investment income was Rs.107.35 crores, a reduction of 1% and other income was Rs.129.21 crores, a growth of 99%.

EXPENSES

Total expenses (except provisions and write offs) during the year were Rs.2,112.38 crores as compared to Rs.1,442.85 crores in previous year, a growth of 46%. Out of total expenses for the year, interest expenditure was Rs.1,860.29 crores (Rs.1,264.84 crores) and operating expenditure was Rs.252.09 crores (Rs.178.01 crores).

DIVIDEND

Your Directors are pleased to recommend a dividend of 34% (last year 30%) on enhanced equity share capital, post Rights Issue. Total dividend, including dividend distribution tax is Rs.48.61 crores which will be paid pro-rate on enhanced equity capital.

2. LOANS PERFORMANCE

During the year, the Company has sanctioned loans amounting to Rs.23,011 crores as compared to Rs.15,076 crores in the previous year, recording a growth of 52.63%.

During the year, the Company has disbursed loans worth Rs.14,456 crores as compared to Rs.9,440 crores in the previous year, recording a growth of 53.14%.

Out of total disbursements, Rs.10,284 crores loans were disbursed for housing and Rs.4,172 crores were disbursed for non-housing purposes.

Out of total loan sanctioned during the year, loans of Rs.795 crores are eligible under Golden Jubilee Rural Housing Scheme of Government of India, in respect to 3,891 units.

LOANS OUTSTANDING

Total loans outstanding as at March 31st, 2016 were Rs.27,177 crores, recording a growth of 62% over last year.

During the year under review, an amount of Rs.4,098 crores was received by way of scheduled re-payment and pre-payment of loan amount.

NEW BRANCHES

During the year, the Company has opened nine branch offices; one branch in North at Faridabad; four branches in West at Nasik, Surat, Thane and Vadodara; and four branches in South at Hyderabad, Thrissur, Vijayawada and Vishakhapatnam. The Company has a network of 47 branches.

The Company has 3 Zonal Offices at NOIDA, Mumbai and Bengaluru for Northern, Western and Southern regions respectively, which are co-located with three processing hubs. Each of the zonal offices are supported by regional hubs; 6 in North, 4 in West and 3 in South.

RECOVERIES AND NON-PERFORMING LOANS

The Company has maintained low NPAs and delinquencies.

Gross non-performing assets were Rs.59.81 crores i.e. 0.22% of outstanding loans and net non-performing assets (after provision as per the NHB Directions) were Rs.38.13 crores i.e. 0.14% of outstanding loans.

The total delinquency for both retail and nonretail loans as on March 31st, 2016 was 1.58%.

During the year, recovery proceedings under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) was initiated for 521 loan accounts amounting to Rs. 201.80 crores. The Company re-possessed properties in 99 accounts amounting to Rs. 70.47 crores.

PROVISIONS AND WRITE OFF

During the year, the Company has made a provision of Rs. 51.37 crores towards nonperforming and standard loans as per the NHB Directions, 2010. The Company has written off bad loans of Rs. 2.55 crores during the year.

As on March 31st, 2016, the Company is carrying total provision of Rs. 130.46 crores on standard loans. The Company is also carrying a provision of Rs. 21.68 crores on non-performing loans. The Company is thus carrying a total provision of Rs. 152.14 crores on loan assets.

4. RIGHTS ISSUE

During the year, the Board of Directors had made final call of Rs. 39/- per share (Rs. 37-balance face value and Rs. 36/- towards balance security premium). The 7,69,23,000 equity shares aggregating to Rs. 1,000 crores issued pursuant to the Rights issue now stands fully paid.

5. RESOURCES

During the year, the Company has raised Rs. 13,066 crores as under;

- Non-Convertible Debentures Rs. 5,015 crores.

- Deposits Rs. 3,726 crores.

- Commercial Paper Rs. 3,425 crores.

- Refinance from the National Housing Bank Rs. 900 crores.

GREEN BONDS

The Company has raised rupee denominated Green Bonds subscribed by International Finance Corporation, Washington. This was the first of its kind by any HFC in India. The Company has raised Rs. 500 crores on March 31st, 2016 with a coupon of 8.01% Series XXVI NCDs for 60 months maturity.

SECURED NON-CONVERTIBLE DEBENTURES (NCDs)

In addition to green bonds as mentioned above, the Company raised Rs. 4,305 crores of secured NCDs through private placements as under;

- 8.59% Series XX of Rs. 700 crores for 60 months maturity, issued on June 17th, 2015.

- 8.56% Series XXI of Rs. 700 crores for 60 months maturity, issued on July 28th, 2015.

- 8.23% Series XXII of Rs. 1,125 crores for 42 months maturity, issued on October 9th, 2015.

- 8.19% Series XXIII of Rs. 500 crores for 60 months maturity, issued on November 9th, 2015.

- 8.36% Series XXIV of Rs. 780 crores for 42 months maturity, issued on January 12th, 2016.

- 8.33% Series XXV of Rs. 500 crores for 65 months maturity, issued on February 3rd, 2016.

The outstanding balance of secured NCDs as on March 31st, 2016 was Rs. 8,770 crores as against, Rs. 3,965 crores in the previous year.

SUBORDINATE DEBT

The Company raised Rs. 210 crores of unsecured subordinated NCDs through private placement as under;

- 8.42% Series IV of Rs. 210 crores for 120 months maturity, issued on January 18th, 2016.

The debt is subordinated to present and future senior indebtedness of the Company. Based upon the balance term of maturity as on March 31st, 2016 an amount of Rs. 610 crores is considered as Tier II capital under the NHB Directions for the purpose of computation of capital adequacy ratio.

The Company has redeemed on maturity, un secured NCDs Series I of Rs. 100 crores on March 22nd, 2016.

The NCDs and subordinate debts issued by the Company are listed on wholesale debt segment of National Stock Exchange.

DEPOSITS

The total outstanding deposits as at March 31st, 2016 were Rs. 7,115.85 crores (including inter corporate deposits) as against Rs. 4,897.43 crores (including inter corporate deposits) outstanding last year, registering a growth of 45%.

UNCLAIMED DEPOSITS AND NCDs

Out of the deposits, which became due for repayment up to March 31st, 2016, deposits of Rs. 45.57 crores, including interest accrued and due relating to 2,952 depositors had not been claimed or renewed.

Depositors have been intimated regarding the maturity of their deposits with request to either renew or claim the deposits and subsequent reminders have been sent.

During the year, the Company has transferred an amount of Rs. 2.97 lacs to Investor Education and Protection Fund (IEPF) established by the Central Government under section 125 of the Companies Act, 2013. In terms of the said section, no claim would lie against the Company after transfer to IEPF.

As at March 31st, 2016 there was no NCDs or interest thereon, remaining unclaimed or unpaid.

6. CREDIT RATING

DEPOSITS

CRISIL has revised credit rating outlook of fixed deposit programme from FAAA/stable to FAAA/Negative.

NCDs

During the year, different series of NCD issuances were rated. The outstanding ratings are; CARE AAA, India Rating AAA, ICRA AA (outlook negative) and CRISIL AA (outlook negative).

COMMERCIAL PAPER

CARE has rated commercial paper programme at CARE A1 .

All the above ratings indicate very high to highest safety for the various instruments issued by the Company to the investors.

7. REGULATORY COMPLIANCE

The Company has been complying with the guidelines and directions issued by the NHB on asset classification, accounting standards, income recognition, provisioning, capital adequacy, concentration of credit/investments, credit rating etc. as amended from time to time.

The know your customer (KYC) guidelines, fair practice code and anti money laundering (AML) standards as notified by the NHB are available on the Companyâs website. The Company has also adopted the model code of conduct for direct selling agents and guidelines for recovery agents as stipulated by the NHB.

8. CAPITAL ADEQUACY RATIO

The Capital Adequacy Ratio (CRAR) as on March 31st, 2016 was 12.70% (comprising Tier I capital of 9.04% and Tier II capital of 3.66%).

The NHB has prescribed minimum CRAR of 12% of total risk weighted assets.

9. INVESTMENT IN SLR

The Company has maintained its Statutory Liquid Ratio (SLR) as stipulated by the NHB. The Company is having total SLR investments of Rs. 895.79 crores as on March 31st, 2016. The Company has classified its SLR investments as per the NHB Directions, 2010.

10. RISK MANAGEMENT FRAMEWORK

The Company has adopted risk management framework for risk assessment associated with its business and risk management. The Board has constituted a Risk Management Committee of four directors. The Company will shortly frame risk management policy under the guidance of Risk Management Committee.

The Company has a Board approved asset liability management (ALM) policy, which lays down mechanisms for assessment of various types of risks and altering the asset-liability portfolio in a dynamic way to manage such risks. There is an on-going monitoring of the maturity profile of assets and liabilities by asset liability management committee (ALCO) - a strategic decision making body constituted by the Board, to mitigate the risks arising from cash flow mismatches, comprising of the Managing Director and other senior functionaries.

11. HUMAN RESOURCES

The human capital of the Company is its core capital. âPeople Firstâ is Companyâs motto. The human capital has enabled the Company to sustain high growth. We aim to become one of the most admired housing finance company, which is customer-focused, performance-driven and future-ready.

The human capital of the Company has been developed through accumulation of knowledge, skills, abilities, experience, intelligence, judgment, and wisdom. Company impart structured training programmes.

The Company has promoted performance driven culture through formal rewards and recognition schemes and various other employee engagement activities. The Company has employed talent through an efficient recruitment program with individuals having the right skill sets and attitude.

In order to meet business requirement, fresh hiring were made across functions. As on March 31st, 2016, the company had a total of 752 full time employees on its rolls.

Company had five employees as at March 31st, 2016 employed throughout the year who were in receipt of remuneration of Rs. 60 lacs or more per annum. In terms of provisions of section 197 of the Companies Act, 2013 read with Companies (Particulars of Employees) Rules, 1975, as amended, the name and other particulars of such employees are set out in annex to the Directorsâ Report.

12. AWARDS AND RECOGNITION

During FY2015-16, the Company achieved few prestigious awards as under;

- PNB Housing was felicitated for âOutstanding Contribution to CSRâ at the CREDAI Conclave 2015 by Honâble Union Minister Shri Rajiv Pratap Rudy.

- PNB Housing received the âBest Apprenticeship/On the Job training programâ Gold Award at the 7th Annual TISS Leapvault CLO Awards.

- PNB Housing awarded for contribution towards CSR at Dainik Bhaskarâs India Pride Awards 2015-16

13. CORPORATE SOCIAL RESPONSIBILITY (CSR)

In accordance with the provisions of section 135 of the Companies Act, 2013 and rules framed there under the Company has constituted a CSR Committee of four directors; The Board has approved CSR policy which has been uploaded on Companyâs website.

The CSR Committee reviews the CSR policy, indicate activities to be undertaken by the Company towards CSR activities, and formulate a monitoring mechanism to ensure implementation of projects and activities undertaken by the Company.

During the year, the Company has spent a sum of Rs. 2.72 crores on various CSR activities. The annual report on CSR activities undertaken during the year forms part of Annexure âAâ to the Boardâs Report.

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

15. CORPORATE GOVERNANCE

The Company has been complying with the standards of corporate governance required under the Companies Act. The Board discharges the duties and responsibilities as required under the applicable statute(s) including the Companies Act.

BOARD COMPOSITION

The Board of Directors comprise of ten directors, who are well experienced and professional in their own fields. The Board has five independent directors and one woman director. Only Managing Director is the Executive Director. The independent directors have confirmed that they satisfy the criteria prescribed for an independent director as per provisions of section 149(6) of the Companies Act, 2013. None of the directors have any pecuniary relationships or transactions with the Company. None of the directors are related to each other.

The Board has a formal schedule of matters reserved for its consideration and decision, apart from legally required matters. During the year, the Board had met nine times.

BOARD COMMITTEES

The Board is assisted by various committees; Audit Committee, Nomination and Remuneration Committee, Corporate Social responsibility Committee and Credit Committee. The Board has constituted two new committees; Stakeholders Relationship Committee and Risk Management Committee on May 12th, 2016.

The Board has also constituted an IPO Committee to take decisions on IPO related matters.

All the committees of the Board are in conformity with the Companies Act, 2013 and also Listing Obligation and Disclosure Requirements, 2015 (LODR).

AUDIT COMMITTEE

The Board has re-constituted the Audit Committee on May 12th, 2016. It comprises three independent directors; Dr Gourav Vallabh, Shri Nilesh S Vikamsey and Shri R Chandrasekaran. The Board has approved the new Charter for the Audit Committee as required under section 177 of the Companies Act, 2013 which is also in conformity with Regulation 18 of SEBI (LODR) Regulation, 2015.

During the year, the Audit Committee met four times.

NOMINATION AND REMUNERATION COMMITTEE (NRC)

The Board has re-constituted the NRC on May 12th, 2016. It now comprises four directors; Shri Shital Kumar Jain, Shri Nilesh S Vikamsey, independent directors, Dr Ram S Sangapure and Shri Sunil Kaul. The powers role and terms of reference of NRC is as required under section 178 the Companies Act, 2013 which is also in conformity with SEBI (LODR) Regulation, 2015.

During the year, the NRC met six times.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE (CSR)

The Board has re-constituted the CSR Committee on May 12th, 2016. It now comprises four directors; Shri R Chandrasekaran, independent director, Dr Ram S Sangapure, Shri Sunil Kaul and Shri Sanjaya Gupta. The CSR Committee recommends CSR policy to the board and is responsible for implementation of CSR policy approved by the Board.

During the year, the CSR Committee met three times.

CREDIT COMMITTEE (CCB)

It comprises of three directors; Shri Shital Kumar Jain, Shri Devinjit Singh and Shri Sanjaya Gupta. The committee sanctions loan proposals as per authorities delegated by the Board and also evaluates the loan portfolio and recovery performance of the Company.

During the year, the CCB met twenty one times.

STAKEHOLDERS RELATIONSHIP COMMITTEE

It comprises of three directors; Shri Devinjit Singh, Dr Ram S Sangapure and Shri Sanjaya Gupta.

RISK MANAGEMENT COMMITTEE

It comprises of four directors; Dr Gourav Vallabh, Shri Shital Jumar Jain, Shri Sunil Kaul and Shri Sanjaya Gupta.

MEETING OF INDEPENDENT DIRECTORS

The independent directors met on May 12th, 2016 without the presence of non-independent directors. The independent directors evaluated the performance of non-independent directors and of the Board during the year and quality of board performance, timeliness of flow of information with the Board.

NEW POLICIES

The Board in compliance with SEBI (LODR), 2015 has framed policies on Vigil Mechanism, Code of Conduct for Senior Management and Executive Directors, Code of Conduct for Independent Directors and Materiality Policy of the Company.

16. BOARD OF DIRECTORS

Smt. Usha Ananthasubramanian, who is MD & CEO of Punjab National Bank took over as Chairperson of the Board on August 26th, 2015.

- Shri Gauri Shankar, resigned from the Board on August 26th, 2015.

- Smt. Kalpana Gupta, resigned from the Board on October 7th, 2015.

- Shri Pavan Kumar Gupta, an independent director resigned from the Board on May 16th, 2016. He was member of Audit Committee and Nomination and Remuneration Committee of the Board.

Your directors wish to place on record contributions made by these directors on the Board and its various Committees.

NEW DIRECTORS

- Shri R Chandarsekaran, who is executive vice chairman of Cognizant India was appointed as an independent director on the Board by the shareholders on October 7th, 2015.

- Shri Nilesh S Vikamsey, chartered accountant, who is senior partner with Khimji Kunverji & Co was appointed as an independent director on the Board by the shareholders on April 22nd, 2016.

- Dr Gourav Vallabh, who is professor of management was appointed as an independent director on the Board by the shareholders on April 22nd, 2016.

Your directors welcome appointment of four new directors on the board and the Company will benefit a lot through their rich and wide experience in diverse fields.

RE-APPOINTMENT OF DIRECTORS

Necessary resolutions for appointment/re appointment of directors have been included in the notice convening the ensuing Annual General Meeting and details of appointment/ re-appointment of directors have been mentioned in the explanatory statement of the notice.

Your directors recommend their reappointment in the forthcoming Annual General Meeting of the Company.

All the directors have confirmed that they are not disqualified from being appointed/ re-appointed as directors in terms of Section 164 of Companies Act, 2013.

17. DISCLOSURE ON MANAGERIAL REMUNERATION

Details of Managerial remuneration as required under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given as per Annexure B to this report.

18. STATUTORY AUDITORS

During the year, the Comptroller and Auditor

General of India has appointed Messrs B R Maheshwari & Co having registration no. 001035N as statutory auditors for the financial year ended March 31st, 2016. The report of statutory auditors on annual accounts is enclosed along with Directorsâ Report.

19. RE-VIEW OF ACCOUNTS BY C& AG

The annual accounts for the year ended March 31st, 2016 were reviewed by Comptroller and Auditor General of India (C & A G). The C & A G after review has not made any comment on accounts for the year 2015-16.

20. DIRECTORSâ RESPONSIBILITY STATEMENT

In terms of the provisions of section 134 (3) (c) of the Companies Act, 2013 the Board of Directors Report that;

i. In preparation of annual accounts, the applicable accounting standards has been followed.

ii. Company has selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as on March 31st, 2016 and the profit and loss account for the year ended March 31st, 2016.

iii. Company has taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

iv. That the Company has prepared the accounts on a going concern basis.

v. Company has laid down internal controls which are adequate and are operating effectively.

vi. Company has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and are operating effectively.

21. EXTRACTS OF ANNUAL RETURN (FORM NO. MGT 9)

The details forming part of the extracts of the Annual Return in Form MGT-9 is given in Annexure âBâ to this Report.

22. SECRETARIAL AUDIT REPORT

23. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE

The details of investments made by the Company are provided under note 12 and note 15 forming part of Annual Accounts of the Company for the year ended March 31st, 2016.

24. PARTICULARS OF CONTRACT OR ARRANGEMENTS ENTERED INTO WITH RELATED PARTIES

During the year, the Company paid a commission of Rs. 1.30 crore to Destimoney Enterprises Limited for the business sourced. The Company has renewed lease of its registered office with Punjab National Bank.

25. MATERIAL CHANGES, DETAILS OF SUBSIDIARIES AND LITIGATIONS

The Company does not have any subsidiary.

26. EMPLOYEES STOCK OPTION SCHEME (ESOS)

The Board of Directors in its meeting held on March 19th, 2016 has approved 38,07,690 options constituting 3.00% of the share capital to the existing employees and 3,80,769 options constituting 0.30% of the share capital for new joinees and promotions. The ESOS Scheme was subsequently approved by the shareholders in the Extra General Meeting held on April 22nd, 2016.

27. MODIFICATION IN MEMORANDUM OF ASSOCIATION

The shareholders in the extra ordinary general meeting held on April 22nd, 2016 have approved increase in the Authorized Share Capital of the Company to Rs. 500. The necessary formalities in this regard have been completed.

The shareholders have also approved addition to clause 41 in âObjects incidental to attainment of main objectsâ.

28. MODIFICATION IN ARTICLES OF ASSOCIATION

The shareholders have also approved new Articles of Association of the Company, which

will replace the existing Articles after listing of equity shares. The necessary formalities in this regard have been completed.

29. ACKNOWLEDGEMENTS

The Board of Directors thank the valued customers, shareholders, business partners and well-wishers for their wholehearted support.

The Board acknowledge with gratitude the advice, guidance and support of Government of India, Reserve Bank of India, the National Housing Bank and other statutory bodies/departments.

The Directors place on record their appreciation and gratitude to all the Bankers of the Company, Depositors and Debenture holders for their continued confidence and contribution to the growth of the Company.

Finally, the Directors express their appreciation for the dedication and commitment with which the employees of the Company at all levels have worked during the period.

For and on behalf of the Board

Usha Ananthasubramanian

Chairperson

Dated: August 3rd, 2016

Place: New Delhi

Mar 31, 2015

Directors'' Report to the Members

The Directors have the pleasure in presenting the 27th Annual Report together with the Audited Accounts of the company for the year ended 31st March, 2015.

1. FINANCIAL PERFORMANCE

Rs. in crores

	As on March 31st, 2015	As on March 31st, 2014
Profit/Loss before tax	295.77	175.74
Less: Provision for Tax
- Current year	89.80	50.00
- Earlier years	-	0.65
- Deferred Tax	9.87	(2.35)
Profit/Loss After Tax	196.11	127.44
Add: Balance brought for-ward from the previous year	11.50	12.21
	207.61	139.65
Appropriation of Profits
Transfer to Special Reserve (including u/s 29C of NHB Act, 1987)	39.25	25.55
Transfer to General Reserve	25.00	85.00
Proposed Dividend	24.10	15.04
Dividend distribution Tax	4.91	2.56
CSR Activities	2.69	-
Balance carried to Balance Sheet	111.66	11.50
	207.61	139.65

Income

During the year, the Company''s revenue from operations was Rs.1,776.73 crores as compared to Rs.1,116.02 crores in the previous year, recording a growth of 59%. Out of the total revenue, interest income on loans was Rs.1,597.64 crores, a growth of 60%, investment income was Rs.108.50 crores, a growth of 43% and other income was Rs.70.59 crores, a growth of 80%.

Expenses

Total expenses (except provisions and write offs) during the year were Rs.1,442.85 crores as compared to Rs.909.84 crores in the previous year, a growth of 59%. Out of total expenses for the year, interest expenditure was Rs.1,264.84 crores (Rs.801.15 crores) and operating expenditure was Rs.178.01 crores (Rs.108.69 crores).

2. DIVIDEND

Your Directors are pleased to recommend a dividend of 30% (last year 30%) on enhanced equity share capital, post Rights Issue. Total dividend, including dividend distribution tax is Rs.29.01 crores which will be paid pro-rate on enhanced equity capital.

3. LOANS PERFORMANCE

During the year, the Company has sanctioned loans to more than 27,000 customers amounting to Rs.15,076 crores as compared to over 13,000 customers amounting to Rs.8,840 crores in the previous year, recording a growth of 107% in sanction number and 71% in sanction amount.

During the year, the Company has disbursed loans of Rs.9,440 crores as compared to Rs.5,500 crores in the previous year, recording a growth of 72%.

Out of total disbursements, Rs.6,510 crores loans were disbursed for housing and Rs.2,930 crores were disbursed for non-housing purposes. Cumulative sanctions and disbursements as on 31st March, 2015 were Rs.38,533 crores and Rs.26,216 crores respectively.

Out of total loan sanctioned during the year, loans of Rs.228 crores are eligible under Golden Jubilee Rural Housing Scheme of Government of India, in respect to 574 units.

Loans Outstanding

Total loans outstanding as at 31st March, 2015 were Rs.16,819 crores, recording a growth of 59% over the last year. Loan outstanding comprises Rs.10,357 crores for individual housing loan, Rs.1,279 crores for construction finance and Rs.5,183 crores for non-housing loans.

During the year, the Company has securitized housing loan portfolio of Rs.500 crores. The total Assets Under Management (AUM) as on 31st March, 2015 were Rs.17,297 crores.

During the year under review, an amount of Rs.3,213 crores was received by way of scheduled re-payment and pre-payment of loan amount.

The average loan outstanding per individual customer as on 31st March, 2015 was Rs.25 lac. The average ticket size for fresh loans sanctioned during the year was Rs.56 lac.

Branch Network

During the year, the Company has opened six intra city branch offices; two in Bengaluru, one each at Chennai, Delhi, Pune and Thane. The Company has a network of 38 branches.

During the year, the Company opened 10 more Regional Hubs at Ahmedabad, Chennai, Dehradun, Hyderabad, Kolkatta, Kochi, Lucknow, New Delhi, Pune and Thane. The Company has three zonal hubs; North (at NOIDA), West (at Mumbai) and South (at Bengaluru). The zonal hubs are supported by thirteen regional hubs; 6 in North, 4 in West and 3 in South.

Recoveries and Non-Performing Loans

The Company has further brought down gross non-performing assets from 0.32% to 0.20% and net non-performing assets from 0.16% to 0.07%. In terms of absolute amount, gross nonperforming assets as on 31st March, 2015 were Rs.34.14 crores and net non-performing assets (after provision as per NHB Directions) were Rs.11.37 crores.

The total delinquencies (one day past due) were 1.19%, which is lowest ever for the Company.

During the year, recovery proceedings under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) was initiated for 467 loan accounts amounting to Rs.84.67 crores. The Company re-possessed properties in 57 accounts amounting to Rs.28.33 crores.

Provisions and Write Off

During the year, the Company has made a provision of Rs.37.08 crores towards nonperforming and standard loans as per NHB Directions, 2010. The Company has written off bad loans of Rs.1.02 crores during the year.

As on 31st March, 2015, the Company is carrying total provision of Rs.78 crores on standard loans. The Company is also carrying a provision of Rs.22.77 crores on non-performing loans. The Company is thus carrying a total provision of Rs.100.77 crores on loan assets.

4. RIGHTS ISSUE

The Board of Directors had approved Rights

Issue of 7,69,23,000 equity shares of Rs.10/- each at a premium of Rs.120/- per share aggregating to Rs.1,000 crore on 8th August, 2013. The shares were allotted to existing shareholders; Punjab National Bank (PNB) and Destimoney Enterprises Private Limited (DEPL) in the ratio of 51:49 respectively.

The Company had allotted 3,92,30,700 equity shares to PNB in FY 2013-14 and 3,76,92,300 equity shares to DEPL in FY 2014-15.

The Company has so far called Rs.7/- per share in the Rights Issue along with proportionate premium of ''84/- per share aggregating to Rs.700 crores.

5. RESOURCES

Some of the major highlights for the year are-

- Company raised funds through External Commercial Borrowing (ECB) of USD 100 million under affordable housing route.

- Company securitized Home Loan Assets of Rs.500 crores to PNB.

- Company raised short term funds through Commercial Paper to meet disbursement requirements.

- There was special focus on retail deposits of the Company which helped in replacing costly credit lines.

- Company has retired high cost Bank Borrowings during the year.

- Company has raised Tier-II bonds of Rs.200 crores.

During the year, the Company borrowed Rs.12,016 crores from various sources as under;

Deposits

During the year, the Company has raised deposits of Rs.3,769 crores including renewals.

The total outstanding deposits (including unclaimed deposits) as at 31st March, 2015 were Rs.4,897 crores as against Rs.1,712 crores outstanding last year.

The Company has accepted deposits as per NHB Directions, 2010 and as per the provisions of the Companies Act, 2013. The Company has paid/accrued interest on all the outstanding deposits on due dates. There has been no default on repayment of deposits or payment of interest thereon during the year.

Unclaimed Deposits

Out of the deposits, which became due for repayment up to 31st March, 2015, deposits of Rs.8.79 crores, including interest accrued and due relating to 921 depositors had not been claimed or renewed.

Depositors have been intimated regarding the maturity of their deposits with request to either renew or claim the deposits and subsequent reminders have been sent.

During the year, the Company has transferred an amount of Rs.3.37 lacs to Investor Education and Protection Fund (IEPF) established by the Central Government under section 125 of the Companies Act, 2013. In terms of the said section, no claim would lie against the Company after transfer to IEPF.

Non-Convertible Debentures (NCDs)

The Company raised Rs.900 crores of secured NCDs and Rs.200 crores of unsecured subordinated NCDs through private placement as under;

- 9.05% Series XVIII of Rs.600 crores with 3 years maturity, issued on 21st October, 2014.

- 8.60% Series XIX of Rs.300 crores with 3 years 2 months maturity, issued on 24th November, 2014.

- 8.70% unsecured subordinated NCDs of Rs.200 crores with 10 years maturity, issued on 24th November, 2014.

The Company also redeemed on maturity, secured NCDs Series IX A of Rs.75 crores on maturity on 9th November, 2014.

All NCDs issued by the Company are listed on wholesale debt segment of National Stock Exchange.

The outstanding balance of NCDs as on 31st March, 2015 was Rs.4,465 crores as against Rs.3,450 crores in the previous year.

Bank Borrowings

During the year, the Company has raised term loans of Rs.1,611 crores from commercial banks for onward lending operations.

External Commercial Borrowings (ECB)

During the year, the Company has raised ECB of USD 100 million (equivalent to Rs.611 crores) from IFC Washington and ANZ Bank.

NHB Refinance

During the year, the Company has availed refinance of Rs.1,010 crores under various schemes of NHB.

Commercial Paper

During the year, the Company has raised short term funds of Rs.3,975 crores through Commercial paper. After repayments on maturity, the net amount outstanding as on 31st March, 2015 was Rs.1,600 crores.

6. CREDIT RATING

Deposits

CRISIL has maintained credit rating on fixed deposit programme at FAAA/stable, which means highest safety.

NCDs

CARE has upgraded rating of NCDs programme at CARE AAA. CRISIL has maintained credit rating of NCDs programme to CRISIL AA /stable outlook. ICRA has rated NCDs at ICRA AA /positive outlook.

Commercial Paper

CRISIL has reaffirmed rating on commercial paper programme at CRISIL A1 .

All the above ratings indicate very high to highest safety for the various instruments issued by the Company to the investors.

7. BUSINESS OUTLOOK

The year gone by was the year of stabilization for the country''s economy. The wholesale and retail inflation has started to settle down, globally the crude oil price has come down significantly and country''s GDP has grown by over 7.4% (as per revised base). The Indian rupee was stable throughout the year as compared to huge volatility seen in FY 2013-14. The stability of crude oil prices and INR has enabled the government to manage its current account deficit much better.

The Reserve Bank of India has reduced the repo rate on two occasions. Due to cumulative impact of reduced inflation and reduction in repo rates by RBI, the interest rates have started to come down. The overall outlook is optimistic and there are signs of growing investments.

With the economy starting to perform better, the real estate sector is also expected to come out of slow growth. The Government is pushing for infrastructure growth and housing for all by the year 2022. There are optimistic signs for the economy and financial sector. The Company expects to maintain high growth trajectory in the current year as well.

8. REGULATORY COMPLIANCE

The Know Your Customer (KYC) guidelines, Fair Practice Code and Anti Money Laundering (AML) standards as notified by the NHB are available on the Company''s website. The Company has also adopted the model code of conduct for Direct Selling Agents and Guidelines for Recovery Agents as stipulated by NHB.

During the year, NHB has advised HFCs to create Deferred Tax Liability (DTL) on the Special Reserves created and maintained under section 36 (1) (viii) of the Income Tax Act, 1961. Accordingly, the Company has created DTL on the amount transferred to Special Reserves during FY 2014-15. Further, as permitted by NHB, the Company has created DTL equivalent to 25% of Special Reserves created up to 31st March, 2014 directly from the General Reserves.

During the year, the NHB has issued fresh clarifications on pre-payment charges on floating rate housing and non-housing loans. The Company has complied with these directions from the date of its issuance.

9. CAPITAL ADEQUACY RATIO

The Capital Adequacy Ratio (CRAR) as on 31st March, 2015 was 13.76% (comprising Tier I capital of 10.41% and Tier II capital of 3.35%). The NHB has prescribed minimum CRAR of 12% of total risk weighted assets.

10. INVESTMENT IN SLR

The Company has maintained its Statutory Liquid Ratio (SLR) as stipulated by the NHB.

The Company is having total SLR investments of Rs.465.34 crores as on 31st March, 2015. The Company has classified its SLR investments as per NHB Directions, 2010.

11. RISK MANAGEMENT FRAMEWORK

The Company has broad risk management framework for risk assessment associated with its business and risk management. The formal risk management policy of the Company will be implemented in FY 2015-16 after approval by the Board.

The Board has approved Company''s asset liability management (ALM) policy, which lays down mechanisms for assessment of various types of risks and altering the asset-liability portfolio in a dynamic way to manage such risks. There is an on-going monitoring of the maturity profile of assets and liabilities by Asset Liability Management Committee (ALCO) - a strategic decision making body constituted by the Board, to mitigate the risks arising from cash flow mismatches, comprising of the Managing Director and other senior functionaries.

12. HUMAN RESOURCES

''People First'' is Company''s motto. The Company is in a service oriented industry where human element is most important. In order to meet growing manpower needs, the Company has employed talent through its efficient recruitment program with individuals having the right skill sets and attitude.

Company has a contemporary Performance Management and Total Rewards program, which has consistently helped in achievement of organizational goals. The structured alignment of individual, functional and organizational goals has succeeded in fostering a high performance work culture.

In order to meet business requirement, fresh hiring were made across functions. As on 31st March, 2015, the company had a total of 631 full time employees on its rolls.

13. PARTICULARS OF EMPLOYEES

Company had only one employee as at 31st March, 2015 employed throughout the year who was in receipt of remuneration of Rs.60 lacs or more per annum.

14. CHANGES IN KEY MANAGEMENT PERSONNEL (KMP)

During the year, Mr. Jayesh Jain has joined the Company as Chief Financial Officer (CFO) with effect from 22nd August, 2014.

15. AWARDS AND RECOGNITION

During FY 2014-15, the Company was the proud recipient of the following two recognitions.

âBest Practices in Talent Managementâ:

PNB HFL was recognized and awarded with National award for ''Best Practices in Talent Management'' for the year 2014 by Delhi Management Associations (DMA) & Thomas International.

âMicrosoft recognizing PNB HFL for early adoption of Cloud Servicesâ

Microsoft recognized PNB HFL amongst the pioneer institutions and the first Public Financial Institution to adopt email and unified communication on cloud, i.e. Office 365. This shift to Office 365 has given PNB HFL a 100% uptime and 70% savings on cost in comparison with an in-house set up.

16. CORPORATE SOCIAL RESPONSIBILITY (CSR)

During the year, the Company has spent a sum of Rs.0.27 crores on various CSR activities. The Company has set aside balance amount of Rs.2.43 crores out of the profits of the Company for CSR activities to be undertaken in future.

The annual report on CSR activities undertaken during the year forms part of Annexure âAâ to the Board''s Report.

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

There is no information to disclose under the head ''Conservation of Energy and Technology Absorption'' given in the above rules since the company is engaged in providing housing loans. There were no foreign exchange earnings and the Company incurred foreign exchange expenditure of Rs.42.30 crores during the year.

18. CORPORATE GOVERNANCE

The Company has a Board of Directors, which has a formal schedule of matters reserved for its consideration and decision, apart from legally required matters. The Audit Committee comprises four directors including two independent directors. It reviews financial statements besides other matters as required under the Companies Act. The Board has approved a Charter for the Audit Committee as required under the Companies Act.

In addition, there are five Operational Matters Committees such as Nomination and Remuneration Committee, Credit Committee, Business Process Committee, CSR Committee and Marketing Committee of the Board.

The Company has entrusted the Audit Committee to oversee Vigil Mechanism and Business Process Committee to also act as Stakeholders'' Relationship Committee.

In addition, the Company has Asset Liability Management Committee (ALCO) to oversee movement of assets and liabilities, liquidity requirement, movement of interest rates and determine interest rate structure on assets and liabilities.

During the year, the Board of the Company had met six times and the Audit Committee met four times. There were twenty four meetings of other Operational Matters Committees as per the business requirements of the Company.

The independent directors have evaluated the performance of the Board during last year and they have appreciated overall performance of the Board.

19. BOARD OF DIRECTORS

Mr. K. R. Kamath, who was Chairman of the Board resigned on 27th October, 2014 upon completion of his tenure as Chairman and Managing Director of Punjab National Bank. Your Board wish to place on record significant growth achieved by the Company in the last five years under his guidance and leadership.

During the year, the parent Company of Destimoney Enterprises Private Limited (DEPL) sold its entire shareholding to Quality Investment Holdings, which is owned by Carlyle Asia Partners IV, LP, which is the flagship Asia buyout fund of the Carlyle Group. As a result,

Mr. Vivek Vig and Mr. Anand Dorairaj resigned from the Board on 5th March, 2015.

Mr. G. N. Bajpai resigned from the Board on 8th August, 2014 due to personal reasons.

Mr. S. S. Bhatia has resigned from the Board on 31st March, 2015 upon attaining the age of superannuation in Punjab National Bank.

Your directors wish to place on record contributions made by these directors on the Board and its various Committees.

New Directors

Mr. Gauri Shankar, MD & CEO of Punjab National Bank has joined the Board on 5th March, 2015 as Chairman of the Board. Mr. Sunil Kaul, who is the Managing Director, Carlyle Group and Mr. Devinjit Singh who is Managing Director of Carlyle India Advisors Private Limited were nominated by the DEPL on the Board of the Company with effect from 5th March, 2015.

Mrs. Kalpana Gupta, Divisional Head, Retail Banking Division, Punjab National Bank has joined as Director on 16th July, 2015.

Your Board recommends their appointment in the forthcoming Annual General Meeting of the Company.

Managing Director

The five years term of Mr. Sanjaya Gupta is coming to an end on 24th June, 2015. In accordance with the provisions of the Companies Act, 2013, the Board has reappointed Mr. Sanjaya Gupta as Managing Director of the Company for a five years term on 5th May, 2015.

Re-appointment of Directors

Necessary resolutions for appointment/reappointment of directors have been included in the notice convening the ensuing Annual General Meeting and details of appointment/reappointment of directors have been mentioned in the explanatory statement of the notice.

Your directors recommend their re-appointment in the forthcoming Annual General Meeting of the Company. All the directors have confirmed that they are not disqualified from being appointed/re-appointed as directors in terms of Section 164 of Companies Act, 2013.

20. DISCLOSURE ON MANAGERIAL REMUNERATION

Details of Managerial remuneration as required under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given as per Annexure B to this report.

21. STATUTORY AUDITORS

During the year, the Comptroller and Auditor General of India has appointed Messrs B. R. Maheswari & Co having registration no.001035N as statutory auditors for the financial year ended 31st March, 2015. The statutory auditors have not made any adverse comments on the working of the Company. The report of statutory auditors on annual accounts is enclosed along with Directors'' Report.

22. REVIEW OF ACCOUNTS BY C & AG

The annual accounts for the year ended 31st March, 2015 were reviewed by Comptroller and Auditor General of India (C & A G). The C & A G has not made any comment on accounts for the year 2014-15.

23. DIRECTORSâ RESPONSIBILITY STATEMENT

In terms of the provisions of section 134 (5) of the Companies Act, 2013 the Board of Directors Report that;

i. In preparation of annual accounts, the applicable accounting standards has been followed.

ii. Company has selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as on 31st March, 2015 and the profit and loss account for the year ended 31st March, 2015.

iv. That the Company has prepared the accounts on a going concern basis.

v. Company has laid down internal controls which are adequate and are operating effectively.

vi. Company has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and are operating effectively.

24. EXTRACTS OF ANNUAL RETURN (FORM NO. MGT 9)

The details forming part of the extracts of the Annual Return in Form MGT-9 is given in Annexure âBâ to this Report.

25. SECRETARIAL AUDIT REPORT

26. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE

The details of investments made by the Company are provided under note 12 and note 15 forming part of Annual Accounts of the Company for the year ended 31st March, 2015.

27. PARTICULARS OF CONTRACT OR ARRANGEMENTS ENTERED INTO WITH RELATED PARTIES

During the year, the Company availed fresh term loans of Rs.500 crores and overdraft facility from time to time from Punjab National Bank. The Company securitized by sale a housing loan portfolio of Rs.500 crores to Punjab National Bank. All the transactions with Punjab National Bank were entered into by the Company in the ordinary course of business, at arm''s length and after approval by the Board.

During the year, the Company renewed its agreement for sourcing loans business with Destimoney Enterprises Private Limited (DEPL). The agreement with DEPL was at arm''s length and as per Board approved commission structure. The Company paid a commission of Rs.3.39 crores to DEPL for the business sourced.

28. MATERIAL CHANGES, DETAILS OF SUBSIDIARIES AND LITIGATIONS

The Company does not have any subsidiary.

29. ACKNOWLEDGEMENTS

The Board of Directors thank the valued customers, shareholders, business partners and well- wishers for their wholehearted support.

The Board acknowledge with gratitude the advice, guidance and support of Government of India, Reserve Bank of India, National Housing Bank and other statutory bodies/departments.

Finally, the Directors express their appreciation for the dedication and commitment with which the employees of the Company at all levels have worked during the period.

For and on behalf of Board

Gauri Shankar

Chairman

Dated: 3rd August, 2015

Place: New Delhi

Mar 31, 2014

2. FINANCIAL PERFORMANCE

(Rs. in Lacs)

	March 2014	March 2013
Profit/Loss before tax	17,574.24	12,604.48
Less: Provision for Tax
-Current year	5,000.00	3,455.00
-Earlier years	65.00	-
-Deferred tax	-235.01	-1.66
Profit/Loss After Tax	12,744.25	9,151.14
Add: Balance brought forward from the previous year	1,220.71	1,170.06
	13,964.96	10,321.21
Appropriation of Profits
Transfer to Special Reserve (including u/s 29C of NHB Act, 1987)	2,555.00	1,900.00
Transfer to General Reserve	8,500.00	6,000.00
Proposed Dividend	1,503.87	1,026.11
Dividend Distribution Tax	255.58	174.39
Balance carried to Balance Sheet	1,150.51	1,220.71
	13,964.96	1,0321.21

2.1 income

During the year, the Company has earned total income of Rs.1,115.87 crores as compared to Rs.661.44 crores in previous year, recording a growth of 69%. Out of total income, interest income on loans was Rs.1,001.16 crores, a growth of 65%, investment income was Rs.75.79 crores, a growth of 110% and other income was Rs.38.92 crores, a growth of 87%.

2.2 Expenditure

Total expenditure during the year was Rs.909.70 crores as compared to Rs.522.93 crores in previous year, a growth of 74%.

Out of total expenditure, interest expenditure was Rs.801.15 crores (Rs.462.27 crores) and operating expenditure was Rs.108.55 crores (Rs.60.65 crores).

2.3 Provisions and write off

During the year, the Company has written off bad loans of Rs. 7.99 crores and transferred a sum of Rs. 22.44 crores towards provision for non-performing and standard loans as per NHB Directions, 2010.

As on March 31st, 2014, total provision for standard loans was Rs. 46.78 crores and for non-performing loans was Rs. 17.31 crores.

The Company has total provision of Rs. 64.09 crores as against gross non-performing loans of Rs. 33.72 crores.

3. DIvIDEND

Your Directors are pleased to recommend an enhanced dividend of 30% on equity shares, as against 25% dividend paid in the last year. Total dividend including dividend distribution tax is Rs. 17.60 crores on enhanced equity capital.

4. increase in authorized share capital

In terms of shareholders'' approval obtained in the last annual general meeting, the authorized share capital of the Company has increased to 15 crores equity shares of Rs. 10 each aggregating to Rs. 150 crores.

5. rights issue of equity shares

In order to meet Tier-I capital requirement of the Company, the Board of Directors on August 8th, 2013 has approved rights issue of 7,69,23,000 equity shares of Rs. 10 each at a premium of Rs. 120 per equity share aggregating to Rs. 1,000 crores.

The Board has called application money of Rs. 4 per share along with proportionate premium of Rs. 48 per share on October 28th, 2013. The Board will call remaining amount as per business needs of the Company.

5.1 Allotment of shares

Pursuant to the rights offer made on October 28th, 2013, the Board has allotted 3,92,30,700 equity shares to Punjab National Bank on March 29th, 2014. The other shareholder, Destimoney Enterprises Private Limited has subscribed to 3,76,92,300 equity shares on July 18th, 2014. The Board had extended last date for subscription to July 20th, 2014.

6. RESOURCES

Rate of interest during 2nd and 3rd quarter of last year moved northwards after liquidity tightening measures of RBI. During these testing times, the Company successfully managed liquidity and did not resort to high cost borrowings.

During the year, the Company raised Rs. 4,804 crores of fresh resources from banks, HUDCO, NCDs, Deposits and refinance from NHB. In addition, the Company also raised and paid back commercial papers worth Rs. 600 crores.

6.1 Non-Convertible Debentures (NCDs)

The Company raised Rs. 1,500 crores of secured NCDs through private placement in three series as under:

- Series XV of Rs. 600 crores with 10 years maturity, issued on May 16th, 2013 at 8.58% p. a.

- Series XVI of Rs. 300 crores with 3.50 years maturity, issued on January 20th, 2014 at 9.59% p. a.

- Series XVII-A of Rs. 300 crores with 5 years maturity, issued on January 31st, 2014 at 9.53% p. a.

- Series XVII-B of Rs. 300 crores with 10 years maturity, issued on January 31st, 2014 at 9.48% p. a.

The Company also redeemed on maturity, secured NCDs Series VIII of Rs. 150 crores on September 30th, 2013, which were at 10.79% p. a.

The outstanding secured borrowings as on March 31st, 2014 from NCDs were Rs. 3,150 crores as against Rs. 1,800 crores in the previous year.

6.2 Subordinated debt

The Company did not raise any subordinate debt during the year. Based upon balance maturity term, the book value of subordinated debt is considered at Rs. 240 crores to be eligible as Tier II capital under the guidelines issued by National Housing Bank.

All NCDs issued by the Company are listed on wholesale debt segment of National Stock Exchange.

6.3 Bank borrowings

During the year, the Company has raised term loans of Rs. 1,950 crores from commercial banks for onward lending operations. In addition, the Company has also raised term loan of Rs. 284 crores from HUDCO.

6.4 NHB refinance

During the year, the Company has availed refinance of Rs. 408 crores under various schemes of NHB.

6.5 deposits

During the year, the Company has raised incremental deposits of Rs. 661 crores, a growth of 69% over last year. Total outstanding deposits (including unclaimed deposits) as at March 31st, 2014 were Rs. 1,712 crores.

6.6 unclaimed deposits

Out of the deposits, which became due for repayment up to March 31st, 2014, deposits of Rs. 12.11 crores, including interest accrued and due relating to 1,852 depositors had not been claimed or renewed.

Since then, deposits of Rs. 2.76 crores relating to 477 depositors have been repaid or renewed. Other depositors have been intimated regarding the maturity of their deposits with request to either renew or claim the deposits.

During the year, the Company has transferred an amount of Rs. 6.53 lacs to investor education and protection fund (IEPF) established by the Central Government under section 205 C of the Companies Act, 1956. In terms of the said section, no claim would lie against the Company after transfer to IEPF.

7. CREDIT RATING

During the year, CRISIL has upgraded credit rating of fixed deposit program to FAAA/stable, which means highest safety. CRISIL has also upgraded credit rating of NCDs program to CRISIL AA /stable, which means very high safety. CARE has confirmed rating of NCDs program at CARE AA . ICRA has rated fresh issuance of NCDs of Rs. 900 crores at ICRA AA stable outlook which reconfirm very high safety. CRISIL has reaffirmed rating on commercial paper program at CRISIL A1 , which is highest rating.

8. capital adequacy ratio

The net owned funds of the Company as on March 31st, 2014 were Rs. 920 crores. Adjusted value of subordinate debts and other components of Tier II capital were Rs. 267 crores. The capital adequacy ratio (CRAR) was 13.39% (comprising Tier I capital of 10.38% and Tier II capital of 3.01%). NHB has prescribed minimum CRAR of 12% of total risk weighted assets.

9. regulatory compliance

9.1 NHB has advised housing finance companies to ensure that lending practices adopted by them are simple, non-discriminatory, transparent and fair. NHB has also prescribed that pre-payment charges are not to be levied in case of housing loans on floating rates of interest being pre-closed. The Company has complied with these directions from the date of its issuance.

9.2 The know your customer (KYC) guidelines, Fair Practice Code and anti money laundering (AML) standards as notified by the NHB are available on the Company''s website. The Company has also adopted the model code of conduct for Direct Selling Agents and Guidelines for Recovery Agents as stipulated by NHB.

9.3 During the year, NHB reduced the provisioning requirements in respect of standard loans for commercial real estate-residential housing (CRE-RH) from 1% to 0.75%. The risk weight on CRE-RH was lowered from 100% to 75%. NHB has also re-adjusted risk weight on individual housing loans based upon loan amount and loan-to-value ratio. These measures have positive impact on capital to risk assets ratios.

10. OPENING OF NEW BRANCHES

During the year, the Company has opened a branch office in Coimbatore in the state of Tamil Nadu. The Company has expanded its operations and now operates through a network of 32 branches. The Company has three zonal hubs; North (at NOIDA), West (at Mumbai) and South (at Bengaluru). Zonal Hubs are supported by three regional hubs at Jaipur, Indore and Chandigarh.

During the current financial year, the Company plans to open six new branches (two in Bengaluru, one each at Chennai, South Delhi, Thane and Pune). The Company also plans to start three regional hubs at Chennai, South Delhi and Pune to ramp-up business from cluster of locations in close vicinity.

11. HUMAN RESOURCES

11.1 Keeping in line with the Company''s core value of ''People First'' HR processes and initiatives were aligned for building a superior human capital and keeping the workforce across levels engaged and motivated.

11.2 Employee''s functional knowledge and skill development was at the centre of learning interventions undertaken in FY 2013-14. Customized training programs based on detailed training need analysis (TNA) were conducted across functions with focus on enabling employees to enhance functional competency and enable them to perform to their optimum potential.

11.3 In order to meet business requirement, fresh hiring were made across functions. As on March 31st, 2014, the Company had a total of 469 full time employees on its rolls.

11.4 In terms of provisions of section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, no employee of the Company whether employed for the full financial year or for a part of the year, was in receipt of remuneration equal to or exceeding the remuneration as prescribed under the said provisions.

12. directors'' responsibility statement

In terms of the provisions of section 217 (2AA) of the Companies Act, 1956 the Board of Directors Report that:

i. In preparation of annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any.

ii. The directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31st, 2014 and the profit and loss account for the year ended March 31st, 2014.

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

iv. That the Company had prepared the accounts on a going concern basis.

13. CORPORATE GOVERNANCE

13.1 The Company has been complying with the standards of corporate governance required under the Companies Act.

The Board discharges the duties and responsibilities as required under the applicable statute(s) including the Companies Act.

13.2 The Company has a Board of Directors, which has a formal schedule of matters reserved for its consideration and decision, apart from legally required matters. The Audit Committee comprises four directors including two independent directors.

It reviews financial statements besides other matters as required under the Companies Act.

In addition, there are four Operational Matters Committees such as Appointments Committee, Credit Committee, Business Process Committee and Marketing Committee of the Board.

During the year, the Board of the Company had met six times and the Audit Committee met four times. The other Operational Matters Committees have met as per business requirements of the Company.

13.3 As required under the provisions of section 178 (1) of the new Companies Act, 2013, the Company will constitute Nomination and Remuneration Committee of Directors. The Committee shall discharge functions as laid down under the new Companies Act.

14. corporate social responsibility (csr)

The Board has constituted a committee of four directors; CSR Committee. The Committee will formulate CSR policy under section 135 of the new Companies Act, 2013 and also CSR procedures for the Company.

15. business outlook

15.1 The year gone by was a challenging year for the economy.

The country recorded below 5% growth in gross domestic product (GDP) for the second year in a row. After recording its lowest growth of 4.4% in first quarter, the growth rate gradually moved to 4.7%. Despite measures taken by the Union Government to revive the economy, the growth in 4th quarter failed to see revival in industry and services. The slow growth rate has also impacted domestic savings and investments.

15.2 The rupee witnessed a historic low of Rs. 68.88 per USD.

The RBI announced liquidity tightening measures in July 2013 to contain depreciating rupee, which resulted into tight liquidity and rising rate of interest for both short and long-term debt.

15.3 Despite slowdown in overall growth rate, the housing sector recorded an impressive growth of around 18%-19% which is consistent over the years. The demand for housing is coming due to burgeoning middle class and development of tier II and tier III cities.

Property prices across India were stable throughout the year, which means lower real cost after accounting for inflation.

15.4 The country has recently elected a new government at the Centre, which has got a clear mandate and majority on its own.

It is expected that the new government will expedite infrastructure and housing growth because these sectors are engines for generating employment and for revival of many inter linked industries.

16. BOARD OF DIRECTORS

16.1 Re-appointment of Directors

In accordance with the provisions of section 149 of the new Companies Act, 2013, Shri S K Jain, Shri P K Gupta and Shri Tejinder Singh Laschar are being recommended for re-appointment as independent directors for a maximum tenure of five years. The Company has received declaration from all the independent directors that they meet the criteria as laid down under section 149(6) of the new Companies Act, 2013. Your directors recommend re-appointment of these directors in the forthcoming Annual General Meeting.

Shri Vivek Vig is due to retire by rotation in the forthcoming Annual General Meeting of the Company. Your directors recommend his re-appointment in the forthcoming Annual General Meeting.

16.2 Resignation of Shri Rakesh Sethi

Shri Rakesh Sethi, Executive Director, PNB resigned from the Board after being elevated as Chairman and Managing Director of Allahabad Bank on March 12th, 2014. Your directors wish to place on record significant contribution made by him as member of the Board and as Chairman of Appointment Committee and Business Process Committee of the Board.

16.3 Appointment of Dr. Ram S. Sangapure on the Board

The Board has appointed Dr. Ram S. Sangapure, who is Executive Director, Punjab National Bank, as director of the Company in place of Shri Rakesh Sethi. Your directors recommend his appointment in the forthcoming AGM.

17. STATUTORY AUDITORS

During the year, the Comptroller and Auditor General of India has appointed Messrs B R Maheshwari & Co having registration no. 001035 N as statutory auditors for the financial year ended March 31st, 2014. The report of statutory auditors on annual accounts is enclosed along with Directors'' Report.

18. REVIEW OF ACCOUNTS BY C & AG

The annual accounts for the year ended March 31st, 2014 were reviewed by Comptroller and Auditor General of India (C & A G).

The C & A G has not made any comment on accounts for the FY 2013-14.

19. companies (disclosure of particulars in the report of board of directors) rules, 1988.

There is no information to disclose under the head ''Conservation of Energy and Technology Absorption'' given in the above rules since the Company is engaged in providing housing loans. There were no foreign exchange earnings and expenditure during the year.

20. THE COMPANIES ACT, 2013

The Ministry of Corporate Affairs (MCA) has notified various sections and rules made under the Companies Act, 2013. The effective date of coming into force of all the notified sections and rules is April 1st, 2014. In terms of clarification issued by MCA on April 4th, 2014 the Company has prepared this balance sheet, statement of profit and loss, the schedules and notes attached thereto and the Directors'' Report in accordance with the relevant provisions of the Companies Act, 1956.

21. ACKNOWLEDGEMENTS

21.1 The Board of Directors thank the valued customers, shareholders, business partners and well- wishers for their wholehearted support.

21.2 The Board acknowledge with gratitude the advice, guidance and support of Government of India, Reserve Bank of India, National Housing Bank and other statutory bodies/departments.

21.3 The Directors place on record their appreciation and gratitude to all the Bankers of the Company, Depositors and Debenture holders for their continued confidence and contribution to the growth of the Company.

21.4 Finally, the Directors express their appreciation for the dedication and commitment with which the employees of the Company at all levels have worked during the period.

For and on behalf of the Board

Dated: August 8th, 2014 (K R Kamath)

Place: New Delhi Chairman

Mar 31, 2013

DIRECTORS'' REPORT TO THE MEMBERS

The Directors have the pleasure in presenting the 25^th Annual Report together with the Audited Accounts of the company for the year ended on March 31, 2013.

1. Silver Jubilee Year

The Company has entered its twenty fifth (silver jubilee year) of operations. Three years ago, the Company had started Business Process Transformation and Re-engineering Project (BPR) to transform the Company to an operationally robust enterprise to take on bigger and tougher challenges in the future.

Your Directors are happy to report that the Company has achieved these major objectives, which are reflected in business and financial numbers. The Company has re-vamped policies, systems and processes and is now poised for sustained growth in years to come.

2. New initiatives under BPR

A snapshot of few accomplishments for the year gone by is as under;

- A valuable core human capital pool was created which is self-motivated, inspired and knowledgeable.

- Refurbishment of physical infrastructure (important offices and hardware etc.) to facilitate future business growth. Additional space of more than 36500 sq. ft. was created.

- New processes and systems, operating nuances were implemented which will have a multiplier effect in enhancing efficiency, security, compliance and rendering better customer experience.

- In order to improve customer reach, there was a complete re-vamp of the business distribution strategy involving internal sales team and third party agencies.

- To improve the look and feel, the Companyâs website was revamped; standardization of marketing collaterals, signage and other customer communication documents were recreated to be contemporary and customer friendly. An outbound contact centre was also established.

- A team of seasoned underwriters and a technical support group with civil engineers was established to support underwriting variety of loan types. Risk containment unit was established to avoid frauds.

- Concerted efforts were made for creating a robust IT platform, which can support current as well as future flow of business needs.

3. Awards and recognition

During the year Company has been awarded in the category of âoutstanding contribution to real estate sector through growth in home loans in North and West regionâ by annual real estate awards for developers and brokers instituted by Franchisee India in association with Bloomberg.

4. Loans Performance

4.1 During the year, the Company has sanctioned loans to 10976 customers amounting to Rs. 6091 crore as compared to Rs. 1668 crore in previous year, recording a growth of 276%. Loans disbursed during the year were Rs. 3682 crore as compared to Rs. 1508 crore in previous year, recording a growth of 143%.

Out of the total fresh business, Rs. 4814 crore loans were sanctioned for housing and Rs. 1277 crore were sanctioned for non-housing purposes. Cumulative sanctions and disbursements as at March 31 2013 were Rs. 14617 crore and Rs. 11276 crore respectively.

In order to de-risk geographical concentration, 45% of incremental disbursements were from West and South zones. The geographical mix of outstanding portfolio is 62% North, 22% West and 16% South.

Out of total loan sanctions, loans amounting to Rs. 270 Crore are eligible under Golden Jubilee Rural Housing Scheme of Government of India, in respect of 3327 units.

4.2 Loans outstanding

During the year, Loans outstanding grew by 67% and stood at Rs. 6619 crore in respect of 37248 loan accounts. Loan outstanding comprises Rs. 4835 crore for Housing and Rs. 1784 crore for non-housing loans. The average ticket size, at portfolio level, for individual loans as on 31^st March 13 was Rs. 17.77 lac. The average ticket size for fresh loans sanctioned during the year was Rs.55.50 lacsâ.

During the year under review, Rs 1033 crore was received by way of scheduled re-payment and pre-payment of loan amount.

4.3 Asset Quality:

Company continues to maintain high quality of loan assets. Gross non-performing assets as on 31^st March â13 were Rs. 37.09 crore (Rs 41.27 crore) and net non-performing assets (after provision as per NHB Directions) were Rs. 23.40 crore (Rs 26.61 crore).

The overall loan delinquencies is at 2.18%, gross and net non-performing assets at 0.56% and 0.35% respectively were amongst the lowest in the industry.

Company has 112 re-possessed properties under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) amounting to Rs. 32.03 crore (Rs 26.51 crore).

5. Financial Performance

(Rs. in lacs)

	March 13	March 12
Profit/Loss before tax	12604.48	10258.49
Less: Provision for Tax -Current year -Deferred Tax	3455.00 -1.66	2896.00 -157.74
Profit/Loss After Tax	9151.14	7520.23
Add: Balance brought for-ward from the previous year	1170.06	936.90
Appropriation of Profits Transfer to Special Reserve (including u/s 29Cof NHB Act, 1987) Transfer to General Reserve Proposed Dividend distribution Tax Balance carried to	10321.21 1900.00 6000.00 1026.11 174.39 1220.71	8457.13 1520.00 5000.00 660.00 107.06 1170.06
Balance Sheet	10321.21	8457.13

5.1 Income

During the year, the Company earned total income of Rs. 661 crore as compared to Rs 463 crore in previous year, recording a growth of 43%. Out of total income, interest income on loans grew by 45% at Rs. 606 crore as against Rs. 419 crore in previous year. Investment and other income increased by 25% to Rs. 55 crore as against Rs. 44 crore in the previous year.

5.2 Expenditure

Total expenditure during the year was Rs. 523 crore as compared to Rs. 354 crore in previous year, a growth of 48%. Out of total expenditure, interest expenditure was Rs. 462 crore (Rs. 315 crore) and operating expenditure was Rs. 61 crore (Rs. 39 crore).

In addition, the Company has written off bad loans worth Rs. 2.55 crore and transferred a sum of Rs. 9.92 crore for non-performing and standard loans as per NHB Directions, 2010.

As on 31^st March 2013, total provisions (on standard and non-performing loans) were Rs. 41.65 crore and provision coverage ratio increased from 75% to 112%.

6. Dividend

In order to commemorate the silver jubilee year, your Directors are pleased to recommend a special dividend of 25% on equity shares, as against 22% paid in the previous year.

7. Increase in paid up equity share Capital

During the year, paid up equity share Capital of the Company increased from Rs. 30 crore to Rs. 50 crore as under;

7.1 Conversion of CCDs

Compulsory Convertible Debentures (CCDs) aggregating to Rs. 137.32 crore were converted into 1,35,29,411 equity shares of Rs. 10/- each at a premium of Rs.91.50 per share on 8^th June 2012, as per terms of issue.

7.2 Issue of Bonus Shares

The Company allotted 64,70,589 bonus shares of Rs. 10/- each to existing shareholders in the ratio of their shareholding after capitalization of General Reserves of Rs. 6.47 crore after approval of the shareholders in EGM held on 30 March 2013.

8. Increase in Authorized Share Capital

The present authorized, issued and paid up share capital of the Company is Rs. 50 crore. In order to meet capital requirement of growing business, the Board has recommended increase in Authorized capital to Rs. 150 crore divided into 15 crore equity shares of Rs. 10/each.

Your Directors recommend the resolution for your approval.

9. Resources

During the year, the Company raised Rs. 3919 crore of fresh resources from banks, NCDs, Deposits and refinance from NHB.

9.1 Non-Convertible Debentures (NCDs)

During the year, the Company raised Rs. 700 crore of secured NCDs on private placement basis in three series as under;

- 9.25% Series XII of Rs. 300 crore with 10 years maturity, issued on 29^th June 2012.

- 9.15% Series XIII of Rs. 200 crore with 10 years maturity, issued on 14^th September 2012.

- 9.00% Series XIV of Rs. 200 crore with 10 years maturity, issued on 21^st December 2012.

The outstanding secured borrowings from NCDs were Rs. 1800 crore as on 31^st March, 13 as against Rs. 1316 crore.

9.2 Subordinated debt

During the year, the Company had raised 9.10% subordinated NCDs of Rs. 200 crore with 10 years maturity. The outstanding of subordinated debt as on 31^st March 2013 were Rs. 300 crore. Based upon balance maturity term, the book value of subordinated debt is considered at Rs. 260 crore to be eligible as Tier II capital under the guidelines issued by National Housing Bank.

The outstanding rating on bonds by CRISIL AA (positive) and CARE AA which means high safety regarding timely payment of interest and principal.

All NCDs issued by the Company are listed on wholesale debt segment of National Stock Exchange.

9.3 Bank borrowings

During the year, the Company has raised Rs.

1720 crore from commercial banks for onward lending operations. Companyâs bank loan facilities have been assigned CRISIL AA (positive).

9.4 NHB Refinance

During the year, the Company has availed Rs. 611 crore under various refinance schemes of NHB.

9.5 Deposits:

During the year, the Company recorded robust growth of Rs. 688 crore in deposits, which is 190% over last year. Total outstanding deposits (including unclaimed deposits) as at 31^st March 13 were Rs. 1051 crore, which is 16% of loans portfolio. Companyâs public Deposits have been assigned CRISIL AA (positive).

9.6 Unclaimed Deposits

Out of the deposits, which became due for repayment up to March 31, 2013, deposits of Rs 13.14 crore, including interest accrued and due relating to 1926 depositors had not been claimed or renewed.

Since then, deposits of Rs. 1.93 crore relating to 338 depositors have been repaid or renewed. Other depositors have been intimated regarding the maturity of their deposits with request to either renew or claim the deposits.

During the year, the Company transferred an amount of Rs. 12.97 lacs to Investor Education and Protection Fund (IEPF) established by the Central Government under section 205 C of the Companies Act, 1956. In terms of the said section, no claim would lie against the Company after transfer to IEPF.

10. Credit Rating

CRISIL has recently upgraded rating outlook of the Company from AA âstableâ to AA âpositiveâ. It has recognized Companyâs successful transition post BPR exercise.

11. Net worth and Capital Adequacy Ratio

The net worth of the company as on 31^st March, 13 was Rs. 608 crore (Rs. 392 crore). The Capital Adequacy Ratio (CRAR) was 14.40%. NHB has prescribed minimum CRAR of 12% of total risk weighted assets.

12. Regulatory Compliance

The Company has been complying with the guidelines and Directions issued by the NHB on asset classification, accounting standards, income recognition, provisioning, capital adequacy, concentration of credit/ investments, credit rating etc. as amended from time to time.

12.1 NHB has advised housing finance companies to ensure that lending practices adopted by them are simple, non-discriminatory, transparent and fair. NHB has also prescribed that pre-payment charges are not to be levied in case of housing loans being pre-closed. The Company has complied with the new directions from the date of its issuance.

12.2 The Know Your Customer (KYC) guidelines, Fair Practice Code and Anti Money Laundering (AML) standards as notified by the NHB are available on companyâs website. The Company has also adopted the model code of conduct for Direct Selling Agents and Guidelines for Recovery Agents as stipulated by NHB.

13. Change in Accounting Policies

During the year, the Company has changed its Accounting Policies relating to amortization of direct cost on loan and deposit origination over the average tenure of loan/deposit. Similarly, income as loan processing/ management fees is recognized over the average tenure of the loan. These changes have been disclosed in the Balance Sheet for the year.

14. Opening of new branch at Ahmedabad

During the year, the Company has opened a branch office in Ahmedabad and its first office in state of Gujarat. The Company has expanded its operations in 15 states through a network of 31 branches. Besides, the Company has three hubs; North (at NOIDA), West (at Mumbai) and South (at Bangalore) to integrate credit underwriting operations of branches with their respective hubs.

During the current financial year, the Company plans to open a new branch at Coimbatore, Tamil Nadu. The Company also plans to start three sub-hubs at Chandigarh, Jaipur and Indore to ramp-up business from cluster of branches in close vicinity. This will bring in quality retail assets from tier II cities which are end user driven and are easier to be refinanced.

15. Human Resource

15.1 Company recognizes that âHuman Capitalâ, is the only asset of the Organization. Towards this end, HR processes and initiatives were aligned to the business goals and objectives and were simultaneously aimed at talent acquisition, development, engagement, enhancing employee happiness and motivation at work, skill up-gradation and cross functional integration.

15.2 The year gone by has been a year of business growth and capacity building. In order to keep pace with business requirements, lateral talent were hired across functions from the industry. As on 31^st March 2013, the company had a total of 346 employees on its rolls.

15.3 During the year, a comprehensive Training Need Analysis was done to understand training requirements at the organizational, functional and individual levels. Need based trainings were conducted for all functions using both internal & external trainers.

15.4 In terms of provisions of section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, no employee of the company whether employed for the full financial year or for a part of the year, was in receipt of remuneration equal to or exceeding the remuneration as prescribed under the said provisions.

16. Directorsâ responsibility Statement

In terms of the provisions of section 217 (2AA) of the Companies Act, the Board of Directors Report that;

i. In preparation of annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any.

ii. The directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as on 31.03.2013 and the profit and loss account for the year ended 31.03.2013.

iii. That the Company had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

iv. That the Company had prepared the accounts on a going concern basis.

17. Corporate Governance

17.1 The Company has been complying with the Standards of corporate governance required under the Companies Act, 1956. The Board discharges the duties and responsibilities as required under the applicable statute(s) including the Companies Act, 1956.

17.2 The Company has a Board of Directors, which has a formal schedule of matters reserved for its consideration and decision, apart from legally required matters. The Audit Committee reviews the financial statements besides other matters as per section 292A of Companies Act, 1956.

In addition, there are four Operational Matters Committees such as Appointments Committee, Credit Committee, Business Process Committee and Marketing Committee of the Board.

During the year, the Board of the Company had met five times and the Audit Committee met four times. The other Operational Matters Committees have met as per the business requirements of the Company.

18. Business Outlook

18.1 Countryâs GDP growth in FY 2012-13 was slower than the last nine yearsâ rates, which has impacted investment mood and it is expected to have a hangover during FY 2013

14. Real estate is capital intensive and the macro economic factors are getting reflected in this sector too. There is a slow ramp up to bridge the demand and supply gap in urban centres.

18.2 Metropolitan cities are demonstrating an overhang in absorption - primarily due to spiraling of real estate prices and income growth not being able to match up. The CAGR of mortgage lending sector were phenomenally high at around 40-45% from 2002 up to mid-2008; thereafter, it has continuously receded and during 2012-13 growth is expected to be 15-18%. Though Housing Finance Companies (HFCs) have reported higher growth rates quarter on quarter and they are expected to grow at around 20-22%. Mortgages constitutes 7% penetration in GDP, low penetration implies room for growth. Neighboring ASEAN countries have double digit penetration.

18.3 Inflationary pressure have somewhat started easing from the last quarter of FY 2012-13 but high interest rates remains an area of concern. The Company will do its best to fully tap business potential at the most competitive rates and ensure a reasonable profitability.

19. Board of Directors

19.1 Re-appointment of Directors

In accordance with the provisions of the Companies Act, 1956, Shri K R Kamath (Chairman), Shri P K Gupta and Shri Anand Dorairaj are due to retire by rotation in the forthcoming Annual General Meeting of the Company.

We have received nomination for reappointment of these directors at the ensuing Annual General Meeting under section 257 of the Companies Act. 1956.

19.2 Additional Director

During the year, Shri S S Bhatia, General Manager, PNB joined the Board as additional director. Your Board recommends his appointment in the forthcoming Annual General Meeting.

20. Statutory Auditors

During the year the Comptroller and Auditor General of India has appointed Messrs Raj K Aggarwal & Associates as Auditors of the company for the financial year ended March 31, 2013. They have replaced Messrs S K Kapoor & Co., Chartered Accountants, who were statutory auditors of the Company for four years.

21. Re-view of accounts by C & AG

The accounts for the year ended 31^st March, 13 were reviewed by Comptroller and Auditor General of India (C & A G). The C & A G has not made any comment on accounts for the year 2012-13.

22. Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

23. Acknowledgements

23.1 The Board of Directors thank the valued customers, shareholder, channel partners and well- wishers for their wholehearted support.

23.2 The Board acknowledges with gratitude the advice, guidance and support of Government of India, Reserve Bank of India, National Housing Bank and other statutory bodies/departments.

23.3 The Directors place on record their appreciation and gratitude to all the bankers of the Company, Depositors and Debenture Holders for their continued confidence and contribution to the growth of the company.

23.4 Finally, the Directors express their appreciation for the dedication and commitment with which the employees of the Company at all levels have worked during the period.

For and on behalf of the Board

Dated: 8 August, 2013 (K R Kamath)

Place: New Delhi Chairman

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