IndusInd Bank Ltd Directors Report.

The Board of Directors of the Bank have pleasure in presenting the Twenty-sixth Annual Report covering business and operations of the Bank, together with the Audited Financial Statements for the year ended March 31,2020.

The financial performance for the year ended March 31,2020 is summarized as under:

Particulars As on March 31, 2020 As on March 31, 2019
Deposits 202,039.81 194,867.91
Advances 206,783.17 186,393.50
Operating Profit (before Depreciation and Provisions and Contingencies) 11,050.68 8,317.07
Net Profit 4,417.91 3,301.10

During the year under review, in spite of the continuing downtrend in the growth rate of the economy and the challenging macroeconomic environment, the growth momentum of the Bank continued for most part of the year. The "severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2)", generally known as COVID-19, which was declared as a pandemic by the WHO on March 11, 2020, steadily engulfed the nation, with unprecedented level of disruption in the socio-economic front. Globally, countries and businesses were under lockdown, and the Government of India too imposed a country wide lockdown since March 25, 2020. The moratorium imposed by the RBI on a peer private sector bank on March 12, 2020 did impact the business sentiments. Consequent to the twin shocks, the growth during the last quarter of the year under review was muted.

On July 4, 2019, the Composite Scheme of Arrangement (Scheme) involving the merger of the erstwhile Bharat Financial Inclusion Limited (e-BFIL) became effective and as such, the results for the year 2019-20 are not comparable with that of the year 2018-19.

Operating Profit (before Depreciation and Provisions and Contingencies) for the year under review rose by 32.87% to Rs.11,050.68 crores, as compared to Rs.8,317.07 crores in the previous year. The Net Profit of the Bank, after considering all expenses and necessary Provisions and Contingencies, increased to Rs.4,417.91 crores, as against Rs.3,301.10 crores in the previous year registering a growth of 33.83% year on year.

Appropriations

The Directors recommend appropriation of Profit as under:

Operating Profit before Depreciation and Provisions and Contingencies 11,050.68
Less: Depreciation on Fixed Assets 277.97
Less: Provisions and Contingencies inclusive of Income Tax 6,354.80
Net Profit 4,417.91
Profit Brought Forward 11,106.94
Additions on Amalgamation 443.33
Amount available for Appropriation 15,968.18
Transfer to Statutory Reserve 1,104.48
Transfer to Capital Reserve 164.13
Transfer from Investment Reserve Account (40.53)
Transfer to Investment Fluctuation Reserve Account 203.78
Dividend (including Tax on Dividend) 626.52
(25th Annual General Meeting of members held on August 16, 2019 approved the payment of Dividend for the year 2018-19 for the Equity Shares outstanding as on that date.)
Deduction during the year 426.14
Total Appropriations 2,484.52
Balance carried over to Balance Sheet 13,483.66

Dividend

The RBI vide its Circular No. DOR.BP.BC.No.64/21.02.067/2019-20 dated April 17, 2020, has directed that banks shall not make any further dividend payouts from profits pertaining to the Financial Year ended March 31,2020 until further instructions, with a view that banks must conserve capital in an environment of heightened uncertainty caused by COVID-19. Accordingly, while the Earnings per Share amounted to Rs.63.75, the Board of Directors, have not proposed any dividend for the Financial Year ended March 31, 2020.

Pursuant to the Resolution passed in 25th Annual General Meeting, an amount of Rs.626.52 crores was paid to Members towards Dividend for the year 2018-19. This amount consists of Dividend at the rate of Rs.7.50 per equity share and applicable Dividend Distribution Tax to be paid by the Bank.

Financial Performance and state of the Affairs of the Bank

The year under review marked the end of the triennial Planning Cycle 4 (PC4) covering FY 2017-20. The underlying theme of PC4 was to "Digitize to Differentiate, Diversify and Create Domain Leadership" with a strategy to gain Market Share with Profitability (4D)

The Scheme involving, inter alia, the merger of e-BFIL, duly approved by the Board in October, 2017 and the Shareholders in December, 2018, became effective on July 4, 2019 (the Effective Date). On the Effective Date, e-BFIL was amalgamated with the Bank as a going concern, the Business Correspondent Undertaking contained in the amalgamated entity was transferred to the wholly owned subsidiary, IndusInd Financial Inclusion Limited (IFIL), as a going concern, and e-BFIL was liquidated without winding up. Further the name of the wholly owned subsidiary, IndusInd Financial Inclusion Limited was changed to Bharat Financial Inclusion Limited. The accounting effects for the Scheme were duly given during the year in compliance with the Scheme sanctioned by the Mumbai bench of the National Company Law Tribunal and the applicable accounting standards, and hence, the results for the year under review are not comparable with that of the previous year.

Backed by improved volumes, the Total Income of the Bank for the year under review grew by 28.04% to Rs.35,734.14 crores from Rs.27,907.87 crores.

The healthy rise in profitability was the result of growth in Net Interest Income (NII) as well as Non-Interest Income. Net Interest Income improved by 36.32% to Rs.12,058.74 crores from Rs.8,846.18 crores while Non-Interest Income rose to Rs.6,951.31 crores from Rs.5,646.72 crores, registering growth of 23.10%.

Core Fee Income such as commission, exchange, loan processing and account management fees, fees on Investment Banking and distribution of third-party products, and earnings from foreign exchange business grew by 14.17% to Rs.5,785.83 crores from Rs.5,067.57 crores earned during the previous year.

Yield on Advances increased to 11.87% during the year, as against 11.26% in the previous year, while the Cost of Deposits fell marginally to 6.51% from 6.58% in the previous year. Consequently, the Net Interest Margin improved to 4.14% during the year under review.

The Bank expanded its branch network steadily to reach 1,911 branches (including 150 banking outlets), as against 1,665 branches at the beginning of the year. Revenue per employee during the year improved to Rs.62 lakhs.

The Net Non-Performing Assets ratio of the Bank improved to 0.91% as of March 31 2020 and the Provisioning Coverage Ratio (PCR) was higher at 63.34% as compared to 43.04% in the previous year.

The year under review witnessed a number of significant events, some of which are listed below:

• Mixed Business (Deposits plus Advances) crossed Rs.4.09 trillion.

• The Bank established its first Euro Medium Term Notes Programme with a size of USD 1 billion on March 27, 2019. Under the programme, the Bank made a maiden issue with a tranche size of USD 400 million on April 15, 2019. The Notes are listed in Singapore Exchange Securities Trading Limited and India International Exchange (IFSC) Limited.

• The Scheme involving merger of e-BFIL, duly approved by the Board in October, 2017 and the Shareholders in December, 2018, became effective on July 4, 2019, pursuant to receipt of all regulatory, statutory and judicial approvals. On the Effective Date, e-BFIL was amalgamated with the Bank as a going concern, the Business Correspondent Undertaking contained in the amalgamated entity was transferred to the wholly owned subsidiary, IndusInd Financial Inclusion Limited (IFIL), as a going concern, and e-BFIL was liquidated without winding up. Further the name of IndusInd Financial

Inclusion Limited was changed to Bharat Financial Inclusion Limited. In consideration of merger, the shareholders of e-BFIL were allotted equity shares of the Bank in the swap ratio of 639 shares of the Bank for every 1,000 equity shares of e-BFIL. Accordingly, 8,96,17,781 equity shares of Rs.10 each of the Bank were allotted to the Shareholders of e-BFIL. In consideration of the transfer of the Business Correspondent Undertaking to its wholly-owned subsidiary, the Bank was allotted 4,37,03,500 shares of Rs.10 each fully paid. The Scheme included a Preferential Allotment of Share Warrants to the Promoters and upon payment of the subscription amount at 25% of the issue price of Rs.1,709 per Share Warrant, the Promoters were allotted 1,57,70,985 Share Warrants, each convertible to one equity share.

• The Bank adhered to the COVID-19 Regulatory Package prescribed by the RBI, including offering a moratorium on payment of interest and repayment of principal for three months effective from March 1, 2020 to eligible borrowers. As the extent to which COVID-19 pandemic will impact the Banks operations and financial results will be dependent on the future developments which are highly uncertain, the Bank created an additional countercyclical buffer / floating provision amounting to Rs.260 crores, besides the regulatory minimum incremental provision of Rs.23 crores.

• As of March 31, 2020, CKYC completion was at 97.60% of data submitted to CERSAI for the period January 1, 2017 to March 31,2020.

Performance of Subsidiary and Associate Company

The Bank had incorporated a wholly-owned subsidiary during the Financial Year ended March 31,2019, so that the Business Correspondent (BC) Undertaking, post-merger of e-BFIL, would be transferred to the subsidiary. Upon the Scheme becoming effective, on July 4, 2019, the BC Undertaking contained in the merged entity was transferred to the subsidiary and subsequently, its name was changed to Bharat Financial Inclusion Limited (BFIL), which was formerly incorporated as IndusInd Financial Inclusion Limited. BFIL, the subsidiary, then commenced commercial operations and during the year under review, earned a revenue of Rs.881.63 crores as against NIL during the previous year. The Net Profit for the year under review amounted to Rs.39.95 crores as against a marginal loss of 0.61 crores incurred in the previous year. BFIL had 23,475 employees on its rolls as on March 31, 2020.

IndusInd Marketing and Financial Services Private Limited (IMFS) is an Associate Company of the Bank as 30% of its share capital is held by the Bank. IMFS is engaged in the business of providing manpower services, and during the year under review, earned a revenue of Rs.329.23 crores as against Rs.285.43 crores earned in the previous year. The Net Profit earned by IMFS during the year under review amounted to Rs.1.05 crores as against 0.90 crores earned in the previous year. IMFS had 12,976 employees on its rolls as on March 31,2020.

Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014, the Bank has drawn up a Consolidated Financial Statement including the Financial Statement of its Subsidiary Company and Associate Company, and such Consolidated Financial Statement is included in this Annual Report.

In accordance with the fourth proviso to Section 136(1) of the Companies Act, 2013, the Standalone Financial Statements and the Consolidated Financial Statement, including audited accounts of BFIL and IMFS and all other documents required to be attached thereto have been hosted on the website of the Bank at: https://www.indusind.com/in/en/investors/investor- landing/investor-resources.html

A Statement containing the salient features of the financial position of the Subsidiary and Associate Company in Form AOC-1 is enclosed as Annexure to the Financial Statements.

The Bank does not have any joint venture company and the subsidiary is not a material subsidiary in terms of SEBI (LODR) Regulations, 2015.

Share Capital

The Paid-up Equity Capital of the Bank as at March 31,2020 consisted of 69,35,35,738 Equity Shares of Rs.10/- each.

During the year under review, in accordance with the Scheme sanctioned by the Mumbai bench of the National Company Law Tribunal, 8,96,17,781 equity shares of Rs.10 each of the Bank were allotted at par to 35,726 shareholders of e-BFIL pursuant to approval of Finance Committee of the Bank in their meeting held on July 6, 2019. Further, the Bank allotted 12,31,089 Equity Shares of Rs.10 each pursuant to exercise of options by employees including that of the subsidiary, under Employees Stock Option Scheme, 2007 (ESOS 2007) and IBL Special Incentive ESOS for BFIL Merger 2018 (ESOS 2018).

The Bank has not issued any Equity Shares with Differential Voting Rights.

Issue of Equity Shares on Preferential Basis during the Financial Year 2020-21

The Bank is undertaking an issue and allotment of certain Equity Shares, the proceeds of which will be primarily used to meet the needs of the growing business of the Bank, including long term capital requirements for pursuing growth plans and to enhance the Capital Adequacy Ratio, to increase the capacity of the Bank to lend, and for general corporate purposes.

Accordingly, the Board had pursuant to its Resolution passed on July 28, 2020, subject to the consent of the Members, approved the issue and allotment of up to:

a) 4,76,29,768 (Four crores seventy-six lakhs twenty-nine thousand seven hundred and sixty-eight) Equity Shares of Face Value of Rs.10 (Rupees Ten) each at an issue price of Rs.524 (Rupees Five hundred and twenty-four) each (as determined by the Board in accordance with the pricing guidelines prescribed under Regulation 164(4) of Chapter V of the SEBI (ICDR) Regulations, 2018) as on the Relevant Date, i.e., July 24, 2020 to the below mentioned five Qualified Institutional Buyers in the manner as recorded by the Board ("Preferential Issue to QIBs"-Subscription Shares I)

S. No Name of Qualified Institutional Buyer Portion of the Subscription Shares I
1. Route One Offshore Master Fund, L.P 1,06,93,264
2. Route One Fund I, L.P. 71,59,788
3. ICICI Prudential Life Insurance Company Limited 1,62,21,374
4. Tata Investment Corporation Limited 57,25,190
5. AIA Company Limited 78,30,152
Total 4,76,29,768

b) 1,51,17,477 (One crore fifty-one lakhs seventeen thousand four hundred and seventy-seven) Equity Shares of Face Value of Rs.10 (Rupees Ten) each at an issue price of Rs.524 (Rupees Five hundred and twenty-four) each (as determined by the Board in accordance with the pricing guidelines prescribed under Regulation 164B of Chapter V of the SEBI (ICDR) Regulations, 2018, as on the Relevant Date, July 24, 2020 to the below mentioned two Non-QIBs in the manner as recorded by the Board ("Preferential Issue to Non-QIBs- Subscription Shares II").

S. No Name of the Allottee Portion of the Subscription Shares II
1. Hinduja Capital Limited 57,03,816
2. IndusInd International Holdings Ltd. 94,13,661
Total 1,51,17,477

In terms of Sections 23, 42 and 62(1)(c) of the Companies Act, 2013 and Regulation 160 of the SEBI (ICDR) Regulations, 2018, the Preferential Issue, to QIBs and Non QIBs (Preferential Issue) was approved by the Members by way of separate Special Resolutions passed in the Extraordinary General Meeting held on August 25, 2020.

Post the Preferential Issue, the Issued, Subscribed and Paid-Up Equity Share Capital of the Bank shall be 75,63,13,283 (Seventy- five crores sixty-three lakh thirteen thousand two hundred and eighty-three) Equity Shares. The Equity Shares created, offered, issued and allotted under the Preferential Issue shall rank pari passu with the existing Equity Shares of the Bank.

The necessary intimations to the Stakeholders shall be made upon completion of the Allotment of Equity Shares under the Preferential Issue.

Debentures

The Bank did not issue any debenture denominated in Indian Rupee during the year under review. On April 15, 2019, the Bank issued its maiden rated and listed Euro Medium Term Note for USD 400 million.

Compliance with SEBI Circular No.: SEBI/HO/DDHS/CIR/P/2018/144 dated November 26, 2018 on Fund raising by issuance of Debt Securities by Large entities is not applicable to the Bank, being a Scheduled Commercial Bank.

In compliance with Regulation 53 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the names of the Debenture Trustees with their contact details are given below:

Trustee I:
Name of Debenture Trustees : Catalyst Trusteeship Limited (formerly GDA Trusteeship Ltd.)
Address : GDA House, S. No. 94/95, Plot No. 85, Bhusari Colony (Right), Paud Road, Pune - 411038, Maharashtra, India.
Website : www.catalysttrustee.com
E-ma il : dt@ctltrustee.com
Trustee II:
Name of Debenture Trustees : Beacon Trusteeship Limited
Address : 4C&D, Siddivinayak Chambers, Gandhi Nagar, Opp. MIG Club, Bandra (East), Mumbai - 400 051
Website : www.beacontrustee.co.in
E-mail : info@beacontrustee.co.in

Tier 2 Capital

The Bank did not issue any Tier 2 Capital instruments during the year. As on March 31, 2020, the value of outstanding Tier 2 Capital instruments is Nil.

Deposits

The Bank is a banking company governed by the Banking Regulation Act, 1949, and as such, the provisions in the Companies Act, 2013 relating to acceptance of Public Deposits are not applicable.

Capital Adequacy

The Bank continues to be adequately capitalized. The Capital Adequacy Ratio of the Bank, calculated under the Basel III Capital Regulations mandated by RBI, is set out below:

Particulars March 31, 2020 March 31, 2019
i) Capital Adequacy Ratio (CRAR) 15.04% 14.16%
ii) CRAR- Common Equity Tier 1 Capital 13.22% 12.07%
iii) CRAR- Tier 1 Capital 14.57% 13.70%
iv) CRAR- Tier 2 Capital 0.47% 0.46%

Credit Ratings

Instruments Rating Rating Agency
Domestic Ratings
Infra Bond Program AA+ CRISIL
Additional Tier I Bond Program AA CRISIL
Certificates of Deposit Program A1 + CRISIL
Short Term FD Program A1 + CRISIL
Senior Bonds Program AA+ India Ratings and Research
Additional Tier I Bond Program AA India Ratings and Research
Short Term Debt Instruments A1 + India Ratings and Research
Instruments Rating Rating Agency
International Ratings (assigned on June 2, 2020)
Senior Unsecured MTN Program Ba1 Moodys Investors Service

Banks Directors

The Banks Board comprised nine Directors as on March 31, 2020, viz., Mr. Arun Tiwari, Non-Executive, Non-Independent, Part-time Chairman, four Independent, Non-Executive Directors, viz., Mr. Shanker Annaswamy, Dr. T. T. Ram Mohan, Mrs. Akila Krishnakumar and Mr. Rajiv Agarwal, three Additional Directors in the category of Independent, Non-Executive, viz., Mr. Sanjay Asher, Mr. Sanjeev Kumar Asthana and Mrs. Bhavna Doshi, and Mr. Sumant Kathpalia, Managing Director & CEO, who is also an Additional Director.

Mr. Sanjeev Kumar Asthana has resigned from the Banks Board with effect from the close of business hours on July 27, 2020, owing to his acceptance of a new role as the CEO of a corporate, impacting his being a Director in the Banks Board with specialised knowledge / practical experience in Agriculture & Rural Economy, as laid down in the Banking Regulation Act, 1949.

(a) Non-Executive Independent Directors

All Non-Executive Independent Directors have submitted Declarations that they meet the criteria of independence as laid down under sub-section (6) of Section 149 of the Companies Act, 2013. In compliance with Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and based on these Declarations, the following Non-Executive Directors continue to be identified as Independent Directors as on March 31,2020:

(i) Dr. T. T. Ram Mohan

(ii) Mrs. Akila Krishnakumar

(iii) Mr. Rajiv Agarwal

(iv) Mr. Shanker Annaswamy

(v) Mr. Sanjay Asher (Additional)

(vi) Mr. Sanjeev Kumar Asthana (Additional)

(vii) Mrs. Bhavna Doshi (Additional)

In addition, the Banks Board of Directors have pursuant to Regulation 25(9) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, obtained a Certificate from M/s Bhandari & Associates, Practicing Company Secretaries that the aforesaid Directors meet the criteria of independence and are independent of the Management.

(b) Woman Director

In terms of the provisions of Section 149 of the Companies Act, 2013, read with Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014, and Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, specified companies are required to have at least one Woman Director in their Board.

Mrs. Akila Krishnakumar (DIN: 06629992), who joined the Board on August 10, 2018 and is a Non-Executive, Independent Woman Director, and Chairs some important Committees.

Mrs. Bhavna Doshi (DIN: 00400508), who joined the Board on January 14, 2020, was appointed as Additional Director in the category of Non-Executive, Independent Woman Director.

Mrs. Kanchan Chitale (DIN: 00007267), Non-Executive, Independent Woman Director of the Bank, retired on October 17, 2019, on completion of her tenure.

(c) Chairman of the Board

Mr. R. Seshasayee (DIN: 00047985), Non-Executive, Non-Independent, Part-time Chairman of the Bank, retired on July 24, 2019, on completion of his tenure.

Mr. Arun Tiwari (DIN: 05345547), has been appointed Non-Executive, Non-Independent, Part-time Chairman of the Bank with effect from January 31,2020.

Reserve Bank of India had conveyed approval for the appointment of Mr. Arun Tiwari as a Non-Executive, Part-time Chairman for a period of 3 years from the date of his assuming charge as Chairman of the Bank.

Mr. Arun Tiwari assumed charge as Part-time Non-Executive Chairman of the Bank with effect from January 31,2020, and shall hold office up to January 30, 2023.

Mr. Tiwari was earlier appointed as Independent, Non-Executive Director in the Board of the Bank, on August 10, 2018. Mr. Arun Tiwaris membership was reclassified as Non-Executive, Non-Independent with effect from October 15, 2019.

Approval of the shareholders is being requested by the Board for the appointment of Mr. Arun Tiwari as Non-Executive, Non-Independent, Part-time Chairman of the Bank, at the ensuing Annual General Meeting of the Bank.

(d) Managing Director & CEO

Mr. Romesh Sobti (DIN: 00031034), Managing Director & CEO of the Bank, demitted office on March 23, 2020, on completion of his tenure.

Mr. Sumant Kathpalia (DIN: 01054434), has been appointed Managing Director & CEO of the Bank with effect from March 24, 2020.

Reserve Bank of India had conveyed their approval for appointment of Mr. Sumant Kathpalia for a period of 3 years, up to March 23, 2023.

Mr. Kathpalia has been with the Bank since 2008, and his previous role in the Bank was Head - Consumer Banking.

Mr. Sumant Kathpalia is a career banker with over three decades of experience in large multi-national banks such as Citibank, Bank of America and ABN AMRO, including his stint as Head - Consumer Banking in IndusInd Bank Ltd. Mr. Kathpalia has successfully held several leadership roles over his career, with a focus on driving business growth and innovation. He has experience across diverse functions, including Business Strategy, Sales & Distribution, Operations, Systems, Risk & Credit Management, and Financial Management.

Mr. Sumant Kathpalia is a Chartered Accountant, and a Commerce graduate from Hindu College, Delhi University.

Approval of the shareholders is being requested by the Board for the appointment of Mr. Sumant Kathpalia as Managing Director & CEO of the Bank, by passing of an Ordinary Resolution at the ensuing Annual General Meeting.

(e) Details of Directors seeking Appointment / Re-appointment / Directors retiring by rotation at the forthcoming AGM

(i) Appointment

• Mr. Sanjay Asher (DIN: 00008221), was appointed Additional Director in the category of Independent, Non-Executive Director in the Banks Board on October 10, 2019.

Approval of the Shareholders is being requested by the Board for the appointment of Mr. Sanjay Asher as Independent, Non-Executive Director in the Board of the Bank by passing of an Ordinary Resolution at the ensuing Annual General Meeting.

• Mrs. Bhavna Doshi (DIN: 00400508), was appointed Additional Director in the category of Independent, Non-Executive Director in the Banks Board on January 14, 2020.

Approval of the shareholders is being requested by the Board for the appointment of Mrs. Bhavna Doshi as Independent, Non-Executive Director in the Board of the Bank, by passing of an Ordinary Resolution at the ensuing Annual General Meeting.

(ii) Re-appointment of Non-Executive, Independent Directors for a second term of 4 years

• Mr. Shanker Annaswamy (DIN: 00449634), was appointed Director in the category of Non-Executive, Independent Director in the Board of the Bank on January 12, 2016 and approval of the shareholders was obtained in the 22nd AGM held on July 1,2016, for a period of four years with effect from his original date of appointment, i.e., January 12, 2016. Accordingly, Mr. Shanker Annaswamys term as Non-Executive, Independent Director had concluded on January 11,2020.

The Board of Directors have, on the recommendation of the Nomination & Remuneration Committee approved, on January 10, 2020, the re-appointment of Mr. Shanker Annaswamy as Independent, NonExecutive Director for a second term of four years, with effect from January 12, 2020 until January 11,2024.

Approval of the shareholders is being requested by the Board for the re-appointment of Mr. Shanker Annaswamy as Independent, Non-Executive Director by passing of a Special Resolution at the ensuing Annual General Meeting.

• Dr. T. T. Ram Mohan (DIN: 00008651), was appointed Director in the category of Non-Executive, Independent Director in the Board of the Bank on May 12, 2016 and approval of the shareholders was obtained in the 22nd AGM held on July 1,2016, for a period of four years with effect from his original date of appointment, i.e., May 12, 2016. Accordingly, Dr. T. T. Ram Mohans term as Independent, Non-Executive Director had concluded on May 11,2020.

The Board of Directors have, on the recommendation of the Nomination & Remuneration Committee approved on May 8, 2020, the re-appointment of Dr. T. T. Ram Mohan as, Independent, Non-Executive Director for a second term of four years, with effect from May 12, 2020 until May 11,2024.

Approval of the shareholders is being requested by the Board for the re-appointment of Dr. T. T. Ram Mohan as Independent, Non-Executive Director by passing of a Special Resolution at the ensuing Annual General Meeting.

Statement regarding opinion of the Board with regard to integrity, expertise and experience (including the proficiency) of the Independent Directors appointed during the year.

The Independent, Non-Executive Directors, appointed during the year were subject to the due-diligence by the Nomination and Remuneration Committee of the Board, based on parameters of qualification, expertise, track record, integrity and such other parameters as stipulated under applicable regulations. The Board based on recommendation of the Nomination and Remuneration Committee and on its own evaluation, was of the opinion that the Independent, Non-Executive Directors, possess the necessary integrity, expertise and experience.

(iii) Retirement by Rotation

Section 152(6) of the Companies Act, 2013, provides that not less than two-thirds of the total number of directors of a public company shall be liable to retire by rotation, and that one-third of such directors as are liable to retire by rotation shall retire from office at every Annual General Meeting (AGM) of the Bank.

In accordance with the provisions of the Companies Act, 2013, Mr. Arun Tiwari (DIN: 05345547), Non-Executive, Non-Independent, Part-time, Chairman of the Bank, shall be the Director liable to retire by rotation, and being eligible, offers himself for re-appointment at the ensuing AGM.

Approval of the shareholders is being requested by the Board for re-appointment of Mr. Arun Tiwari, who retires by rotation and being eligible offers himself for re-appointment.

As required under Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, particulars of the Directors seeking appointment, re-appointment, on retirement by rotation are given in the annexure to the Explanatory Statement attached to the Notice of the AGM.

None of the Directors have been disqualified from being appointed as Director, pursuant to Section 164 of the Companies Act, 2013 or under any other law.

The Board of Directors have obtained a Certificate from M/s Bhandari & Associates, Practicing Company Secretaries, pursuant to Regulation 34(3) read with Schedule V para C clause 10 (i) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 that none of the Directors on the Board of the Bank have been debarred or disqualified from being appointed or continuing as Directors on the Board by SEBI, Ministry of Corporate Affairs or any other Statutory Authority.

(f) Cessation of Directorships

Mr. Yashodhan M. Kale (DIN: 00013782), Non-Independent, Non-Executive Director of the Bank, retired on April 16, 2019, on completion of his tenure.

Mr. R. Seshasayee (DIN: 00047985), Non-Executive, Part-time Chairman of the Bank, retired on July 24, 2019, on completion of his tenure.

Mr. Siraj Chaudhry (DIN: 00161853), Non-Executive, Independent Director of the Bank, resigned from the Board of the Bank on September 23, 2019, owing to acceptance of a new role as the Managing Director & CEO of a constituent having credit relationship with the Bank, impacting his professional commitment vis-a-vis applicable statutory provisions to his being a Director in the Banks Board.

Mrs. Kanchan Chitale (DIN: 00007267), Non-Executive, Independent Director of the Bank, retired on October 17, 2019, on completion of her tenure.

Mr. Romesh Sobti (DIN: 00031034), demitted the Office of Managing Director & CEO of the Bank on March 23, 2020, on completion of his tenure.

The Board wishes to place on record its deep appreciation for the leadership and contribution made by Mr. Seshasayee as Chairman of the Board for a period of 12 years, and for the remarkable growth of the Bank during his tenure.

The Board wishes to place on record its appreciation for the valuable contributions made by Mr. Yashodhan M. Kale, Mr. Siraj Chaudhry, Mrs. Kanchan Chitale and Mr. Sanjeev Kumar Asthana, towards the deliberations in the meetings of the Board.

The Board also wishes to place on record its appreciation for Mr. Romesh Sobti, for his contribution for the Banks growth from strength to strength during the 12 years under his stewardship, both in terms of growth as well as instituting of robust systems and enhancing compliance.

(g) Cessation of Director after the end of the year and upto the date of the Report

Mr. Sanjeev Kumar Asthana (DIN: 00048958), resigned from the Banks Board with effect from the close of business hours on July 27, 2020, owing to acceptance of a new role as the CEO of a corporate, impacting his being Director in the Banks Board with specialised knowledge / practical experience in Agriculture & Rural Economy, as laid down in the Banking Regulation Act, 1949.

The Board of Directors wish to place on record their appreciation for the valuable contributions made by Mr. Sanjeev Kumar Asthana towards the deliberations in the Board meetings during his tenure as Director of the Bank.

Board and Committee Meetings

During the year, nine meetings of the Board of Directors and seven meetings of the Audit Committee of the Board were held, the details of which are given in the Corporate Governance Report, which forms an integral part of this Report.

The Board has constituted the Audit Committee with Mr. Sanjay Asher as Chairman, Mr. Arun Tiwari, and Mr. Shanker Annaswamy as Members. Mrs. Bhavna Doshi has been appointed as Member of the Audit Committee with effect from May 9, 2020.

There have not been any instances during the year when recommendations of the Audit Committee were not accepted by the Board.

Details of the composition of the Board and all its Committees and of the Meetings held and attendances of the Directors at such Meetings are provided in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Performance Evaluation of the Board

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Nomination & Remuneration Committee of the Board had laid down the criteria for Performance Evaluation of the Board as a whole, Committees of the Board, Directors individually, and of the Chairman, as well as the process of evaluation.

The Bank has aligned its Board Evaluation Framework in line with the Guidance Note on Board Evaluation issued by SEBI as per Circular dated January 5, 2017.

The Board of Directors have, on the recommendation of the Nomination & Remuneration Committee, engaged an external Independent Professional for conducting the Performance Evaluation exercise.

The Board of Directors has carried out the annual evaluation of the performance of the Board as a whole, Individual Directors including Independent Directors, Non-Independent Directors, the Chairman and the Committees of the Board.

The performance of the Board as a whole, Committees of the Board, Directors individually, and of the Chairman has been evaluated / reviewed by the Nomination & Remuneration Committee, Committee of Independent Directors and by the Board of Directors, in accordance with the Policy on Performance Evaluation.

Mrs. Bhavna Doshi was inducted in the Board of the Bank on January 14, 2020. Considering her recent induction in the Banks Board during FY 2019-20, Mrs. Doshi did not participate in the Performance Evaluation exercise.

Mr. Sumant Kathpalia assumed charge as Managing Director & CEO of the Bank on March 24, 2020. Considering Mr. Kathpalias short tenure in the Banks Board as Managing Director & CEO, during FY 2019-20, he was not part of the Performance Evaluation exercise.

The Board has formulated a Policy on Performance Evaluation which details the various aspects that are to be considered for evaluating the Directors including but not limited to attendance, participation in the meeting, contribution towards strategies of the Board etc.

The Policy provides a guideline for the individual Directors to evaluate the Board, its Committees and individual directors.

The Policy on Performance Evaluation is available on the website of the Bank at: https://www.indusind.com/in/en/investors/ investor-landing/investor-resources.html

The Statement indicating the manner in which the evaluation exercise was conducted is included in the Report on Corporate Governance, which forms an integral part of this Annual Report.

Policy on Appointment & Selection of Directors

The Board of Directors are at the helm of the Bank and an enlightened Board creates a culture of leadership and provides a long-term policy approach to improve the quality of governance.

The Policy on Appointment & Selection of Directors has been framed in compliance with Section 178 of the Companies Act, 2013, and other applicable regulations under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Banking Regulation Act, 1949.

The Policy shall act as a guideline for the Nomination & Remuneration Committee for determining the qualifications, positive attributes, independence of Directors and matters related thereto to recommend appointment and removal of Directors to the Board of the Bank.

The Policy on Appointment & Selection of Directors is hosted on the website of the Bank at: https://www.indusind.com/in/en/ investors/investor-landing/investor-resources.html

Familiarization Programs for Independent Directors

Various programs were undertaken for familiarizing the Independent Directors of the Bank, details of which are disclosed in the Corporate Governance Report, which forms part of this Report.

Change in Key Managerial Personnel

During the year, there was no change in Key Managerial Personnel, except for Managing Director & CEO of the Bank, the details of which are given in the para on Banks Board in this Report.

System for Internal Financial Controls and its Adequacy

The Bank operates in a fully computerised environment, with a Core Banking Solution, supported by diverse application platforms for handling special businesses, such as, Treasury, Trade Finance, Credit Cards, Retail Loans, etc. The process of recording of transactions in each of the application platforms is subject to various forms of controls such as in-built system checks, Maker - Checker authorisations, independent post-transaction reviews, etc. The Financial Statements are prepared based on computer system outputs. The responsibility of preparation of Financial Statements is entrusted to a dedicated unit which is completely independent. This unit does not originate accounting entries except for limited matters such as Share Capital, Taxes and Transfers to Reserves. The Bank has implemented adequate procedures and internal controls which provide reasonable assurance regarding reliability of financial reporting and preparation of Financial Statements, and that such internal financial controls were adequate and were operating effectively during the year.

Conservation of Energy and Technology Absorption and Foreign Exchange Earnings and Outgo

The information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo pursuant to Section 134(3)(m) of the Companies Act, 2013, read with the Rule 8(3) of the Companies (Accounts) Rules, 2014, is mentioned elsewhere in this Report. The other Statutory Information / Disclosures required to be given under the Banking Regulation Act, 1949 and the Companies Act, 2013, as applicable to the Bank, have been laid out in the Schedules / Notes attached and forms part of the Balance Sheet and the Profit and Loss Account, which forms an integral part of this Report.

Conservation of Energy

Considering the nature of its activities as an entity in the Financial Services sector, the Bank has voluntarily taken steps towards conservation of energy, details of which are furnished in Principle 6 of Section E of the Business Responsibility Report.

Technology Absorption

The Bank has made optimum use of Information Technology in its operations. Details pertaining to Technology Absorption have been explained in the Management and Discussion Analysis Report which forms an integral part of the Annual Report.

Foreign Exchange Earnings and Outgo

The provisions relating to 134(3)(m) of the Companies Act, 2013, on particulars relating to Foreign Exchange Earnings and Outgo are not applicable to a Banking company and as such no Disclosure is being made in this regard.

Risk Management

The Bank has an Enterprise-wide Risk Management (ERM) framework in place. The integrated Risk Management Department covers Credit Risk, Market Risk, Assets-Liabilities Management (ALM) and Operational Risk across all verticals, independent of business functions.

Risk Management functions in the Bank have been aligned with best industry practices, supported by advanced risk measurement and analytical systems which enable proactive risk management and monitoring. Risk Management is continually enhanced in line with changes in operating environment and regulations.

The Bank has a comprehensive framework of Risk Management Policies which specify the risk appetite, risk measurement methodologies, and monitoring and control measures for the respective business segments. The policies have been designed keeping risk appetite as the central objective, and business strategies have been aligned to risk policies.

The Bank has set up a Board-level Committee, viz., Risk Management Committeeto examine risk policies and procedures developed by the Bank and monitor adherence to risk parameters and prudential limits set for different portfolios / products / segments.

Details of Risk Management Models and Frameworks implemented by the Bank are mentioned underManagement Discussions and Analysis Report which forms an integral part of this Annual Report.

Vigil Mechanism / Whistle Blower Policy

The Bank has in place the Whistle Blower Policy since 2009.

The said Policy is in compliance with RBI Guidelines, provisions of the Companies Act, 2013, and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Vigil Mechanism at the Bank requires submission of Quarterly Reviews before the Audit Committee of the Board, and placing of Annual Reviews before the Audit Committee and the Board of Directors.

The Policy also incorporates suggestions of the Protected Disclosure Scheme for private sector and foreign banks issued by the Reserve Bank of India.

The Board of Directors of the Bank have constituted a Board-level Committee, viz., the Vigilance Committee, which conducts overview of cases of vigilance nature arising out of actions of the employees of the Bank. The Committee meets at least twice a year.

The Banks Whistle Blower Policy is in synchrony with all statutory and regulatory guidelines on Vigil Mechanism.

Further details about the Vigil Mechanism are furnished in the Report on Corporate Governance, and the current Whistle Blower Policy of the Bank is available on the Banks website at the under-mentioned link:

https://www.indusind.com/in/en/investors/investor-landing/investor-resources.html >> Policies & Codes >> Whistle Blower Policy

Reporting of Fraud, by the Auditors

During the year under review, there were no instances of fraud reported by the Auditors pursuant to Section 143(12) of the Companies Act, 2013 to the Audit Committee or the Board of Directors.

Statutory Auditors

M/s Haribhakti & Co. LLP, Chartered Accountants were appointed the Statutory Auditors in the 25th Annual General Meeting held on August 16, 2019 for a period of one year, until the conclusion of the next Annual General Meeting. It is now proposed to reappoint M/s Haribhakti & Co. LLP, Chartered Accountants (ICAI Firm Registration Number 103523W / W100048) as Statutory Auditors of the Bank from the conclusion of this AGM until the conclusion of the next AGM. In terms of Section 30 of the Banking Regulation Act, 1949, the Bank has received the approval of the RBI, vide letter dated August 11, 2020, for the appointment of M/s Haribhakti & Co. LLP, Chartered Accountants, as the Statutory Auditors of the Bank, for the financial year 2020-21. The proposal for their re-appointment is placed before the Shareholders for their approval at the ensuing AGM.

Independent Auditors Report

M/s Haribhakti & Co. LLP, Statutory Auditors of the Bank, have audited the accounts of the Bank for the year 2019-20 and their Report is included elsewhere in the Annual Report. Pursuant to Section 143(3)(i) of the Companies Act, 2013, the Statutory Auditors have also reported on the adequacy and operating effectiveness of internal financial controls system over financial reporting, which has been enclosed as Annexure A to the Independent Auditors Report.

Significant Audit observations, if any, and corrective actions taken by the Management are presented to the Audit Committee of the Board from time to time.

There are no qualifications, reservations or adverse remarks or disclaimers made in the Auditors Report.

Secretarial Audit

In terms of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Bank has appointed M/s Bhandari & Associates, Practicing Company Secretaries, to undertake Secretarial Audit of the Bank for the FY 2019-20. The Secretarial Audit Report submitted by M/s Bhandari & Associates is furnished at Annexure II, and forms an integral part of this Report.

The Secretarial Audit Report submitted by M/s Bhandari & Associates for FY 2019-20 does not contain any qualification, reservation or adverse remark.

Employees Stock Option Scheme

The Bank had instituted the Employee Stock Option Scheme (ESOS-2007) to enable its employees, including Whole-time Directors, to participate in the future growth of the Bank. Under the Scheme, Options can be granted, which upon exercise could give rise to the issuance of a number of shares upto 7% of the issued Equity Capital of the Bank from time to time. The eligibility and number of Options to be granted to an employee is determined on the basis of criteria laid down in the Scheme and is approved by the Compensation Committee of the Board of Directors.

In accordance with the approval granted by the Shareholders in the NCLT-convened meeting held on December 11,2018, the Bank instituted the IBL Special Incentive ESOS for BFIL Merger 2018 (ESOS 2018) with a pool of 57,50,000 options. The ESOS 2018 was adopted to ensure that the e-BFIL employees who became part of the Bank consequent to the merger, including such e-BFIL employees who were holding stock options under various e-BFIL Employee Stock Option Plans as of the Effective Date, were provided parity in relation to the stock options so held, as well as were adequately incentivized with further options.

An aggregate of 486,64,142 Options, comprising about 7% of the Banks Equity Capital, have been granted under the Scheme. Statutory disclosures as required by SEBI (Share Based Employee Benefits) Regulations, 2014 are given at Annexure III, and form an integral part of this Report.

The Annual Certificate on compliance with SEBI (Share Based Employee Benefits) Regulations, 2014 issued by Statutory Auditors of the Bank shall be made available on the website of the Bank, on the day of the AGM.

The Employees Stock Option Plan is administered by the Compensation Committee of the Board.

Statutory disclosures as mandated under Regulation 14 of the SEBI (Share Based Employee Benefits) Regulations, 2014, as amended, have been hosted on the website of the Bank at: https://www.indusind.com/in/en/investors/investor-landing/ investor-resources.html

Disclosure on compliance with Secretarial Standards

The Bank has complied with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and has systems which are adequate and are operating effectively.

Maintenance of Cost Records

Being a Banking Company, the Bank is not required to maintain cost records as per sub-section (1) of Section 148 of the Companies Act, 2013.

Directors Responsibility Statement

To the best of their knowledge and belief and according to the information and explanations obtained by them, the Directors make the following statement in terms of Section 134(3)(c) and 134(5) of the Companies Act, 2013:

(a) that in the preparation of the Annual Accounts for the year ended March 31,2020, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;

(b) that such accounting policies as mentioned in the Notes to the Financial Statements have been selected and applied consistently and that judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as at March 31,2020 and of the profit of the Bank for the year ended on that date;

(c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting frauds and other irregularities;

(d) that the Annual Financial Statements have been prepared on a going concern basis;

(e) that proper internal financial controls were in place and that the financial controls were adequate and operating effectively; and

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

Extract of Annual Return

The details forming part of the extract of the Annual Return in Form MGT-9, as required under Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014 are included in this Report as Annexure IV and form an integral part of the Annual Report.

The Annual Return of the Bank in the prescribed Form MGT-7 is available on the website of the Bank and at: https://www. indusind.com/in/en/investors/investor-landing/investor-resources.html

Particulars of Employees

The Bank had 30,674 employees on its rolls as on March 31,2020.

71 employees employed throughout the year, were in receipt of remuneration of Rs.1.02 crores per annum or more and 24 employees employed for the part of the FY 2020 and are in receipt of remuneration of Rs.8.50 lakhs per month or more.

The information containing particulars of employees pursuant to Section 197 of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. However, the above Annexure is not being sent along with this Annual Report to the Members of the Bank in line with the provision of Section 136 of the Companies Act, 2013. Members who are interested in obtaining the Annexure may please send an email to the Company Secretary at investor@indusind.com.

None of the employees hold (by himself or along with his spouse and dependent children) more than two percent of the Equity Shares of the Bank.

Details pursuant to remuneration of Directors and Employees in terms of Section 197 (12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 including the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016, are given at Annexure V and form an integral part of this Report.

Policy on Remuneration to Non-Executive Directors

In line with the guidelines contained in RBI Circular dated June 1,2015 on compensation of Non-Executive Directors of Private Sector Banks, and the approval of the Board of Directors, the Shareholders and the Reserve Bank of India, wherever applicable, the Remuneration was paid to the Non-Executive Directors in the form of Profit-related Commission in addition to Sitting Fees for attending meetings of the Board and of various Board Committees.

Mr. R. Seshasayee, Part-time, Non-executive Chairman of the Bank, retired from the Banks Board on July 24, 2019, on completion of his tenure.

Reserve Bank of India had, vide letter dated January 30, 2020, approved the appointment of Mr. Arun Tiwari, Non-Independent, Non-Executive Director, as Part-time, Non-Executive Chairman of the Bank for a period of three years.

Accordingly, Mr. Arun Tiwari assumed charge as Part-time, Non-Executive Chairman of the Bank with effect from January 31, 2020.

In line with the guidelines contained in RBI Circular dated June 1, 2015, on compensation of Non-Executive Directors of Private Sector Banks, the Nomination & Remuneration Committee and the Board of Directors, in their meeting held on December 4, 2019, subject to approval of Reserve Bank of India, approved payment of remuneration of Rs.30 lakhs per annum to Mr. Arun Tiwari as Part-time, Non-Executive Chairman. The approval of RBI was received on January 30, 2020 for payment of remuneration with effect from the date of his assuming charge as Chairman of the Bank.

The Non-Executive Directors, other than the Part-time Chairman, shall continue to receive Profit-related-Commission not exceeding Rs.10 lakhs per annum.

The annual remuneration payable to a single Non-Executive Director does not exceed 50% of the total annual remuneration payable to all Non-Executive Directors.

No Stock Options were granted to the Non-Executive Directors.

During the Financial Year 2019-20, the Board has reviewed and approved changes to the Policy on Remuneration to NonExecutive Directors. The Policy is hosted on the Banks website at the link given below:

https://www.indusind.com/in/en/investors/investor-landing/investor-resources.html

The Board of Directors have also formulated a Policy in relation to Key Management Personnel and Senior Management Personnel of the Bank. The said Policy is given under Disclosure on Remuneration at Note No. 12.6 of the Notes in Schedule 18 to the Financial Statements, which forms an integral part of this Annual Report.

Details on compensation to Whole-time Directors are given under the Report on Corporate Governance, which forms an integral part of this Report.

Particulars of Loans, Guarantees or Investments outstanding

Pursuant to Section 186(11) of the Companies Act, 2013, loans made, guarantees given, securities provided or acquisition of securities by a banking company in the ordinary course of its business are exempted from the disclosure requirement under Section 134(3)(g) of the Companies Act, 2013.

Particulars of Contracts or Arrangements with Related Parties

All transactions entered with Related Parties during the year under review were on arms length basis and in the ordinary course of business and therefore do not attract the provisions of Section 188 of the Companies Act, 2013.

Further, there are no materially significant Related Party Transactions during the year with any of the Related Parties, viz., Promoters, Directors and Key Management Personnel, Subsidiary and other related entities including IMFS, an Associate Company, which may have potential conflict with the interest of the Bank at large.

In view of the above, the disclosure under Form AOC-2 is not applicable to the Bank.

The Policy on Related Party Transactions as approved by the Board of Directors is hosted on the Banks website at the below given link:

https://www.indusind.com/in/en/investors/investor-landing/investor-resources.html

Consolidated Financial Statements

In accordance with Section 129(3) of the Act, Consolidated Financial Statement of IndusInd Bank Limited (the Bank), Bharat Financial Inclusion Limited (formerly known as IndusInd Financial Inclusion Limited) (BFIL) ("the Subsidiary") and IndusInd Marketing and Financial Services Private Limited (IMFS) ("the Associate") has been prepared and is included in the Annual Report.

In the preparation of the Consolidated Financial Statement, the Standalone Financial Statements of BFIL, the wholly-owned subsidiary for the year ended March 31, 2020, have been considered on a line by line basis by adding together like items of assets, liabilities, income and expenses, in accordance with Accounting Standard 21.

In accordance with Accounting Standard 23, the Standalone Financial Statements of IMFS, an associate in which the Bank has a 30% stake, has been considered in the Consolidated Financial Statement by adopting Equity Method.

Indian Accounting Standards (Ind As)

The Reserve Bank of India (RBI) issued a Circular in February, 2016, requiring Scheduled Commercial Banks to implement Indian Accounting Standards (Ind AS) from April 1,2018. RBI had, vide a press release dated April 5, 2018, deferred the implementation of Ind AS by one year. The legislative amendments recommended by the Reserve Bank towards implementation of Ind AS are still under consideration of the Government of India. Accordingly, RBI had, through a Notification dated March 22, 2019, deferred the Ind AS implementation till further notice.

Pursuant to the RBI Circular dated February 11,2016, the Bank formed a Steering Committee, comprising members from crossfunctional areas, for the purpose of reviewing and monitoring the progress of implementation. The Bank had set up a Working Group under the guidance of the Steering Committee and has conducted Gap Assessment and identified the differences between the current accounting framework and Ind AS, including the identification of the accounting policy options provided under Ind AS 101, First Time Adoption. The Bank had engaged the services of a professional firm with international experience in the field, to assist in the project of implementation of Ind AS. The Bank has obtained licenses for IT systems to automate Expected Credit Losses and Effective Interest Rate calculations towards implementation of Ind AS and the project is currently under implementation. The Bank continues to organize trainings for its teams across business and support functions. The Audit Committee of the Board of Directors has an oversight on the progress of the Ind AS implementation.

Some of the areas of significant accounting impact pursuant to the application of Ind AS are summarized below:

(a) Accounting impact on account of application of Ind AS at the date of transition, i.e. at transition date will be recognized in equity or other components of equity.

(b) The classification and measurement of financial assets will be driven by the business model of the Bank for managing those assets and the characteristics of the contractual cash flows of the assets. All financial assets will be classified as subsequently measured at amortised cost, Fair Value through Other Comprehensive Income (FVOCI) or Fair Value through Profit or Loss (FVTPL).

(c) Financial Instruments would be derecognised on transfer of significant risks and rewards, and not based on the legal form of the arrangement.

(d) Interest will be recognised in the Income Statement using the effective interest method and any directly attributable fees and costs would be considered to be an adjustment to the effective interest rate.

(e) All Derivatives would be required to be fair-valued and recognised on the Balance Sheet.

(f) Expense for Stock Options will be recognised in the Statement of Profit and Loss based on the Fair Value of the Options.

(g) Impairment requirements for financial assets carried at amortised cost or at fair value through other comprehensive income, including certain off Balance Sheet items are based on an Expected Credit Loss (ECL) model. The Bank will be required to recognise either a 12-months or lifetime ECL, depending on whether there has been a significant increase in Credit Risk since initial recognition. This will be significantly different from the current methodology for calculating the provision for Standard Assets and Non-Performing Assets (NPAs). The Bank has developed models for computation of ECL and is testing the same.

In accordance with RBI directions, the Bank has been submitting standalone pro forma Ind AS financial statements along with other computations to the RBI, from time to time.

Corporate Social Responsibility

In line with its CSR focus areas, the Bank is committed to various long term community development projects that have a large positive impact. Consistent with the requirements of Section 135 of the Companies Act, 2013 and CSR Rules, 2014, the Bank has set up a Board-level CSR Committee to look after the CSR initiatives. The Committee is headed by Mrs. Akila Krishnakumar as the Chairperson, Mr. Rajiv Agarwal, Mr. Sanjay Asher and Mr. Sumant Kathpalia as Members.

The composition of the CSR Committee is in accordance with Section 135 of the Companies Act, 2013.

The Banks CSR Policy and strategy directs and governs the Banks activities in focus areas, namely Environmental Sustainability, Rural Development and Inclusiveness, Preventive Healthcare, Education and Sports.

In FY 2019-20, the Bank continued its flagship initiative under the water stewardship wherein it undertook water conservation through various interventions viz. watershed management, restoration of natural water bodies, springshed water management, roof rain water harvesting, and availability & accessibility of safe drinking water through installation of water ATMs.

Under the theme Education, the Bank implemented enhanced education programme, early learning literacy outcomes, and road to school project which is expected to change the way in which education is delivered. The Bank provided mid-day meals to children in Government and Government aided schools in Odisha and Delhi improving their nutritional status.

IndusInd Bank supported inclusiveness of the differently abled along with gender inclusiveness / equality in Sports. The Bank had a separate non-business vertical for Sports which undertook spreading the culture of inclusivity and excellence in sports within and outside the organization. Currently five excellence programmes namely IndusInd Para Champions, IndusInd Blind Cricket, IndusInd Girl Power, IndusInd Hockey for her Excellence and Nurturing Rural Champions are being supported.

Under the focus area Preventive Healthcare, IndusInd Bank supported an intervention on reducing cancer burden by providing care, treatment, awareness and prevention services with supply of radiology equipments. The Bank also supports the treatment of children with cancer in Rajasthan. IndusInd Bank has increased the number of Mini Health Clinics to provide affordable primary healthcare to individuals from poor & lower Income Group families. Under the Stree Swabhimaan initiative, school girls were provided with sanitary pads in the State of Madhya Pradesh. These pads were manufactured by trained Village

Level Entrepreneurs, thus encouraging their livelihoods as well. The initiative is driven by awareness and outreach to effect behaviour change towards the issue of menstrual hygiene in the community.

To promote livelihood, the Bank supports skill development of disabled from the marginalized communities in various districts of Karnataka. The Bank supports long term residential rehabilitation program for substance abusing street children/ youth. The two-pronged approach involves rehabilitation (medical and psychological) from substance abuse and thereby enhance skills for employability. The Bank also runs training programmes in BFSI, Hospitality and Retail at Assam for the local unemployed youth to create livelihood for them.

The CSR Initiatives / Projects undertaken by the Bank are in accordance with Schedule VII of the Companies Act, 2013.

The Bank, on the basis of criteria prescribed under Section 135 of the Act, is required to spend at least two per cent of the Average Net Profits made during the three immediately preceding financial years in pursuance of their Corporate Social Responsibility Policy. Accordingly, the Bank spent Rs.108.15 crores towards various CSR activities specified in Schedule VII of the Companies Act, 2013.

The Report on CSR activities undertaken by the Bank is set out at Annexure VI and forms an integral part of this Report.

The CSR Policy is framed basis the activities permitted under Schedule VII of the Companies Act, 2013. Details of the CSR Policy and initiatives adopted by the Bank on CSR are available on Banks website at the link given below:

https://www.indusind.com/in/en/csr-policy.html

Sustainability

The Bank continues to deliver consistently greater value to the stakeholders while mainstreaming sustainability in to the business practices. The sustainability policy of the Bank lays out guidelines and targets in key areas of the environmental, social, economic and governance aspects. The Bank has committed targets on Environmental, Social and Governance (ESG) aspects and continues to improve the sustainability performance to surpass the ESG targets.

The Bank recognizes the fact that incorporating ESG issues in its operations as well as investment practices contributes towards betterment of the environment and society at large and also presents a good business case. As a socially and environmentally responsible organization, the Bank seeks to specialize the lending portfolio by increasing investments in development sectors and contribute positively to the nations developmental transformation in a sustainable manner.

In its endeavor to incorporating sustainability in to business, the Bank is meticulously setting up processes that reflect its long standing view - "Good Ecology is Good Economics". The Bank keeps abreast with latest research on corporate citizenship and responsible banking both globally and locally. The Bank has adopted various reporting schemes and guidance frameworks laid out by Standard Setters such as International Integrated Reporting Council (IIRC), Global Reporting Initiative (GRI), Carbon Disclosure Project (CDP), Dow Jones Sustainability Index (DJSI) etc. for assessment and accountability in sustainability performance.

The Bank consistently works to mitigate and reduce the impact of its business activities on the natural environment. The Bank continues to invest in energy efficiency, water conservation and greening the IT systems. The Bank promotes sustainable and ethical procurement practices through selection and on-boarding criteria for vendors and suppliers and emphasizes the importance of sustainability performance including human rights, labour laws adherence to standardised environmental social and governance norms by the upstream and downstream supply chain partners.

https://www.indusind.com/in/en/sustainability.html

Business Responsibility Report (BRR)

The Securities and Exchange Board of India (SEBI) have, vide their Circular dated December 22, 2015, mandated Top 500 Listed entities to include the Business Responsibility Report (BRR) as part of the Annual Report, describing the initiatives taken by the listed entity from an environmental, social and governance perspective, in the format as specified by SEBI.

In view of the above and in compliance with Regulation 34(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, BRR has been hosted on the Banks website at:

https://www.indusind.com/in/en/sustainability.html

Corporate Governance

Corporate Governance is essentially a set of standards, systems, and procedures aimed at effective, honest, transparent, and responsible management of a company within the applicable statutory and regulatory structures.

The Bank has adopted the industry best practices of Corporate Governance and aims to continue banking on the highest principles of governance and ethics. At IndusInd, Corporate Governance is more than just adherence to the statutory and regulatory requirements. It is equally about focusing on voluntary practices that underlie the highest levels of transparency.

The Governance framework is driven by the objective of enhancing long-term stakeholder value, without compromising on Ethical Standards and Corporate Social Responsibilities.

The Banks guiding principles are also articulated through the its Code of Business Conduct and various initiatives taken to maintain transparency by communicating with the Shareholders on developments in the Bank, the Bank has also set up various sub-Committees of the Board to bring in more efficacy and transparency in the workings.

The Bank continues to focus on better, complete and timely disclosures to the Stock Exchanges for dissemination to the Stakeholders. Detailed disclosures regarding Corporate Governance are provided in the Corporate Governance Report, which forms an integral part of this Annual Report.

Management Discussion and Analysis Report

The Management Discussion and Analysis Report, as prescribed under Regulation 34(2)(e) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms part of the Annual Report.

Significant and Material Orders passed by the Regulators or Courts

There were no significant and material Orders passed by the Regulators / Courts that would impact the going concern status of the Bank and its future operations.

Material Events that have happened after the Balance Sheet date

No material changes and commitments affecting the financial position of the Bank have occurred between the end of the financial year of the Bank to which the Financial Statements relate and the date of this Report.

For the impact of COVID-19 on the performance of the Bank and the Group, please refer to "Note No. 5.13 of Schedule 18 - Notes forming part of the Accounts" of the Financial Statements of the Bank and "Note No. 12 of Schedule 18 - Notes forming part of the Accounts" of the Consolidated Financial Statements of the Bank.

On August 25, 2020, an Extra-ordinary General Meeting of the Bank was convened wherein the Shareholders had approved, by way of a Special Resolution, the proposal to allot upto 6,27,47,245 equity shares of the Bank at a price of Rs.524 per equity share, to a select group of investors including one of the Promoter entities of the Bank.

Awards and Accolades

The year has been quite rewarding for the Bank, with many accolades and awards coming the Banks way. The Bank has been bestowed with many awards for excellence in managing IT and Data Analytics for Business Outcome, Payment Initiative amongst Private Sector Banks, Payment and Collection Solution, Technology Solutions to provide a suite of services enabling a superior customer experience, Innovative Use of Technology in Customer Service, and Best Corporate Social Responsibility Practices (CSR).

The Bank won the Best Bank Award in the mid-sized bank category at the 24th edition of the Business Today - Money Today Financial Awards. Mr. Romesh Sobti, Former Managing Director & CEO, was honoured with the Lifetime Achievement Award at the Financial Express Indias Best Banks Awards 2019. The Bank was also awarded the Spirit of Innovation award for the launch of its IndusCorp, Duo Card, Nexxt Credit Card and Data Warehouse & Power BI Implementation Projects, at the 8th Edition of the Finnoviti 2020 Conference & Awards.

Abridged details of the awards feature in the initial pages and Management Discussion and Analysis Report, which is an integral part of this Annual Report.

Cautionary Statement

Certain statements in the Directors Report and in the Management Discussion and Analysis document describing the Banks objectives, estimates and expectations may be forward-looking statements within the meaning of applicable Securities Laws and Regulations. Actual results could differ substantially from those expressed or implied. Important factors that could make a difference include economic conditions in the domestic and overseas markets, changes in Laws / Regulations, and other incidental factors.

Policy on Prevention, Prohibition and Redressal of Sexual Harassment at Workplace

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

The disclosures relating to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 is included in the Corporate Governance Report, which forms an integral part of this Report.

Acknowledgements

The Directors are grateful to the shareholders for the trust and confidence reposed by them in the Bank.

The Directors are also grateful to the Reserve Bank of India, the Ministry of Corporate Affairs, Securities and Exchange Board of India, Insurance Regulatory and Development Authority, and the Stock Exchanges, for the guidance and support extended by them to the Bank.

The Board expresses its deep sense of appreciation to all employees for their excellent performance, strong work ethic, and untiring commitment, which qualities have contributed to the Banks continued progress in a challenging environment.

The Board thanks its valued customers for their patronage, and looks forward to the growing of this mutually supportive relationship in future.

For and on behalf of the Board of Directors
Place : Mumbai Arun Tiwari
Date : August 26, 2020 Chairman
(DIN: 05345547)