Fedbank Financial Services Ltd Directors Report

To the Members,

The Directors have pleasure in presenting the 31^st Annual Report on the business and operations of the Fedbank Financial
Services Limited ("Fedfina" / "the Company") together with the Audited Financial Statements for the Financial Year ended
31^st March, 2026 ("year under review").

FINANCIAL HIGHLIGHTS

The key highlights of the Audited Financial Statements are presented in the table below:

(Rs. in Lakhs)

Financial Highlights	31s* March, 2026	31s* March, 2025
Total Revenue	2,22,661	2,07,982
Net Interest Income (Nil)	1,22,975	1,07,080
Fees and Other Income	11,754	15,524
Operating Expenses & Loan Loss Provisions	88,628	92,229
Profit Before Tax	46,101	30,375
Net Profit	34,360	22,518
Appropriations:
Transfer to Reserve Fund	6,872	4,504
Balance Carried Over to Balance Sheet	27,488	18,014
Total Advances	14,31,885	11,64,637
Total Borrowings	13,48,413	10,26,866
Total Assets (Balance Sheet Size)	16,87,478	13,24,970
Net Worth	2,92,610	2,54,736
Ratios:
Return on Average Assets (%)	2.44%	1.82%
Return on Eguity (%)	1 2.62%	9.39%
Earnings per share (Rs.) - Basic	Rs. 9.20	Rs. 6.06
- Diluted	Rs. 9.1 2	Rs. 6.04
Book Value per share (Rs.)	Rs. 78.19	Rs. 68.35
Cost to Income ratio (%)	57.23%	57.58%
Capital Adeguacy Ratio (%)	22.40%	21.92%

Highlights of Performance

The total revenue of the Company for the financial year ended 31^st March, 2026 has increased to Rs. 2,22,661 Lakhs as against
Rs. 2,07,982 Lakhs for the previous year ended 31^st March, 2025. Similarly, Net Interest Income (Nil) grew by 15% from Rs. 1,07,080
Lakhs in FY 2024-25 to Rs. 1,22,975 Lakhs in FY 2025-26. The revenue increased by 7% on the back of growth of 23% in loan
book during the year. The net profit of the Company increased by 53% to Rs. 34,360 Lakhs for the financial year ended 31^st March,
2026, as against Rs. 22,518 Lakhs for the financial year ended 31^st March, 2025. The Net worth of Company at the end of previous
financial year, i.e. 31^st March, 2025, was Rs. 2,54,736 Lakhs and closing Net worth as on 31^st March, 2026, was Rs. 2,92,610 Lakhs.

Growth in Business

As of 31^st March, 2026, the AUM increased by 27.5% compared to FY 2024-25, reaching Rs. 20,15,314 Lakhs while disbursements
improved by 67.18% to Rs. 31,41,014 Lakhs.

Over the past year, Rs. 2,43,265 Lakhs of the gold loan AUM was through co-lending, and the Company conducted portfolio sell-
down transactions totaling Rs. 2,57,933 Lakhs. At the end of the year, 12.1 % of the AUM was off the books.

CREDIT RATING

The Company has obtained credit ratings from India Ratings & Research Private Limited, CARE Ratings Limited, CRISIL Limited
and ICRA Limited.

The details of all the credit ratings obtained as on 31^st March, 2026 are given below:

Name of the Credit Rating Agency	Facilities / Instruments	Credit Rating
India Ratings & Research Private Limited	- Bank Loans - Non-Convertible Debentures - Non-convertible Debentures subordinated debt	IND AA+/Stable
CARE Ratings Limited	Non-Convertible Debentures	CAREAA+; Stable
CARE Ratings Limited	Long Term / Short Term bank facilities	CAREAA+; Stable/ CAREA1 +
CARE Ratings Limited	Long-term instruments	CAREAA+; Stable
CARE Ratings Limited	Subordinated Debt	CAREAA+; Stable
Crisil Ratings Limited	Commercial Paper	CRISIL A1 +
Crisil Ratings Limited	Non-Convertible Debentures	Crisil AA+/Stable
ICRA Limited	Commercial Paper	ICRAA1 +
ICRA Limited	Subordinated Debt	ICRA AA+(Stable)

EXPANSION OF NETWORK

The Company has broadened its geographical presence by establishing new branches in different locations, thereby enhancing
accessibility for its customers. With the opening of 148 branches, the branch network has now reached to 757 branches as on
31^st March, 2026 across 17 states for different products and the break-up is as follows:

State / Union Territories	MSME Hubs	Gold Loan	MSME + Gold Loan (Vyapaar)	Grand Total
Andhra Pradesh	9	42	6	57
Chandigarh	1	-	-	1
Delhi NCR	1	45	-	46
Goa	-	5	-	5
Gujarat	11	no	15	136
Haryana	7	25	-	32
Karnataka	9	77	9	95
Madhya Pradesh	7	8	5	20
Maharashtra	31	102	8	141
Pondicherry	2	1	-	3
Punjab	1	12	-	13
Rajasthan	10	19	5	34
Tamil Nadu	26	57	7	90
Telangana	4	27	11	42
Uttar Pradesh	9	21	2	32
Uttarakhand	1	5	2	8
U/T- Dadra & Nagar Haveli	-	2	-	2
Grand Total	129	558	70	757

BUSINESS OVERVIEW

The Company has maintained a stable performance with a focus on credit guality and returns. Its strong parentage and robust
credit rating have enabled access to eguity and debt on competitive terms. The Company offers a diversified range of products
catering to underpenetrated market segments, which have demonstrated growth potential. The Company has a dedicated
workforce of 5303 employees spread across 17 states and union territories.

There is no change in the nature of business of the Company for the year under review. Further information on the business
overview and outlook and state of the affairs of the Company is discussed in detail in the Management Discussion & Analysis
Report.

DIVIDEND

In view of the planned business growth, the Board deems
it proper to preserve the resources of the Company for its
activities and therefore, do not propose any dividend for the
financial year ended 31^st March, 2026.

DIVIDEND DISTRIBUTION POLICY

Since the Company is one of the top 1000 listed Companies
as per market capitalisation as on 31^st March, 2026 and
in accordance with the Regulation 43A of Securities and
Exchange Board of India (Listing Obligations and Disclosure
Reguirements) Regulations, 2015 (SEBI Listing Regulations),
the Dividend Distribution Policy is available on the website
of the Company at https://www.fedfma.com/site/assets/
files/2898/dividend distribution policy.pdf

AMOUNT PROPOSED TO BE TRANSFERRED TO STATUTORY
RESERVES

The Board of Directors has proposed a transfer of Rs. 6,872
Lakhs to the Statutory Reserves maintained under Section
45IC of the RBI Act, 1934.

ASSET-LIABILITY MANAGEMENT

The Company follows a well-defined Asset Liability
Management (ALM) system, driven by Asset Liability
Committee (ALCO), to monitor efficiently and pursue
appropriate policy initiatives.

Liguidity positions are examined regularly across the
specified time buckets to assess and manage mismatches.
The ALM policy and practices of the Company are in line
with the regulatory guidelines, designed to protect
against liguidity as well as interest rate risk challenges
and to optimise cost of funds at all times to fund growth
reguirements.

The Company maintains a robust ALM framework, overseen
by the ALCO, to ensure prudent monitoring and strategic
decision making. This system enables the Company to
effectively manage liguidity and interest rate risks while
aligning with business growth objectives.

Liguidity positions are reviewed regularly across defined time
buckets to identify and address any potential mismatches.
The Companys ALM policy and practices are fully compliant
with regulatory guidelines and are structured to mitigate
liguidity and interest rate risks. In doing so, the Company
aims to optimise the cost of funds and support sustained
growth.

CHANGES IN CAPITAL STRUCTURE
Authorised Share Capital of the Company:

The Authorised Share Capital of the Company is
Rs. 10,00,00,00,000/- (Rupees One Thousand Crores only)
consisting of 99,00,00,000 (Ninety-nine Crores) eguity

shares ofRs. 10/- (Rupees Ten) each and 1,00,00,000 (One
Crores) 0.01% non-cumulative redeemable preference
shares of face value Rs. 10 (Rupees Ten) each.

Issued, Subscribed and Paid-up Share Capital of the
Company:

The Issued, Subscribed and Paid-up share capital of the
Company changed from Rs. 3,72,71,68,540/- comprising of
37,27,16,854 Eguity shares of face value of Rs. 10 each to
Rs. 3,74,20,61,010/- comprising 37,42,06,101 of Eguity shares
of face value of Rs. 10 each.

The issued, subscribed and paid-up share capital increased
due to allotment of eguity shares under the Employee Stock
Option Plan (ESOP) to eligible employees upon exercise
of vested options. During the year under review, 14,89,247
eguity shares of face value of Rs. 10/- each were allotted
pursuant to exercise of stock options by the employees of
the Company under The Fedbank Financial Services Limited
- Employees Stock Option Plan 2018, as amended.

ISSUE OF DEBENTURES

During the period under review, the Board of Directors at their
Meeting held on 25^th August, 2025, approved the issuance of
Non-Convertible Debentures ("NCDs") up to Rs. 2,500 Crores,
in one or more tranches, on a private placement basis,
subject to the approval of the shareholders.

Pursuant to the aforesaid approval and approval of the
Shareholders obtained at the Annual General Meeting held on
29^th September, 2025, the Company, during the year, issued
and allotted the following Non-Convertible Debentures on a
private placement basis:

- 20,000 (Twenty Thousand) Rated, Listed, Senior,

Secured, Redeemable, Non-Convertible Debentures
having a face value of Rs. 1,00,000/- (Rupees One
Lakh only) each, aggregating up to Rs. 200,00,00,000/-
(Rupees Two Hundred Crore only), carrying a coupon of
7.29% p.a., allotted on 6^th January, 2026.

- 25,000 (Twenty-Five Thousand) Rated, Listed,

Unsecured, Subordinated, Redeemable, Non-

Convertible Debentures having a face value of
Rs. 1,00,000/- (Rupees One Lakh only) each, aggregating
up to Rs. 250,00,00,000/- (Rupees Two Hundred and Fifty
Crores only), carrying a coupon of 8.85% p.a., allotted
on 24^th March, 2026; and

- 20,000 (Twenty Thousand) Rated, Listed, Unsecured,
Subordinated, Redeemable, Non-Convertible
Debentures having a face value of Rs. 1,00,000/-
(Rupees One Lakh only) each, aggregating up to
Rs. 200,00,00,000/- (Rupees Two Hundred Crores only),
carrying a coupon of 8.90% p.a., allotted on 24^th March,
2026.

All the Non-Convertible Debentures issued by the Company are listed on BSE. The details of all the outstanding
Non-convertible Debentures as on 31^st March, 2026 are mentioned below:

NCD Series/ Security name	Date of Allotment	Date of Redemption	Amount Outstanding (in Rs.)
Reset Rate Secured Rated Listed Non Convertible Debentures Letter of Allotment Date of Maturity 26th June, 2027	26th June, 2023	26th June, 2027	31,25,00,000
9% Unsecured Rated Listed Redeemable Non Convertible Subordinate Tier II Debentures Letter of Allotment Date of Maturity 26th April, 2030	26th May, 2023	26th April, 2030	2,00,00,00,000
G-Sec Secured Rated Listed Redeemable Principal Protected Market Linked Non Convertible Debentures Letter of Allotment Date of Maturity 04th April, 2026	4th January, 2023	4th April, 2026	200,00,00,000
9.90% Unsecured Listed Rated Redeemable Non Convertible Debentures Date of Maturity 30th September, 2027	30th September, 2020	30th September, 2027	250,00,00,000
Repo Rate Linked Secured Rated Listed Redeemable Non Convertible Debenture Letter of Allotment Series 1-2408 Date Of Maturity 14th August, 2028	14th August, 2024	14th August, 2028	75,00,00,000
G Reset Rate Secured Rated Listed Redeemable Non Convertible Debenture Series 4 Date of Maturity 05th January, 2029	6th January, 2026	5th January, 2029	200,00,00,000
8.85% Unsecured Rated Listed Redeemable Non Convertible Debenture Series 1 Date of Maturity 21st October, 2033	24th March, 2026	21st October, 2033	250,00,00,000
8.90% Unsecured Rated Listed Redeemable Non Convertible Debenture Series II Date of Maturity 21st November, 2033	24th March, 2026	21st November, 2033	200,00,00,000

MANAGEMENT DISCUSSION AND ANALYSIS ("MDA")

In compliance with the Regulation 34 of the SEBI Listing
Regulations, a separate section on Management Discussion
and Analysis which includes details on the state of affairs of
the Company forms part of this Annual Report.

CORPORATE GOVERNANCE

Corporate Governance has been an integral part of the way
the Company has been doing business since inception. The
Company believes that good Corporate Governance emerges
from the application of the best and sound management
practices and compliance with the laws coupled with
adherence to the highest standards of transparency and
business ethics.

The Company seeks to embed and sustain a culture that
will enable us to achieve our objectives through effective
corporate governance and enhance transparent engagement
with key stakeholders.

A separate report on Corporate Governance setting out the
governance structure, principal activities of the Board and its
Committees and the policies and practices that enable the
Board to fulfil its stewardship responsibilities together with
a Certificate from the Secretarial Auditor of the Company
confirming the compliances with the Corporate Governance

reguirements as stipulated under SEBI Listing Regulations
forms part of this Annual Report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY
REPORTING (BRSR)

In compliance with Regulation 34(2)(f) of the SEBI Listing
Regulations, as applicable, the Business Responsibility
and Sustainability Report (BRSR) of the Company for the
financial year ended 31^st March, 2026, forms part of this
Annual Report as a separate report.

The BRSR provides a comprehensive overview of the
Companys Environmental, Social, and Governance (ESG)
initiatives, disclosures, and performance. It reflects the
Companys commitment to responsible and sustainable
business practices, aligned with the expectations of its
stakeholders and regulatory reguirements.

EMPLOYEES STOCK OPTION SCHEME

The Company had formulated the Employees Stock Option
Scheme, 2018 ("ESOS, 2018"), duly approved by the
shareholders of the Company to enable its employees to
participate in the future growth and financial success of the
Company. The Company also intends to use this ESOS, 2018
to attract and retain talent in the organisation. The Employee
Stock Option Scheme was formulated in accordance with

the SEBI guidelines, as amended from time to time. The
eligibility and number of options to be granted to an employee
is determined on the basis of various parameters such as
scale, designation, performance, grades, period of service,
Companys performance and such other parameters as may
be decided by the Nomination & Remuneration Committee
of the Board from time to time in its sole discretion.

Further, a scheme titled Fedbank Financial Services
Fimited- Employees Stock Option Scheme, 2024 ("ESOS
2024") in accordance with the Securities and Exchange
Board of India (Share Based Employee Benefits and Sweat
Eguity) Regulations, 2021 for the benefit of employees
was approved by the Shareholders at the AGM held on 19^th
September, 2024.

During the year under review, 14,89,247 eguity shares of face
value of Rs. 10/- each were allotted to employees pursuant to
exercise of stock options by the employees of the Company
under ESOS 2018.

Other statutory disclosures as reguired under Regulation
14 of Securities and Exchange Board of India (Share Based
Employee Benefits and Sweat Eguity) Regulations, 2021 and
Rule 12 of the Companies (Share Capital and Debentures)
Rules, 2014 on ESOS is available on the website of the
Company at https://fedfna.eom/site/assets/fles/l 81670/
disclosure pursuant to regulation 14 of sebi sbeb
regulations- 2021 as on march 31- 2026.pdf

NOMINATION AND REMUNERATION POLICY

The Company has formulated Nomination and Remuneration
Policy under the provisions of Section 178 of the Act and
SEBI Listing Regulations and the same is uploaded on the
website of the Company at https://www.fedfna.com/site/
assets/files/2898/nomination remuneration polioy.pdf.

The Company has also formulated Compensation Policy in
accordance with the RBI Circular dated 29^th April, 2022.

ALTERATION OF MEMORANDUM AND ARTICLES OF
ASSOCIATION

During the year under review, there were no changes in the
Memorandum and Articles of Association of the Company.
However, the Board of Directors of the Company have,
subject to the approval of the shareholders of the Company,
approved alteration of Articles of Association of the Company
which is given in the Notice of the 31^st AGM, being sent with
this Annual Report.

The existing Memorandum and Articles of Association of the
Company are in compliance with the applicable provisions of
the Companies Act, 2013 and SEBI Listing Regulations.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

The composition of the Board is in accordance with Section
149 of the Companies Act, 2013 and Regulation 17 of the

SEBI Listing Regulations with an optimum combination
of Executive, Non-executive and Independent Directors
including two women directors.

As on the date of this report, the Board of Directors of the
Company comprised of five (5) Independent Directors, one
(1) Non-Executive Non-Independent Chairman, two (2)
Nominee Directors and one (1) Managing Director & CEO
(MD & CEO).

The Company has a Non-executive Chairman who is not
related to the MD & CEO.

Changes in the Directorship

During the year under review and till the date of the Report,
following changes took place in the composition of the
Board of Directors of the Company:

Mr. Muralidharan Rajamani (DIN: 01690363) was appointed
as an Independent Director (Additional) of the Company with
effect from 24^th January, 2025, and his appointment was
subseguently approved by the shareholders on 16^th April,
2025 vide Special Resolution through Postal Ballot.

Mr. Maninder Singh Juneja (DIN: 02680016), Nominee
Director representing True North Fund VI LLP resigned from
the Board with effect from 14^th May, 2026 following the exit
of True North Fund VI LLP from the Company. He confirmed
that there were no other material reasons for his resignation.

Section 152 of the Act provides that unless the Articles
of Association provide for retirement of all directors at
every AGM, not less than two-third of the total number of
directors of a public company (excluding the Independent
Directors) shall be persons whose period of office is liable to
determination by retirement of directors by rotation, of which
one-third are liable to retire by rotation.

Accordingly, Mr. Harsh Dugar (DIN: 00832748) will retire by
rotation at the ensuing AGM and being eligible, has offered
himself for reappointment.

Changes in Key Managerial Personnel (KMP)

- Mr. Rajaraman Sundaresan ceased to be the Company
Secretary & Compliance Officer and KMP of the
Company from close of business hours on 31^st July,
2025 pursuant to completion of his term.

- Upon recommendation of Nomination and Remuneration
Committee, the Board at its meeting held on 28^th July,
2025 appointed Mr. Parthasarathy Iyengar as Company
Secretary & Compliance Officer and a KMP of the
Company with effect from 1^st August, 2025.

There were no other changes except as above in the
composition of the Board of Directors and KMP of the
Company during the year under review and as on the date
of this report.

BOARD MEETINGS HELD DURING THE YEAR

During the year under review, Board of Directors met 11
times and the gap between any two meetings did not exceed
one hundred and twenty days.

The dates on which the meetings were held are 23^rd April,
2025, 28^th April, 2025,29^th April, 2025,2^nd May, 2025, 28^th July,

2025, 25^th August, 2025, 17^th October, 2025, 7^th November,
2025,15^th January, 2026, 26^th February, 2026 and 3^rd March,

2026.

Details of the meetings and attendance thereat forms part of
the Report on Corporate Governance.

DECLARATION FROM INDEPENDENT DIRECTORS

There were five (5) Independent Directors on the Board of the
Company as on 31^st March, 2026. The Independent Directors
have submitted declarations that they continue to fulfil the
criteria of independence laid down under Section 149 of
the Companies Act, 2013, Regulation 16 of SEBI Listing
Regulations and complied with the Code for Independent
Directors prescribed in Schedule IV to the Act.

The Independent Directors have confirmed that they are not
aware of any circumstance or situation, which exists or may
be reasonably anticipated, that could impair or impact their
ability to discharge their duties with objective judgement and
without any external influence.

In the opinion of the Board, the Independent Directors are
eminent persons and possess reguisite gualifications,
integrity, expertise and experience in the relevant functional
areas.

All the Independent Directors have a valid registration in
the Independent Directors databank of the Indian Institute
of Corporate Affairs as reguired under Rule 6(1) of the
Companies (Appointment and Oualification of Directors)
Rules, 2014.

INDEPENDENT DIRECTORS MEETING

Pursuant to the Act and SEBI Listing Regulations, the
independent directors must hold at least one meeting in
a financial year without attendance of Non-independent
directors and members of the Management. Accordingly,
meeting of independent directors of the Company was
convened on 25^th August, 2025, and was subseguently
adjourned due to paucity of time and concluded on
12^th September, 2025. The Independent Directors:

- noted the report of performance evaluation of the Board
and committees for the FY 2024-25;

- reviewed the performance of Non-independent
directors and the Board as a whole;

- reviewed the performance of the Chairman of the
Board, taking into account the views of executive and
Non-executive directors; and

- assessed the guality, guantity, and timeliness of flow of
information between the Companys Management and
the Board that is necessary for the Board to effectively
and reasonably perform their duties.

Suggestions of the Independent Directors were noted by the
Board.

BOARD EVALUATION

The Company has defined a manner of evaluation as per
the provisions of the Act and SEBI Listing Regulations and
formulated a method for the evaluation of the performance
of the Board, its committees and individual Directors. The
annual evaluation of the performance of the individual
Directors (including the Chairman of the Board) was
conducted on parameters such as level of engagement
and contribution and independence of judgment - thereby
safeguarding the interests of the Company.

The performance evaluation of the Independent Directors
was carried out by the entire Board, excluding the director
being evaluated. The performance evaluation of the
Chairman, the Non-Independent Directors and Board as a
whole was carried out by the Independent Directors. The
Board also carried out annual performance evaluation of the
working of each of its Board constituted Committees.

All the Directors have confirmed that they satisfy the fit and
proper criteria in terms of the provisions of Master Direction-
Reserve Bank of India (Non-Banking Financial Companies-
Governance) Directions, 2025 as amended from time to time
and that they are not disgualified from being appointed/
re-appointed/continuing as Director in terms of Section
164(1) and (2) of the Act. None of the Directors of the
Company are disgualified and/or debarred as per the
applicable provisions of the Act and the Securities and
Exchange Board of India.

The Directors have expressed their satisfaction with the
evaluation process. The Board opined that the Board
Committees composition, structure, processes and
working procedures are well laid down and that the Board
Committees members have adeguate expertise drawn from
diverse functions, industries and business and bring specific
competencies relevant to the Companys business and
operations.

All Board members and senior management personnel have
affirmed compliance with the Companys code of conduct
for the FY 2025-26.

COMMITTEES

Details on composition of various Committees of the
Board, terms of reference and number of meetings of the
Committees held are given in the Corporate Governance
Report which forms part of the Annual Report.

COMPLIANCE WITH THE SECRETARIAL STANDARDS

During the year under review, the Company has complied
with the applicable secretarial standards issued by the
Institute of Company Secretaries of India.

THE CHANGE IN THE NATURE OF BUSINESS, IF ANY

There was no change in the nature of business of the
Company during the financial year ended 31^st March, 2026.

HUMAN RESOURCE

The Company has always prided itself in being a people first
organisation. Our evolved digitised onboarding assisted us
in seamless joining for new joiners in different geographies
where we have expanded our presence. Our employee
strength has grown by 6.3% over the previous year, in line
with our business expansion plans. Our concentration
revolves around continuous growth, culture and a learning
experience. To nurture this talent, the Company has
implemented practices focused on skill enhancement
through regular training sessions, leadership development
programs, and a transparent performance management
system. Additionally, priority is given to maintaining a healthy
work-life balance for our employees, believing it enhances
their productivity and motivation.

1. Restart with Fedfina:

As part of our continued commitment to promoting
gender diversity and inclusion, the Company continued
the Restart with Fedfina initiative, to help women
professionals with career breaks an opportunity to
re-enter the workforce to rebuild their careers.

2. Digital Recruitment & In-house Background
Verification:

We have an in-house recruitment module with sole
purpose to automate the recruitment process, making
it more efficient and structured for the organisation. It
aims to minimise the TAT and enhance recruitment
experience for both interviewer and candidates by
providing a centralised platform.

We also have an Internal BGV to ensure that an
applicants background is thoroughly evaluated, that
there is no criminal history, and that the individual is the
best fit for the company. This process decreases BGVs
costs, reduces dependency on external vendors, lowers
risks, prevents fraud, and ensures that the business
complies with legal reguirements.

3. Apprentice Program:

This year we have on boarded over 400 apprentices
under National Apprenticeship Promotion Scheme

(NAPS) by the Government with an objective to develop
skilled workforce, enhance employability, and foster a
pipeline of talent for industries. They focus on providing
practical, on-the-job training alongside theoretical
learning, leading to nationally recognised gualifications
and increased career opportunities for apprentices.

4. Capability Building:

We are continuing our endeavours to build capabilities
across the organisation through our learning
interventions. Few of them are,

D.R.E.A.M. - A structured capability development
journey for Relationship Managers, focused on
strengthening sales effectiveness, customer
engagement, and overall business performance.

Gurukul Training, monthly learning sessions jointly
facilitated by Business, Quality and Credit teams to
reinforce product knowledge, process excellence, policy
understanding and the sharing of field best practices.

Story-Based Learning, a learning initiative that draws
lessons from renowned books and movies, making
leadership, teamwork, communication, and behavioural
concepts engaging and relatable.

Professional Skill Development Sessions - Learning
interventions focused on enhancing workplace
effectiveness through topics such as time management,
MS Office productivity, collaboration, communication,
and other essential professional skills.

ACE Assessments - Capability assessments
conducted across key business functions to benchmark
knowledge levels, identify learning priorities.

5. Leadership Development:

The Company is continuing to invest in building
leadership pipeline through various development
initiatives across levels.

Utkarsh Program, a structured leadership
development program for Area and Regional Business
Heads, designed to strengthen people leadership,
accountability, and business performance.

Compass, a capability-building initiative for people
managers focused on developing essential managerial
skills, enabling them to lead teams effectively, drive
performance, and create a positive team culture.

Leadership League Network, a CXO-led mentorship
and knowledge-sharing platform that provides

employees with an opportunity to engage directly with
senior leaders, gain business insights, and learn from
their leadership experiences.

Leadership Dialogues, an interactive speaker series
featuring accomplished industry leaders, aimed
at inspiring employees through conversations on
leadership, career growth, ownership, resilience, and
professional excellence.

6. Employee Experience & Engagement:

We continued to foster an engaging, inclusive and
collaborative workplace through various employee
engagement initiatives. Few of them are,

Sakhi@Fedfina, a dedicated platform for the
engagement and development of women employees,
featuring discussions and initiatives focused on
wellbeing, career growth, leadership, and personal
development. As part of this initiative, Power Within
Us brought together four of our women leaders to
share their journeys and inspire employees through
conversations on leadership, resilience, and growth on
this Womens Day.

Fedfina Cricket League, an annual cricket tournament
that brings together employees of regional offices,
fostering camaraderie, teamwork, and a spirit of healthy
competition while strengthening cross-functional
relationships.

Employee Engagement Calendar, a year-round
calendar of engagement initiatives including festival
celebrations, competitions, recognition activities, and
team-building events aimed at strengthening employee
morale and workplace culture.

7. Employee Voice & Connection:

We continued to create regular opportunities for
listening, dialogue, and meaningful employee
interactions.

Mad - Sad - Glad, a structured team engagement
exercise that encourages employees to openly share
their positive experiences, concerns, and suggestions,
helping managers understand team sentiment and
identify opportunities for improvement.

Filter Kappi, an Informal leadership connect session
that provides employees with an open platform to
interact with senior leaders, exchange ideas, ask
guestions, and strengthen organisational transparency.

8. Community & Social Impact:

We encouraged employees to contribute to meaningful
social causes through various volunteering initiatives,
including, Blood Donation Drives and Annapurna

Grain Drive, participation in TATA marathon to support
Cuddles Foundation.

PARTICULARS OF EMPLOYEES

Disclosures relating to remuneration and other details as
reguired in terms of the provisions of Section 197(12) of
the Act read with Rule 5(1) of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 are
given in Annexure I which forms part of this Report.

Further, in accordance with the provisions of Sections 197(12)
& 136(1) of the Act read with the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014,
the list pertaining to the names and other particulars of
employees drawing remuneration in excess of the limits set
out in the aforesaid Rules, is kept open for inspection during
working hours at the Registered Office of the Company and
the Report & Accounts as set out therein are being sent
to all the Members of the Company. Any Member, who is
interested in obtaining these, may write to the Company
Secretary at the Registered Office of the Company.

CAPITAL ADEQUACY

The Companys capital adeguacy ratio stood at 22.4% as on
31^st March, 2026 which is well above the threshold limit of
15% prescribed by the Reserve Bank of India. Tier-1 Capital
ratio alone stood at a healthy 17.53%.

PUBLIC DEPOSITS

The Company is a Non-Deposit taking Systematically
Important NBFC and has not accepted public deposits
falling under purview of provisions of Section 73 of the Act
during the year. Flence the reguirement of furnishing the
details in terms of Chapter V of the Companies Act, 2013 is
not applicable.

RISK MANAGEMENT POLICY

Risk management forms an integral part of our business.
The Company has a Board approved Enterprise Risk
Management Policy that lays down the overall framework
for identifying, assessing, measuring and monitoring
various elements of risk involved in the businesses and
for formulation of procedures and systems for mitigating
such risks. The main objective of this policy is to ensure
sustainable and prudent business growth. The Company has
defined the Risk Appetite Statement (RAS) for monitoring all
critical risks and ensuring compliance to the RAS.

The Risk Management Committee, a dedicated board-level
committee, plays a pivotal role in continuously reviewing,
approving, and refining our risk management policies and
procedures and governing framework for each type of
risk on a regular periodicity. The Committee monitors the
compliance of risk parameters and aggregate exposures
within the defined limits.

Directors have basis recommendation of Risk Management
Committee adopted ICAAP Policy and Framework with
the objective of ensuring availability of adeguate capital to
support all risks in business and also to enable an effective
risk management system in the Company.

Additionally, the Company has Operational Risk Management
Policy with an objective to improve the effectiveness of
Operational Risk Management of the Company and enhance
its Operational Resilience.

The Company continues to invest in people, processes,
training and technology; so as to strengthen its overall Risk
Management Framework.

AUDITORS

1. STATUTORY AUDITORS & THEIR REPORT

M/s. KKC & Associates LLR Chartered Accountants
(Firm Registration No. 105146W / W100621) were
appointed as Statutory Auditors of the Company by
the members of the Company for a term of three years

i.e. from the conclusion of 29^th Annual General Meeting
(AGM) held on 19^th September, 2024 till the conclusion
of the 32^nd Annual General Meeting.

M/s. KKC & Associates LLR Chartered Accountants,
(Firm Registration No. 105146W / W100621) have
confirmed that they have subjected themselves to
Peer Review process by the Institute of Chartered
Accountants of India ("ICAI") and hold valid certificate
issued by the Peer Review Board of ICAI.

Further, M/s. KKC & Associates LLR Chartered
Accountants, (Firm Registration No. 105146W /
W100621) conducted the statutory audit for
FY 2025-26. There are no gualifications, reservations,
adverse remarks or disclaimers made by the Statutory
Auditors in their Audit Report for FY 2025-26. The notes
to the accounts referred to in the Auditors Report are
self-explanatory and therefore do not call for any further
clarifications under Section 134(3) (f) of the Act. Your
Company continues to adopt best practices to ensure
a regime of financial statements with unmodified audit
opinion.

In accordance with the Reserve Bank of India (Non-
Banking Financial Companies - Statutory Audit)
Directions, 2026 dated 31^st July, 2026 ("RBI Directions"),
Non-Banking Financial Companies (NBFCs) having an
asset size of Rs. 15,000 Crores or more as at the end of
the previous year are reguired to appoint joint statutory
auditors, comprising a minimum of two audit firms.

Pursuant to the said regulatory reguirement and based
on the recommendation of the Audit Committee, the
Board of Directors has approved the appointment of

M/s. V. Sankar Aiyar & Co., Chartered Accountants,
(Firm Registration No. 109208W) as one of the Joint
Statutory Auditors of the Company for a term of three
(3) consecutive financial years, commencing from the
conclusion of the 31^st Annual General Meeting (AGM)
and continuing until the conclusion of the 34^th AGM,
subject to the approval of the members at the ensuing
AGM.

M/s. V. Sankar Aiyar & Co., Chartered Accountants,
(Firm Registration No. 109208W) have confirmed their
eligibility and compliance with the provisions of Section
139 and Section 141 of the Companies Act, 2013, read
with the rules made thereunder, and have also affirmed
that they meet the criteria prescribed under the
Chartered Accountants Act, 1949 and the regulations
framed thereunder. They have further confirmed that
they are not disgualified from being appointed as Joint
Statutory Auditors of the Company.

Adoption of Policy for appointment of Statutory
Auditors

In compliance with the RBI Directions, the Company
has in place a Policy for appointment of Statutory
Auditors of the Company.

2. SECRETARIAL AUDITORS & THEIR REPORT

DKJ & Associates, Company Secretaries were appointed
as the Secretarial Auditors to conduct the Secretarial
Audit for the financial year ended 31^st March, 2026.
The Report of the secretarial auditors in the prescribed
Form MR-3 is set out in Annexure-ll to this Report.
The Secretarial Audit Report does not contain any
gualifications, reservation or adverse remark.

FRAUD REPORTING

Pursuant to the Board approved Fraud Risk Management
and Fraud Investigation Policy of the Company, information
relating to all frauds are reported to the Audit Committee of
the Board on guarterly basis.

During the year under review, frauds detected have been
timely reported to the Audit Committee/Board as well as to
the Reserve Bank of India (RBI) amounting to Rs. 110 Lakhs.

Pursuant to the section 143(12) of the Companies Act, 2013,
no frauds were reported by the Auditors of the Company to
the Audit Committee during the year under review.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company believes that strong internal control system
and processes play a critical role in the health of the
Company. The Company has instituted adeguate internal
control systems commensurate with the nature of its
business & size of operations. The Companys well-defined

organisational structure, documented policy guidelines,
defined authority matrix and internal controls ensure
efficiency of operations, compliance with internal policies
and applicable laws and regulations as well as protection
of resources. The internal control system is supplemented
by internal audits, regular reviews by the management and
standard policies and guidelines which ensure reliability
of financial and all other records. The Companys Internal
Audit department performed regular reviews of business
processes to assess the effectiveness & adeguacy of the
internal control systems, compliance with policies and
procedures. The Company upholds strong governance
with a risk-based internal audit framework to identify and
mitigate operational risks efficiently.

All significant audit observations of the internal auditors and
follow up actions were duly reported to the Audit Committee.

INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY

Internal Financial Controls laid down by the Company is
a systematic set of controls and procedures to ensure
orderly and efficient conduct of its business including
adherence to the Companys policies, safeguarding of
its assets, prevention and detection of frauds and errors,
accuracy and completeness of the accounting records and
timely preparation of reliable financial information. Internal
financial controls not only reguire the system to be designed
effectively but also to be tested for operating effectiveness
periodically.

During the year under review, the Company had engaged a
firm of Chartered Accountants to evaluate the internal
financial control framework and to test its operating
effectiveness. Based on the testing conducted by the
aforesaid firm, the Board is of the view that the Company
has laid down adeguate internal financial controls
commensurate with the nature and size of its business
operations and these controls are adeguate and operating
effectively and no material weaknesses have been observed.

RELATED PARTY TRANSACTIONS

All the related party transactions that were entered into
during the financial year were on arms length basis and in
the ordinary course of business.

The related party transactions were placed before the Audit
Committee on a guarterly basis. Transactions with related
parties, as per the reguirements of Accounting Standards,
are disclosed in the notes to accounts annexed to the
financial statements.

All the related party transactions that were entered into
during the financial year were on arms length basis and
in ordinary course of business. There were no contracts or
arrangements entered into with related parties referred to in

Section 188(1) of the Act during FY 2025-26 and hence Form
AOC-2 is not reguired to be enclosed with Directors Report
in accordance with Rule 8(2) of the Companies (Accounts)
Rules, 2014.

The Related Party Transactions Policy has been hosted on
the website of the Company at: https://www.fedfna.com/
site/assets/files/2898/related party transactions policy.
pdf.

The Shareholders of the Company through Postal Ballot
Notice dated 28^th April, 2025, accorded their approval for
entering into and/or carrying out and/or continuing with
material related party transaction(s) with Federal Bank
Limited for FY 2025-26.

Further, the Shareholders of the Company through Postal
Ballot Notice dated 28^th April, 2026, accorded their approval
for entering into and/or carrying out and/or continuing with
material related party transaction(s) with Federal Bank
Limited for FY 2026-27 and till one year from the effective
date of passing of this resolution.

In order to align the approval process with the AGM cycle,
and to regularise shareholder approvals from one AGM to
the next instead of through postal ballot, and considering
that such approvals are valid for a period of one year under
the SEBI Listing Regulations, the Company is placing the
proposal for approval of members at the ensuing AGM. The
approval sought covers the entering into and/or carrying
out and/or continuing of material related party transactions
with Federal Bank Limited from the date of the 31^st Annual
General Meeting up to the date of the next Annual General
Meeting of the Company, for a period not exceeding fifteen
months.

MATERIAL CHANGES AND COMMITMENTS AFFECTING
THE FINANCIAL POSITION OF THE COMPANY THAT
OCCURRED BETWEEN THE END OF THE FINANCIAL
YEAR TO WHICH THIS FINANCIAL STATEMENT RELATE
TILL THE DATE OF THIS REPORT

No material changes and commitments affecting the
financial position of the Company have occurred between
the Financial year ended 31^st March, 2026 till the date of this
report.

PARTICULARS OF LOANS, GUARANTEES AND
INVESTMENTS UNDER SECTION 186 OF THE COMPANIES
ACT, 2013

The Company, being a NBFC registered with RBI, is exempted
from complying with the provisions of section 186 of the
Act related to loans made, guarantees given and securities
provided. Flowever, the details of investments made by the
Company pursuant to the provisions of Section 186 (4) of
the Act are given in Note 9 to the Financial Statements.

DISCLOSURES UNDER SEXUAL HARASSMENT OF
WOMEN AT WORKPLACE (PREVENTION, PROHIBITION &
REDRESSAL) ACT 2013

The Company has Prevention of sexual harassment (POSH)
policy which is in line with the requirements of The Sexual
Harassment of Women at the Workplace (Prevention,
Prohibition and Redressal) Act, 2013. The Company is in
compliance with the constitution of Internal Complaints
Committee (ICC) to redress complaints received regarding
sexual harassment. All employees (permanent, contractual,
temporary, trainees) are covered under this policy.

The following is a summary of sexual harassment complaints
received and dealt with during the year 2025-26:

- No. of complaints received: 3

- No. of complaints disposed of: 3

- No. of cases pending for more than ninety (90) days: 0

DISCLOSURES UNDER MATERNITY BENEFITS ACT 1961

The Company affirms its compliance with the provisions
of the Maternity Benefit Act, 1961, as amended. We remain
committed to supporting our women employees and
ensuring a workplace environment that upholds their rights
and well-being. The Company has extended all applicable
benefits under the Act, including paid maternity leave,
medical bonuses, nursing breaks, and, where required,
creche facilities.

CORPORATE SOCIAL RESPONSIBILITY

The Company has a Corporate Social Responsibility (CSR)
Committee in place in accordance with section 135 of the
Act. The CSR Committee has formulated and recommended
to the Board, a Corporate Social Responsibility Policy ("CSR
Policy") indicating the activities to be undertaken by the
Company, which has been approved by the Board. The CSR
Policy is available on the Companys website at https://
www.fedfina.com/site/assets/files/855002/corporate
social responsibiltv policy.pdf. The Company has spent
Rs. 5,83,63,482/- on CSR activities during the year under
review.

The required disclosure as per Rule 8 of Companies
(Corporate Social Responsibility Policy) Rules 2014 is
attached as Annexure III to this report.

RBI GUIDELINES

The Reserve Bank of India (RBI) granted the Certificate
of Registration to the Company in August 2010 vide
Registration No. N-l 6.00187, to commence the business of
a non-banking financial institution without accepting public
deposits. The Company is categorised as NBFC in Middle
layer pursuant to Reserve Bank of India (Non-Banking
Financial Companies - Registration, Exemptions and
Framework for Scale Based Regulation) Directions, 2025
(as amended from time to time) and has complied with and
continues to comply with all the applicable regulations and
directions of the RBI.

DETAILS OF GOLD LOAN AUCTIONS

Details of Gold auction conducted:

Particulars	For the year ended 31s* March, 2026
No. of loan accounts	4,633
Principal Amount outstanding at the date of auction (Rs. in Lakhs)	2,039
Interest, penalty and other charges amount outstanding at the date of auction (Rs. in Lakhs)	2,756
Total value fetched (Rs. in Lakhs)	4,401

Note: No entity within the Companys group including any holding or associate Company had participated in any of the above
auctions.

VIGIL MECHANISM

As per the provisions of Section 177(9) of the Companies Act, 2013, the Company is required to establish an effective Vigil
Mechanism for Directors and employees to report genuine concerns. The Company as part of this has in place a Board
approved "Whistle Blower Policy" to deal with the instances of fraud and mismanagement, if any. The said policy is available on
the website of the Company at https://fedfna.com/site/assets/files/2898/whistle blower policy.pdf.

This Vigil mechanism of the Company is overseen by the Audit Committee and provides adequate safeguard against
victimisation of employees and also provide direct access to the Chairman of the Audit Committee.

Out of 16 complaints received, 3 complaints were pertaining to vigil mechanism framework/policy. All the said complaints
received were resolved.

The Company affirms that no personnel has been denied access to the Audit Committee.

ANNUAL RETURN

Pursuant to section 92 (1) of the Companies Act 2013,
the Annual Return for the financial year 2025-26 is placed
on the website of the Company (https://www.fedfina.com/
investors-relations/reports/other-disclosures-reports/1

PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE INFLOW/OUTFLOW,
ETC

The requirements of disclosure with regard to Conservation
of Energy and technology absorption in terms of Section
134 of the Companies Act, 2013, read with the Companies
(Accounts) Rules, 2014, are not applicable to the Company
as it does not engage in any manufacturing facility.

The Company continues to invest in cutting edge
technology, which has resulted in automation of the loan
lifecycle process along with building a scalable and modular
application architecture. Customer centricity is a key focus
area in the Companys digital initiatives. Our customers
also benefit from the doorstep model of loan disbursal.
These investments along with leveraged national digital
enablers like IndiaStack, Aadhaar eKYC, helps us to drive
growth.

We continue to focus on data protection, infrastructure
upgradation and also ensure complete adherence to
RBI policies. Investments have also been made in next
generation security and network monitoring tools.

The Company had availed total External Commercial
Borrowing (ECBs) of USD 250 Mn (Including March 2025:
USD 30 Mn) for financing prospective borrower as per the
ECB guidelines issued by Reserve Bank of India ("RBI") from
time to time. The borrowing has a maturity of three years. In
terms of the RBI guidelines, borrowings have been swapped
into rupees and fully hedged for the entire maturity by way
of cross currency swaps. The Company has not borrowed
any Foreign Currency (USD) denominated Term Loan other
than rollover of existing foreign currency borrowing facility
(31^st March, 2025: Nil). Such FCNR borrowings are currently
carried at Rs. 6,250 Lakhs as at 31^st March, 2026 (31^st March,
2025: Rs. 1 1,250 Lakhs).

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134 of the Companies Act, 2013, the
Directors confirm that:

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

(b) such accounting policies have been selected and
applied them consistently and made judgments and
estimates that are reasonable and prudent so as to

give a true and fair view of the state of affairs of the
Company at 3 I^st March, 2026 and of the profit and loss
of the Company for the financial year ended on that
date;

(c) proper and sufficient care have been taken for
the maintenance of adeguate accounting records
in accordance with the provisions of the Act for
safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;

(d) the annual accounts have been prepared on a going
concern basis;

(e) internal financial controls to be followed by the
Company have been laid down and that such internal
financial controls are adeguate and were operating
effectively; and

Explanation. -For the purposes of this clause, the term
"internal financial controls" means the policies and
procedures adopted by the Company for ensuring the
orderly and efficient conduct of its business, including
adherence to companys policies, the safeguarding
of its assets, the prevention and detection of frauds
and errors, the accuracy and completeness of the
accounting records, and the timely preparation of
reliable financial information;

(f) proper systems have been devised to ensure
compliance with the provisions of all applicable laws
and that such systems were adeguate and operating
effectively

OTHER DISCLOSURES

In terms of applicable provisions of the Act, the Company

discloses that during the year under review:

i. The Company has not issued any shares with
differential rights and hence no information as per
provisions of Section 43(a)(ii) of the Act read with Rule
4(4) of the Companies (Share Capital and Debenture)
Rules, 2014 is furnished.

ii. The Company has not issued any sweat equity shares
and hence disclosure as per provisions of Section 54(1)
(d) of the Act read with Rule 8(13) of the Companies
(Share Capital and Debenture) Rules, 2014 is not
provided.

iii. There were no instances of non-exercising of voting
rights in respect of shares purchased directly by
employees under a scheme hence no information
pursuant to Section 67(3) of the Act read with Rule
16(4) of Companies (Share Capital and Debentures)
Rules, 2014 is furnished.

iv. There are no significant and material orders passed by
the regulators or courts or tribunals that would impact
the going concern status of the Company and its future
operations.

v. The Company has not made any application nor any
proceedings are pending under the Insolvency and
Bankruptcy Code, 2016.

vi. There were no instances of one-time settlement for any
loans taken from the Banks or Financial Institutions.

vii. There were no amounts reguired to be transferred
to Investor Education and Protection Fund (IEPF)
pursuant to section 124 and 125 of the Companies Act,
2013 read with Rules made thereunder.

viii. The Company being, a Non-Banking Financial Company
is not reguired to maintain cost records and the
reguirement of cost audit as prescribed under section
148(1) of the Act is not applicable to the Company.

ix. The Company does not have any subsidiary, joint
venture or associate Company.

CAUTIONARY NOTE

Certain statements in this Report may be forward-looking
and are stated as may be reguired by applicable laws and
regulations. Actual results may vary from those expressed or
implied, depending upon economic conditions, Government
policies and other incidental/related factors.

ACKNOWLEDGEMENT

The Board of Directors place on record sincere gratitude to
all employees for their unwavering dedication, resilience,
and collaborative spirit. With such a strong foundation
and shared vision, we are confident in our ability to drive
continued success in the years ahead.

The Directors would also like to place on record, their
gratitude for the cooperation and guidance received from all
the statutory bodies, especially the RBI. The Directors also
thank the shareholders, clients, vendors, investors, banks
and other stakeholders in placing their faith in the Company
and contributing to its growth.