Bajaj Finance Ltd Directors Report.

At the outset, your Companys (BFL) Board of directors commiserates with the families of all employees, shareholders and others who succumbed to this dreadful COVID-19 pandemic.

Your directors present the thirty-fourth Annual Report along with the audited standalone and consolidated financial statements for FY2021. This report read with the Management Discussion and Analysis include details of the macro-economic scenario, Companys performance, various initiatives taken by the Company as well as its approach to risk management.

Circulation of Annual Reports in electronic form

Pursuant to Ministry of Corporate Affairs (MCA) circulars dated 8 April 2020, 13 April 2020, 5 May 2020 and 13 January 2021, read with SEBI Circulars dated 12 May 2020 and 15 January 2021, relaxation has been granted to the companies in respect of sending physical copies of annual report to shareholders and requirement of proxy for general meetings held through electronic mode till 31 December 2021.

Accordingly, the financial statements (including Boards Report, Corporate Governance Report, Management Discussion and Analysis, Auditors Report and other documents to be attached therewith) are being sent only through electronic mode to those shareholders whose email addresses are registered with the Companys Registrar and Share Transfer Agent viz.,

KFin Technologies Private Limited (KFin)/Depository Participants, and whose names appear in the register of members as on Friday, 18 June 2021. The Company has also made arrangements for those shareholders who have not yet registered their email address to get these registered by following the procedure prescribed in the notice of Annual General Meeting (AGM).

The Annual Report for FY2021 is also available on the website of the Company at investor-relation-annual-reports.

Financial results

The highlights of the standalone financial results are given below

Particulars FY2021 FY2020 % change over FY2020
Total income 23,546 23,834 (1)
Interest and finance charge 7,446 7,857 (5)
Net interest income 16,100 15,977 1
Total operating expenses 5,016 5,364 (6)
Pre-provisioning operating profit 11,084 10,613 4
Impairment on financial instruments 5,721 3,805 50
Profit before tax 5,363 6,808 (21)
Profit after tax 3,956 4,881 (19)
Retained earnings as at the beginning of the year 10,349 7,612 36
Profit after tax 3,956 4,881 (19)
Other comprehensive income on defined benefit plan (26) (25) (0)
Retained earnings before appropriations 14,279 12,468 15
Transfer to reserve fund u/s 45-IC(1) of the RBI Act, 1934 (792) (977) (19)
Dividend paid - (950)
Tax on dividend - (195)
Adjustment of dividend to ESOP Trust - 3
Retained earnings as at the end of the year 13,487 10,349 30

Due to rounding off, numbers presented in above table may not add up precisely to the totals provided.

Transfer to reserve fund

Under section 45-IC(1) of Reserve Bank of India Act, 1934, non-banking financial companies (NBFCs) are required to transfer a sum not less than 20% of its net profit every year to reserve fund before declaration of any dividend. Accordingly, the Company has transferred a sum of H 792 crore to its reserve fund.

Vide amendment dated 5 June 2020 to the Companies (Share Capital and Debenture) Rules, 2014, (the Rules) the requirement to invest upto 15% of the amount of debentures maturing during the next financial year, in case of privately placed debentures, has been done away with. Further, in terms of the provisions of the Companies Act, 2013 (the Act) and the Rules, the Company, being a NBFC, is exempt from transferring any amount to debenture redemption reserve in respect of privately placed debentures.

Dividend distribution policy

Pursuant to the provisions of regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the SEBI Listing Regulations), the Company had formulated a dividend distribution policy. The Board, at its meeting held on 15 March 2021, amended the said policy. In terms of the amendment, the Board will endeavour to maintain a dividend pay-out in the range of 15% to 25% of the profit after tax on a standalone basis. Prior to the amendment, the pay-out was up to 15%. The revised policy is annexed to this report and is also available on the website of the Company at policy.pdf.


The directors recommend, for consideration of the members at the ensuing AGM, payment of dividend of H 10 per equity shares (500%) of face value of H 2. The total dividend for FY2021 is H 602.59 crore.

The dividend recommended is in accordance with the principles and criteria set out in the dividend distribution policy.

Dividend paid for FY2020 was H 10 per equity share (500%) of face value of H 2. The amount of dividend and tax thereon aggregated to H 725.37 crore.

In view of the amendment to the Income Tax Act, 1961 through the Finance Act, 2020, imposition of dividend distribution tax has been abolished. The dividend, if declared, at the ensuing AGM will be taxable in the hands of the members of the Company. For further details on taxability, please refer Notice of AGM.

COVID-19 pandemic

The COVID-19 pandemic which is a once in a lifetime occurrence has brought with it an unimaginable suffering to people and to almost all sections of the economy. The nationwide lockdowns to curtail the transmission of disease, had put the global economy in extreme stress of the level not seen since the Great Depression and would have a long-lasting economic impact.

The dynamic and evolving nature of the pandemic with its resurgence (second wave) at the close of the year once again creates uncertainty, including economic impact. Hopefully, the outreach of vaccination drives across the country, additional efforts to set up medical infrastructure and obtain required medical supplies, in addition to continued adherence to COVID-19 specific protocols will help in overcoming this testing situation.

Like the greater economy, the pandemic coupled with the lockdown and relief measures provided by RBI had a bearing on the performance of the Company. The impact of the above on the performance of the Company and the measures adopted by the Company to steer through the pandemic have been discussed in detail in Management Discussion and Analysis.

Working results of the Company

The performance of the Company was impacted due to the COVID-19 pandemic resulting in marginal growth in consolidated Assets Under Management (AUM) by 4% and a degrowth in the consolidated profit after tax by 16%. FY2021 was earmarked by lower acquisition volumes, higher liquidity buffers and increased recovery costs. Despite the challenges, the Company once again demonstrated the resilience of its business model which generates strong pre-impairment profitability to absorb higher losses resulting from the crisis.

BFL maintained a conservative stance on volumes as post-lockdown restrictions were gradually lifted till August 2020.

The conservative stances were maintained considering extended moratoriums, disruption in economic activity, weakened portfolio quality and collections, and absence of updated customer bureau data.

Consolidated Performance highlights for FY2021 are as below

Number of new loans booked: 16.88 million

AUM grew by 4% to H 152,947 crore

Total income increased by 1% to H 26,683 crore

Net interest income (NII) rose by 2% to H 17,269 crore

• Total operating cost to NII improved to 30.7% from 33.5% in FY2020

Loan losses and provisions was H 5,969 crore. During FY2021, the Company has done accelerated write-offs of H 3,500 crore of principal outstanding on account of COVID-19 related stress and advancement of its write-off policy.

The Company holds a management overlay and macro provision of H 840 crore as of 31 March 2021

BFLs Gross NPA and Net NPA stood at 1.79% and 0.75%, respectively - amongst the lowest across all NBFCs.

The Companys loan book continued to remain strong because of its deeply embedded risk culture and robust risk management practices

Profit before tax (PBT) decreased by 18% to H 5,992 crore Profit after tax (PAT) decreased by 16% to H 4,420 crore

Capital adequacy ratio as of 31 March 2021 was 28.31%, which is well above the RBI norms. Tier I adequacy ratio was 25.11%

For more details on the performance of the Company, its products and risk management framework and initiatives, please refer to Management Discussion and Analysis.


BFL, being one of the largest and most diversified NBFCs in India has transformed itself from a mono-line captive lender to a diversified financial service business.

The Company was amongst the early movers to transit to digital process in the financial services industry. The Company has embarked to create an omnichannel framework to conduct its business. The omnichannel model will provide flexibility to the customer to move between online to offline and vice versa in a frictionless manner. It had already moved from Physical to Phygital.

Further details regarding the operations, state of affairs and initiatives of the Company are given in the Management Discussion and Analysis.

Moratorium and restructuring of loans

RBI issued guidelines on 27 March 2020 permitting all commercial banks, co-operative banks, All- India Financial Institutions and NBFCs to give moratorium to customers in respect of instalments falling due between 1 March 2020 to 31 May 2020. It then further extended the moratorium period by three months till 31 August 2020, through its notification dated 23 May 2020. Accordingly, the Company offered moratorium to its customers based on a Board approved policy.

RBI, through its circular dated 6 August 2020, provided a resolution framework for COVID-19 related stress and allowed a one-time restructuring of certain categories of loans from 1 September 2020 till 31 December 2020. In line with the RBIs framework and a Board approved policy, the Company executed restructuring to the tune of H1,725 crore (approximately 1.50% of AUM).

The impact of the moratorium and restructuring on the performance of the Company is discussed in the Management Discussion and Analysis.

Customer engagement

The Company strives to create a culture of Customer Obsession and endeavours to provide a frictionless experience across the lifecycle, from pre-disbursal to closure of loan, deposit accepting activities and other value-added services.

The Company measures, through an independent third party, its Net Promoter Score to rate its customer loyalty. This helps the Company to gauge the outcome of its customer engagement efforts.

The initiatives of the Company towards customer engagement are detailed in the Management Discussion and Analysis.

Subsidiaries, associates and joint ventures

The Company has two wholly owned subsidiaries, viz.,

(i) Bajaj Housing Finance Ltd. (BHFL or Bajaj Housing), which is registered with National Housing Bank as a Housing Finance Company (HFC); and

(ii) Bajaj Financial Securities Ltd. (BFinsec), which is registered with the Securities and Exchange Board of India (SEBI) as a stockbroker and depository participant.

BHFL commenced its business in FY2018. BFinsec commenced its commercial operations in FY2020.

During FY2021, no new subsidiary was incorporated/acquired. The Company does not have any associate company, nor has it entered into a joint venture with any other company.

The financial statements of the subsidiary companies are also available in a downloadable format under the Investor Relations section on the Companys website at

The Companys policy for determination of material subsidiary, as adopted by the Board of Directors, in conformity with regulation 16 of the SEBI Listing Regulations, can be accessed on the Companys website at media/finance/downloads/policy-for-determining-material-subsidiaries.pdf.

In terms of the said policy and provisions of regulation 16 of the SEBI Listing Regulations, BHFL is a material subsidiary of the Company as its net worth exceeds 10% of the consolidated net worth of the Company.

Performance highlights of the subsidiaries are given below:


AUM as at 31 March 2021 was H 38,871 crore as compared to H 32,705 crore as at 31 March 2020, representing a growth of 19%

Total income increased by 19% to H 3,155 crore NII rose by 15% to H 1,189 crore

Total operating cost to NII improved significantly to 27.7% from 32.9% in FY2020

Impairment on financial instruments was H 247 crore. BHFL holds a management overlay provision of H 166 crore as of 31 March 2021 on account of COVID-19 related stress

Gross NPA and Net NPA were at 0.35% and 0.22%, respectively, amongst the lowest across all HFCs PBT increased by 8% to H 613 crore PAT grew by 8% to H 453 crore

As on 31 March 2021, capital adequacy ratio was 21.33%, which is well above the NHB norms of 14%


Total Income for FY2021 was H 36.34 crore PAT was H 5.55 crore

For more detailed discussion on the performance of the subsidiaries and their various segments, refer to the Management Discussion and Analysis.

A separate statement containing the salient features of the subsidiaries in the prescribed form AOC -1 is attached to the standalone financial statements.

Directors and key managerial personnel (KMP)

A. Change in Directorate

Having been at the helm of affairs of the Company for over three decades, Rahul Bajaj, as a part of succession planning, demitted the office of Chairman of the Company w.e.f. close of business hours on 31 July 2020.

The Board, at its meeting held on 21 July 2020, appointed Sanjiv Bajaj as Non-executive Chairman of the Company w.e.f. 1 August 2020.

Due to his health, Rahul Bajaj stepped down from the Board of the Company w.e.f. the close of business hours on 30 April 2021. The Board, after considering his huge contribution to the spectacular success of the Company and in order to benefit from his tremendous experience, conferred upon him the status and title of Chairman Emeritus w.e.f. 1 May 2021. His insights on strategic aspects, corporate governance related matters, brand and image building will further steer the Company to achieve its strategic and business objectives. He has agreed to shoulder the responsibility of Chairman Emeritus without any compensation and would not be considered as a director for the purpose of the provisions of the Act and SEBI Listing Regulations.

B. Directors liable to retire by rotation

Rajiv Bajaj retires by rotation at the ensuing AGM, being eligible, offers himself for re-appointment.

Brief details of Rajiv Bajaj, who is seeking re-appointment, are given in the Notice of AGM.


There was no change in the KMP of the Company during FY2021.

As per the requirements of the RBI Directions and SEBI Listing Regulations, details of all pecuniary relationship or transactions of the non-executive directors vis-a-vis the Company are disclosed in the Corporate Governance Report.

Declaration by independent directors

The independent directors have submitted a declaration of independence, stating that they meet the criteria of independence provided under section 149(6) of the Act, as amended, and regulation 16 of the SEBI Listing Regulations.

The independent directors have also confirmed compliance with the provisions of rule 6 of Companies (Appointment and Qualifications of Directors) Rules, 2014, as amended, relating to inclusion of their name in the databank of independent directors.

The Board took on record the declaration and confirmation submitted by the independent directors regarding them meeting the prescribed criteria of independence, after undertaking due assessment of the veracity of the same in terms of the requirements of regulation 25 of the SEBI Listing Regulations.

Policy on directors appointment and remuneration

The salient features of the policy on directors appointment and remuneration forms a part of the Corporate Governance Report. This policy is also placed on the Companys website and can be accessed at finance/downloads/remuneration-policy.pdf.

Annual return

A copy of the annual return as provided under section 92(3) of the Act, in the prescribed form, which will be filed with the Registrar of Companies/MCA, is hosted on the Companys website and can be accessed at finance-investor-relation-annual-reports.

Number of meetings of the Board

Six (6) meetings of the Board were held during FY2021. Details of the meetings and attendance thereat forms part of the Corporate Governance Report.

Directors responsibility statement

The financial statements are prepared in accordance with the Indian Accounting Standards (Ind AS) under historical cost convention on accrual basis except for certain financial instruments, which are measured at fair values pursuant to the provisions of the Act and guidelines issued by SEBI/RBI. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy. These form a part of the Notes to the financial statements.

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

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

(ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for FY2021;

(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) they have prepared the annual accounts on a going concern basis;

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

(vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and are operating effectively.

Audit Committee

The Audit Committee comprises of Dr. Omkar Goswami as Chairman and Sanjiv Bajaj, Ranjan Sanghi and Dr. Naushad Forbes as other members.

The brief terms of reference and attendance record of members are given in the Corporate Governance Report.

Particulars of loans, guarantees and investments

The Company, being an NBFC registered with the RBI and engaged in the business of giving loans in ordinary course of its business, is exempt from complying with the provisions of section 186 of the Act with respect to loans. Accordingly, the disclosures of the loans given as required under the aforesaid section have not been made in this Report.

During FY2021, the Company infused capital in the following:

1. One MobiKwik Systems Pvt. Ltd. (MobiKwik)

Pursuant to a commercial agreement with MobiKwik, the Company was allotted 22,944 Series E compulsorily convertible cumulative preference shares, in tranches, against receivables aggregating to H 18.89 crore.

Total investment in MobiKwik as on 31 March 2021 is approximately H 281.21 crore.

2. BFinsec

In order to support BFinsec to augment its minimum net worth and consequently help leverage its Margin Trading Financing requirements, the Company made further investment of approximately H 150 crore. The total investment in BFinsec as on 31 March 2021 is H 270.38 crore.

The Company continues to stay invested in BHFL and RBL Bank Ltd. Information regarding investments covered under the provisions of section 186 of the Act is detailed in the financial statements.

Employee Stock Options (ESOP)

The Company grants share-based benefits to eligible employees with a view to attract and retain talent, align individual performance with the Company objectives, and promote increased participation by them in the growth of the Company.

Shareholders, through postal ballot, approved amendment to the existing ESOP Scheme to, inter alia, increasing the limit of options by 10,000,000 options; and treatment of unvested and vested options at the time of retirement. The maximum limit of stock options that can be granted under the scheme now stand revised from 25,071,160 options to 35,071,160 options.

A statement giving complete details, as at 31 March 2021, under regulation 14 of the SEBI (Share Based Employee Benefits) Regulations, 2014, is available on the website of the Company and can be accessed at investor-relation-annual-reports.

Grant wise details of options vested, exercised and cancelled are provided in the notes to the standalone financial statements.

The Company has not issued any sweat equity shares or equity shares with differential rights during FY2021.

Share capital

During FY2021, 898,270 equity shares, at applicable grant prices, were allotted to BFL Employee Welfare Trust under the BFL Employee Stock Options Scheme, 2009.

As on 31 March 2021, the paid-up share capital of the Company stood at H 120.52 crore consisting of 602,587,339 equity shares of face value of H 2 fully paid up.

Related party transactions

All contracts/arrangement/transactions entered by the Company during FY2021 with related parties were in compliance with the applicable provisions of the Act and SEBI Listing Regulations. Prior omnibus approval of the Audit Committee is obtained for all related party transactions which are foreseen and of repetitive nature. Pursuant to the said omnibus approval, details of transaction entered into is also reviewed by the Audit Committee on a quarterly basis.

All related party transactions entered during FY2021 were on arms length basis and in the ordinary course of business of the Company under the Act and not material under the SEBI Listing Regulations or extant RBI guidelines. None of the transactions required members prior approval under the Act or SEBI Listing Regulations.

Details of transactions with related parties during FY2021 are provided in the notes to the financial statements. There were no transaction requiring disclosure under section 134(3)(h) of the Act. Hence, the prescribed Form AOC-2 does not form a part of this report.

The Company has formulated a policy on materiality of related party transactions and on dealing with related party transactions including clear threshold limits, duly approved by the Board. The Board has reviewed the policy and has not recommended any change to either the policy or prescribed threshold. The policy is available on the website of the Company at and also forms a part to the Corporate Governance Report.

Material changes and commitments

There were no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year and the date of this report.

Conservation of energy

The operations of the Company are not energy intensive. The Company implements various energy conservation measures across all its functions and value chain, which are highlighted in the Business Responsibility Report.

Technology absorption

The details pertaining to technology absorption have been explained in the annexed Management Discussion and Analysis.

Foreign exchange earnings and outgo

During FY2021, the Company did not have any foreign exchange earnings and the foreign exchange outgo in terms of actual outflow amounted to H 128.17 crore (FY2020 - H 203.67 crore).

Risk management

The Board of Directors have adopted a risk management policy for the Company which provides for identification, assessment and control of risks which, in the opinion of the Board, may pose significant loss or threat to the Company.

The Company re-calibrated its risk management framework and approach to enable it to tide over the ongoing COVID-19 pandemic. These included:

Tightening of underwriting and LTV norms across all businesses Buttressing of collection infrastructure and capacity Offering flexible payment options to the customers Pausing lending in B2C and commercial lending during the lockdown

Building multiple scenarios on potential COVID-19 credit cost impacts taking into consideration lockdown, behaviour of moratorium customers, collection capacity management, changes in regulatory forbearance and response of the economy after the lockdown

Proactive contingency provisioning to the tune of H 672 crore

The above initiatives helped the Company to bounce back to pre-COVID levels in the risk metrics.

Further, during FY2021, the Board enhanced the scope of risk management committee to cover operational, reputational and market (investment) risk. The frequency of the meetings of the Risk Management Committee has been increased to have a closer oversight. Details of the Committee are given in the Corporate Governance Report.

As per RBI circular on Risk Management System - Appointment of Chief Risk Officer dated 16 May 2019, Fakhari Sarjan is the Chief Risk Officer (CRO) of the Company. Further, in terms of the said circular, an independent meeting of the CRO with the Board/Risk Management Committee in absence of the Managing Director is organised on a quarterly basis.

More detailed discussion on the Companys risk management and portfolio quality is covered in the Management Discussion and Analysis.

Corporate social responsibility (CSR)

The CSR Committee comprises of three directors viz., Rahul Bajaj, Sanjiv Bajaj and Dr. Naushad Forbes. Consequent to resignation of Rahul Bajaj w.e.f. close of business hours on 30 April 2021, the CSR Committee was re-constituted with induction of Rajeev Jain as its member and Sanjiv Bajaj, member, was designated as Chairman w.e.f. 1 May 2021.

During FY2021, the Committee met three (3) times. The attendance record of members is given in the Annual Report on CSR activities.

Section 135 of the Act and the Companies (Corporate Social Responsibility Policy) Rules, 2014 (the CSR Rules) have been amended substantially with effect from 22 January 2021.

In terms of the provisions of the Act, read with the CSR Rules, the Annual Report on CSR activities under the format prescribed in Annexure II of the CSR Rules is annexed to this Report.

In line with the said amendments, the Board, at its meeting held on 27 April 2021, amended the existing Policy.

The Policy is uploaded on the website of the Company and can be accessed at social-responsibility.pdf.

Further, in terms of the amended CSR Rules, Chief Financial Officer has certified that the funds disbursed have been utilized for the purpose and in the manner approved by the Board for FY2021.

Formal annual evaluation

Information on the manner in which formal annual evaluation is made by the Board of its own performance and that of its Committees, Chairperson and individual directors is given in the annexed Corporate Governance Report.

Significant and material orders

During FY2021, there were no significant or material orders passed by any regulator or court or tribunal impacting the going concern status and Companys operations in future.

In January 2021, the RBI imposed a monetary penalty of H 2.50 crore on the Company for non-compliance with provisions of Directions on Managing Risks and Code of Conduct in Outsourcing of Financial Services by NBFCs. The Company maintains that this is neither financially significant nor material in nature and does not affect the going concern status of the Company. However, the Company has strengthened its collections infrastructure, institutionalised the framework for training of recovery agents and has taken other measures to ensure that such incidents do not recur.

Internal audit

At the beginning of each financial year, an audit plan is rolled out after approval of the Audit Committee. The audit plan is aimed at evaluation of the efficacy and adequacy of internal control systems and compliance thereof, robustness of internal processes, policies and accounting procedures and compliance with laws and regulations. Based on the reports of internal audit function process owners undertake corrective action in their respective areas.

Significant audit observations and corrective actions thereon are presented to the Audit Committee on quarterly basis.

RBI, through its circular dated 3 February 2021, has introduced risk based internal audit (RBIA) for NBFCs, by which applicable NBFCs shall put in place a RBIA framework by 31 March 2022.

On the recommendation of the Audit Committee, the Board has approved a RBIA framework, along with appropriate processes and plans for internal audit. This has been implemented from 1 April 2021.

Business continuity and cyber security

In the wake of COVID-19 pandemic, the Company swiftly leveraged its technological capabilities to ensure bandwidth availability, set-up virtual private networks, make laptops available wherever needed, and created multiple available platforms for collaboration and team meetings over digital media. This allowed operations to continue under the Work-from-Home protocol. The Company also enabled remote access for identified IT vendors/partners to enable full resources for user support, DC support, application maintenance and testing. Simultaneously, the Company increased its thrust on digital capabilities to connect with customers for servicing and recovery during the lockdown period.

To improve its cyber security posture, the Company has migrated all its critical internet-facing properties behind a well- known cloud-based web application firewall to safeguard against web application attacks as well as distributed denial of service attacks.

Further, regular vulnerability assessment and penetration testing, review of segregation of duties, other audit and compliance testing(s) have ensured that the Companys information assets are safe and secure. An awareness program is conducted for all employees using the digital channel regarding cyber security. Employees of the Company are required to undergo a mandatory online learning module on information security and affirm that they have understood and are aware of the protocols to be followed. Regular information security related mailers are also sent to all employees for awareness and training purpose.

The Company will continue its focus on the automation of security orchestration to respond to cyber incidents through its security operations centre.

A detailed discussion on information systems, cyber security and information technology is covered under Management Discussion and Analysis.

Information system audit

In terms of the Master Direction on Information Technology Framework for the NBFC Sector, NBFCs are required to have an information system audit at least once in two years. During FY2021, a system audit was conducted by a CERT-in empaneled audit firm. The areas audited were, inter alia, user access management, patch management, business continuity and disaster recovery, data protection and the information security management system framework. The audit revealed no major observations.

Internal financial controls

The Company has in place adequate financial controls commensurate with its size, scale and complexity of operations with reference to its financial statements. Internal financial controls of the Company are also similarly commensurate.

These have been designed to provide reasonable assurance about recording and providing reliable financials information, ensuring integrity in conducting business, accuracy and completeness in maintaining accounting records and prevention and detection of frauds and errors.


The Company accepts deposits from retail and corporate clients. As on 31 March 2021, it had a deposit book of H 25,803.43 crore, delivering an annual growth of 20% in FY2021. Deposits contributed to 26% of BFLs standalone borrowings versus 21% as at the end of FY2020.

During FY2021, the Company accepted public deposits of H 8,850.82 crore. Public deposits outstanding as at the end of the year aggregated to H 18,961.23 crore.

Pursuant to provisions of the RBI Act, 1934, the Company has created a charge on statutory liquid assets amounting to H 3,275.03 crore in favour of the trustee for FD holders.

During FY2021, the Company accepted inter corporate deposits (ICDs) of H 4,550.59 crore. ICDs outstanding as on 31 March 2021 were H 4,012.86 crore.

During FY2021, the Company accepted other deposits of H 2,448.48 crore. Other deposit outstanding as on 31 March 2021 were H 2,829.34 crore.

During FY2021, there was no default in repayment of deposits or payment of interest thereon.

As on 31 March 2021, there were 6 FDs amounting to H 16.43 lakh which had matured and remained unclaimed and interest on matured deposits amounting to H 0.18 lakh and interest on active deposits amounting to H 0.95 lakh had also remained unclaimed.

To avoid piling up of unclaimed deposits, depositors money shall be paid by default on maturity date through RTGS/NEFT unless renewal instructions have been submitted by the depositor. Wherever it is not possible to make the payment and the amount remains unclaimed, the following process has been adopted:

Wherever payment of deposit amount and interest thereon is rejected by bank, the Companys customer service team calls the depositor to inform about the reason(s) for the rejection and advises them on the process of changing their linked bank account.

In addition, SMS/email are also sent to depositors to inform them of rejection reason(s) which advise them to initiate appropriate action to update their bank details.

In case of death of depositors, claim settlement process is advised to joint depositors/nominee/legal heir, as the case may be.

Wherever resident status of the depositors has changed from Resident to Non-Resident, they are advised to submit updated FATCA/CRS declaration and to get their bank details updated.


The Company had established a Secured Euro Medium Term Note Programme for USD 1.5 billion listed on Singapore Exchange Securities Trading Ltd. during FY2020, to be utilised over a period.

During FY2021, the Company has availed external commercial borrowing (ECB) to the tune of USD 175 million in addition to USD 575 million availed during FY2020. The ECB is within overall borrowing limits approved by the shareholders of H 160,000 crore.

During FY2021, the Company has issued non-convertible debenture to the tune of H 8,213 crore and redeemed non-convertible debentures and subordinate debt to the tune of H 10,619.30 crore and H 228.70 crore respectively.

Credit rating

The brief details of the ratings received from credit rating agencies by the Company for its outstanding instruments is given in General Shareholder Information.

Whistle blower policy/vigil mechanism

The Company has a whistle blower policy encompassing vigil mechanism pursuant to the requirements of the section 177(9) of the Act and regulation 22 of the SEBI Listing Regulations. The Audit Committee reviews the functioning of the whistle blower policy. The policy/vigil mechanism enables directors and employees to report to the management their concerns about unethical behaviour, actual or suspected fraud or violation of the Companys code of conduct or ethics policy and leak or suspected leak of unpublished price sensitive information. More details are given in Corporate Governance Report.

The whistle blower policy is uploaded on the website of the Company and can be accessed at media/finance/downloads/whistle-blower-policy.pdf.

RBI guidelines

The Company continues to fulfil all the norms and standards laid down by RBI pertaining to non-performing assets, capital adequacy, statutory liquidity assets, etc. As against the RBI norm of 15%, the capital to risk-weighted assets ratio of the Company was 28.31% as on 31 March 2021. In line with the RBI guidelines for asset liability management (ALM) system for NBFCs, the Company has an asset liability committee, which meets monthly to review its ALM risks and opportunities.

The Company continues to be in compliance with the NBFC - Corporate Governance (Reserve Bank) Directions, 2015.

Statutory disclosures

The financial statements of the Company and its subsidiaries are placed on the Companys website at .

Details required under the provisions of section 197(12) of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, containing, inter alia, the ratio of remuneration of directors to median remuneration of employees, percentage increase in the median remuneration, are annexed to this Report.

Details of top ten employees in terms of the remuneration and employees in receipt of remuneration as prescribed under rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, containing details prescribed under rule 5(3) of the said rules, which form part of the Directors Report, will be made available to any member on request, as per provisions of section 136(1) of the Act.

The Company being an NBFC, the provisions relating to Chapter V of the Act, i.e., acceptance of deposit, are not applicable. Disclosures as prescribed by Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 and other NBFC regulations have been made in this Annual Report.

The provision of section 148 of the Act relating to maintenance of cost records and cost audit are not applicable to the Company.

The Company has a policy on prevention of sexual harassment at the workplace. The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The number of complaints received, disposed of and pending during FY2021 is given in the annexed Corporate Governance Report.

There is no change in the nature of business of the Company during FY2021.

The Company has not defaulted in repayment of loans from banks and financial institutions.

There were no delays or defaults in payment of interest/principle of any of its debt securities.

The Managing Director, as per the terms of his appointment, does not draw any commission or remuneration from subsidiary company. Hence, no disclosure as required under section 197(14) of the Act has been made.

Disclosures pursuant to RBI Master Directions, unless provided in the Directors Report, form part of the notes to the standalone financial statements.

Corporate governance

In terms of the SEBI Listing Regulations, a separate section titled Report on Corporate Governance has been included in this Annual Report, along with the Management Discussion and Analysis and report on General Shareholder Information.

All Board members and senior management personnel have affirmed compliance with the Companys code of conduct for FY2021. A declaration to this effect signed by the Managing Director is included in this Annual Report.

The Managing Director and the Chief Financial Officer have certified to the Board in relation to the financial statements and other matters as specified in the SEBI Listing Regulations.

A certificate from auditors of the Company regarding compliance of conditions of corporate governance is annexed to this Report.

Business responsibility report (BRR)

According to the provisions of the SEBI Listing Regulations, BRR has been hosted on the website and can be accessed at . The BRR highlights the initiatives, actions, process and the way Company conducts its business in line with its environmental, social and governance obligations.

Secretarial standards of ICSI

The Company has complied with the requirements prescribed under the Secretarial Standards on meetings of the Board of directors (SS-1) and general meetings (SS-2) read with the MCA Circulars granting exemptions in view of the COVID-19 pandemic.

Statutory auditors

In terms of section 139 of the Act, S R B C & CO LLP, Chartered Accountants, (Firm Registration No. 324982E/E300003) were appointed as statutory auditors of the Company to hold office from the conclusion of the 30th AGM of the Company till the conclusion of the 35th AGM. The statutory auditors have confirmed they are not disqualified from continuing as auditors of the Company.

The audit report by S R B C & CO LLP, for FY2021 is unmodified, i.e., it does not contain any qualification, reservation or adverse remark or disclaimer.

In terms of the RBI Master Directions - Non-Banking Financial Companies Auditors Report (Reserve Bank) Directions, 2016, the auditors have also submitted an additional report dated 21 July 2020, for FY2020 which has been filed with RBI.

There were no comments or adverse remarks in the said report.

Secretarial auditor

Pursuant to the provisions of section 204 of the Act, the Board has appointed Shyamprasad D. Limaye, practising company secretary (FCS No. 1587, CP No. 572), to undertake secretarial audit of the Company.

A report from the secretarial auditor in the prescribed Form MR-3 is annexed to this Report. It does not contain any qualification, reservation or adverse remark or disclaimer.

In addition to the above and pursuant to SEBI circular dated 8 February 2019, a report on secretarial compliance issued by Shyamprasad D. Limaye for FY2021 has been submitted with the stock exchanges. There are no observations, reservations or qualifications in that report.

As per regulation 24A of the SEBI Listing Regulations, a listed company is required to annex a secretarial audit report of its material unlisted subsidiary to its Directors Report. The secretarial audit report of BHFL, a material subsidiary (though a debt listed company) for FY2021 is annexed herewith.

The auditors, i.e., statutory auditors and secretarial auditors have not reported any matter under section 143(12) of the Act, and therefore, no details is required to be disclosed under section 134(3)(ca) of the Act.


The Board places its gratitude and appreciation for the support and cooperation from its members, the RBI and other regulators, banks, financial institutions, trustees for debenture holders and fixed deposit holders.

The Board also places on record its sincere appreciation for the commitment and hard work put in by the management and the employees in these trying times.

On behalf of the Board of directors

Sanjiv Bajaj Chairman

27 April 2021