IndusInd Bank Ltd Management Discussions.

Macro-economic and banking environment

The fiscal year 2020-21 was a watershed year for the Indian economy and banking sector. A "once-in-century" COVID-19 pandemic engulfed India and the world, bringing mobility and activity to a standstill. To break the chain of transmission of this novel virus, the Government imposed a national lockdown for 68 days, which lasted until the end of May 2020, followed by a gradual and phased unlocking. This national lockdown was the most stringent containment measure taken anywhere in the world and economic activity was severely hampered as a result. Indian economy went into a recession, with real GDP estimated to have contracted by 8% during the year. The economy would be smaller in size by about 4% compared to the March 2020 level. This is only the sixth instance of a recession since FY1951-52 and the magnitude of the contraction is the deepest. During the first half of the year, a sharp slump in growth ensued, with real GDP growth, at -16% y-o-y, slipping into negative territory.

The economy recovered during the second half to return to positive growth. A deep contraction in the non-farm economy was seen over the first half, followed by a manufacturing sector-led recovery in Q3 and a pick-up in services sector activity in Q4. The farm sector showed resilience with another year of record foodgrains production helped by normal monsoons. On the spending side, a sharp contraction in private consumption and capital formation during the first half triggered the recession, while government consumption and net exports provided support. The global economy also witnessed a large contraction of 3.3% in FY2020, estimates the IMF, with the US economy contracting by 3.5% and Euro area GDP declining by 6.6%.

The actual growth outcome was, however, better than anticipated. Large fiscal stimulus, especially in the US, along with ultra-loose monetary conditions put in place by major global central banks coupled with a rapid vaccination roll-out, allowed for a faster rebound in global activity and trade. Total budgetary and below the line support offered globally amounted to USD 16 trillion or 15.3% of global GDP as of March 2021, as per the IMF Fiscal Monitor of April 2021.

In India too, a large and coordinated policy response was initiated by the Government and the RBI encompassing fiscal, monetary, liquidity and regulatory measures. The Central Government raised its budget spending and had to forgo tax revenue because of growth contraction. As a result, the fiscal deficit for the year rose sharply to 9.5% of GDP from the budget estimate of 3.5%, with 2.1% of GDP in additional spending on subsidies and 2% of GDP due to tax revenue shortfall. The fiscal policy response in the initial stages was targeted at providing liquidity and credit guarantee support particularly to small businesses and cash/kind support to migrant workers and other vulnerable sections. With gradual unlocking, fiscal support was calibrated towards helping consumption and reviving investment activity. The Central Government also extended the production-linked incentive scheme to 10 new sectors, to promote domestic investments and to reduce reliance on imports. The Union of Indias Budget for FY2021-22 also aims to increase public spending on CAPEX and healthcare infrastructure.

Monetary policy levers were also eased to counter the growth slump via sharply lower policy rates and infusion of durable surplus liquidity in the banking system, with targeted operations to channelise credit towards sectors most impacted. This was done to ensure that financial conditions remain easy and to reduce the cost of borrowings for both the Government and private borrowers. Repo rate was reduced by 1.15% over March and May to 4%, while the reverse repo rate was reduced by 1.55%. The RBI through various measures including a 1% cut in banks CRR, open market bond purchases and target lending operations, injected Rs.13.6 trillion or 6.9% of GDP in durable liquidity from February 6, 2020 to March 31,2021. With the overhang of surplus liquidity, market rates got anchored to the reverse repo rate, leading to a significant easing in rates over the year.

However, the large size of the Governments market borrowing programme for the FY2021-22 at Rs.12 trillion, on top of record borrowings in FY2020-21 at Rs.12.6 trillion, started exerting pressure on sovereign bonds yields over February and March, especially for the longer tenors. That in turn exerted upward pressure on the cost of borrowings for other borrowers. Taking note of that and in line with accommodative monetary policy, the RBI announced another unprecedented step. The central bank introduced a facility called GSAP 1.0 to buy a pre-defined size of Government bonds each quarter, which is akin to quantitative easing. This programme, along with the extension of the HTM limit increase to 22% of the NDTL of banks until March 2022, helped in curbing the pressure on bond yields.

On the regulatory front, the RBI provided a 6-month loan moratorium window on all term loans affected by the pandemic along with an asset quality standstill for banks. By end-August, when the moratorium period ended, almost 40% of the term loans by banks and NBFCs had availed of the moratorium. In October 2020, the RBI introduced a resolution framework for the sectors most impacted by the pandemic, which provided for one-time restructuring of loans to allow borrowers to tide over the lockdown induced business disruption. In May 2021, the RBI extended the loan resolution scheme to individuals and the SME segment in response to local restrictions being imposed by states to curb the second wave of COVID-19 which started in March.

The banking sector continued to build on the turnaround seen during FY2019-20, with improved asset quality and stronger capital and provision buffers. During the first half of FY2020-21, these trends continued, even in the face of the pandemic, aided by the regulatory dispensation given to deal with COVID-19 related stress. Policy induced easy liquidity and financing conditions enabled improvement in profitability and capital adequacy of banks with some moderation in balance sheet stress, however, bank credit remained subdued. The CRAR of Scheduled Commercial Banks (SCBs) improved to 15.8% in September 2020 from 14.7% in March 2020, while their gross NPA ratio declined to 7.5% from 8.4%, and the Provision Coverage Ratio (PCR) improved to 72.4% from 66.2%. As per the RBI Financial Stability Report of January 2021, macro-stress tests indicate that the GNPA ratio of all SCBs may increase from 7.5% in September 2020 to 13.5% by September 2021. Provisions made for COVID-19 related loan losses and capital raising by banks would help alleviate this stress. Credit growth during the year registered a feeble growth of 5.6%, pointing to continuing risk aversion amidst the pandemic. Deposit mobilisation remained sturdy, clocking 11.4% growth. The year ended with a cumulative credit expansion of Rs.5.8 trillion, a shade lower than Rs.6 trillion in the previous year. In comparison, banks invested Rs.7.2 trillion in government securities, nearly double of their investment in the previous year.

Indias external sector fundamentals improved significantly during the year. This was partly due to the current account turning into a large surplus from a deficit during the first half, following a collapse in domestic demand. Helped by a current account surplus of 3% of GDP in H1FY21 and robust capital inflows, both from FDI and FPI-equity, during the second half, RBIs foreign exchange reserves went up by USD 103.7 billion over the year. That makes for a comfortable position, covering over 18 months of imports and 102.8% of Indias external debt.

As the year ended, the country was in the midst of a second and more intense wave of the pandemic, leading to most states imposing lockdown-like restrictions. Thus, a key downside risk to the nascent economic recovery had materialised. To counter the pandemic, an immunisation program with 2 vaccines was started in mid-January. The roll-out, however, remained slow with respect to the need to generate herd immunity. The Government is looking to address the issue by allowing more vaccines and through wider population coverage. With the staggered imposition of restrictions and localised nature of lockdowns, a strong global economic turnaround, prospects of a normal monsoon, accommodative monetary policy, and government focus on reviving public investments, the economic impact of the second wave is likely to be limited compared to the first wave. Better adaptation of work from home practices, digital payments, e-commerce and online delivery models, would also help. A sizeable foreign exchange reserve pile will help contain exchange rate pressures due to episodes of capital outflows which may occur on the back of upward pressure on US treasury yields on concerns about higher inflation. Continued vigilance and policy support would, however, be required, until a sustainable recovery is in sight and mass vaccinations have contained the pandemic.

Business Performance

The financial year under review was severely impacted by the COVID-19 pandemic, as the entire world was affected in a manner unseen for more than a century. During the financial year 2020-21, the Bank embarked on multiple initiatives to fortify the Balance Sheet, which included growing and granularising the deposit franchise, rebalancing the loan book with a moderate growth year on year, improving the credit rating and tenor profile of the loan book and augmenting capital and provision buffers to build resilience. While the loan growth was a moderate 3%, the deposit book increased by 27% and the Bank had less reliance on Borrowings as of March 31,2021, as compared to a year ago.

The salient features of the Banks Operating Performance during the FY2020-21 are summarised in the table below:

Particulars FY2020-21 (Actual) FY2019-20 (Actual) Y-o-Y Growth
Interest Earned 28,999.80 28,782.83 0.75%
Interest Expended 15,471.91 16,724.09 -7.49%
Net Interest Income 13,527.89 12,058.74 12.18%
Non-Interest Income 6,558.61 6,951.31 -5.65%
Revenue 20,086.50 19,010.05 5.66%
Payment to Employees 2,213.51 2,208.48 0.23%
Other Expenses 6,146.32 6,028.86 1.95%
Operating Expenses 8,359.83 8,237.34 1.49%
Profit before Depreciation, Provisions and Contingencies 12,032.08 11,050.68 8.88%
Depreciation 305.41 277.97 9.87%
Operating Profit 11,726.67 10,772.71 8.86%
Provision and Contingencies 7,942.53 4,652.10 70.73%
Profit Before Tax 3,784.14 6,120.61 -38.17%
Provision for Tax 947.75 1,702.70 -44.34%
Net Profit 2,836.39 4,417.91 -35.80%

Business PerformanceHighlights

Despite a moderate loan growth, the Operating Profit (before Provisions and Contingencies) increased by 8.86% over the previous year to Rs.11,726.67 crores from Rs.10,772.71 crores. The provisions and contingencies during the FY2020-21 increased to Rs.7,942.53 crores, which was 70.73% higher than the previous year. Significantly, during the year, the Bank made regulatory, floating, counter cyclical and contingent provisions relating to the COVID-19 pandemic, taking the total amount of such provisions to Rs.2,208 crores as of March 31,2021, including an amount of Rs.905 crores in respect of borrower accounts restructured in accordance with Resolution Framework for COVID-19 related stress. The provisions held by the Bank are higher than the provision required under the RBI guidelines. In view of the large provision cushion made to meet exigencies, the Net Profit moderated to Rs.2,836.39 crores registering a fall of 35.80% over Rs.4,417.91 crores earned during the previous year.

Net Interest Income of the Bank increased by 12.18% to Rs.13,527.89 crores from Rs.12,058.74 crores. Abundant liquidity available in the system led to softening of interest rates. While Yield on Advances fell marginally to 11.84% as compared to 11.97% in the previous year, the Cost of Deposits registered a sharper decline to 5.38% from 6.51% a year ago. Consequently, the Net Interest Margin for the year improved to 4.17%.

Non-Interest Income fell by 5.65% to Rs.6,558.61 crores from Rs.6,951.31 crores. Owing to the subdued economic activity, 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 was Rs.4,679.22 crores as compared to Rs.5,785.83 crores earned in the previous year.

The Bank expanded its branch network to reach 2,015 branches/banking outlets, as against 1,911 branches/banking outlets at the beginning of the year. The extended network of the Bank included 2,872 ATMs, 2,289 branches of BFIL, and 828 outlets of IndusInd Marketing and Financial Services Private Limited, an associate entity. Revenue per employee during the year improved to Rs.67.72 lakhs.

Net Non-Performing Assets of the Bank improved to 0.69% as on March 31, 2021, and Return on Assets for the year stood at 0.90%.

Under a Preferential Issue completed in two stages, on September 2, 2020, the Bank allotted 4,76,29,768 equity shares of Rs.10 each to five Qualified Institutional Buyers and on September 4, 2020, allotted 1,51,17,477 equity shares of Rs.10 each to two corporates including one of the promoter entities, at a price of Rs.524 per equity share, in compliance with the applicable laws and regulations. Consequently, the equity share capital of the Bank increased by Rs.62.75 crores and Share Premium Account by Rs.3,196.39 crores, net of share issue expenses.

Pursuant to a Composite Scheme of Arrangement with Bharat Financial Inclusion Limited, on July 6, 2019 the Bank had allotted 1,57,70,985 Share Warrants to the Promoters of the Bank, on receipt of the subscription amount at 25% of the price of Rs.1,709 per Share Warrant. Each Share Warrant was convertible to one equity share of the Bank fully paid, upon exercise of the option by paying the remaining amount. On February 18, 2021, the Promoters paid Rs.2,021.45 crores towards the remaining 75% of the price of Share Warrants and exercised the option of conversion and consequently, the Bank allotted 1,57,70,985 equity shares of Rs.10 each fully paid at a price of Rs.1,709 per equity share. Accordingly, the share capital increased by Rs.15.77 crores and the share premium by Rs.2,679.49 crores.

Consumer Banking

The Consumer Bank business continued its growth momentum with strong business growth on the liabilities side, across client segments. With a focus on deposit mobilisation. Consumer Liabilities grew by 38%, with retail deposits jumping 50% y-o-y. The Bank witnessed the highest per branch and per customer growth in deposits amongst peer banks through a systemic, digital and tele-assisted sales-cum-service model for its branch and affluent customers, as well as for new client acquisition via online channels. The Banks deposit growth was twice as that of the market, thereby increasing its market share on both, CASA and Retail deposits. The NRI segment continued to grow and ended the year at a 2.5% market share, thereby making the Bank the fifth largest private sector bank within the NRI segment.

In keeping with the needs of its customers in these dynamic times, the Bank tied up with multiple e-commerce, food delivery players and payment apps to help drive customer engagement. The Bank saw Debit Card volumes grow more than the market by almost 50% y-o-y, and UPI spends by 250% y-o-y. The Bank played a pivotal role in driving financial inclusion by enabling disbursement through Direct Bank Transfer (DBT) for citizens at large, through its Aadhaar Enabled Payment System partnerships with some of the leading public and private business correspondent networks in the country.

The focus on Digital payments helped the Bank retain its position among the Top 3 Private Banks in the latest Government of Indias Ministry of Electronic and Information Technology Digital Payment ScoreCard.

The Banks digital agenda journey continued to gain momentum, with more than 50% of its sales across retail liabilities, assets and wealth products coming via digital platforms, thereby helping drive sales efficiency. Digital transactions comprised 84% of the overall transactions, up from 80% at the beginning of the year, helping optimise back-end costs.

Small and Medium Enterprises

As part of the Current Account business, the Bank launched a mobile application for opening current accounts for diverse types of business entities including individuals, proprietorship and partnership firms, private and public limited companies in a fully digital manner. This digital journey has increased customer experience while improving the Turn-Around-Time (TAT) for setting up new relationships to 1-2 days from the earlier timespan of 6-7 days. There were concerted efforts focussed around capturing branch neighbourhood businesses, via the feet-on-street on spot sales structure and at a later stage via the Do-It-Yourself (DIY) module.

For merchant clients, the Bank went live with acceptance solutions on UPI 2.0 and National Common Mobility Card (NCMC) which increased the digital merchant base of the Bank to over 1 lakh, making it one of the fastest-growing banks in this space.

During the country-wide lockdown that led to severe business disruption in Q1, the Bank accelerated the pace of digitisation in third-party product distribution, strengthened its processes, and launched innovative products/solutions.

In a bid to minimise face-to-face contact with customers, the Bank provided its wealth products through online channels. The Bank created multiple online journeys for its customers. Consequently, customers were able to digitally complete over 2.55 lakh (i.e., 93% of total buy transactions) transactions during the year ended March 31,2021.

Keeping customer-centricity at the core of all initiatives, the Bank innovated by offering complimentary COVID-19 defined benefit policies to eligible premium debit card and fixed deposit customers. Through this initiative, the Bank offered customers who are eligible under the plan, a lump-sum pay-out on being detected COVID-19 positive, and was able to extend this offer to over 1,00,000 clients.

The Bank distributes a comprehensive bouquet of best-in-class third-party products, viz., Life Insurance, General Insurance, Health Insurance, Mutual Funds and Alternate Investment Products. In its step towards providing customers with a larger portfolio of life insurance products and solutions, a new partner, ICICI Prudential Life Insurance Company was on-boarded in addition to the Banks current partner, Tata AIA Life Insurance Company. The Bank now has a corporate agency tie-up with 2 life insurers, 3 general insurers and 1 standalone health insurer and over 25 Asset Management Companies (AMC).

As on March 31, 2021, Consumer Bank held Assets Under Management (AUM) of Rs.48,000 crores of its customers through products like Mutual Funds, Portfolio Management Service (PMS), Alternate Investment Fund (AIF) and Demat. The Bank also mobilised an insurance premium of Rs.1,650 crores for Life and Non-Life products, for the year ended March 31,2021.

Retail Agriculture Business

The Bank sanctioned more than Rs. 2,000 crores covering 11,000 farming households across 105 districts of Madhya Pradesh, Gujarat, Haryana, Punjab, Kerala, Rajasthan, Maharashtra and Chhattisgarh, for taking up Agricultural and agri-allied activities.

As a part of the Banks commitment towards improving digital literacy, all its customers were made aware and empowered for doing cashless transactions through RuPay Debit Card and Net/Mobile Banking.

Loans have been extended to small and marginal farmers, women beneficiaries and other weaker sections, thereby establishing the Banks commitment to service these segments. The Banks regular engagement with Agri Value chain stakeholders allows the Bank to stay abreast with the latest developments and accordingly provide the best product to its customers. All the Banks customers are offered a unique insurance facility that secures their loan liabilities in case of death or disability, and with Pradhan Mantri Fasal Bima Yojana (PMFBY) scheme.

Loan Against Property (LAP)

The Loan against Property (LAP) business continued its steady growth trajectory, keeping the portfolio metrics robust. The loan book, as well as the fresh acquisition yield, remained strong despite a competitive market and downward rate cycle. With a consistent focus on leveraging the branch distribution network and cross-sell opportunities, the share of internal sourcing remained upwards of 40%. The Bank continues to distribute Home Loans in association with HDFC Limited and it remains a key asset product that is distributed through the branch network, providing lucrative cross-sell opportunities.

Personal Loans

On the Personal loans front, given the outbreak of COVID-19, the Bank had promptly revised sourcing guidelines and policies restricting acquisition from lower risk score bands/segments. Additionally, the nationwide lockdown impaired physical movement that resulted in a muted growth for the year. Personal loan disbursements for the year was 42% lower than the previous year, and the loan book remained fiat at approximately Rs.3,500 crores. The product has a live portfolio of a little over 3 lakh accounts, with 0.82 lakh accounts being on-boarded in FY2020-21. Overall, the cross-sell book stands at 62%, with significant contributors being savings account clients, which were sourced and fulfilled completely using digital platforms.

Credit Cards

Credit Card receivables grew by 5% over the year as growth was focussed on low-risk accounts given the economic situation of the country. The business focussed on trimming operational costs, as it reduced by 4.5% while maintaining the revenue at the same value, which improved the cost efficiency during the year. The Cards in use crossed the 1.5 million mark, an increase of 13% over the previous year. With lockdown restrictions getting lifted, the overall spends during Q3 was more than that in the same quarter of the previous year. However, for the full year, spends saw a drop of 7% mainly due to the stringent national lockdown imposed in Q1.

Post the outbreak of COVID-19, in partnership with Bank Bazaar, the Bank pioneered the sourcing of new-to-bank customers through Video-KYC in a completely digital manner. The business will continue its focus on driving the

cross-sell agenda across the vast data pool of internal customers, through a process of pre-qualification of low-risk clients. Moreover, the business is moving towards a new digital platform, which will help acquire new clients directly, in a digital manner. Digital acquisition significantly reduces the cost of acquisition.

The Commercial Card

The Commercial Card business, which provides payment solutions for corporates, continued to demonstrate growth and has been a key product proposition for the Banks corporate clients. During the year, spends on commercial card products grew by 18%. The business has diversified into new client segments and has deepened its existing client base by offering new products. In FY2020-21, the Bank launched contactless Corporate Cards for the Travel and Entertainment segment which is equipped with the tap n pay feature to facilitate 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 that focusses on payment solutions via partnerships with new-age fin-tech players to offer technology platforms to reduce operational costs for clients.

The Bank had taken a conservative approach towards growing its Business Loans portfolio (Unsecured SME) and shifted its focus to strengthen collections. As a result, the Business Loan book remained fiat at Rs.1,076 crores as of March 2021, while the previous FY2019-20 reported y-o-y growth of 28%. With more focus on collections, the Bank was able to hold portfolio quality in FY2021, even as the industry faced challenges with increased default within the unsecured SME segment. This will also help the Bank in the ensuing year to handle expected collection challenges pertaining to the unsecured lending business.

Consumer Finance

The Consumer Finance Division (CFD) is one of the three specialised asset businesses of the Bank, with industry-leading market share across product segments, deep customer penetration and a well-managed business franchise. The CFD extends funding for a wide range of Vehicles/Equipment, which includes Heavy, Light and Small Commercial Vehicles used 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 been launched a couple of years ago participating in the housing for all project, a key focus area of the Government of India.

The lockdown on account of the COVID-19 pandemic and the lower level of activity resulted in the aggregate disbursements made by the CFD during FY2020-21 drop to Rs.24,057 crores as against Rs.32,664 crores in FY2019-20, a decline of 26%y-o-y. The Passenger Transport segment was the most severely affected. During FY2020-21, loan disbursements towards the purchase of new vehicles was Rs.18,756 crores as against Rs.25,185 crores in FY2019-20, a 26% de-growth y-o-y and used vehicle disbursement at Rs.4,640 crores as against Rs.6,776 crores in FY2019-20, registered a decrease of 31% over the previous year. During the year, CFD added 9.09 lakh new loan accounts, as compared to 13.14 lakh new loan accounts during FY2019-20. As the loan acquisition got impacted significantly, the focus during the year shifted towards optimising the product mix to maximise yields, while maintaining portfolio quality despite the COVID-19 impact and industry sluggishness.

Despite the pandemic, Tractor funding, a major initiative towards Priority Sector Lending and Financial Inclusion, performed well during the year with the disbursement of Rs.3,545 crores as against Rs.2,871 crores in FY2019-20, a 23% growth over the previous year. Disbursement under the low cost/affordable housing segment for the year was Rs.661 crores as against Rs.703 crores in FY2019-20. Though the segment recorded a marginal drop at 6%, essentially due to the pandemic, the Bank plans to grow the loan book business substantially during the coming years. Many of the beneficiaries under this segment qualify under the Pradhan Mantri Awas Yojana Credit Linked Subsidy Scheme and the Bank has been successful in getting the same to the customers.

Besides lending, CFD also earned a Commission Income of Rs.51.20 crores through the distribution of various third-party insurance products of Cholamandalam MS General Insurance, the Banks strategic partner for bancassurance in the General Insurance segment.

The operations of CFD are well supported by a deep back office and the Document Storage and Retrieval Facility at the Banks Karapakkam Unit in Chennai. During the year, this Unit handled nearly 5 million transactions including loan bookings closure.

CFD sources applications for all products through Android Tablets which has enabled a seamless credit and business approval process and has improved efficiency. All the field collection executives of the Division have been provided with Android mobile-based Collection App on the Bank-owned mobile devices, and the 12,000+ units in use is one of the largest deployment in the banking industry. It is integrated within the Airwatch MDM Container Model for data security and operates with data and access controlled APN SIMS.

Corporate, Institutional and Investment Banking

The Corporate & Institutional Banking group provides Universal Banking Solutions to large Indian groups and multinational corporates. Over the years, with the continued addition of new-to-bank clients, the unit has developed deep relationships amongst a large number of corporate houses.

During the year, the Corporate Banking group continued its emphasis on strengthening relationships with high rated corporates and gained higher market share in entities and groups rated A or higher.

In FY2020-21, the C&I group undertook an exercise of rebalancing its portfolio to achieve a healthier portfolio diversification across sectors and client segments and to reduce the concentration risk. As a result, assets worth Rs.7,000 crores were sold down. At the same time, the Group managed to leverage the relationships for a higher share of product penetration and cross-sell.

• C&I 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.

• The Groups business grew well in both, Assets and Liabilities. The deposit book registered good growth with renewed focus to enlarge the deposit base and grow the deposits granularly.

Specialised Verticals: Financial Services, Real Estate, Healthcare:

To sharpen the focus on certain sectors, bring out a better understanding of the industry and offer more customised products, the following specialised verticals are present within the Corporate Banking Unit:

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

Hospitals: Primary, Secondary and Tertiary care units - Super and multi-speciality.

Diagnostics: Multi-location diagnostic chains augmenting medical diagnostics.

Others: Medical equipment/consumable manufacturing.

The Unit also provides loans to Doctors as well as small value healthcare equipment loans. Given the macro environment due to the COVID-19 pandemic, the unit came into sharp focus and financed several transactions.

Financial Services: Offers products to a large landscape of Financial Services Players - NBFCs, HFCs, Insurance Companies, Mutual Funds and Public Financial Institutions. The Group has built strong ties with key players with 99% of books rated A or better. The Group has a unique positioning in the marketplace as a preferred choice for transaction banking and has a leading share in cash management and escrow services to leading NBFCs.

Multinational Corporations: This vertical targets MNCs having large businesses in India with significant local banking requirements and Financial Sponsors who are active through M&As in India. The Group has been able to garner a good market share of business from multinational corporates and has coverage of corporates from the USA, Europe, and the Far East, predominantly.

Real Estate: Products offerings for commercial and residential projects including, LAP, LRD and construction finance. It also offers advisory for REITs and syndication.

V )

lnvestmentBankln^^^^^^^^

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. The 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 ( Rs. Borrowings) in India, the Bank was ranked 1st in deal count and 2nd in deal volume with syndication volumes of about Rs.15,000 crores.

Lenders Market Share Volume ( crores) Rank (Volume) Deals Rank (Deal Count)
SBI 44.36% 56.631 1 18 2
IndusInd Bank 11.99% 15,219 2 23 1
L&T Financial Services 8.70% 11,110 3 13 4
ICICI Bank 7.35% 9,028 4 17 3
Yes Bank 5.47% 7,005 5 12 5
Standard Chartered 5.08% 6,486 6 6 6

*Source: Refinitiv (erstwhile Reuters) league table for CY2020

The Bank has consistently improved its league table position in terms of deal volume, from 6th in CY 2016 to 4th in CY 2019 and 2nd in CY 2020.

The Project Finance unit has 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. Aligning its sustainability strategy, the Bank added new sectors in Project Finance that support Sustainable Development Goals (SDGs). Until March 2021, the Bank has supported an installed capacity of 4,500 MW in renewable energy power with nearly Rs.14,000 crores in sanctions. The Bank has also financed projects in e-mobility and City gas distribution.

The Government of India has envisioned National Infrastructure Pipeline (NIP) 2020-2025 with an outlay of Rs.111 trillion with key thrust on roads and highways, renewables, transmission, thermal, city gas distribution, water, energy efficiency and railways. 20% of the above investments are expected to come from the private sector. Given the expertise of the Unit in these sectors, the Bank intends to actively participate with an underwrite and sell down strategy, holding 20-30% of the underwritten amount in the Banks books and selling down of the rest, depending upon the size of the project.

PublicSectorGrou^^^^^^^J

Public Sector Group maintains relationships with most of Central Government-owned and select State Government owned Public Sector Undertakings (PSUs) which include the Maharatnas, Navratnas and Mini Ratnas.

The group has been adding number of Asset and Liability clients every year, and has a significant portion of business pertaining to this universe. The PSU Assets are preferred by many lenders considering the lower delinquencies and hence the Assets portfolio growth is achieved under stiff competition from all banks and at competitive pricing. PSUs also act as a source of large Liability books and CA floats for the Bank which has been growing over the years.

The group offers customised solutions to PSU clients in the areas of Trade, Forex, CMS and other digital products. Additionally, an entire bouquet of Asset products like Term Loans, Working Capital Finance, Bonds and NCDs, etc., are also offered to these clients customised to their requirements. The Bank offers targeted Retail Banking products to the employees of its PSU clients, such as Salary Accounts, Credit Cards, Retail loans amongst the junior and middle-level managers and a Pioneer range of products amongst the senior management team. The Bank is keen to garner increased market share in this space and be a sizeable banking partner to strategic large PSUs, which until recently, was the exclusive domain of large banks.

f

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.

Despite COVID-19 related disruptions in global trade and payments, FIG ...

continued its flagship performance during the year under review,

contributing to the Banks overall revenue. 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, and borrowing programmes with MFIs and DFIs. During the year, FIG helped in generating liquidity from global and domestic banks and financial institutions. FIG also acts as the single point of contact for administration of the USD 400 million Medium Term Note Programme of the Bank, and raising of 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.

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

The International Financial Service Centre Banking Unit (IBU) has seen significant business, achieving a Balance Sheet size of USD 1.50 billion as on March 31, 2021. The product offering from IBU includes External Commercial Borrowings (ECBs), Trade Credits, Loans to Overseas Entities, non-funded products, and swaps and derivatives undertaken for proprietary trading and client hedges. The IBU provides an access to hitherto untapped clients and product profiles and is slated to be a significant contributor to the Banks Balance Sheet as well as profitability. IBU provides the Bank with the ability to serve large corporates with overseas presence with end-to-end solutions by participating in the international syndicated loan market and to strengthen the brand globally. The Global Markets Group of the Bank is amongst a few private sector banks to have been invited to participate in working committees organised by IFSCA (the regulating body of IBU) on formulating regulatory guidelines on FX and Derivatives.

Commercial, Inclusive and Rural Banking

The Commercial Banking Group focusses on providing end-to-end financing solutions to emerging and mid-sized corporates across a wide spectrum and follows a target industry approach. This Group also drives the Inclusive and Rural Banking verticals.

Mjdmarket Group

With a presence across 14 cities, the Group provides strategic value to its 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 the clients wallet and product penetration.

Focussing on client relationships at all levels has 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 a target industry approach and has specialised verticals of Education, Logistics and Pharmaceuticals under its umbrella. These sectors are the identified growth sectors for the Indian economy and have experienced minimal business disruption during the pandemic.

The FY2020-21 has been a challenging year for the country, with the pandemic and country-wide lockdown. Notwithstanding that, the Commercial Banking Group has clocked higher than average growth in advances and deposits. The key pillars of business strategy for the financial year ending March 2021 has been: (a) Liability-led asset growth; (b) Robust portfolio management backed by sharp analytics; and (c) Cautious growth and focus on increasing granularity in the portfolio. The focussed approach has enabled the business to withstand the current times and grow consciously while ensuring robust portfolio management.

Education

Education Sector is one of the sunrise sectors for the Indian economy, considering the young demographic profile of the country.

The segment has witnessed significant transformation in the last 2 to 3 years, with evolving business models such as Public-Private partnership, new Education Policy, booming ED Tech sector with increased private investments and evolving ecosystem. The Bank is one of the leading players in the sector and provides niche and digital solutions for meeting the financing and cash management needs of the players across the education ecosystem.

Logistics

Logistics is the backbone of consumption, and in an era of e-commerce, the impetus on this sector has significantly increased and continues to increase, especially considering the strategic role during the pandemic period. The Bank, through its specialised industry verticals, provides a customised product suite for this sector which helps in meeting clients specific needs.

Going forward, Mid-market Group shall continue its focus on specialised verticals, viz., education, logistics and pharma, and providing niche offerings and sector customised financial solutions.

Supply Chain Finance

With a focus on granular business, the Bank is investing significantly in the Supply Chain Finance business and aims to grow it multi-fold over the next three years. Significant investment is planned in digitisation, upskilling manpower and deepening client relationships. The vertical provides comprehensive financing solutions to dealers/vendors of large corporates across industries, the key being, Auto and Auto OEMs, Steel, Consumer Durables, etc., by catering to their financing needs through different products such as channel finance and vendor finance. With a dedicated and experienced relationship team, backed by a strong product proposition and seamless services, the Supply Chain Finance product has enabled inroads into large corporate relationships.

The COVID-19 pandemic has had a far-reaching impact on the auto industry which has impacted the entire supply chain. Despite that, assets in the SCF book have recorded 34% growth (78% from peak lockdown levels) with the on-boarding of 66 new Anchors and 250+ new suppliers/dealers. With stringent governance processes and comprehensive portfolio monitoring tools, the Bank has been able to maintain high portfolio quality in the SCF book.

Agriculture Business Group

Agriculture Business Group follows the Value Chain Financing approach to cover the complete Agri Value Chain from farmers to Agri corporates.

With presence across 17 States, 60 locations and 45 commodities, the Group has a strong presence in core Agriculture-based markets with innovative Agri Project Finance, Agri Trade Finance and Agri Infrastructure Finance. Currently, the vertical leads the commodity funding space through its flagship Pledge Finance product. Incrementally, the Group focusses on mid-size corporates in food and agriculture, making the Bank one of the significant players in the dairy financing segments. Agriculture Business Group is also one of the major PSL contributing divisions of the Bank with more than two-thirds portfolio classified as PSL. The marquee relationships in this Group has helped gain inroads into rural masses wherein IndusInd as a bank, has been able to offer a comprehensive suite of rural products to the rural population under rural franchise, hence deriving significant synergies across the spectrum.

Business Banking Group

The Business Banking Group caters to the financing needs of MSME customers across the country spread across 150+ cities.

MSME segment has been one of the most impacted segments across the economy, following the onset of the pandemic early last year. Following the economic impact on the MSME segment, the Government had announced a series of measures enabling the survival and revival of the MSME segment. The Business Banking Group has been instrumental in ensuring the Banks participation in enabling these relief measures to the existing customers in the MSME segment.

The business approach for the year was focussed on cautious on-boarding of new customers with stringent on-boarding norms and, at the same time, ensuring the active management of the existing portfolio. The Bank enhanced its product offering for this segment with the launch of the GST and Banking Secured Overdraft product. This is a score-based templated product that relies on the customers banking and repayment behaviour, GST payments, and availability of collateral for making instant appraisal decisions.

The acquisition rate of the portfolio had been impacted during H1FY21 due to the external environment. However, in the last quarter of the financial year, the Bank has observed new acquisitions inching back to pre-COVID-19 levels. There has been increased focus on sourcing the NTBs internally, through the Banks branch network. The initiative of SME clusters identification was concluded in FY2021 and this is expected to further provide an impetus to the acquisition engine in the coming year.

Another strategic initiative within Business Banking Group has been launched in collaboration with Affluent Business Group, leveraging the expertise of the Bank across two groups and providing a one-stop shop for the MSME customers across their banking needs for their business or personal finances. This includes an entire gamut of banking products including, Personal Accounts, Investment Management, Insurance and Cash Management, Family Business planning, etc., thus, increasing the overall wallet share from such relationships.

MSME segment is one of the growth engines for the Bank in their PC-5 strategy. During the financial year, there has been an increasing focus on building foundation blocks for the digital transformation of the segment. The digital transformation is expected to cover all aspects of the customer and the Banks journey, including loan delivery, loan assessment using advanced machine learning and AI-based models, front to back-end process digitisation, to name a few.

Partnerships for lending have helped us establish a commercially viable and financially sustainable business. Inclusive Banking Group (IBG), through its partnership model, has been able to establish a domain leadership position in the inclusive finance space, specifically in the microfinance sector, by reaching out to around 85 lakh women borrowers. With a portfolio outstanding of ~ Rs.27,500 crores by end of FY2021 accounting, for a -11% market share in sustainable livelihood financing, the Bank is well-positioned within the microfinance industry. With the MFI industry Portfolio Outstanding at Rs.2,52,000 crores and growing at a CAGR 34%, and with active customers at 6 crores, there is huge potential to tap this market further. This apart, from a host of liability products/services such as Savings Bank Accounts, Micro Recurring Deposits, Remittances, etc., helps the Bank to offer comprehensive banking services to this segment. The Bank believes that the key to the 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.

Drawing the principles of partnership, the Units canvas is expanding beyond microfinance into the space of MSME, Gold loans, Affordable housing, FPOs. Similarly, in the Community Banking space, we would want to leverage the good work done by NGOs/Agri value chain companies/self-help promoting institutions and originate good quality and diversified portfolio along with a priority sector book. Our overall business strategy is to expand the collaboration opportunities and offer other loan products to small businesses for which pilot programmes are being run.

Sports

IndusInd For Sports - a non-banking sports vertical was launched in 2016, with an objective to inspire communities inside and outside the Bank using the unique power of sports.

In a pandemic-stricken year, IndusInd For Sports has kept the spirit of sportsmanship alive by adapting to the new normal through virtual engagement with external and internal stakeholders, while abiding by COVID-19 protocols. Through various initiatives across platforms, IndusInd For Sports has ensured continued support to athletes under its programmes and also promoted health and fitness within the organisation to ensure a happy and healthy workforce in the tough times.

Get Set Run

Get Set Run Phase 4 (FY2020-21) aimed at engaging -12,000 employees across 35 cities with the inclusion of women-specific runs, ultra-marathons and endurance runs. However, due to the limited visibility of on-ground events, virtual running initiatives were explored. These virtual initiatives enabled participants to run anytime and anywhere by recording their activity data on any GPS-enabled App.

A total of 32 virtual marathons were conducted in Phase 4 which engaged 6,000+ employees across the length and breadth of the country.

This phase kickstarted in June 2020, with participation in one of the first virtual marathon - Run to the Moon, a month-long event which witnessed participation from 15 countries across the globe. IndusInd Banks participants formed 39% of the total run contingent and topped the list of corporates by clocking over 1,50,000 kms, with competition from Cisco, TCS, Wipro, the Indian Navy, to name a few. Other causes supported by the Bank, which supported virtual running events were, contribution to the National Defence Fund, welfare of army veterans and their dependents, spreading awareness on environmental issues such as protection of wetlands and sustainable mountain tourism, cancer aid, saluting the frontline warriors, to name a few.

#SportsChangesLife

In addition to the regular campaigns launched under this vertical for the Banks employees, an inspirational employee-centric campaign launched with an objective to drive the core philosophy of encouraging participation in sports and fitness amongst employees, by using relatable stories as shining examples of the employees who embraced sports to bring a positive change in their lives. It pushed them further through engaging communication to develop an interest around sports. IndusInd Bank is proud to say that its in-house talent has skills across the sports categories from Biking, Running, Badminton, Cricket, to Mountaineering, Motor-biking, Paragliding, to name a few.

The Finish Line

An 8-part web series was launched in partnership with Baseline Ventures with an aim to keep the sportsman spirit and motivation alive by showcasing some of the most defining moments in Indian Sports.

It featured 8 athletes over a span of 8 weeks in the form of a conversation interview by the host, Sourav Ghoshal (professional Indian Squash Player). The athletes that were featured were - Abhinav Bindra, Vishwanath Anand, Pankaj Advani, Smriti Mandhana, Leander Paes, Varun Singh Bhati, Parul Parmar, Dinesh Kartik. This series garnered more than 2 million views.

Para Champions Programme

43 para-athletes supported across 7 disciplines to cover their high-performance need, travel, injury management, rehabilitation, strength training, medical support needs, etc.

With the COVID-19 lockdown, all athletes went back to their hometowns and online sessions on nutrition, physiotherapy, mental well-being commenced to ensure wellness of the athletes.

During FY2020-21, 3 of the para-athletes were conferred the Arjuna Award. With 4 national and 2 international competitions across para-athletics, powerlifting, shooting and swimming, the Banks para-athletes bagged 35 gold, 16 silver and 4 bronze medals across these events.

Cricket for Blind Programme

In partnership with the Cricket Association for Blind in India (CABI), the sporting wing of Samarthanam Trust, this programme supports the Indian Blind Cricket Team and 300+ blind cricketers at the state and district level.

During FY2020-21, the 3rd edition of IndusInd Bank Nagesh Trophy Tournament, which is equivalent to the Ranji Trophy for able-bodied cricketers, was conducted successfully. Post the tournament, the Indian National Blind Cricket Team was finalised. This team will be representing India across all international blind cricket events.

Girl Power Programme

60 girl athletes supported across 3 disciplines, i.e., judo, boxing and wrestling, with an objective to nurture and develop each of these young talents at the Inspire Institute of Sports (IIS) through high quality coaching, tailor-made academic and life skills programme to help athletes chase their Olympic dream.

With the COVID-19 lockdown, online sessions on nutrition and mental well-being commenced to ensure wellness of the athletes. Life-skill modules on communication and financial literacy were organised virtually to ensure holistic development of athletes. IIS was converted into a bio-bubble with dummies introduced in practice sessions of contact sports - judo, wrestling and boxing.

In FY2020-21, IIS was recognised as the National Centre of Excellence for Boxing, Wrestling and Judo by the Sports Authority of India. These girl athletes have won 10 medals at national and international events, which included 4 gold, 2 silver and 4 bronze medals.

Elite Athlete Programme

In line with the Banks excellence and inclusive approach for sports, this programme supports 55 athletes (from nomadic tribes/backward castes) in Satara district in Maharashtra, in partnership with the Mann Deshi Foundation, across 3 disciplines (field hockey, athletics and wrestling) with an objective to improve the livelihood of rural children by strengthening their leadership skills, motor skills and life skills through medium of sports.

With the COVID-19 lockdown imposed, the academy shutdown, and in-house training sessions commenced in partnership with the local government panchayats. Furthermore, COVID-19 relief packs were distributed to the athletes and to their families.

During FY2020-21, in a wonderful display of talent, 18 of the Banks rural athletes garnered 11 gold, 5 silver and 4 bronze medals at various national, state, district and local level events.

Hockey for her excellence programme

Encourages 40 girl athletes in the age group of 13-16 years, with an objective to groom and facilitate young talent at the high-performance hockey academy in Bhubaneswar (Odisha) to represent at the National/International level.

With the COVID-19 lockdown, the Academy in Bhubaneswar was converted into a bio-bubble, and virtual sessions on physical fitness, mental well-being, nutrition, and education were organised to ensure wellness of the athletes.

During FY2020-21, two new grassroot centres were identified to scout talent. In the first ever Hockey India Junior and Sub Junior Women Academy National Championship, the teams won a bronze and silver respectively. 9 girls from the programme were selected in the Odisha State Team for Hockey India Junior Women National Championship 2021.

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 the Corporate Banking unit in FY2018.

After successfully completing two years of implementation, the Bank hired an 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 the 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:

"—

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), as prescribed by the Reserve Bank of India and other regulating bodies. In addition, the Desk manages the day-to-day liquidity requirements of the Bank through appropriate funding avenues 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 Trading Desk trades in Rates, Equities, Foreign Exchange and Derivatives. It strategises and takes proprietary positions in Government Bonds, Corporate Debt, Equities, Interest Rates (INR and Foreign Currency), Interest Rate Futures and Currencies. The FX & Derivatives Trading Desk focuses on Currency and Interest Rate Derivative products for proprietary positions and also acts as a liquidity provider cum market access in respect of client business. The desk has executed Long-Term Currency and Interest Rate Swaps with established market counterparties.

In view of the proposed discontinuation of publication of global benchmarks, the Bank has embarked upon a planned transition of derivative products, in line with the global market practices, on certain benchmark trades linked to LIBOR. The Equity desk takes proprietary positions in both primary offerings as well as trades in listed securities.

The Financial Markets Sales and Solutions team provide hedging solutions to clients across Large Corporates, Financial Institutions and Mid-market corporates and Consumer clients on their foreign exchange and interest rate exposures. The Bank enters into these transactions based on strict suitability, appropriateness 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 the exchange-traded currency derivatives market.

During the year, GMG continued to actively undertake proprietary and client hedges across FX, Interest Rates, Derivatives, Credit markets, besides Equity IPOs. The Bank is in the process of expanding the Global Markets Desk at its IBU in GIFT City and will undertake activities in products allowed by the regulator under the new liberalised guidelines of IFSCA.

The Bank has well laid-out Board-approved Funds & Investment and Risk Management Policies, Client Suitability and Appropriateness Policy, and appropriate systems support to monitor transactions and risk on a 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 & Finance, Factoring & Global Remittances and it continues to build world-class products 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 continued to enjoy a significant market share in LRS Outward Remittances from India, originating transactions from its network of branches as well facilitating flows for other licensed partners. It also continues to be a preferred India Correspondent for Overseas Banks, Exchange Houses as well as MSBs/MTOs. Banks association with Ripple Network also saw an increased interest from new partners (Banks as well as non-banks) keen to work with the Bank for their India bound remittances. Despite the pandemic impact, the Bank witnessed a healthy growth in its in-bound flows during the year.

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. In addition, the strengthening of the Corporate Internet Banking product suite, the Bank also started offering Synchronous APIs for Domestic Payments to complement the bouquet of Asynchronous APIs managed to date. The focus was towards driving efficiency in the API integration process, thereby ensuring instantaneous transaction processing, coupled with transparency in payment status.

Amongst the focussed areas for the Bank, the Financial Institutions Segment (NBFCs/HFCs/Govt. FIs/Microfinance/Insurance/Fintech) saw the Bank deliver bespoke solutions within quick Implementation timelines. The Bank continued its focus on Digital product offerings with reasonable success especially in API NACH, UPI, BBPS, Link Based Payments, Open Banking, E-Payments & Escrow solutions. Apart from this, the Bank continued to be an important player in providing Digital solutions to Government Departments across e-Tendering, e-Procurement, GeM, PFMS and Subsidy management services. Sustained focus by the Bank in CMS saw significant gains by way of enhancement in CASA (Current Account Savings Account) balances.

IndusInd Bank offers a wide range of trade services designed to meet our Large, Medium and MSME customer needs ranging from short-term to medium-term Trade Financing requirements, with a product suite comprising of basic as well as complex trade structures, applicable for Domestic as well as International Trade.

Our Exporter clients avail Credit bills negotiation, Pre-shipment financing (INR and FCY), Post-shipment financing, Export Letter of Credit (LC) advising, LC confirmation, Export bills on collection services, Bank line discounting amongst other Trade Services. Likewise, our Importer clients avail of product offerings comprising of LCs, Shipping Guarantees, Import financing, Custom bonds and guarantees, Import collections, Direct and Advance remittances, Buyers credit LOU, Performance & Financial Bank Guarantees. The Bank also caters to clients trade finance requirements for their offshore business units through its GIFT City branch.

Owing to the COVID-19 impact, the Bank witnessed an increased adaption of our Connect Online platform, the digital platform facilitating all Trade transaction requests such as Bank Guarantee issuance, BG Amendment, Letters of Credit issuance, LC amendment, Remittances & a variety of enhanced data insight analytics to add value throughout the trade transaction life cycle. The platform also gives a comprehensive view of IDPMS/EDPMS Dashboards, Bill of Entry/Shipping Bill Regularisation and Direct Import Payment & Export Bill Lodgement with IDPMS/EDPMS Linkages.

The Banks prowess in Transaction Banking was yet again underlined by the multiple recognitions received during the year, from The Asset, an independent leading Asian business journal:

• 4 awards in the "Best Payments and Collections Solution" Category

• 1 award in "Best in Treasury and Working Capital-Public Sector" Category

The Gems and Jewellery industry in India is one of the largest in the world, contributing 29% to global jewellery consumption and 15% to Indias total merchandise exports. 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. India is a world leader in Diamond manufacturing and exports with more than 90% of the polished stones manufactured in India. 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. Apart from this, the Group has a focus on the global luxury market for jewellery which is growing at a CAGR of 3% p.a. and has immense scope of expansion with more preference for branded jewellery both domestically and globally.

IndusInd Bank is the largest player in India and a worldwide leader in this segment with almost 20% share in finance globally. The Bank has been recognised by the Trade Council as a Centre of Excellence through many awards and accolades, 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 sector provides large cross-sell opportunities and contributes to the Banks targets in Priority Sector Lending and is house to a number of MSME entities. During the year, portfolio had zero delinquency and overall has remained delinquency free, providing attractive returns over the years including the last financial year. The Bank has been spreading its portfolio in various segments apart from its core dominance in the cut and polished diamond sector. Started as a mid-stream player, the expanse spreading over to financing of rough traders, midstream diamond manufacturers in India with more than one-third being MSMS to largest exporters, jewellery manufacturers and financing worlds biggest names directly or indirectly in the diamond, jewellery and high-end luxury chains. The financing activity is undertaken both in India and through GIFT City to businesses around the globe like Hong Kong, Dubai, Antwerp and Luxembourg, etc.

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.56.57 crores in written-off accounts. Net NPAs of the Bank stand at 0.69% of Total Advances, while the ratio of Gross NPA as a percentage of Total Advances is 2.67%.

Priority Sector Lending

Being a socially responsible Bank, the Bank has a special focus on the requirements for the needy/Priority segment of society. Lending to the Priority Sector is institutionalised within the multiple business verticals of the Bank due to which the Bank has comfortably exceeded the overall Priority Sector targets during FY 2020-21. The Bank has met all the sub-targets, except a shortfall in direct Agriculture financing. Given the wide range of sectors and activities covered, various business units of the Bank, i.e., Corporate, Commercial, Consumer, Inclusive, Agriculture and Rural Banking, have been oriented to align and focus on the specialised needs of the clientele under priority segments, which has helped the Bank create its footprint in almost all the categories under PSL.

Being a responsible corporate citizen, as a contribution towards building sustainable banking, the Bank continues to have a special focus on the clients at the bottom of the pyramid and who are largely in the informal segment. Nearly 50% of the loans by the Bank are provided for livelihood purposes across sectors of strategic importance to the economy. The Bank has come up with relevant and innovative solutions by leveraging our technology to increase credit flow and deepen access and further financial inclusion. With the help of our domain expertise and rich experience built with over decades of work, a well-developed risk framework has been put in place which is yielding good results in building a healthy portfolio resilient to shocks and aid in long-term growth. It is our firm belief that the various sectors under PSL offer huge growth opportunities and emerge clear growth drivers in future. While complying with the letter and spirit of the needs and requirements of PSL, we are creating a domain leadership in the space.

The Banks technology platforms has witnessed huge investments and are built to drive and facilitate an inclusive society giving equal opportunities to all and empower women. The Bank has designed and developed products under assets and liabilities which are affordable, easily accessible and flexible to the needs of the customers and align them to the evolving needs of customers.

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 the 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 the necessary agreement with NeSL and submitted the required data to NeSL as per their guidelines.

Customer Service

In accordance with the RBIs recommendations, meetings of the Standing Committee on Customer Service (SCCS) are attended by Senior Management of the Bank. Customers are also invited to attend these meetings to provide feedback to the Bank in order to further improve the service standards.

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 "CRM Next", a Customer Complaints and Requests Management System.

This is a bank-wide single system to track requests, complaints and queries at the 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.

Risk Management

Management of risks inherent in the Banking business effectively and proactively is critical to sustainable growth. Banking is exposed to a wide range of risks and such risks must be measured precisely, monitored on an ongoing basis and managed effectively. A robust Enterprise-wide Risk Management (ERM) framework enables precise measurement of respective risks, effective and proactive management of various risks while supporting business growth. ERM framework helps to maintain earnings quality and stability 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), Operational Risk Management and Business Continuity Planning (BCP). 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.

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

The Bank has also appointed an Internal Ombudsman, and complaints which are rejected and/or partial relief is being provided to the Complainant, are referred to him for an independent review.

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.

Customers can contact their respective Branch Manager or call the Banks Contact Centre on the toll-free number or send an email to the dedicated email IDs or access the Banks website www.indusind.com to lodge their grievances in a simplified way and get their complaints redressed without delay.

Details of the Nodal Officer/Regional Managers have been furnished. 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.

Credit Risk Management

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

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

• Credit Risk policies are aligned with business strategies with 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, the 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 the internal rating of borrowers), industries, sectors, etc;

• Measurement of the 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 the shock-absorbing capacity under multiple stressed scenarios and assessment of the impact of potential credit losses on profitability and capital adequacy, thus enabling initiation of appropriate risk mitigation measures;

• Early Warning Signals (EWS) system implementation for tracking risks and alerts in borrowers accounts as a post disbursement monitoring mechanism;

• Credit Quality Assurance, which is independent of business and credit, for tracking post disbursement weaknesses developing in the account for initiating corrective measures in time.

Despite the challenging environment posed by COVID-19 impact, the Bank has maintained the asset quality of its portfolio, with its NPA being one of the lowest in the industry. The Bank has been proactively assessing the impact of COVID-19 on its asset quality, profitability and capital adequacy. Such an assessment facilitated the Bank in making a strong provision buffer and managing risks in a better manner. During the year, the Weighted Average Credit Rating (WACR) of the Credit Portfolio has remained stable. The Bank has always strived towards maintaining a balanced mix of Corporate: Retail loan book.

The Bank has been introducing a wider range of Retail products and their variants, to have a 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. Further, the Bank has rationalised its Corporate lending during the year with diversification while on boarding borrowers with high credit rating profile.

The Coronavirus outbreak in early 2020 caused turbulence in all financial markets and led to multiple disruptions in all major economies and global trade. A major part of 2020 was dominated by remedial measures to counter the impact of pandemic-related disruptions across the globe as well as in India. The lockdown resulted in the loss of business activities and it impacted different sectors with varying degrees of severities. In India, while Q1 of FY2020-21 was majorly impacted by lockdowns in various parts of the country, economic activity picked up from Q2 onwards and almost all sectors which had been impacted started picking up momentum gradually well up to Q4 of FY2021, supported by various fiscal and monetary measures. Since March 2021, there has been a sudden and sharp rise in the number and spread of COVID-19 infections across the country. The spread which was largely restricted to a few states has gradually spread to other states as well and the numbers and the severity of the second wave are far higher than the first wave. Major states have announced a localised lockdown to curb the spread of infections as compared to a nationwide lockdown last year. However, even these localised lockdowns have now spread across various states and impacted the economic recovery and movement of goods and people. Therefore, the impact of these on economic activity will be felt across industries and sectors. The key is how long the second wave would last and localised lockdown/restrictions would continue. If its duration is short, the impact could be controlled. Vaccination drive, if ramped up, could cushion the severities of lockdown.

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 to manage the credit quality and proactively initiate appropriate actions and determine the provisioning as a result of COVID-19 pandemic.

Market Risk Management

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 a state-of-the-art Market Risk Management System, which supports the monitoring of risk parameters and risk sensitivities and computation of capital charge. The Market Risk Management system supports advanced risk measurement functionalities for the proactive management of risks. The system supports monitoring of Value-at-Risk (VaR) limits, Risk Sensitivity limits such as PV01 and Greeks 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 using advanced measurement measures. Risk values, mismatches under various time buckets and liquidity ratios are monitored against regulatory and prudential limits prescribed under Asset and Liability Management Policy.

• 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, PV01 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, Liquidity Coverage Ratio (LCR), Liquidity measures on a daily basis for managing liquidity in a cost-effective manner.

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

The Bank regularly conducts stress tests to assess the potential impact of COVID-19 on the liquidity position of the Bank under stress scenarios, assumed with varying severity. Results of such Stress tests are presented to ALCO and discussed and the committee provides guidance /direction for pro-active management.

The Bank has put in place Contingency Funding Plan (CFP) to respond swiftly to any anticipated or actual stressed market conditions. The Contingency Funding Plan is reviewed periodically.

The Bank reviews its contingency plans considering 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 plan if deemed appropriate.

Roles and responsibilities of the 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 the 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 the Traditional Gap Approach.

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. The Bank has put in place several operational risk measurement and monitoring frameworks for the management of Operational Risk. Besides the above, the Operational Risk Management framework effectively manages 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 the Operational Risk Management Framework in the Bank, an Enterprise Governance Risk and Compliance (EGRC) system has been implemented. This system has the following key components:

* Incident Management Module enables reporting and management of incidents (i.e., operational risks and fraud incidents), Root Cause Analysis (RCA), internal escalations, action plans, resolutions, etc., which helps appropriate actions towards mitigation of such risks.

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

* Key Risk Indicator (KRI) Module enables reporting, monitoring, tracking, trend analysis of Key Risk Indicators. It has been designed to generate periodic reports for respective units and provide the KRIs to Function-Heads, Department-Heads, Business-Heads for necessary actions towards mitigation of such identified risks.

* Risk and Control Self-Assessment (RCSA) module provides a 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 the 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.

Operational Risk Assessment Process (ORAP) Framework:

The Bank assesses new Products and Processes under the Operational Risk Assessment Process (ORAP) Framework. An advanced ORAP system has been implemented to reinforce the identification of risks associated with new products/processes and assign necessary controls before the launch of the products.

Operational Risk Stress Testing 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 an Operational Risk Stress Testing Framework covering different operational risk scenarios. Stress tests are carried out to gauge the impact of stressed events on the 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.

Systerns Risk

The Bank deploys the best Information Security capabilities, where it continuously strives for excellence in the respective areas of tools and practices which the Bank is using to protect its IT infrastructure and information.

The Bank has adopted the COBIT framework, ITIL framework and ISO/IEC27001 standards. COBIT, a globally accepted and proven framework, provides best practices and tools for monitoring and managing IT activities. It enables clear policy development and good IT practice. This has helped the Bank to manage IT-related risks and ensure compliance, business continuity, security and privacy. Banks Data-Centres, IT and Support functions are ISO 27001:2013 certified.

The Board-approved Information Security Policy and Cyber Security Policy mandates control objectives in all domains, i.e.:

• Security operations including real-time monitoring, analysis, and triage of threats.

• Cyber risk and cyber intelligence including maintaining current knowledge of security threats and context for the threat response.

• Data loss and fraud prevention including monitoring for and protecting against insider threats.

• Security architecture including applying security best practices to network and application architecture.

• Identity and access management including to ensure adequate authentication, authorisation and auditing techniques.

• Investigations and forensics including to ensure complete investigations.

• Governance including complete coverage of security operations and reporting.

The Bank has a Board-approved Cyber Crisis Management Plan in place. This guides the Bank in mitigating the risks from Cyber Security incidents by providing complete coverage for response to various cyber security incidents, effectively and efficiently. This establishes the Cyber Security resilience vision of the Bank. The framework and processes help consistent approaches during various stages of detection, identification, containment, eradication, and recovery from specific Cyber Security incidents.

The Information Security Department identifies risks, vulnerabilities and solutions, securing critical information and enforcement activities related to Information & Cyber Security. Various other departments, divisions and groups of the Bank assist in the implementation of Information & Cyber Security practices. These are respectively measured and the same is presented in the form of a Dashboard to the Banks top management.

The Bank has a Security Operations Center (SOC). The Banks security services partner provides the services through a combination of onsite and offsite resources. The Bank has invested in a leading SIEM solution, Anti-phishing, Anti-malware, DDoS protection services are also being delivered. Alerts are monitored and responded to by the remote security team on a 24x7 basis. Qualified security events or series of events that contributes to a successful attack or breach which causes significant disruption of business operations and/or breach of information/data are logged as security incidents.

The Bank has also tied with external experts for Cyber Security Incident Response Management. The Incident Response Plan defines major categories of incidents and incident handling procedures. In case of a critical cyber security incident, external experts are having retainers arrangements for assisting the Bank, for bringing in crucial expertise during the incident response. The Bank has Cyber Security incident insurance in place.

The Bank has a 24x7 onsite Incident response team to monitor alerts and advisories from various sources for immediate assessment and necessary action.

Insider Treats/Internal Frauds are mitigated and monitored through various channels like the Surveillance Unit, etc. The Bank communicates awareness messages and tips through various digital channels, e-learning, classroom training and workshops. The program is aimed at raising awareness around cyber frauds, safe use of the internet and online banking, recognising and avoiding phishing/vishing attempts, tips for safe use of credit/debit cards, protection from malware and malicious websites, et al. The awareness program addresses internal users, customers and partners.

From a technology perspective, the Bank has taken several measures to detect and protect against such threats in a timely manner. The Bank has subscribed to services to detect any Rogue mobile application and phishing site detection of the Bank and for the phishing sites. On confirmation by the Bank about a suspected app/site to be unauthorised, the takedown is immediately commenced.

The Bank has also subscribed to DDoS protection services from its ISPs. Additionally, the Web Application Firewall protects against application-level DOS attacks. The Bank has taken a special initiative for feeds from the Dark Web through Threat Intelligence Services.

The Bank has a detailed and periodic Disaster Recovery Strategy to protect from loss or damage due to unforeseen events, e.g., ransomware, natural disasters, or single points of failure. The Bank has implemented Disaster Recovery Strategy to recover information, restore systems, and resume operations. These strategies are a part of the Business Continuity Management (BCM) plan, designed to enable and maintain operations with minimal downtime.

The Bank has a defined Vulnerability Management Plan which is used to reduce inherent risks in an application or system. The idea behind this practice is to discover and patch vulnerabilities before issues are exposed or exploited. The Vulnerability Management Plan practices rely on testing, auditing, and scanning to detect issues.

The Bank is deploying threat hunting capabilities, which involves validating certain hypotheses for emerging threat scenarios.

The Bank deploys a variety of tools for fine-grained authentication and authorisations to restrict unauthorised users from accessing private information. These measures help the Bank to prevent harm related to information theft, modification, or loss.

The Bank is using Cloud for services and have similar protections to application and infrastructure security but is more focussed on cloud or cloud-connected components and information. The Banks Cloud security adds extra protections and tools to focus on the vulnerabilities that may come from Internet-facing services and shared environments, such as public clouds.

With the advent of IT service management at the Bank, the Bank was to plan, design, implement, operate, support and improve IT services and align them with the business needs. This helps to map the processes with the right process owners and right process champions, functions with clear roles and responsibilities.

These various capabilities ensure that the Bank is deploying a safe and secure banking experience to the customers and hence trust in the digital properties of the Bank.

Business Continuity Management

The Bank has implemented 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 the Banks critical operations and services in the event of a 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 the implementation of the EGRC system, key components of BCP such as, Business Impact Analysis (BIA), BCP Recovery Plan, BCP Testing, BCP Risk Assessment, are monitored through the system, which reinforces effective monitoring and management of Business Continuity.

BCP - Coping with COVID-19

Anticipating the disruption due to the spread of COVID-19, the BCM Steering Committee of the Bank regularly reviewed the readiness of critical functions; decisions were taken and implemented swiftly to minimise disruption and provide critical banking services to customers. A Quick Response Team (QRT) has been constituted to handle the COVID-19 situations. Safeguarding the health and safety of officials and customers of the Bank has been accorded the top-most priority. Guidelines issued by the Central Government, State Governments and local law enforcement authorities have been adhered to. The Work From Home (WFH) strategy has been implemented. Resourcing was reviewed by Department Heads and teams carrying out similar processes were bifurcated into teams that will alternatively work from the office.

Despite serious constraints due to the complete stoppage of public transport and imposition of curfew rules, the required minimum attendance was ensured at most of the Banks branches and centralised operations.

Health of Employee and Customer Safety

All officials at offices/branches observed COVID-19 protocols, usage of Masks, Sanitisers, Thermal Scanners, etc. 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. Branches/Offices were sanitised on reporting of suspicious/confirmed COVID-19 positive cases. As a proactive measure, a large number of branches, offices and Currency Chests were sanitised. Suspected officials were advised to self-isolate, branches were sanitised and then only operations were resumed.

SOPs were issued with procedures to resume full-fledged operations post lockdown, ensuring the 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 the spread of COVID-19, and self-reporting.

IT Initiatives

Access to critical systems was provided to key officials through VPN. Proactive DR Drills for 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 the IT team. Specific dos and donts to avoid cyber frauds particularly under the Work From Home (WFH) arrangement were reiterated through frequent communications to all employees.

Customer-Centric Initiatives

Digital Channels namely, 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.

General Banking Operations

The Bank has strengthened the policy framework on "Know Your Customer" (KYC) norms measures from time to time, in line with regulations. The Bank has implemented a simplified procedure of "Know Your Customer", which will benefit Lower Income Group persons to open accounts with minimal documentation, in line with the RBI Policy.

The Bank has implemented a state-of-the-art Workflow and Imaging System for Account Opening, booking Term Deposits, processing Trade Finance transactions and 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 improve efficiency at the branches as well as enhance client servicing standards.

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

Central Government through its third amendment on Prevention of Money-laundering Rules, 2005 dated August 19, 2019 has permitted banks and 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 customer on-boarding. Accordingly, the Bank introduced a Video-Based Customer Identification Process enabling customers to complete their KYC verification and account opening formalities from the comforts of their home to enjoy unlimited banking with zero paperwork.

The Bank is participating in the Clearing through Cheque Truncation System (CTS). As on March 31, 2021, the Bank had 1,586 branches covered under the Grid Clearing, through its three CTS Centres at Mumbai, Chennai and New Delhi.

The Bank as on March 31, 2021 has Five Currency Chests, i.e., Thane, New Delhi, Kolkata, Bengaluru and Chennai.

The Bank has also started participating in NACH (National Automated Clearing House) 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 provided on the Banks website.

The Bank has put in place a "Deposit Policy" and a "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 voluntary, establishing standards to be followed by all branches in their dealings with the 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 a "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 the 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 the Grievance Redressal Mechanism for quick resolution of complaints and record-keeping. Further, in line with RBI directives, balances in unclaimed deposits and other accounts are periodically transferred to "Depositor Education and Awareness Fund" (DEAF), w.e.f., June 2014. Details relating to accounts unclaimed are duly 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 a "Customer Protection Policy" based on RBI guidelines with the aim to provide a safe, rational, superior and transparent service experience to the customers. The policy aims to address customer 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 the customers.

Corporate and Global Markets Operations

Corporate and Global Market Operations (CGMO) is responsible for operational support/delivery of products related to Trade Services, Supply Chain Finance, Cross Border Remittances, Cash Management, Global Markets (Investments, Money Markets, Foreign Exchange, Derivatives), Depository and Capital Markets, and Bullion. CGMO services customers in both Corporate as well as Retail segments for these products.

Given the unprecedented challenges during the year on account of the pandemic situation, the major focus areas for CGMO were: (a) ensuring the safety of the employees and continuation of development initiatives; (b) providing strong support to customers, through agile capacity management and secure communications; (c) efficiency initiatives to reduce cycle times with a view to enhance customer service and (d) comprehensive risk reviews and robust controls.

Throughout the year, CGMO teams demonstrated outstanding commitment, and many customers highly commended the exceptional support provided. A number of early actions were taken to rapidly build Work From Home capability across teams. Ensuring staff safety was one of the top priorities, however, despite the precautionary steps taken, some colleagues who were impacted by COVID-19 were provided with all required support. Through these challenges, CGMO teams maintained a strong focus on serving customers and ensured 100% of transactions were processed, by working from both office and home, often working long hours. Learning and development initiatives were sustained throughout the year.

CGMO leaders ensured high levels of engagement in the teams and recognition for the outstanding work done. CGMO will continue to focus on building People capability and maintain high engagement.

During the year all transactions were handled in a timely manner, with CGMO teams working from office and home.

Several key processes were proactively simplified, in order to make it easier for customers to deal with the Bank. For example, digital submission of Trade transactions was enabled through the online Connect On-Line (COL) channel and email, especially for voluminous activities like Shipping Bill and Bill of Entry regularisation. There was a strong focus on onboarding customers onto COL, to accelerate digital submission of transactions. CGMO also played a key role in the seamless operationalisation of RTGS 24x7.

Optimal customer outcomes will continue to be at the heart of CGMO initiatives.

Despite pandemic-related challenges, some key system upgrades and automation projects were implemented, as part of the CGMO journey to optimally leverage technology in order to simplify processes, enhance efficiency, reduce cycle times, and strengthen controls.

Building on the automation initiatives in previous years, CGMO implemented high-end automation for some voluminous processes, leveraging Robotic Process Automation (RPA) and Cognitive Machine Reading (CMR), leading to improvement in processing time, operational controls, and cost saves. These were landmark automation, which will be replicated in other areas in the coming months.

The Inward Remittance process was further improved by offering customers multiple avenues to provide disposal instructions, leading to improved cycle times.

The upgraded Cash Management system Finnaxia for Payment products was implemented, offering customers a range of advanced features related to bulk printing of cheques. A project to upgrade the existing Treasury platform with enhanced features was initiated.

CGMO has initiated several projects leveraging diverse automation technologies, to drive operational efficiency and deliver superior customer outcomes and cost saves.

Risk Management

Proactive management of operational risk and strict adherence to regulatory guidelines has been a major focus area for CGMO. Throughout the year, given the unprecedented environment, CGMO teams operated with a heightened focus on risk and ensured strict adherence to the revised control framework. The resilience of CGMO delivery capability was effectively tested during the lockdowns. Amidst tightened liquidity conditions due to the pandemic. Treasury Operations seamlessly supported the Global Markets Group, reaffirming the resilience of its processes and systems.

All key risk and control actions were completed in a timely manner, including submission of all regulatory reports and returns. CGMO continued to implement the Risk & Control Self-Assessment (RCSA) framework for key processes in a phased manner.

CGMO will continue to focus on building and maintaining a strong risk culture.

Branch Network and Infrastructure

With a total network of 2,015 banking outlets and 2,872 ATMs, the Bank has a presence in all 28 States, and 6 out of the 8 Union Territories. In addition, the Bank also has Representative Offices in London, Dubai and Abu Dhabi.

Apart from expanding its Pan-India network, the Bank has also refurbished/re-modelled 10 branches and 1 office, relocated 21 branches and 1 office towards better business prospects. The Bank has 5 currency chests located in Mumbai, Delhi, Chennai, Kolkata and Bengaluru and one more coming up in Chandigarh. The Bank has set up 9 PIONEER branches in Mumbai (Juhu, Pedder Road and Lower Parel), Pune (Koregaon Park and Ghole Road), Delhi (Defence Colony and Punjabi Bagh), Gurugram (Palm Springs) and Chandigarh.

The Bank also leverages its presence and customer service through 2,289 branches of Bharat Financial Inclusion Limited (BFIL), a wholly-owned subsidiary of the Bank and 828 outlets of IndusInd Marketing and Financial Services Private Limited (IMFS), an associate entity. As of March 2021, there were more than 51,000 active Retail Distribution Service Points, managed by BFIL, acting as the Business Correspondents of the Bank.

Information Technology

Technology in IndusInd Bank

Information Technology (IT) in IndusInd Bank continues to be the backbone supporting the business growth ambitions. The Banks IT has a 3-pronged strategy: (1) Delivering superior client experience; (2) Delivering efficiency; and (3) Managing risk. The Bank has taken several significant steps in improving client experience, with the all-in-one store (aggregator being GoNuclei) which enables clients to use services such as, DTH recharges, place orders for cab services, etc., while in app-delivered through a single sign-on. The Bank had been the first to launch the innovative Video Branch, which enables clients to engage services of dedicated agents over a video call and this was extended through the launch of on-boarding of new-to-Bank accounts. The Bank has been keen to engage its clients digitally through the means of channels like WhatsApp and Alexa to offer a range of services that are supported by Natural Language Processing.

Towards better performance, the Bank has come out with a large scale, secure Work from Home setup for its staff, and has enabled most of its staff to work remotely. Users can now connect to Bank applications on mobile phones too, for example, tab-based account opening for savings and current accounts (more than 70% digital today), for its vehicle collections are accessible on users mobile phones and secured via the Banks mobile device management seamlessly. The Bank has also recently moved its staff to the Microsoft O-365 email on cloud offering coupled with MS Teams for easy on-the-go collaboration digitally.

The Bank has modernised its data centre and progressively moved some of its digital applications like Website, CRM onto the Cloud in India. This has achieved high resiliency and throughput. Digital payments have been increasing at the rate of 5X for UPI acquired transactions and 2X for IMPS transactions, which have been delivered successfully. MEITY has acknowledged this and the Bank was rated 1st and in the top 3 in recent quarters among peer Banks. The Bank has smoothly transitioned to RTGS and NEFT 24X7 supporting the Regulators drive for 24X7 Banking.

The Bank has adopted the highest standards for client data and transaction security with a range of modern and sophisticated security tools. The Bank has not faced security breaches which have been very common during the pandemic, as it has been careful about controls and data protection, supported by threat intelligence.

Towards superior management of business risk, the Bank has adopted robust systems for fraud monitoring, operational risk management, and DR management through investment in market-leading tools.

Recently, the Bank successfully implemented the Early Warning Signal which is an AI-based set of algorithms which measures impact or risk to accounts assimilating various market data and internal Bank data.

Launched in FY 2020-21

Superior customer experience - New Initiatives: Video KYC Platform

This new KYC facility enables the Bank to onboard customers using a live video-based interface, thereby, replacing the existing practice involving physical authentication of documents. With this, customers who are new to the Bank can request for opening an IndusInd Bank savings account and complete the entire formalities from their homes or offices, without any direct physical interaction or meeting with bank officials. The project was launched in May 2020. The application offers a fully integrated, zero-contact, completely digital account opening facility as well as a process for booking fixed deposits in just a few steps. This also enables credit card customers to submit applications and get them processed digitally - a first-of-its-kind service in the banking industry.

UPI Auto Pay - Recurring Mandate

IndusInd Bank was one of the key partners for the launch as it did the pilot use cases on the merchant side and implemented AutoPay functionality for SIP investments through CAMS and reloading of DMRCs transit card. NPCI has launched the functionality of UPI AutoPay for recurring payments in July 2020. With this new facility introduced under UPI 2.0, customers can now enable recurring e-mandate using any UPI application for recurring payments such as mobile bills, electricity bills, EMI payments, entertainment/OTT subscriptions, insurance, and mutual funds, among others.

RBI Positive Pay

An independent portal created where the Banks customers can initiate a request to OPT-IN for Positive Pay confirmation against Cheques presented for clearing and can provide/submit cheque related details online. It was launched in February 2021.

NEFT 24X7 Implementation

NEFT 24X7 implementation launched in December 2020, enables corporate clients to process NEFT Payments round the clock. This customisation also includes mapping of customer-wise per transaction and cumulative limit.

RTGS 24X7 CBS Implementation

The RTGS 24x7 was implemented in December 2020 thus, providing availability of RTGS payment round the clock. As per RBI Regulation, the Bank has implemented the logic for per transaction limit. Per transaction limit variables for the stipulated start and end time are configurable.

Corporate Website Revamp

IndusInd Bank launched its redesigned Website in June 2020, to offer customers an enhanced experience across devices such as desktops, laptops, mobile phones and tablets. The new Website enables users to seamlessly navigate through the various products and services of the Bank, thereby enabling it to curate its offerings based on customer preferences. The new Website also comprises features that aim to offer users who are visually impaired a smooth browsing experience.

New Products/Innovations with superior operating efficiency

iBPS (Intelligent Business Process Suite) - iWorks upgrade

Document Management and Workfiow Critical Bank processes that are digitised have been migrated from iWorks to the iBPS Platform. iBPS Platform enables low-code with rapid application development, thus reducing CR cost and efforts. Since on latest technology platform, it helped in closing security and compliance-related open items. The upgrade also accommodated the recent Regulatory related changes.

SWIFT upgrade

SWIFT universal confirmation Utility for Inward remittances - The Bank has developed this utility in-house to comply with the recent mandatory guidelines released by SWIFT - FIN where users must provide confirmations of the status when the receipt of a MT 103 results in a credit to the account of the beneficiary customer or when it results in a rejection of the payment. The Utility developed will store the payment acknowledgements from all the source systems in which the payments via MT 103, MT 103 STP and MT 103 REMIT are processed.

Account Aggregator - FIU & FIP

IndusInd Bank was the first Bank to go live on RBIs Account Aggregator Framework. Account Aggregator (AA) Services is one of the new initiatives introduced by RBI in collaboration with Sahamati. Sahamati Foundation, which is a Collective of Account Aggregator (AA) ecosystem set up as a non-government, Not for Profit Company. AA model is intended to provide ease of sharing financial information of customers securely and digitally across all regulated financial entities basis explicit consent provided by the customer.

CRMNext on Cloud (AWS)

CRMNext launched in July 2020, provides an enhanced digital customer experience and action platform leveraging the elasticity and resilience of the Cloud and through a robust API-led integration with all customer touchpoints. This platform provides a unified view of the customer across the lifecycle by incorporating the principle of a golden customer profile from lead/prospect to after-sales service. CRM Platform is a single platform for Customer Service, Sales, Campaign and Leads Solution and with enhanced Customer Survey Management.

Straight Through Processing (STP) Transactions Capability

Through CRMNext, the Bank was able to integrate with internal and third-party applications to enable STP transactions capability across Branch, Contact Centre and Operations. This further enhanced productivity.

IndusQode: Open Banking Sandbox

The Bank launched Indus Open Banking in September 2020, a developer portal for seamless development experience and faster adoption for its partners - Fintechs, Corporate, Exchange Houses and FI partners. The Bank has a strong API Banking suite that spans Collections, Payments, Bill Payments, Global Remittances and more. Via Open Banking, the Bank brings time-tested APIs on Cloud, to enable developers to build innovative use cases to drive digital payments in India. A total of 44 APIs are available in the Open Banking Sandbox.

Ganseva Online Saving Account

As part of the PM SVANidhi (PM SVANidhi Scheme: Central Government launched a scheme, PM Street Vendors AtmaNirbhar Nidhi (PM SVANidhi), to empower Street Vendors, by not only extending loans to them but also for their holistic development and economic upliftment). IndusInd has tied up with Atyati who offers Assisted Digital Financial services through its technology and service platform. The new business module implemented in January 2021, is now bringing banking to the customers doorstep, wherein one can be at ease while interacting, transacting and even on-boarding an application for setting up a new relationship with the Bank.

Security, Risk & Internal Efficiency Initiatives:

New email gateway with Cisco Ironport

The Bank has a state-of-the-art Email Security system (Cisco IronPort) deployed on-premise which protects the email users from malware, phishing and spoofing. The Email Security system adequately secures users against viruses and spam.

NAC (Network Access Control)

The Bank has implemented Network Access Control which provides the capability of Visibility and Control, provides insights into what connects into the Banks network by showing which systems are connected to the Banks network. It provides control on what can connect to the Bank network by denying network connection to the unauthorised system. It limits the access provided to the Banks system if the system fails to meet minimum compliance criteria.

Early Warning Signals System on Cloud

This is a Monitoring Tool to proactively identify deterioration in credit quality, as a result of various Internal and External factors during the life cycle of the credit.

Early identification of credit deterioration signals enables the Bank to trigger necessary action for preventing the account from slipping into the Non-Performing Loans (NPL) category and taking timely remedial actions and facilitate appropriate account strategy.

End-user Support over Work From Home

In order to ensure continuity of Business, Operations and Support functions, secured remote access has been enabled for employees and partners through VPNs. Different types of VPN and Virtual Desktop solutions such as SSL VPN, Remote Desktop, Hosted Shared Desktop and Windows Virtual Desktop have been configured for authorised users pan-India, basis their role and approved requirements to facilitate Work From Home. Two-Factor Authentication has been enabled for authentication on the VPN gateway, and End point analysis has been enabled on the VPN gateway to ensure thatthe laptops connecting to it are domain-joined machines provided by the Bank with the most updated Antivirus and security software.

Network-Based Anomaly Detection (NBAD) Implementation

a. The Bank has implemented the NBAD solution and its available security use-cases on IBM Q-radar platform in March 2021.

b. NBAD is the continuous monitoring of a network for unusual events or trends. NBAD is an integral part of Network Behaviour Analysis (NBA), which offers security in addition to that provided by traditional anti-threat applications such as, firewalls, intrusion detection systems, antivirus software and spyware-detection software.

Enhancing Security of Card Transactions

The completion of this initiative makes IndusInd Bank and its clients compliant with the RBI issued circular, whereby it was mandated that banks provide an ability to the debit card-holder to switch on/off the following types of transactions - International/Domestic usage of the card, ATM, POS, E-commerce, Contactless Transactions, SI (Standing Instructions)/MOTO/Tokenisation. This was launched in September 2020.

Robotic Process Automation (RPA) for SWIFT Controls

RBI mandated banks to strengthen their operational controls for SWIFT-related processes. One of the key controls required to be implemented was related to frequent reconciliation of all outgoing payment SWIFT messages every 1-2 hours. To overcome the manual reconciliation challenges, the Automated (RPA) SWIFT message reconciliation process through BOTs was implemented in October 2020.

TRRACS - Trade Regulatory Reporting and Compliance System

Trade Regulatory Reporting and Compliance System is the one-stop solution that allows banks to continue with the existing business process and still be compliant with RBI Regulatory requirements. It was launched in November 2020. TRRACS processes the data from the Banks existing system as per RBI Guidelines and transforms the dataset into RBI compliant formats. It provides web interfaces for the banks to handle the processes that are not available in their existing trade system. TRRACS -IDPMS Processing now handles complete reporting to RBI.

Human Resources

FY 2020-21 was a very challenging year for the entire nation and the economy in particular. The Corona pandemic caused economic disruptions of unimaginable proportions. The key focus of the Human Resources function during the year was to ensure the health and well-being of its employees.

The Bank continues to create an enabling environment of entrepreneurship, innovation, accountability and creativity. The Bank believes in nurturing its human capital and make them co-participants in the business growth plans of the Bank.

The Banks Human Resources function agenda is to be a strategic business partner with a mandate to attract and retain quality talent, build cutting edge competencies, reward and recognise talent, design aspirational career plans, ensure compliance to the Governments regulations, regulatory and statutory guidelines. The key aspiration is to create a great workplace and culture to become an employer of choice.

The Banks HR processes seek to enhance employee value propositions in terms of employee development, compensation, performance management, career planning, work-life balance, etc.

Improved business results, stable leadership and influx of quality talent from the marketplace indicate that the Bank is enroute to becoming an employer of choice in the BFSI sector.

Key Highlights:

• The employee headcount of the Bank stood at 29,661 as on March 31, 2021. The new hires in FY2020-21 were mainly recruited for supporting new business initiatives, critical and specialised roles requiring domain expertise and for new branches.

• The Bank believes in hiring the "best-in-class" and providing them with suitable career opportunities. The Bank has employed diversified hiring channels such as Employee Referral Schemes, Job Portals, Consultants, Campus Hiring, Social Media for quality hiring. Social Media (LinkedIn, Facebook) is continuously leveraged for critical roles requiring domain expertise and leadership hiring.

• Employee development initiatives were on an upswing throughout the year. The Bank followed a well-defined learning process comprising learning need identification, dissemination of learning plan amongst the stakeholders and learning delivery through digital modes (virtual classroom sessions/e-learning). The Bank made learning fun by launching several Gamefied online modules on Business Ethics, Business Etiquettes, Managerial Effectiveness, Customer Focus, Sustainability, and COVID-19 learning series for employees across the Bank.

During the year, the Bank conducted over 8,50,000 learning man-hours for 5,05,000 participants with an emphasis on Leadership Development, Selling and Negotiation Skills, Managerial Effectiveness, Customer Focus and Responsiveness, Banking Products, Operational Processes, Credit, Risk, Treasury, Compliance and Orientation programs. The learning effectiveness was ensured through well-designed content, online delivery and assessments by competent internal and external subject matter experts, refresher courses and a feedback mechanism to improve learning design and 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.

The 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 FY2020 was executed amidst testing times with an intent to maintain the morale and commitment of its employees. The process focussed on identifying future leaders for enhancing the Banks business growth and meaningful performance conversations for addressing performance issues and enhancing employee productivity.

• The Banks strategic intent has always 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 key agenda has been to ensure compliance with the new RBI Compensation Guidelines throughout the process.

• 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 discipline.

The HR and Line Managers connected with employees through virtual visits in the pandemic period and provided support to effectively handle COVID-19 related issues.

The Bank also launched WeConnect and Lets Connect employee connect initiatives to understand employee issues, resolve employee grievances, facilitate employee retention and development.

The Bank celebrated Womens Day and gave long service awards to its female employees as a recognition measure.

The Bank has continued to battle the COVID-19 pandemic. The entire focus continues on protecting its employees and customers through initiatives such as Issuance of comprehensive COVID-19 Guidelines (sanitation, social distancing, travel, hygiene, rostering), Work from Home advisory, Virtual Branch Visits, Adherence to Government guidelines, providing full support to all the affected cases, etc. The Banks employees also rose to the occasion and provided exemplary customer service throughout the pandemic.

• Digitisation is the theme to drive the efficiency of Employee Lifecycle processes. Launch of digital on-boarding platform, internet-based on-boarding process, Online Staff Account Opening, Career Platform, New LMS platform 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 seamlessly 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 deviation is dealt with punitive action.

• Compliance is also an integral part of the SMARTs of employees. The Bank continues to conduct awareness programmes on compliance, business ethics, prevention of sexual harassment, cyber security to prevent misconduct. The Bank also ensured adherence to all the HR-related regulatory and statutory laws.

Employees Stock Option Scheme:

On September 25, 2020, the shareholders of the Bank approved the IndusInd Bank Employee Stock Option Scheme 2020 (ESOS 2020), which comprehensively replaced the erstwhile Employee Stock Option Scheme 2007 (ESOS 2007) that was approved by the shareholders earlier on September 18, 2007. ESOS 2020 enables the Board and the Compensation Committee to grant a number of stock options of the Bank not exceeding 7% of the aggregate number of paid-up equity shares of the Bank, in line with the guidelines issued by the SEBI. The options vest at one time or at various points of time as stipulated in the Award Confirmation issued by the Compensation Committee, and there shall be a minimum period of one year between the grant of option and vesting of the option. The unvested options shall expire by such period as stipulated in the Award Confirmation or five years from the grant of options whichever is earlier, or such further or other period as the Compensation Committee may determine. The exercise price for each grant is decided by the Compensation Committee, which is normally based on the latest available closing price and shall not be lower than the face value of the shares. Upon vesting, the options have to be exercised within a maximum period of five years or such period as may be determined by the Compensation Committee from time to time. The stock options are equity-settled where the employees will receive one equity share per stock option.

Pursuant to a Composite Scheme of Arrangement with the erstwhile Bharat Financial Inclusion Limited, the shareholders of the Bank approved the IBL Special Incentive ESOS for BFIL Merger 2018 (ESOS 2018) on December 11,2018.

ESOS 2018 was approved with a pool of 57,50,000 Options which are equity settled. 50% of the options vest over a period of three years from the grant date and the remaining options vest over a period of three years from the first anniversary of the grant date. Upon vesting, the options have to be exercised within a maximum period of five years.

Marketing and Communications

The Bank always believes in putting our Customer First in whatever the Bank does, with a larger objective of providing customers with financial solutions that offer them a rewarding banking experience. Despite the external challenges, the Bank introduced some of the most unique innovations that cater to the dynamic needs of its discerning customers. The Banks marketing and communication strategy has been aligned with this vision wherein campaigns were designed to understand stakeholders interests and engage with them in their world.

As a testament to the Banks unflinching focus towards making customers the epicentre of all its strategies, the Bank launched its first brand campaign -

#HarIndianKaComeback. The campaign celebrated the indomitable spirit of resourcefulness and resilience that every Indian citizen held amidst trying times.

The campaign highlighted the Banks unwavering commitment to partnering customers in their renewed focus on restarting their journey. The campaign was primarily a TV-led one and was aired on 32 high-performing channels across different genres like English, Hindi, and Business news, General Entertainment (Hindi and English), as well as Regional channels. It was also covered by major media houses like Moneycontrol, NDTV, Economic Times, among others. Moreover, the campaign was significantly amplified across all social media platforms as well. The Bank created a separate micro-site for the campaign that garnered over 2 lakh traffic in terms of people visiting the site, banners that were put up across digital properties such as, news websites and portals, garnered over 110 million impressions, while the advertisement itself received more than 10 million views on social media platforms. The Bank also issued a press release on the campaign which garnered 8 stories across key advertising and marketing portals.

Going forward, the Bank aims to continue interacting with customers at multiple touchpoints by significantly leveraging traditional, digital as well as social media channels to reach out to the world at large.

In a bid to further enhance the Banks brand visibility, earlier this year, IndusInd Bank in partnership with the Municipal Corporation of Greater Mumbai (MCGM) and supported by the Hinduja Foundation, unveiled a majestic sculpture of its brand identity - The Zebu Bull at the central business district of Worli in Mumbai. Conceptualised by globally acclaimed Mumbai-based sculptor Arzan Khambatta, the Zebu bull resonates through the Banks history as a symbol of stability, confidence and strength.

The sculpture was inaugurated and dedicated to the city by Shri Aaditya Uddhav Thackeray, Honble Cabinet Minister of Tourism and Environment, Government of Maharashtra along with Mr. Ashok P. Hinduja, Managing Trustee, Hinduja Foundation and Mr. Sumant Kathpalia, Managing Director and CEO, IndusInd Bank. The media was also invited to the unveiling ceremony basis which, the event got featured across 22 local publications as well as online platforms.

As a Bank, we have built on the strong innovations and digitisation platforms that we already have and constantly remained focussed on innovating and finding simple but robust solutions. The single-minded objective is that we should continue to provide banking solutions that simplify banking and fulfil every customers financial requirement in a convenient, simple and speedy manner. It, as always, is critical to be connected with the customer and to be in sync with their needs and expectations in a dynamic and fast-changing world. Keeping this in view, the Banks marketing and communication strategy too has moved towards showcasing convenience and simplicity as important attributes that underpin the Banks approach towards providing banking services.

FD Radio Campaigns

IndusInd Bank executed two strategically planned radio campaigns on the Banks Fixed Deposit propositions which aired in 6 languages, viz., Hindi, Tamil, Telugu, Kannada, Malayalam and Bengali. The radio campaign was aired across 24 markets. The key idea behind the campaign was to communicate the high, best-in-class FD interest rates to the audience. The first activity spanned from August 27 to October 1, 2020 (5 Weeks), while the second one spanned from February 15 to March 12, 2021 (4 Weeks). Other than standard radio spots, the campaign also used multiple RJ mentions and sponsorship tags.

Launch of the PIONEER Heritage Metal Credit Card

A unique offering for those who live on their own terms. Not only is the metal card loaded with features for the discerning few, but is a piece of art owing to its stylish aesthetics. From privileges on dining, travel and entertainment to exciting rewards, it is a meticulously crafted credit card for the discerning few. This state-of-the-art card, along with an extended line of best-in-class offerings, redefines luxury and convenience. The card was rolled out with a strategic Out-Of-Home (OOH) campaign in select cities at marquee locations, Direct-to-Customer (D2C) e-mailer campaigns to the base as well as amplification through social media.

COVID-19 specific initiatives (Digital and Zonal)

The year 2020 was extremely challenging as every individual and organisation had to adapt to a new normal. Banking too, witnessed a major transformation during the nationwide lockdown as people stopped visiting their nearest branch or ATM for undertaking routine transactions such as cheque deposits or cash withdrawals. While maintaining social distancing became the new normal, IndusInd Bank implemented the same in its banking methods. The Bank revolutionised the traditional way of banking to adopt a fully digital process.

• This included introducing state-of-the-art digital banking solutions such as Banking on WhatsApp, IndusNet, Banking on Alexa, Video Branch services, Video KYC and much more. All these services enabled customers to bank from the safety and comfort of their homes during the pandemic. Additionally, the Bank also deployed Mobile ATMs that helped people undertake a host of banking facilities at their doorstep.

• There was extensive communication of the moratorium done to the assets customers of the Bank. There were explanation videos and emailers created to communicate the impact of the moratorium. These were done consistently over the 6-month moratorium period.

• In a bid to further amplify the digital banking initiatives of the Bank, the Bank launched a social media campaign that conveyed to customers that they can now invest in a hassle-free life with a bank thats always invested in their best interests. Through this campaign, customers were told about the perks of opening an account with Induslnd Bank that offers attractive interest rates and innovative digital services for banking.

• The Bank also launched a two-part digital ad campaign to communicate about its products and services that are relevant during the current times. Coupled with some fine nuances of ventriloquism, the Bank created two fictional characters - Viggy & Victor to explain the convenience that the Bank offers to its customers through its state-of-the-art digital banking products and services. The response to all the advertisements has been extremely gratifying. The Bank has even issued a press release on the campaign which garnered 6 articles across reputed advertising and marketing portals.

• Apart from this, the Bank also created multiple tutorial videos which focussed on educating its customers on using its robust suite of Digital Banking platforms.

• At the zonal level, the Banks teams put up communication collaterals pertaining to COVID-19 safety awareness protocol atall its branches. Otherthan in-branch communication, the Bank has also installed sanitiser stands at housing societies and implemented several COVID-19-centric educational initiatives.

A New Website

During the year, the Bank engaged with a new-age technology platform to enhance its corporate website.

This website offers a personalised experience to each customer basis their profile and relationship with the Bank. It is equipped with the latest technological updates which provide a rewarding banking experience thereby, depicting the iim ethos of the Bank.

Loan Festivals

The Bank organised over 1,000 Loan Melas across 125 cities during the months of October, November and December 2020. Through this initiative, the Bank reached out to both, existing and potential customers with its entire bouquet of loan-related products ranging from home loan, personal loan, credit card, business loans, among others.

Fixed Deposit Campaigns

In September and October 2020, the Bank did a 360-degree campaign on the Banks Fixed Deposit offerings that were spread across 150 cities. The campaign included mobile van deployments, newspaper inserts as well as merchandising at branches. The Bank used the alternative media and reached out to housing societies and senior citizens in particular, with its FD propositions.

Digital Banking

During the year, the Bank acquired approximately 2.5 lakh relationships digitally on the back of partnerships or the back of platform marketing leveraging the IndiaStack foundation. The Bank also re-launched its digital savings account propositions as Digi-Start and IndusDelite with attractive cashbacks across leading brands such as Amazon, Bigbasket and Swiggy resulting in better engagement and activation of clients. The Bank also entered into partnerships with digital aggregators such as Paisa bazaar and IndiaLends for its credit cards business.

During the year, the Banks registered user base on the mobile app increased by 39%. In terms of transactions growth, mobile transactions grew by almost 140% year-on-year. On emerging channels such as WhatsApp Banking, the user base increased almost 3 times during the year.

The Bank also took the lead in bringing several new initiatives to clients, true to its promise of being client-responsive:

• At the onset of lockdown in Q1-FY21, the Bank was quick to realise the needs of customers and launched several digital banking initiatives to enhance the customer experience, such as:

• Portal for booking FD for the existing bank, credit card and vehicle loan customers.

• A virtual Debit Card for e-commerce transactions when physical delivery of cards was impacting the industry.

• Digital banking access without the need for Debit Card and PIN.

• The Bank was amongst the first ones to go live with VideoKYC for both, liabilities and asset clients. During the year, approximately 1.2 lakh clients were onboarded leveraging Video KYC across assets and liabilities.

• The Bank was the first to go live on the RBIs Account Aggregator Framework.

• The Bank also expanded its digital presence by providing a Mobile App instance and access to its growing vehicle loan segment.

• The Bank provided additional convenience to its customers to start the banking relationship by downloading the IndusMobile App and on-boarding themselves digitally.

• The Bank continued with innovations, such as becoming the first Bank to provide a P2P payments option of pulling funds within WhatsApp and the ability to connect with a live agent during Al-enabled chat.

• During the year, the Bank also launched a unique Merchant on-boarding journey and is the first in the industry to have a completely digital paperless on-boarding process for merchants, including digital merchant service agreement leveraging e-sign and e-stamping where on-boarding for CA and Payment product is done together in a single seamless journey.

The Bank also invested in further digitisation of its capabilities on the lending side in a powerful stack named IndusEasyCredit that offers instant personal loans and credit cards to new bank clients. It is a unique, one of its kind platform, leveraging the power of Indiastack that offers digital end-to-end paperless, presence-less, cashless journey for new-to-Bank clients seeking personal loans or credit cards. It leverages digital checks across KYC, AML, Employment Verification, Real-Time Bank Statement Analysis, Real-Time Underwriting, Video KYC, E-agreement, E-sign, E-stamping and E-Nach setup to provide a seamless experience to clients. Additionally, it is a single stack that gets leveraged across Client, RM assisted, Partner led or DSA led journeys.

The Bank is also in the advanced stages of developing its stack for the business owner segment and will soon launch easy credit for business owners leveraging GST, Banking and Bureau data.

The banking industry will look radically different from what it is today, and digital will transform the way we bank or consume financial products. The Bank has always been a leader in bringing responsive innovations to clients. While the focus thus far was on bringing product or service-specific innovations on commoditized products and services and on delivering end-to-end digital journeys to clients, the next phase will be all about bringing end-to-end holistic, experience-driven, innovative client value propositions to clients with deep segment focus.

The Bank is accordingly investing in making its architecture ready for Open Banking to the core and is in the process of developing segment-specific digital stacks which will also include value-added services from ecosystem players relevant to those segments leveraging partnerships and alliances.

The Bank has also stepped forward several times during the COVID-19 crisis to lend a helping hand towards society, by enabling donation options digitally for feeding the less privileged or raising money for Oxygen.

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 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 the Banks stakeholders.

Ebar Pujo, Shobar Pujo

It is a yearly activity undertaken by the East zone during the auspicious Durga Puja festival. This year, it was the third edition of the initiative which was organised in association with the Rotary Club of Calcutta Magnum and Rotaract Club of Contemporary Kolkatans. The Bank organised a giveaway ceremony on October 17, 2020 at Anandaghar, an orphanage near Kolkata, where new clothes were donated to over 200 children who live there. The event was graced by Smt. Shanti Sen, IPS, West Bengal Police as a Chief Guest.

Amaar Siksha, Sobar Siksha

Induslnd Bank organised the first edition of Amaar Siksha, Sobar Siksha on February 20, 2021. Under this initiative, the Bank distributed 700 sets of new books and stationery to underprivileged children in Kolkata. The Branch teams conducted this activity across 22 housing societies and got an excellent response from neighbourhood catchments.

Zonal Initiatives

In a bid to engage with its clientele, the Banks Zonal teams conducted various digital marketing initiatives on the occasion of Mothers Day, Doctors Day, Independence Day, Environment Day as well as Teachers Day. Digital workshops on immunity-boosting, fitness and nutrition were organised for its clients that witnessed active participation.

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 100 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 its pursuit of investing in strategic long-term brand properties, the Bank identified the Chakala Metro Station in Mumbai - one of the most prominent stations on the Versova-Ghatkopar Metro corridor, and bagged the rights to name and re-brand the station. The station is in a prominent location in Andheri and is frequented by office goers, businessmen and youngsters for their daily commute. The area around the Chakala metro station has become a major corporate hub and also houses several banks in the vicinity. The station is a 5-minute drive from Terminal 2 of the Mumbai International Airport which caters to both, domestic and international travellers.

Within the Bank, employee activities go beyond the realm of banking to extend the 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. We celebrate running as an activity that inspires those around you. Keeping this in view, the Bank had introduced the Get Set Run initiative in 2017, which has been the biggest employee engagement activity since then.

During FY2020-21, the Get Set Run initiative aimed at engaging 12,000 employees across 35 cities with the inclusion of women-specific runs, ultra-marathons and endurance runs. However, due to the limited visibility of on-ground events, owing to the pandemic, virtual running initiatives were explored. These virtual initiatives enabled participants to run anytime and anywhere by recording their activity data on any GPS-enabled App. A total of 32 virtual marathons were conducted throughout the year, which engaged over 6,000 employees across the country.

This phase kickstarted in June 2020 with participation in one of the first virtual marathons - Run to the Moon, which was a month-long event commemorating the 51st Anniversary of Man landing on the Moon. With participation from 15 countries across the globe, IndusInd Banks participants comprised 39% of the total run contingent. The Bank even topped the list of corporates consistently throughout the duration of this event by clocking over 1,50,000 kms. To commemorate this milestone, the Bank has created a video that garnered over 7,20,000 views across the social media platforms of the Bank.

During the nationwide lockdown, the Bank organised the following employee initiatives and has even made videos featuring its employees which were shared on the Banks social media pages:

Squat Challenge

This was created to add an element of fun along with fitness during the peak lockdown. Participants were encouraged to send across short videos of them doing squats - one of the most effective exercises. This video garnered over 29,000 views across social media platforms of the Bank.

Runners Tips Video

With the focus on six of the Banks in-house runners, this video touched upon what kept their spirits high and the athlete in them alive, even while at home. This video garnered more than 25,000 views across social media platforms of the Bank.

The Finish Line

The Bank partnered with Baseline Ventures - a sports management firm to present an 8-episode web series called The Finish Line. It featured 8 noted athletes who spoke about the most defining moment in their sporting career. The Bank shared the links of each episode on its social media pages which garnered over 2 million views.

During the year, the Bank also launched an internal campaign featuring stories of employees who have taken up a certain kind of sport as part of their daily regime. The campaign used relatable stories as shining examples, thereby living up to the ethos of the sports vertical which says, Theres a sportsperson in everyone. The campaign received great traction as it featured 28 employees across 18 sport disciplines.

Activities to Reinforce Brandlmag

The Bank has extended its support to the field of art, music, sports and environment through sponsorships. To begin with, the Bank collaborated with Sanctuary Asia Foundation to organise their virtual Annual Wildlife and Photography awards. 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 Pandit Chaturlal Memorial Society, FICCI and Isha Utsav.

Bharat Financial Inclusion Limited, a wholly-owned subsidiary of the Bank

Bharat Financial Inclusion Ltd. (BFIL) has been expanding its reach over the years, penetrating geographies that cover a wider populace of India. Asides from financial inclusion, which remains the cornerstone of the operating model, BFIL has been expanding into other product lines to fulfil the needs of various customer segments across income brackets. BFILs foray into two new business lines, viz., Bharat Super Shop (Loans to Merchants) and Bharat Money Stores (Kirana stores) to meet credit demand has seen success, and it is now in the process of scaling these models from the current levels. BFIL continues to build on both, the asset and liability product suite by offering Loans, Savings Bank accounts, Recurring/Term Deposits and Remittances, to a wider customer base thus ensuring that it integrates them fully into the formal financial system. BFILs focus on providing last-mile delivery is the core of its existence. Riding on technology and robust processes, BFIL will continue to pursue the goal of financial inclusion by delivering solutions at the doorstep of the customer in a transparent manner through efficient delivery channels and low operational costs.

With a Portfolio Outstanding of Rs.25,507 crores as of March 31,2021, which accounts for more than 12% market share in sustainable livelihood financing, BFIL, is well-positioned within the Microfinance industry to lead this space in the coming years. BFILs conservative approach to lending, concentration norms defined at a geographic level, muted ticket sizes and a high level of focus on new customer acquisition, has held it to great advantage over the years and shall continue to pursue these rigorously to ensure Qualitative Profitable Growth.

While BFIL continues to grow its microfinance operations, the focus shall also be on scaling up its operations under Bharat Money Stores (BMS) and Bharat Super Shop (BSS). Initial results have given the company sufficient confidence in expanding these verticals thus, creating new opportunities and playing a meaningful role towards building sustainable financial inclusiveness across unbanked and under-banked segments of the country.

BFIL and every employee of the company is committed to being a strong and reliable partner in the journey of making India financially Atmanirbhar.

Microfinance business is primarily operated through the Banks wholly-owned subsidiary "Bharat Financial Inclusion Limited". Engaged in providing microfinance to low-income individuals in India, essentially women borrowers, BFIL has a presence in 22 states, with 2,289 branches and 27,561 employees as of March 31,2021.

Brief details of BFILs operating model and geographical reach are given below:

Unique Operating Model Extensive Reach #1 Low-Cost Producer Pan-India presence with balanced geographic exposure
100% Group lending No. of districts 436 Interest Rate: State Portfolio cap of maximum 14%
• Sub 20% lending rate for existing borrowers.
80% Rural Customer base No. of branches 2,289 • Focus on Sales & Operational Efficiency. FOS handling ~610 loan clients one of the highest in the Industry. District Monthly disbursement cap of 3% and portfolio cap of 1%
Weekly meetings with customers 100% Number of borrowers 8 million Branch Monthly disbursement cap of 1%

In a year of major upheaval due to the COVID-19 pandemic, BFIL continued to make deeper inroads into existing and new geographies providing uninterrupted services to over 8 million borrowers. Despite challenging times, lockdowns, risk of exposure to COVID-19, BFIL ensured credit support to its customers albeit, making them aware of the need to be prudent. This ensured customer loyalty, quality portfolio and double-digit portfolio growth in FY2021 over the previous year.

BFIL ended FY2020-21 with about 4.4 million of its members having an IndusInd Savings account and about 1 million of its members having an active Recurring Deposit account. BFIL is also seeing good interest being shown by its members to open Fixed Deposit accounts. BFIL expects increased penetration of savings account among its customer base and a healthy uptick of term deposits going forward. This strategy will not only help BFIL in building a strong relationship with customers, but it will also help in extending higher credit limits basis their savings and deposit behaviour.

Door-Step-Banking through Bharat Money Stores - The True Last-Mile solution

Last-mile delivery of financial service remains a challenge. BFIL is endeavouring to bridge this gap through "Bharat Money Stores (BMS)". BMS (typically a neighbourhood Grocery store) acts as transacting point offering a gamut of banking 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 its customers but also by other residents. By end of the year, BFIL had a distribution network of over 51,000 stores, the results ensuring that BFIL scales this up exponentially. BMS stores delivered tremendous value to customers and general population thus helping BFIL take a step closer towards providing doorstep financial service.

Bharat Super Shop

Bharat Super Shop is an initiative launched to address the demand for working capital loans by small shops, merchants & retailers in Tier I to Tier III cities. These customers are offered the entire range of services such as current account, recurring deposit, loans along with the convenience of payment services such as UPI/QR, Mobile/WhatsApp Banking. BFIL has adopted a Phygital approach in the entire life cycle of the customer- from sales to service.

As on March 31, 2021, BFIL had 135 branches across India. Given the response and the opportunity, BFIL is planning to scale this up pan-India in the FY2022.

Technology drives BFIL

The challenges are unique on account of deep geographical presence, unstable internet connectivity, large feet-on-street requiring mobility solutions and high velocity of transactions. These unique challenges were met through technology-driven solutions. The unique customisation ensures a niche that BFIL and its field force has with respect to delivering solutions and services.

Unique Challenges Business Deliverables In-House Developed Solutions
• Deep geographical footprint - presence in 1,26,000 villages. • Seamless and Paperless transactions with customers. End-to-End process of customers covering attendance, collections, loan applications, disbursements is digital. • Mobility-driven Jan-Dhan/ Aadhaar compliant (JAM) Lending Management Software (LOS & LMS).
• Large feet-on-street workforce on the move -20,000 field staff travelling 30-50 km every day. • Hand-held device for the field- staff.
• The high volume of transactions is ~2 million transactions every day. • Cashless disbursements. • JAM Compliant Agent Banking for Cashless transactions and Cross-Sell.
• Real-time information on collections and disbursements.
• Route maps of centre meetings, FOS logistics are monitored and reviewed digitally.

Internal Control Systems and their adequacy

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

• 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; and

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

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 ongoing 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 an 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 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 purposes, reports to the Managing Director & CEO. The ACB reviews the performance of the 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 Risk is defined by the Basel Committee as "the risk of legal or regulatory sanctions, financial loss, or loss to the 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". It 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.

Compliance is an integral part of the culture of IndusInd Bank. The Bank accords the highest priority to compliance with laws, regulations and internal rules for all of its businesses and operations. It is the responsibility of every staff member to perform their functions within the framework of the statutory and regulatory regime.

The culture of compliance starts from the top. The Banks Board of Directors is responsible for overseeing the management of the Banks compliance risk. The Bank has formulated a Compliance Policy enumerating the Compliance Philosophy of the Bank and establishing an independent compliance function in the Bank.

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 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 Bank has adopted three lines of defence approach with (a) operations and business controls as the 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 functional

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 the 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.

Corporate Social Responsibility

The Banks CSR programmes are guided by the CSR policy. During the year, IndusInd Sattvam was launched as the umbrella brand for all social responsibility initiatives undertaken by the Bank. Aligning with the CSR mission of designing sustainable CSR programmes that primarily empower and benefit marginalised and weaker sections of society, high risk and high-stressed communities, the initiatives are focussed on five major themes:

LENVIRONMENT

The Banks core sustainability philosophy of Good Ecology is Good Economics is extended beyond the fence through CSR initiatives on Environmental Conservation with sub-themes as follows:

1.1 Water Stewardship

1.1.1 Water Resource Development and Management

These projects work on restoration of degraded and water scarce landscapes and improve water harvesting capacity by building structural barriers. On the demand side, it tries to address less remunerative agriculture through awareness on adaptation and best cropping practices, soil conservation and optimum water use. While it revives the ecosystem & provides water security, the socio economic conditions of mainly agrarian community is also impacted.

Projects:

• Watershed Management(Maharashtra, Odisha, Jharkhand, MP)

• Springshed Management (Odisha)

• Rain Water Harvesting (Rajasthan)

• River Water Harvesting (West Bengal)

• Revival of Water Bodies & Watershed (Bundelkhand)

• Community-led Institutions for Managing Agriculture-resources with Tank-based Watershed Approach (TN, AP, Karnataka, Telangana)

• Pragat Watershed Development (Karnataka)

Towards the end of completion, the activities will result in increase in groundwater levels, area under irrigation and cultivation, crop production, household incomes, farmers adopting sustainable agriculture practices, reduction in women drudgery and migration etc.

1.1.2 Restoration of Water Bodies

Lakes, ponds and drains especially in urban areas which are most vulnerable to encroachment and degradation are restored and maintained in partnership with the local corporations and community in five states & union territories of Tamil Nadu, Karnataka, Gujarat, Puducherry, Andhra Pradesh.

1.1.3 Access to Safe Drinking Water

40 RO-based Water ATMs are installed in areas of Uttar Pradesh and Rajasthan facing issues of drinking water quality and its accessibility & affordability. These village-based decentralised Water ATMs dispense clean water at the rate of 30 paise per litre and is owned and operated by the community and Gram Panchayat. Similarly, 10 defunct RO systems were revived in Karnataka under BFILs Pragat Water initiative.

Both initiatives have incorporated borewell recharge in and around the system which has a water harvesting and recharge capacity of more than 3.7 Crore Litres.

1.2 Afforestation

Under the Banks Urban Afforestation Programme, 56000 trees were planted across multiple cities in states of Maharashtra, Karnataka, Tamil Nadu, Delhi, Haryana, West Bengal and Uttar Pradesh. Plantation in urban spaces was done through strong liaison with Government officials and departments for land, permits and other resources.

The plantation survival rate has been maintained at around 90% with all native species planted so far. Miyawaki (mini-forest) technique was also adopted in three cities.

Apart from the Urban Afforestation Programme, 1.64 lakh trees were planted in project locations of watershed management, springshed management, rejuvenation of water bodies and others.

1.3 Renewable Energy

Work for a rooftop solar installation was initiated in a hospital. This will not only provide a clean energy source, but will help the hospital to save electricity cost. The hospital selected for solar electrification provides preventive and curative paediatric cardiac care.

In another initiative, an AC Micro-Grid system (Solar PV based), was installed in a village on Kumirmari Island, in Sundarbans. This has provided critical electricity supply to 200 households and village institutions which are generally at risk of human wildlife conflicts. This will support 400 households and institutions. Also, a total of 100 smart solar street lights are operationalised.

1.4 Waste Management

The waste management programme in Dehradun added three more Panchayats making it a total of 11 villages and 25000 beneficiaries in 2020-21. Over 12 Lakh kilograms of waste is collected per annum, of which, 40000 kilograms are recycled and 1.2 Lakh kilograms of compost is produced.

2.1 School Academic Improvement Programmes

There are three main programs that are implemented under this sub-theme. Two of these focus on providing remedial education to bridge the learning gaps in grade level reading, comprehension and solving arithmetic with a holistic approach for overall development of children in government schools. Teachers are also trained through disseminating unique teaching ideas, approaches and concepts. In another programme Education Centres run group tuitions to assist children from poor families with necessary education and knowledge support, to help them pass class 10. It also intends to reduce dropouts and encourage them for salaried employment.

To continue the programme during the pandemic, Online mode of teaching and Offline mode of teaching in community centres were conducted to provide access to face time with their teachers. Self learning mode of learning with the help of video resources and learning worksheets were adopted.

2.2 Education Excellence

Scholarships were provided to deserving students from economically weak families to complete their education. Such support is provided through Ashoka University, FFE Foundation for Excellence and Purkal Youth Development Society.

3. HEALTHCARE

3.1 Primary healthcare

Keeping in mind the restrictions due to pandemic and to provide timely access through primary medical care in remote locations, e-Health/Telemedicine Clinics were set up. In some places access is provided through Mobile Medical Units (MMUs). Local Awareness campaigns on health & hygiene and preventive healthcare were conducted by local Community Health Facilitators.

The programs run hand-in-hand with the governmen healthcare machinery.

Care has been majorly provided for primary ailments and cases requiring secondary care are referred with a follow-up. Patients receive free consultation & medicines at subsidised cost. Therefore, they are also saved of the quacks in the community.

3.2 Specialised Care

Support for screening, diagnosis, treatment, surgeries and infrastructure support (e.g. equipment) for critical and cost intensive ailments like Paediatric and General Cancer, Paediatric Congenital Heart diseases and HIV are provided. Tie-ups with institutions working on a large-scale and catering to disadvantaged patients are done.

The Bank has also launched Mother and Child Care Programme in conjunction with the Government Healthcare machinery of Odisha State Government and a specialised menstrual and general health programme for Adolescent girls in Telangana.

The sports programmes focus on inclusion (gender, differently-abled and the underprivileged) and sporting excellence. Athletes who are scouted and supported, compete at national and international sports tournaments to win accolades.

77% of the total athletes supported are differently-abled and 27% are females.

5. SKILLS& LIVELIHOOD

Employment security is provided through creating village entrepreneurs in sanitary pad manufacturing and carrying out three short-term, employment-led skill training programmes and providing placements for youth. The latter has led to average earnings of Rs.8185 per month, while the former has created 201 women Village Level Entrepreneurs, further creating livelihood opportunities for more.

Out of the total youth and VLEs, 45% differently-abled and 47% are women.

Apart from the above, two income enhancing livestock development programmes - Dairy Farmers Livelihood Program (income enhancement through ICT intervention and market linkage) in Punjab and Sanjeevani Program in MP & Jharkhand (livestock veterinary care) reach over 4.7 Lakh beneficiaries.

The Bank committed and spent nearly 24% of the total CSR expenditure in response to the pandemic. Following activities were conducted under COVID-19 relief work by the Bank:

• Supported MCGM in training of 3000 doctors and nurses for Ventilator Management for critical care

• Setting up of 1100 kitchen gardens for the sustenance and benefit of villagers during pandemic mobility issues

• Conducted online training to initiate the use of technology for business continuity for 1000 women micro-entrepreneurs

• Donation to Chief Ministers Relief Fund and States Disaster Management Authority of several states and PM CARES Fund

• Distribution of relief material with Government, directly and through NGOs as follows:

Three-ply face masks: 4 Lakh PPE kits: 35650 Hospital beds: 100
N-95 face masks: 9000 VTM & Rapid testing kits: 15200 Pulse oximeters: 5000
Pairs of gloves: 2.72 Lakhs Ventilators: 4 Spray machine: 110
Sanitiser: 16310 litres Dry ration kits: 24250 Thermal fogging spraying machine: 34
Sanitiser dispensers: 123 Disposable bed sheets: 15500 Soya cooking oil for community kitchens: 3400 litres

Apart from the above, the Bank also carried out relief works through its existing CSR projects implementation partners with activities like ration and sanitation kit distribution, carrying out awareness programmes, stitching and distribution of masks through SHGs, grocery procurement from small farmers, SHGs, MSMEs whose livelihood were impacted due to COVID-19 etc. In one such drive, 50000 Happiness boxes were distributed to children of Govt. schools and their families who were losing on their daily nutrition due to COVID-19.

The Bank is committed towards sustainable and inclusive development of the nation and its people, along with its biodiversity and its resources.

OVERALL THE PROJECTS HAVE THE FOLLOWING COLLECTIVE REACH

Over 19 Lakh beneficiaries from the projects Around 64000 villages and towns reached Over 6680 Crore Litres of water storage capacity created About 2.2 Lakh trees planted

92770 students benefited from education programmes

Over 6.6 Lakh people provided with preventive and affordable primary healthcare services

Around 639 sportspersons groomed to compete at national on international platforms across several disciplines

1209 youth and entrepreneurs trained for employable & entrepreneurial skill to generate income

16 Lakh kilograms of Carbon Dioxide emissions mitigated through clean energy solutions

More than 5000 Local/Village level volunteers and frontline workers

Created and strengthened local institutions which are representative of the community. Most of the interventions are implemented through around 1000 institutions like SHGs, Village Development Committees, Water User Groups, Village Energy Committees and others. These trained institutions are capable of identifying and contribute in implementing any developmental issue in their village.

All the interventions are accepted, adopted and later owned by the community.

AWAR k. DS RECEIVED
Sr. No. Name of Award Platform Category Applied for Project covered Result/Remark
1 Mahatma Awards Overall CSR profile Won
2 Mahatma Awards COVID-19 Humanitarian Efforts COVID Relief works Won
3 CSR summit and awards by CSR Times Education Road to School Odisha Won
4 Water Conservation & Management Rainwater harvesting Rajasthan - Project SARAL Won
5 CII National Awards for Excellence in Water Management 2020 Beyond the Fence Rainwater harvesting Rajasthan - Project SARAL Special mention as Noteworthy Project in Water Management

Sustainability

The Bank has adopted a comprehensive approach to improve its triple bottom line (i.e., People, Planet and Profit) performance by integrating sustainability considerations in its business practices, decision-making, operations and products. The Bank has voluntarily committed targets on Environmental, Social and Governance (ESG) aspects and continues to improve the performance to surpass the ESG targets. The Banks inclusion in the S&P Dow Jones Sustainability Yearbook 2021 showcases that the Bank clearly looks beyond profits to focus on its people, society and the planet. The Bank has also been recognised for leadership in Carbon Disclosure Project (CDP), securing a place on its prestigious A List for tackling climate change. The Bank has been publishing the Integrated Report for four 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.

Sustainable from the Cornerstones

IndusInd Bank through its PC-5 strategy has embedded sustainability as one of its cornerstones. Through this, the Bank aims at interlinking its strategic focus areas with its sustainability commitments, to emerge as a responsible organisation. The Bank understands its responsibility towards enabling positive environmental and social impact on its investment decisions. IndusInd Banks sustainability journey culminated in the Bank bringing through its investments and operations under the ESG lens. The Bank has forayed into financing sustainable projects as well as greening its operations.

The Bank has established a Sustainability Policy to have an umbrella guideline that oversees ESG (i.e. the Environmental, Social, and Governance) aspects of the Bank. The Sustainability Policy defines the guiding principles for integrating Sustainability considerations in our business practices, decision-making, operations, processes and systems to demonstrate a promising triple bottom line performance to our legitimate stakeholders.

The Banks ESG framework, in accordance with its Sustainability Policy, comprises key initiatives as follows:

Responsible Banking

The Banks Environmental and Social Risk Management System (ESMS policy) incorporates Responsible banking standards and mitigates the ESG risks arising from our lending activities. This approach integrates environmental, social and governance factors in addition to the various credit & financial risk factors while undertaking lending and investment decisions. The system includes an exclusion list comprising of specific industries that carry an extremely high social or environmental risk.

Sustainable Financing

IndusInd Bank as a socially and environmentally responsible organisation, seeks to specialise the lending portfolio by increasing lending in development sectors and contribute positively to the nations developmental transformation in a sustainable manner. The aim of Sustainable Finance is to facilitate funding of specific sectors that contribute directly to the SDGs or allow businesses to align with the SDGs. The Sustainable Finance portfolio is further divided into Green and Climate Finance and Social, Livelihood and Inclusive Finance. The Bank is increasing its Green and Climate Finance portfolio through sectors such as renewable energy, clean energy, energy efficiency, green buildings and water and sanitation.

Social, Livelihood and Inclusive Finance include sectors such as education, healthcare, affordable housing, impact NBFCs, social infrastructure, agribusiness and inclusive finance.

Greening Operations

The Bank is determined to mitigate climate change impact by deploying a climate strategy to invest in eco-friendly projects as below:

• Greening IT system - server virtualisation and installation of thin clients and timers

• Greening infrastructure - green building certification achieved for three facilities

• Waste management - recycling e-waste as per govt. regulations

• Shifting to renewable energy - Solar ATMs and rooftop solar installed at Karapakkam, Chennai and IBL House, Mumbai

• Carbon Sequestration through Tree plantation - More than 1 lakh trees have been planted since the inception of the Urban Afforestation Programme

• Virtual Meetings - Promoting the concept of online meetings, which has resulted in a decrease in business travel emissions

Sustainable Procurement

IndusInd Bank promotes sustainable and ethical procurement practices through selection and onboarding criteria for vendors and suppliers. Sustainable Procurement Policy emphasises the importance of sustainability performance including human rights, labour laws and adherence to standardised ESG norms by the vendors. The Bank has conducted sustainability assessments for its critical suppliers that provide technology, equipment, IT hardware, white goods manpower, security and housekeeping services. These suppliers were assessed on their social and environmental practices, including health and safety, employee welfare, GHG emissions management, etc. The Bank seeks to associate with supply chain entities willing to abide by standard and progressive labour practices while upholding basic human rights.

Sustainability Commitments

The Bank has its specific ESG targets across the Environmental, Social and Governance (ESG) facets, dedicated to carry out responsible operations, contributing directly and indirectly to 12 UN SDGs. These targets were adopted in order to establish a systematic approach to measure and enhance Banks ESG performance.

IndusInd Bank recognises its responsibility towards the environment. The Bank is devoted to having a positive impact on the environment through its investment decisions. It endeavours to mitigate risks emerging from a variety of hazards by undertaking various initiatives.

Climate Change Mitigation

The Bank considers climate change to be the most pertinent issue of our times and aligning financing with the Paris Climate Agreement has put in place comprehensive strategies, for reducing its carbon footprint:

• Measuring, monitoring, and reducing GHG emissions associated with its operations across India.

• Transforming its operations to achieve carbon neutrality over the long term.

• Investing in renewables and energy-efficient solutions for meeting its energy requirements.

• Divesting from fossil fuel.

• Educating its employees on climate change and encouraging them to be partners in the implementation of its mitigation strategies.

The Bank is geared up to finance renewable energy projects in India as a means to contribute towards the national agenda of installing at least 9% of generation capacity through wind and solar energy - a commitment within Indias Intended Nationally Determined Contributions (INDC) towards the Paris Climate Change Agreement. As against the Green Commitment to finance 2,000 MW of additional renewable energy capacity by the end of 2019 (provided as part of the Renewable Energy Global Investors Meet and Expo (RE-Invest)), the Bank had financed more than 3,500 MW of new renewable energy projects. Apart from Renewable Energy, Bank is also increasing its climate finance portfolio through sectors such as energy efficiency, water and sanitation, electric vehicles and others. At IndusInd Bank, the eligible sectors under the Green and Climate Finance portfolio are as follows:

Renewable Energy

As on March 31, 2021, the Bank has financed renewable energy projects of 4,568 MW capacity, these projects include solar, wind, biomass or biogas and small hydro projects, renewable energy products and renewable energy production/transmission and distribution.

Clean Energy

IndusInd Bank seeks to encourage the transition from conventional energy sources to cleaner fuels. The Bank finances waste-to-energy and electric mobility projects (vehicles, charging infrastructure and technology), smart grids, mini-grids, energy storage devices, electric or hydrogen technologies.

Green Buildings

The Bank finances real estate developers that directly provide products/services for infrastructure projects with certifications such as LEED/GRIHA/GBC certifications as well as retrofitting/replacement in existing buildings.

Energy Efficiency (EE)

Projects including retrofitting/ replacement for reducing energy consumption in commercial and residential buildings, municipal projects, agricultural equipment, ; industrial EE improvement as well as manufacturing of energy-efficient products approved by the Bureau of Energy Efficiency (BEE) are financed by the Bank.

Water, Sanitation and Hygiene (WaSH)

Projects including basic sanitation, sewage treatment plants (STPs), industrial and municipal wastewater treatment plants, water management/treatment projects, distribution, desalination are financed by the Bank.

Social

IndusInd Bank recognises its responsibilities towards society. The Bank aims to contribute towards social development nurturing relationships and brand value.

People

For IndusInd Bank, its people are the core pillars of its success. The Bank hosts a diverse, talented and professional workforce who strive to deliver top-notch performance, while the organisation ensures to provide a safe, transparent work environment for all its employees.

Promoting a culture of growth through:

Diversity and Inclusion

IndusInd Bank is committed to empowering a diverse workforce culture, devoting the necessary focus towards ensuring gender equality. People at IndusInd Bank are not only diverse in terms of age, gender, race and cultural background but also in terms of their different skill sets and experience. The Bank has 5,528 permanent women employees, 25 differently-abled staff members and 2 Women Directors out of 8 Board Members.

Employee Learning and Development

IndusInd Bank invests in induction and development programmes for employees. During FY2020-21, the Bank conducted 8,52,997 training man-hours for 5,05,132 participants through 1,593 programmes. New training initiatives on business communication skills, leadership development, the art of collaboration and interpersonal effectiveness were also conducted.

Employee Engagement

At IndusInd Bank, we believe our employees are our primary stakeholders and they form an integral part of the Banks success. An engaged employee is a Brand Ambassador of the organisation. Within the Bank, employee engagement activities go beyond the realm of banking to extend to innumerable initiatives that are undertaken through the medium of Sports and CSR that explore and nurture their talent, passion and team spirit. As an organisation, the Bank strongly subscribes to the spirit of innovation and entrepreneurship wherein every employee is encouraged to share their thoughts and ideas.

Health and Safety

The Bank is committed to providing its employees with a safe and secure working environment with Health and Safety Management System. The Bank has a Fire Safety Manual, Security Manual and Workplace Health and Safety Policy in place and also conducts regular drills and training in first aid, fire safety and personal safety, periodic checks on the physical and mental health.

Human Rights Practices

IndusInd Bank has a robust and comprehensive policy on human rights including areas of child labour and forced labour as well as on prevention of sexual harassment and discrimination at the workplace under the guidance of the Board of Directors. Reviews on Human Rights aspects are being undertaken from time to time in areas of hiring employees/contract staff and during their life cycle, on an ongoing basis.

The Bank has identified rural banking and microfinance as a strategic priority under its Planning Cycle 4. The strategic decision to merge Bharat Financial Inclusion Ltd. (BFIL), the countrys largest microfinance institution, with IndusInd Bank was driven by the need to create a stronger and more sustainable platform for financial inclusion, especially in rural India. In FY2019, Bank had reached out to 7.53 million Bottom of Pyramid beneficiaries through microfinance, and after the merger is capable of reaching 22.2 million customers.

Livelihood and Inclusive Finance at IndusInd Bank translates to investing in projects that create long-term values for stakeholders in terms of sustainable livelihood; financial inclusion through supporting agriculture & agri-allied sectors and micro-enterprises. Apart from livelihood and inclusive finance, the Bank also has a significant portfolio in other social development sectors such as education, affordable housing, healthcare and social infrastructure.

Keeping in view the strong emphasis on creating sustainable livelihoods and financial inclusion in the country, the Bank has set ambitious targets for social impact lending.

At IndusInd Bank, the eligible sectors under the Social, Livelihood & Inclusive Finance portfolio are as follows:

Inclusive Finance

IndusInd Bank believes in delivering affordable and flexible services to every individual in society. The Bank hosts a wide range of financial inclusion offerings such as microfinance commercial vehicle lending for livelihood purposes, small business financing and other sectors that qualify under priority sector lending as per RBI guidelines. IndusInd Bank has also been proactively engaging women to get a sustainable livelihood through microloans.

Agribusiness Financing

IndusInd Bank supports the holistic development of agricultural businesses and value chains. The Bank is expanding its investment in agribusiness through financing projects and providing finance to corporate linked agricultural and dairy cooperatives as well as agri-infrastructure. IndusInd Bank also provides short and long-term credit products to farmers from agriculture and agri-allied sectors.

Education

The Bank is providing loans to different types of educational institutions which cater to different sections of the society, thus having a holistic impact on society. Under the education segment, funding is provided to various types of educational institutions like medical colleges, engineering colleges, vocational colleges. Further, few institutes provide affordable education to make education accessible to students belonging to lower socio-economic strata of the society thereby contributing to the social cause as well.

Healthcare

IndusInd Bank is devoted to offering support to the healthcare ecosystem. The Bank is catering to hospitals, diagnostic chains, speciality care units and equipment manufacturing units. The Bank has formulated a passionate and dedicated healthcare delivery team. The entire healthcare value chain is covered from growing medical equipment manufacturers to large established hospital chains.

Affordable Housing

Catering to the basic needs such as affordable housing in a developing nation is vital. Thus, the Bank provides loans to real estate developers providing affordable housing. Rural housing finance, linked to the government housing scheme - Pradhan Mantri Awas Yojana (PMAY), social enterprises focussed on improving living conditions (related to housing) are also supported by the Bank.

Social Infrastructure

With a focus on supporting better accessibility for all, IndusInd Bank promotes financing of social infrastructure projects such as multi-modal transport projects (Metros and BRT), roads and highways.

Impact focussed NBFCs: The Bank provides loans to NBFCs strongly supporting SDG themes such as affordable housing, healthcare, small business loans, education, renewable energy, infra projects - roads, highways, multi-modal transport and social enterprises.

IndusInd Bank values good governance practices. The Bank has a clear board and management structure consisting of various internal policies and processes which ensure transparency and trust for the long-term benefit of the Banks stakeholders.

The leadership at IndusInd Bank provides strategic guidance and is committed to keeping improving the Banks governance mechanism for better value creation for our stakeholders.

They consider the outcomes of the Banks actions and activities and choose whats best for the business and its stakeholders. IndusInd Bank has a strong vigilance mechanism in place for ensuring prudent governance. These policies help the Bank uphold its code of conduct and ethical standards. The Bank has an Anti-Corruption Policy, Whistleblower Policy and Privacy Policy in place which ensure the effective establishment and implementation of ethical company culture. The Banks governance practices are laid out on the foundation of honesty and integrity, conducting business in compliance with all regulatory & legal obligations.

The Board has formulated a Policy on Performance Evaluation which provides a guideline for the individual Directors to evaluate the Board, its Committees and individual members. IndusInd Bank has a single-tier system and its Board of Directors has 8 members including the Chairman, Managing Director & CEO and 6 directors. Six out of the total number of directors (8) are independent directors on the Board including 2 Woman Directors. The Banks Board members are individually elected and re-elected on an annual basis. The average tenure of Board members is eight years and the attendance for Board meetings is 94%.

IndusInd Bank has always looked at the world through a sustainable lens. The Banks current PC-5 strategy has embedded sustainability into the core framework. Sustainability-led actions and decisions are a way to conscientiously move forward. The Bank is operating responsibly to achieve inclusive growth in terms of revenue, environmental and social value creation. IndusInd Bank understands that inclusion of sustainable practices is key for surviving and thriving in the long run. The Bank upholds sustainability in every aspect of its functioning, devising various board committees, councils and teams. At the apex lies the CSR and Sustainability Committee of the Board, followed by the Sustainability Council and the Sustainability Team.

Shareholders Satisfaction

In IndusInd Bank, we recognise the importance of regular and transparent communication with our shareholders.

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

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, etc.

The practice of sending SMS/e-mail messages to shareholders continues, informing about Board meetings for Quarterly/Annual Financial Results, and forwarding snapshots of the Results.

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

With the implementation of the Companies Act, 2013, companies are permitted to 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.

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

The full text of the Annual Report is also made available in an easily navigable format on the website www.indusind.com under the link Investors/Reports and Presentation/Annual Reports.

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

As regards the transmission of securities, in case of securities held in physical mode (in a single name, without Nomination), SEBI has prescribed a threshold limit of Rs.2,00,000 (Rupees Two lakhs only), i.e., the market value of securities per folio, as on the 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 the convenience of shareholders, delegated the authority to the Share

Transfer Committee for approving transmission of securities held in physical mode of the market value of securities of up to Rs.10,00,000 (Rupees Ten lakhs only) subject to compliance with the simplified documentation procedure prescribed by SEBI.

Shareholders are requested to note that according 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 have not been paid or claimed for seven consecutive years or more be transferred to the IEPF Authority.

The Bank has sent intimation to shareholders on April 30, 2021 in respect of the shares on which Dividend for FY2013-14 had remained Unpaid or Unclaimed for seven consecutive years or more, requesting them to claim such dividend on or before July 31, 2021 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 4, 2021.

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://iepf.gov.in/IEPF/corporates.html.

Shareholders are requested to contact Link Intime India Pvt. Ltd. (Contact details and Office Address given elsewhere 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 shareholders and the shares due for transfer to the IEPF Authority are also available on the Banks website at www.indusind.com.