City Union Bank Ltd Directors Report

Dear Shareholder

The Board of Directors of your Bank is pleased to present the Annual Report on business and operations of your Bank together with the Audited Financial Statements for the Financial Year ended March 31, 2025.

ECONOMY OVERVIEW

Global Economy

In FY 2024-25, the Global economy demonstrated resilience in the face of several external pressures and challenges, ensuring stability in growth. The growth forecasts for FY 2024-25 and FY 2025-26 are 3.2% and 3.3% respectively, which is one of the lowest medium - term forecasts in a decade. The emerging market economies were confronted with structural challenges due to escalating trade tensions, protectionist policies, geo political tensions and decline in Chinese economy. The Advanced economies experienced modest acceleration (1.7% - 1.8%) during the year.

The world since the past few months has been gripped in the midst of a major tariff war. The world has witnessed a huge blow to the Multilateral Trading System and the concept of the Most Favoured Nations (MFN) on which the pillar of world trade rests has been eroded especially since the announcement of high reciprocal tariffs on imports from most countries of the world by the President Trump led US Administration. In response, China among other countries retaliated provoking a further dose of tariff leading to a full scale trade war with USA, bringing the rate of tariffs applied on imports from China to a staggering 145%. The current global environment is highly challenging with a new restricted and fragmented global trade taking shape amidst announcements of retaliatory tariffs. The broader implications of tariff war could result in prolonged uncertainty and paralyze world trade. Though the uncertainty around the global economic outlook has somewhat ebbed since April 2025, in the wake of temporary tariff reprieve and optimism around trade negotiations, the global economic landscape remains in a state of flux, amidst heightened geopolitical uncertainties, with attendant implications for economies across the world, posing complex challenges and tradeoffs in policy making.

Indian Economy

The Indian economy ended FY 2024-25 on a positive note with real Gross Domestic Product (GDP) growth accelerating to 7.4% in Q4. The real GDP growth for FY 25 stood at 6.5% compared to 9.2% in FY 2023-24 in line with RBIs projections. India remained a bright spot in the global landscape despite the challenges faced, as a result of increased consumer expenditure and government investments. In the near future sustained demand from rural areas, revival in urban consumption, increased government capital expenditure, higher capacity utilization, and healthy balance sheets of banks and corporates are expected to support growth. Agricultural prospects appear bright on the back of an above normal south-west monsoon forecast; Industrial sector is on a recovery path, while Services Sector is expected to maintain the growth momentum. Merchandise exports, on the back of a lackluster performance last year recorded a strong growth in April & May 25. Considering all these factors, real GDP growth for FY 2025-26 is now projected at 6.5% with Q1 at 6.5%, Q2 at 6.7%, Q3 at 6.6% and Q4 at 6.3% with the risks being evenly balanced.

The inflation trajectory of India has considerably improved, with the Consumer Price Index (CPI) is projected at 4.6% in FY 2024-25 (RBI estimate) compared to 5.4% in FY 2023-24. The CPI headline inflation declined to a nearly six year low of 3.2% in April 2025. Fuel group continued an inflationary trend with a hike in LPG prices. Core Inflation increased to 4.1% in February 2025, driven primarily by a sharp rise in Gold prices. Assuming a normal monsoon, healthy reservoir levels, record wheat production, higher production of key pulses in the Rabi crop season and likelihood of good Kharif prospects, the CPI inflation for FY 2025-26 is projected at 3.7%, with Q1 at 2.9%, Q2 at 3.4%, Q3 at 3.9% and Q4 at 4.4% with the risks evenly balanced.

The Indian economy exhibited a picture of strength, stability and opportunity with strong balance sheets of five major sectors namely Corporates, Banks, Households, Government and the External sector. India continues to remain an attractive investment destination with robust flows in the form of FDI, FCB and NRI deposits. Foreign Exchange Reserves stood at US$ 691.5 Billion at the end of May 2025, sufficient to fund more than 11 months of goods imports and about 96% of outstanding external debt, providing the much needed buffer to tackle unforeseen global headwinds. The current economic environment in India amidst global uncertainties requires constant monitoring as well as promptness in policy actions to deal with any emerging risk to growth particularly on trade front. As US is Indias largest export destination, the exact impact of US Tariffs remains uncertain and could weigh heavily on trade, financial markets and domestic economy. The Indian economy offers immense opportunities to investors through the 3DS i.e. demography, digitalization and domestic demand and provides the necessary core strength to cushion the domestic economy against global spillovers and propel it to grow at a faster pace.

OUTLOOK

During FY 2024-25, the Net Interest Margin (NIM) of banks was bolstered by stable interest rates and lower inflation, which supported investment and consumption. Private Sector credit has been stimulated by rate cuts and ample liquidity provided by RBI. Tax incentives and lower borrowing costs have also contributed to increased liquidity conditions. During FY 2025-26 disposable income is expected to increase with moderate inflation. Credit growth will be sustained in FY 2025-26 as a result of accommodative monetary policy. Indian economy of which Banking forms a significant part is supported by stable monetary policy, robust financial ecosystem and a stable government. Indias strong domestic demand and lower dependence on exports cushions the Indian economy from external spillovers.

BANKS PERFORMANCE

In the above backdrop, your Bank recorded a total business of Rs 1,16,592 crore in FY 2025, an increase of Rs 14,454 crore over the previous year figure of Rs 1,02,138 crore, a 14% increase over FY 2024 position. The Net Profit of the Bank has increased to Rs 1,124 crore from Rs 1,016 crore, 11% increase over FY 2024 position. The Net Interest Income of the Bank stood at Rs 2,316 crore. The Key Performance Indicators i.e., the Return on Assets of the Bank at 1.55%, Return on Equity at 12.63%, the Net Interest Margin of the Bank stood at 3.60% and the Cost to Income ratio at 47.77% during the reporting year. The financial performance has been discussed in detail in the subsequent paragraphs. During the year the Bank opened 75 additional branches to take the total number of branches to 875 and it has 1,736 ATMs as at March 31, 2025. Further information on the state of affairs of the Bank is included in detail in the Management Discussion and Analysis Report forming a part of this Report.

FINANCIAL HIGHLIGHTS

(Rs in crore)

Particulars	2024-25	2023-24	Growth (%)
Share Capital	74	74	-
Reserves & Surplus	9,393	8,327	13%
Deposits	63,526	55,657	14%
Advances (Gross)	53,066	46,481	14%
Investments (Gross)	17,346	15,673	11%
Total Assets / Liabilities	77,623	70,826	10%
Total Income	6,732	6,012	12%
Total Expenses	5,053	4,495	12%
Net Interest Income	2,316	2,123	9%
Operating Profit	1,679	1,517	11%
Provisions & Contingencies	555	501	11%
Net Profit (A)	1,124	1,016	11%
Appropriations
Balance of Profit brought forward (B)	113	109	-
Amount available for appropriations (A+B)	1,237	1,125	-
Transfers to:
Statutory Reserve	300	280	-
Capital Reserve	12	6	-
General Reserve	520	555	-
Investment Reserve Account	50	12	-
Special Reserve under IT Act, 1961	90	85	-
Dividend	111	74	-
Balance of Profit carried forward	154	113	-
Total	1,237	1,125	-

The Deposits and Advances for the current year stood at Rs 63,526 crore and Rs 53,066 crore respectively. The total business stood at Rs 1,16,592 crore as compared to Rs 1,02,138 crore for the previous year registering a growth of 14%. The size of the Balance Sheet as on March 31, 2025 is Rs 77,623 crore as compared to Rs 70,826 crore last year recording an increase of 10%.

PROFIT

Gross Profit and Net Profit of the Bank for FY 2025 stood at Rs 1,679 crore and Rs 1,124 crore respectively.

TOTAL INCOME

The Total Income earned by the Bank increased in FY 2025 to Rs 6,732 crore as against Rs 6,012 crore in FY 2024, registering an increase of 12%. The non-interest income of the Bank increased to Rs 898 crore from Rs 742 crore. The total expenditure of the Bank increased to Rs 5,053 crore as compared to Rs 4,495 crore in the previous year, registering an increase of 12%.

NET INTEREST INCOME

The Net Interest Income for FY 2025 stood at Rs 2,316 crore as compared to Rs 2,123 crore in the last year.

DEPOSITS

The Banks total Deposits for the year under review increased by Rs 7,869 crore to Rs 63,526 crore from Rs 55,657 crore registering a growth of 14% over previous year. During the current year CASA increased by Rs 1,069 crore to Rs 18,119 crore from Rs 17,050 crore. The cost of deposit of the Bank stood at 5.85% in FY 2025 as compared to 5.59% in FY 2024.

ADVANCES

Gross Advances of the Bank increased by Rs 6,585 crore to Rs 53,066 crore from Rs 46,481 crore, posting a growth of 14%. The yield on advances improved to 9.79% from 9.72% during the reporting year. The Bank achieved the target / sub-targets prescribed by the RBI for Priority Sector, Agriculture, Micro Enterprises, Small / Marginal farmers and weaker section.

The Gross NPA and Net NPA for the year under review stood at 3.09% and 1.25% respectively as compared to 3.99% and 1.97% in the previous year.

The Provision for tax for the reporting year stood at Rs 293 crore. The provision for NPA for the financial year was Rs 255 crore vis-a-vis Rs 327 crore last year. The total provision increased by Rs 54 crore to Rs 555 crore from Rs 501 crore in the previous year.

TREASURY OPERATIONS

Domestic Treasury

The gross Investments increased by Rs 1,673 crore to Rs 17,346 crore as on March 31, 2025 from Rs 15,673 crore as on March 31, 2024. Out of this, the investments in Government Bonds alone at Rs 17,186 crore constituted 99.07% of the total Investment. The financial year began with hardening of yields on continuing geopolitical tensions across the globe and Brent crude oil prices crossed the crucial mark of $90 per barrel. However, yield softened after the inclusion of Indian bonds in JP Morgan global index and outcome of union election suggesting political stability and continuity. US treasury yields softened on account of increased unemployment, recessionary fears and hopes of multiple rate cuts. US Fed reduced its policy rate cumulatively by 100 bps during the financial year. The Reserve Bank of India announced CRR cut by 50 bps and REPO rate cut by 25 bps during the year. Also, RBI infused durable liquidity to the tune of Rs 2.55 trillion through Open Market Operation (OMO) and buy / sell swap in forex market. Indian bond market witnessed softening of yields on account of foreign capital inflows after the inclusion of bonds in global index, stable liquidity in the market and benign inflation. In FY 2025, bond yield softened by 47 bps on optimism over repo rate cut from RBI. During the year, the Bank has booked a profit of 55.23 crore through sale of securities.

In compliance with the RBI Master Direction on "Classification, Valuation and Operation of Investment Portfolio of Commercial Banks (Directions), 2023", dated September 12, 2023, the Investments of the Bank have been re-classified, wherever required and valued in accordance with the above mentioned RBI direction. Hence, the corresponding figures of year ended March 31, 2024 are not comparable due to the impact of the revised RBI guidelines.

Forex Treasury

During the FY 2024-25, Indian Rupee weakened against U.S Dollar by 2.52% to close at Rs 85.47. Major reasons attributed for weaker rupee were stronger dollar, slower economic growth and weakening of Asian currencies especially Chinese Yuan. Geopolitical tensions impacted global markets and favoured U.S Dollar. Indian economic growth rate slowed down to 5.6% in the second quarter of FY 2024-25. Higher U.S Treasury yields and attractive valuation of Chinese equity markets resulted in continuous outflow of funds from Indian equity market. Consequent to change in U.S policy stance and imposition of tariff, Indian Rupee weakened against US Dollar to an all time low of Rs 87.95 Intervention by RBI reduced the pace of depreciation of the rupee. During the FY 2024-25, profit on our foreign exchange operations stood at Rs 37.71 crore as against Rs 71.80 crore during the previous financial year.

NET WORTH & CAPITAL ADEQUACY RATIO

Net Worth

The paid-up Share Capital of the Bank increased to Rs 74.10 crore as on March 31, 2025 from Rs 74.07 crore as on March 31, 2024. During the reporting period, the Bank has allotted 3,13,830 Equity Shares to employees under Employee Stock Options pursuant to CUB ESOS Scheme 2008 & CUB ESOS Scheme 2017. The Net worth of the Bank stands improved to Rs 9,416.87 crore as on March 31, 2025 from Rs 8,374.23 crore as on March 31, 2024.

Capital Adequacy Ratio

As per Basel III regulations, banks are required to maintain a minimum Pillar 1 Capital (Tier I + Tier II) to Risk Weighted Assets Ratio (CRAR) of 9% on an ongoing basis. Besides this minimum capital requirement, Basel III also required creation of capital conservation buffer and countercyclical buffer of 2.50% with effect from 01.10.2021. The Bank has maintained Tier I CRAR of 22.70% and total CRAR of 23.75% as at March 31, 2025 which are well above the norms prescribed by the RBI. The CRAR of the Bank continues to be monitored, to ensure that we keep the same at an optimum level. Periodic disclosures are made as per extant regulations.

DIVIDEND

The Board of Directors of the Bank at its meeting held on May 2, 2025, had recommended a Dividend of 200% i.e. 2.00/- per equity share on face value of 1/- each fully paid up for the Financial Year ended March 31, 2025 subject to the approval of shareholders at the ensuing Annual General Meeting. The dividend, if declared at the AGM, will be paid to the shareholders as on the record date specified for such purpose, within the prescribed time. The dividend payout for FY 2025 is in accordance with the Dividend Distribution Policy of the Bank and the same has been uploaded in the website of the Bank. Weblink:

https://www.cityunionbank.com/filemanager/July24/Dividend%20Distribution%20policy_01.04.2017.pdf

In case any shareholder has not claimed dividend(s) for previous year(s), they may kindly approach the Bank or its Registrar and Transfer Agents. The details on Unclaimed Dividends and transfers to IEPF Account of Govt. of India is given in a separate Report on Corporate Governance forming a part of this Report.

BRANCH EXPANSION

During the Financial Year, the Bank expanded its Branch Network by adding 75 more Branches across the country totaling 875 Branches as on March 31, 2025. The total ATMs stood at 1,736 which performs the job of accepting and dispensing cash. As on March 31, 2025 the Bank had a total of 1,219 Onsite ATMs and 517 Offsite ATMs. As for the Branch spread, as on date 84% of Branches are operational in South, 7% in West, 5% in North, 3% in Central, 1% in Eastern parts of India.

FINANCIAL INCLUSION

Financial Inclusion is a concept where the Banking financial solution and services are offered to every individual and to ensure that even the under privileged get easy access to Banking channels. A detailed information on financial inclusion aspects of the Bank is set-out in Management Discussion & Ananlysis Report forming a part of this report.

HUMAN RESOURCE DEVELOPMENT

The details on the Human Resource Management functions of the Bank is set-out in detail in Management Discussion and Analysis Report which forms a part of this Report.

EMPLOYEES STOCK OPTION SCHEME (ESOS)

The Bank implemented Employee Stock Option Scheme CUB ESOS 2008 [ESOS] for grant of stock options to eligible employees of the Bank. The Shareholders of the Bank approved the scheme on April 26, 2008 at an Extraordinary General meeting of the Bank. The maximum aggregate number of options that may be granted under this scheme is 5 crore. The Bank offers ESOS to its employees which vests over a period of five years from the date of grant of options i.e., 15% options each for first three years, 25% and 30% for fourth and fifth year respectively. The options are offered at prevailing market prices at the time of grant to the employees. However the same is adjusted pursuant to corporate actions viz., Rights issue, Bonus issue etc. There were no material changes in the ESOS of the Bank during the period under review and the same is in compliance with the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 as amended from time to time ("SEBI SBEB Regulations"). As at the end of March 31, 2025, the Bank has 13,16,260 options yet to be granted under the scheme.

In addition, the shareholders of the Bank at its meeting held on August 23, 2017 approved CUB ESOS Scheme 2017 for 3 crore options on terms and conditions mostly similar to previous one. As on March 31, 2025, 256,94,360 options are yet to be granted under the Scheme. The disclosures pursuant to Regulation 14 of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 has been hosted in the website of the Bank and also the same is annexed hereto asAnnexurel. Weblink:

https://www.cityunionbank.com/filemanager/Jun25/CUBValuationReport_may2025.pdf

NEW TECHNOLOGY INITIATIVES Digital Loan Originating System

As part of Digital Lending, the Bank has implemented AI based system which assesses & reports the customers provisional credit eligibility which is sanctioned based on customers acceptance & approval. In line with this, the Bank has also launched pre-approved personal loans to the customers in this segment.

Delegate Payments (UPI Circle)

Delegate Payments is designed to enable users to perform payments on behalf of the secondary holder without the Primary holder being present. It is a solution where a Primary holder can extend the control of transacting from their UPI account to an individual with required security. It enables a secondary user to perform transactions from the primary holder account with minimum intervention

Rupay Credit Card on UPI

The "Credit Card on UPI "feature allows users to link their credit card to their UPI ID, enabling to make payments. Users can link their credit card to their UPI ID using their UPI app, just as they would link a Bank account and when making a payment users can choose to pay directly from their linked credit card. The UPI app will then process the transaction using the credit card details instead of directly debiting a Bank account

Open Network Digital Commerce (ONDC)

We are empowering MSME customers with our new MSME Digital Platform. This unified portal offers seamless access to personalized "banking" and "beyond banking" services, designed to meet the unique needs of MSMEs.

Features like Digital Ledger, Inventory Management and e-Invoicing, Payments & Collections, Expense Management, etc. are made available as part of the ONDC - MSME solution.

Credit Line on UPI:

Credit line is a flexible OD against the deposit standing in the name of the customer that works as a pre-approved product, with a fixed limit that the customer can utilize when needed at the time of buying / getting goods / services using UPI

Credit line on UPI allows the customer to borrow money by against the lien on Customers deposit as collateral. This facility allows customers to meet their financial needs without going in for premature encashment of deposits.

Online Loan against Securities [Mutual Fund and Shares] (LAS)

We have provisioned Online Loan against Securities (Mutual Fund and Shares) through our Internet / Mobile Banking. Loan against Mutual Funds allows the customer to borrow money by pledging Customers Mutual Fund units as collateral. This facility allows customers to meet urgent financial needs without liquidating their investments. With this new option the customers can avail Loan against approved Equity and Debit Mutual Funds. The Loan is sanctioned in the form of an Overdraft facility. All documentations are made digitally and no manual intervention is needed.

RuPay National Common Mobility Card (NCMC) topup through APP

The customer has to login into the UPI app. NCMC option shall be made available in the Mobile app.

RuPay NCMC has four options

• Card Activation - Once the card is tapped against mobile, service area is created for usage. This is for old cards issued without service area creation.

• Balance enquiry - Upon tapping card against mobile, the balance stored in the chip will be displayed.

• NCMC top-up : Load money to the Card.

• Balance Update: Upon tapping the card with mobile, balance amount gets updated.

Co-Branded Credit Card CSK & SRH

We have tied up with Franchise CSK for Exclusive Credit Card Partner and SRH as a Banking partner. Under this program, we issue co-branded Credit card to customers who are eligible as per the eligibility criteria. The cards come up with Reward Programs, exclusive offers on franchise Merchandising.

Customer can apply for this card from the Portal with end to end DIY (Do It Yourself Journey) with instant Virtual Card issuance followed by Physical Card delivered to the customer.

Customer can opt for Credit Card on UPI where the card can be added instantly in Any UPI APP for payments.

UPI Lite

Bank extended the UPI Lite service, which enables small value transactions for the convenience of many users. Here customer can do offline payments to merchant or person without using MPIN Additionally, multiple Lite account can be created by the customer on different UPI Apps for the same Bank Account Transaction is made possible from other Payment Service Providers (PSP) apps even if our banks server is not reachable

Ospyn

The Bank has introduced Document Management System thorugh OSPYN which is a paperless authentication system. This comprehensive workflow solution facilitates initiation, verification and approval of office notes electronically and also allows upload of relevant documents / evidences for reference during the approval process.

This also helps end-to-end tracking of the internal administrative notes and works as central repository of the same.

Robotic Process Automation

The Bank has implemented Robotic Process Automation (RPA), for generating periodic reports, regular internal and external communications, whichever is of repeated nature. This reduces the work load of the employees by removing manual intervention and also facilitates error free reporting.

OTHER BUSINESS ACTIVITY

The Bank has Corporate Agency tie-up with 8 Insurance Companies for augmenting the Non-Interest Income. The eight Insurance Companies with whom we have tied up with are given below:

A) Life Insurance Business:

LIC of India

Bajaj Allianz Life Insurance Company TATA AIA Life Insurance Company

B) Standalone Health Insurance Business:

Star Health and Allied Insurance Company Ltd Aditya Birla Health Insurance Company Care Health Insurance

C) General Insurance Business:

Royal Sundaram General Insurance Company Shriram General Insurance Company

The Bank offers Insurance products of all the above companies to its customers. During the reporting year, the Bank has earned a Fee income of 97.56 crore as against 54.64 crore in the previous year, through cross selling of Insurance Products.

Bank is also offering additional services to all our Customers through Net Banking & Mobile Banking Platforms:

a. Demat , Trading and Mutual Fund

b. Demat A/c from our own DP with NSDL

c. Trading A/c from our tie up with Integrated Enterprises India Ltd.

d. Mutual Fund Investment Solution The Bank has tie up with;

a. Finwizard Technology Pvt. Ltd. (widely known as FISDOM) - Banks Customers can invest in Mutual Fund Units thorugh Banks Mobile Banking App and Demat Account is not required for this purpose.

b. Integrated Enterprises India Ltd., (Integrated) for customers having Demat with us and trading with Integrated can hold units in Demat Account and Statement of Accounts also.

SUBSIDIARIES AND ASSOCIATES

Your Bank does not have any Subsidiaries or Associates to report during the year under this Report.

BOARD MEETING

The Board meetings of the Bank were held in accordance with the Companies Act, 2013, the Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [Listing Regulations]. During the year under review, 12 (Twelve) meetings were held. The details of such meetings along with the constitution of the Board and its Committees are given under the Report on Corporate Governance forming a part of this Report.

BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL

Shri. R. Vijay Anandh (DIN 09656376)

During the year based on the application made by the Bank, the RBI vide its letter no. DoR.GOV.No.1252/ 08.42.001/2024-25 dated May 28, 2024, accorded its prior approval for the appointment of Shri. R. Vijay Anandh as the Whole-time Director - Executive Director of the Bank for a period of 3 years and in accordance with this approval, the Board at its meeting held on June 24, 2024, had approved the co-option of Shri. R. Vijay Anandh as an Additional Director of the Bank designated as Executive Director in the category of Whole-time Director with effect from June 24, 2024 subject to the approval of Shareholders.

The Shareholders at the previous Annual General Meeting held on August 22, 2024, approved the appointment of Shri. R. Vijay Anandh as Executive Director of the Bank together with remuneration.

Shri. V. Ramesh (DIN 10954322)

During the year based on the application made by the Bank, the RBI vide its letter no. DoR. Gov.No. 7429/08.42.001/2024-25 dated February 14, 2025 and DoR. Gov.No. 7925/08.42.001/2024-25 dated March 4, 2025, accorded its prior approval for the appointment and remuneration respectively of Shri. V. Ramesh as the Whole-time Director - Executive Director of the Bank for a period of 3 years and in accordance with this approval, the Board at its meeting held on February 21, 2025, had approved the co-option of Shri. V. Ramesh as an Additional Director of the Bank designated as Executive Director in the category of Whole-time Director with effect from February 21, 2025 subject to the approval of Shareholders. The appointment of Shri. V. Ramesh as Executive Director of the Bank together with remuneration was approved by the Shareholders by way of Postal Ballot through remote e- voting on May 3, 2025.

Directors to retire by Rotation

All directors on the Board except the Managing Director and CEO, Shri. R. Vijay Anandh, Shri. V. Ramesh, Executive Directors of the Bank are Independent Directors. Independent Directors are not required to retire in terms of Section 149(13) of the said Act. Further, as per the provisions of Section 152(6) of Companies Act, 2013 read with Article 26(b) of the Articles of Association of the Bank, none of the Executive / Whole-time Directors are subject to retirement by rotation. Therefore, no Director including MD & CEO and two Executive Directors are required to retire by rotation at the ensuing Annual General Meeting.

Declaration by Independent Directors

The Bank has received relevant declarations from all the Independent Directors under Section 149(6), 149(7) of the Companies Act, 2013, notifications issued by the Ministry of Corporate Affairs and SEBI Listing Regulations, 2015 as amended. The Board is satisfied that the Independent Directors meet the criteria of independence as stipulated under the aforesaid provisions of the Companies Act, 2013.

Further, in compliance with MCA Notification No. G.S.R 805(E) dt. October 22, 2019, all Independent Directors of the Bank have registered themselves in the Independent Directors data Bank of Indian Institute of Corporate

Affairs and are qualified / exempt from undertaking selfassessment exam.

Familiarization program for Independent Directors

The details of programme for familiarization of Independent Directors with the Bank, their roles, rights and responsibilities in the Bank and related matters are provided separately under the Corporate Governance Report forming a part of this Annual Report.

Performance Evaluation

I n line with the provisions of the Companies Act, 2013, SEBI Listing Regulations, 2015 and relevant notifications / guidelines issued by SEBI in this regard, there exists an evaluation matrix approved by the Nomination Committee of the Board which is used for carrying out the performance evaluation of the Board as a whole, its Committees as well as Independent Directors, MD & CEO, Executive Directors and Chairman.

The necessary evaluations / review were carried out by the Board and Independent Directors to determine the effectiveness of the Board, its Committees, MD & CEO, Chairman and individual Directors. Additional information on performance evaluation is set out in Corporate Governance Section forming a part of this Annual Report.

Key Managerial Personnel

In terms of Section 203(1) read with Section 2(51) of the Act and Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Bank had the following KMPs as on March 31, 2025:

• Dr. N. Kamakodi - Managing Director & CEO

• Shri. R. Vijay Anandh - Executive Director, w.e.f. June 24, 2024

• Shri. V. Ramesh - Executive Director, w.e.f. February 21, 2025

• Shri. J. Sadagopan - Chief Financial Officer

• Shri. Venkataramanan S - Company Secretary AUDITORS

Joint Statutory Central Auditor

M/s. P. B. Vijayaraghavan & Co., Chartered Accountants, Chennai (FRN 004712S) & M/s. M. Srinivasan & Associates, Chartered Accountants, Chennai (FRN 004050S), Joint Statutory Central Auditors ("SCAs") of the Bank will retire at the conclusion of ensuing AGM for their first year. The Joint Statutory Central Auditors have furnished their Report for FY 2025 which forms a part of this Report and there are no qualifications, reservations or adverse remarks made by the Auditors in their Report. Further, the Auditors of the Bank have not reported any fraud under Section 143(12) of the Companies Act, 2013.

As per RBI circular, No. DoS.CO.ARG / SEC.01 / 08.91.001 / 2021-22 dated April 27, 2021 read with the policy of the Bank on appointment of SCAs and the provisions of Section 139 of the Companies Act, 2013 and subject to the approval of RBI, the Board as per the recommendations of Audit Committee had considered & approved the appointment of M/s. P. B. Vijayaraghavan & Co., Chartered Accountants, Chennai (FRN 004712S) & M/s. M. Srinivasan & Associates, Chartered Accountants, Chennai (FRN 004050S) as the Joint Statutory Central Auditors of the Bank for FY 2025-26 for their second term.

With respect to the above appointments, the Bank has received the consent from such Auditors and confirmation to the effect that they are not disqualified to be appointed as Joint Statutory Central Auditors of the Bank in terms of Companies Act, 2013 & the rules made there under and RBI guidelines. The Members are requested to consider and approve their appointments as Joint Statutory Central Auditors of the Bank as per the agenda set out in the Notice calling this Annual General Meeting.

Secretarial Auditor

Pursuant to Section 204 of the Companies Act, 2013, read with Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 and Regulation 24A of SEBI Listing Regulations, 2015 as amended, subject to the approval of the Shareholders in the ensuing Annual General Meeting, the Bank had appointed M/s. KUVS & Associates, Practicing Company Secretaries, Tiruchirappalli a Peer Reviewed Firm holding Peer Review Certificate No 6318/2024 dated December 16, 2024 issued by the Institute of Company Secretaries of India, as the Secretarial Auditor for a period of 5 (five) years to conduct the Secretarial Audit of the Bank from the FY 2026 to FY 2030. The proposed appointment is set-out in the Notice calling this AGM for approval by the Shareholders.

As regards FY 2025, the Report of Secretarial Auditor Secretarial Audit ReportRs in the prescribed format is annexed to this Report as Annexure II. In addition, pursuant to Regulations 24A of SEBI Listing Regulations, 2015, read with relevant SEBI circular, the Bank has obtained Secretarial Compliance Report certified by the above Auditor on compliance with all applicable SEBI regulations and circulars / guidelines issued thereunder and the copy of the same was submitted to the Stock Exchanges within due timelines.

Cost Audit

The requirement of maintaining cost records u/s 148(1) of the Companies Act, 2013 is not applicable to the Bank.

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with Section 134 (5) of the Companies Act, 2013, the Board of Directors of the Bank hereby declares and confirms that:

i) In the preparation of the Annual Accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures.

ii) The Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the State of Affairs of the Bank as at the end of the Financial Year and of the Profit & Loss of the Bank for that period.

iii) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing Banks in India for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities.

iv) The Directors had prepared the annual accounts on a going concern basis.

v) The Directors had laid down adequate internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and

vi) The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

INSIDER TRADING NORMS

The Bank has formulated the Code of Conduct pursuant to SEBI (Prohibition of Insider Trading) Regulations, 2015 as amended from time to time (SEBI PIT Regulations) to regulate, monitor and ensure reporting of trading by the designated persons and other connected persons. The said code is being reviewed and amended by the Board of Directors from time to time.

The code is adopted to maintain highest ethical standards in dealing with securities of the Bank by persons to whom it is applicable. The code of conduct and related policy are available in the Banks website. Weblink: https://www.cityunionbank.com/filemanager/Jun25/PITPolicy_31.01.2025.pdf

All listed companies are required to maintain an in-house Structured Digital Database ("SDD") under Regulation 3(5) of SEBI PIT Regulations, 2015 and report Unpublished Price Sensitive Information (UPSI) under Regulations 9 (2). In this regard our Bank has installed the required software which has been integrated in the Banks server. The trades of all Designated and Connected persons ("Insiders") are monitored on a continuous basis.

Further, in order to exercise additional vigil on the trades conducted by all Insiders, the PAN of all the Insiders are linked in the database of RTA and thereby the RTA furnishes a Weekly Report to the Bank on trades conducted by the Insiders. In addition, the SEBI as per its circular dated July 19, 2023 has notified the freezing of transactions related to the PAN of Insiders at Depository Level effective October 1, 2023. Accordingly, the Demat Accounts related to the PAN numbers of Insiders of the Bank are being frozen by our Designated Depository - NSDL for trading in the equity shares of the Bank, during the Trading Window Closure period beginning with the first day of the closure period till completion of two days after declaration of financial results.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE BANK AND SIGNIFICANT / MATERIAL ORDERS PASSED BY THE REGULATORS

There are no material changes and commitments affecting the financial position of the Bank which occurred between the end of the financial year of the Bank i.e., March 31, 2025 and the date of Directors Report i.e., June 11, 2025. In this connection, it needs to be mentioned that during the reporting year, the RBI has levied a penalty of Rs 6,91,400 towards Chest / ATM Cash out related transactions during FY 2025.

POLICIES

Directors Appointment(s) and Remuneration / Compensation Policy

The Bank has formulated and adopted a policy on Board Diversity as per which the Nomination Committee of the Board of Directors of the Bank conducts the preliminary assessment for appointment of Directors on the Board of the Bank and makes suitable recommendations to the Board for its consideration.

The Nomination Committee identifies and assesses the qualifications and positive attributes of the proposed candidate for the position of Director based on the disclosures / declarations received from such person under the Companies Act, 2013, the Banking Regulation Act, 1949 and also RBI guidelines. The Nomination Committee makes a thorough scrutiny of the prospective candidate and certifies the fit and proper status to the Board after exercising above due diligence process.

Apart from the above, the Nomination Committee before the appointment of an Independent Director also considers the Declaration on Independence furnished by the proposed candidate for the position of Director under Section 149 (7) of the Companies Act, 2013 and SEBI Listing Regulations, 2015.

Further, the Bank has a Compensation Policy which is in accordance with the directives issued by the Reserve Bank of India. The Bank has constituted a Compensation & Remuneration Committee which oversees the framing, implementation and review of the Compensation Policy of the Bank. The Remuneration Policy of the Bank is briefed under Corporate Governance Report forming a part of Annual Report. The Compensation policy is available at the Banks website. Weblink:

https://www.cityunionbank.com/filemanager/May24/compensationpolicy26032024final.pdf

RISK MANAGEMENT

Pursuant to Regulation 21 of SEBI Listing Regulations, the Bank has constituted the Risk Management Committee. The details of the said Committee together with the terms of reference are set out in the Report on Corporate Governance, which forms a part of this Annual report.

Further, the Bank has in place an Integrated Risk Management framework supported by detailed policies and processes for management of Credit Risk, Market Risk, Liquidity Risk, Operational Risk and various other Risks. The details on the Risk Management framework of the Bank is detailed in the Management Discussion and Analysis section appended to this Report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

As per Regulation 34(2)(f) of SEBI Listing Regulations, 2015, your Bank has prepared the Business Responsibility and Sustainability Report setting out the Banks Social, Environmental and Governance aspects. The same is available in the website of the Bank. Weblink:

https://www.cityunionbank.com/filemanager/Jul25/BRSR_FINAL_2024_25_16072025.pdf

DEPOSITS UNDER CHAPTER V OF COMPANIES ACT, 2013

Being a Banking company, as Section 73 of Companies Act, 2013 is not applicable, hence the disclosures as required under Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, 2014 of the Companies Act, 2013 are not applicable.

INTERNAL FINANCIAL CONTROL SYSTEMS & ITS ADEQUACY

The Bank has put in place adequate internal financial controls commensurate with the size and scale of its operations. The Bank has, in all material aspects, Adequate Internal Control Systems over Financial Reporting and these controls have been designed to capture the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. Such Internal Financial Controls over Financial Reporting were operating effectively during the Financial Year. More details have been set out in Management Discussion and Analysis Report which forms a part of this Report.

RELATED PARTY TRANSACTIONS

The Board of Directors of the Bank has adopted a policy on Related Party transactions which is in line with the Companies Act, 2013 and SEBI Listing Regulations, 2015. During the reporting year, all transactions with related parties of the Bank were in the ordinary course of business and on an arms length basis. The Bank did not enter into any material transaction with such related parties, under Section 188 of the Companies Act, 2013, during the year. Form AOC-2, as required under Section 134 (3) (h) of the Act, read with Rule 8 (2) of the Companies (Accounts) Rules 2014, is attached as Annexure III forming part of this Report. A detailed policy on the Related Party Transaction is available at the Banks website. Weblink:

https://www.cityunionbank.com/filemanager/July24/RPT%20POLlCY_26062023.pdf

LOANS, GUARANTEES OR INVESTMENTS

The Loans, Guarantees or Investments made in securities by the Bank are exempt pursuant to the provisions of Section 186 (11) of the Companies Act, 2013 and hence do not attract any disclosure required under Section 134 (3)(g) of the Companies Act, 2013.

ANNUAL RETURN u/s 92(3) OF COMPANIES ACT, 2013

The Annual Return pursuant to Section 92(3) of the Companies Act, 2013 read with Rule 12 (1) of the Companies (Management and Administration) Rules, 2014 is uploaded in the website of the Bank. Weblink:

https://www.cityunionbank.com/filemanager/Jun25/ANNUALRETURN2024.pdf

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In compliance with Section 135 of the Companies Act, 2013 (the Act) read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 as amended from time to time and in consonance with the CSR policy, the Bank had undertaken a number of initiatives that contribute to society at large, in the areas of healthcare, education, environment, preservation & improvement of Water Bodies and preservation of the countrys rich culture and heritage.

The Bank has established CUB Foundation, a non-profit entity to identify suitable deserving projects, recommend and oversee the CSR initiatives of the Bank. The Annual Return on CSR activities as required under Rule 9 of the Companies (Corporate Social Responsibility) Rules 2014 is furnished under AnnexureIV to this Report.

Further, in accordance with Section 135(5) of the Act read with Rule 8(3)(a) of the Companies (Corporate Social Responsibility Policy) Rules, 2014, one of the projects funded in FY 2024 i.e., Renovation / Desiltation of Olayakunnam Village Lake in Madukur, Pattukottai Taluk, Thanjavur district area admeasuring 130 acres approx., is required to undergo Impact Assessment through a third- party agency. Accordingly, assessment of such project has been conducted by M/s. B Balaumasudhan & Co., Chartered Accountants, Chennai and they have submitted their report. As per MCA General Circular no.14 / 2021 dt.

August 25, 2021, a summary of such Assessment reports are given hereunder while the complete report is given in the website of the Bank. Weblink:

https://www.cityunionbank.com/filemanager/Jun25/IMAPn_ASSESSMENT_REPORT%20_COCLOUR_FINAL_2025.pdf

Renovation and Desiltation of Olayakunnam Village Lake

The project was undertaken in response to a request submitted by Tamil Nadu Cauvery Vivasayigal Sangam. The initiative focused on renovation and desilting of the Olayakunnam Village Lake and encompassed activities such as lakebed, restoration, removal of silt deposits, clearance of overgrown vegetation and elimination of encroachments. The lake spans an area of 130 acres, and after renovation and desiltation through removal of invasive vegetation, the lakes water holding capacity has been significantly enhanced. The rejuvenated lake supports irrigation across approximately 400 to 450 acres of surrounding farmland, significantly enhancing agricultural productivity. Peripheral works including the construction of side pathways, demarcation and extension of lake boundaries have contributed to better accessibility and conservation. The renovated lake in addition to agriculture now provides water for domestic use, livestock needs, and overall community sustenance, reinforcing its role as a critical local resource.

DISCLOSURE TO BE MADE UNDER SECTION 177(8) OF COMPANIES ACT, 2013

The Board of the Bank had constituted the Audit Committee under the extant guidelines of Reserve Bank of India (RBI), provisions of the Companies Act, 2013 and SEBI Listing Regulations, 2015. The details of the composition of the Audit Committee are furnished in the Corporate Governance Report which forms a part of this Report.

CORPORATE GOVERNANCE

The Bank is committed to achieving the highest standards of Corporate Governance. It also adheres to the Corporate Governance requirements set by the Regulators / applicable laws. The Corporate Governance practices followed by the Bank aim to ensure value creation for all its stakeholders through ethical decision making and maintaining transparency.

A detailed Report on Corporate Governance standards followed by the Bank as per SEBI Listing Regulations, 2015, Companies Act, 2013 and Rules made there under alongwith Certificate of Compliance issued by the

Statutory Central Auditor is furnished separately which forms part of this Report.

MANAGEMENT DISCUSSION & ANALYSIS

A detailed Management Discussion and Analysis Report for the year under review as stipulated in SEBI Listing Regulations, 2015 is presented as a separate section forming a part of this Report.

OTHER DISCLOSURES

Conservation of Energy and Technology Absorption

In respect of the nature of activities carried out by the Bank, w.r.t. the provisions of Section 134 (m) of the

Companies Act, 2013 relating to conservation of energy and technology absorption, the Bank has taken every effort to conserve energy. The Bank has been installing energy efficient equipments at all its branches including installation of Solar panels wherever feasible and power saving LED bulbs at majority of Branches and Central Office. The members may refer the Business Responsibility and Sustainability Report for more details on this aspect.

On the technological front, the Bank continued to offer reliable and secure banking service to its customers by facilitating the latest customer friendly technological solutions. A separate para on Technology matters has been set out elsewhere in this Report.

Foreign Exchange Business

The Bank continues to encourage countrys export promotion by lending to exporters and offering them forex transaction facilities. The Bank also offers necessary foreign exchange transaction facilities to all users having underlying forex exposures.

EMPLOYEES / OTHER DISCLOSURES

Disclosures under Section 197 of the Companies Act, 2013

The disclosures pursuant to the provisions of Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are furnished as Annexure V.

In terms of Section 197(12) of the Act, read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of limits set out in said rules forms a part of this Report.

In accordance with the provisions of Section 136(1) of the Act, the Integrated Annual Report excluding the aforesaid information, is being sent to the members of the Bank and others entitled thereto. The said information is available for inspection by the Members at the Registered Office of the Bank during business hours up to the date of the ensuing AGM.

Any member interested in obtaining a copy thereof, may write to the Company Secretary of the Bank at its registered office or at secretary@cityunionbank.in

Disclosure under Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Bank has a policy on Prevention of Sexual Harassment at Workplace, which provides protection for Women employees working in the organization. An Internal Complaint Committee ICC has been set up to redress the complaints received under Sexual Harassment. ICC have reported for the Financial Year as follows:

No. of Complaints pending at the beginning of financial year	1
No. of Complaints received during the financial year	1
No. of Complaints disposed during the financial year	2
No. of Complaints pending as on the end of financial year	Nil

Whistle Blower / Vigil Mechanism

Pursuant to the provisions of Section 177(9) and (10) of the Companies Act, 2013, a vigil mechanism for Directors and employees to report genuine concerns has been established. The Bank has a policy on Whistle Blower/Vigil Mechanism which is uploaded in the website of the Bank. Weblink:

https://www.cityunionbank.com/filemanager/Jun25/WHISTLE_BLOWER_POLICY_2025.pdf

There exists an online forum for all employees in the intranet server of the Bank to report genuine concerns under the mechanism. During the reporting period there was an opening balance of 1 complaint and 14 complaints were received during the year under this mechanism. All the 15 cases had been disposed of including 1 case which pertains to last year. As on March 31, 2025 there were no pending complaints. The functioning of the mechanism is reviewed by the Audit Committee from time to time.

Compliance with Secretarial Standards and applicable laws

It is hereby confirmed that the Bank has complied with the Secretarial Standards issued by the Institute of Company Secretaries of India (SS-1 and SS-2) relating to Meetings of the Board, its Committees and Shareholders. Further proper systems are in place to ensure compliance with all laws applicable to the Bank.

ACKNOWLEDGEMENT

The Board of Directors of the Bank would like to take this opportunity to thank all its Customers and Stakeholders and wish to place on record its sincere appreciation for the guidance, assistance and co-operation received from the Reserve Bank of India, SEBI, IRDAI, NABARD, NHB, SIDBI, EXIM BANK, ECGC, DICGC, NPCI, Stock Exchanges, Depositories, Integrated Registry Management Services Private Limited, Life Insurance Corporation of India and all other authorities.

Your Directors also place on record their deep sense of appreciation for the Banks Executives, members of the Staff and all other employees for their unwavering commitment to serve the Bank to the best extent possible.

	For and on behalf of the Board
	Sd/-
	G. Mahalingam
Date : June 11, 2025	DIN 09660723
Place : Chennai	Chairman