HDB Financial Services Ltd Directors Report

Dear Members,

Your Directors take pleasure in presenting the Nineteenth Annual Report on the business and financial operations of your Company together with the audited accounts for the Financial Year ended March 31, 2026.

SUMMARY OF FINANCIAL PERFORMANCE

(Rs.in Crore)

Particulars	FY 2025-26	FY 2024-25
Total Income	18,429.67	16,300.28
Total Expenditure (excluding depreciation)	14,834.12	13,178.06
Profit / (Loss) before Depreciation & Tax	3,595.55	3,122.22
Less: Depreciation	209.27	194.42
Profit	3,386.28	2,927.80
Tax Expense	842.45	751.88
Profit afterTax	2,543.83	2,175.92
Other Comprehensive Income (net of tax)	3.38	(47.88)
Total Comprehensive Income after tax	2,547.21	2,128.04
Appropriations from Profit after Tax:
Transfer to Reserve Fund under Section 45-IC of the RBI Act, 1934	508.77	435.18
Dividend Paid	245.49	238.10
Balance carried forward to Balance Sheet	1,789.57	1502.64

Your Company posted total income and net profit of 18,429.67 Crore and 2,543.83 Crore, respectively, for the financial year ended March 31, 2026, as against16,300.28 Crore and 2,175.92 Crore respectively, in the previous financial year.

DIVIDEND & DIVIDEND DISTRIBUTION POLICY

RBI vide Master Direction Reserve Bank of India (Non-Banking Financial Companies Prudential Norms on Declaration of Dividends) Directions, 2025 dated November 28, 2025, has prescribed the framework for declaration of dividend by NBFCs. Accordingly, the Board of Directors of the Company, at its meeting held on April 15, 2026, has proposed a finaldividend of 2/- (Rupees Two only) per equity share i.e. 20% (Twenty percent) on each equity share of face value of 10 (Rupees Ten only) for financial year March 31, 2026. The proposal is subject to the approval of the shareholders at the ensuing Annual General Meeting (AGM) to be held on June 25, 2026. During the year, the Company has paid Interim Dividend of 2/- (Rupees Two Only) per equity share i.e. 20% on each equity share, aggregating to 165.91 Crore. This translates to a Dividend Payout Ratio of 13.05% of the profits for the financial year ended March 31, 2026.

The Company has formulated a Dividend Distribution Policy with an objective to provide the dividend distribution framework to the Stakeholders of the Company. The policy sets out various internal and external factors, which shall be considered by the Board in determining the dividend pay-out. The policy is available on the website of the Company and can be accessed at https://www.hdbfs.com/sites/default/files/policies/ Dividend_Distribution_Policy_23012026.pdf

TRANSFER TO RESERVE FUND

Under Section 45-IC (1) of Reserve Bank of India (‘RBI) Act, 1934, non-banking financial required to transfer a sum not less than 20% of its net profit every year to reserve fund before declaration of any dividend.

Your Company has transferred an amount of 508.77 Crore to Reserve Fund under Section 45-IC of the RBI Act, 1934.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

There are no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this Report.

MATERIAL DEVELOPMENT

During the year underreview,theCompanyhasachievedsignificantmilestone with listing of its equity shares on the National Stock Exchange of India Limited and BSE Limited. Your Company has successfully concluded its Initial Public Offer of 12,500 Crore (Rupees Twelve Thousand Five Hundred Crore Only) comprising of a fresh issue aggregating up to 2,500 Crore (Rupees Two Thousand Five Hundred Crore Only) and an offer for sale aggregating up to 10,000 Crore (Rupees Ten Thousand Crore Only). The Companies equity shares were listed on stock exchanges on July 02, 2025. Consequently, HDFC Banks shareholding in the Company reduced to 74.19%.

Details of Stock Exchanges where securities of the Company are listed

BSE	NSE
Scrip code: 544429	NSE Symbol: HDBFS
Address: Phiroze Jeejeebhoy Towers,	Address: Exchange Plaza, C-1, Block-G, Bandra Kurla
Dalal Street, Mumbai 400 001	Complex, Bandra (East), Mumbai 400 051

The International Securities Identification Number (‘ISIN) for Depositories (NSDL and CDSL) in respect of equity shares is INE756I01012. The Debt securities are listed on Wholesale Debt Market (WDM) segment of the BSE Limited and Commercial Papers are listed on National Stock Exchange of India Limited.

CAPITAL STRUCTURE

As at March 31, 2026, the issued, subscribed and paid-up share capital of your Company is 8,30,32,72,160/- (Rupees Eight Hundred Thirty Crore Thirty Two Lakhs Seventy Two Thousand One Hundred Sixty Only) comprising of 83,03,27,216 (Eighty Three Crore Three Lakhs Twenty Seven Thousand Two Hundred and Sixteen Only) equity shares of 10 each.

During the year, your Company has issued 3,45,50,871 equity shares. The details of which are provided below:

Purpose	No. of fully paid up equity shares	Date of allotment
Shares were issued to employees under the Employees Stock	6,600	April 28, 2025
Option Scheme Shares issued under Initial Public Offer	3,37,83,782	June 30, 2025
Shares were issued to employees under the Employees Stock Option Scheme	2,80,496	November 28, 2025
Shares were issued to employees under the Employees Stock Option Scheme	1,90,957	December 19, 2025
Shares were issued to employees under the Employees Stock Option Scheme	2,37,865	January 23, 2026
Shares were issued to employees under the Employees Stock Option Scheme	27,926	February 23, 2026
Shares were issued to employees under the Employees Stock Option Scheme	23,245	March 23, 2026

CAPITAL ADEQUACY

Capital adequacy as at March 31, 2026 under Ind-AS stood at 21.40 % which is well above the minimum regulatory norms for non-deposit accepting NBFCs.

RATINGS

The CARE Ratings Limited (CARE) and CRISIL Ratings Limited (CRISIL) and ICRA Limited have reaffirmed highest ratings for the various facilities availed by the Company, details of which are given below:

Name of the Instrument	CARE	Limit	CRISIL	Limit	ICRA	Limit
Term Loans from Banks and Financial Institutions*	CARE AAA; Stable	65,000.00	CRISIL AAA; Stable	65,000.00	-	-
Secured Redeemable Non- Convertible Debentures	CARE AAA; Stable	50,000.00	CRISIL AAA; Stable	36,339.18	-	-
Commercial Paper	CARE A1+; Stable	5,000.00	CRISIL A1+; Stable	5,000.00	-	-
Subordinated Bonds	CARE AAA; Stable	7,000.00	CRISIL AAA; Stable	7,000.00	-	-
Perpetual Bonds	CARE AAA; Stable	2,150.00	CRISIL AAA; Stable	2,150.00	-	-
Borrowing under Securitisation (Unlisted PTC)	-	-	CRISIL AAA; SO	3,027.32	ICRA AAA; SO	583.09

*Include ECB and exclude WCDL / CC

All of the above ratings indicate a high degree of safety with regard to timely payment of interest and principal amount.

BORROWINGS

Your Company has diversified funding sources from Public Sector, Private Sector, Foreign Banks, Mutual Funds, Insurance Companies, Pension Funds, Financial Institutions etc. Funds were raised in line with Companys Resource Planning Policy through Term Loans, Non-Convertible Debentures ("NCDs") and Commercial Papers Instruments. The details of funds raised during the year are as below:

Sr No Borrowings / Security type	CARE	Credit rating CRISIL	ICRA	Amount raised (Rs.in Crore)
1 Term Loans from Banks and Financial Institutions*	CARE AAA; Stable	CRISIL AAA; Stable	-	26,910.00
2 Secured Redeemable Non-Convertible Debentures	CARE AAA; Stable	CRISIL AAA; Stable	-	9,333.00
3 Commercial Paper	CARE A1+; Stable	CRISIL A1+; Stable	-	10,065.00
4 Subordinated Bonds	CARE AAA; Stable	CRISIL AAA; Stable	-	700.00
5 Perpetual Bonds	CARE AAA; Stable	CRISIL AAA; Stable	-	-
6 Borrowing under Securitisation (Unlisted PTC)	-	CRISIL AAA; SO	ICRA AAA; SO	3,610.41

No interest payment or principal repayment of the Term Loans was due and unpaid as on March 31, 2026. The assets of the Company which are available by way of security are sufficient to discharge the claims of the banks and financial institutions as and when they become due.

Secured Redeemable Non-Convertible Debentures, Unsecured Redeemable Subordinated Bonds, Unsecured Perpetual Debt Instruments are issued by your Company on private placement basis and the rating for various facilities indicates the highest degree of safety with regard to timely servicing of financial obligations.

Perpetual Debt Securities are 7.74% of Tier I capital of the Company. An amount of 1500 Crore are outstanding as on March 31, 2026.

NCDs were issued with maturity period ranging from 13 to 60 months. The interest payable on all the debt securities is either annually or on maturity. No interest was due and unpaid as on March 31, 2026. The Company had not received any grievance from the debt security holders during the year of the last under review. The assets of the Company which are available by way of security are sufficient to discharge the claims of the debt security holders as and when they become due. The above mentioned Debt securities are listed on Wholesale Debt Market (WDM) segment of the BSE Limited and Commercial Papers were listed on National Stock Exchange of India Limited.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company believes that CSR is a way of creating shared value and contributing to social and environmental good. Our endeavour is to mainstream economically, physically and socially challenged groups and to draw them into the cycle of growth, development and empowerment. To achieve this, your Company collaborates with development-focused organisations, involves local communities in the development process and works with systems & frontline staff to achieve desirable social outcomes in an effective and sustainable manner.

The Companys CSR Projects are compliant with the CSR mandate as specified VII of the Act along with the Companies (Corporate Social Responsibility Policy) Rules, 2014 ("CSR Rules"), as amended from time to time and in line with notifications issued by Ministry of Corporate Affairs ("MCA"), from time to time.

The Companys CSR interventions are designed to strengthen the healthcare services and infrastructure, impart skill training and basic literacy for better livelihoods and to promote environmentally sustainable initiatives. All CSR initiatives are implemented in accordance with the Schedule

VII of the Companies Act, 2013 ("Act").

The brief outline of CSR Policy, including overview of the program proposed to be undertaken, the composition of the CSR Committee, average net profits of the Company for the past three financial years, prescribed CSR expenditure and details of amount spent on CSR activities during the financial year have been disclosed in "Annexure A" to this report, as mandated under the said Rules. Further, the Corporate Social Responsibility Policy of the Company as approved by the Board has been hosted on the website of the Company at https://www.hdbfs.com/sites/default/files/policies/CSR_ Policy__final_2_23042026.pdf As per Section 135 of the Act, the Company was required to spend an amount of 58.97 Crore equivalent to 2% of the (3) financial years. After ‘averagenetprofits adjusting the excess spend of 0.44 Crore for FY 2024-25, the total CSR obligation of the Company was 58.53 Crore. During the FY 2025-26, the Company has spent an amount of 58.92 Crore on CSR activities as against total CSR obligation of 58.53 Crore.

BOARD OF DIRECTORS

As on March 31, 2026, the Board comprised of eight members consisting of one Executive Director, one Non-Executive Director and six Non-Executive Independent Directors including two Women Directors. Changes in Directors during the financial year 2025-26 are given below:

Name of the Director	Nature of change	With effect from
Mr. Arijit Basu	Resigned as Part-	January 23,
(DIN: 06907779)	Time Non-Executive	2026
	Chairman &
	Independent Director

The Board places on record its sincere appreciation for the valuable guidance,underSection135readwithSchedule leadership and contributions of Mr. Arijit Basu during his tenure as Part-Time Chairman and Independent Director of the Company. The Board acknowledges his strategic insights and stewardship, which significantly support the Companys governance framework and growth journey, express its gratitude for his association with HDBFS and extends its best wishes in his future endeavours.

Mr. Natarajan Srinivasan has been appointed as the Non-Executive Chairman and an Additional Independent Director on the Board of HDB Financial Services Limited for a period of three (3) years, commencing from May 14, 2026 to May 13, 2029, subject to the shareholders approval. The shareholders approval would be sought at the ensuing Annual General Meeting, scheduled on Thursday, June 25, 2026.

KEY MANAGERIAL PERSONNEL

During the financial year 2025-26, no changes were observed in the Key Managerial Personnel of the Company. As on the date of this report, following are the Key Managerial Personnel (the "KMP") as per 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.

Name of the KMP	Designation
Mr. Ramesh G	Managing Director & Chief Executive Officer
Mr. Jaykumar Shah	Chief Financial Officer
Ms. Dipti Jayesh	Head Legal and Company
Khandelwal	Secretary

DECLARATION BY DIRECTORS

The Company has received necessary declarations / disclosures from each Independent Directors of the Company under Section 149(7) of the Act and Regulation 25(8) of the SEBI Listing Regulations that they fulfil the criteria of Independence as prescribed under Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations and have also confirmed that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgement and without any external influence.

The Independent Directors have also confirmed that they have registered themselves with the Independent Directors Database maintained by the Indian Institute of Corporate Affairs. All the Independent Directors have qualified the online proficiency self-assessment test or are exempt from passing the test as required in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014.

None of the Director of the Company are disqualified from being appointed as a Director, continue to act as a Director, as specifiedunder section 164(1) and 164(2) of the Act read with Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014 (including any statutory modification(s) and or re-enactment(s) thereof for the time being in force) or are debarred or disqualified by the Securities and Exchange Board of India ("SEBI"), Ministry of Corporate Affairs ("MCA") or any other such statutory authority.

All the Directors of the Company have confirmedthat they satisfy the ‘fit and proper criteria as prescribed under Reserve Bank of India (Non-Banking Financial Companies Governance) Directions, 2025.

All members of the Board and Senior Management have affirmed compliance with the Code of Conduct for Board and Senior Management for the financial year 2025-26. Each of the Directors of the Company have confirmed that he/ she is not debarred from holding the office virtue of any order by SEBI or any other authority. Further, based on these disclosures and confirmations, the

Board is of the opinion that the Directors of the Company are distinguished persons with integrity and have necessary expertise and experience to continue to discharge their responsibilities as the Director of the Company.

DIRECTOR E-KYC

Pursuant to the requirement prescribed under the Companies (Appointment and Qualification of Directors) Rules, 2014, the Directors with active Director Identification Number need to filean eForm DIR-3 KYC annually on the MCA portal verifying their mobile number and personal e-mail address. All the Directors of the Company have complied with the KYC registration on the MCA portal for the FY 2025-26.

DIRECTORS & OFFICERS LIABILITY INSURANCE

The Directors and Officers(D&O) insurance is liability insurance which covers or protects Directors, Officers and Employees of the Company from claims which may arise from decisions and actions taken while serving their duty. During the FY 2025-26, the Company has taken Directors & Officers Liability Insurance for all its Board of Directors and members of Senior Management for such quantum and risks as determined by the Board.

SUCCESSION PLANNING

The Nomination and Remuneration Committee and the Board maintain a proactive, continuous oversight of succession planning and leadership transitions. At the Board level, this involves a systematic and ongoing evaluation of composition and expertise to ensure that desired skill sets are maintained and potential vacancies are addressed well in advance. Similarly, for Senior Management, including both business and assurance functions, the review process ensures leadership depth and continuity up to two levels below the Managing Director. By identifying and preparing successors before positions actually become vacant, the organisation ensures a smooth, seamless transition that preserves institutional stability.

BOARD MEETINGS

During the year, twelve Board Meetings were convened and held, the details of which are given in the report on Corporate Governance, which is forming a part of this Board Report. The intervening gap between the said Board Meetings was within the period prescribed under the Companies Act, 2013 and Listing Regulations. The details of the Board and Committee Meetings and the attendance of Directors thereat, forms part of the Corporate Governance Report, which is annexed to this Directors Report.

BOARD COMMITTEES

Your Company has nine Board Level Committees - Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Corporate Social Responsibility & ESG Committee, Risk Management Committee, Information Technology Strategy Committee,

Customer Service Review Committee, Special Committee of the Board for Monitoring and Follow-up of cases of frauds and Review Committee for Identification of Wilful Defaulters.

The details of the role and composition of these Committees, including the number of meetings held during the financial year and attendance at these meetings are provided in the Corporate Governance Section of the Annual Report. Further, the functions, roles & responsibilities and terms of reference of these committees are included in the Corporate

Governance Code available on the Companys website at https://www.hdbfs.com/sites/default/files/policies/ Corporate_Governance_Code_24042026.pdf Board of Directors at its meeting held on January 14, 2026 approved dissolution of Strategic Transaction Committee with immediate effect since purpose for which Committee was constituted had been fulfilled.

PERFORMANCE EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and SEBI Listing Regulations, the Annual Performance

Evaluation of the Board, its Committees, Chairman and individual Director has been carried out for the year under review. The evaluation framework covers key aspects such as composition, effectiveness, governance practices and contribution of Directors and is periodically reviewed to align with regulatory expectations and evolving best practices. The evaluations of the Board as whole, the Individual Performance of the Independent Directors, the Committees and the Chairman of the Board were undertaken through circulation of questionnaires each for the Individual Performance of Directors, the Board, the Committees and the Chairman of the Board. The performance of the Board as whole was assessed on selected parameters related to Board

Composition & Quality, Board Meetings and Procedures, Board Development, Board Strategy and Risk Management, Board and Management Relations, Stakeholder value and responsibility. The evaluation criterions for the Individual Performance of Directors were based on their Knowledge, Diligence & Participation, Leadership, Personal Attributes etc. The evaluation criteria for the Committees related to its Function and Duties, Management Relations, Committee Meetings and Procedures. The evaluation criteria for the Chairman of the Board besides the general criteria adopted for assessment of all Directors, Participation at Board / Committee Meetings, Managing Relationship, Knowledge and Skill, Personal Attributes, Independence and Leadership. The details of evaluation process of the Board, its Committees,

Chairman and individual Directors have been disclosed in the Corporate Governance Report forming part of this Annual Report.

COMPLIANCE WITH SECRETARIAL STANDARDS

The Secretarial Standards are guidelines, which lays down the standard procedure and structure for undertaking specific tasks and actions within an organisation, which is in addition to the provisions of the original law i.e., Companies Act, 2013 and not in substitution of the original law. In terms of Section 118(10) of the Companies Act, 2013, every Company is required to observe the Secretarial Standards issued by the Institute of Company Secretaries of India with respect to Board Meetings and General Meetings.

The Company has complied with the applicable provisions of Secretarial Standard-1 on Meetings of the Board of Directors (SS-1) and Secretarial Standard -2 on General Meetings (SS-2) issued by the Institute of Company Secretaries of India.

DIRECTORS RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Act:

i. that in preparation of the annual financial statements for the year ended March 31, 2026, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii. that appropriate accounting policies have been selected and applied consistently and judgements and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended March 31, 2026 and of the profits of the Company for the said year;

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

iv. that the annual accounts have been prepared on a going concern basis;

v. that the Company had laid down internal financial controls to be followed and that such internal financial controls are adequate and were operating effectively; and

vi. that systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

As per the provisions of Section 177(9) of the Act and Regulation 22 of the SEBI Listing Regulations, the Company is required to establish an effective Vigil Mechanism for Directors and employees to report genuine concerns. The Company as part of the ‘vigil mechanism has in place a Board approved ‘Whistle Blower Policy to deal with instances of fraud and mismanagement, if any. The Whistle Blower Policy has been placed on the website of the Company and can be accessed at

https://www.hdbfs.com/sites/default/files/policies/Whistle_Blower_Policy_July25_Final_ Revised_15.07.25_Website_11082025.pdf This vigil mechanism of the Company is overseen by the

Audit Committee and provides adequate safeguard against victimisation of employees and directors and also provides direct access to the Chairman of the Audit Committee in exceptional circumstances. The whistle blower complaints were reviewed by the Audit Committee on a quarterly basis. The Policy covers malpractices and events which have taken place / suspected to have taken place involving:

i) Abuse of authority

ii) Breach of Code of Conduct or employment contract

iii) Manipulation of company data / records

iv) Financial or compliance irregularities, including fraud, or suspected fraud

v) Criminal offence having repercussions on the company or its reputation

vi) Theft of confidential / proprietary information

vii) Deliberate violation of law / regulation

viii) Misappropriation or misuse of Company funds / assets

ix) Breach of employee Code of Conduct or Rules

x) Leakage / suspected leakage of unpublished price sensitive information xi) Any other illegal, unethical, imprudent deed

The policy does not cover the following types of complaints which if made would not qualify as being reportable under this Policy:

(i) Anonymous complaints unless otherwise determined by the Whistle Blower Committee

(ii) An interpersonal conflict between two employees including with supervisor

(iii) Matter relating to a personal grievance including a decision relating to employment or engagement of employees, such as a transfer, promotion, increments, working hours or disciplinary action etc.

(iv) Allegations relating to sexual harassment such complaints will be dealt in accordance with Policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at the Workplace (POSH Policy)

(v) Matters which are pending before a court of law, tribunal, other quasi-judicial bodies or any governmental authority

All Protected Disclosures made under Policy are made to the Whistle Blower Committee through e-mail or by way of a letter.

Details of whistle blower complaints received and subsequent action taken and the functioning of the whistle blower mechanism are reviewed periodically by the Audit Committee. During the FY 2025-26, a total of 13 such complaints were received, 12 complaints were closed and 1 complaint was under investigation as on March 31, 2026. As on date, the pending complaint was closed. The broad categories of whistle blower complaints were in the areas of misappropriation of Bank / customer funds, forgery related cases, improper business practices and corruption. None of the personnel of your Company were denied access to the Audit Committee.

COMPLIANCE MANAGEMENT

The Company has in place a comprehensive and robust regulatory compliance management tool, which is devised to ensure compliance with all applicable laws and regulations which impact the Companys business. Automated alerts are sent to compliance owners to ensure adherence within stipulated timelines. This measure helps keep on track and avoid any penalties or other enforcement actions that could arise from non-compliance. The compliance owners certify the compliance status which is reviewed by compliance approvers and a consolidated dashboard is presented to the respective functional heads and Compliance Officer. A certificate of compliance with all applicable laws and regulations along with the corrective and preventive action, if any, is placed before the Audit Committee and Board of Directors on a quarterly basis.

DISCLOSURES PURSUANT TO THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

In line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 your Company has adopted a Policy on Prevention of Sexual Harassment (POSH) at Workplace and Rules framed thereunder. The said policy is uploaded on the website of the Company which can be accessed at https://www.hdbfs.com/ sites/default/files/policies/POSH_Policy_21012026.pdf Your

Company has complied with the provisions relating to the constitution of Internal Complaints Committee under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The policy provides guidelines for prompt redressal of complaints related to sexual harassment and in compliance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (the "Act"). The policy aims at defining sexual harassment and providing a clearly stated codified redressal mechanism for any sexual harassment occurring at workplace. The main objective of the policy is to enable all those working with the Company to raise their concerns and make complaints without any fear and be heard in a fair and unbiased manner.

The details of complaints for FY 2025-26 are provided below:

# Particulars	Counts
1 Number of complaints received	40
2 Number of complaints investigated and addressed	26
3 Number of complaints under investigation as on March 31, 2026	14

All Fourteen open complaints pertaining to the previous year ending March 31, 2025, were closed during the reporting year. Due to ongoing enquiries, six complaints remained pending for more than 90 days as on March 31, 2026.

COMPLIANCE TO MATERNITY BENEFIT ACT, 1961

The Company has complied with the applicable provisions of Maternity Benefit Act, 1961 for female employees of the Company with respect to leaves and maternity benefits thereunder.

PROHIBITION OF INSIDER TRADING

Your Company has adopted the Code of Conduct for regulating, monitoring and reporting of Trading by insiders (‘Code") for prohibition of insider trading in the securities of the Company, code of practices and procedures for fair disclosure of unpublished price sensitive information (UPSI) and policy & procedure for inquiry in case of leak or suspected leak of UPSI. Pursuant to the listing of Companys equity shares during the year and considering the existing listed debt securities, the Company has strengthened and aligned its code on prevention of insider trading in accordance with the provisions of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015.

The objective of the Code is to prevent persons who have access to UPSI relating to the Company and / or its Securities to misuse such information and / or profit from such information. The Code lays down guidance for Designated Persons and their Immediate Relatives, to understand their obligations under the PIT Regulations, including the procedures to be followed at the time of Trading in the Securities of and dealing with UPSI related to the Company or its Securities.

Company conducts periodic training sessions as well as share awareness mailers for its personnel, Designated

Persons, Board and senior management, so as to sensitise them of the compliances under the PIT Regulations on an on-going basis.

Your Company has also formulated and adopted the policy for Determination of Materiality of Events or Information of the Company, in terms of Regulation 30 of the SEBI Listing Regulations. The policy for Determination of Materiality of events / Information is available on the Companys website viz,

https://www.hdbfs.com/sites/default/files/policies/Policy_for_Determination_of_Materiality_of_Events_03072025.pdf

ANNUAL RETURN

Pursuant to the provisions of Section 134(3)(a) and Section 92(3) of the Act read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the Annual Return of the Company is available on the Companys website viz; https://www.hdbfs.com/investor/dur62-annual-returns#DISCLOSURES

PARTICULARS OF EMPLOYEES

As on March 31, 2026, the full-time employee strength of the Company was 88,162.

Disclosures in terms of Section 197(12) read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in ‘Annexure B.

Further, the statement containing particulars of employees as required under 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 is given in an Annexure and forms part of this report. In terms of Section 136(1) of the Act, the annual report and the financial statements are being sent to the Members excluding the aforesaid Annexure. The Annexure is available for inspection and any Member interested in obtaining a copy of the Annexure may write to the Company Secretary of the Company.

STATUTORY AUDITORS AND THEIR REPORT

Pursuant to the provisions of Sections 139 and 141 of the Act and Rules made thereunder, the Shareholders in the 17^th Annual General Meeting had appointed M/s. Kalyaniwalla & Mistry LLP and M/s. G D Apte & Co. as the Joint Statutory Auditors of the Company, to hold office for a continuous period of three years until the conclusion of the 20^th Annual General Meeting of the Company.

M/s. Kalyaniwalla & Mistry LLP and M/s. G D Apte & Co. have given their confirmation to the effect that they are eligible to be act as a Statutory Auditors and that they have not been disqualified in any manner from continuing as Statutory Auditors of the Company.

Further, the Auditors Report "with an unmodified opinion", given by the Statutory Auditors on the Financial Statements of the Company for FY 2025-26, is disclosed in the Financial Statements forming part of the Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Statutory Auditor in their Report for the year under review.

During the year, Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 under subsection (12) of section 143 of the Act, for one instance of fraud identified by the Management, has been filed with Central Government within stipulated time.

SECRETARIAL AUDITORS AND THEIR REPORT

Pursuant to the provisions of Section 204 of the Act and Rules thereunder and Regulation 24A of the SEBI Listing Regulations, M/s. N. L. Bhatia & Associates, Company Secretaries, were appointed as the Secretarial Auditor of the Company, for a term of 5 (Five) consecutive years commencing from the financial year 2025-26.

The Report of the Secretarial Auditor in Form MR-3 is annexed as ‘Annexure C. There has been no qualification, reservation, adverse remark or disclaimer given by the Secretarial Auditor in its Report for the year under review.

MAINTENANCE OF COST RECORDS

Maintenance of cost records and requirement of cost audit as prescribed under the provisions of section 148(1) of the Companies Act, 2013 are not applicable for the business activities carried out by the Company as the Central Government has not prescribed the maintenance of cost records under Section 148 of the Act for the services rendered by the Company.

NOMINATION AND REMUNERATION POLICY

Pursuant to the provisions of Section 178(3) of the Act and Regulation 19 of the SEBI Listing Regulations, the Board has formulated Nomination and Remuneration Policy of the

Company, which inter alia, includes the criteria for determining qualifications, positive attributes and independence of Directors, identification of persons who are qualified to become Directors, Key Managerial Personnel and Senior Management. The Nomination and Remuneration Policy also covers the Remuneration of the Directors, Key Managerial Personnel, Senior Management and other employees of the Company. The Nomination and Remuneration Policy is available on the website of the Company at

https://www.hdbfs.com/sites/default/files/policies/Nomination_and_Remuneration_Policy_20052026.pdf

EMPLOYEES STOCK OPTION SCHEME (ESOS)

There are three Employee Stock Options Schemes viz; ESOS 2014, ESOS 2017 and ESOS 2022. During the FY 2025-26, the members of the Company approved the alignment of these three ESOP Schemes of the Company with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 through postal ballot.

The objective of the ESOS Schemes is to enable the Company to attract and retain appropriate human talent and encourage value creation and value sharing with the employees by aligning the interests of the employees with the long-term interests of the Company.

The information pertaining to ESOS in terms of Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014 is given in ‘Annexure D.

RELATED PARTY TRANSACTIONS

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 required to be enclosed with Directors Report in accordance with Rule 8(2) of the Companies (Accounts) Rules, 2014. During the FY 2025-26, there were no materially significant related party transactions that may have potential conflict with the interest of the Company at large. The Related Party Transactions Policy has been hosted on the website of the Company com/sites/default/files/ at https://www.hdbfs. policies/RPT_Policy_Jan_2026_for_website_28012026.pdf

CORPORATE GOVERNANCE REPORT

Your Company is committed to maintain the highest standards of Corporate Governance and adheres to the Corporate Governance requirements set out by SEBI. The report on Corporate Governance of the Company forms part of the Annual Report.

The Quarterly Report on Corporate Governance has been submitted by the Company to the Stock Exchanges, in terms of Regulation 27(2) of the SEBI Listing Regulations. The said reports have been uploaded on the website of the Company at https://www.hdbfs.com/investor/investor-compliances The Report on Corporate Governance for the FY 2025-26 along with the Certificate issued by the Secretarial Auditors of the Company regarding compliance of conditions of corporate governance, is annexed as ‘Annexure E to this Report confirming compliance with the mandatory requirements relating to Corporate Governance as stipulated under Chapter IV of the SEBI Listing Regulations,

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND THE COMPANYS OPERATIONS IN FUTURE

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.

CHANGES IN NATURE OF BUSINESS

There has been no change in the existing nature of business and operations of the Company during the year under review.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Pursuant to section 186(11) of the Act, the provisions related to loans made, guarantees given and securities provided do not apply to the Company.

As regards investments made by the Company, the details of the same are provided in note no. 9 to the financial statements of the Company for the year ended March 31, 2026.

SUBSIDIARIES, JOINT VENTURES, ASSOCIATE COMPANIES

During the year under review, your Company had no subsidiary, joint venture or associate company. Also, the Company did not become a part of any Joint Venture during the year.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The provisions of Section 134(3)(m) of the Act, the rules made there under relating to conservation of energy, technology absorption do not apply to your Company as it is not a manufacturing Company. However, your Company has been increasingly using information technology in its operations and promotes conservation of resources. The details of foreign exchange earnings and foreign exchange expenditures are as below:

(Rs.in Crore)

# Particulars	FY 2025-26	FY 2024-25
1 Foreign exchange earnings	Nil	Nil
2 Foreign exchange expenditures	17.11	55.75

FIXED DEPOSITS

Your Company is a non-deposit taking Company. The Company has not accepted any fixed deposit during the FY 2025-26. The Company has passed a Board resolution for non-acceptance of deposits from public.

TRANSFER OF UNCLAIMED DIVIDEND AND EQUITY SHARES TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Pursuant to the applicable provisions of the Act read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules"), all unpaid or unclaimed dividends are required to be transferred by the Company to IEPF, after the completion of seven years. Further, according to the IEPF Rules, the shares on which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to IEPF. During the year under review, dividend amount of 28,744.8 remaining unclaimed for consecutive seven (7) years from the date of its transfer to the Unpaid Dividend Account of the Company has been transferred to IEPF Authority. During the year under review, there were no equity shares due to be transferred to the IEPF Authority pursuant to IEPF Rules.

Any claimant of dividend transferred above shall be entitled to claim the dividend from Investor Education and Protection Fund (IEPF) in accordance with such rules, procedure and submission of documents as prescribed. No claim shall lie in respect thereof with the Company. As advised by MCA through their circular dated July 19, 2018, the Company has provided webpage link of IEPF Authority for refund on itscom/sites/default/files/ website at https://www.hdbfs. investor-service/HDBFSL_Shareholder_FAQs_25082025.pdf to facilitate refund procedure for its investors/claimants. The details of the nodal officer are available on the website https://www.hdbfs.com/investors#investor_services

RBI GUIDELINES

Reserve Bank of India ("RBI") granted the Certificate of Registration to the Company in December 2007 vide Registration No. N.01.00477, to commence the business of a Non-Banking Financial Institution without accepting deposits. Your Company is a Non-Banking Financial Company - Upper Layer (NBFC - UL). Your Company has complied with and continues to comply with applicable RBI Regulations and other regulations issued by sectoral regulators like SEBI / IRDAI as may be applicable to the entity.

MANAGEMENT DISCUSSION AND ANALYSIS

GLOBAL ECONOMIC OVERVIEW

The global economy in CY 2025 held its ground, sustaining moderate growth through a period defined more by resilience. Technology-led investment and steady services demand provided the principal support, even as elevated borrowing costs and headwinds from geopolitical tensions continued to weigh on sentiment. Consequently, the tone shifted from stabilisation to caution in the latter part of the fiscal, as downside risks increasingly dominate the outlook. headroom, with global public The regional picture reveals a sharp divergence. Advanced economies, constrained by various factors, are expected to remain subdued. Emerging and developing economies, by contrast, have sustained stronger momentum, supported by domestic consumption, infrastructure development and favourable demographics. Asia continues to drive incremental global growth, spearheaded by robust momentum in India and steady performance in China.

This divergence is increasingly visible in global trade flows.

As demand patterns shift and policy priorities turn more inward-looking, world trade growth is expected to slow before a modest recovery. The deceleration is structurally driven by a rise in protectionist measures, which now impact over 11% of global imports. Intensifying tariff wars between major economies have disrupted trade flows, costs and added friction to global commerce. Ongoing tensions in the West Asia conflict have added severe supply-side uncertainties, particularly affecting energy markets and critical maritime choke points. Policy uncertainty has compounded this fragmentation further.

These trade and policy pressures are now transmitting into financial markets. This is where the implications for emerging market economies and the institutions that finance them, become most direct. Businesses are restructuring production networks, shifting from global efficiency to regional resilience through alternate sourcing strategies. While this improves supply security, it also introduces higher costs and reduces efficiency. A strong US dollar has tightened financial conditions in emerging markets and increased refinancing risks. Limited fiscal debt at around 94% of GDP, restricts governments ability to respond. The result is an equilibrium that is more fragile than headline growth numbers suggest, with monetary tightness, trade fragmentation and fiscal constraints increasingly feeding into one another.

Against this backdrop, the global economy faces a delicate balance of risks where downside scenarios now firmly dominate. Downside risks, including further geopolitical escalation in West Asia, financial market corrections particularly in AI-driven valuations and persistent inflation could severely disrupt the current stability. Conversely, a sustained easing of trade tensions and tangible productivity gains from AI adoption could support stronger medium-term growth. The trajectory for CY 2026 and ahead will therefore depend on how these interconnected forces evolve,increased determining whether the current stabilisation transitions into renewed expansion or remains constrained by deepening structural and geopolitical headwinds.

INDIAN ECONOMIC OVERVIEW

India entered FY 2025-26 as one of the worlds fastest-growing major economies and the year reinforced that position. Real GDP is estimated to have expanded at a robust pace of 7.6% in FY 2025-26, as highlighted in the Reserve Bank of India (RBI) Monetary Policy Committee (MPC) review of April 2026, with growth remaining broad-based across consumption, investment and sectoral activity. Private Final Consumption Expenditure expanded contributing the largest share of GDP, reflecting stable urban demand and a gradual recovery in rural consumption. Gross Fixed Capital Formation rose, sustaining investment levels at around 30% of GDP, driven by infrastructure creation, manufacturing expansion and capacity additions. Services remained the primary growth engine, while industrial growth also strengthened, aided by infrastructure activity, construction momentum and improved capacity utilisation.

Underlying this aggregate performance, the rural economy provided an important stabilising force. Foodgrain production reached record levels for the FY 2025-26 crop year supported by a normal monsoon and improved crop growth-oriented yields. With agriculture contributing around 15-16% of GDP and supporting around 45% of the workforce, this was critical to rural income stability and consumption demand. Strengthened procurement operations, continued MSP support and direct benefit transfers supported rural liquidity during the year. Tractor sales, two-wheeler demand and FMCG volumes pointed to a gradual synchronisation of rural and urban consumption trends. Stable agricultural output also helped moderate food inflation .year duringthe fiscal Narrowing to the macroeconomic policy environment, the inflation and interest rate picture shifted meaningfully during the year, with direct relevance to credit markets. CPI inflation remained subdued for much of 2025, enabling the RBI to ease the policy repo rate to 5.25% by December 2025. However, as noted in the April 2026 MPC review, the narrative and outlook have changed. Amid rising global commodity prices and renewed supply-side uncertainties stemming from the West Asia conflict, the RBI adopted a more vigilant outlook. Consequently, the MPC maintained the repo rate at 5.25% with a neutral stance, shifting focus to balance durable growth support with strict price stability against imported inflation risks. Liquidity conditions remained adequate, supported by open market operations and calibrated regulatory measures. Stable rates and improving liquidity supported credit offtake across retail, MSME and corporate segments. System-wide credit growth remained healthy, with MSME lending expanding at a faster pace, reflecting formalisation and enhanced credit penetration.

This credit momentum was underpinned by a banking system in robust health. Gross NPAs of the scheduled commercial banks continued to decline, reaching multi-year lows of around 2.0% by the end of FY 2025-26 and capital adequacy remained at comfortable levels, providing adequate buffers to support growth. Improved asset quality trends and stronger provisioning coverage contributed to a healthier credit environment. Capital markets also witnessed strong mobilisation, reflecting deepening financialisation household savings and diversified funding avenues for NBFCs and corporates. Stable funding access, diversified liability profilesand prudent asset-liability management remain critical considerations for NBFCs as the rate cycle evolves. On the fiscal side, the government maintained its consolidation trajectory without sacrificing. The fiscal deficit remained aligned with the medium-term glide path, while effective capital expenditure held at around 4% of GDP, reinforcing infrastructure creation across roads, railways, logistics, renewable energy and urban development. GST collections remained remarkably buoyant, exceeding 20 Lakh Crore for the full financial year FY 2025-26, reflecting formalisation and stable economic activity.

The Union Budget FY 2026-27 sustained capital expenditure at approximately 12.2 Lakh Crore, while strengthening MSME credit guarantee frameworks, digital infrastructure and skilling initiatives. These measures are structurally positive for credit demand, entrepreneurship and employment generation. Externally, India demonstrated resilience even as global trade conditions became more complex. Total exports remained robust in FY 2025-26, supported by strong services exports exceeding US$ 418.3 Bn. Foreign exchange reserves remained comfortable, crossing the US$ 700 Bn mark by early 2026, providing a strong buffer against external volatility. Stable remittance inflows further supported domestic liquidity and consumption. Indiasdiversifiedexport base and strong domestic demand reduce vulnerability to external shocks, even as global trade fragmentation and geopolitical developments remain key risks.

Looking ahead, India is positioned to transition from cyclical recovery to a phase of more durable, structurally anchored expansion. Domestic demand is likely to remain the principal growth driver, supported by improving income dispersion across urban and rural segments, sustained public investment in infrastructure and a gradual broadening of private capital formation. Economy-wide formalisation, deepening digital integration and policy emphasis on manufacturing competitiveness and MSME development are expected to strengthen productivity and supply-side capabilities. For financial services institutions operating in this environment, the combination of a growing credit-seeking population, of improving asset quality and a supportive policy backdrop present a compelling medium-term opportunity.

INDUSTRY OVERVIEW

Indias NBFC sector is on a sustained growth trajectory, with assets under management (AUM) expected to surpass 50 Lakh Crore in FY 2026-27 excluding government-owned NBFCs, as per CRISIL Ratings. NBFC credit growth has historically outpaced Indias GDP growth and this trend is expected to continue. The AUM growth trajectory reflects both its expanding relevance and demonstrated resilience within Indias financial ecosystem.

For FY 2025-26, the credit growth of NBFCs is estimated at 16.7% year on year, a slight moderation from 18.4% in FY 2024-25. Amid declining interest rates, NBFCs faced intense pricing competition from banks, particularly in housing, auto ground and MSME loans. However, NBFCs gained significant in the consumer durable segment, with their market share surging to 59% in FY 2025-26. While banks remained dominant in wholesale lending, NBFCs leveraged rising disposable income and rate cuts to drive retail expansion.

The near-term outlook remains constructive. For FY 2026-27, momentum is expected to gain further pace in specialised segments like Consumer Durable financing, with NBFC market share projected to reach 63%. Growth trajectories will nonetheless vary across segments, shaped by risk calibration, regulatory oversight and funding access. Balance sheet strength and funding diversification remain the critical differentiators. retail segments are

High Focus on Retail Lending Driving Financial Inclusion

Banks remain the primary financial though retail loans accounted for only around 40% of total banking credit as of FY 2025-26. In contrast, retail credit constituted approximately 57% of the overall NBFC loan portfolio (ex-infra NBFCs) in the same period, highlighting the sectors focus on individual borrowers and small businesses. This has created a meaningful opening for NBFCs to advance financial inclusion by catering to informal incomeprofiles. Rural and semi-urban markets represent a vast untapped opportunity. NBFCs have played a significant role in addressing these financing needs by complementing banks and bridging gaps in credit availability across underserved regions.

Segmental Trends

MSME, housing and auto financing continue to be the bedrock of NBFC credit. Credit outstanding to MSMEs is estimated at 51 Tn in FY 2025-26 (across the system), with NBFCs playing a vital role through digital lending and government credit guarantee schemes. The MSME financelandscape clocked a CAGR of 20.7% between FY 2021-22 to FY 2025-26, propelled by formalisation and GST data-based lending. Consumer Durable (CD) financing reached an estimated 1,040 Bn by March 2026, maintaining a 19% CAGR (FY 2021-22 to FY 2025-26). NBFCs have successfully disrupted this space, outperforming banks who scaled back due to revised credit card reward rules. In the Personal Loan segment, growth has seen a ‘measured normalisation as lenders turned cautious due to visible stress in early-delinquency buckets.

Infrastructure remains a significant segment at approximately 27% of NBFC credit as of FY 2025-26, though its share has gradually declined from 31% in FY 2018-19 as the sector shifts towards retail and MSME lending.

Asset Quality

Asset quality across the NBFC sector remains resilient, though pressure.specific In FY 2025-26, while overall GNPA ratios remained manageable, the GNPA ratio for NBFC personal loans rose institutions in India, to 8.1%, with particular stress in loans with ticket sizes below 50,000, where GNPA including write-offs surged to 39%. However, the systemic risk remains contained as these small-ticket loans account for only 6% of the NBFC personal loan portfolio. Across other productive segments like MSME and Consumer Durables, asset quality stayed within historical ranges, supported by tighter monitoring and improved collection efficiencies. Improving asset quality in core segments provides more comfort for mid-term growth.

COMPANY OVERVIEW

HDB Financial Services Limited (‘HDBFS or ‘the Company) is a leading, diversified, retail-focused non-deposit-taking non-banking financial company (NBFC), established in 2007 as a subsidiary of HDFC Bank Limited. Classified as an Upper Layer NBFC by the Reserve Bank of India (RBI), the Company offers lending solutions to individuals, emerging businesses and enterprises across India. The Company was listed on stock exchanges on July 02, 2025. (BSE: 544429; NSE: HDBFS) The Company operates through three core business verticals: Enterprise Lending, Asset Finance and Consumer Finance. We deliver loan products designed to address the needs of underserved and underbanked customers including salaried individuals, self-employed professionals and entrepreneurs. Our distribution platform combines physical presence and digital capabilities.

The Company leverages data-driven insights to provide tailored financial solutions beyond conventional lending, Risk management guided by integrity, transparency and responsible practices.

Geographical Presence processes, localised controls, supported HDBFS maintains a deep, pan-India presence through a phygital distribution model that combines an extensive branch network with digital capabilities. As of March 31, 2026, the Company operated 1,730 branches across 1,161 cities and towns, with a strong presence beyond the top 20 cities, reflecting its focus on semi-footprint enables the Company to serve aspirational India while mitigating concentration risk.

Each branch functions as a hub for localised sourcing, underwriting and collections, complemented by digital platforms that extend reach beyond physical locations. Data centres in Bengaluru and Mumbai and centralised operations in Hyderabad, Chennai and Noida support operational efficiency and service consistency across the network.

Products and Services

The Company operates across three core business verticals, Enterprise Lending, Asset Finance and Consumer Finance, offering a comprehensive suite of lending solutions tailored to the needs of underserved and underbanked customers. Its for diversified product portfolio is supported by a robust omni-channel distribution network that integrates a widespread physical presence with advanced digital capabilities.

The Companys digital ecosystem, anchored by the HDB On-the-Go app, recorded 14.1 Mn downloads. Our loan sourcing through digital or digitally assisted channels reduced turnaround times, lowering reliance on branch infrastructure and enabling deeper penetration into Tier 2 and 4 geographies through simplified and assisted digital journeys. HDBFS offers lending, fee-based financial solutions and business process outsourcing services, providing end-to-end support across the customer lifecycle.

Lending Products Enterprise Lending

The Enterprise Lending vertical offers a variety of secured and unsecured loans to MSME customers, as well as salaried borrowers, primarily through our branch network. These loans are primarily aimed at providing financefor the growth and working capital requirements of our customers. The target customers are small businesses, run as proprietorships oraspartnership firms. is anchored in a comprehensive 360-degree credit assessment framework that integrates centralised automated scorecards, physical byverification AI-driven credit scoring and machine learning-based fraud detection systems. Key offerings include:

• Loan Against Property: Secured loans which can be utilised for various purposes, such as supporting new and business initiatives, buying office rural markets.This working capital or expanding existing business. These loans are backed by property as collateral.

• Enterprise Business Loan: Self-employed customers (including professionals), private companies and partnership firms are eligible for Loans (EBLs), which aim to enhance their business activities in manufacturing, trading and services. EBL is backed by property as collateral.

• Business Loans: Unsecured loans to assist small businesses in fulfilling their financial needs, which may include acquiring new equipment and inventory, working capital or upgrading their outlets.

• Salaried Personal Loans: Personal loans to salaried both employees, providing financial flexibility personal and professional requirements.

• Gold Loans: Secured loans against gold jewellery, providing quick access to credit with faster processing and disbursement.

Asset Finance

The Asset Finance vertical provides financing options to customers for acquiring new and used commercial vehicles, construction equipment and tractors, all of which are income generating assets for our customers. Customer acquisition in this segment is driven through field teams and strategic partnerships with OEMs and dealers. The offerings include:

• Commercial Vehicle Loans: Financing for purchase of new and pre-owned commercial vehicles, including refinancing options, for fleet operators, first-time buyers and captive users.

• Construction Equipment Loans: Loans for purchase of new and used construction equipment, including refinancing solutions.

• Tractor Loans: Financing solutions for individuals seeking to acquire tractors and related equipment.

Consumer Finance

The Company offers a range of consumer loan products addressing personal and household requirements. Our offerings are:

• Consumer Durable / Digital Product / Lifestyle Product Loans: Financing solutions to customers for purchase of

(i) household appliances and durable goods, such as televisions, refrigerators, washing machines and air conditioners,

(ii) digital products such as mobile phones, laptops, tablets and cameras

(iii) lifestyle product loans which are designed to help customers purchase premium lifestyle items to elevate their standard of living such as furniture and high-end cooking ranges.

• Relationship Personal Loans: Personal loans to existing customers of the Company, catering to diverse needs, including life events, emergencies and home improvements, with repayment structures aligned to individual financial profiles.

• Auto Loans: Financing solutions for purchase of new and pre-owned vehicles, with competitive interest rates, flexible tenures and a streamlined application process for both individual and business customers.

• Two-Wheeler Loans: Financing for two-wheeler purchases, with minimal documentation, competitive pricing and flexible repayment plans.

• Micro Lending: Small-ticket loans extended through the Joint Liability Group (JLG) framework, supporting financial inclusion

Fee-Based Products / Insurance Services

HDBFS operates as a Corporate Insurance Agent under an Insurance Regulatory and Development Authority of India (IRDAI) licence, distributing both life and general insurance products. The Company has partnered with several market leaders in the life insurance and general insurance industry, which enables it to offer comprehensive risk coverage alongside the lending products.

BPO Services

HDBFS provides business process outsourcing services across back office, sales support and collection services

• Collection Services: The Company manages collection call centres for HDFC Bank across its retail lending portfolio, operating from over 700 locations through 18 call centres with approximately 5000 agents, covering both tele-calling and on-ground collection support.

• Back Office and Sales Support: HDBFS supports

HDFC Bank through services such as form processing, document verification, accounting operations and transaction handling, improving front-office efficiency while generating stable fee-based income.

Digital-First Approach

At HDBFS, technology is the operating architecture through which the Company sources, underwrites, disburses and services its loan portfolio. Over the past two years, the Company has made foundational investments in its technology stack. This has been done recognising that competitive differentiation in retail lending comes down to speed, data quality and the ability to reach customers outside conventional banking infrastructure. Trends in loan sourcing through digital or digitally assisted channels reflects a structural shift in how the business acquires and retains customers.

The focus on technological integration extends into the realm of Artificial Intelligence, where the Company is currently implementing five large-scale, AI-powered business initiatives. These investments have yielded measurable dividends across marketing, customer service and collections, further reinforcing the digital-first mandate.

• Collections Efficiency: An initial implementation within the collections vertical involves a scalable, bot-based intervention designed for early-stage delinquency management. By Q4 of FY 2025-26, over 50% of customers requiring a payment nudge were managed via automated calling bots. This intervention directly contributed to a 25-basis-point improvement in collection efficiencies within early buckets.

• Customer Service Optimisation: On the service front, the Company deployed an in-house Small Language Model (SLM) to power automated query sorting. This resulted in a 20% reduction in response time, ensuring a faster resolution for the customer base.

Technology-Enabled Customer Lifecycle Management

The Companys integrated digital platform supports the full customer journey, from onboarding and credit assessment through disbursement and servicing. This helps in connecting internal teams, external partners and customers on a unified technology backbone. It also compresses turnaround times, reduces documentation friction and delivers a consistent experience across the loan lifecycle. It is built across three functional layers:

• Systems of Innovation: The foundational core, comprising a product-specific Advanced Loan Origination System (LOS); an industry-standard CRM serving as the omni-channel hub for sales and customer engagement; a consolidated Data Lake for structured, access-controlled, data-driven decision-making; and technologies including Low-Code / No-Code platforms, Robotic Process Automation (RPA) and reusable components such as CKYC, eNACH and UPI 2.0 for seamless digital transactions.

• Systems of Engagement: The API layer through which all channels, including direct-to-customer (D2C) and assisted digital, interact with the Companys systems for acquisition and servicing. It accommodates APIs, IVR, contact centres, mobile applications, e-mail, SMS, web platforms, chatbots, social media, DSAs, aggregators and fintech collaborations, while remaining adaptable to future models.

• Customer-Facing Infrastructure: This comprises a redesigned Flutter-based native mobile application and Progressive Web App (PWA); a dedicated Assisted Digital App for sales, credit and collections teams; a modern API Gateway with a developer and partner portal on an Open API, self-service model; a DIY low-code platform for unassisted customer onboarding; Account Aggregator integration for pre-filled data and credit decisions; and standardised communication gateways spanning e-mail, SMS, WhatsApp, contact centres and chatbots. All these are integrated with the CRM for a seamless omnichannel experience.

The underwriting stack draws on a broad universe of data points such as geo-location, liveliness detection, alternate data, serial number verifications and AI-based RPA. This helps sharpen credit decisions and reduce onboarding time without compromising through-the-gate quality. Collections are accelerated through direct access to customer bank accounts via NACH, supported by AI-driven RPA and digital e-receipts. Servicing is managed through a centralised Customer 360 view combining FinnOne LMS and SugarCRM.

Digital Customer Service Channels

The Company operates multiple digital touchpoints to reduce branch dependency and shift routine interactions online.

• HDB On-the-Go App: The Companys unified loan platform recorded 14.1 Mn downloads and carries a 4.6-star app rating on Android and 4.0 star on iOS as of March 31, 2026, serving 4.76 Lakh daily active users. It offers end-to-end service journeys. Customers can access pre-approved offers, apply for loans across all three business verticals, track applications, manage repayments and raise service requests within a single platform. The app is available on Android, iOS and web and won the Best NBFC DNA Award 2024.

• WhatsApp Account Management: Customers receive real-time loan account updates by messaging on the Companys dedicated WhatsApp number, providing instant access via a widely used channel.

• Chatbot Assistance (#AskPriya): An AI-powered virtual assistant that provides instant responses to customer queries on loans and current offers, improving service efficiency and reducing contact centre load.

• Missed Call Service: Customers retrieve loan details via SMS by calling from their registered mobile number. This is a low-friction channel that serves customers in low-connectivity environments.

Other Key Initiatives

• Customer Service Week: An initiative that educates walk-in customers about HDBFS self-service tools, covering loan account management, digital payment options, the grievance redressal system and the RBI Ombudsman Scheme. Customer feedback collected during the programme is used to drive continuous service improvements.

• Personalised Relationship Management: Select customers are assigned a dedicated Relationship Manager for ongoing financial support, reinforcing the hybrid model of digital efficiency and human-led trust.

The digital infrastructure continues to evolve. HDBFS refines onboarding journeys on the app to reduce drop-offs and improve completion rates, shortens turnaround times from application to fulfilment and extends its Tier 2 and 4 market reach through assisted digital journeys. This enables scalable growth without proportionate increases in acquisition or servicing costs. The platform functions as both a retention engine and an organic growth channel. As customers use HDB On-the-Go for servicing, top-ups and repeat borrowing, the cost-to-serve falls while revenue per customer rises.

• HDB–AWS Ideathon: In collaboration with Amazon Web Services (AWS), HDBFS launched the HDB Ideathon, bringing together 38 fintechs, techfins and technology innovators to develop scalable, production-ready solutions across lending, risk management, customer experience and operational efficiency. Ten shortlisted teams worked closely with HDBFS and AWS mentors, leveraging cloud, data and generative AI capabilities to address real business challenges. The selected solutions are now entering pilot phases across HDBFSs pan-India network of more than 1,700 branches, with the objective of improving turnaround times, enhancing customer experience and expanding access to affordable credit through technology-led innovation.

• Expanding Digital Partnership Ecosystem: HDBFS continues to strengthen its digital transformation journey through strategic partnerships designed to embed financing solutions into everyday consumer ecosystems. With additional collaborations in the pipeline, the Company remains focused on building a seamless, scalable and technology-enabled lending infrastructure that enhances accessibility, improves customer convenience and supports long-term digital growth.

• Pro Kabaddi League (PKL) – Haryana Steelers: HDBFS partnered with the Haryana Steelers as the Official Lending Partner during the Pro Kabaddi League season to strengthen its brand presence across North India. Through strategic jersey branding, in-stadium visibility and digital amplification, the campaign reinforced the Companys ‘Jeet Pakki brand promise of certainty, confidence and assured progress. By associating with a sport popular with Bharat, HDBFS strengthened its emotional connect with aspirational consumers, enhanced brand recall and expanded visibility across key growth markets.

• Tamil Nadu Premier League (TNPL) – Kovai Kings:

HDBFS partnered with the Kovai Kings in the Tamil Nadu Premier League to deepen regional engagement across South India. As the Official Lending Partner, the Company leveraged jersey branding, on-ground visibility and digital outreach under the localised ‘Vetri Nichchayam campaign, the Tamil adaptation of ‘Jeet Pakki. The initiative strengthened cultural resonance while reinforcing the Companys positioning as a trusted financial partner. The campaign enhanced brand affinity, improved recall and strengthened visibility across Tamil Nadu during the tournament season.

SWOT ANALYSIS Strengths

One of the largest customer franchises, serving 22.9 Mn customers.

Highly granular retail-focused book, significantly reducing concentration risk (top 20 customers contribute around 0.30% of loans).

Net

18-year track record of tailored lending across Enterprise Lending, Asset Finance and Consumer

Finance segments, with a deep understanding of local nuances across India.

Robust credit underwriting and collection capabilities enabling competitive risk-adjusted returns for customers with minimal or no credit history.

Weaknesses

Exposure to economically sensitive segments such as commercial vehicles and MSME lending creates higher sensitivity to economic cycles and asset quality fluctuations.

Higher credit costs during periods of portfolio stress.

Opportunities

Rising credit demand in Tier 2, 3 and rural markets.

Cross-sell potential through the existing customer base to a wide range of products and services.

Growth in secured lending including LAP and gold loans.

Growing digital adoption enabling cost efficiencies and wider reach.

Threats

Regulatory tightening for NBFCs impacting capital and compliance requirements.

Competitive intensity from banks, fintechs and other NBFCs.

Macroeconomic volatility affecting borrower cash flows and asset quality. contributor to

Interest rate fluctuations impacting spreads and funding costs.

FINANCIAL PERFORMANCE

HDBFS delivered steady operating performance in

FY 2025-26, with continued expansion across its core lending segments. Total Revenue from Operations grew from 16,300.28 Crore in FY 2024-25 to 18,429.67 Crore in FY 2025-26, reflecting healthy loan book growth and a disciplined approach to market expansion.

The Company maintained strong profitability

Margin (NIM) rose to 7.96% as compared to 7.56% in the previous year and Pre-Provisioning Operating Profitgrew by 23.02% in the year to 6,201 Crore, highlighting our robust operational execution. Profit After Tax (PAT) rose to 2,543.83 Crore in FY 2025-26 from 2,175.92 Crore in FY 2024-25. Our financial resilience is further evidenced by a robust Capital Adequacy Ratio (CAR) of 21.4%, well above the regulatory requirements. Earnings Per Share (EPS) stood at 30.97 against 27.40 in the previous year. These results reflect efficiency and a calibrated approach to credit underwriting and risk management.

SEGMENT-WISE PERFORMANCE

Lending Business

Revenue from the Companys lending business increased to 17,205.76 Crore in FY 2025-26, up from 15,083.62 Crore in FY 2024-25 driven by an increase in Gross Loan Book.

Vertical wise details: Enterprise Lending

The Enterprise Lending segment serves self-employed individuals, SMEs and salaried customers. Secured products, including Loan Against Property, Enterprise Business Loan and Gold Loans continued to provide portfolio stability and lower credit volatility. The Company adopted a calibrated approach towards unsecured business lending, prioritising asset quality and portfolio health. As credit conditions stabilised, the segment recovered gradually, positioning it for sustainable growth. Gold loans were a strong growth driver, supported by favourable pricing trends and steady customer demand. the Enterprise Lending remained a significant Companys loan book and earnings. This vertical, at 44,841 Crore, formed 38% of our Gross Loan Book as on March 31, 2026 and grew by 6.7% Y-o-Y.

Asset Finance

The Asset Finance segment, covering commercial vehicles, construction equipment and tractors, navigated a challenging operating environment during the year. Adverse weather conditions and regional economic disruptions temporarily affected asset utilisation and customer cash flows in the first half of FY 2025-26. The Company remained focused on disciplined underwriting, proactive collections and close portfolio monitoring and asset quality indicators showed signs of stabilisation by the latter half of the year. The long-term strategy focuses on building a balanced mix between new and used vehicle financing, improving risk-adjusted returns while supporting customers engaged in essential economic activities. This vertical, at 44,729 Crore, formed 38% of our Gross Loan Book as on March 31, 2026 and grew by 10.0% Y-o-Y.

Consumer Finance

The Consumer Finance business continued to address the evolving credit needs of retail customers during the year. The portfolio, comprising financing for two-wheelers, consumer durables, digital devices and passenger vehicles (auto loans), drew on strong OEM and dealer partnerships and a wide contribution to providing credit to distribution footprint. Demand moderated temporarily due to external factors, but overall performance remained healthy, supported by festive demand, improved consumer sentiment and steady retail credit offtake. Cross-sell personal loans to existing customers scaled meaningfully, deepening customer engagement and improving portfolio profitability. Through this segment, the Company also provides micro-loans with a focus on promoting financial inclusion. The Consumer Finance vertical delivered solid year-on-year growth, reinforcing its position as a key contributor to the Companys overall performance. This vertical, at 28,923 Crore, formed 24% of our Gross Loan Book as on March 31, 2026 and grew by 19.4% Y-o-Y.

BPO Services

This segment provided services such as back office, sales support and collection services to HDFC Bank. Performance was supported by efficient cost management and streamlined processes. Revenue from the BPO services division was 1,223.91 Crore in FY 2025-26 compared to 1,216.66 Crore in FY 2024-25.

Outlook

The Company has a balanced approach to growth, regulatory compliance and customer-focused innovation. It is strategically positioned to create long-term value and make significant India.

With Indias growth momentum expected to continue, HDBFS is optimistic about FY 2026-27, supported by a diversified product portfolio, an extensive branch network and a strengthening digital infrastructure.

RISK MANAGEMENT

HDBFS operates in an environment of multiple, interconnected risks such as credit, operational, liquidity, digital lending and information security. The Company manages these through a comprehensive risk management framework designed for proactive identification and mitigation. The Board of Directors maintain oversight across all risk categories, supported committees that ensure focused supervision and stringent controls. The Chief Risk Officer along with his team monitors all risks and provide strategic direction to the business units. The Company continuously strengthens its security infrastructure, particularly in cybersecurity, to defend against emerging threats and remains confident in its ability to safeguard financial stability, operational efficiency and market reputation.

Risk	Mitigation
Credit Risk, including Credit Concentration Risk	Credit risk is managed through defined policies, procedures and systems that set clear parameters and monitor exposures against limits.
	The loan book is highly granular with the top 20 borrowers accounting for approximately 0.30% of gross loans, containing concentration risk, while seasoning across cycles, including COVID-19, supports stability.
	This disciplineisreflectedin a Gross Stage 3 ratio of 2.44%, alongside a Provision Coverage Ratio of 55.53%.
Business / Strategic Risk	Strategic risk is mitigated through diversification across products, segments and geographies.
	• The 1,18,493.35 Crore loan book is balanced across Enterprise Lending (38%), Asset Finance (38%) and Consumer Finance (24%), with presence across 31 states and union territories.
	Growth remains calibrated at 10.87% Y-o-Y, supported by prudent ALM and strong capital adequacy (CRAR 21.40%), reinforcing resilience.
Reputation Risk	The Company embeds reputation management through a strict code of conduct, strong governance and an active grievance redressal mechanism.
Technology Risk	Technology is leveraged to strengthen customer experience, operational efficiency and cybersecurity.
	A layered architecture, including an AI-ML-enabled Security Operations Centre, ISO 22301:2019-certified BCP / DR framework and TRINETRA Command Centre, ensures real-time monitoring and resilience.
	ISO 27001:2022 certification and continuous employee training align defences with evolving threats.
Compliance Risk	Compliance is managed through a dedicated function led by the Chief Compliance Officer, ensuring continuous alignment with regulatory requirements.
	Operating within the RBIs Upper Layer NBFC framework, the Company proactively updates policies and processes.
	Mandatory employee training across regulations such as fair practice code, KYC & AML, cybersecurity and safety reinforces a culture of compliance and reduces regulatory exposure.
Liquidity Risk	The Asset Liability Committee (ALCO) actively manages liquidity by monitoring maturity profiles, stock ratios and ALM positions.
	The average Liquidity Coverage Ratio (LCR) for the quarter ended March 31, 2026 was 177%, ensuring adequate buffers above regulatory thresholds.
Interest Rate Risk	A positive cumulative mismatch across buckets, supported by unencumbered HQLA and a diversified 99,230 Crore, reflects a conservatively managed liquidity profile. borrowingbaseof Interest rate risk is managed through ALCO-led gap analysis, aligning borrowing repricing with loan repricing to support margin stability.
	NIM improved to 8.23%, demonstrating the direct linkage between risk management and earnings quality.
Operational Risk	Operational Risk is managed through a framework designed to identify, assess and monitor risks resulting from inadequate internal processes, systems or external events.
	The Company utilises a Three Lines of Defence model: Business units (First Line), ORMD and Compliance (Second Line) and Internal Audit (Third Line) for independent review.
	Operational oversight is maintained by the Operational Risk Management Committee (ORMC) to ensure robust control across 1,730 branches.
	Primary measurement tools include Internal Loss Data, Risk Control Self-Assessment (RCSA) and Key Risk Indicators (KRI) to proactively mitigate potential losses.
	Internal controls are reinforced through maker-checker protocols, segregation of duties and a central Risk Control Unit dedicated to fraud monitoring and root cause analysis.
	Resilience is ensured via a layered IT architecture and a periodically tested Business Continuity Plan (BCP) to minimise service disruptions.

Internal Control System and Internal Audit

The Company has implemented a comprehensive internal control framework to ensure operational efficiency, regulatory compliance and adequate financial reporting. The Internal Audit Department (IAD) plays a crucial role in strengthening Governance, Risk and Compliance (GRC) by conducting independent and objective evaluations. These assessments enhance transparency, accountability and trust across the Company.

The internal audit function operates as per Board approved internal audit charter, supported by a risk-based internal audit policy that defines the departments authority and responsibilities. The IAD follows a Risk-Based Internal Audit (RBIA) approach, wherein the audit plan is formulated based on a comprehensive risk assessment of business activities and processes. Adopting a risk-based approach, the IAD focuses on key risk areas, ensuring effective resource allocation.

The Risk-Based Internal Audit framework also offers independent assurance to the Audit Committee of the Board, tailored to the Companys scale, complexity and operations.

The audit plan, developed based on activity risk profiles, reviewed and approved annually by the Audit Committee, which also evaluates audit findings and performance. To enhance audit quality and efficiency, while ensuring extensive data coverage, the IAD utilises advanced data analytics tool. Additionally, recognising the evolving industry scenario, Information Systems (IS) audits have become a key component of the internal audit function. This comprehensive audit strategy not only strengthens risk management practices but also reinforces the Companys ability to navigate technological advancements and emerging challenges. structure,

HUMAN RESOURCES

Workforce and Culture

HDBFS recognises that employees are central to operational efficiency and long-term growth. The Company continues to provide a safe, inclusive and performance-oriented workplace. Its culture is anchored in six core values: Integrity, Collaboration, Agility, Respect, Excellence and Simplicity. During FY 2025-26, value-based induction programmes and mandatory Code of Conduct and Fair Practices training were conducted across functions.

Talent Development

Guided by the belief that people are the cornerstone of sustainable business success, our talent development philosophy rests on building a future-ready, high-performing workforce aligned to organisational priorities. It emphasises continuous learning, capability enhancement and leadership development as key enablers of long-term growth, fostering a culture where employees are empowered to realise their potential while contributing meaningfully to business outcomes.

Designed to create a sustainable growth model, our performance programmes such as Revive, emphasise structured action planning, rigorous performance governance and on-ground execution support to deliver measurable improvements in overall branch effectiveness. By identifying performance gaps and enabling targeted interventions, Revive has contributed to consistent enhancement in business outcomes across identified units.

Learning and Capability Building

The Companys learning philosophy rests on four principles: treating continuous learning as a strategic enabler, linking capability building to business outcomes, developing a future-ready workforce and upholding ethical and responsible conduct. Learning is embedded across the employee lifecycle from onboarding to leadership development and is aligned with the Companys long-term growth and transformation agenda. With increasing reliance on digital platforms and analytics, digital capability building was strengthened during the year under the Social and Governance pillars of ESG. Key initiatives included Digital Enablement programmes covering LMS platforms, analytics dashboards, automation tools and digital customer acquisition systems. Data Literacy Initiatives were implemented to build competency in data interpretation, risk analytics, portfolio monitoring and performance dashboards. Cyber Security and InformationSecurity Awareness programmes are conducted through mandatory micro-learning modules on data privacy, phishing awareness and regulatory compliance.

Responsive Learning Framework

The learning architecture continues to evolve in response to regulatory changes, digitalisation and changing customer expectations. Training modules aligned with RBI circulars and compliance mandates were rolled out, including structured programmes on KYC, AML, fair practices code and responsible lending. The Company used e-learning platforms, mobile-based micro-learning, simulation-based credit and risk assessment training and gamified modules to reinforce adoption of new systems. Programmes on responsible selling and customer grievance management were also conducted. To ensure equitable access, the Company uses mobile-first learning platforms accessible to frontline and field teams, vernacular language modules for regional inclusion, blended learning formats combining virtual and classroom sessions and role-based learning journeys tailored for sales, collections, credit, operations and corporate teams. Participation and completion metrics are monitored to ensure coverage across roles and geographies.

Leadership Development and Internal Mobility

The Company has continued to invest in robust talent management and capability-building initiatives to support long-term growth. These include structured learning pathways, leadership development programmes and role-based capability enhancement interventions aligned to business priorities. Key focus areas include strengthening managerial effectiveness, building future-ready leadership pipelines and enhancing functional and behavioural competencies across levels. Through a blend of digital learning, experiential workshops and on-the-job development, these initiatives have enabled employees to elevate performance, drive innovation and contribute meaningfully to organisational success, thereby ensuring a strong foundation for sustained growth. During FY 2025-26, the Company continued to prioritise internal growth, with over 53% of middle and senior management positions filled through internal promotions. Employees are encouraged to pursue cross functional and cross geographic opportunities to support career progression and organisational depth.

Diversity, Inclusion and Well-Being

Recruitment and promotion practices are merit based, considering skills, experience and competence. The Company actively hires individuals with disabilities, provides accessible infrastructure and conducts tailored training programmes to support integration. Regular awareness sessions are organised to reinforce inclusive policies and respectful workplace behaviour.

Employee well-being initiatives during the year included health check-ups, yoga and meditation workshops, sports tournaments, cultural events and community outreach activities. Reward and recognition programmes continue to acknowledge performance and encourage consistent standards of excellence.

Frontline Feedback and Risk Governance

Frontline employees play an important role in identifying early signals of repayment behaviour shifts, sectoral stress and customer affordability concerns. Insights are captured through structured feedback loops via branch reviews and regional forums, CRM-based customer feedback analytics, early warning systems in collections and credit monitoring and pulse surveys and employee suggestion mechanisms. These inputs are integrated into risk recalibration models, product refinement and process improvements, strengthening portfolio quality and customer service standards.

CSR ACTIVITIES

HDBFS treats Corporate Social Responsibility (CSR) not as a compliance obligation but as a parallel business, one measured in communities stabilised, livelihoods created and ecosystems restored. Since inception, the Company has spent over 2800 Mn on CSR initiatives, across 100-plus social and environmental projects and through a network of 77 on-ground partners. These efforts have directly impacted more than 1.6 Mn lives across healthcare, literacy & livelihoods and environmental interventions.

On healthcare, as of March 31, 2026, HDBFS conducted 790 diagnostic camps promoting preventive care, introduced

116 patient beds, including 1 operating theatre, in charitable hospitals and operates 8 active Transport Aarogyam Kendras, physiotherapy centres built specifically for truck drivers, who form a significant segment of the Companys asset finance customer base. On literacy and livelihoods, the Company has run 250 financial literacy workshops and delivers skill enhancement programmes that build employable capabilities in underserved communities.

On the environment front, as of March 31, 2026, HDBFS restored 429 waterbodies to recharge groundwater tables and planted over 63,000 trees to create carbon sinks and support rural livelihoods.Ithasalsoretrofitted30 sanitation complexes in schools and six sanitation complexes in transport hubs and communities, while diverting over 800 tonnes of waste from landfills and waterbodies in partnership with local authorities. The geographic focus is deliberate. Over 70% of the Companys branches are located in Tier 4 cities and beyond and 14% of FY 2025-26 disbursements directed to women borrowers to advance financial inclusion and economic empowerment. Thus, the Companys social footprint mirrors its commercial one, concentrated in the same underserved districts where its customers live and work. HDBFS has financed over 1,60,000 MSMEs and more than 89,000 farmers, reinforcing its commitment to inclusive growth beyond the boundaries of conventional CSR programming.

Governance of these efforts sits at the Board level through a dedicated CSR & ESG committee, which has approved a comprehensive ESG policy framework covering climate and resources, sustainable sourcing, people and culture, customer focus, social impact, stakeholder trust and good governance. Progress is tracked against measurable outcomes rather than spend targets, with impact reported externally as part of the Companys broader accountability to stakeholders. For further details on the Companys CSR activities, please refer to page 40.

GREEN INITIATIVES

In line with the Green Initiatives, the Notice of Nineteenth Annual General Meeting of the Company is being sent to all Members whose e-mail addresses are registered with the Companys Registrar and Share Transfer Agents / Depository Participant(s). Members who have not registered their e-mail addresses, are requested to register their e-mail IDs with their Depository Participant(s) / Companys Registrar and Share Transfer Agents, MUFG Intime India Private Limited.

FINANCIAL RATIOS

Ratios	FY 2024-25	FY 2025-26
Net Interest Income to Average	7.56%	7.96%
Gross Loan Book*
Operating Expenses to Average	3.78%	3.79%
Gross Loan Book*
Return on Average Total Assets	2.16%	2.19%
(ROA)
Return on Average Equity (ROE)	14.72%	13.94%
Capital to Risk-weighted assets	19.22%	21.40%
Ratio (CRAR)
- Tier 1	14.67%	17.06%
- Tier 2	4.55%	4.34%
Gross NPA	2.26%	2.44%
Net NPA	0.99%	1.09%
Provisioning Coverage Ratio (PCR)	55.95%	55.53%
EPS ( ) - Basic	27.40	30.97
- Diluted	27.32	30.88

CAUTIONARY STATEMENT

This Management Discussion and Analysis (MD&A) contains forward-looking statements that involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed or implied in these statements due to various factors including economic conditions, regulatory changes, market dynamics and other unforeseen circumstances. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are advised to exercise caution and not to place undue reliance on these The Directors also acknowledge forward-looking statements.

[Source: International Monetary Funds World Economic Outlook (IMF WEO), April 2026; Reserve Bank of India - MPC Report, April 2026; CRISIL Ratings Press Release, Nov 2025; CRISIL Research NBFC Report 2025-26]

ACKNOWLEDGEMENT

The Board of Directors extends its sincere appreciation to the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDAI) and the Government of India (GOI) for their continuous support, cooperation and valuable guidance.

The Directors also take this opportunity to express their heartfelt gratitude to the Companys customers, shareholders, employees, bankers and distributors for their constant the trust and confidence. invaluable advice, insights and support received from auditors and statutory authorities, which have been instrumental in the Companys continued growth and success.

	For and on behalf of the Board of Directors
	Mr. Natarajan Srinivasan
	Non-Executive Chairman and Additional Independent Director
	DIN: 00123338
Place: Mumbai
Date: May 14, 2026