Bandhan Bank Ltd Management Discussions

A. Global and Indian Economic Scenario

Global economy - fared better than expected

Global economy had a better than expected year in 2023 as inflation peaked out for most of the economies while growth remained steady. Factors, such as, government and private spending, along with real disposable income gains, drove the upswing. Consumption was supported despite tight labour markets, as households continue to tap into pandemic-era savings along with robust gains in wages. Euro area, however, continued to witness soft growth on the back of weak consumer sentiment. Global growth, is projected to remain steady at 3.2 per cent. in both 2024 and 20251.

Monetary policy remained restrictive for most central banks primarily in order to combat higher inflation. Global headline inflation is expected to fall from an estimated 6.8 per cent. in 2023 (annual average) to 5.9 per cent. in 2024 and 4.5 per cent. in 20252.

With disinflation and steady growth, the likelihood of a recession is more or less ruled out and interest rates are expected to get lowered in the second half of 2024. Having said that, growth forecast for 2024 for most economies remains below the historical average as multi-year high interest rates are expected to slightly dampen growth prospects. Policymakers near-term challenge will be to intricately manage the final descent of inflationary forces while being cognizant of the fact that growth might need support in the latter half of the year. Potential risks to macrostability like commodity price upswing, geopolitical tensions and looming debt burden would need close monitoring.

Inflation easing faster than expected

Inflation rates have been declining at a faster pace than anticipated, as readings have approached the pre-pandemic average for both headline and core inflation, highlighting significant progress. This healthy progress on inflation can be attributed to higher interest rates induced demand moderation along with easing commodity prices. Resolution of pandemic-era supply chain issues has also helped in improving supply side bottlenecks and have aided in reducing cost pressures. Near-term inflation expectations have decreased across major economies, while long-term expectations have remained stable, indicating a level of anchored confidence in price stability.

Interest rates expected to come down in the second half of 2024

Major central banks raised policy interest rates to restrictive levels in 2023. However, the policy decisions have been quite varied across various developing and developed economies.

United States Fed had raised rates 11 times between March 2022 to July 2023 and is now expected to ease rates in second half of 2024. On the other hand, countries such as Brazil and Chile, have seen declining inflation and subsequently reduced interest rates since the second half of 2023 in order to support faltering growth. Conversely, Japan have responded to persistent inflation by shifting to a more restrictive monetary policy stance for the first time since late 1990s.

But with easing of prices and steady growth levels, expectations of future policy rate reductions are very much in the horizon. However, the pace and direction of rate action would be varied across economies depending on the price-growth dynamics of the individual country.

Factors critical to future policy decisions

a) Geopolitical tensions:

The Ukraine war and renewed Middle East tensions, including Houthi attacks in the Red Sea, underscore the critical role of geopolitics in shaping the 2024 global economy. Beyond potential oil disruptions, the Red Sea attacks threaten to elevate freight insurance, lengthen trade routes, and exacerbate supply chain disruptions, potentially fuelling inflation and consequently disrupting livelihoods. Geopolitics continues to take a centre-stage in determining global policy stances around security, macro-economy and trade.

b) Climate disruptions:

Climate change threatens the stability of the global economy by disrupting key resources, causing extreme weather events, and creating uncertainty. Recordbreaking heat in 2023 and climate shocks like droughts and floods continue to threaten livelihood and food security. On the other hand, severe episodes of drought-induced depletion of water levels has reduced the count of transiting ships through the Panama Canal. These two examples indicate how climate change is quickly transitioning from a medium-term hazard to a near-term risk. Policy makers are increasingly baking in climate disruptions into their assumptions while devising policies.

c) Chinas economic conundrum:

The worlds second largest economy is witnessing its one of the softest growth periods as a debt crisis in the property sector added to geopolitical tensions and weakening global demand. International Monetary Fund (IMF) has projected Chinese growth to slow down to 3.5 per cent. by 2028 and also stated that

uncertainty surrounding the outlook is very high. Protracted slowdown in Chinese economy could pose contagion risks to the rest of the world through various economic and financial channels.

d) Rise in global debt:

Global debt has increased massively to hit a record of $307 trillion in 20233. Both advanced and developing economies are facing the pressure, with more than 80 per cent. of the incremental debt build up in 2023 coming from developed economies. This rise in global debt significantly reduces fiscal space for governments to incur targeted expenditures while creating considerable uncertainty regarding macro-financial stability.

Some other key themes, both short-term and long-term, that remain crucial to policymaking going forward are discussed below:

1) Upcoming elections critical to future policy course:

The continuation of existing policies, alongside necessary reforms and implementation of new initiatives, will be a critical factor in determining the trajectory of the global economic, social and political landscape.

2) Emergence of Artificial Intelligence (AI):

AI has moved leaps and bounds in recent years and is poised to impact employment generation, job quality, and overall productivity of the global economy. In a latest study by IMF, almost 40 per cent. of global employment is exposed to AI and could potentially have significant impact on livelihood and income distribution4. Balanced and swift policies regarding AI remain crucial as rapid growth in this sector seems imminent in the next few years. This could unlock greater investment, enhanced productivity and accelerate convergence to higher income levels.

3) Divergence in demographics across nations:

Large economies like Japan and China are on the verge of a structural shift in terms of demographic mix as they transition to an ageing economy. United Nations (UN) projections indicate an increase in number of countries experiencing annual population decline, from 41 countries in 2022 to 88 countries in 2050. Since demographic trends are also relatively predictable, key stakeholders have a fairly wide window of opportunity to enact policies and encourage behaviours that shape future demographics and cushion potential adverse impacts of the demographic changes that do occur. However, this also provides opportunity for nations like India, who are endowed with large young labour force, to capitalise on global efforts to diversify supply chains and propel higher growth.

4) Inequality is still on the rise:

While extreme poverty in middle-income countries has decreased, poverty in the poorest countries and countries affected by conflicts still remains on the rise. The persistence of poverty in these countries makes key global development goals much harder to achieve5. In India, divergence of income growth between the super-rich and poor has also continued to widen - between 1961 and 2023, the top 1 per cent. wealth share increased threefold, from 13 per cent. to 39 per cent.6 This warrants timely and targeted policies to alleviate the deprived sections of the society in order to foster equitable and significant income growth.

Indian Economy - continues to shine

The Indian economic growth story in FY 2023-24 continued to maintain its momentum with growth prints exceeding expectations. The World Bank has highlighted that India will be a major contributor to Asias growth story and it is expected to see GDP growth of around 7 per cent. in FY 2024-25. Anticipations of a renewed wave of capital expenditure by the corporate sector are poised to be the leading driver of the forthcoming phase of economic expansion in FY 2024-25. On the other hand, inflation has started to ease from the peaks observed in November 2023 and December 2023, while core inflation has reached its lowest level in several years. Moderation in inflation means that bulk of the policy rate hike is behind for India and RBI is very much expected to lower rates in the second half of FY 2024-25.

India has long held the promise of a young, aspirational population, backed by robust democratic and business frameworks. Following a prolific period of reform, increasing global influence, and rapid digitisation, investors are now directing their attention towards the impending inception of Indias decade. In 2023, India also hosted one of the most successful G20 summits and has shown its ability to generate consensus among a diverse group of countries. This pivotal juncture coincides with Indias status as the fastest- growing major economy, amidst a polarised global landscape characterised by elevated debt levels, decelerating growth, and heightened uncertainty.

Economic indicators point to a robust domestic economy, aided by pro-active and growth positive policies. Below we discuss some of the macro-economic parameters indicating the Indian economic juggernaut.

• Government capex induced investment propelled domestic growth in FY 2023-24; private capex revival underway-

Capex growth, averaging 8.5 per cent. since June 2022, reached double digits at 10.6 per cent. in the December 2023 quarter, compared to the pre-pandemic average of 7.3 per cent. (2017-2019)7. Government-led capital spending has driven the recovery in capital expenditure since Covid. In FY 2024-25 interim budget, the Government has allotted

Rs.2.78 lakh crore for the road ministry, up about 2.8 per cent. compared to last year, while another Rs. 2.55 lakh crore will be given to the Indian Railways. This is the fourth consecutive increase in capital investment by the Government and this is expected to stimulate private capital expenditure, drive economic growth and propel higher consumption. Disparity in capital expenditure among states has come down, resulting in inclusive expansion of capital across the nation in the last few years. That bodes well for the long-term growth of India.

Private capital expenditure, which has been subdued over the past decade, is expected to turn a corner during the next few years primarily due to favourable interest rates and Governments focus on infrastructure development, enhancing the investment climate and attracting private funds.

• Overall demand continues to be stable; recovery in rural demand ongoing-

private Final Consumption Expenditure (PFCE) growth remained stable at 4 per cent. during the quarter ended March 31, 2024 as compared to the quarter ended March 31, 20238. Rural consumption remained a bit muted, primarily due to uneven monsoon. On the other hand, urban consumption has remained relatively strong. Consumption growth is expected to recover durably in FY 2024-25, led by the revival in rural consumption. Consumer sentiment has remained steady while demand indicators like nonoil imports and two wheelers sales reflect consumption is gaining strength. Going forward, continued emphasis on capex, lower inflation, and improved monsoon forecasts are expected to alleviate rural demand distress.

• Sustained optimism in manufacturing and service sectors-

Propelled by new orders, upturn in inventories and higher job creation, Indias manufacturing activity hit a 16-year high of 59.1 in March 2024 as indicated by Purchasing Managers Index (PMI). The latest PMI numbers showed that manufacturing output rose for the 33rd month running in March 2024, and to the greatest extent since October 2020.

Service sector continues to deliver robust growth as witnessed during FY 2022-23 despite global headwinds. Latest PMI print of service sector indicates that the sector has continued to be expansionary since August 20219.

There are structural tailwinds at play for the Indian economy, indicating that the Indian growth story could be a multidecadal phenomenon. The Indian story in the next few decades is likely to be driven by the broad themes of: -

a) rapid digitisation,

b) demographic dividend,

c) increased and improved credit access,

d) sustainability, and

e) effective and transformative policy making.

a) Digital infrastructure development remains rampant:

• Digitalisation in India has been progressing steadily, first covering large urban areas, followed by smaller urban areas and rural areas.

• Digital growth in India is getting a further fillip now and would become a major factor in sustaining Indias long-term growth story. According to the State of Indias Digital Economy Report, 2024, by Indian Council for Research on International Economic Relations (ICRIER), the state of digitalisation in India is better than some developed countries including the United Kingdom, Germany and Japan, compared by their aggregate level of digitalisation.

• The foundation of Indias digital transformation lies in building a democratic and efficient digital infrastructure to ensure ease of living. The Digital India initiative has been instrumental in achieving this goal, and it has been extended with a total budget of Rs.14,903 crore from FY 2021-22 to FY 2025-2610.

• Indias foundational Digital Public Infrastructure (DPI), called India Stack, has been harnessed to foster innovation and competition, expand markets, close gaps in financial inclusion, boost government revenue collection and improve public expenditure efficiency.

• Emerging technologies have played a key role in fuelling the growth of the Indian economy. Technologies like cloud computing and artificial intelligence have helped businesses in India become more efficient and productive.

b) Demographic dividend is expected to stimulate multidecadal domestic growth:

• As per the United Nations Population Funds (UNFPA) State of World Population Report 2023, India now is the most populous country in the world, with 68 per cent. of the population belonging to the working age category, i.e. 15-64 age group.

• Governments continued focus on building social infrastructure, including education, skilling, public health and nutrition, and drinking water and sanitation, will lead to a more productive and proficient workforce. This is crucial for the success story of Indias growth.

• Mismatch in skillsets availability and industry- specific needs, along with low human development parameters are some of the challenges that holds the potential to derail Indias demographics driven growth momentum. Policy makers need to closely monitor these concerns and act accordingly to make the most use of this dividend.

c) Increased access to credit is crucial for long-term growth:

• India has witnessed a significant surge in credit penetration, which could be a very significant instance in the nations economic and social landscape. The latest data reveal a notable increase in the number of individuals and businesses accessing credit, a trend that is largely influenced by the concerted efforts towards financial inclusion.

• Financial inclusion has played a pivotal role in fostering the growth of credit penetration in India. Initiatives such as the Pradhan Mantri Jan Dhan Yojana (PMJDY) have been instrumental in bringing a vast segment of the population into the formal banking system.

• In terms of the numbers for the quarter ended March 31, 2024, credit growth expanded by 16 per cent. year-on-year (excluding HDFC merger impact), which is well-above last years print of 15 per cent.11 Personal loans continued to drive credit demand while bank credit growth outpaced deposit growth significantly in FY 2023-2412. The medium-term prospects look promising with sustained growth in personal loans along with the anticipated increase in capex spending, especially in the private sector.

• Micro, Small and Medium Enterprises (MSMEs) credit drive: Credit supply to MSMEs grew by 14 per cent. year-on-year during FY 2023-24, indicating robust lender confidence 13. Commercial credit lending still continues to maintain its overall growth post initial boost provided by ECLGS scheme (launched by Government of India to support credit to MSME sector).

• Improved credit access to women: Women borrowers in India have increased at a Compound Annual Growth Rate (CAGR) of 15 per cent. over the last five years compared to a CAGR growth of 11 per cent. for male borrowers. The share of women borrowers has increased from 25 per cent. in 2017 to 28 per cent. in 202214.

• Indias credit growth is expected to remain buoyant over the next several years, driven by economic growth, pro-active policy making and a surge in retail lending through digital channels.

d) Sustainability driven inclusive growth is the way forward:

• Embracing renewable energy resources will play a crucial part in the development of Indias sustainable strategy. India currently stands as the worlds third-largest producer of renewable energy, with 42 per cent. of its installed capacity sourced from clean and sustainable options. Indias goal of producing 500 GW of renewable energy capacity by 2030 will unlock 80 per cent. of power capacity additions from renewable sources15.

• As of February 2024, renewable energy sources, including large hydropower, have a combined installed capacity of 183.49 GW. India will witness more than 83 per cent. increase in investments in renewable energy projects to around $6.5 billion in 2024 as the country focuses on energy transition to reduce carbon emissions16.

• The National Green Hydrogen Mission is aimed at making India a global hub for manufacturing this clean source of energy and is expected to lead to the development of 5 million metric tonnes per annum of green hydrogen production capacity by 2030. The Union Cabinet approved the National Green Hydrogen Mission with a total initial outlay of Rs.19,744 crore17.

B. Indian Banking Sector: Key Developments Indian Banking Sector: Robust and healthy

During FY 2023-24, credit offtake grew at a robust 20.2 per cent. year-on-year (including HDFC merger) and 16.3 per cent. year-on-year (excluding HDFC merger)18, outpacing deposit growth which grew by 13.5 per cent. (including HDFC merger) and 12.9 per cent. (excluding HDFC merger)18. As a result, the credit-to-deposit (CD) ratio has increased to around 80.3 per cent. for all Scheduled Commercial Banks (SCBs), with a significantly higher ratio for private sector banks as compared to public sector banks19.

The growth of credit has been broad-based across segments:

a. Personal Loans and credit to services have been the key credit growth drivers for FY 20 2 3-2420

- Credit growth to services sector accelerated to 20.2 per cent. year-on-year (excluding HDFC merger) in March 2024 from 19.6 per cent. a year ago, due to the improved credit offtake to real estate, tourism and aviation. Including HDFC merger, growth in services credit came in at 22.9 per cent. year-on-year.

- Personal loans registered a robust growth of 17.7 per cent. (excluding HDFC merger impact) in March 2024 as compared with 21 per cent. a year ago, mainly driven by housing loans. Including HDFC merger, growth in personal loans came in at 27.6 per cent. year-on-year.

b. Credit to agriculture and allied activities came in strong21

c. Industry credit growth recovered in FY 2023-2422. In terms of scale-distribution, credit growth to micro, small and large-scale industries accelerated while credit growth was observed to be steady in medium-scale industries:

Sector	For the FY ended
	March 2024	March 2023	April 2022
Agriculture & allied activities	20.1%	15.4%	10.6%
Industries	9.0%	5.7%	7.9%
	(8.5%)	12.3%	29.8%
I. Micro and Small	14.9%	19.6%	53.7%
II. Medium	13.2%	3.0%	1.3%
III. Large	7.0%	19.8%	11.2%
Services	22.9%
	(20.2%)

Numbers in parentheses indicate year-on-year growth rate excluding HDFC merger impact

d. Non-Performing Assets (NPAs) continue to recover post pandemic jitters.

e. As per the Financial Stability Report23 (FSR) by the RBI, Gross Non-Performing Asset (GNPA) ratio of SCBs fell to an twelve-year low of 2.8 per cent. in March 2024 whereas the Net Non-Performing Assets (NNPA) improved to a record low of 0.6 per cent. in March 2024.

f. The FSR also highlights that the Indian banking sector would be able to withstand severe stress conditions in credit, as per extensive macro stress tests. This underscores Indias banking sector strength with respect to any significant spill-overs from a possible banking crisis in the developed economies.

g. Reserve Bank of India (RBI) has continued to emphasise that sustained focus must be on a customercentric approach to strengthen the confidence of people in the banking system. The apex body has also exhorted banks to further strengthen governance and assurance functions, which is crucial for the economic and financial stability of India.

h. According to a latest report by PwC and Association of Microfinance Institutions of India, global Microfinance Institutions (MFI) industry is expected to grow at a compound annual growth rate of 11.6 per cent.24 MFIs, which have acted as a financial support system to low-income households by offering credit access, will continue to play a leading role in the growth process of India. Following data indicates the continued growth and widening scale of MFI in India25 :

• As per the latest data from Microfinance Institutions Network (MFIN), total Gross Loan Portfolio (GLP) of microfinance stood at Rs.4.33 lakh crore, with Non-Banking Finance Companies - Microfinance Institutions (NBFC-MFIs) share at 40 per cent. followed by banks at 33 per cent., Small Finance Banks (SFB) at 17 per cent. and NBFCs at 9 per cent.

• The portfolio growth has been pronounced for SFBs (28 per cent. year-on-year) and NBFCs (38 per cent. year-on-year). Portfolio for banks rose by 21 per cent. while for NBFC-MFIs the growth came in at 24 per cent.

• The industry currently serves 7.8 crore unique borrowers through 14.9 crore loan accounts.

• The top 10 states (based on universe data) constitute 84.4 per cent. in terms of GLP. Bihar continues to be the largest state in terms of portfolio outstanding followed by Tamil Nadu and Uttar Pradesh.

With strong and ever-improving public and financial institutions in place, India stands at an opportune moment to ride the next cycle of growth in the coming decades.

Potential threats

• The impediment to the Indian growth story mainly stems from the external sector:- significant slowdown in overseas demand and persisting global inflation may temper growth outlook for India.

• Another risk to growth could be from worsening supply-chain bottlenecks (due to increased geopolitical tensions). This may result in lower trade volumes, uncertainty in policy making and pick-up of inflation primarily due to volatile commodity prices, resulting in tempering of overall growth expectations.

• Rapid technological disruption may require traditional enterprises to rejig their business model quicker than expected. This could also result in a skill-jobs mismatch resulting in below-expected employment growth, which would significantly hinder the optimal use of Indias favourable demographics. Policy makers, businesses and employees would need to be prepared and act accordingly.

• Corporations and policymakers would continue to remain cognizant of risks from adverse climatic changes. One such risk could be food supply shock due to unfavourable monsoon conditions in 2024. This could entail risks to domestic food security along with aiding the resurgence of inflationary pressures.

C. Strategy

Your Bank has clearly laid out its vision to be a financial institution that caters to all and provide simple and cost- effective financial solutions in a courteous and responsible manner. It intends to create value for all stakeholders through a committed and efficient team, robust practices, superior systems and technology while continuing to deepen its customer reach.

Your Bank has been diligently working towards strengthening the foundations over the last few years to create the bedrock for the future growth story. This year, your Bank, has gone the extra mile and managed to instil key foundational blocks in critical parameters of success like tech, people and distribution. This will undoubtedly springboard your Bank to its next phase of development.

Your Bank remains focused on scaling up the business by strengthening its loan book and bringing in quality deposits. Your Bank will continue to spread its presence across the country, while also upgrading its core businesses in existing geographies. Your Bank will continue to focus on reinforcing the culture of adhering to the highest standards of risk and compliance protocols at every stage of its functioning. By leveraging the vast network of branches and banking units, your Bank will continue to emphasise on providing improved financial solutions through innovative products. Through strict adherence to risk management framework, greater investment in data analytics and technology, your Banks objective is to establish a robust foundation at each stage of its journey.

In line with the Indian growth story, your Bank has been able to deliver a robust performance in terms of extending business horizons and remain in course to deliver on its goals. Your Bank has been able to tread the industry growth path and even outperform in certain parameters as detailed below:

• Your Bank has demonstrated exceptional growth over the years with advances growing at a CAGR of 26 per cent. from Rs.15,593 crore in FY 2015-16 to Rs.1,24,721 crore in FY 2023-24. Your Bank has achieved this growth in advances while simultaneously diversifying the portfolio through increased allocations to housing, retail, and commercial banking loans.

• This growth story also underscores the trust that the customers have placed in your Bank, as evident by the increase in the deposits portfolio from Rs.12,089 crore in FY 2015-16 to Rs.1,35,202 crore in FY 2023-24, translating to a CAGR of 31 per cent. Your Bank aims to achieve greater heights while focusing on its mission to provide accessible and cost-effective financial solutions to its customers.

• Your Bank continues to invest in future with great emphasis on digitisation for productivity and efficiency gains, along with enhanced customer experience. This year, your Bank, has made giant strides in the tech domain:

- Your Bank has achieved a significant milestone towards accomplishing this goal through the successful migration of its Core Banking Solution (CBS) and subsequent revamping of its digital banking solution mBandhan application. This will ensure that your Bank is future-ready and equipped with the capability to meet the evolving requirements, as well as the dynamic shifts in customers banking demands.

- Your Bank will also continue its pursuit to drive operational excellence on every count and provide digital-first solutions, ensuring that the customer experience remains the focal point of every initiative.

• Your Bank has maintained its pace of growth in terms of employees and remains a favoured choice for employees: During the Financial Year under review, manpower has increased by 9 per cent. from 69,702 as on March 31, 2023 to 75,748 as on March 31, 2024. Your Bank has additionally enhanced its geographical network with 1,700 retail branches and 4,597 banking units as on March 31, 2024.

Your Bank is confident in advancing towards its vision by leveraging its strategic pillars focusing on People, Process and Technology:

• Talent - Your Bank recognises the importance of its most important resource i.e. its talent pool. Your Bank will work towards talent development through integrated learning and devolvement plan, and develop comprehensive capabilities across functions through relevant training. There is a continued assessment of productivity and efficiency metrics as a part of your Banks pursuit to operate at an optimal level. Your Bank is actively implementing attrition management measures across focus areas using advanced analytics.

• Systems and Processes - Your Bank prioritises continuous process improvement, recognising the vital role of aligning processes with organisational objectives. This commitment ensures operational efficiency and effectiveness, which is key to the achievement of strategic goals. Your Bank is investing in its systems and processes to enhance customer experience. Your Bank prioritises customer experience and transparency at every stage of designing processes. •

• Technological Progress - Over the years, your Bank has worked diligently towards widespread usage and adoption of IT applications and analytical tools within the Bank and will continue to invest further in its IT and Analytics capabilities. These upgrades have enabled your Bank to enhance its abilities around exchange of data, strategic insights and timely reporting of key events resulting in improved coordination among different departments. Your Bank will continue to prioritise data security and integrity at every stage of its functioning.

Keeping in line with its long-term goals, your Banks long-term vision lays down the following objectives:

• Be a banker for the new Indian, through every step of their aspirational journey.

• Serve the needs of emerging India through innovative products and dedicated service.

• Enable entrepreneurs with timely resources in order to scale-up their businesses.

• Be a value-based employer of choice - to attract high-quality and motivated talent.

As part of its strategy, your Bank has been a part of various social development programmes on enhancing education, health, poverty alleviation, livelihood promotion, market linkages, enterprise development, employment generation and financial literacy. Going forward, your Bank will continue to engage with the community through strategic interventions aimed at contributing to society.

Indias growth story presents a perfect operating context to leverage the capabilities your Bank has built over the years. Your Bank remains committed to executing its strategy plan in a systematic manner to deliver on both of its short-term and long-term goals.

D. Financial Performance of the Bank

The financial highlights for the financial year under review are presented below:

Summary of Financial Performance in crore)

Particulars	For the financial year ended
	March 31, 2024	March 31, 2023
Deposits:	1,35,201.99	1,08,064.69
Advances (Net):	1,21,136.78	1,04,756.77
Total Assets/Liabilities	1,77,841.66	1,56,037.09
Net Interest Income	10,325.61	9,259.62
Non-Interest Income	2,164.65	2,468.55
Less: Operating Expenses (excluding depreciation)	5,613.20	4,494.17
Profit before Depreciation, Provisions and Tax	6,877.06	7,234.00
Less: Depreciation	237.58	142.65
Less: Provisions	3,696.57	4,198.37
Profit Before Tax (PBT)	2,942.91	2,892.98
Less: Provision for Tax	713.35	698.34
Profit After Tax (PAT)	2,229.56	2,194.64
Balance in Profit & Loss Account brought forward from previous year	7,453.78	6,009.94
Less: Appropriations	1,004.21	750.80
Balance carried over to Balance Sheet	8,679.13	7,453.78
EPS (Basic) (in ^)	13.84	13.62
EPS (Diluted) (in ^)	13.84	13.62

The financial performance of your Bank during the financial year ended March 31, 2024, remained healthy with the Total Net Revenue (Net Interest Income Plus Other Income) rising by 6.5 per cent. to Rs.12,490.26 crore from Rs.11,728.17 crore during the previous financial year. Net Interest Income grew by 11.5 per cent. to Rs.10,325.61 crore. The net interest margin (NIM) was 7.3 per cent. during FY 2023-24 against 7.2 per cent. during the FY 2022-23.

Operating (Non-Interest) Expenses increased to Rs.5,850.78 crore from Rs.4,636.82 crore during FY 2023-24. During the FY under review, your Bank has set up 289 new branches and 9 new Banking Units. Employee strength increased to 75,748 during FY 2023-24 from 69,702 as on March 31, 2023. Staff expenses also went up due to annual wage revisions and there was a 8.67 per cent. increase in staff strength. Consequently, the cost to income ratio increased to 46.8 per cent. for FY 2023-24 from 39.5 per cent. for FY 2022-23.

The Profit After Tax (PAT) for FY 2023-24 stood at Rs.2,229.56 crore, an increase of 1.6 per cent. over the previous financial year. The Total Provisions and Contingencies (including tax provisions) was Rs.4,409.92 crore as compared to Rs.4,896.71 crore in FY2022-23. Consequently, the Return on Average Net Worth (ROANW) was 10.7 per cent. for FY 2023-24 against 11.8 per cent. for FY 2022-23. Return on Average Asset (ROAA) was 1.4 per cent. for FY 2023-24 against 1.6 per cent. for FY 2022-23. Your Banks basic as well as diluted Earnings Per Share (EPS) increased from Rs.13.62 for FY 2022-23 to Rs.13.84 for FY 2023-24.

However, reflecting on steady growth in the balance sheet, Total Liabilities (including capital and reserves) increased by 13.97 per cent. from Rs.1,56,037.09 crore as on March 31, 2023 to Rs.1,77,841.66 crore as on March 31, 2024 whereas Total Advances (Net) stood at Rs.1,21,136.78 crore, a growth of 15.6 per cent. over FY 2022-23. Total Business of your Bank increased to Rs.2,59,923 crore (Gross Advances: Rs.1,24,721 crore and Deposits: Rs.1,35,202 crore as on March 31, 2024) from previous year of Rs.2,17,191 crore (Gross Advances: Rs.1,09,122 crore and Deposits: Rs.1,08,069 crore) as on March 31, 2023.

Priority Sector Lending and Investment

RBI has mandated Priority Sector Lending (PSL) of 40 per cent. of advances for all the banks. Your Bank continues to focus on financial inclusion by providing various financial services to the underserved. During FY 2023-24, your Banks PSL was Rs.60,123 crore as on March 31, 2024 as compared to Rs.54,176 crore as on March 31, 2023. At the end of FY 2023-24, PSL as a proportion of the gross advances of Rs.1,24,574.05 crore was 48 per cent.

Key Ratios

	March 31, 2024	March 31, 2023
Fee to total income@	10.29%	13.44%
Cost to income#	46.84%	39.54%
Earnings per share	13.84	13.62
Book value per share	126.42	114.24
Return on average assets	1.44%	1.56%
Return on average net worth	10.65%	11.77%
Operating Profit to Average Total Assets	4.29%	5.03%
Net Interest Margin	7.35%	7.21%

@lower fee to total income for the current financial year due to one time income received in FY 2022-23 due to sale of portfolio to ARC ##increased cost to income ratio due to increase in operational costs

E. Business Segment Wise Performance

Emerging Entrepreneurs Business (EEB)

Consistent with its longstanding commitment to financial inclusion and fostering economic opportunity within disadvantaged communities, your Bank has prioritised serving borrowers at the base of the economic pyramid. Your Banks EEB strategy offers affordable and accessible loans, designed to empower individuals to establish and grow their businesses, ultimately transforming their lives.

Your Bank strategically expanded its network by establishing 4,597 Business Units (BUs) across India. This growth prioritises financial inclusion while simultaneously enhancing portfolio quality by ensuring a focus on personalised service through a reduced client-to-BU ratio.

This year also witnessed a robust loan portfolio, with Group Loans amounting to Rs.40,745.31 crore, Small Business and Agri Loans (SBAL) at Rs.21,501.74 crore, and Small Enterprise Loans (SEL) reaching Rs.5,671.83 crore. These figures highlight your Banks commitment to both financial inclusion and implementing robust credit control measures to ensure portfolio health.

Your Bank now has several loan products under its Group Loans, SBAL and SEL categories, which are provided from BUs and branches to cater better to the varied demands and needs of its customers:

Group loans

1. Srishti Loan: Timely funds to start a new business or grow an existing one. Loan size is from Rs.15,000 to Rs.1,50,000.

2. Subriddhi Loan: Loan amount is up to 50 per cent. of the disbursement amount of running primary loan. Sanctioned to help customers fulfil their extra business requirement during their ongoing loan.

3. Suraksha Loan: Loan size is up to Rs.15,000 and is sanctioned to help existing customers meet their emergency expenses, e.g.- medical, drinking water and sanitation.

4. Sushiksha Loan: Loan size is up to Rs.10,000 and is sanctioned to help customers meet expenses towards the education of their children.

5. Baazar Loan: With a loan size from Rs.26,000 to Rs.1,50,000, this product is for small entrepreneurs, who have an existing super-saver account with your Bank. This loan provides financial support to deposit customers for their working capital needs.

Small Business and Agri Loans

1. Sahayata Loan: Loan to fund growing business needs of individuals involved in an array of income generation activities. Loan amount is from Rs.50,001 to Rs.5,00,000.

2. Suyog Loan: Loan amount is up to 50 per cent. of the disbursement amount of running Sahayata loan. Sanctioned to help customers fulfil their additional short-term business requirement during their ongoing loan.

Small Enterprise Loan (SEL)

In the current economic scenario, India is a country burgeoning with small businesses which are regularly in need of short to medium-term funding to maintain and grow their businesses. The SEL vertical empowers these businesses to expand by extending them business loans tailored to suit their needs. As on March 31, 2024, the SEL book stood at Rs. 5,671.83 crore, with over 1.22 lakh customers.

The following products are presently offered under SEL:

• SEL Term Loans (^1.01 lakh to ^10 lakh)

These are term loans with a tenure of one to three years, and they are aimed towards financing working capital or asset creation needs of small businesses or other short-term business requirements.

• SEL Max Loans (^10.01 lakh to ^25 lakh)

This is similar to SEL Term Loans, but it is targeted towards slightly larger enterprises in terms of revenue, which might need loans of value higher than Rs.10 lakh.

• SEL Cash Credit (^5 lakh to ^25 lakh)

This is a revolving credit facility, whereby a limit will be set up in the customers loan account and the customer can avail of whatever amount is required and pay interest only on the utilised amount. The limit is subject to renewal on a yearly basis. •

• SEL Secured Overdraft Loans (^10.01 lakh to ^25 lakh)

This overdraft product has been added to your Banks SEL product bouquet during FY 2023 with a vision to cater to the MSME borrowers who need working capital in the form of an overdraft and are willing to pledge security for the loan. The range for this product is from Rs.10.01 lakh to Rs.25 lakh and the overdraft limits are subject to renewal on a yearly basis.

During the FY under review, your Bank has taken various initiatives:

• to strengthen the credit assessment process for Group Loan and SBAL, and SEL in order to have a better portfolio. Your Bank has further deployed a separate Loan Sanctioning Team to manage the loan sanctioning process for Group Loans.

• Deployed a separate independent Recovery Team to improve recovery collections from delinquent customers. Business team will focus on collections from standard accounts to restrict slippages while the recovery team will have a focused approach for collection from NPA accounts.

• Deployed several analytics-driven models to improve both, sourcing and recovery. Some of the key initiatives in this regard are: identification of good borrowers for a higher ticket loan based on a data-driven renewal base; identification of potential borrowers for graduating to individual loan, categorisation of delinquent borrowers based on their propensity to repay; and prioritising collections accordingly, etc.

• Training customers under EEB vertical, to make them aware about the benefits of digital payments and various other aspects, such as seeding bank accounts with mobile number and Aadhaar. Your Bank has also taken initiative by informing the customers to pay through online transactions.

Your Bank has always placed strong emphasis on training and development, via online and classroom training sessions, which would upskill and reskill staff to ensure that they stay relevant to the fast-changing world across levels and locations.

Branch Banking

Your Bank offers a diversified suite of retail liability products, meticulously designed to address the varied banking needs of its clientele across all customer segments. Your Bank prioritises customer satisfaction by fostering a culture of continuous innovation, ensuring that its convenient and effective banking solutions consistently meet the evolving needs of its valued customers.

During FY 2023-24, your Banks deposit portfolio witnessed a robust growth of 25 per cent. with a total deposit base of Rs.1,35,202 crore as on March 31, 2024. The growth in deposits was primarily driven by the varied liability products of term, savings and current account deposits with the total retail deposit (CASA + Retail Term Deposit) book growing by 22 per cent.

Your Banks commitment to a comprehensive and customercentric product offering is exemplified by its focus on distinct customer segments. The Affluent segment, featuring premium products like Elite & Premium Savings Accounts, has significantly strengthened your Banks savings proposition. Recognising the specific needs of senior citizens, your Bank launched the Inspire programme, offering specialised services tailored to this demography. Building upon this success, your Bank plans to further expand its segment- specific offerings to cater to the diverse needs of its growing customer base.

Furthermore, your Bank prioritises effective communication by developing product-focused campaigns. These initiatives aim to educate customers about features, rates, and the integration of technology-driven services. This year saw the introduction of the RuPay Platinum Debit Card, reiterating your Banks commitment to providing customers with enhanced value propositions, features, and a wide range of debit card choices. This comprehensive debit card portfolio generated a total card fee income of more than Rs.70 crore as on March 31, 2024, encompassing issuance fees, annual fees, and reissue fees.

Your Banks Current Account segment exhibited robust performance during FY 2023-24, characterised by consistent customer balances and a commitment to sound financial management practices. Strategic initiatives including enhanced EDC penetration, CAM Channel development, re-engagement with ETB customers via NEEV project, and intensified focus on new branches have effectively met customer demands, demonstrating resilience in a competitive market landscape. The overall Current Account Book has sustained a commendable growth rate of 51 per cent. as on March 31, 2024.

Your Banks extensive branch network has been a fundamental driver of its success. FY 2023-24 witnessed a significant expansion with the inauguration of 289 new branches across the nation. This strategic growth initiative has bolstered your Banks overall presence, bringing the total number of branches to 1,700 strategically located to serve diverse communities throughout India. To fortify its relationship with customers, your Bank is engaging in communication through marketing campaigns, social media outreach, and branch-level initiatives. Your Bank has also seamlessly transitioned to the latest Core Banking System - Flexcube and rolled out a new Internet Banking platform and mBandhan app, boasting upgraded features.

Your Bank will continue to harness technology to provide innovative digital solutions that prioritise security, convenience, and user-friendliness. Your Bank is dedicated to delivering top-notch banking solutions to the customers and eagerly anticipates serving them with unwavering zeal and commitment in the years ahead.

Merchant Acquiring Business (MAB)

Merchant Acquiring Business is an integral part of the digital ecosystem, providing necessary infrastructure to acquire merchants and facilitating them to accept payments through different modes of digital transactions. MAB of your Bank is built on the philosophy of customer-centricity, with a keen focus on people, processes and technology. MAB plays a pivotal role in attracting current account relationships.

loT (Internet of Things) is one aspect that has fundamentally changed the nature of banking, and MAB is aggressively on boarding PoS/ EDC devices with incremental month- on-month numbers and providing PG (Payment Gateway) services to all categories of merchants. With the number of on-boarded PoS, your Bank is creating a positive impact on the digitisation ecosystem. Your Bank has launched a number of value-added services to cater to its existing and potential merchants and are planning to launch a range of new products in the next financial year.

Your Bank offers Merchant Acquiring Services through its large branch network of more than 1,665 branches at attractive rates to its existing as well as new customers. This business has grown at a rate of 326 per cent. on the acquisition front and 52 per cent. growth in throughput compared to the previous year, leading to the build-up of balances in linked accounts.

Wholesale Banking Financial Institution Group (FIG)

Your Bank continuously strives to meet the diverse credit needs across sectors, with a dedicated focus on Institutional Lending catering to NBFCs, Housing Finance Companies (HFCs) and public financial institutions. Your Bank also has credit exposure through Direct Assignments and Investment exposure through Pass Through Certificates (PTCs) and NonConvertible Debentures (NCDs). In the NBFCs segment, your Banks primary focus is secured financing through housing loan, loan against property, gold loan, business purpose loan, commercial & vehicle financing, etc. While in the NBFC-MFI (Microfinance institutions) segment, the focus is to cater primarily to the priority segment funding. FIG segment has a diverse portfolio with geographical presence across the country. The FIG portfolio stood at Rs.12,814.89 crore as on March 31, 2024 as compared to Rs.10,386.72 crore as on March 31, 2023, representing a growth of 23 per cent. over previous financial year.

Mid-Market Group (MMG)

MMG offers loan products to majorly Small & Medium Enterprises (SMEs) and large corporate borrowers for meeting their working capital and capital expenditure requirements, including non-fund based facilities. These are generally secured loans extended to businesses involved in manufacturing, trading, services, etc., with acceptable credit ratings. This segment offers both fund-based and non-fund based facilities including term loan, cash credit, overdraft, loan against property, construction/ project finance, lease rental discounting, Letter of Credit (LoC), Bank Guarantee (BG), etc. MMG book stood at Rs.6,700.68 crore as on March 31, 2024 as compared to Rs.3,605 crore as on March 31, 2023, representing a growth of 86 per cent. over previous financial year.

Commercial - LAP

This segment caters primarily to proprietorships, partnerships and private limited companies for Loans Against Property (LAP). This is in line with your Banks overall objective of increasing the secured lending portfolio. The segment will leverage your Banks branches besides sourcing from the open market, along with a higher level of engagement to meet additional financial requirements of customers. This segment offers a bouquet of income-linked programs to cater to most of the sectors in the market. The book-size stood at Rs.515.50 crore as on March 31, 2024 as compared to Rs.53.14 crore as on March 31, 2023, representing a significant growth of 870 per cent. over previous financial year. As we move along, your Bank will use technology for better turnaround time which is essential for scaling up the business volume in this space.

Business Banking Group (BBG)

BBG offers loan products to Micro, Small and Medium Enterprises (MSMEs) to meet their working capital or capital expenditure requirements. These are secured loans generally between Rs.5 lakh to Rs.15 crore extended to businesses involved in manufacturing, trading and services. The loans are extended in the form of secured credit facilities including term loan, cash credit, overdraft or lease rental discounting or as non-fund-based facilities like letter of credit or bank guarantee. Some of the schematic loan products offered by the segment are as follows:

• SME Business Connect: These loans help entrepreneurs in financing their working capital and capital expenditure requirements against primary security of current or fixed assets and collateral security including residential or commercial property or liquid securities. These loans, ranging from Rs.10 lakh to Rs.5 crore, are provided as fund-based facilities like overdraft, cash credit, or term loan and non-fund-based facilities like letter of credit or bank guarantees.

• SME GST Connect: These loans for financing entrepreneurs working capital needs are provided as overdraft or fund-based facilities. These loans are offered against collateral security, which can be in the form of current assets, property or liquid securities. The loan quantum ranges from Rs.25 lakh to Rs.3 crore. •

• Bandhan CGTMSE Loan: These loans are offered to finance the working capital and capital expenditure of Micro and Small Enterprises (MSEs) and provided as fund-based and non-fund-based facilities, without any collateral security or third-party guarantee. The loan quantum ranges from Rs.5 lakh to Rs.5 crore, with credit guarantee of CGTMSE up to a maximum limit of Rs.5 crore per borrower. Collateral security for the remaining uncovered portion of the credit facility can be obtained under "Hybrid/ Partial Collateral Security" product, introduced by CGTMSE.

The BBG fund based Book stood at Rs.1,009.65 crore as on March 31, 2024 as against Rs.535 crore as on March 31, 2023, registering a growth of about 89 per cent. during FY 2023-24.

Agri-business Loans

Your Bank recognises the importance of this sector and offers a wide range of credit facilities to provide financial support to all participants in the Agri value-chain system. Currently, the segment provides Kisan Cash Credit (KCC) loans to borrowers engaged in farming activities, including animal husbandry, horticulture, pisciculture, etc., with competitive interest rates and minimal documentation. This segment is expanding its reach by offering both fund-based and non-fund-based credit facilities to entities involved in agri-ancillary products and services, such as food and agri processors, agri input dealers, etc.; credit facilities to support development of agricultural infrastructure; financing to Corporate Agri customers, with a key focus to on-board quality customers; and commodity finance.

The book-size of this segment stood at Rs.267.78 crore as on March 31, 2024 as compared to Rs.126.52 crore as on March 31, 2023, a growth of 112 per cent. during FY 2023-24.

Housing Finance

Your Bank has continued its focus on the long-term strategy for Housing Finance. This business has seen a robust growth during FY 2023-24 in spite of the challenging macroeconomic environment. In addition to the existing business channels, your Bank has introduced a Prime lending channel, which has impacted positively with a higher disbursement and portfolio growth along with a lowered delinquency risk. Your Bank has expanded its home loan network to over 450 branches offering housing loans and 320 Business units offering micro-home loans spread across 18 states and 2 union territories.

With a focus on acquiring quality business and reducing delinquency over the last financial year, your Bank has disbursed Rs.7,270 crore during the financial year, a growth of 14 per cent. and has been able to reduce its GNPA to 1.6 per cent. from 3.9 per cent. during the financial year while growing the portfolio to Rs.29,915.65 crore, at around a growth of 11 per cent. over previous financial year.

The introduction of Direct Sales Agent (DSA) in the previous financial year has continued to gain traction, and has been contributing to overall disbursement. The newly introduced Prime channel has also seen a steady traction since its introduction during the FY 2023-24 and continues to contribute significantly to the overall business.

Your Banks focus has still remained on affordable housing business, which is its primary strength. This is indicative by its sanctioning average ticket size of sub Rs.20 lakh. During the FY, your Bank continued the special campaign "Junoon Rahe Barkaraar (JBR)" for higher ticket loans offering attractive and competitive rates of interest to customers with good credit history and high credit scores.

Retail Assets

To expand its reach and cater to a wider range of customer demography, the Bank has implemented a strategic approach to its Retail Asset portfolio throughout FY 2023 -24. This approach balances risk mitigation with product offerings. Customers now benefit from a comprehensive suite of loan options, including Gold Loans, Personal Loans, Two-Wheeler Loans, Car Loans, and Commercial Vehicle & Construction Equipment (CVCE) Loans.

Gold Loan: Your Banks Gold Loan product is meticulously crafted to cater to customers immediate financial needs with expediency. This loan option is distinguished by a streamlined documentation process, ensuring swift loan processing. Furthermore, your Banks extensive branch network guarantees exceptional accessibility. The loan amounts ranging from Rs.10,000 to Rs.40,00,000 and flexible tenure options up to 3 years at competitive interest rates.

Personal Loan: During FY 2023-24, your Bank implemented a strategic review of the personal loan approach and optimised its customer acquisition approach ensuring continued alignment with the market dynamics. Throughout FY 2023-24, your Bank has been systematically expanding this sector across all distribution channels, encompassing key market segments. Personal loans are available within the range of Rs.50,000 to Rs.25,00,000 at competitive interest rates, with a maximum tenure of 5 years.

Two-Wheeler Loan: Your Bank has achieved remarkable and consistent growth, exceeding a customer base of 1,00,000 satisfied customers with over 90 per cent. of these new customers being previously unbanked. Leveraging its digital expertise, your Bank has streamlined the loan approval process, achieving an impressive average approval time of just 5 minutes for more than 90 per cent. of applicants. This revamped loan service is designed to cater to a broad spectrum of customer needs, offering financing of up to Rs.5,00,000. Your Bank has aligned the product with industry best practices by introducing a dealer/ channel-based distribution model, which has significantly expanded your Banks reach across diverse geographical locations.

Car Loan: The Car Loan product has been meticulously crafted to simplify vehicle ownership and enhance accessibility for all customers, offered at competitive interest rates and adaptable repayment options, it extends financial support for the acquisition of both new and pre-owned vehicles. By harnessing its digital capabilities, your Bank has streamlined the application process, ensuring a seamless experience with swift approval times, thus enabling customers to realise their dream of owning a car sooner. Your Bank has developed a range of product schemes catering to a diverse array of customer profiles, including salaried individuals, self-employed individuals and non-individual entities, with loan amounts spanning from Rs.1 lakh to Rs.1 crore.

CVCE Loan: Road transport is crucial for moving goods and people as it offers complete connectivity and adaptability. Your Banks CVCE loan is designed for self-employed individuals and businesses needing loans from Rs.1 lakh to Rs.15 crore. Your Bank is dedicated to providing exceptional value to its customers, using its wide branch network, partnerships with manufacturers and dealer connections to offer the best deals possible.

Third Party Products

Your Bank currently distributes mutual funds, life insurance and general insurance, including health insurance and 3 in 1 online trading products to its customers. FY 2023-24 has been a year of transformation and integration. Your Bank continues to demonstrate a continued focus on offering a value led, robust and comprehensive product proposition to its customers. Your Bank has also been working tirelessly to build a strong distribution ecosystem augmented by analytics and technology to offer the best in class insurance solutions to its customer base.

In the General Insurance business, your Bank continued to serve its customers in their quest towards healthy living, by offering them a wide variety of health insurance solution- based product propositions. In mutual funds distribution, your Bank continues to focus on a research-driven distribution strategy with a vision of providing its customers ease and flexibility while planning for investments. This year your Bank has launched the distribution of Mutual Funds through its Mobile Banking (mBandhan) platform, which along with the existing distribution available through the Retail Internet Banking (RIB) platform demonstrated your Banks continuous efforts towards offering customers further convenience and benefits.

The total mutual fund AUM managed under your Banks code during FY under review was Rs.1,024.84 crore, earning an income of Rs.6.31 crore. A total of Rs.131.55 crore and Rs.519.85 crore of general and retail life insurance business, respectively, were garnered through the retail network during FY 2023-24, earning a fee income of Rs.15.16 crore and Rs.214.80 crore, respectively. During FY under review, the life insurance business through all asset verticals amounted to Rs.279.59 crore, earning an income of Rs.47.10 crore. Your Bank has also earned Rs.0.15 crore as commission for the distribution of Atal Pension Yojana, NPS Lite Swavalamban schemes of PFRDA and others during the FY 2023-24.

Digitising Bandhan 2.0

Bandhan Bank is committed to enhancing its digital offerings with a focus on risk management, customer-centricity and digital analytics.

Your Bank has successfully launched a new Internet Banking platform and the mBandhan mobile app, featuring over 175 functionalities, delivering a modern banking experience. Regular improvement in delivery, underscores your Banks successful efforts in promoting digital banking channels and enhancing customer awareness of digital banking products.

Your Bank aspires to become a digitally enabled bank by focusing on the following key areas:

• User Experience: Improving design principles and conducting user research to ensure customer-centric digital experiences.

• Developing a number of digital product stacks - E.g.:

Savings Account Stack Development which is aimed at tailoring savings account products to various customer profiles.

• Platform Optimisation: Ensuring continuous platform performance improvement and optimised processes for both retail and corporate clients.

• Digital Payment Innovation: Introducing new functionalities and innovative products in line with our customers expectations

• Mobile Security: Continuously enhancing safety measures and adhering to regulatory controls for digital payment security.

Your Bank remains dedicated to innovation, enhancing customer experience and leveraging technological advancements to simplify and improve banking services.

Data Science and Analytics

The Data Science and Analytics function is one of the most critical functions for your Bank. The Analytics Team was set up during FY 2022-23 and by the end of FY 2023-24, Analytics Team strength has grown significantly. The objective of this team is to provide accurate and timely information using internal and external data, provide early warnings about emerging risks, and bring operational efficiency.

This Team supports all the business verticals at every stage of the customers lifecycle journey. It helps your Bank to grow profitably, manage risk, ensure better customer experience and improve operation efficiency and accuracy. The analytics function develops statistical models (including AI-ML) for onboarding new customers, managing existing customers and retaining profitable customers. It provides prospect leads for retaining good customers, new product penetration to existing customers, and pre-approved offers. It also helps your Bank to identify emerging areas of risk, process improvement, and prioritise and optimise collection efforts.

F. Internal Financial Control

Your Bank engages external firms to carry out independent reviews of internal controls, processes, reporting, etc., and recommendations, if any, are made by them to the Bank/ ACB for improvement.

Considering the internal financial controls of the Bank, and the work performed by the auditors, including the audit of internal financial controls over financial reporting by the auditors and the reviews performed by management under the supervision of the ACB, the Board of Directors is of the opinion that the internal financial controls established and maintained by the Bank are adequate.

G. Risk and Concerns

Your Bank is exposed to various risks by the very nature of its business. Your Bank has put in place a comprehensive Enterprise-wide Integrated Risk Management Framework supported by detailed policies and processes for the management of Credit Risk, Market Risk, Liquidity Risk, Operational Risk and various other risks. Please refer to the section Risk Management of the Boards Report for details.

H. Development in Human Resources

Human Capital

Your Banks greatest asset is its people. Maintaining relevant and competitive HR policies and practices is an ongoing endeavor. Since its inception, your Bank has balanced experienced staff with new talent, providing opportunities for career progression. During FY 2023-24, your Bank continued transitioning processes from traditional to digital platforms, enhancing user experience, streamlining operations, and boosting productivity. Your Banks efforts also focused on improving performance, enhancing employee wellness, aligning learning modules with in-demand skills, and fostering a robust forum for feedback. Emphasis was placed on building strong, collaborative and empathetic leadership. Additionally, your Bank continued expanding branches and channels to increase market penetration and solidify its position as a Bank for all. Through continuous enhancement of HR practices, your Bank strives to remain a dynamic, inclusive and innovative workplace.

Building Capabilities and Capacities

Your Banks key talent acquisition processes remained on track during FY 2023-24; manpower increased by 8.83 per cent. from 69,702 in FY 2022-23 to 75,748 as on March 31, 2024. Your Bank has enhanced its geographical network to 1,700 Branches and 4,597 Banking Units during FY 2023-24. Your Bank has introduced several verticals, such as Bank Control Unit, Customer Experience, Process Quality and Transformation & Recovery in FY 2023-24 for improved internal controls, risk management, process optimisation, quality assurance and enhanced customer satisfaction and relationship management.

Talent Acquisition

To support the Banks expansion journey and fulfil its commitment to superior service delivery and operational excellence, the Bank has quadrupled its workforce since inception. The total workforce of your Bank stood at an impressive 75,748 as against 69,702 in the previous year. The new employees were recruited from a variety of functions and skill sets, the ones that your Bank is focussing on for the next phase of growth and those that will assist the Bank to achieve its near-term and long-term strategic goals. Campus recruitment drives were organised to contribute to the growth and development of young professionals entering the workforce and creating a talent pipeline for the upcoming years. Your Bank visited 95 top ranked institutes and handpicked 680 young talents for various roles and locations across India.

Employee Engagement

Your Banks growth story has been fuelled by its committed and motivated employees who make the Bank an exceptional place of work. In an endeavour to motivate them and build a happy and satisfied workforce, employee engagement programmes have been a regular feature on your Banks annual calendar. In the year under review, your Bank organised multiple town-halls with the top management. Cricket tournament, Womens Day celebration, festival celebrations and other local level engagement programmes were also organised to boost employee morale. Aiming to enhance employee wellness, various health awareness initiatives were planned by your Bank. These included online health awareness programmes, regular communication to employees on topics such as potential health risk at workforce and road safety, and a session on Prevention of Diabetes on World Diabetes Day. Additionally, a webinar on Common Gynaecological Problem for Working Women was also conducted on the International Womens Day. Service Awards were further distributed to recognise and appreciate employees long-term association with your Bank.

Learning, Development & Talent Management

During FY 2023-24, your Bank accelerated its efforts towards building a strong Learning and Development (L&D) proposition for its employees, in alignment with its strategy for growth across new businesses. The L&D programmes aimed at equipping the employees with the necessary skillset, mindset and knowledge to meet the challenges of the rapidly changing banking landscape in the country. Focused on key strategic initiatives, your Bank formulated and implemented engaging learning initiatives to build and enhance employee competencies. Thematic programmes to improve employee productivity, ensure strict compliance to risk culture and regulations, increase employee engagement, foster employee wellness and develop digital skill building were also organised.

Performance Management

A structured succession planning and leadership development process enables your Bank to identify and groom leaders for next level roles. Your Bank closely tracks the leadership bench for senior management positions and has created a strong pipeline for critical leadership roles. Contributing to a positive work environment and long-term organisational success, your Bank has promoted 8,709 employees through a competency-based grade promotion process. In alignment with its Succession Planning Policy, most leadership positions arising from your Banks growth and expansion were filled through internal role elevations. This policy was also extended to mid-level positions in retail lending.

I. Culture of Ethics

The Code of Conduct and Ethics (Code) articulates your Banks commitment to conduct business in accordance with the highest ethical standards and in compliance with all applicable laws, rules and regulations. At Bandhan Bank, ethical behaviour is doing "what is right when no one is watchingRs.". Making it inseparable from honesty, integrity and good judgment, all employees follow the Code with a high degree of professional and ethical standards. In the journey of over eight years, your Bank has strengthened its workforce by 4x resulting in an exciting blend of energetic new and experienced old workforce focussed towards a culture of professionalism, value driven growth and ethical governance. Human Resources has strategically focussed on a supportive and collaborative work environment, remaining customer-centric, performance driven and future ready.

J. Disclosure of Accounting Treatment

The Financial Statement have been prepared under the historical cost convention and on the accrual basis of accounting, unless otherwise stated and in compliance with the requirements prescribed under the Third Schedule (Form A and Form B) of the Banking Regulation Act, 1949. The accounting and reporting policies of your Bank used in the preparation of the Financial Statement conform to Generally Accepted Accounting Principles in India (Indian GAAP), the guidelines issued by the RBI from time to time, the accounting standards notified under Section 133 and other relevant provisions of the Companies Act, 2013, read together with the Companies (Accounting Standards) Rules, 2021, as amended, from time to time, to the extent applicable and practices generally prevalent in the banking industry in India.