IndusInd Bank Ltd Management Discussions.

Macro-economic and banking environment

Fiscal year 2019-20 was an extremely challenging year for the Indian economy. It witnessed a broad-based and sequential slowdown in growth over the year, leading up to a sudden stop in economic activity, following a national lockdown in response to COVID-19 pandemic in March. As a result, both monetary and fiscal policy support was employed to counter the slowdown during the year. On the monetary policy front, Repo rate was cut by 1.85% over FY2019-20, with 0.75% reduction in March coming specifically to counter the pandemic related activity disruption. On a positive note, re-election of a stable BJP led NDA government at the Centre in May 2019, provided continuity for overall economic policy setting. Macro-economic stability was broadly maintained. Headline CPI inflation remained below the 4% target for a better part of the year, current account deficit narrowed helped by a sharp fall in oil prices and exchange rate movements of the Rupee versus the US dollar remained orderly, helped by net capital inflows. Banking sector continued to face asset quality pressures, with exposures to various sectors, particularly NBFCs, telecom and real estate coming under stress. Global economic environment remained challenging with US-China trade tensions adversely affecting global trade, exports, manufacturing and investments. Major global economies witnessed a synchronised slowdown over 2019, though the year ended with US-China agreeing on a trade deal. In first quarter of calendar year 2020, pandemic related containment measures and social distancing norms, severely impacted growth, capital flows and trade across the world, with China most severely affected. IMF projects global economy to see its worst recession in 2020 since the Great depression of 1930s.

As per the latest official estimates, real GDP growth slowed down to a 11-year low of 4.2% from 6.1% in FY2018-19. During the year, consumption and investment activity decelerated. Private consumption growth at 5.3% y-o-y, slipped to its weakest in a decade and investments registered a contraction of -2.8%. Government expenditure remained the main driver of activity, with 11.8% y-o-y growth in FY20, on top of 10% growth in FY19. As a result, the fiscal deficit for FY20 widened to 4.6% of GDP from 3.4% in the previous year, as the central government kept budget spending largely unchanged despite a shortfall in tax revenues. Notably, a major rationalisation of corporate tax system was announced in September, lowering the peak rate and curbing exemptions available. And, in the budget for the FY2020-21, income tax rationalisation was also announced on similar lines. In May 2020, the central government announced Rs.20 trillion economic package to provide liquidity and credit support to businesses, especially MSMEs, develop farm sector infrastructure and to ensure livelihoods for migrant workers. Alongside major long term structural reforms were also initiated.

The onset of COVID-19 pandemic prompted a sharp cut in the Repo rate over March and May 2020, by an aggregate of 1.15% and infusion of durable liquidity worth over 4.7% of GDP, targeted to support flow of credit to various constituents of the financial system and corporate bond market. Prior to this pandemic response, monetary policy was already in an accommodative mode, with a cumulative reduction in the Repo rate by 1.1% from April 2019 to February 2020, on the back of headline CPI inflation remaining below the target of 4% for a better part of the year and weak demand conditions. Below-potential growth in the economy, saw monetary policy becoming much more supportive as the year progressed. The RBI introduced a new liquidity management framework, under which it started long-term repo operations to provide durable liquidity to banks. The central bank also put in place a new external benchmark regime for loans to speed up transmission of policy rate cuts to bank lending rates.

Banking sector saw subdued credit growth during the year, as economic slowdown became more entrenched, especially towards the second half, when activity sluggishness became more pronounced and risk aversion increased. Bank credit growth fell from about 14.5% at the beginning of the year to 6.2% by March 2020. Credit growth to industry decelerated to 0.7% y-o-y in March 2020 from 6.9% in March 2019. Credit growth to services saw a much sharper slowdown to 7.4% from 17.8% over the same period. On a positive note, asset quality stabilised and capital adequacy ratios improved. Gross NPA ratio of commercial banks stood at 8.3% in March 2020 compared to 9.1% in March 2019, while their CRAR increased from 14.3% to 14.8% over the year. Exposures to non-bank financial sector remained a major area for concern, as the sector saw its asset quality come under stress and face a liquidity crunch on the back of asset-liability mismatch issues. Financial distress in a private sector bank and the subsequent RBI led restructuring plan in February 2020, was another major event for the sector, which raised depositor and investor concerns around contagion to other banks and financial institutions.

Following the national lockdown, asset quality concerns increased with several sectors witnessing a sudden stop in activity. In order to avoid a liquidity crisis and ensure financial stability, the RBI reduced banks cash reserve ratio (CRR) by 1% for the first time in 7 years, provided targeted long-term liquidity facilities for banks to buy corporate bonds and on-lend to non-bank financial institutions. The central bank also announced a 3-month moratorium on all loans until August 2020, in order to help borrowers tide through their own cash flow problems. Furthermore, the RBI asked banks to not pay dividends from their retained income for FY20 in order to help them strengthen their capital position.

Indias external sector fundamentals improved over the year, as the current account deficit (CAD) narrowed while net capital inflows picked up, allowing a build-up of foreign exchange reserves by the RBI. The current account went into a surplus in Q4 after narrowing over the year. For whole of FY20, CAD shrank to 0.9% of GDP from 2.4% in FY19. The contraction in the CAD was primarily on account of a lower trade deficit and a rise in net services receipts. Capital inflows remained robust and exceeded the CAD. Net FDI inflows at $42.7 billion were higher than $30.7 billion in FY19. Foreign portfolio flows, however, registered net outflows, on account of a large sell-off in March with rising risk of global recession. During FY2019-20, foreign exchange reserves increased by $65 billion, ending the year at $475 billion, equivalent to 11.8 months of imports. During Q1FY2020-21, reserves grew further to cross $500 billion mark.

The year ended with COVID-19 pandemic public health crisis causing severe and unprecedented disruption in economic activity all over the world. The IMF projects that as a result of the pandemic, the global economy would contract sharply by -4.5% in 2020, much worse than during the 2008-09 financial crisis. This will be the worst global growth outcome since the Great depression, as developed and developing countries have been hit alike. India too is likely to see negative GDP growth in FY2020-21, for the first time in 40 years, following the most stringent containment measures. Massive monetary easing and fiscal support (both direct and indirect) has already been announced worldwide. However, given the nature of the pandemic, there is heightened uncertainty on its pathway and therefore around the duration of containment measures. While the Government and the RBI have announced a whole host of measures, including long-term reforms, to ease the burden on the vulnerable sectors and individuals, contraction in economic activity will affect already weak consumption and investment. More fiscal, monetary and regulatory policy support will be needed to avoid permanent damage to the economy. Banking industry will face the most severe headwinds, with a heightened risk of loan impairments, debt defaults and asset market sell-offs, leading to requirements of higher provisioning and capital.

BUSINESS PERFORMANCE

The financial year under review saw deceleration in growth rate in the Indian economy and a challenging macroeconomic environment, a sharp moderation in the global crude oil prices, weakening of the Rupee against the Dollar, strain on the banking sector caused by distress of a private sector bank, and concerns on the persistently high levels of NPAs in the banking space. The Composite Scheme of Arrangement (Scheme) involving, inter alia, the merger of the erstwhile Bharat Financial Inclusion Limited (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), after 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 the wholly owned subsidiary, IndusInd Financial Inclusion Limited, was changed to Bharat Financial Inclusion Limited.

Upon the Scheme coming into effect, the entire undertaking of e-BFIL including its assets, liabilities and reserves and surplus stood transferred to and vested in the Bank, with effect from January 1, 2018, the Appointed Date. In consideration of such transfer and vesting, 639 equity shares of the Bank were allotted to shareholders of e-BFIL on a fully paid basis for every 1,000 equity shares of e-BFIL held by them on the Record Date, i.e., July 4, 2019. 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 fully owned subsidiary, the Bank was allotted 4,37,03,500 shares of Rs.10 each fully paid. 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.

Accounting effects for the Scheme was given in accordance with the Scheme approved by the Mumbai Bench of the National Company Law Tribunal and the applicable Accounting Standards.

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 continued to spread across India, causing an unprecedented level of disruption on socio-economic front across the country. Globally, countries and businesses were under lockdown. Considering the severe health hazard associated with COVID-19 pandemic, the Government of India declared lockdown effective March 25, 2020. Government of India and the Reserve Bank of India have been taking a slew of measures to reduce the distress across various sectors of the economy, including in Banking and Financial Services. The Bank has adhered to the requisite regulatory prescriptions and offered moratorium on payment of interest and repayment of principal for three months effective March 1, 2020 to eligible borrowers. The extent to which COVID-19 pandemic will impact the Banks operations and financial results is dependent on future developments, which were highly uncertain at the onset, but seem to suggest some amelioration in economic activity as the country moves to the unlock phases with concurrent ramp up in the health infrastructure. In view of the pandemic, the Bank created an additional countercyclical buffer / floating provision amounting to Rs.260 crores, besides the regulatory minimum incremental provision of Rs.23 crores.

The salient features of the Banks Operating performance during the year 2019-20 are summarised in the following table. Since the merger of e-BFIL became effective during FY2019-20, the Results for the year are not comparable to the Results of the previous year.

Particulars FY 1 9-20 FY 18-19 Y-o-Y Growth
Interest Earned 28,782.83 22,261.15 29.30%
Interest Expended 16,724.09 13,414.97 24.67%
Net Interest Income 12,058.74 8,846.18 36.32%
Non-Interest Income 6,951.31 5,646.72 23.10%
Revenue 19,010.05 14,492.90 31.17%
Payment to Employees 2,208.48 1,853.51 19.15%
Other Expenses 6,028.86 4,551.17 32.47%
Operating Expenses 8,237.34 6,404.68 28.61%
Profit before Depreciation, Provisions and Contingencies 11,050.68 8,317.07 32.87%
Depreciation 277.97 228.85 21.46%
Operating Profit 10,772.71 8,088.22 33.19%
Provision and Contingencies 4,652.10 3,107.65 49.70%
Profit Before Tax 6,120.61 4,980.57 22.89%
Provision for Tax 1,702.70 1,679.47 1.38%
Net Profit 4,417.91 3,301.10 33.83%

Business Performance Highlights

During the financial year 2019-20, the Bank witnessed robust growth in its topline as well in operating profits. Net Profit rose by 33.83% over the previous year to Rs.4,417.91 crores from Rs.3,301.10 crores. Operating Profit (before Provisions and Contingencies) increased by 33.19% to Rs.10,772.71 crores from Rs.8,088.22 crores.

Net Interest Income of the Bank increased by 36.32% to Rs.12,058.74 crores from Rs.8,846.18 crores. Yield on Advances improved to 11.97% 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. The Net Interest Margin for the year improved to 4.14%.

Non-Interest Income rose by 23.10% to Rs.6,951.31 crores from Rs.5,646.72 crores. 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 in the previous year.

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. The extended network of the Bank included 2,760 ATMs, 2,071 branches of BFIL, and 853 outlets of IndusInd Marketing and Financial Services Private Limited, an associate entity.

Net Non-Performing Assets of the Bank improved to 0.91% as on March 31, 2020, and Return on Assets for the year stood at 1.54% (annualised).

Consequent upon the merger of e-BFIL, the IBL Special Incentive ESOS for BFIL Merger 2018 (ESOS 2018) became effective 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 incentivised with further Options. During the year under review, the Bank had granted a total of 67,72,842 options which included 14,85,036 options granted under ESOS 2007 and 52,87,806 options were granted under ESOS 2018.

CONSUMER BANKING

The Consumer Banking business continued its growth story with strong revenue and balance-sheet growth across business segments, and continued focus on retailisation and digitalisation. The Banks journey on its Digital agenda

continued apace, with more than 50% of its sales across retail liabilities, assets and wealth products done via digital platforms, helping drive sales efficiency.

Digital Transactions touching 84% of the overall transactions, up from 80% at the beginning of the year, helping optimise back-end costs. Digital Transactions throughput as percentage of Retail Deposits was also at par with best-in-class, indicating stickiness of the retail base.

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As part of the Current Account Business, the Bank has launched the Digital Mobile App for opening Current Accounts for almost all types of business entities, viz., Individuals, Proprietorship Firms, Partnership Firms, and Private Limited and Public Limited Companies. This has helped the Bank in reducing the Turn-Around Time (TAT) for setting up new relationships to 1-2 days from the earlier timespan of 6-7 days. This is focussed around capturing branch neighbourhood businesses, via feet-on-street on spot sales and at later stage via the Do-It-Yourself (DIY) module.

On the deposits side, compelling customer proposition via product differentiators and competitive pricing have remained the cornerstone of our brand promise that has helped drive business growth. Retail Deposits grew 34% y-o-y, amongst the best-in-class, with new client acquisition scale-up across our distribution franchise which is the 4th largest in the private banking space, coupled with the launch of digital e-KYC based account opening both, on the Mobile App and our Website. Online Account Opening for NR and Current Account customers were launched as well and have helped improve traction in these target client segments. In addition, partnership with other financial services players, viz., Upstox, Paytm, besides Bharat Financial have been scaled up through the year for new customer and deposit mobilisation.

The Bank continued to invest in digital engagement and productivity tools for both, customers and employees. The Bank has launched Natural Language based Chat bot service both on our Website as well as on WhatsApp for improved engagement with new and existing customers. Efforts to migrate customers at each touch point in the customer journey from account opening onwards, have helped drive up Digital Transactions to 84% of the overall transactions, up from 80% last year, with UPI, Mobile and POS spends being the biggest driver of customer stickiness.

For Merchant clients, the Bank went live with acceptance solutions on UPI 2.0 and NCMC cards, taking the digital merchant base of the Bank to over 1 lakh as one of the fastest growing banks in this space. The Bank secured the joint 3rd rank across all private and public sector Banks in Governments Digital Payments Scorecard for FY2019-20, underlining our investments in merchant payment ecosystem and focus on digitising payments for our retail customers. The Bank has been at the forefront of Central Governments initiative of digitising transit payments, by collaborating with NHAI for the rollout of the UPl-based FASTag App for the public at large.

The Affluent Business Team of the Bank caters to the Banking and Wealth Management needs of the top consumer clients of the Bank. This has been the fastest growing segment in the Bank with 50% growth in customer base in FY20.

The marque program PIONEER, which was launched in mid-2018, completed first full year of business, expanding to 10 major cities in FY20 with a dedicated 300+ relationship management and service team and 6 state-of-the-art PIONEER Lobbies. In addition to the best-in-class proposition, the program relies on service as the key differentiator and a holistic approach towards client experience. Its footprint is planned to be increased to 50 cities in FY21, doubling the Balance Sheet, AUM, and Revenues.

Being the best-in-class proposition in the market for the Affluent segment, PIONEER has also been extended to NRI clients. Built on the values of trust, transparency, simplicity,

and superior service, inspired by the Indus Valley Civilisation, the PIONEER programme has been crafted for the pioneers of today.

The Business Banking Group (BBG) which fulfils the financial needs of the Banks MSME customers followed a cautious approach towards new customer acquisition during FY20, looking to the overall economic scenario. Increased emphasis was laid on portfolio granularity through expansion of the client base: 85% of the customers acquired during the year were of ticket size of less than Rs.2 crores, and almost 50% of these were sourced through the Banks own branch network.

The Bank enhanced its product offering for this segment with the launch of GST and Banking Secured Overdraft product during Q3-FY2020. This is a score-based template product which relies on customers banking and repayment behaviour, GST payments, and collateral, for making instant appraisal decisions.

Identification of SME clusters at nearby branches were a key focus for branch lead acquisition and this will continue in FY21, besides, greater use of digital applications to improve productivity and customer experience.

Besides fulfilling the entire banking needs of its SME customers, BBG also enhanced its focus on strengthening its overall client relationships by fulfilling all the banking needs of such business owners through offering the entire gamut of banking products including Personal Accounts, Investment Management, Insurance and Cash Management, thus increasing the overall wallet share and fee generation from such relationships.

Loan Against Property (LAP) business continued on its steady growth path, keeping the portfolio metrics robust. Both Loan Book yield and fresh acquisition yield remained strong despite a competitive market and downward rate-cycle. With consistent focus on leveraging the Branch distribution network and cross-sell opportunities, share of internal sourcing remained upwards of 40%. The Bank continues to distribute Home Loans in association with HDFC Ltd. and it remains one of the key Asset products distributed through the branch network providing lucrative cross-sell opportunities along with it.

Personal Loans business continued on its rapid growth path, while contributing strong yield to the Assets portfolio. The performance of the Book continued to be robust, growing by 46%, while exhibiting strong portfolio metrics. The product

has a live portfolio of more than 3 lakh accounts, with ~1.86 lakh accounts on-boarded in the year 2019-20. Cross-sell synergy with the Consumer Finance Team helped expand the footprint into new geographies and now contributes to a sizeable 24% of the Personal Loan Book, overall cross-sell book stands at 59%, the significant contributor being cross-sell to Savings Account clients, sourced and fulfilled completely using digital platforms.

Credit Cards receivables grew by 38% over the year while maintaining a strong profitability and core portfolio fundamentals. The business significantly improved its cost efficiency during the last financial year with strong revenue momentum and effective cost management. The business saw a growth of 28% increase in Cards in force, and crossed 1.35 million clients during the year. The yield remained stable while the EMI Book grew by 65% during the year. Indias first battery-powered Credit Card with functional buttons, the Nexxt Credit Card, has been a key driver of the EMI business at the Point of Sale (POS), clearly showcasing the strong adoption of the new feature by customers who are using the EMI option for their big-ticket purchases. Fee income and interest income were robust and contributed in equal measure to the overall revenue. The business is being ramped up by the effective use of low cost digital channels, and creating platforms for straight-through customer journeys. The business continued to be the key growth area, with a strong focus on risk management and profitability. The business will continue its focus on driving the cross-sell agenda across the vast data pools of internal customers, through a process of pre-qualification of low-risk and high-profit clients.

The Commercial Card business, which provides payment solutions for corporates, continues to demonstrate growth in key metrics and has been a key product proposition for the Banks corporate clients. In the last financial year, the spends on the commercial cards products grew by 18%. The business has diversified into new client segments and has deepened its existing client base by offering new products. The Bank has, in the last financial year, launched Contactless Corporate Cards for the Travel and Entertainment segment which is equipped with tap to pay feature to help faster payments at merchant outlets. Contactless payment is the latest in secure technology for safe online shopping and Point of Sale (POS) transactions. The Bank has also identified a new growth area strategy which focusses on payment solutions via partnerships with new age fin-tech players to offer technology platforms to reduce operational costs for the client.

The Bank had taken a conservative approach in growth in Business Loans (Unsecured SME) and shifted its focus to strengthen collections. As a result, Business Loan Book remained fiat at Rs.1,076 crores as of March 2020 against earlier reported y-o-y growth of 28%. With more focus on collection, the Bank was able to hold portfolio quality in FY20, even as the industry faced challenges with increased default in unsecured SME. This will also help the Bank to handle expected collection challenges faced in unsecured lending with better efficiency post COVID-19 in FY2020-21.

During the year, the Bank also entered into partnerships with fin-techs for digital lending under revenue-sharing and risk-sharing models and acquired about 2,000 new customers with negligible delinquencies in portfolio.

Retail Agriculture

The Retail Agriculture Business witnessed steady growth through expansion in rural and semi-urban locations, operational in 98 districts of Madhya Pradesh, Gujarat, Haryana, Punjab, Kerala, Rajasthan, Maharashtra and Chhattisgarh. More than 10,000 relationships with over 15,000 farmers have been created under the Indus Kisan Credit Card (KCC) product for taking up traditional Agricultural / Agri-allied activities, bringing nearly 12% growth in the Book over the previous year. As a part of the Banks commitment towards improving digital literacy, all customers are made aware and empowered in making cashless transactions through RuPay Debit Card and Net / Mobile Banking.

Key focus remains on deepening the high-potential Agri markets and exploring opportunities in new markets. Loans have been extended to Small and Marginal Farmers, Women beneficiaries and other Weaker Sections, thus establishing the Banks commitment to service these segments. The Banks regular engagement with the Agri value chain stakeholders allows it to stay abreast with the latest developments and accordingly provide the best product offerings to its customers.

The Bank has built a highly diversified portfolio since its launch, ranging from funding for traditional agricultural activities to high-tech farming / Agri-allied activities, and has crossed the Rs.1,670 crores mark as on March 2020.

The Banks robust portfolio is backed by experienced Agri professionals, efficient processes and risk monitoring tools which enable to identify risks at early stages and take timely preventive measures.

IndusInd Bank is among the first commercial banks to offer Paperless approval for KCC, thereby underlining the Go Green initiative of the Bank. As a part of financial awareness commitment towards its customers, the Bank offers a unique insurance which secures customers loan liabilities in case of any death or disability, and educates them to avail ^he benefits of PMFBY (Crop Insurance) Scheme.

Client Experience

The FY2019-20 Customer Experience Strategy was to Redefine Convenience through a customer-centric approach by embedding the key principles of Seamless, Easy, Fast and Transparent (SEFT). The endeavour was to deliver superior customer experience with key principles of SEFT embedded in our culture, processes and technology solutions.

The Bank remained committed towards creating distinctive Customer Experience (CEX) as a source of sustainable competitive advantage in FY20. Client journeys were continually redefined and made client-centric through digitisation, artificial intelligence, process re-engineering and improved client communication. The Bank has invested in a state-of-the-art Customer Relationship Module (CRM) aiming to redefine client experience by significantly enhancing its servicing capability with redesign of client journeys through straight-through processing, definition of priority queues, personalisation of delivery and redefined client engagement and coverage principles.

The year saw a dramatic increase in digitisation of client journeys, with over 85% of Savings Accounts and over 60% of Current Accounts getting digitally acquired. Over 92% of the fixed deposits were instantly opened and over 97% of the wealth management clients got digitally on-boarded. Over 93% of service requests were resolved within the defined turnaround time and almost two-thirds of the surveyed clients gave the Bank top rating in surveys across client journeys.

The customer experience strategy focusses on delivery of products and services through effective use of digital channels as well as through human interactions with enabled and experienced frontline staff. Dedicated Service Managers are introduced to offer personalised services to Banks Resident and Non-Resident affluent clients. Technology is leveraged to execute personalised client engagement programs based on client offers of the most appropriate products and services to clients.

There has been an ever-growing focus on enhancing the technical and behavioural skills of the front line staff. The Bank had enabled both, face-to-face and electronic delivery of training modules to enhance the capability levels to improve the quality of interactions.

The Bank has continually monitored and set quantitative targets to improve customer satisfaction and experience standards. With the objective of assessing the efficacy of its service delivery standards, the Bank conducts real-time, continuing and independent surveys based on the type of interaction and channel used by the customer. The feedback

of the surveys is assessed to make further enhancements and innovate delivery platforms and internal processes.

The Bank shall continue to focus on customer-centric initiatives and innovations to digitise, simplify and personalise its suite of products and services with an objective to increase the share of wallet and increase transaction intensity on the channel, as chosen by the client.

Innovation

New launches, viz., Virtual Debit Cards, NLP-based Banking on WhatsApp, AI Chat Bot IndusAssist ensured that the customers remained engaged with new technology-led innovations that the Bank has been at the forefront of. Partnerships with market leaders in industries ranging from fin-tech to transit were made live for value added services to our esteemed patrons. The Bank launched IndusStox, an industry-first, completely digital 3-in-1 trading savings account with Upstox, a leading online brokerage firm. On the transit side, the Bank now powers NHAIs UPI FASTag App to enable customer of any bank to procure and recharge their FASTag via UPI.

Distribution

Apart from opening 161 new branches and 85 new banking outlets, the ATM network expanded by setting up 255 new ATMs. The Bank has also partnered with White-Label ATM Operators to set up co-branded ATMs. The total number of branches as on March 31,2020 stood at 1,911 (including 150 Business Correspondence Units).

Credit Cards ^

The Banks Credit Cards business maintained a consistent and robust growth, fuelled by strong digitisation initiatives and data-driven portfolio actions. The quality of customer receivables has continued to be healthy, growing by 38%.

The Cards business crossed 1.35 million clients during the year. The asset quality is within acceptable risk and the yields on the portfolio remain stable. Fee and Interest contributed equally to the overall revenue. The business is ramping up using low cost digital channels which will enable the business to grow without compromising the Return on Assets.

The business continues to expand its distribution through the branch network and through the adoption of a strong cross-sell strategy. Increased focus on acquisitions through online and digital channels has also contributed to the growth, delivering scale and efficiency.

Under the Banks instant, real-time credit card approval portal, branded as "Easy Credit", a new feature of issuing Card on Phone was introduced. The portal caters to existing Savings Account holders who are pre-approved for Credit Cards, and this new functionality enabled customers to apply for Cards over phone.

With the revised regulations permitting performance of KYC through video, the Bank has already initiated the development of a Video KYC platform for Credit Card applicants in partnership with BankBazaar, the countrys leading financial marketplace. This integration will provide a completely digital-fulfilment model for credit card

applications and is expected to be a pioneer in such capabilities in the credit cards space. The product suite has been further strengthened, with relevant offerings and luxury brand tie-ups, keeping in mind lifestyle preferences across various customer segments.

A new Credit Card product Celesta was launched on the Amex network. A super-premium offering rich in lifestyle benefits, the product caters to the high-end customer segment. The product carries best-in-class features like unlimited domestic lounge access and a fixed complimentary number of games / lessons in golf, amongst others.

The Business Team continued to work with leading and emerging brands, both local and international, towards creating strong propositions for the Banks customers. The business tied up with a new leading resort during the year, offering high-end luxury stay options to Card holders. Such tie-ups further complement the wide range of partnerships and tie-ups that the business has with leading brands. These tie-ups and partnerships go a long way in driving the customer spends agenda for the Cards business and towards making it a preferred method of payment for customers.

Re-crafting of the Banks top PIONEER Heritage Card shall be done soon. The Card was launched in September 2018 as part of the Banks PIONEER Banking Program to cater to the countrys High Net Worth Individuals (HNIs). There is strong focus on shifting the fulfilment of key features and offerings to the digital mode through an online journey. The business has moved to NFC-enabled Contactless Credit Cards for all new Card issuances, to embrace the latest payment technology along with the highest level of security.

Consumer spends increased by 28% on the basis of strong customer engagement programs supported by alliances with prominent brands in key spend categories. With a focus on bringing differentiated, relevant and value-based products to customers, Business has continued to partner with leading local and international brands to bring best-in-class benefits and features to its customers. Adoption of convenient, secure and contactless payment technologies, such as, Visa Pay Wave, MasterCard Pay Pass and Samsung Pay have helped in delivering a seamless payment experience to customers.

The Bank has product offerings across all three leading network partners, MasterCard, Visa and Amex.

CONSUMER FINANCE

The Consumer Finance Division (CFD) extends funding for a wide range of Vehicles / Equipment, which include Commercial Vehicles, viz., Heavy, Light and Small Vehicles used both for goods and passenger applications, Passenger Cars, Utility Vehicles, Two-Wheelers, Tractors, and Construction Equipment such as Excavators, Loaders, Tippers, Cranes, etc. Finance is extended for both, new and used assets in all the above segments. Housing loans to Low cost / affordable housing segment has also been launched in line with the accent on housing for all, focus by the Government of India.

Aggregate disbursements made during the year stood at Rs.32,664 crores as against Rs.34,706 crores in 2018-19, a drop of 6% caused by the slowdown in the overall vehicle and construction equipment sales, especially commercial vehicles which forms a signification portion of the Divisions Loan Book. New Loan Accounts numbered 13.14 lakh loans as against 12.84 lakh in 2018-19. The focus during the year was optimising the product mix to maximize yields, while maintaining portfolio quality despite the industry sluggishness.

During the year 2019-20, loan disbursements towards purchase of new vehicles was Rs.25,185 crores as against Rs.28,398 crores in 2018-19, a 11% de-growth y-o-y, even as used vehicles disbursement was Rs.6,776 crores as against Rs.6,046 crores in 2018-19, an increase of 12% over the previous year.

This Division earned Commission Income of Rs.71.39 crores through distribution of various third-party insurance products of Cholamandam MS General Insurance, the Banks strategic partner for bancassurance in the General Insurance segment.

The operations of Consumer Finance Division are solidly supported by the Document Storage and Retrieval Facility at the Banks Karapakkam Unit (near Chennai), which handles processing of loan documents and maintenance of records. This Unit handled over 2.6 million loan bookings and closure transactions and over 50 million customer service / accounting transactions during the year 2019-20. The processing and vaulting facility at Karapakkam has state-of-the-art facilities in terms of data / equipment protection mechanisms and is equipped with access rights with sensors to facilitate monitoring of document movement within the Centre.

The Bank has a Data Centre within the Airtel Data Centre facility at Siruseri, on the outskirts of Chennai, with state-of-the-art security systems, with a backup at the Banks G. N. Chetty Road premises, as part of Business Continuity Planning.

Sourcing of applications has been through Android Tablets for almost all products which has reduced the Turn-Around-Time (TAT) in the credit delivery process and enabled seamless credit and business approval process. Sourcing through Tablets for the Affordable Housing Segment is under implementation in a phased manner and will be completed by mid-2020-21. In order to be in line with the latest technology for handling collections, hand-held terminals have been replaced with mobile devices, and with the entire field collection team using the App on the Bank-supplied Android Mobiles, the deployment is one of the largest in the banking industry. These initiatives have led to improvement in process efficiencies and customer experience.

CORPORATE AND COMMERCIAL BANKING GROUP

Corporate & Investment Banking provides Universal Banking Solutions to large Indian groups and multinational corporates. Over the years with continued addition of New to bank clients, the unit has become a banker to and developed deep relationships with almost all large corporate houses and large market cap companies in India.

? This group has increased penetration in the top corporate groups through a variety of working capital and transactional facilities including trade products, foreign exchange products and Investment Banking activities.

? It has a strong reputation as a provider of innovative solutions for complex financing requirements. Structured solutions for Trade Finance and Foreign Exchange hedging have been developed by the group to suit unique client needs.

? Over the years the group has built a quality portfolio by minimising exposures to high risk industries.

? During the past financial year, the group has added over 150 New to Bank large corporate clients.

? The groups business grew well in both Assets and Liabilities. The groups deposit book has registered a good growth with renewed focus to enlarge the deposit base and grow granular deposits.

? To sharpen the focus on certain sectors the group created the following specialisations:

? Healthcare: Specialised offering of banking products to the Indian healthcare industry consisting of:

• Hospitals: Primary, secondary & Tertiary care units- Super & multi-speciality.

• Diagnostics: Multi-location diagnostic chains augmenting medical diagnostics.

• Others: Medical equipment/consumable manufacturing.

? Financial Services: Offers products to Large landscape of Financial Services Players - NBFCs/HFCs/Insurance Companies/Mutual Funds/Institutions.

? Multinational Corporations: Targets MNCs having large businesses in India with significant local banking requirements and Financial Sponsors who are active through M&As in India.

Investment Banking

With over 100 years of Financial Services Expertise (aggregate team experience), the business has developed significant underwriting and syndication abilities. The unit has showcased its structuring capabilities through its deep understanding across a variety of sectors. The Investment Banking offerings of the Bank are trusted by leading Indian business houses and it services clients in the fields of Infrastructure, Energy, Healthcare, Metals and Telecom.

Investment Banking unit provides Strategic advisory services to aid growth initiatives and offers Equity and Debt products to support a variety of funding structures and enables the Bank to partner with growth-oriented corporates throughout their lifecycles.

Amongst the top Mandated Lead Arrangers (INR Borrowings) in India, the Bank achieved Rank 4 for CY 2019 with syndication volumes of ~INR 11,000 crores, bettering its position from Rank 5 in CY 2018. The Bank was ranked 2 when it comes to number of deals.

With strong domain expertise in Wind Energy, Solar Energy, Roads, Ports, Logistics and Power Transmission sectors, the Project Finance team was able to win Project Underwriting and Syndication mandates from several large reputed Indian corporates.

Public Sector Group

The Public Sector Group handles relationships with majority of Maharatna, Navratna and Mini Ratna Public Sector Undertakings, their joint venture companies, autonomous authorities and State Government undertakings.

The Group offers working capital facilities, structured banking solutions to the Public Sector companies and entities, besides long term asset finance, project finance, regular trade finance and forex solutions covering long term hedging / risk management advisory, cash management solutions and new age digital banking solutions. The group also sources liability products for the Bank, from the Public Sector companies.

Financial Institutions Group

Financial Institutions Group (FIG) manages relationships with Domestic and International Banks as well as Global Financial Institutions including Development Finance Institutions (DFIs) and Multilateral Financial Institutions (MFIs). In addition, the Group also manages and administers the entire correspondent banking network of the Bank and plays a key role in framing and managing the Counterparty Risk Policy of the Bank.

FIG continued its flagship performance during the year under review contributing handsomely to Banks fee and float. Direct fee earning from FIG clients crossed Rs.100 crores for the first time in FY20 making it a key milestone for the comparatively new Business Unit. FIG is also actively involved in raising liabilities for the Bank through inter-bank deposits, CDs as well as borrowings in the form of Syndicated Loans, Bilateral and Club Loans, Borrowing programmes with MFIs and DFIs, etc. During the year, FIG helped conclude borrowing deals in excess of USD 1.50 billion from global banks and financial institutions. FIG also acts as the single point of contact for the administration of the EMTN and Syndicated Loans. The Bank conducts its FI Business in strict conformity with applicable domestic and international laws and abides by various sanction provisions applicable from time to time.

In a short span of five years, FIG has evolved into a strategic business unit of the Bank, managing such diverse roles from business origination and facilitation to policy making and risk management in the interbank domain.

International Financial Service Centre Banking Unit (IBU)

The International Financial Service Centre Banking Unit (IBU) has seen significant business, achieving Balance Sheet size of USD 1,453 million as on March 31,2020, registering a 53% growth over 2019.

The product offering from IBU includes External Commercial Borrowings (ECBs), Trade Credits, Loans to Overseas Entities, and non-funded products. Having developed the product offerings that cover an area that the Bank was not able to address hitherto, the IBU is slated to be a significant contributor to the Banks Balance Sheet as well as profitability.

IBU provides the Bank the ability to serve large corporates with high overseas presence with end-to-end solutions by participating in the international syndicated loan market and to strengthen the brand globally.

The Banks Commercial Banking Group focuses on providing end-to-end financing solutions to companies to mid-sized corporates, Supply Chain Financing and Agriculture companies.

Mid Markets Group (MMG):

Focuses on Corporate Banking needs of Emerging and Mid-sized corporates. The portfolio remains highly diverse with a large client base. The group provides strategic value to clients through relationship-lending approach, a deep understanding of clients business requirements, and offering Products and Services that meet all the evolving needs of business across industries and sectors. This approach has helped the Bank to get a substantial share of clients wallet and product penetration. Focusing on client relationships at all levels has also enabled the business to detect and act on early warning signals, maintaining low stress in the book. The business also has a significant liability book spread across the customers which provides granularity both in the Banks lending and deposits. Incrementally, the Group follows target industry approach and has specialised verticals of Education, Logistics and Pharmaceuticals under its umbrella. These sectors are sunrise sectors for the Indian economy and more so in the current times, where the impact of pandemic has been positive or minimal to these industries.

Education:

Being identified as a sunrise sector, this segment witnessed rapid transformations (both in India and globally) - including evolving business models like Public Private Partnerships (PPP), Private Investment and Government Investments with the client base ranging from Pre-primary to professional courses.

Logistics:

Logistics is the back-bone of the consumption and in the era of e-commerce, the impetus on this sector is expected to increase. IndusInd Bank provides specialised product suite for this sector which helps in meeting specific clients needs. To help logistics organisations achieve their business goals, we offer unique end-to-end funding solutions.

Going forward, MMG shall continue its focus on specialised verticals namely education, logistics and pharma - that in the current times more so, have positive outlook in terms of growth.

Supply Chain Finance mm

Supply Chain Finance vertical provides comprehensive financing solution to dealers / vendors of large corporates across industries, key being, Auto & Auto OEMs, Steel, Consumer Durables, etc., by catering to their financing need through different product such as channel finance and vendor finance. Supply Chain finance product has enabled inroads into large corporate relationships. With a dedicated and experienced relationship team backed by strong product proposition and seamless services, IndusInd Bank has been recognised for Excellence in Sustainable & Operational Risk Management and Best in Supply Chain Finance. FY20 has seen one of the most challenging year for Auto industry which has impacted the entire supply chain. Our focus on portfolio quality has remained higher than ever and with stringent governance process and comprehensive portfolio monitoring tools, we have been able to maintain high portfolio quality. Our focus for the current year shall remain on strengthening the product proposition further through end-to-end digitisation of customer journey and innovative products and solutions.

Agricultural Business Group

Agricultural Business Group (ABG) follows value chain financing approach to cover complete Agri value chain from farmers to Agri corporates. ABG offers complete suite of banking products that helps the Bank gain significant wallet share of Agri customers. With presence across 17 States, 60 locations and 45 commodities, ABG has strong presence in core Agri markets with granular and diversified portfolio. ABG has widespread relationships with Collateral Managers to handle commodity-related risks. This Division has scaled up innovative products such as Agri Project Finance, Agri Trade Finance and Agri Infrastructure Finance. Currently, the vertical dominates the commodity funding space through its flagship Pledge finance product and has established itself as a significant player in Agri Infrastructure and Dairy financing segments. Food Financing Unit was introduced as a sub-vertical of ABG to bring sectorial focus and segment diversification. With customised bouquet offerings and focus towards dairy industry, the Bank is the one of the largest banker to Indias dairy giant and other marquee clients. ABG is also one of the major PSL contributing divisions of the Bank with two-third portfolio classified as PSL. It also helps identify PSL deals across other CCBG divisions like Education, Logistics and Mid-Market. The impact of the pandemic has been relatively less on this group, with yields protected. The marquee relationships in this group has helped gain inroads into rural masses wherein we as a bank have been able to offer comprehensive suite of rural products to the rural population.

Inclusive Banking Group

Inclusive Banking Group has reached out to 94 lakhs women borrowers (72% rural). The footprint which was largely confined to Microfinance is slowly expanding into other product lines such as microenterprise loans which are of higher ticket size and to a segment above the microfinance segment. This apart from host of liability products/services such as Savings Bank Accounts, Micro Recurring Deposits, Remittances, etc. is contributing to our aspiration of comprehensive financial inclusion services to the unbanked / underbanked segments of the population. We believe that the key to success of financial inclusion is the last mile delivery that offers affordability, convenience and flexibility through low operational costs enabled by innovations in digital solutions and process improvements.

With a Portfolio Outstanding of ~Rs.25,000 crores as of end of FY2019-20 which accounts for ~11% market share in sustainable livelihood financing we are well positioned within the Microfinance industry which is largely dominated by Banks and Small Finance Banks. With the MFI industry Portfolio Outstanding at Rs.2,38,000 crores and growing at a CAGR of 27%, and with Active customers at 5.8 crores we see a huge potential to tap this market further.

Our Business strategy is to expand the BC operations and include other loan products like Two wheelers and Retail loans to small businesses for which Pilot programs are being run. Through merger of BFIL we are confident of creating new opportunities and playing a meaningful role in rural India towards building financial inclusiveness and sustainability across unbanked and under-banked locations of the country. Simplifying credit underwriting process through a data driven approach is also on the cards and we are evaluating various models currently.

Environment & Social

Management System Policy

To promote sustainable development through our investment activities, while conforming to international and national standards, a department-wide Environmental and Social Management System (ESMS) was instituted across Corporate Banking unit in FY18.

After successfully completing two years of implementation, the Bank hired external agency for ESMS Implementation Review and conducted several stakeholder discussions to identify gaps and strengthen the implementation strategy.

ESMS is administered via an online portal, which in addition to screening proposals for risks, also captures data on the volume of projects having a positive impact on environment and society. ESMS has helped the Corporate Banking department foster new partnerships with several development financial institutions such as ADB and OPIC; and international development agencies like USAID, among others.

GLOBAL MARKETS GROUP

THE GLOBAL MARKETS GROUP (GMG) COMPRISES THREE MAIN FUNCTIONS —

0 1 Asset Liability Management (ALM); ^

02 Trading (Rates, Foreign Exchange and Derivatives); ^

03 Client Sales, comprising, Financial Markets Sales and Solutions team, which essentially provides

hedging strategies to clients for their exposures across foreign exchange and interest rates, and the Credit Sales Team, which provides clients access to Debt Capital Markets.

The Asset Liability Management Unit manages various regulatory requirements including Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), Liquidity Coverage Ratio (LCR), Intra-day Liquidity (IDL), High Quality Liquid Assets (HQLA) as prescribed by the Central Bank and other governing bodies. In addition, the Desk manages day-to-day liquidity requirements of the Bank through appropriate funding avenues along with Transfer Pricing, involving both, INR and Foreign Currency. The liquidity and resource mobilisation strategy proactively addressed the Structural Liquidity Risk conditions and achieved significant efficiency in the Banks sourcing of funds with an optimal mix of Term Deposits, Market Borrowings and Refinance. The Bank has leveraged its strengths in raising long term funds during the year, through issuance of E-MTN Bonds and Long Term Foreign Currency Loans.

The Trading Desk trades in Rates, Foreign Exchange and Credit. It is instrumental in taking proprietary positions in Government Bonds, Corporate Debt, Interest Rates (INR and Foreign Currency), Interest Rate Futures and Currencies. The Trading Desk also trades in Derivatives, and has executed Long-Term Currency and Interest Rate Swaps with established market counterparties.

The Financial Markets Sales and Solutions team is instrumental in providing hedging solutions to clients across Corporates, Financial Institutions and Retail clients on their

foreign exchange, and interest rate exposures. The Bank enters into these transactions based on a strict suitability and credit criteria. Besides the above OTC products, the Bank is also a Trading-cum-Clearing Member of NSE and BSE, which enables the Bank to offer a web-based platform across client segments for hedging their currency exposures in exchange-traded currency derivatives market.

During the year, GMG has increased its operations in the IFSC Banking Unit established in GIFT City, Gandhinagar, and also offers hedging solutions to clients and cover operations with international counterparties. During the year, the Bank had raised the first tranche of USD 400 million from the Euro-Medium Term Notes (E-MTN) programme of USD 1 billion, set up in the previous year and listed on the Singapore Stock Exchange and on the India International Exchange (IFSC) Limited (India INX).

The Bank has a well laid-out Front Office Policy guideline, Risk Management Policies, Client Suitability and Appropriateness Policy, and appropriate systems support to monitor transactions and risk on real-time basis. Given the dependency on System and Trading platforms, the Bank has been conducting Business Continuity Plan drills at regular intervals. The Bank has an Integrated Treasury application interfaced with the Risk Monitoring System, that covers all Client and Trading products of the Global Markets business and provides seamless straight-through flow of transactions.

TRANSACTION BANKING GROUP

The Transaction Banking Group (TBG) offers products and services to customers across all Business Units in the areas of Cash Management, Trade Services and Finance, Factoring, Global Remittances and continues to build a world class Transaction Banking product portfolio by leveraging the strengths of its Digital Banking platform.

The Bank continued to be one of the leading players facilitating India linked Cross Border Remittances. The Bank enjoys a significant share in Retail Outward Remittances from India, originating transactions from its branches as well as facilitating flows for other licensed AD II players. It also continues to be a preferred India Correspondent for Overseas Banks, Exchange Houses as well as MSBs / MTOs. The Bank continued to add new licensed partners under Rupee Drawing Arrangement Scheme of RBI as well as adding new Banking Partners for their India-bound remittances.

Under the umbrella of Cash Management Services (CMS), the Bank offers customised and differentiated products to its Corporate and Consumer Banking customers, to enhance efficiencies in their Payables and Receivables Management with increased digital focus through APIs, eNACH, Remote Cheque Scanning products. Apart from this, the Bank is steadily becoming a significant player in providing Digital Solutions to Government Departments across e-Tendering, eProcurement, GeM, PFMS and subsidy management services.

The Bank has emerged as one of the leading players in the Trade Finance segment among peer banks by differentiating itself through tailor-made solutions based upon thorough understanding of clients business requirements. The Bank is reckoned as a Bank of First Choice for Trade Credit by leading business groups and institutions across segments in the country. The Bank also caters to clients trade finance requirements for their offshore business units through its GIFT City branch.

The Bank has launched critical initiatives that focus on trade digitisation for its clients on Connect Online - Corporate Internet Banking platform. These initiatives include, IDPMS / EDPMS Dashboards, Bill of Entry / Shipping Bill Regularisation and Direct Import Payment and Export Bill Lodgement with IDPMS / EDPMS Linkages.

In addition to the strengthening of the Corporate Internet Banking product suite, the Bank has also launched Synchronous APIs for Domestic Payments and Domestic Money Transfer business to complement the bouquet of asynchronous APIs managed till date. The focus is to drive efficiency in the API integration process so that the processing is instantaneous with transparency in payment status.

IndusInd Bank was one of the first banks to partner with Swift in the following digitisation initiatives:

The Banks prowess in Transaction Banking is underlined by the multiple recognitions received by it from The Asset, an independent leading Asian Business Journal:

The Bank has also been recognised as Best Bank - Payments and Digital Initiative by World BFSI Congress and Awards 2020 CMO Global.

Gems and Jewellery Group m

Gems and Jewellery industry contributes to about 16% to Indias total merchandise exports and has grown at a CAGR of over 14.8% over the last 50 years. The industry in India is one of the largest in the world, contributing 27% to global jewellery consumption. India is one of the largest exporters of gems and Jewellery, and the industry is considered to play a vital role in the Indian economy as it contributes a major chunk to the total foreign reserves of the country. The sector contributes around 12% of total exports of the country, being

approximately USD 40 billion during 2019. The gems and jewellery market in India is home to more than 3,00,000 players, with the majority being MSME players. Apart from this, it also employs more than 5 million workers and artisans in the sector. As one of the fastest growing sectors, it is extremely export-oriented and labour intensive. This Group caters to the important manufacturing export sector engaged in diamond manufacturing, jewellery manufacturing and exports. India is a world leader in Diamond manufacturing and exports.

IndusInd Bank is the industry leader in this Sector. The Bank has been recognised by the Trade Council as a Centre of Excellence, and the same has been acknowledged through continuous awards and recognitions, the latest being, the Gems and Jewellery Export Promotion Council (GJEPC), sponsored by the Commerce Ministry of the Government of India, awarding the Bank as the Best Bank financing the Industry in the category of Highest Limits Sanctioned. The Bank finances more than 10% of the total finance extended to the sector in the country. The sector provides large cross-sell opportunities and contributes to the Banks targets in Priority Sector Lending. The Portfolio has been mostly delinquency free and provided attractive returns during the year. The Bank has been spreading its portfolio in various segments apart from its core dominance in cut and polished diamond sector. The Bank has clientele base of some of the best known jewellery retailers in the country and is further extending finance to some of the biggest names in the diamond industry overseas, through GIFT City operations mostly backed by AIG credit guarantee.

PRIORITY SECTOR LENDING

The Banks Priority Sector Lending portfolio is sourced from various business divisions from Corporate, Commercial and Consumer Banking Groups, to address the demands of various niche areas.

Increased focus on emerging markets that provide relevant solutions by leveraging technology within a well-developed risk framework will yield good results in building a healthy portfolio resilient to shocks and aid in long-term growth. Furthermore, the technology platforms are built to drive and

facilitate an inclusive society giving equal opportunities to all and empower women. Development of products under assets and liabilities - which are affordable, easily accessible, and flexible to the needs of the customers and their alignment to the evolving needs of customers, is in place. Moreover, the strategic decision to merge Bharat Financial Inclusion Ltd. with IndusInd Bank, was also driven by the need to create a stronger and more sustainable platform for Financial Inclusion and thereby build Priority Sector lending.

Approach to Priority Sector Lending

To address the demands of various niche areas, the Banks PSL portfolio is sourced from various business divisions from Corporate, Commercial and Consumer Banking Groups.

The Bank identifies potential high-credit areas like micro-enterprises, agri-allied sectors, etc. and to achieve the stipulated targets for these segments, defined processes

Submission of Financial Information to Information Utilities

have been set up including a committee which looks after identifying the gaps and oversees the PSL portfolio built up by contributing business divisions.

With the Bharat Financial Inclusion Limited (BFIL) merger and its portfolio largely comprising Agriculture and Small & Marginal Farmers, the Bank will be able to meet PSL targets.

In accordance with the regulations under the Insolvency and Bankruptcy Code (IBC), 2016, and of the Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017, which has come into force with effect from April 1, 2017, financial creditors are required to submit information to Information Utilities (IU). The Insolvency and Bankruptcy Board of India (IBBI) has registered National E-Governance Services Limited (NeSL) as the first IU under the IBBI (IUs) Regulations, 2017 on September 25, 2017.

As per the directives of Reserve Bank of India, all financial creditors regulated by RBI were advised to adhere to the relevant provisions and immediately put in place appropriate systems and procedures to ensure compliance to the provisions of the Code and Regulations.

In accordance with the same, we are happy to share that the Bank has executed necessary agreement with NeSL and submitted the required data to NeSL as per their guidelines.

RISK MANAGEMENT

Management of risks inherent in the Banking business in an effective and proactive manner is critical to sustainable growth. Banking is exposed to a wide range of risks and it is imperative that such risks are measured precisely, monitored on an on-going basis and managed effectively. A robust Enterprise-wide Risk Management (ERM) framework enables effective and proactive management of various risks, while supporting business growth. ERM helps to maintain earnings quality while aligning risk appetites with business strategies.

The Bank has an integrated Risk Management Department, independent of business functions, covering Credit Risk, Market Risk, Assets-Liabilities Management (ALM) and Operational Risk management. Risk management practices in the Bank have been aligned with the best industry practices and are adaptable to a dynamic operating environment and market conditions.

Credit Risk Management

Credit Risk is managed both at transactions level as well as at portfolio level.

Key objective of Credit Risk management is to maintain credit quality within the defined risk appetite, while achieving appropriate return in relation to risks assumed. Various measures adopted for management of Credit Risk are mentioned hereunder:

• Credit Risk policies are aligned with business strategies and the defined risk appetite. The policies are maintained in alignment with changes in RBI guidelines and economic environment;

• Credit Risk at the time of credit assessment is gauged by means of risk-rating models, implemented for different business segments;

• Credit Portfolio Management Analysis monitors credit quality, composition of portfolios, concentration risk, yield v/s risk and business growth;

• Measurement and monitoring of credit quality regularly by means of Weighted Average Credit Rating (WACR) of the credit portfolio;

• Prudential internal exposure limits prescribed for assuming exposures on counterparties (linked to internal rating of borrowers), industries, sectors, etc.

• Measurement of credit quality of Vehicle Finance portfolios by means of Behaviour Models;

• Sector reviews are carried out to assess and evaluate potential risks and stress within such sectors for analysing the impact of stress on portfolio health and taking proactive actions to mitigate such risks;

• Management of exposures to counterparty banks and the countries by setting exposure limits basis their risk profiles and monitoring such exposures regularly;

• Stress Testing of Credit Portfolios is carried out periodically to measure shock absorbing capacity under multiple stressed scenarios and assessment of impact of potential credit losses on profitability and capital adequacy, thus enabling initiation of appropriate risk mitigation measures.

Despite the challenging environment, the Bank has been able to achieve credit growth while maintaining quality of its portfolio, with its NPA being one of the lowest in the industry. The Banks restructured assets are among the lowest in the industry, with the Corporate as well as the Retail loan books having remained resilient. During the year, Weighted Average Credit Rating (WACR) of Credit Portfolio has remained stable.

The Bank has been introducing wider range of Retail products, to have larger share of the wallet and to meet customers needs. Such products are governed by structured product programmes specific to the business, which details out the criteria on customer selection and underwriting standards.

The Coronavirus outbreak has triggered concerns in financial markets, economy and global trades. It has become evident that it will lead to global economic slowdown leading to GDP contraction. The extent of impact on global economies will depend on the duration of coronavirus and its effect of containment. The COVID-19 spread in India has resulted in country-wide lockdown resulting in almost complete halt in economic / business activities which has impacted various industries and borrowers with different degree of intensities. Reserve Bank of India and the Government of India have announced various measures and reliefs to support businesses and borrowers to overcome the difficult economic and operating environment. Considering these ongoing related developments, the Bank has been assessing COVID-19 impact on its business and credit and has been carrying out stress testing of credit portfolio at regular intervals so as to manage the credit quality and proactively determine the provisioning as a result of COVID-19 pandemic.

Market Risk Management isx

Market Risk is the possibility of loss to the Bank caused by changes in market variables, such as, interest rates, exchange rates, equity prices and risk-related factors such as market volatilities.

The Bank manages market risk in trading portfolios through a robust Market Risk Management Framework prescribed in its Market Risk Management Policy.

The Bank has implemented state-of-the-art Market Risk Management System, which supports monitoring of risk sensitivities and computation of capital charge. The Market Risk Management system supports advanced risk measurement functionalities for pro-active management of risks. The system supports monitoring of Value-at-Risk (VaR) limits, PV01 limits for Forex, Investments, Equity and Derivatives portfolios, besides Stop-Loss limits, Exposure limits, Deal-size limits, etc. Valuation of all portfolios and the risk sensitivities are monitored on daily basis.

Asset-Liability Management

The Banks Asset-Liability Management (ALM) system supports effective management of liquidity risk and interest rate risk, covering all assets and liabilities.

• Liquidity Risk is managed through Liquidity Coverage Ratio (LCR), Structural Liquidity Gaps, Liquidity Simulation, Dynamic Liquidity monitoring, Liquidity Ratios analysis, Behavioural Analysis of liabilities and assets, and prudential limits for negative gaps in various time buckets.

• Interest Rate Sensitivity is monitored through prudential

limits for Rate Sensitive Gaps, Earning at Risk, Modified Duration of Equity and other risk parameters.

• Interest Rate Risk on Trading Portfolios is monitored through Market Risk Measurement tools such as, VaR, P01 and other Risk Sensitivities on a daily basis. Optimum risk is assumed through the Market Risk Measurement parameters, to balance between risk containment and profit generation from market movements.

Detailed analysis of liquidity position, interest rate risks, product mix, business growth versus budgets, interest rate outlook, etc., is presented to Asset-Liability Management Committee (ALCO) which meets frequently and deliberates on liquidity position and interest rate risk and reviews business strategies.

ALCO provides directional guidance to Business Units towards effective management of liquidity position, while achieving business goals. The Bank assesses its structural liquidity position on a daily basis for managing liquidity in a cost-effective manner.

Stress Testing - Liquidity Risk

The Bank carries out stress tests on liquidity position periodically, to assess the impact of stressed liquidity scenarios on funding and liquidity position. Stress tests help to be better equipped to meet stressed situations and have contingency funding plans in place.

The Bank has been regularly assessing the impact on COVID-19 and RBI financial measures on the liquidity position of the Bank, through stress test carried out on various stress scenarios.

Contingency Funding Plan

Contingency Funding Plan (CFP) has been developed to respond swiftly to any anticipated or actual stressed market conditions.

The Bank reviews its contingency plans considering the evolving market conditions. Contingency Funding Plan covers monitoring of internal as well as external contingency triggers, categorised into Yellow, Amber and Red. The CFP mentions the available sources of funds to supplement cash flow gaps in the event of stressed scenarios. CFP prescribes the conditions basis contingency triggers for assessment of liquidity position and invocation of contingency if deemed appropriate. Roles and responsibilities of Contingency Management Group constituted under the CFP have been defined to facilitate effective execution of contingency plans in the event of invocation of contingency plan. The Bank carries out CFP testing to assess the effectiveness of the plan.

Interest Rate Risk on Banking Book

Interest Rate Risk on Banking Book (IRRBB) largely arises on account of: (i) Re-pricing Risk; (ii) Optionality; (iii) Basis Risk; and (iv) Yield Curve Risk.

From an economic value perspective, it is the Banks policy to minimise sensitivity to changes in interest rates on assets and liabilities. Interest Rate Risk is measured based on the re-pricing behaviour of each item under asset, liability and off-Balance Sheet products. The Banks Assets and Liabilities Management Policy has laid down tolerance limits based on the risk appetite and the impact on NII and Economic Value of Equity (EVE) for a given change in Interest Rate.

The Bank has put in place the necessary framework to measure and monitor Interest Rate Risk on Banking Book using the Duration Gap Approach as well as Traditional Gap Approach.

Operational Risk Management

Operational Risk is the risk of loss resulting from inadequate or failed internal processes, people, systems or external events. The Operational Risk Management Policy documents the Banks approach towards management of Operational Risk and defines roles and responsibilities of various stakeholders within the Bank. Based on this Policy, the Bank has initiated several measures for management of Operational Risk. The Bank has put in place an Operational Risk Management framework to effectively manage operational risk through several internal committees, viz., Operational Risk Management Committee (ORMC), Fraud Risk Management Committee and BCM Steering Committee.

With the objective to reinforce Operational Risk Management Framework in the Bank, EGRC system (Enterprise Governance Risk and Compliance) with following modules have been implemented:

I. Incident Management Module enables reporting and management of incidents (i.e., operational risks and fraud incidents), root cause analysis, internal escalations, action plan, resolutions, etc., which helps in mitigation of such risks.

II. Issue and Action Module enables tracking and monitoring issues emanating from Root Cause Analysis, Risk Assessment, Actionables relating to various operational risks, products / processes approvals, etc.

III. Key Risk Indicator (KRI) Module: enables reporting, monitoring, tracking, trend analysis of Key Risk Indicators. It has been designed to generate periodic reports for all concerned stakeholders (Function Heads, Department Heads, Business Heads) for necessary actions towards mitigation of such identified risks.

IV. Risk and Control Self-Assessment (RCSA) module: provides single platform enabling identification of operational risks, recording of such risks, assessment of residual risks and effectiveness / adequacy of corresponding controls, etc. RCSA module shall progressively reinforce assessment of operational risks and their mitigation. Status of operational risks, associated controls, Heat Map and Risk Index are generated by the system for concerned stakeholders (Operation Heads, Department Heads, Business Heads) to take appropriate action towards risk mitigation.

The Bank assesses new Products and Processes under Operational Risk Assessment Process (ORAP) Framework. An advanced ORAP system has been implemented to enhance the ORAP Framework.

In order to strengthen the existing Operational Risk Framework and make it more forward looking and assess resilience under stressed scenarios, the Bank has created Operational Risk Stress Testing Framework covering different operational risk scenarios. Stress tests are carried out to gauge the impact of stressed events on Profitability and Capital Adequacy of the Bank.

As per RBI guidelines, the Bank has been following Basic Indicator Approach for computation of capital charge for Operational Risk.

The Bank has adopted Business Continuity Policy (BCP) wherein critical processes and other enablers have been identified and appropriate recovery plans have been put in place for such critical processes to ensure timely recovery of Banks critical operations and services in the event of crisis. BCP Framework ensures continuity of critical processes to extend essential services to the customers. Regular mock tests are carried out to ascertain BCP preparedness. With implementation of EGRC system, key components of BCP such as Business Impact Analysis (BIA), BCP Recovery Plan, BCP Testing, BCP Risk Assessment, Fire Drills are system-based, which ensures effective monitoring and management of Business Continuity.

Coping with COVID-19

Anticipating the disruption due to the spread of COVID-19, BCM Steering Committee of the Bank has reviewed readiness of the critical functions; decisions were taken and implemented swiftly to minimise disruption and provide critical banking services to customers. A Quick Response Team (QRT) was formed to handle the COVID-19 situation. Safeguarding health and safety of officials and customers of the Bank was accorded top-most priority. Multiple orders of the Central, State Governments and local law enforcement authorities were duly complied with. Work from Home (WFH) strategy was adopted for key officials. Resourcing was reviewed by Department. Heads and teams carrying out similar processes were bifurcated into Team A and Team B. Despite serious constrains due to complete stoppage of public transport, including buses, trains, metro, and requirement of curfew passes for using personal vehicles, the required minimum attendance was ensured at most of the Banks branches and centralised operations. All inter-city and foreign travel was stopped and in-person meetings were cancelled.

Branch Operations

All officials at branches adopted usage of Masks, Sanitizers, Thermal Scanners. Critical Banking Services, namely, - Cash, Remittances, Clearing and Government business related services were provided to customers. 90% of the branches and ATMs were kept operational on most days.

Health and Safety initiatives

Sanitisers, Masks, Thermal Scanners were procured and provided to all Branches / Offices. Branches / Offices were sanitized on reporting of suspicious / confirmed COVID-19+ cases. As a proactive measure, large number of branches, offices and Currency Chests were sanitized. Suspected officials were advised to self-isolate, branches were sanitized and then only were operations resumed. SOPs were issued with procedures to resume full-fledged operations post lockdown, ensuring safety of employees at all establishments. Biometric devices were disabled for recording attendance at Offices. Guidelines were issued to cover aspects like, Personal Hygiene, handling of suspected cases, isolation and treatment, prevention of spread of COVID-19, and self-reporting.

IT Initiatives

Access to critical systems was provided to key officials through VPN. Proactive DR Drills for some very critical IT applications were carried out to ascertain the level of readiness and address the gaps, if any. 24*7 rigorous monitoring of network traffic was ensured by IT team. Specific dos and donts to avoid cyber frauds particularly under Work from Home (WFH) arrangement were reiterated through frequent communications to all employees

Customer Awareness

Initiatives

Digital Channels, e.g., Mobile Banking, Internet Banking, chatbots were widely promoted through newspaper advertisements and social media campaigns. Posters, Standees, POP displaying awareness about COVID-19 were arranged for Branches / Offices. Awareness Videos about COVID-19 were widely released through branches and offices.

Despite the above proactive actions, a few officials were infected with COVID-19 which had temporary minor impact on the operations of the concerned departments and other departments occupying the same building, as these premises were required to be vacated and sanitized before reoccupying the same as per instructions of Government authorities.

Systems Risk

The Banks Information Security Policy provides the security framework upon which all subsequent security efforts are based, and to guide the development and maintenance of a comprehensive information security program. It deals with security of information in various forms like, spoken, written, printed and electronic or any other medium and handling of information in terms of creation, viewing, transportation, storage or destruction. It contains the principles that direct managerial decision making and facilitates secure business operations. It is designed to enable management of the Bank to ensure the security of information assets and maintain accountability. It also defines the appropriate and authorised behaviour for personnel approved to use the Banks information assets. The policies and procedures are built around the following principles:

• Treat Information Security Risk in line with Business, Regulatory and Legal requirements;

• Ensure Availability, Integrity, Confidentiality of Information, establish Accountability and provide Assurance;

• Focus on People, Processes and Technology for implementation;

• Apply least privilege, need to know / use principles;

• Promote Information Security Awareness to create security-aware culture within employees, contractors, third-parties and customers;

• Deal with exceptions and violations appropriately;

• Focus on Information Security Governance, Assurance and Evolution to ensure suitability, adequacy and effectiveness;

• Participation of security team during initial stages of system acquisition and development;

• Structured approach towards Information Security Awareness.

The Bank subscribes to threat intelligence feeds from global

security partners. The Bank also receives and acts on alerts

from authorities and regulators that are analysed for

applicability to the Banks environment. The Bank also conducts proactive assessments of its technology environment and security controls for early identification and remediation of risks, if any. The Bank has engaged external experts to assess the effectiveness of controls to handle cyber threats and frauds on digital channels. The Bank participates in security drills conducted by IDRBT and has a Crisis Management Plan in place. The Bank also subscribes to Cyber Insurance cover.

Considering the importance of Access Control, the Bank provides access to various information assets basis least privilege, need to know / use principles.

Awareness plays a very important role in mitigating cyber risks. Periodic Information Security Awareness is communicated to employees, contractors, third-parties and customers.

Exceptions to the policies and controls are reviewed and approved basis the risks and justifications.

Focusing on secure development life cycle helps reduce security vulnerabilities in the applications being developed and helps mitigate the risks due to insecure coding.

The Bank conducts quarterly VA and PT exercises for proactive identification and remediation of vulnerabilities. The Bank also conducts Red Team exercises to proactively identify potential issues and remediate.

FINANCIAL RESTRUCTURING AND RECONSTRUCTION GROUP

All activities relating to recovery of non-performing loans and restructuring of stressed assets are handled by the Financial Restructuring and Reconstruction Group (FRRG). Implementation of the Insolvency and Bankruptcy Code 2016 and NCLT activities has accelerated, especially with the Reserve Bank of India notifying mandatory filing in certain large value cases in a time-bound manner. The Bank has created a dedicated desk to handle and monitor IBC-related activities.

The Bank has also actively utilised the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 for recovering its dues. During the year, the Bank had recovered an amount of Rs.56.80 crores in written-off accounts. Net NPAs of the Bank stand at 0.91% of Total Advances, while the ratio of Gross NPA as percentage of Total Advances is 2.45%.

GENERAL BANKING OPERATIONS

The Bank has strengthened the policy framework on "Know Your Customer" (KYC) norms and Anti Money Laundering (AML) measures in line with regulations from time to time. The Bank has implemented a simplified procedure of Know Your Customer, which will make it easy for persons from the Low Income Group to open accounts with minimal documentation.

The Bank has implemented a state-of-the-art Workfiow and Imaging System for Account Opening, for booking Term Deposits, processing Trade Finance transactions, for sale of Third-Party products and for Branch Expenses processing.

The System enables faster turnaround time and movement of work from branch locations across the country to the Central Operations Unit in real-time mode, thus cutting out the time that physical forms would take to arrive through courier. This has helped in freeing up manpower at the branches to tend to customer service.

With the emphasis on digitalisation and e-KYC, the Bank has implemented Digital Account Opening through TAB wherein the process of Account Opening is straight-through and validation of KYC is online. This cuts short the turnaround time for account opening process and provides greater convenience to customers with stronger controls and compliance.

The Union Government, through the third amendment to Prevention of Money-laundering Rules, 2005 dated August 19, 2019 has permitted banks and similar financial institutions to accept KYC documents electronically. Further, with a view to leveraging the digital channels for Customer Identification Process (CIP) by Regulated Entities (REs), RBI has allowed Video-based Customer Identification Process (V-CIP) as a consent-based alternate method of establishing the customers identity, for on-boarding. The Bank accordingly introduced the Video-based Customer Identification Process, thus enabling customers to complete their KYC verification and account opening formalities from the comfort of their home to avail of banking facilities with zero paperwork.

The Bank is participating in Clearing through Cheque Truncation System (CTS). As on March 31,2020, the Bank had 445 locations covered under the Grid Clearing, through its 3 CTS Centres at Mumbai, Chennai and Delhi.

The Bank has also started participating in National Automated Clearing House (NACH) transactions both for Debit and Credit (ECS) at Mumbai, as also Aadhaar-Based Payment System (ABPS) transactions through NPCI.

The Bank has adopted a Comprehensive Policy, on settlement of claims in respect of deceased depositors. The Policy covers all types of deposits, and has simplified the

procedure for settlement. The forms are also available on the Banks website.

The Bank has put in place the Deposit Policy and the Fair Practice Code. The former outlines the guiding principles in respect of various products of the Bank and the terms and conditions governing the operations of the accounts and the rights of depositors. The Fair Practice Code is a voluntary Code, establishing standards to be followed by all branches in their dealings with customers.

The Bank has framed the Citizens Charter to promote fair banking practices and to give information in respect of various activities relating to customer service.

The Bank has put in place Customer Compensation Policy as part of the commitment to customers for any direct and actual loss, by way of internal loss / payment of charges by customer due to deficiency in service to the extent mentioned in the Policy. The Policy is based on principles of transparency and fairness in dealings with customers.

The Bank has framed the Unclaimed Deposit Policy based on RBI guidelines with the objective of classification of unclaimed deposits and setting up of the Grievance Redressal Mechanism for quick resolution of complaints and record-keeping. Further, in line with Reserve Bank of Indias directives, balances in unclaimed deposits and other accounts have been transferred to Deposit Education and Awareness Fund (DEAF), with effect from June 2014. Details relating to Unclaimed Accounts are uploaded on the Banks website.

The Bank has formulated the Customer Rights Policy and the same is hosted on the Banks website.

The Bank has framed the Customer Protection Policy based on Reserve Bank of Indias guidelines aimed at providing safe, rational, superior and transparent service experience to the customers. The Policy aims to address customers complaints related to all unauthorised transactions done through electronic mode. It also lays down the criteria for determining customer liability in different circumstances and increases awareness among customers.

CORPORATE AND GLOBAL MARKETS OPERATIONS

Corporate and Global Market Operations (CGMO) comprises operations related to Trade Services, Supply Chain Finance, Cross Border Remittances, Payments and Cash Management Services, Global Markets, Foreign Exchange and Derivatives, Depository and Capital Markets, and Bullion Operations. CGMO services clients in the Corporate as well as Retail segments for these products.

The major focus of CGMO initiatives during the year was on: (a) generating efficiency; (b) enhancing customer experience; (c) proactive risk management; and (d) building people capability.

Enhancing efficiency through automation

CGMO has, for the past several years, focused on building centralised transaction processing capabilities, complemented by dedicated client service teams at branches. This enhanced economies of scale, standardised delivery and improved processing controls. During the year, the focus was on making the processes leaner and scalable, in order to expedite the delivery of products and services to customers and also generate greater operational efficiency. Several initiatives were launched to simplify and automate processes, through process re-engineering and greater leverage of system functionalities.

Building on the pilot automation initiatives in the previous years, CGMO has developed an agenda for high-end automation leveraging Robotic Process Automation (RPA) and Cognitive Machine Reading (CMR). These automation initiatives will yield long-term benefits in the coming years by way of significant improvement in Turn-Around Times (TAT) for voluminous operational activities. Additionally, this will help build the requisite scale to absorb higher volumes without cost linearity, and improve the risk profile.

Greater utilisation of system functionalities, specifically for Treasury Operations, helped improve operational efficiency, and enabled adherence to stringent timelines for regulatory reporting.

Following the introduction of new CMS products, the Bank continued the journey of upgrading critical systems, and re-platformed its Cash Management System by implementing Finnaxia.

Client Experience

Consistent delivery of superior customer experience continues to be a key focus area for CGMO, and various initiatives were implemented during the year to support this, over and above the servicing journeys launched in the previous year.

Implementation of the Finnaxia Cash Management system has led to enhanced customer experience through a range of new facilities, such as, Online Credit Posting with Core Banking System (CBS) integration, Dynamic Narration in Account Statement, and customisation of CBS posting as well as Auto-scheduling of key actions as per customers requirements.

A significant process re-engineering was effected to enable immediate credit of inward remittances to client accounts. This step has enabled credits to customers accounts in a near Straight Through manner, leading to enhanced client experience.

A process was implemented allowing clients to initiate certain Trade transactions via email directly to the Centralised Processing Centres, thereby eliminating the need for submission of physical documents at branches. This process has been implemented for regularisation of pending Shipping Bills and Bills of Entry. This facility enabled uninterrupted delivery of this service during the lockdown period.

Proactive Risk Management

Proactive management of Operational Risk continues to be a major focus for CGMO. The Operational Risk & Control (ORC) team compiles key reports and metrics to identify and monitor potential risk events. From a proactive risk management standpoint, the Risk & Control Self-Assessment Framework was implemented in a phased manner. Focused workshops were conducted for several key CGMO processes, and the mitigating actions arising from these workshops are in various stages of implementation. Resilience of the operating model was effectively tested during the year to ensure stability and Business Continuity during any exigency.

Building People Capability

Continuous enhancement of people capability is a core value of CGMO, and the focus is on building domain knowledge, equipping people with skillsets to deliver consistently high service, and develop them into strong Operations professionals. Thousands of man-hours of training were delivered during the year, covering product, process, operational risk, regulatory requirements, and key soft skills like communication, team effectiveness and leadership skills.

Empowering people to ideate and drive Continuous Improvement initiatives has been an abiding feature of People Engagement in CGMO. As part of this initiative, over 900 process improvement ideas were implemented by CGMO teams, resulting in improved client experience, greater efficiency, and stronger controls.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Operational Controls

The Bank has laid down the Policy Framework related to Know Your Customer (KYC) norms, Anti Money Laundering Measures (AML) and Combating of Financing Terrorism (CFT). Policy has been framed on the basis of recommendations of the Financial Action Task Force and the Paper issued on Customer Due Diligence for Banks by the Basel Committee on Banking Supervision.

The Bank has sharpened internal controls and compliance through the following:

• Separate and independent Compliance function has been set up for Bank-wide compliance;

• Separate and independent Vigilance function;

• Expenses Management Software has been deployed at all branches for facilitating cost control;

• Standard Operating Procedures have been defined for processes at branches to ensure consistency of delivery with the expanding branch network;

• Branch Monitoring Unit is entrusted with regular monitoring of branch operations;

• The Process Adherence and Quality function has been operationalised for attaining uniformity in processes followed by branches, to minimise operational risk.

Customer Service

In accordance with RBIs recommendations, a Standing Committee on Customer Service (SCCS) has been constituted, comprising senior Functional Heads of the Bank and a few customers.

The Bank has also constituted a Customer Service Committee of the Board of Directors (CSCB) to review the performance of the SCCS.

The Bank has constituted Branch-level Customer Service Committees (CSC) at all branches, comprising employees and customers. CSC meetings are convened every month to examine complaints / suggestions, cases of delay, difficulties faced / reported by customers / members of the Committee. Feedback and suggestions are submitted to SCCS.

SCCS examines and provides regular feedback to the Customer Service Committee of the Board for necessary policy / procedural actions.

The Bank has implemented Talisma, a Customer Complaints and Requests Management System. The key objective of this solution is to have a single system to track requests, complaints and queries at customer level so that the service standards as set out by the Bank are managed and enhanced. The System has been implemented across all branches and the Banks Contact Centres in Mumbai and Chennai.

Intimation of Central Payments Fraud Information Registry to Committee

Reserve Bank of India have, vide Circular dated February 24, 2020 intimated that a Central Payments Fraud Information Registry would be created as per the Statement on Developmental and Regulatory Policies of the Third Bi-monthly Monetary Policy Statement for 2019-20 dated August 7, 2019.

Through this Registry, RBI will track the frauds perpetrated using Payments Systems and put in place a mechanism to prevent such frauds in the long run. Hitherto, all digital frauds were required to be updated by the Bank on CSITE platform with all the details, on quarterly basis.

As per the Circular dated February 24, 2020, RBI has advised all banks to commence reporting of payments frauds data on daily basis. Banks have to report the fraud and the closure of the same within 90 days of reporting of the transaction.

The Bank has implemented the same and reporting of data has commenced from March 23, 2020.

Grievance Redressal Mechanism

The Bank follows the Board-approved Grievance Redressal Policy, which lays down a defined escalation process for all customer complaints received at branches and at the Corporate Office, within the overall framework of RBI guidelines.

A Quarterly Report related to complaints received and redressed is placed before the Board of Directors. Based on the recurrence of complaints in specific areas, causative factors are identified and remedial measures are initiated.

A link has been created on the Banks website www.indusind.com providing for a Feedback Form, which gives an opportunity to all customers to air their grievances, in a simplified way and get their complaints redressed without delay. Further, customers can lodge their grievances by contacting their respective Branch Manager or call the Banks Contact Centre on the toll-free number or send an email to the dedicated email IDs.

Details of the Nodal Officer / Regional Managers have been displayed. These details are also displayed at the Banks branches. Details of the Banking Ombudsman Scheme, 2006 as amended up to July 1,2017 are also displayed at branches and hosted on the Banks website.

Internal Audit

The Bank has a robust, distinct and dedicated Internal Audit function performing an independent and objective evaluation of the adequacy and effectiveness of internal controls on an on-going basis to ensure that units invariably adhere to the compliance requirements and internal guidelines.

In congruence with the Reserve Bank of Indias Guidelines on Risk Based Internal Audit (RBIA), the Bank has adopted the Internal Audit Policy and the Internal Audit function undertakes a comprehensive Risk-based Audit of operating units.

An Audit Plan is drawn up on the basis of risk-profiling of auditee units and audit of operating units is undertaken at a frequency synchronised to the risk profile of each unit in line with the guidelines relating to Risk-Based Internal Audit. An Independent IS Audit team within Internal Audit Department provides assurance on the management of Information Technology related risks.

In order to strengthen the Internal Audit function and to achieve the incessant real time supervision and control, critical units of the Bank are subjected to independent Concurrent Audit by reputed external audit firms.

The Head - Internal Audit functionally reports to the Audit Committee of the Board (ACB), ensuring his independence, and for administrative purpose, reports to the Managing Director & CEO. The ACB reviews the performance of Internal Audit Department, the effectiveness of controls laid down by the Bank, and compliance with regulatory guidelines, thus ensuring alignment with the global best practices on corporate governance.

Compliance ^

Compliance Risk is defined by the Basel Committee as "the risk of legal or regulatory sanctions, financial loss, or loss to reputation that a bank may suffer as a result of its failure to comply with all applicable laws, regulations, codes of conduct and standards of good practice". The Basel document includes the conduct of banking and financial business (including conflicts of interest), privacy and data protection, and in particular, provisions on the prevention of money-laundering and terrorist financing.

The Bank accords highest priority to compliance with laws, regulations and internal rules for all of its businesses and operations. It is the responsibility of each and every staff member to perform their functions within the framework of statutory and regulatory regime. Compliance is an integral part of doing business in the right way, and wherever felt necessary, proactive consultation with Compliance Function has been embedded in functioning of all businesses.

The Board of Directors, Audit Committee of the Board and the Top Management ensure effectiveness of the Banks compliance risk management framework within the Bank. The Bank follows the ethos that Compliance starts from the top, in letter and in spirit. The strong compliance culture is ensured through detailed policies and guidelines, strong procedures, mechanism of regular reviews, monitoring and testing, regular messages from the Top Management on the importance of compliance and zero-tolerance towards non-compliance, and compliance awareness programmes.

The Bank has a robust Compliance Policy, charting out the compliance philosophy of the Bank and the roles and responsibilities of the Compliance function. The Compliance function plays a vital role in ensuring that the overall business of the Bank is conducted within the ambit of rules, regulations, laws and internal guidelines. The function assists the Board and Top Management in efficiently managing the compliance risk.

The Compliance function works as a nodal link between the Bank and the regulatory authorities, i.e., RBI, SEBI, DFS, UIDAI, IBA, IRDA, PFRDA, etc., and provides guidance to all verticals in the Bank on applicable regulatory framework, i.e., regulatory guidelines, statutes and advisory issued by the regulatory authorities. The Compliance function enjoys complete independence, and identifies, records and assesses compliance risks associated with the Banks operations, including new products and practices, proposed establishment of new types of business, and material changes in the products and businesses.

The Bank has adopted three lines of defence: (a) approach with operations and business controls as first line of defence; (b) internal governance including Compliance Risk Management as the second line; and (c) Internal Audit being the third line of defence to ensure a strong compliance culture at all levels.

Vigilance Function B

The Vigilance Department has been functional in the Bank since October 2008, and its objective is to enhance the level of managerial and operational efficiency and effectiveness. The aim is to prevent, detect and analyse corruption / wrongdoing / misdemeanours on the part of the employees and follow it up by deterrent / preventive action to ensure highest standards of integrity, governance and ethical practices.

The Whistle Blower Policy was adopted by the Bank in 2009 so as to provide a channel to various stakeholders, viz., employees, customers, suppliers, shareholders, etc., to bring to the notice of the Bank any issue involving compromise / violation of ethical norms, legal or regulatory provisions, etc., without any fear of reprisal, retaliation, discrimination or harassment of any kind.

The Banks Vigilance Manual / Whistle Blower Policy and practices are in complete synchrony with all statutory and regulatory guidelines on Vigil Mechanism to ensure a compliant, fraud-free and ethical work environment.

HUMAN RESOURCES

The Bank realises that its human capital is the most important business growth driver. Skilled, well-trained and motivated employees are the real champions for enabling the business growth theme.

The core focus of the Banks Human Resources function is to be a strategic business partner and a business enabler by focussing on talent acquisition, talent development, talent management, retention, employee life cycle processes and compliance. The key HR agenda is to attract and retain quality talent, build desirable functional and behavioural competencies, sustain a high growth culture, reward and recognise talent, design aspirational career plans and be compliant with the regulatory and statutory guidelines.

The Bank believes in creating an environment of entrepreneurship, innovation and creativity, which helps employees achieve their potential. The Bank has several cutting edge HR processes that effectively enhance employee value proposition in terms of employee development, compensation, performance management, • career planning, work-life balance, etc.

Improved employee productivity, continual decline in attrition across job levels, stable leadership and influx of quality talent from market-place indicate that the Bank is now a preferred career destination in the BFSI sector.

Key Highlights:

• Employee headcount of the Bank stood at 30,674 employees in FY20. The headcount increased by 2,935 employees in FY20 and new hires were mainly recruited for supporting new business initiatives, critical and specialised roles requiring domain expertise and new branches.

The Bank believes in hiring the best-in-class and employs diversified hiring channels such as Employee Referral Scheme, job portals, consultants, campus hiring, social media and Hire-Train-Deploy Model for quality hiring. The social media (LinkedIn, Facebook) is continuously leveraged for niche and leadership hiring. The Banks selection process comprised qualitative and quantitative assessments, multi-layered interviews, background verification and reference checks to recruit the right • candidates.

• Employee development is the core theme. Well-trained employees are catalysts for business growth and innovation. The Bank has a well-defined training process comprising training need identification, dissemination of training plan and delivery through classroom / e-learning modes. The training needs of our Bank are tailor-made to

the business requirements as outlined in the Business Planning Cycles. The key training programs seek to hone behavioural & functional competencies of employees and cover various areas of Orientation, Banking product and operational processes, technology platforms, behavioural & attitudinal skills.

During FY20, the Bank conducted 14,00,000 learning man-hours for over 5,77,000 participants with an emphasis on Leadership development, Selling skills, Managerial Effectiveness, Banking Products, Banking Operational Processes, Credit, Risk, Treasury, Compliance and Orientation programs.

The learning effectiveness was ensured through well-designed content, delivery by qualified internal and external subject matter experts, refresher courses, online assessments and a feedback mechanism to improve learning efficacy.

• The Banks performance objectives are derived from its business objectives. The key enabler for employee performance is the Banks Performance Management process, which comprises Goal / SMART setting, and Annual review processes.

The Banks business ambition based on stretch targets is captured in the Individual Goals / SMARTs, which are linked to the business plans of the Bank. Periodic performance reviews aim at identifying performance gaps and counselling employees to achieve the desired performance levels. Individual performance evaluation is based on tangible achievement of performance objectives. The Bank recognises and rewards individuals through monetary rewards, learning opportunities, horizontal / lateral career mobility, and also by showcasing top performers as role-models.

The Annual Performance Appraisal for FY19 was executed meticulously with an emphasis on linking rewards to performance, identifying future leaders for enhancing the Banks business growth and devising course corrections to enhance performance and productivity.

• The Banks strategic intent has been to Attract, Reward and Retain quality talent. The Banks core Compensation philosophy is to Pay for Performance and Role criticality, be a competitive paymaster and offer market-linked performance-based compensation, build long-term employee ownership through ESOPs. The Bank ensured adherence and compliance to the regulatory guidelines on compensation practices on an ongoing basis.

• The Bank believes in employee connect and bonds with its employees through various employee engagement initiatives. Quarterly Webcasts by the MD & CEO helped to communicate the Banks business direction and performance and emphasised on core values of compliance, integrity and desirable conduct.

Employee visits by HR and Line Managers is a regular feature and helps to understand employee issues, resolve employee complaints and grievances. Employee recreation programs such as marathons, sporting competitions, business off-sites, team get-togethers, outdoor training workshops, celebration of festivals help to energise the employees.

From end FY20 onwards, the Bank has prepared an effective response for prevention and containment of COVID-19 pandemic. The entire endeavour is to protect employees and customers through initiatives such as: issuance of comprehensive COVID-19 guidelines (sanitation, travel, hygiene), Work From Home advisory, Virtual Branch visits, adherence to Government advisory, full support to all affected cases, etc.

• The Bank invests in Technology initiatives which continue to be the drivers in improving the efficiency of Employee Lifecycle processes. The theme remains digitisation and robotisation of HR operational processes. Launch of digital onboarding platform, internet based onboarding process are steps in the direction. All the Employee Lifecycle HR processes relating to Attendance, Leave, Payroll, Confirmations, Loans, Mediclaim, Gratuity, Exits, Full and Final Settlement were managed accurately and within the stipulated TATs.

• The Bank pursues "Discipline and Compliance" as its core values.

Every employee follows the Banks Code of Conduct and any aberration or deviation is dealt with punitive action.

Compliance is an integral part of the SMARTs of employees. The Bank conducted several awareness programs on a pan Bank basis on compliance, prevention of sexual harassment, cyber security, etc., to prevent misconduct. The Bank also ensured adherence to all the HR-related regulatory and statutory laws.

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.

An aggregate of 4,86,64,142 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 placed before Members in the ensuing AGM.

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

SHAREHOLDERS SATISFACTION

Contact details of shareholders such as e-mail IDs, mobile numbers and telephone numbers are obtained, so as to communicate to them about developments in the Bank. This direct communication is in addition to the regular dissemination of information through usual channels such as the Stock Exchanges, Press, Banks website, RTAs website, Newspaper Advertisements, etc.

The Bank voluntarily sends SMS / e-mail messages to shareholders informing about Board meetings for Quarterly / Annual Financial Results, and providing snapshots of the Results.

Shareholders shall continue to receive best-in-class services and be promptly informed of the developments in the institution.

Standees were kept / Banners were installed at the AGM venue conveying important shareholder-centric information.

The Bank has been at the forefront in "Green Initiatives", and aspires continually to graduate to paperless disclosures and compliances.

Shareholders have been requested to furnish their e-mail IDs at investor@indusind.com or by sending a request in writing at Secretarial & Investor Services office to help accelerate the Banks migration to paperless communication.

With the implementation of the Companies Act, 2013, companies can send Annual Reports and other communications through electronic mode to those shareholders who have registered their email addresses with the Bank or made available by the Depository.

On account of prevailing COVID-19 situation and Circulars issued by Ministry of Corporate Affairs and Securities and Exchange Board of India, the Bank had enabled a process with Link Intime India Pvt. Ltd., RTA of the Bank, for the limited purpose of registering contact details for receiving the Annual Report and Notice for the Annual General Meeting, allowing shareholders to update / modify their e-mail address and mobile number on a temporary basis by providing the basic credentials which may be asked for during the verification process. The link for updating the details is https://linkintime.co.in/emailreg/email_register.html.

The full text of the Annual Report shall also be made available in an easily navigable format on the website www.indusind.com under the link Investors / Investor Relations / Annual Reports.

Shareholders are also informed about the easy process for claiming the dividend amounts lying unclaimed with the Bank.

As regards transmission of securities, in case of securities held in physical mode (in single name, without Nomination), SEBI have prescribed a threshold limit of Rs.2,00,000 (Rupees Two lakhs only), i.e., market value of securities per folio, as on date of the application for transmission, for following simplified documentation. SEBI have, however, empowered Issuer Companies to enhance the value of such securities, at their discretion.

Considering the difficulties faced by the legal heirs in obtaining of Succession Certificate / Probate / Letters of Administration, the Board of Directors of the Bank have, for operational convenience, delegated the authority to the Share Transfer Committee for approving the transmission of securities held in physical mode, in case of market value of securities of up to Rs.10,00,000 (Rupees Ten lakhs only) subject to compliance with simplified documentation procedure prescribed by SEBI.

Members are requested to note that pursuant to provisions of Section 124 of the Companies Act, 2013, the amounts of Dividend remaining Unpaid or Unclaimed for a period of 7 years from the date of their transfer to the Banks Unpaid Dividend Accounts are required to be transferred to the Investor Education and Protection Fund (IEPF) established by the Central Government.

Further, the Ministry of Corporate Affairs has made effective the provisions of Section 124(6) of the Companies Act 2013, which requires that all shares in respect of which Dividend has not been paid or claimed for seven consecutive years or more to be transferred to IEPF Authority.

The Bank has sent intimation to Members on May 23, 2020 in respect of the shares on which Dividend for FY2012-13 had remained Unpaid or Unclaimed for seven consecutive years or more, requesting them to claim such dividend on or before August 22, 2020 so as to avoid the corresponding shares from being transferred to the IEPF Authority.

Notice in this regard was also published in Financial Express (all editions) and Loksatta (Pune Region) on May 23, 2020.

The detailed procedure for claiming the shares / dividend amounts which have been transferred to IEPF Authority is available on the website of the Bank at: www.indusind.com and can also be accessed at http:/www.iepf.gov.in/IEPFA/refund.html.

Members are requested to contact Link Intime India Pvt. Ltd. (Contact details and Office Address given in the Notice) /

Banks Secretarial and Investor Services Team for claiming Unclaimed Dividends standing in their name.

The information pertaining to Unpaid or Unclaimed Dividends, and the details of such Members and the Shares due for transfer to the IEPF Authority are also available on the

Banks website at www.indusind.com.

In Newspaper Advertisements for Board meetings, etc., message is added requesting shareholders to claim unclaimed dividends and which are not transferred to IEPF.

INFORMATION TECHNOLOGY

Technology in IndusInd Bank

IndusInd Bank has always been a pioneer in digital innovations such as its industry-first Alexa Voice Banking. It is the first Bank to launch a Video Branch and the first Duo Card which combines a debit and a credit card. Also, it is the first to allow customers to choose their account number and their choice of currency in ATMs. These innovations have stood the test of time and customers have great recall for them. The Bank has maintained the view that innovative and best-in-class solutions will be consistently launched to improve the experience of its customers through safe, convenient and reliable digital platforms. The technology function in the Bank has consistently been the recipient of numerous awards/accolades from leading industry bodies among its peers.

Some key transformation initiatives launched in FY 19-20 are

Superior customer experience - New Initiatives

SME Digital Lending Platform (DLP)

The Bank launched a comprehensive solution to address Banks Business Loan and Loan Against Card Receivable products - through a digital lending platform to existing as well as to new customers. The platform facilitates disbursement instantly based on the organisations profile and risk assessment. This follows real time loan application process, loan eligibility and disbursement with integrated underwriting process.

IndusStox for Online Trading

The Bank has launched an industry first partnership product called the 3-in-1 account. The Banks partner Upstox has their broking platform through which IndusInd Bank offers a unique 3-in-1 product: An IndusInd Savings Account, an Upstox Demat Account and an Upstox Trading Account. It provides a convenient option for Banks customers to upgrade to a full-fledged trading and Demat account.

Banking on WhatsApp with NLP

IndusInd Bank is the first bank to integrate Natural Language

Processing (NLP) on WhatsApp. The new rolled features allow customers to chat on WhatsApp in natural language. The Banks agent has been trained to interpret natural language/English phrases such as balance to make it simpler for customers to use the services with an economy of effort - whereas other banks provide mostly menu-based options. Service requests across CFD, CASA, NR customer base have gone live in FY2019-20.

Corporate Banking Digitisation Current Account Opening

An assisted app-based platform (DIGICA) has been introduced to help our customers to open a Current Account in a digitally integrated - seamless and hassle-free manner.

ASPECT Interactive Voice Response (IVR) 7.3 Upgrade

Aspect IVR is an existing Contact Centre solution used for handling inbound calling. The upgrade to version 7.3 provides enhanced Performance and Manageability with increased recording scalability with fully integrated Aspect Quality Management, increased flexibility and visibility for defining workflow business rules and Skill Group enhanced dynamic routing.

CFD Loan Repayment (ClickPay)

An online platform for CFD loan repayment where the customer can make the payment for their loan dues. The platform can be used for making repayment for CFD loans through Debit Card, Net Banking, UPI (Both QR & Collect Request). Dynamic QR code and deep linking interface are integrated for the seamless transaction experience. This would provide an additional facility for the customers to make the online payment without visiting our office and would also promote digital transactions and help us in reducing cash volumes.

Unified Payments Interface (UPI) 2.0

Bank has aligned its PSPs with UPI 2.0 upgrade along with other major banks. Existing features includes Registration/ Deregistration, VPA Creation and Account Linkage, Real Time Account Balance, Transaction History, Send Money (VPA, Account + IFSC and Mobile MMID), Receive Money, Collect Request raise/Authorise, Payment Authorisation, Merchant Self Boarding.

GeM (Government e-MarketPlace)

GeM is an e-market place for online and end-to-end integrated e-procurement portal for products and services and has been designed keeping in mind the need for ease of doing business as well as transparency & efficiency. Government of India has made it mandatory for all Central Government entities to mandatorily start procurement through GeM portal and almost all State governments have signed MOU with GeM to start procurement. IndusInd Bank has sourced mandates for both challan and non-challan modes.

• IndusInd FASTag - This enables automatic deduction of toll charges and lets customers pass through the toll plaza without stopping for the cash transaction, a perfect solution for a hassle-free trip on national highways. Under the NETC acquiring program, the Bank ties up with toll plazas and processes the transactions coming from NETC lanes. The Bank takes the toll file or online API message as input from the toll plazas, checks the validity of tags, performs toll fare calculation and send the transactions to NETC system. The Bank is responsible to collect funds from NETC settlement and post the funds in bank accounts of toll plazas.

• One Touch Insurance - OneTouch is an online platform for Consumer Finance Department (CFD) customers to buy/renew insurance policy. Customers can buy insurance for Home, Renew their Health Insurance Policies or Standalone OD Policies for two wheelers and Private Cars. The target segment is CFD Customers and for the open market. Premium can be paid through insurer payment gateway or customer can opt for personal loan for the same. It is integrated with the Insurance manufacturers core system for immediate policy issuance.

• Online Fixed Deposit Service - IndusInd Bank has launched a platform for Fixed Deposit/ Savings Account Opening - to acquire new customers for the Bank and also for existing customers to open Deposits. Customers can book their Fixed Deposits online and enjoy the prevailing interest rate bank offers. The entire on-boarding of the customer takes less than 5 minutes. The portal was rolled out with a feature that bank can in real time on-board the customer through this digital platform. Basis Aadhaar + OTP authentication, EKYC is done for customers. This is expected to serve as one of the key customer acquisition tools to acquire customers and increase the liabilities book. It helps the Bank in reducing dependency on branches for being the primary sources for CASA accounts.

• IndusConnect - IndusConnect is a portal for CFD Dealers. It facilitates dealers to boost their relationships, increase transparency and to bring efficiency. IndusConnect application provides below facilities to dealers:

V Share new leads to bank Share Market share/ Seasonal Sales ^ data to Bank
View Disbursements/ Commission details Raise Trade Advance request A
r Upload Post Disbursal Documents Dealers can view the relationship with CFD

Superior risk management and operating efficiency

Enterprise Data Warehouse with Analytics & Power BI

Implementation of the Enterprise Data Warehouse on a high scalable Cloud/Azure platform along with the analytics & Power BI. The Enterprise Data warehouse built on cloud (Azure) integrates more than 50 banking systems, generates business dashboards and reports in a matter of few hours while dealing data in the volumes of terabytes. With this this initiative, we have utilised analytics across the Bank.

LCR Computation Automated System

Liquidity Coverage Ratio (LCR) is a regulatory ratio that indicates short-term liquidity resilience of the Bank. The Bank has completely automated the process of computation of LCR by integrating real time with the source systems for asset and liabilities. Under the current market scenario, the automated LCR Computation system is of significant importance given the importance of liquidity management and submissions to RBI. The components that make up LCR are:

High Quality Liquidity Asset(HQLA) Cash Inflows: Advances, Derivatives Inflows
Cas Deposits, N Deriva h Out flows: ion-fund Facilities, tives Outflows

Cash Management System

Cash Management System has been upgraded for a superior performance and an increased functionality for various functionalities like e-payments and e-collections. The new Cash Management System replaces existing Cash@Will system to handle the payment and collection products of the Bank. The product is implemented covering Collections, Payments and Printing. It supports cash processing for Receivables/ Collections, it is the latest stable version of the product and the technology supports almost all business and operations requirements. The implementation has been smooth considering no major changes in the recon process, less training efforts, easy & seamless migration of data.

Security, Risk & Internal Efficiency Initiatives PCI-DSS Certification

Payment Cards Industry Data Security Standard is an information security standard for organisations that handle card payments. Banks Applications and Operations for storing, processing or transmitting Debit, Credit and Prepaid Cards are now compliant with the controls defined in industrys benchmark PCIDSS standard. We have achieved this for both acquiring and issuing functions.

Aadhaar Vault Implementation

From a data privacy point of view, the Bank has implemented the Aadhaar Data Vault on a state-of-the-art HSM solution - it is a centralised storage for all the Aadhaar numbers collected by the Bank for specific purposes under Aadhaar Act and Regulations, 2016. It is a secure system inside IndusInd Bank infrastructure accessible only on need to know basis. All systems now only store the UID token and the Aadhaar number is not stored nor accessible within the Banks applications.

RSA Adaptive Authentication

The Bank has implemented the RSA Risk Engine - which uses AI and Machine Learning techniques to profile the end user behavior. Based on the pattern of the user the system intelligently creates a step-up authentication using different factors or denies login.

Identity Access Management (IDAM) 2.0

The Bank has brought automation to its IT function - through use of robotics to handle user data validation, notifications, actions and reporting at a fraction of the manual effort and with higher accuracy.

Network Access Control (NAC) enhancements

The Bank has been a leader in implementing a NAC which follows a process by which all end points (users) are matched in real time to a standard set of conditions for compliance, the system is able to handle a complex set of constraints and apply locks to prevent unauthorised machines from accessing the network.

Technology Awards

Winner under category - Best Technology Bank

IndusInd Bank was awarded winner in the

B category Best Technology Bank, the Bank was recognised for executing an array of innovative technology initiatives focused on customer experience and accessibility.

Winner under category - Best Payment Initiative amongst private sector Banks

E IndusInd Bank was awarded winner in the

category Best Payment Initiatives, for being at the forefront and following an innovation-led strategy both for Consumer and Corporate payments.

Winner under category - Best use of IT and Data Analytics for Business Outcome

B IndusInd Bankwas winner in the category Best use of IT & Data Analytics for Business Outcome, for realising business outcomes in Consumer, Corporate and MSME segment.

BankTech Awards 2020

IndusInd Bank has won the award for Best use of IT in Customer Experience category.

Finnoviti 2020 Awards

* IndusInd Bank has won Spirit of

Innovation awards for the launch of fOI -^-1 Indus Corp, Duo and Nexxt Card and Data warehouse & Power Bl Implementation projects at the 8th edition of the Finnoviti 2020 Conference & Awards.

BFSI Smart Tech Leadership Awards

IndusInd Bank has been the winner in the following categories:

• Best use of IT • Best use of Data & Analytics • Best Digital Launch

• Disruptive Innovation and Financial Services

CORPORATE SOCIAL RESPONSIBILITY

IndusInd Bank operates within an innovative sustainability strategy which leverages investment in natural, social & relationship capital, and human capital equally in response to rapidly changing social and environmental backdrops. The Banks CSR mission is to emerge as a Best-in-Class Bank committed to growth and development that benefits, not only the Bank and its customers but also, the natural environment and the community at large. To this end, the Bank is guided by the principles outlined in the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVGSEE) and the UN Global Compact. In line with its CSR focus areas, the Bank has committed to various long-term and need-based projects. The Banks CSR Policy and strategy directs and govern the Banks activities in focus areas, as follows:

Environment

Watershed Management Programme

In its 2nd year of operations treated 5,576 hectares of land in 63 villages in the States of Madhya Pradesh, Maharashtra, Jharkhand and Odisha. This has resulted in creation of 7,15,154 cubic metres water storage capacity. The project carries out area and drainage line treatments in a watershed to capture rainwater and check soil erosion. It works with communities & farmers and build their capacities to adopt sustainable agricultural practices and judicious usage of water. A cadre of 5,460 members from 517 Self Help Groups, 580 members from Village Development Committees, and more than 100 Vasundhara Sevaks are on ground implementing the work.

Springshed Management

This intervention proposed in Rayagada, Kandhamal and Kalahandi districts of Odisha aims to conserve and utilise the perennial source of water through streams which otherwise would be untapped. In the 1st year of implementation i.e. in FY2019-20, the project benefited 170 households with 4 diversion based irrigation structures which will provide critical irrigation to the farmers and provide water for domestic purposes.

Rejuvenation of Urban Lakes/Ponds

Considering the severe water crisis building up across Indian cities, IndusInd Bank continues to focus on the restoration and the conservation of water bodies, particularly in urban & peri-urban centres. During FY2019-20, 22 lakes/ponds were taken up across 5 cities for rejuvenation benefitting close to 1.50 lakh people, treating 76 hectares of land and creating water capacity of 7,000 lakh litres.

Drain Restoration

Badshahpur drain, Gurugram was taken up to create public space, water conservation & recharge along with urban greening. This project also envisaged increasing the water table along with a collateral of creating public space and giving engagement opportunity to the Banks employees. Over 5,000 trees were planted with about 200 man hours of employee engagement. This project has generated fantastic goodwill with people of the city and the corporation (MCG).

Roof Rain Water Harvesting

Seeing the impact in FY2018-19, this intervention was scaled up from 250 harvesting structures to 400 rain water harvesting structures in FY2019-20 in 30 villages impacting close to 40,000 beneficiaries. The intervention is expected to reduce women drudgery caused for making water available from long distances. Children can spend time in going to school instead of accompanying mothers to fetch water from long distances.

Urban Afforestation

" sustainability, IndusInd

Bank planted another 59,000 trees in FY2019-20. All these trees have been planted across 13 cities pan-India where space has been a premium. Apart from the traditional plantation, Miyawaki type of plantation was executed in this financial year, which is creation of Mini Forests. These plantations have carbon sequestration potential of 16,667 MT (over a period of 15 years).

Schools on Solar

The Bank has taken up 10 schools/institutions under Schools on Solar project in FY2019-20 which cater to the education of the needy students coming from the lower strata of the society. The project has had significant impacts to date with 3.94 lakh electricity units generated, 323 metric tonnes of CO2 reduced and Rs.35 lakh saved in electricity bills. Over a period of 25 years the existing installations are expected to save over Rs.6 crores and 5,600 metric tonnes of carbon.

Indus Oorja Solar Village

To provide consistent decentralised renewable supply of energy in one of the highly remote village on Kumirmari island of Sundarbans, the Bank initiated Solar-Based micro-grid project during FY2019-20. The solution proposed is to set up two AC solar micro-grid system having a capacity of 30 kWp of electricity generation each which will further be connected to provide power to approx. 395 households and 10 rural institutions (Schools, Panchayat Office, Community Building, etc.) along with 40 street lights near embankments in two years and reducing carbon emission by approx. 34 tons per grid p.a.

Solar Street lights

IndusInd Bank carried out installation of Street Lights powered by solar panels in 38 villages in Rajasthan benefiting over 1,63,000 villagers through the installation of 2,000 such lights. The intervention has enhanced mobility of the villagers and has provided enhanced security for the villagers, women and children in particular.

Education

Enhanced Education

without external aid or help. In

FY2019-20, the programme has been scaled to another 317 centres totalling the educational centre count to 717. Over 18,000 students have enrolled from grade 1 to grade 10.

Early Learning Outcome

In FY2019-20, the Bank supported improving Early Learning Literacy (ELL) outcomes in Haryana. The beneficiaries will be 1,00,000 Grade 1 and Grade 2 students and about 7,000 teachers and teacher educators across 7 districts and 3,200 schools of Haryana. By the end of the programme, it is envisaged that the students will have fluency to read grade level text by the end of Grade 2.

Road to School Project

During FY2019-20, the Bank initiated "Road To School" project in partnership with Learning Links Foundation for bringing a change in delivering the education especially to the children from Government School. The programme addresses the issues of learning gaps amongst government primary & middle school students and builds a fundamental framework for development of the student. The programme reaches to 10,915 children and 125 Teachers in 42 Government Schools & 10,000+ community members in Khordha district of Odisha.

Mid-day Meal Programme

The Bank has partnered with The Akshaya Patra Foundation

with an aim to end classroom hunger, enhancing enrolments in school and improve nutritional levels. The programme, which incentivises children to attend school regularly, follows a two pronged approach - to not let any child go hungry to school and also to ensure the child is well fed that he concentrates on the studies for better academic performance. The Bank is supporting 50,000 children in more than 540 schools.

IndusInd FFE Scholars

This programme runs on a unique concept wherein every scholar undertakes a pledge to support education of at least two other students through a contribution to the Foundation whenever they are able. This pay-forward model ensures the self-sustainability of the organisation. IndusInd Bank supports 31 scholars for 4 years from the engineering background.

Young India Fellowship

IndusInd Bank supports deserving meritorious students through the Young India Fellowship (YIF) programme in partnership with Ashoka University, a one year full-time residential programme renowned for creating next generation of leaders and change agents. IndusInd Bank supports the course fees for fellows who are from poor socio-economic background. 60% of the total pass-outs have joined the corporate sector, 30% are engaged in the not-for-profit sector and 10% have moved on to become entrepreneurs.

IndusInd Scholars for Purkal

IndusInd Bank has been supporting about 75 children Dehradun by giving opportunity for quality school education to the Lower

Income Group. These are

children with academic potential, who are predominantly from villages near Dehradun and other parts of Uttarakhand. The project implementation not just focuses on the regular curriculum, but also conducts a series of sessions and training for the students to enhance every possible life skill.

Single Teacher Schools Programme

The Bank supports 25 Single Teacher Schools in the districts of Coimbatore and Kanchipuram in Tamil Nadu benefiting 750 students in the villages. The purpose is to provide free quality primary education to the village children and thus eradicating illiteracy, child labour, and drop outs. 95% of the teachers running the schools are women.

Arts & Heritage

IndusInd Bank contributes to Sahapedia with Frames Photography Grant which actively encourages documentation of our cultural heritage. This grant is to support about 25 photographers giving an opportunity to document cultural spaces, themes, practices of their interest in subjects related to culture, arts and heritage.

Livelihood

Skill Development of drug rehabilitated youth

IndusInd Bank supports SUPPORT an NGO offering long-term residential rehabilitation programme for substance abusing street children/youth. During FY2019-20, 216 youths underwent rehabilitation out of which 167 were trained (welding, carpentry, tailoring, wiremen) at the vocational training centre. The programme has placed 57 youth during FY2019-20 with salaries up to Rs.10,000. This has given them immense confidence and motivation to lead a drug free life.

Stree Swabhiman Livelihood Programme

Under this initiative, around 4,500 girls were provided with supplies of sanitary pads in Madhya Pradesh through the Banks business correspondent Samhita. During the project, the supply of the pads was a bigger challenge. To resolve this challenge, 350 Village Level Entrepreneurs (VLEs) were engaged to set up units to manufacture pads across 100 districts in 16 states. These manufacturing set-ups engaged 6-8 women thus creating livelihood for over 1,800-2,000 women.

Association of People with Disability (APD)

This programme supports training and placement of 266 young men and women (18 to 35 years) with disabilities from marginalised communities with or without schooling. This makes these individuals become economically & functionally independent and socially rehabilitated through domain based training opportunities in 13 districts of Karnataka. 81% trained youth were placed with salary in the range of Rs.7,000 to Rs.20,000.

Indus Saksham

IndusInd Bank initiated skills training programme in various trades at Guwahati, Assam where 400 local unemployed youth are being trained. The programme aims at 100% placement ensuring income of Rs.12,000 to Rs.18,000 per month. The programme aims to promote gainful employment for the youth to ensure stable livelihood through alternate employment/self-employment.

Sports

The Banks sports initiatives have been conferred Honourable mention by Ministry of Corporate Affairs under their Contribution to the National Priority Areas - Promotion of Sports.

IndusInd Para Champions Programme

Encourages differently abled athletes through a sports scholarship program. 45 athletes are supported to cover their high performance need, travel, injury management, rehabilitation strength training, medical support needs, etc. During FY2019-20, these athletes have won 61 Gold, 30 Silver and 25 Bronze medals in various competition both national & international.

IndusInd Blind Cricket Programme

The Programme is implemented in association with the Cricket Association for the Blind in India (CABI), the cricketing arm of Samarthanam, who governs Indian cricket tournaments. IndusInd Bank is principal supporter for 26 players in the Indian Blind Cricket Team. During FY2019-20, the Team won bilateral ODI series against the West Indies and Nepal. Further, The Nagesh IndusInd trophy was started to identify more talents. 400 blind cricketers participated in this trophy and played 60 matches in 12 States.

IndusInd Girl Power Programme

The Bank supports 60 girl athletes from lower income families from all across India. They get access to world-class coaching and training facilities at the Inspire Institute of Sports (IIS) and are being groomed to become champions who will represent & win medals for India at international sporting events. In FY2019-20, these women athletes have won medals which included 51 Gold, 25 Silver and 36 Bronze medals.

Nurturing Rural Champions Programme

In line with the Banks excellence and inclusive approach for sports, 55 young athletes i.e. 15 national level and 40 state/ district level athletes are being supported in Mann for their training, nutrition, medical care, injury and recovery management, etc. and enable them to compete at the international arena. The focus is on select disciplines, viz. Wrestling, Track and Field, Athletics and Hockey. At present, 9 dedicated trained coaches are a part of the programme.

IndusInd Hockey for Her Excellence Programme

This programme which is being carried out at Bhubaneswar, Odisha, aims at nurturing talent through supporting the excellence in sports. Throughout the 3-year project, 40 high performing girls in the age group of 13-15 years will be further trained & their talent will be nurtured at the state-of-the-art Naval Tata Hockey Academy (NTHA) excellence centre at Bhubaneswar along with building capacity of 10 coaches.

Healthcare Mini-Health Clinics

IndusInd Bank has supported the setting up of 280 Mini Health Clinics (MHCs) in rural Uttar Pradesh, in partnership with Cashpor. These MHCs provide affordable primary healthcare to individuals from Poor and Lower Income Group families. The project now covers 5 States and 24 districts with an outreach of about six lakh & direct beneficiaries of over additional 85,000 people. 83,173 patients have been enrolled with various ailments. This project not only provides medical access to villages but also creates capacity of 3,000 women workforce.

Indus Aarogya Soukhyam (Cancer Care)

IndusInd Bank has partnered with TATA Trust to support an intervention on reducing cancer burden by providing care, treatment, awareness and prevention services under the bigger umbrella of Government of Assams Cancer programme. The Bank has provided radiology equipments at Assam Medical College and Hospital, Dibrugarh.

Support for Cancer affected children

The Bank has been supporting treatment of the cancer affected children, in partnership with Bhagwan Mahaveer Cancer Hospital and Research Centre (BMCHC) in Jaipur, Rajasthan. These children, aged under 14, come from remote villages/towns of Rajasthan and have no access to medication or treatment. A total of 155 patients have been treated over 4 years until March 2020 out of which 106 children have completed their treatment & have been declared cancer free (cure rate of 68%) and are currently only on follow-up &/or supervision.

Support for Cataract Surgeries

The Bank supported cataract surgeries of 5,000 beneficiaries in 9 districts (including aspirational districts) across 7 States in partnership with Vision Foundation of India. These beneficiaries, which belonged to the marginalised strata of the society, were operated without any charges and were provided with lens, medicines, one day stay, food, and transportation. These beneficiaries include 2,600 females and 2,400 male patients.

Support for HIV infected

The Bank, in partnership with Lotus Medical Foundation, has been supporting treatment of HIV infected patients at Kolhapur. The support includes cost of treatment, meals, and medicines at subsidised rates at the care centre and also has Anti-Retroviral Therapy (ART) centre. More than 300 patients have been admitted for treatment during FY2019-20.

Projects in collaboration with Bharat Financial Inclusion Ltd (BFIL)

Bharat Sanjeevani

It is an indigenously implemented initiative wherein the project delivers qualified livestock care at the doorstep, eliminating the hassles and financial losses faced by small and marginal farmers. The project is implemented in 3 States i.e. Madhya Pradesh, Jharkhand and Uttar Pradesh.

Pragat - Holistic village development

Pragat works towards achieving better holistic growth in under-developed villages with lack of basic amenities and aims to eliminate the gaps and bring access to the services, on par with any urban facilities. The project works across 12 villages in Gulbarga, Karnataka addressing a population of 65,000. The key areas of intervention include Healthcare, Education and Water.

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 voluntarily committed targets on Environmental, Social and Governance (ESG) aspects and continues to improve the sustainability performance to surpass the ESG targets. The Bank currently features in the A list of CDP India Climate Change Rising Stars, a platform that is widely referred by global Investors. The Bank has been publishing the Integrated Report for the last three years, which aims to communicate how the Banks Strategy, Governance, Performance and Prospects create value over time. The value creation story of the Bank articulated in the Integrated Report has been prepared on voluntary basis in adherence to SEBI Circular No. SEBI/HO/CFD/CMD/CIR/P/2017/10 dated February 6, 2017. As a green initiative, the Bank has hosted the latest Integrated Report on its website at https://www.indusind.com/in/en/sustainability.html

MARKETING & COMMUNICATIONS

At IndusInd Bank, customers are always put First. It has been the Banks constant endeavour to leverage the latest technology to build capabilities, and bring forth some of the most unique innovations that cater to the dynamic needs of the Banks discerning customers. The Banks marketing and communication strategy have always been aligned with this vision wherein campaigns are designed to understand stakeholders interests and engage with them in their world.

2019 was a special year, as the Bank turned 25. In a bid to commemorate the milestone, the Bank announced the launch of a multimedia campaign - #Just25. The campaign drew inspiration from the 25-year-olds of today. Individuals who are innovators, who have made a difference, levelled the playing field or beaten the odds to take on the world. The campaign reflected the Banks ethos of always being inspired by its customers and not rest on past laurels. The campaign highlighted the Banks continued aspirations of being innovators, achievers with one cohesive goal of becoming Indias most Convenient Bank.

The campaign comprised five TVCs showcasing a para-athlete who has overcome every possible challenge to achieve his goal, a green crusader aspiring to make the world

a better place to live, a beginner whos making an impact through innovative ideas, a rural housewife who is a successful entrepreneur as well as an individual who is living his dream of doing things differently; eventually reflecting upon the role that the Bank has played in the lives of millions of such individuals over the 25-year journey. Further, as part of the celebrations, the Bank organised two mega Town Halls in Mumbai and New Delhi which witnessed over 8,000 employees gracing the occasion, thereby making it a platform for them to engage with the senior management at a personal level. The theme for the Town Hall was "celebrating the past, excited by the future" which also resonates the spirit of 25-year-olds of today, and strives to build an identity of a brand which is youthful, modern and full of energy.

Going forward, the Bank aims to resonate the very same youthful spirit, SSKA and continue interacting with customers at multiple touch points by significantly leveraging traditional, digital as well as social media channels to reach out to the world at large.

Digital innovation at the heart of what is done

For the Bank, continuing to be relevant to diverse set of customers means creating solutions that simplify their lives and the delivery of their banking requirements. Leveraging on innovations, to create differentiated products and platforms, will continue to be the key to the Banks communication plank. As banking gets simplified, the communication too moves towards showcasing convenience and simplicity as important attributes that underpins the Banks approach towards providing banking services. The Bank has been focussed on customer experience and the "customer first" mantra translates into meaningful and comprehensive product development, service and product delivery through digital means which in turn, means simplifying the process of adoption

#Just25 Campaign

The Bank launched a multimedia campaign to commemorate the completion of 25 years of operations. Christened #Just25, the campaign took inspiration from the 25-year-olds of today and comprised five TVCs which reflected the role that the Bank has played in the lives of millions of such individuals over the 25-year journey. Nearly 95% of users who engaged with the commercials on YouTube, have seen all the TVCs, which is significantly more than the Industry standard of 30% - 40%. The campaign garnered over 270 million impression across social media sites, while the TVCs alone fetched over 15 million views across platforms. The Bank also created a microsite for the campaign which witnessed 6 lakh visits.

Launch of the IndusInd Bank Celesta Credit Card

The Bank announced the launch of a super-premium credit card - Celesta which offers best-in-class rewards and benefits and has been created keeping the discerning needs of senior professionals and businessmen who are always on the go. The card provides this segment of customers with superior features, benefits and experiences specially put together to meet their travel, wellness and lifestyle needs. A press release was issued to the media to announce the launch which garnered 25 articles across print and online platforms.

Launch of PIONEER Banking

The Bank has also launched PIONEER Banking, its wealth management platform, which caters to the high net worth segment of customers. Based on state-of-the-art research based capabilities of the Bank, this new service merges

bespoke wealth management solutions with a wide array of personal & commercial banking products, curated to suit the requirements of the discerning few. So far, the Bank has set up 7 PIONEER branches across Mumbai, Pune, Delhi and Gurugram. A mega digital and print campaign was executed to launch the PIONEER platform which garnered tremendous response. Additionally, 2 large-scale events were organised in Mumbai and Delhi for the wealth customers of the Bank to showcase the offerings of PIONEER.

Customer Engagement on Digital Platforms

During the year, the Bank started engaging with customers through digital platforms. It created a digital journey for new customers who are travelling overseas for leisure and looking for Forex. In a bid to cater to their forex needs, the Bank started a campaign named Always On across all major digital marketing platforms. A similar campaign was also done for people who were looking for a savings bank account. Through such digital campaigns, the Bank has successfully on-boarded several new customers for Savings Account, Fixed Deposits, Forex Cards, Telegraphic Transfer and NRI Savings Account among others.

A New Website

During the year, the Bank has also engaged with new age technology platforms to enhance its corporate website. This website will offer a personalised experience to each customer basis their profile and relationship with the Bank. It will be equipped with latest technological updates that will provide a rewarding banking experience thereby, depicting the ethos of the Bank which is being young, relevant and modern.

Qualitative Research to evaluate the current Savings Account proposition

A large-scale qualitative research was commissioned at the beginning of the financial yearto understand the reasons for opening and subsequently operating a Savings Bank Account, amongst both customers and non-customers. The research also aimed at understanding the relevance and usefulness of our USPs. The research which spanned over 2 months, helped the Bankin understating the savings account landscape better, threw light on how the innovative offerings provided by the Bank are perceived. The findings of the research is helping the Bank create a more robust and customer-centric products.

Issuance of FASTags

The Bank extensively promoted the usage of FASTags across all customer segments and launched campaigns highlighting free issuance of FASTags from IndusInd Bank. The Bank promoted this extensively across the country through print advertisements as well as all through its digital platforms and branches.

Beyond Banking

The Bank is committed to running its business in a way that generates sustainable value for its customers, clients, shareholders and employees. The Bank also recognises that since its sphere of activity and influence extends beyond the boundaries of the financial system, it needs to work through various CSR initiatives for social upliftment and environmental conservation. Placed below, are a slew of fascinating initiatives, which have spearheaded the Banks efforts beyond the banking domain. The Marketing & Communications team has crafted customised messages for each of them to create awareness among all stakeholders.

Ebar Pujo, Sobar Pujo

It is a yearly activity undertaken by the East Zone during the Durga Puja festival. This year, the initiative was organised in association with Rotary Club of Calcutta Magnum and Rotaract Club of Contemporary Kolkatans wherein the Bank donated new clothes to over 1,200 underprivileged children at an event held in Kolkata. The event was graced by Mr. Harshavardhan Neotia, Chairman of the Ambuja Neotia Group and Mr. Alexandra Mendes Garcia, Chief Coach of Quess East Bengal.

Zonal Initiatives

Zonal teams undertook several initiatives to extensively promote social causes. Some of the prominent ones are Environment Day - aimed at spreading awareness on plantation of saplings and usage of paper bags instead of plastic, Flag making competition across 125 schools to commemorate Independence Day as well as activities to celebrate Earth Day. Through these activities, the Bank generated nearly 90,000 leads.

Mini Health Clinics

The Bank has partnered with Cashpor (a Section 8 Company) for setting up 177 Mini Health Clinics to serve as Primary Health Centres. These are spread across 20 backward districts across Uttar Pradesh, Bihar, Jharkhand and Madhya Pradesh and are expected to benefit about 2,00,000 patients per annum.

Hockey for Her Excellence Programme

In a bid to scout and nurture promising talent in the field of

Hockey, the Bank has partnered with Tata Trusts and the Government of Odisha to support 40 girl athletes to receive high-performance training and coaching. The goal is to create champions who can be a part of the national team and state teams, and can win laurels for the country. These athletes were selected from a pool of 2,000 girls and will be trained at the state-of-the-art Naval Tata Hockey Academy.

Rural Champions Programme

The Bank has partnered with the Mann Deshi Foundation to support the development of 55 young athletes (15 National Level and 40 State/District Level), to make them champions in their respective disciplines. These disciples are Wresting, Athletics and Hockey.

Alliances and tie-ups

Through strategic alliances and tie-ups, the Bank not only offers customers more value, but also engages with them at the highest level.

Brand Partnerships for Debit and Credit Card Customers

This year, the Bank entered into various tactical alliances with over 50 brands to bring forth engaging value adds for its Debit and Credit Card customers. These partnerships are spread across an array of categories including Travel, Lifestyle, Food & Beverage, and Health & Wellness among others.

Branding Metro stations

Continuing with our pursuit to invest in strategic long term brand properties, the Bank signed up for a strategic branding initiative which included semi naming of two metro rail properties in Noida and Mumbai. Both properties have been taken up for a period of 5 years.

DDA Housing Scheme

The Bank was shortlisted by the Delhi Development Authority to collect booking amounts for their housing scheme of 2019. In order to generate interest amongst applicants, the Bank executed a radio campaign across the NCR region and amplified it further on digital media.

Employee engagements and activities

Internal stakeholders form an integral part of the Banks success. They are considered as Brand Ambassadors of the organisation. Within the Bank, employee activities go beyond the realm of banking to extend to innumerable initiatives that explore and nurture their talent, passion and team-spirit. The Bank considers running as a holistic activity that contributes to life like none other. IndusInd Bank celebrates running as an activity that inspires those around. And this is the thought that the Bank believes in, which is why it sponsored more than 8,000 of its employees across 25 cities to run marathons, making them more aware about the benefits of a healthy body and healthy mind. To commemorate this milestone, the Bank created a film on running, featuring stories of some of its employees who have made running a part of their daily routine. Christened Get Set Run, the film garnered over 1.4 lakh impressions across social media platforms.

Activities to Reinforce Brand Image

The Bank has extended significant support to the field of art, music, sports and environment through sponsorships. To begin with, the Bank collaborated with Sanctuary Asia to organise their Annual Wildlife Awards. Music being another key area of focus, the Bank has been continuing to partner with Sahachari Foundation which brings together Ustad Zakir Hussain along with other musicians from around the globe on one platform. This year, the performance was held at the National Centre for the Performing Arts (NCPA) in Mumbai. Further, the Banks association with Indradhanush Foundation and Uttung Sanskrutik has been offering significant support to musicians at the grassroot level. The association with Rajmata Vijaya Raje Scindia Centre for Development has also ensured that the age-old sport of Polo remains in its purest form through the Maharaja Jiwaji Rao Scindia Gold Cup. One of the biggest contributions of the Bank towards encouraging Fine Arts has been its association with Art for Concern by Secure Giving Foundation. A charitable Exhibition cum Sale event organised by the Foundation helps in achieving dual purposes of promoting art and helping the underprivileged. Other associations include FICCI, Bombay Chamber of Commerce & Industry, Isha Utsav, Hindu Sindhi and Kochin Patrika.

BRANCH NETWORK

AND INFRASTRUCTURE

Apart from expanding its pan-India network, the Bank has also refurbished/re-modelled 8 Branches, set up 5 Administrative offices, and relocated 13 branches and 1 Office towards better business prospects. A total of 637 new seats were added across India to cater to growth in Back-office/Controlling office requirements, distinct from branch network capacity additions. The Bank has 5 Currency Chest, one each in, Mumbai, Delhi, Chennai, Kolkata and Bengaluru. The Bank has set up 7 PIONEER branches in Mumbai (Juhu, Peddar Road & Lower Parel), Pune (Koregaon Park), Delhi (Defence Colony & Punjabi Baugh) and Gurugram (Palm Springs).

BHARAT FINANCIAL INCLUSION LTD.

(formerly known as IndusInd Financial Inclusion Ltd.), Banks Wholly-owned Subsidiary

Microfinance

Microfinance business is primarily operated through our wholly owned subsidiary "Bharat Financial Inclusion Limited". We are the largest microfinance institution in India by number of borrowers, branches, districts and gross loan portfolio, as of March 31,2019 according to data published by Sa-Dhan (Source: Bharat Microfinance Report 2019).

We are primarily engaged in providing microfinance to low-income individuals in India. We have presence in 22 states in India, with 2,071 branches and 23,475 employees, as of March 31,2020.

Our leadership in this business is further demonstrated by:

1 Unique operating model Extensive Reach 1 1.Low cost producer Pan-India presence with no unbalanced geographic sectoral exposure
Group lending 100% No. of districts 431 State Portfolio cap of 16%
Rural Customer base 80% No. of branches 2,071 Interest Rate Sub 20% lending rate District Montly disbursement cap of 3% and portfolio Cap at 1%
Weekly meetings with customers 100% Number of members 9.6 million Branch Monthly disbursement cap of 1%

We continued to grow deeper in the existing 22 States with 2,071 branches as on March 31,2020. Our borrower base grew by 9% to 8.1 million as on March 31,2020. Disbursement for the year grew by 11% to Rs.29,681 crores from Rs.26,699 crores (FY2018-19). Gross advances for the year grew by 29% to Rs.22,428 crores as on March 31,2020 from Rs.17,417 crores as on March 31,2019.

Offering Savings and Deposits products for our microfinance customer base

In FY2019-20, we opened 3.1 million Savings accounts and 1.6 million Recurring Deposit accounts. The penetration of recurring deposit accounts to savings accounts is 51%. We expect full penetration of savings account among our customer base and a healthy penetration of recurring deposits, going forward. This strategy shall not only help us in building strong relationship with customers, but it shall also help in lower loan delinquency levels (as witnessed in pilots) and build individual lending products for our customers, based on their savings and deposits behaviour.

Door-Step-Banking through BharatMoney Stores

Last mile monetisation still remains a challenge. We are endeavouring to bridge this gap through "Bharat Money Stores (BMS)" programme. BMS (typically a neighbourhood Grocery store) are sub-business correspondents to IndusInd Bank Ltd and acts as transacting point offering gamut of banking services. They offer services such as cash deposits, cash withdrawals, bill payments, fund transfers, etc. The in-house developed technology platform enabled in BMS smartphone, leverages JAM (Jan Dan, Aadhaar, Mobile), by using AEPS (Aadhaar Enabled Payment System). These services are utilised not only by our microfinance customers, but also by other residents in these villages. BMS pilot was extended to Odisha, Maharashtra, Karnataka and Bihar and currently have 14,883 stores registered as on March 31,2020. The volume of transaction for FY2019-20 was 3.1 mn with value amounting to Rs.1,531 crores. Out of the total customers transacted, 22% was from our microfinance customers and rest 78% were from other residents in village.

Banks in-house technology platform

The challenges are unique on account of deep geographical presence with thin internet connectivity, large feet-on-street requiring mobility solutions and high velocity of transactions, given the weekly collections model. These unique challenges were met, coupled with business expectations, by developing in-house technology solutions, given the unique customisation requirements (as outlined below).

1 Unique Challenges M Business Expectations In-House Developed Solutions
• Seamless and Paperless transactions with customers. Ex: Loan officers 30 mins window with 30 customers covering attendance, collections, loan applications, disbursements, product financing.
• Cashless disbursements
• Real-time information on collections and disbursements
• Tracking Route maps of loan officers and center meeting efficiency.