Karnataka Bank Ltd Directors Report

Dear Stakeholders,

Your Directors have the pleasure of presenting the 101^st Annual Report of the Bank together with the Audited Statement of Accounts for the financial year ended MarcRs. 31, 2025, and the Auditors Report thereon. The highlights of the operational performance are as under:

OPERATIONAL PERFORMANCE

Hin crore

	MARCRS. 31, 2025	MARCRS. 31, 2024
Net Profit	1,272.37	1,306.28
Operating Profit	1,827.04	2,163.31
Net Interest Income (NII)	3,310.38	3,298.72
Gross Income	10,283.12	9,617.42
Deposits (A)	1,04,807.49	97,988.22
Gross Advances (B)	77,958.72	73,001.66
Aggregate Business (Gross) (A)+ (B)	1,82,766.21	1,70,989.88
Investments	24,536.51	24,302.05
CASA deposits (as a share of total deposits) (%)	31.75	31.94
Gross NPA (%)	3.08	3.53
Net NPAs (%)	1.31	1.58
Provision Coverage Ratio (%)	81.42	79.22
Capital Adequacy Ratio (CRAR) (%)	19.85	18.00
Return on Assets (%)	1.05	1.19

Note: The figures mentioned above are on a standalone basis. The consolidated financial statements are furnished separately as part of this report.

BUSINESS OVERVIEW

As on MarcRs. 31, 2025, the Aggregate Business (Gross) of the Bank has reached to RS. 1,82,766.21crore with a YoY growth of 6.89%. During FY 25, the Bank has registered net profit of RS. 1,272.37crore with YoY negative growth of (2.60) %. The deposits and Gross advances grew by 6.96% and 6.79% YoY respectively. As of MarcRs. 31, 2025, the CD ratio was 74.38%. Despite of the northward movement of interest rates, the Bank has maintained the share of CASA at 31.75%. The asset quality has been improved with a 45 bps and 27 bps reduction, respectively, under Gross NPAs and Net NPAs. As on MarcRs. 31, 2025, Provision Coverage Ratio (PCR) was 81.42%. However, CRAR improved to an all-time high of 19.85%. Overall, the financial year 2024-25 was yet another year of satisfactory performance, witnessing further strengthening of the fundamentals of the Bank.

DEPOSITS AND CASA

The total deposits grew by 6.96% during the FY under review, with CASA at 31.75% of total deposits. The CASA deposits grew by 6.35% YoY.

ADVANCES

The advances grew by 6.79% YoY. The lending profile was well balanced with the share of retail advance at 50.38% & mid corporate advances at 22.88% and Large corporate advances at 26.74% of the loan book.

The priority sector advances increased from RS.36,516.93 crore to RS.37,569.19 crore forming 43.51% of applicable Adjusted Net Bank Credit (ANBC) agricultural advances together with eligible deposits under the Rural Infrastructure Development Fund (RIDF), increased from RS.14,281 crore to RS.16,614.37 crore, which, constituted 19.24% of ANBC during Q4FY25. The Bank also focuses on lending under various socio-economic schemes, weaker section schemes, MSMEs etc.

ASSET QUALITY AND PROVISION COVERAGE RATIO (PCR)

The Bank has been focusing on improving the asset quality through better credit appraisal and effective monitoring, as well as intensified recovery efforts. In terms of absolute numbers, the GNPAs decreased to RS. 2,402.08 crore as on MarcRs. 31, 2025, from RS. 2,578.42 crore as on MarcRs. 31,2024. However, the percentage of Gross NPAs reduced from 3.53% as on MarcRs. 31,2024, to 3.08% as on MarcRs. 31,2025.

The amount of Net NPAs (NNPAs) reduced to RS.1,004.55 crore (1.31%) as of MarcRs. 31,2025, compared to RS.1,129.18 crore (1.58%) as of MarcRs. 31,2024. During the period, the percentage of NNPAs substantially improved to 1.31% from 1.58% last year. The Provision Coverage Ratio (PCR) stood at 81.42% on MarcRs. 31,2025.

INVESTMENTS

The total investments increased by 0.96% and the ID ratio stood at 23.41% as on MarcRs. 31,2025, as against 24.80% on MarcRs. 31,2024.

OPERATIONAL METRICS

The gross income of the Bank for the year ended MarcRs. 31,2025, stood at RS. 10,283.12 crore compared to H 9,617.42 crore last year recording a YoY growth of 6.92%.

The total expenditure (excluding provisions and contingencies) increased by 13.44% to H 8,456.08 crore for the year ended MarcRs. 31,2025, as against H 7,454.11 crore for the last financial year. The cost-to-income ratio increased by 696 bps to 60.11%.

During the FY, Net Interest Income (NII) grew by 0.35% over the previous year. The Net Interest Margin (NIM) reduced to 3.19% from 3.52% during last year.

The operating profit decreased by 15.54% to RS. 1,827.04 for FY 2024-25 from RS. 2,163.31 crore . The provisions (other than tax) and contingencies for FY 2024-25 were RS. 186.44 crore vis-a-vis H 600.58 Crore for the previous year.

The net profit reached to RS. 1,272.37 crore from RS. 1,306.28 crore during the previous year, registering a decrease of (2.60)%.

APPROPRIATIONS

The net profit of RS. 1,272.37 crore, along with the sum of RS. 209.78 crore brought forward from the previous year, aggregating to RS. 1,482.15 crore, has been appropriated as under:

Appropriation	Rs. in crore
Transfer to Statutory Reserve	319.00
Transfer to Capital Reserve	9.63
Transfer to Revenue and Special Reserves	845.33
Transfer to Investment Fluctuation Reserve	(89.00)
Dividend of 2023-24 paid during the year	207.69
Balance carried over to Balance Sheet	189.50

DIVIDEND

The Board of Directors have recommended a dividend of RS.5.00/- per share (50%) for the year ended 31^st MarcRs. 2025 (previous year H 5.50/- per share (55%) pursuant to the financial performance of the bank for FY 2024-25. The dividend payout ratio for the year works out to 14.84% as against 15.88% for the previous year. The said dividend declaration is in adherence with the dividend distribution policy of the bank and applicable regulations of RBI and other statutes. The dividend is subject to approval of Shareholders at the AGM for the FY 2024-25.

EARNINGS PER SHARE (EPS) AND BOOK VALUE

The Earnings Per Share stood at RS. 33.69 (basic) and RS. 33.61 (diluted) for the year ended MarcRs. 31, 2025. This was RS. 39.84 (basic) and RS. 39.66 (diluted) during the previous year. The Book Value per share has further improved to RS. 319.77 as on MarcRs. 31, 2025 as against RS. 287.57during the last year.

CAPITAL FUNDS AND CAPITAL ADEQUACY RATIO (CRAR)

The capital funds of the Bank increased from RS. 11,253 crore to RS. 12,219 crore. The Capital to Risk- Weighted Assets (CRAR) Ratio improved to a high of 19.85% as on MarcRs. 31, 2025, as against the previous years 18.00%. The Bank has consistently maintained the CRAR ratio well above the minimum requirement of 11.50%, including the Capital Conservation Buffer of 2.50% stipulated by the Reserve Bank of India and the internal policy of the Bank of maintaining the CRAR 1.50% over and above the regulatory requirement.

EQUITY CAPITAL BASE

As on MarcRs. 31, 2025, the paid-up capital of your Bank stood at RS. 377,93,66,620.00 comprising 37,79,36,662 equity shares of RS. 10/- each.

During the year 6,86,704 equity shares of RS. 10/- each were allotted to option grantees upon exercise of stock options under KBL ESOS-2018.

CHANGE IN CAPITAL BASE AFTER THE CLOSE OF THE FINANCIAL YEAR

After the close of the Financial Year 43,771 equity shares of RS. 10/- each were allotted pursuant to the exercise of options vested with grantees under KBL ESOS-2018.

LISTING

The Equity Shares of the Bank continue to remain listed on BSE Limited and the National Stock Exchange of India Limited.

DEBT INSTRUMENTS & CREDIT RATING

The Bank has issued subordinated debt instruments (i.e., Unsecured Non-Convertible Subordinated BASEL III Debt Instruments) as a part of Tier-2 Capital on a private placement basis. These bonds are listed on the debt segment of the National Stock Exchange of India Limited (NSE). The details of the debt instruments outstanding as on MarcRs. 31,2025, are as under:

Series	Date of Issue	Face Value per Bond (?)	Number of Bonds	Amount (? crore)	Tenure from date of issue	Coupon Rate (% p.a.)	Credit Rating	Listing	ISIN of the Bonds
VII	30.03.2022	1,00,00,000	300	300.00	120 months	10.70	ICRA A+ (Positive) & CARE A+(Stable)	Listed on NSE-Debt Segment	INE614B08054

Your Bank has paid interest on these debt instruments on time since the issue of respective debt instruments as per the terms of the issue.

TRANSFORMATION JOURNEY- KBL VIKAAS 3.0

Banks aspirational transformation journey, KBL-VIKAAS, was launched in the year 2017, and has successfully completed seven impactful years. Building on this strong foundation, the initiative has evolved into KBL VIKAAS 3.0, reflecting a renewed focus on innovation, agility, and customer-centricity. The transformation continues to be driven by the three strategic pillars: Run the Bank, Grow the Bank, and Change the Bank.

In alignment with the Banks vision to emerge as a Digital Bank of the Future, digital banking continues to be a key enabler under KBL VIKAAS 3.0 During FY 2024-25, the Bank has accelerated its digital journey with the implementation of various digital projects as mentioned below.

SL No	Strategy Mapping				Project Title	Summary			Status
1	Asset Growth Strategy				KBL Dropline OD	To support businesses and individuals facing fluctuating cash flows and unexpected financial needs, the Bank introduced KBL Dropline OD. Dropline OD is a financial instrument that combines the features of both a term loan and an Overdraft. It offers borrowers the flexibility of an operative account similar to an OD limit, with the advantage of a longer tenure, extending up to 120 months. The facility allows withdrawals up to an agreed limit, with the withdrawal limit gradually reducing each month, quarter, half-year, or annually from the sanctioned limit. The frequency of reduction is determined based on the borrowers cash flow.			Live on 27.08.2024
2	Asset Growth Strategy				KBL PEAK (Education Loan)	Recognizing education as a key driver of economic growth and personal advancement, the Bank launched a revamped education loan product KBL PEAK. This offering provides comprehensive financial support to students pursuing higher education, both in India and abroad. KBL - PEAK features competitive interest rates, flexible repayment options, and customized loan amounts tailored to individual academic needs. The loan covers a wide range of expenses including tuition fees, accommodation, and other related costs, ensuring a holistic approach to financing education and empowering students to access quality learning opportunities.			Live on 13.11.2024
SL No		Strategy Mapping			Project Title			Summary		Status
3		Asset Growth Strategy			Open Network for Digital Commerce (ONDC)			Bank launched personal loan offerings on the Open Network for Digital Commerce (ONDC) platform, enabling seamless and secure digital lending for existing-to-bank (ETB) customers. This initiative allows bank to source loans from apps like Tata Neu, EasyBuy, PayNearby and paisabazaar. This was done as a part of innovation engagement and bank will study the value proposition, credit quality and plan future roadmap.		Live on 23.06.2024
4		Digi Bank Strategy			Credit Line on UPI			The Bank has introduced a pre-approved shortterm credit facility through the Unified Payments Interface (UPI), allowing eligible customers to make payments even when their account balance is low. This initiative offers a convenient and flexible payment option, ensuring uninterrupted transactions and enhancing customer experience.		Live on 26.12.2024
5		Liabilities Strategy			KBL Non-Callable Deposit			Non-Callable Fixed Deposit offers higher rate of interest to customers in exchange for a commitment to keep funds locked in until maturity. Unlike traditional fixed deposits, early withdrawal is not permitted except under exceptional circumstances. This product features fixed tenures ranging from 1 to 3 years, guaranteed returns. This Product encourages financial discipline, making it ideal for long tern financial planning and securing future financial goals.		Live on 31.05.2024
6		Liabilities Strategy			KBL Wise (Wellness, Investment and Savings for Elderly)			A product which offers a comprehensive value proposition, combining traditional banking features with healthcare-focused benefits. Tailor-made to support the financial security and well-being of senior citizens, KBL WISE stands out as one of the most thoughtfully designed offerings in the banking industry, helping customers manage their lifetime savings while also addressing their health and lifestyle needs.		Live on 14.06.2024
7		Liabilities Strategy			Term Deposit Advice			The Bank has introduced Term Deposit Advice where in Customer on opening a Term deposit, will be issued Term Deposit Advice (i.e. digital / physical) copies instead of Term Deposit receipts. These TD advices serve the same purpose as traditional TDRs. This shift towards TD advice reflects the banking industrys commitment to ease process and reduce risk to both customers and the bank. Also, as part of Green Initiative, TD advice is sent through email to customers in order to reduce carbon footprints, be a digital organization along with bringing in process and people efficiency.		Live on 24.06.2024
8		Liabilities Strategy			Do it Yourself (DIY) & Assisted Digital Onboarding Journey (SB Account)			Digital Onboarding of New to Bank customer through VCIP was introduced to enhance customer experience. This involves digital KYC documents verification & leverages live video interaction between a Bank representative and the customer to verify identity and conduct KYC procedures. This method enhances convenience, security and compliance by allowing customers to open savings accounts remotely without visiting a branch.		Live on 29.07.2024
SL No			Strategy Mapping	Project Title			Summary Status
9			Partner Strategy	Vakrangee (Banking Correspondent Module)			The Bank partnered with Vakrangee to extend Live on 02.12.2024 banking services through a dedicated Banking Correspondent (BC) module. This initiative enables Aadhaar-based savings account opening and supports both on-us and off-us transactions via the Aadhaar Enabled Payment System (AEPS). It promotes financial inclusion by offering essential banking services in underserved areas.

LEVERAGING THROUGH WHOLLY OWNED SUBSIDIARY OF THE BANK:

Wholly owned subsidiary of the Bank "KBL Services Limited" was incorporated as a non-financial services wholly owned subsidiary of The Karnataka Bank Limited on 21.06.2020. Setting up of the KBL Services Limited was envisioned with an objective of achieving higher operational efficiency and creating value over the longer run for the group as a whole. The scope of activities permitted to be carried out by the "KBL Services Limited" are business sourcing, data entry work, contact center management, management of alternate banking channels, back-end processing activities, IT projects & support, digital capabilities and providing sub-staff/housekeeping/ maintenance staff/attenders to the parent Bank. To begin with, the Company has taken up Business Sourcing, Data entry work, back-end processing activities and contact center and expects to widen its service offering to other permitted activities in the upcoming financial years. There has been no change in the business of the Company during the financial year ended MarcRs. 31,2025.

RISK MANAGEMENT AND GOVERNANCE

In the normal course of business, the Banks are exposed to various risks, namely, Credit Risk, Market Risk and Operational Risk, besides other residual risks such as Liquidity Risk, Interest Rate Risk, Concentration Risk, Strategic Risk, Reputation Risk etc. With a view to efficiently manage such risks, your Bank has put in place various risk management systems and practices. In line with the guidelines issued by the Reserve Bank of India from time to time, your Bank continues to strengthen various risk management systems that include policies, tools, techniques, systems and other monitoring mechanisms.

Your Bank aims at achieving appropriate trade-off between risks and returns. Risk management objectives of the Bank broadly cover proper identification, assessment, measurement, monitoring, controlling, mitigation and reporting of the risks across various business segments of the Bank. The risk management strategy adopted by your Bank is based on a clear understanding of the risks and the level of risk appetite, which is dependent on the willingness of your Bank to take risks in the normal course of business. A Board level committee, viz., Risk & Capital Management Committee (RCMC) periodically reviews the risk profile, evaluates the overall risks encountered by the Bank and develops policies and strategies for its effective management.

The various senior management committees such as Credit Risk Committee (CRC), Asset-Liability Management Committee (ALCO), Operational Risk Management Committee (ORMC) etc. operate within the broad policy framework of the Bank to ensure and enhance the risk control and governance framework within the Bank. The Risk Management Department at Head Office oversees the overall implementation of various risk management initiatives across the Bank.

In line with guidelines issued by RBI, your Bank has nominated a Chief Information Security Officer (CISO), who is responsible for articulating and enforcing the policies that the Bank use to protect the information assets apart from coordinating security related issues in implementation of new systems under Information Technology in the Bank.

OFSAA (Oracle Financial Services Analytical Applications): Your Bank has all the necessary systems and tools in place for ALM, MRM, LRM, FTP and IRRBB. An advanced application i.e. OFSAA is in the advanced stage for implementation which covers ALM, LRM, FTP, PFT & IFRS9.

More elaborate discussion on how the Bank manages the key risks associated with its operations are provided under the Management Discussion and Analysis attached to this report.

Basel III Capital Regulations - Implementation of Leverage Ratio: To mitigate the risk of excessive leverage and enhance the financial stability, RBI mandated the minimum Leverage Ratio (LR) under Basel III Regulations for banks in India. Both the capital measure and the exposure measure along with the leverage ratio are to be disclosed on a quarter-end basis. However, banks must meet the minimum leverage ratio requirements at all times. As on MarcRs. 31, 2025, your Bank had a comfortable leverage ratio of 8.51% as against the regulatory minimum requirement of 3.50%.

Capital Adequacy & Capital Adequacy Assessment Process (ICAAP):

Under Pillar 2 of the Basel II Accord, Internal Capital Adequacy and Assessment Process (ICAAP) was introduced as a measure of the adequacy of a capital resource of the Bank in relation to its current liabilities and in relation to the risks associated with its assets.

An appropriate level of capital adequacy ensures that the entity has sufficient capital to support its activities and that its net-worth is sufficient to absorb adverse changes in the value of its assets without becoming insolvent. An assessment of the capital requirement of the Bank is carried out through comprehensive projections of future business that takes cognizance of the strategic intent of the Bank, profitability of particular business and opportunities for growth. The proper mapping of credit, operational and market risks to this projected business growth enables assignment of capital that not only adequately covers the minimum regulatory capital requirements but also provides headroom for growth. The calibration of risk to business is enabled by a strong risk culture in the Bank aided by an effective, technology-based risk management system.

The Disclosure under Pillar III of Basel III accord has been annexed to this report as in Annexure-I.

In compliance with Basel guidelines, the Bank has put in place a policy document for Internal Capital Adequacy Assessment Process (ICAAP) to evaluate its capital adequacy requirements. Stress testing framework for various stress scenarios is also put in place for a better understanding of the likely impact of adverse market movements/events on the capital and earnings. The results of the ICAAP and stress testing are reviewed periodically to assess the capital requirement for the projected business growth, keeping in view the risk appetite and risk profile of the Bank. A Board level Risk & Capital Management Committee (RCMC) reviews the risk appetite, risk profile, business projections as well as capital assessments of your Bank at periodic intervals.

SEGMENT REPORTING Business Segment-

For the purpose of segment reporting in terms of AS 17 of the Companies (Accounting Standards) Rules 2021 and as prescribed in the RBI guidelines, the business of the Bank has been classified into 4 segments i.e. (a) Treasury operations (b) Corporate/Wholesale Banking (c) Retail Banking (d) Other Banking Operations.

Geographical Segment-

Further as per the RBI circular DOR.AUT.REC.12/22.01.001/2022-23 dated April 07, 2022, on establishment of Digital Banking Unit (DBU), Digital Banking has been identified as a Sub-segment under Retail Banking. Since the Bank does not have any overseas branch, reporting under geographic segment does not arise. The segment assets have been identified and segment liabilities have been allocated on the basis of segment assets.

H in crore

				Standalone Segment Results
BUSINESS SEGMENTS	TREASURY		CORPORATE/ WHOLESALE BANKING			RETAIL BANKING			OTHER BANKING OPERATIONS		TOTAL
Particulars	Mar25	Mar24	Mar25	Mar24	Mar25		Mar24		Mar25	Mar24	Mar25	Mar24
					DBU	Others	DBU	Others
Revenue	1645.64	1652.13	3516.44	3450.37	0.54	4699.22	0.19	4244.25	298.65	248.77	10160.49	9595.71
Unallocated Income											122.63	21.71
Total Income											10283.12	9617.42
Result	157.05	164.79	615.44	977.96	-0.50	959.37	-0.47	1046.40	58.10	24.73	1789.46	2213.41
Unallocated expenses (including provisions & contingencies)											-148.86	-650.68
Profit before tax											1640.60	1562.73
Income taxes											368.23	256.45
Extraordinary/ Exceptional Profit / Loss
Net Profit											1272.37	1306.28
Other Information											-	-
Segment Assets	32881.72	32708.88	38037.67	38324.06	13.92	46608.80	8.25	41605.74	29.57	40.22	117571.68	112687.15
Unallocated Assets											3390.10	3397.42
Total Assets											120961.78	116084.57
Segment Liabilities	29632.27	29483.85	34234.15	34886.66	13.99	41907.77	8.72 3	57740.55	26.64	36.24	105814.82	102156.02
Unallocated liabilities	-	-	-	-		-			-	-	3061.64 3080.05
Total Liabilities	-	-	-	-		-			-	-	108876.46 105236.07
Capital employed	-	-	-	-		-			-	-	12085.32 10848.50

The details about aforesaid business segments are discussed in Management Discussion and Analysis attached to this report. Banking Outlets and Alternate Delivery Channels (ADCs):

As on 31^st MarcRs. 2025, your Bank had 2468 service outlets including 952 branches, one extension counter, 837 ATMs and 679 recyclers with a presence across 22 States and 2 Union Territories. Apart from the above, the Bank also has one Data Centre with a Disaster Recovery Centre and Near Line Site (NLS), two Service branches, five Currency Chests, two Central Processing Centers, one Digital Centre of Excellence, Thirteen Asset Recovery Management Branches and 5 Retail Loan Processing and Sanction Centre (RLPSC), one Central Loan Processing and Sanctioning Centre for Sanctioning of retail loans (CLPSC)and 2 Retail Assets Centre (RAC). During the financial year under review, your Bank has opened Thirty One new branches.

More details are discussed in Management Discussion and Analysis attached to this report.

Government Business:

Pursuant to the deregulation of the policy by the Central Government and Reserve Bank of India (RBI), the eligible scheduled private sector banks have been permitted to act as agency banks of RBI for conduct of government business. Based on the evaluation and fulfillment of eligibility criteria, your Bank has been appointed by RBI as Agency Bank vide Lr.DGBA.GBD.No. S363/42.01.033/2021-22 dated 20/07/2021 followed by execution of Agreement between RBI and your bank on July 27, 2021. With this, your Bank can now undertake Revenue Receipts and Payments on behalf of the Central/State Governments, Pension Payments and collection of Stamp Duty charges and any other item of work specifically approved by the user department concerned and concurred by RBI.

With pan-India presence, driven by strong and robust technology and digital platforms, your bank is confident of being the preferred choice for the Central and State Governments in providing the best possible financial solutions in the most seamless manner. The handling of government business augurs well for your bank as it helps in facilitating the customers in tax payments thus enhancing relationship stickiness and as a source of revenue through eligible agency business commission.

Your Bank has made active progress and started collecting statutory tax payments such as Customs Duty, Goods & Service Taxes (GST) on behalf of Central Board of Indirect Taxes and Customs (CBIC) and Direct Tax (Income Tax/Advance Tax) on behalf of Central Board of Direct Taxes (CBDT). The specialized schemes are formulated to on board Government Department/Bodies/ Corporation/ etc. accounts.

Your Bank has entered into an agreement with the Department of Treasury (DoT), Government of Karnataka for facilitating payments to various State Government departments through Khajane II, the Integrated Financial Management System (IFMS) of the Government of Karnataka. Through this integration, customers will be able to seamlessly remit various revenue and tax payments directly to the respective government departments using Banks digital and branch banking channels.

Your Bank has commenced accepting applications from the public for Capital Gain Tax Exemption Bonds issued under Section 54EC of the Income Tax Act, 1961. These 54EC Capital Gain Bonds are specialized financial instruments issued by Government-backed entities and Public Sector Undertakings (PSUs), which allow investors to avail exemption from long-term capital gains tax arising from the sale of immovable property, subject to applicable provisions and conditions of the Income Tax Act. Currently, we are accepting applications for bonds issued by the following institutions: Power Finance Corporation Limited (PFC), REC Limited (formerly Rural Electrification Corporation Limited), Indian Railway Finance Corporation Limited (IRFC). This initiative not only strengthens our Banks engagement with various Government departments and PSUs but also enhances our portfolio of value-added services aimed at meeting the diverse financial needs of our customers.

Your Bank has entered into an agreement with the Employees Provident Fund Organization (EPFO), effective 1^st April 2025, for the collection of EPFO-related payments on behalf of the organization. Under this arrangement, Your Bank will facilitate the collection of: Provident Fund contributions, Dues and damages, Remittances and payments, Applicable charges and fees. This facility will

be extended to customers who are registered members of EPFO, enabling them to conveniently make these payments through Internet Banking platform in due course. This partnership further strengthens your Banks role in facilitating statutory collections and significantly enhances digital service capabilities for both institutional and individual customers.

Your bank has made active progress in completing the administrative and technical procedures with few of the agencies. Your bank is well positioned to make foray into strategically important government projects/mandates that helps in expansion of liability business skewed towards low-cost deposits and open new avenues of fee income contributing to the bottom-line.

Third Party Products

With an aim to provide diversified financial products & services and to maximize value-added services to the customers, your Bank provides a bouquet of Third-Party Products, which include Life Insurance, General Insurance, Health Insurance, Mutual Funds, Demat Account, Trading Account, Co-branded Credit Cards, PoS Network, KBL FASTag, NPS, SGB, APY, etc. A summary of the major third-party products is provided in Management Discussion and Analysis attached to this report.

Customer Service:

Your Bank is consistently focused on setting new benchmarks in customer service to enhance its competitiveness. This involves designing an innovative and cost-effective mechanism to deliver banking services efficiently. The Bank is actively engaged in establishing systems and procedures for providing quality services to customers, along with an effective grievance redressal mechanism, including an Internal Ombudsman (IO), in line with the guidelines issued by the RBI and IBA from time to time.

Additionally, the Bank offers doorstep banking services to senior citizens above 70 years of age, as well as to differently abled or infirm individuals, including the visually impaired, at all metro branches. These services are also provided on a "best-effort" basis at all other branches of the Bank.

Credit Monitoring Excellence:

In order to have an effective post sanction monitoring and collection mechanism, an exclusive Credit Monitoring Department (CrMD) was set up at Head Office. Contact Centre was setup for follow-up of stress accounts during initial days of stress. Regional Monitoring and Collection Centre (RMCC) consisting of Regional Retail Collection Team (RRCT) and Regional Corporate Collection Team (RCCT) are set-up at all the Regional offices for follow up /initiate time bound/DPD-wise actions for collection of dues in respect of all loan accounts. A dedicated Credit Monitoring Team (CrMT) is also functioning under RMCCs to undertake post-sanction monitoring of loan accounts of respective Regions. In addition to this, calls are made to borrowers directly from CrMD in respect of big-ticket loans. Further, during the visit of HO-executives to RO/ Branches, borrower visits are also undertaken for regularization of the accounts. A separate wing at HO under Legal & Recovery Dept. is created for collection of dues under Standard Retail advances.

With a view to improve the efficiency in monitoring & follow up activities, Bank has implemented Behavioral, EWS & call prioritization modules to identify the loan accounts having threat to recover the dues in future dates and to classify the account based on the risk category of the borrowers. Various collection modes, like sending SMS, emails, calling & customer visits etc. are prioritized. Web based collection tool "KBL-Kollect+" is also finetuned for undertaking prioritized collection activity.

The Bank has been making its best efforts in bringing down overall SMA (SMA 0, 1,2) under performing advances and the result is clearly visible. The stress in Restructured advances is also showing declining trend on account of improved monitoring and collection efficiency. Auto Sweep system for auto collection of EMI / Installment/Interest of loans from operating accounts of borrowers, enabled E-Connect solution for making payment to the loan accounts through UPI payment options, auto-capturing of Early Warning Signals etc., are put in place.

The Regular Asset Monitoring Cell at CrMD is monitoring the diversion of funds in OD accounts through offsite surveillance. Drawing Power updation activity at CrMD is approving DP in respect of OD accounts having sanctioned limit of RS. 10.00 crore & above under maker checker concept.

The Restructured Advances Monitoring Cell and Consortium & Multiple Banking Arrangement Cell are formed at CrMD for monitoring of restructured accounts and loan accounts under Consortium & Multiple Banking Arrangement respectively. A system of auto submission of Exchange of Information (EOI) is also introduced for prompt submission of EOI to member banks, as a part of regulatory compliance.

Quality Assurance Cell is formed at CrMD for purification of MIS data in respect of loan accounts. Newly opened loan accounts are being checked on an ongoing basis for proper MIS classification. While extending agri gold loans of above RS. 2 lakh, QAC checks for obtention of RTC/any other document as a proof of owning agriculture land.

Digital Initiatives undertaken by the Department during the FY 2024-25

1. Digitalization of valuation process in respect of Agricultural Properties.

2. Online Gold Auction Process.

SUPPORT AND CONTROL FUNCTIONS Information Technology:

The Bank has Robust Core Banking System (CBS) since year 2000 and all its branches and offices are under CBS network. Alternate Delivery channels viz. ATM, Internet Banking, Mobile Banking, UPI, PoS have been integrated with the Core Banking System.

The Disaster Recovery [DR] arrangement also exists to ensure business continuity in the event of primary site failure for all business-critical applications (CBS, ATM, Internet Banking, Mobile banking, UPI). This arrangement is strengthened by implementing three-way data replication process aimed at maintaining zero data loss. The critical applications like CBS, ATM, Internet Banking and Mobile Banking are part of this arrangement. Primary Data Centre of the Bank hosted in Tier 4 Data Centre and DR Data Centre hosted in Tier-3 Data Centre.

The IT infrastructure of the Bank is headed by Chief Information Officer (CIO) and supported by other executives of IT Dept. Your Bank will continue to take note of technological revolutions and take appropriate decision at the right time to provide premier banking services and also continue to be a tech-savvy Bank aiming for Digital Bank of Future.

The Bank is also extending facilities like Funds Transfer through electronic means [NG-RTGS, NEFT, IMPS, UPI, ECS, NECS etc.], Speed Clearing, CTS, Financial Inclusion, IVR and other technology enabled services and products.

Last year, the strategy was to build resilience , governance and transparency across the Technology Landscape for the bank. These included implementation of Data Domain Architecture , enhancing customer experience by building high availability for critical mobile &core banking applications and execution of technology Enterprise Technology Service Management for real time Technology Governance. The bank also won prestigious IBA Technology Awards under six categories that validated the technology roadmap strategy.

Bank will be building on the base framework and would be sharpening its focus on Hollowing the Core Strategy , Scaling the Enterprise Architecture by it API 2.0 initiative and Application Consolidation by Technology re-engineering

Analytical Centre of Excellence (ACoE):

Analytical Centre of Excellence (ACoE) accelerated the Banks data-driven transformation by embedding advanced analytics, AI/ML and BI tools across key business lines to enhance decision-making and operational agility. Unified data infrastructure & integrated CRM systems have elevated service delivery and customer insights. The foundation systems set up during the previous year were put to utilization, which led to:

Growing Business with Data-Driven Insights: -

By leveraging advanced analytics, AI/ML, Analytical Center of Excellence (ACoE), is targeting business growth across CASA, Term Deposits, Loans & TPP while reducing stress through Collections vertical. 40+ use cases comprising of predictive, strategic and descriptive analytics have been developed & deployed to identify and target high-propensity customers. Modern, robust cloud-based infrastructure that ensures uninterrupted data availability and fast processing, driving generation of quality leads is put in place. Targeted campaigns are deployed across multiple channels - Branches, Digital modes and contact centers, where detailed customer insights on demographics, banking behavior and product usage are used to ensure effective outreach. This process enhances customer engagement, builds stronger relationships and improves conversion outcomes across key segments.

Proactive Customer Outreach and Engagement: -

Banks contact center plays a critical role in executing these initiatives. Business teams actively engage with customers and onboard them to the appropriate products based on their needs. Simple and customer-focused methods are followed so that every outreach is meaningful and yields positive results. Campaigns such as dormant account reactivation initiative have successfully re-engaged customers and revived business relationships. All campaigns deployed by the Bank have been well received by the business teams, leading to robust engagement and promising contact / convert rates.

Empowering Teams & Boosting Operational Efficiency: -

CRM adoption among frontline staff has significantly improved, empowering them with scheduling tools, activity reminders and comprehensive customer insights via Customer 360 view. Real-time dashboards to monitor performance, gain actionable insights and drive continuous improvements in operational efficiency are consumed by the top management. Meanwhile, the in-house analytics team consistently upgrades their skills in data science, data engineering and cloud security through ongoing training programs. This commitment has reduced the reliance on external resources while delivering innovative solutions to the business.

Human Resources (ISO-9001:2015 certified):

As on MarcRs. 31, 2025, Bank had 8750 employees of which, 2778 are women employees constituting around 31.75% of the total strength. Your Bank has put in place an institutional mechanism for the protection of women employees at the workplace and adopted a policy pursuant to Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal)

Act, 2013, providing for the protection of women employees against the sexual harassment of women at the workplace and redressal of such complaints. At the start of the fiscal year, no complaints were pending. During the year, three complaints were received, of which two were upheld.

Internal Complaints Committees [Information Under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013]

The Bank had constituted Internal Complaints Committee, as per letter and spirit contained in the provisions of "The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013", to prevent and redress the complaints relating to sexual harassment and to organize workshops/ awareness programs to empower women employees while handling cases relating to sexual harassment. The data with regard to the redressal of complaints by the Internal Complaints Committee are as follows:

Particulars	No. of cases
No. of complaints received for the year FY- 2024-25	03
No. of complaints disposed of during FY-2024-25	03
No. of cases pending for more than 90 days	Nil

Compliance with respect to the provisions of Maternity Benefit Act,1961

The Bank is in compliance with the provisions of Maternity Benefit Act,1961. More details are available in the Business Responsibility and Sustainability Report of the Bank which is part of the Annual Report of the Bank and is also available on the Banks website.

Risk Based Supervision (RBS)

In view of the growing complexities in the processes, product offerings and systems and procedures in the Indian banking sector, pursuant to the recommendation of the High-Level Steering Committee, the Reserve Bank of India has shifted its supervisory stance to a risk-based approach called the Supervisory Program for Assessment of Risk and Capital (SPARC) which is focusing on evaluating both present and future risks, identifying incipient problems and facilitating prompt intervention / early corrective action etc. Your Bank has been included under the same and migrated to Risk Based Supervision since MarcRs. 31,2015. A plan of action for complying with various findings in RBS communicated to the Bank in the Risk Assessment Report is also ensured.

Compliance Function

Your Bank is effectively addressing Compliance Risk through the Compliance function. The compliance function is one of the key elements in the Corporate Governance structure of the Bank along with internal control and risk management process. The Bank has set up a robust Compliance Department with sufficient independence to promote a healthy compliance culture. The Bank ensures strict observance of all statutory provisions, guidelines from RBI and other Regulators, standards and codes, the internal policies, and fair practices of the Bank.

The compliance function includes interpretation/dissemination of regulatory and statutory guidelines and ensures that controls and procedures capture the appropriate information to the Senior Management in their risk management function. The risk-based compliance programme of the Bank, under the supervision of the Chief Compliance Officer, ensures appropriate coverage across businesses, besides verifying the level of compliance through Compliance Testing of branches/business units. The Bank carries out an annual compliance risk assessment to identify and assess its significant compliance risks and take steps to manage the risks effectively. Further, the tone from the Top management continuously emphasizes the significance of compliance to usher in perceptible improvements in the overall compliance culture of the Bank.

Vigil Mechanism

The Bank has implemented the Protected Disclosure Policy (Whistle Blower Policy) since the year 2007. It is intended to promote participation of employees at all levels and detection of corruption, misuse of office, criminal offences, suspected/ actual fraud, failure to comply with the rules and regulations prescribed by the Bank and any events/acts detrimental to the interest of the Bank, depositors and the public resulting in financial loss/operational risk, loss of reputation etc. Further, the mechanism adopted by the Bank encourages Whistle Blower to report genuine concerns or grievances and provides for adequate safeguards against victimization of Whistle Blower who avails such mechanism and also provides for direct access to the Chief of Internal Vigilance (CIV). The detailed Policy on Whistle Blower hosted on Banks website and available at the link: https://karnatakabank.com/investors/policies-codes.

Corporate Social Responsibility

Corporate Social Responsibility (CSR) initiatives of the Bank are designed to make a positive impact on a wide range of areas of social life like healthcare, education, livelihood enhancement, empowering women/socially and economically disadvantaged, environmental sustainability/ green initiatives, protection of heritage/ culture, rural development, Swachh Bharat etc., aimed at promoting the overall development of the society. Further, to minimize the urban-rural divide, your Bank has been strengthening

its rural orientation through initiatives aimed at imparting financial literacy and extending banking services to the people in rural unbanked areas, fairly and transparently, at an affordable cost.

Further, pursuant to Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board has constituted Corporate Social Responsibility (CSR) Committee of the Board and has also put in place a Policy on Corporate Social Responsibility (CSR Policy) to undertake projects/programmes in pursuance of the said Policy. Under CSR activities, The Bank has so far funded 2247 projects with a total financial outlay of RS. 117.29 crore, and these projects have exhibited a welcome positive impact on society.

Pursuant to Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, the contents of the CSR Policy, along with the report on amounts spent on various projects/ programmes during FY2024-25, are detailed in Annexure - II to this report. Further, in terms of Rule 4(5) of the CSR rules, certification from the Chief Financial Officer has been obtained for the CSR spending during FY 2024-25.

Financial Inclusion:

Through the Financial Inclusion Plan, your Bank aims at connecting people with the Bank and not just opening accounts. This includes meeting the small credit needs of the rural public, giving them access to the payments system, providing remittance facilities, life insurance and health insurance etc. Your Bank has 442 branches, apart from 35 Ultra Small Branches, located in the rural and semi-urban areas and offers banking facilities to the rural clientele. Our rural branches are also acting as Financial Literacy Centers (FLCs) and imparting banking literacy among the rural populace. In accordance with Prime Ministers Jan Dhan Yojana (PMJDY), the Bank has implemented the revised Strategy and Guidelines for Financial Inclusion activities. Your Bank is actively participating in the Direct Benefit Transfer (DBT) Programme of Govt. of India to transfer the benefits of various Schemes / LPG subsidies directly to the beneficiaries Aadhaar-enabled bank accounts.

As part of the Financial Inclusion plan, the Bank has been offering the following services:

1. Business Correspondent (BC) services:

M/s Sub-K Impact Solutions Limited: -

The Bank has tied up with Sub-K Impact Solutions Limited to provide the BC services, and as on MarcRs. 31,2025, 153 BC Agents are covering allocated villages in the states of Karnataka, Andhra Pradesh and Chhattisgarh.

M/s Vakrangee Limited:-

Bank associated with M/s Vakrangee Limited as Corporate BCs since July 2024 to tap assets and liabilities business across India under BC model. As on 31.03.2025, 21 BC agents are onboarded who carrying eKYC based account opening and AEPS transaction.

M/s Digivriddhi (DGV): -

The Bank has engaged with M/s DGV as corporate BCs since January 2024 to tap milk farmers business across Karnataka states. As on March, 2025, they have been onboarded by Six Dairy Co-operative Societies (VDCS) as sub-BC agents. The bank is expecting good accretion business in future.

Aadhar Enabled Payment System (AEPS): The Bank has introduced AEPS transaction services offered by the National Payments Corporation of India (NPCI) at all Business Correspondent (BC) locations of the Bank, and with this, the customers of the Bank having an Aadhar-enabled SB account can transact at the BC point.

2. Financial Literacy and Credit Counseling Centers (FLCs): The Bank is running 5 FLCs at B.C Road - Bantwal, Hangal, Kundagol, Tiptur and Alur (Karnataka). During FY2024, 5 FLCCs have conducted 1,031 Financial Literacy campaigns in which 77,575 participants took part. In adherence to RBI guidelines, all the rural branches of your Bank are also conducting financial literacy Camps.

3. Social Security Schemes: All the branches of your Bank are actively involved in providing three Social Security Schemes-Prime Minister Jeevan Jyothi Bima Yojana (PMJJBY), Prime Minister Suraksha Bima Yojana (PMSBY) and Atal Pension Yojana (APY) schemes to customers across the country.

4. Prime Minister Jan Dhan Yojana (PMJDY): All the branches across the country are opening accounts under PMJDY and are issuing RuPay Debit Cards.

5. The Bank is one of the trustees of Karnataka Farmers Resource Center (KFRC), Bagalkot, established to impart training and act as a resource center for farmers under the umbrella of SLBC Karnataka. The Bank has contributed H 50.00 lakhs towards the capital expenditure/corpus of KFRC.

6. In line with the Pradhan Mantri Street Vendors Atmanirbhar Scheme, The Bank has rolled out KBL- PM - SVANidhi scheme providing working capital loans up to H 50,000/- to the street vendors to support their businesses.

AWARDS AND ACCOLADES:

Your Bank has bagged the following awards during the financial year under review in recognition of its achievements:

1) The Bank has bagged prestigious awards from Infosys Finacle Innovation Awards 2024, i.e., Gold under Business Model Innovation - (Enhancing Co Lending Platform).

2) The Bank has bagged "APY Ultimate Champions Cup" for FY 2023-24 under Private Banks Category from PFRDA under the Atal Pension Yojana during the Annual Felicitation Program held at New Delhi on 21.06.2024.

3) The Bank has been awarded WINNER under the category Best Innovation & Partnership Initiatives under Small Banks Category by ASSOCHAM in ASSOCHAMs 19^th Annual Summit and Awards on Banking and Financial Sector Lending Companies. (17/10/24).

4) The Bank has bagged the Social Leadership of the Year Award at the 15^th Series Chanakya Awards 2024, conferred by the Public Relations Council of India (PRCI). (08/11/24).

5) The Bank was declared as the Winner of the SamvAAD 3i (Innovation, Impact, Implementation) competition from Sahamati under "Best entry in the financial inclusion category" for leveraging Account Aggregator in the ONDC journey. (19/11/24)

6) The Bank has been awarded Winner at ET BFSI EXCELLER Awards 2024 for the ACoE initiative to Leverage Data for Banks Growth through data-driven decision-making across the Customer lifecycle. (28/11/24).

7) The Bank has bagged a record number of 6 Awards in the I BA 20^th Annual Banking Technology Conference, Expo and Citations- 2023-2024 event held on 24.01.2025. This is one of the highest numbers of Awards won (categories below) by any Bank in recent years.

a) Best Tech. Talent & Organization: Runner Award

b) Best IT Risk Management: Runner Award

c) Best Technology Bank: Runner Award

d) Best Fintech & DPI Adoption: Runner Award

e) Best Digital Sales, Payments & Engagement: Special Mention Award

f) Best AI &ML Adoption: Special Mention Award.

IMPLEMENTATION OF IND AS:

In order to implement Indian Accounting Standards (Ind AS), the Bank has set up a Steering Committee headed by the Managing Director and a sub-committee called IFRS Working Group having members across cross-functional business verticals, to work towards effectively implementation of Ind AS in the Bank. Bank has been submitting the Proforma Ind AS financials to RBI every half year as per the RBI guidelines. Also, as a prudent measure, the Bank is preparing Proforma Ind AS financials on a quarterly basis and the estimated impact along with the latest update on the Ind AS implementation in the Bank is placed to the Audit Committee of the Board. Towards effective implementation of the Standards, Bank has also endeavoured on onboarding - Oracle Financial Services Analytical Application (OFSAA) which includes IFRS-9 Module to compute Effective Interest Rate (EIR) and Expected Loan Loss Provisioning (ECL) through the Core Banking System.

The Reserve Bank of India (RBI), vide its communication Ref: DBR.BP.BC.No.29/21.07.001/2018-19 dated 22^nd March, 2019 has deferred implementation of Ind AS for all Scheduled Commercial Banks till further notice.

DIVIDEND DISTRIBUTION POLICY

Your Bank has adopted a Policy on the Distribution of Dividend to the shareholders pursuant to the Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Gist of the Dividend Distribution Policy is as under:

• Being a Banking entity, Dividend Distribution is guided by the RBI Circular DBOD.No.BP.BC.8821.02.67/2004-05 dated May 5, 2005, with regard to eligibility criteria for distribution of dividend.

• Factors considered for a recommendation of dividend includes both internal factors such as financial performance, dividend payout trends, tax implications, and corporate actions and external factors such as shareholders expectations, macro environment etc.

• Factors considered for determining the quantum of dividend include financial performance, capital fund requirements to support future business growth, having regard to the dividend payout ratio prescribed under the aforesaid RBI Guidelines etc.

The Dividend Distribution Policy of the Bank is available on website of the Bank at https://karnatakabank.com/investors/policies-codes

ANNUAL RETURN

Pursuant to Section 92(3) of the Companies Act, 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014, a copy of the Annual Return of the bank for FY2025 prepared in accordance with Section 92(1) of the Act would be placed on the website of the bank https://karnatakabank.com/investors/ after the Annual General Meeting.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the provisions of Section 129(3) of the Companies Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014, the Bank has prepared Consolidated Financial Statement including its subsidiary - KBL Services Limited and pursuant to the provisions of Accounting Standard (AS) 21, the Consolidated Financial Statements notified under Section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014, the Consolidated Financial Statements of the Bank along with its subsidiary for the financial year ended MarcRs. 31, 2025 forms part of the Annual Report. The financial position and performance of the subsidiary are given in Form AOC-1 attached to this Report as Annexure-III.

In accordance with the third proviso to Section 136(1) of the Companies Act, 2013, the Annual Report of the Bank, containing therein its Standalone and Consolidated Financial Statements has been hosted on the website, https://karnatakabank.com. Further, as per the fourth proviso to the said Section, the Audited Annual Accounts of the said subsidiary Company of the Bank, considered as part of the Consolidated Financial Statements have also been hosted on the website of the Bank: https://karnatakabank.com. The documents/details available on the website of the Bank: https://karnatakabank.com will also be available for inspection by any Member at its Registered Office.

INVESTOR RELATION CELL

To maintain a regular connect with the investors, your Bank has a dedicated Investor Relation Cell at the Registered Office. Besides redressing the grievances, if any, from the investors, Cell proactively disseminates corporate information on a voluntary basis to the shareholders through email (wherever made available) about financial results, major events and coverage about the Bank in the media etc.

CORPORATE GOVERNANCE

Your Bank is committed to adopt the best practice of corporate governance to protect the interests of all the stakeholders of the Bank, viz. shareholders, depositors and other customers, employees and society in general and maintain transparency at all levels. A detailed report on corporate governance practices is given in Annexure-IV to this report.

Further, pursuant to Regulation 34(3) of SEBI Listing Regulations read with Part E of Schedule V of the Listing Regulations, a certificate from SVJS & Associates, Bengaluru, Practicing Company Secretaries certifying compliance with various provisions of the Corporate Governance is annexed to this Report as Annexure-V.

The Bank has received a certificate from SVJS & Associates, Bengaluru, Practicing Company Secretaries, pursuant to clause 10(i) of Part C under Schedule V of SEBI Listing Regulations that none of the Directors on the Board of the Bank have been debarred or disqualified from being appointed or continuing as Directors of companies by the Securities and Exchange Board of India or the Ministry of Corporate Affairs or any such statutory authority and same is attached as Annexure-VI to this report.

EMPLOYEE STOCK OPTIONS (ESOP)

The shareholders of the Bank, on MarcRs. 30, 2023, have approved KBL Employee Stock Option Scheme-2023 (ESOS-2023) with a total of 15,00,000 stock options available for grant. During the reporting year, the details of the grant of options under the scheme ESOS 2023 are as follows.

The option is granted as part of the variable pay package:

Sl. No	Plan Name	Name of the Employee	Designation	Grant Date	Options Granted
1	Series - IV	Giridhar R	Head-Wholesale & Mid Corporate Banking	07-Jun-24	1,491
2	Series - IV	Ramachandra K Gurumurthy	Head-Treasury	07-Jun-24	15,253
3	Series - IV	Ramaswamy Subramanian	Chief Product Officer	07-Jun-24	7,005
4	Series - IV	Venkat Krishnan Veeramoni	CIO & CTO	07-Jun-24	4,670
5	Series - V	Pankaj Gupta	CDO & Head-Digital Marketing	30-Jul-24	6,449
	Grand Total				34,868

Other statutory disclosures as required by the SEBI guidelines/Securities and Exchange Board of India (Share Based Employee Benefits and sweat equity) Regulations, 2021 on ESOS are given in website of the Bank in the link: https://karnatakabank.com/ investors/annual-reports

The Company has received a certificate from M/s. SVJS & Associates, Bengaluru, Practicing Company Secretaries, pursuant to Regulation 13 of the Securities Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 that the Bank has implemented the ESOP Schemes in accordance with the applicable provisions of the Regulations and Resolution(s) of the Bank in the General Meeting(s) and through postal ballots, as the case may be and same is attached as Annexure-VII to this report.

DIRECTORS AND CHANGES IN THE BOARD

As of MarcRs. 31, 2025, Board of the Bank comprised of eleven Directors with one independent woman Director. Except Mr. Srikrishnan H, Managing Director & CEO, Mr. Sekhar Rao, Executive Director and Mr. B R Ashok, Non-Executive Director all of them are Independent Directors. The details of the criteria for appointment and remuneration of Directors are provided in the report on Corporate Governance under Annexure-IV.

Considering the foregoing and as per Section 152(6) of the Companies Act, 2013, at the ensuing AGM, Mr. B R Ashok, Non-Executive Director, being the longest in office, shall retire on rotation. Further, being eligible, he has offered himself for reappointment. In the opinion of the Board, Mr. B R Ashok, Non-Executive Director, has the integrity, expertise and requisite experience, which is beneficial to the business interest of the Bank. Based on the performance evaluation and recommendation of the NRC, the Board recommends his re-appointment for approval by the members of the Bank. Accordingly, a resolution seeking the reappointment of Mr. B R Ashok, Non-Executive Director, has been included in the Notice of 101^st AGM.

RESIGNATIONS

Mr. Srikrishnan H (DIN: 00318563), resigned from the position of Managing Director & CEO of the Bank, w.e.f. July 15, 2025. Further, Mr. Sekhar Rao (DIN: 06830595), resigned from the position of Executive Director of the Bank, w.e.f. July 31,2025.

CESSATION

Mr. Justice A V Chandrashekar (DIN :08829073) ceased to hold office as Non-Executive Independent Director w.e.f. August 18, 2025 upon completion of his tenure.

APPOINTMENT

Mr. Raghavendra Srinivas Bhat (DIN: 11165725), was appointed by the Board of Directors as an Additional Director, in the capacity of Managing Director & CEO of the Bank for a period of 3 (Three) months from July 16, 2025, or till the appointment of a regular MD & CEO, whichever is earlier or for any further period, in accordance with the approval of RBI, from time to time.

MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER (MANAGING DIRECTOR & CEO)

Mr. Raghavendra Srinivas Bhat (DIN: 11165725), was appointed as Managing Director & CEO of the Bank by the Board of Directors, for a period of three months, w.e.f. July 16, 2025, or till the appointment of a regular MD & CEO, whichever is earlier or for any further period, in accordance with the approval of RBI, from time to time, consequent to the resignation of Mr. Srikrishnan H (DIN: 00318563) as Managing Director & CEO, w.e.f. July 15, 2025.

DECLARATION BY INDEPENDENT DIRECTORS

Pursuant to the provisions of Section 149(7) of the Companies Act, 2013 and Regulation 25(8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, your Bank has received necessary declarations from all the Independent Directors confirming that they meet the criteria of independence for Independent Directors as on MarcRs. 31,2025.

FAMILIARISATION PROGRAMMES OF INDEPENDENT DIRECTORS

All Directors, including Independent Directors are familiar with their roles, rights, and responsibilities in the Bank at the time of appointment and also on a recurrent basis. The Bank facilitates familiarisation programme and other programmes including a Certification programme for its Directors. The details of various programmes undertaken/ arranged for familiarizing the Independent Directors and other programmes arranged for the directors are disclosed in the Report on Corporate Governance under Annexure-IV, which forms part of this Report.

PERFORMANCE EVALUATION OF THE BOARD

Your Board of Directors has laid down criteria and processes for performance evaluation of Directors, Chairman, Whole-time Directors, Committees of the Board and Board as a whole. The NRC annually reviews and approves the criteria and the mechanism for carrying out the evaluation exercise effectively. The statement indicating the manner in which formal annual evaluation of the Directors, the Board and Committees of the Board, etc., is given in detail in the report on Corporate Governance under Annexure-IV. In pursuance to the above, the Independent Directors, in their separate meeting held on MarcRs. 29, 2025, have reviewed, and evaluated the performance of the Board as a whole and the Non-Executive Directors. Further, the Board has also reviewed the performance of the individual Independent Directors at its meeting held on MarcRs. 27, 2025.

As per the Policy of the Bank on Performance Evaluation, the performance evaluation of the Managing Director & CEO and the Executive Director is being carried out by the Independent Directors.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All transactions with the related parties that were entered into during the financial year under review are in the ordinary course of the business of the Bank and on an arms length basis. There were no materially significant related party transactions entered into by the Bank with the Directors, Key Managerial Personnel or other persons which may have a potential conflict with the interest of the Bank. As such a disclosure in Form AOC-2 is not applicable. The Policy on dealing with Related Party Transactions as approved by the Audit Committee/ Board has been placed on the website of the Bank under the Investor Portal.

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with Section 134(3)(c), 134(5) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rule, 2014 and other applicable provisions, your Directors state that:

a) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures.

b) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as of the end of financial year MarcRs. 31,2025, and profit and loss for that period.

c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities.

d) The Directors have prepared the annual accounts on a going concern basis.

e) The Directors have laid down the internal financial controls followed by the Bank and that such internal financial controls are adequate and are operating effectively.

f) The Directors have devised proper systems to ensure compliance with the provision of all applicable laws and that such systems were adequate and operating effectively.

AUDITORS

a. Statutory Auditors:

At the 100^th Annual General Meeting held on 10^th September 2024, M/s. Ravi Rajan & Co LLP, Chartered Accountants, (Firm Registration No./LLP No. 009073N/N500320) and M/s. R. G. N Price & Co., Chartered Accountants (FRN 002785S), were appointed as Joint Statutory Auditors of the Bank to hold office up to the ensuing 101^st Annual General Meeting.

As per RBI guidelines, it is necessary to have a minimum of two Statutory Auditors for our asset size. Accordingly, the Board of Directors of the Bank, at its meeting held on 24.06.2025, on the recommendation of the Audit Committee, proposed the re-appointment of M/s. Ravi Rajan & Co LLP, Chartered Accountants, (Firm Registration No./LLP No. 009073N/N500320) and M/s. R. G. N Price & Co., Chartered Accountants, (FRN 002785S) for the remaining period of one year and two years respectively as Joint Statutory Auditors of the Bank. RBI, upon our application, pursuant to Section 30(1A) of the Banking Regulation Act, 1949, has approved the proposed appointment vide letter dated 18.07.2025. Accordingly, the Board of Directors recommends the appointment of M/s. Ravi Rajan & Co LLP, Chartered Accountants, (Firm Registration No./LLP No. 009073N/N500320) and M/s. R. G. N Price & Co., Chartered Accountants, (FRN 002785S) as Joint Statutory Auditors of the Bank for the remaining period of one year and two years respectively. The Bank has received consent from the above auditors and necessary confirmation from them that they are not disqualified from being appointed as auditors of the Bank pursuant to the provisions of the Companies Act, 2013 and the Rules made thereunder.

b. Secretarial Audit Report:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the rules made thereunder, your Bank has appointed M/s. SVJS & Associates, Bengaluru, Company Secretaries in practice as the Secretarial Auditor to conduct the Secretarial Audit for the financial year ended MarcRs. 31,2025. The secretarial audit report from the Secretarial Auditor is annexed to this report as a part of Annexure-VIII.

Pursuant to Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with SEBI Circular No. CIR/CFD/CMD1/27/2019 dated February 08, 2019, the Bank has obtained the Annual Secretarial Compliance Report, certified by CS Lekha Ashok (COP: 9011), M/s. SVJS & Associates, Company Secretaries in practice, Bengaluru, for the financial year ended MarcRs. 31,2025, on compliance of all applicable SEBI Regulations and circulars/ guidelines issued thereunder and a copy was submitted to the Stock Exchanges within the prescribed timeline. The Secretarial Compliance Report is annexed to this report as a part of Annexure-IX.

c. Reporting of frauds by Auditors

There is no qualification in Auditors Report, except for an Emphasis of matter drawn for attention. During the year, pursuant to Section 143(12) of the Companies Act, 2013, Auditors have reported one fraud (where amount involved is more than rupees one crore) and reported the same to the Central Government under Form ADT-4.

STATUTORY DISCLOSURES

The disclosures under sub-section (3) of Section 134 of the Companies (Accounts) Rules, 2014 are furnished below:

a) Conservation of energy and technology absorption: Considering the nature of the business of the Bank, the provisions of Section 134(3)(m) of the Companies Act, 2013 relating to conservation of energy and technology absorption are not applicable to your Bank. The Bank has, however, used information technology in its operations extensively. Further, to promote renewable sources of energy, the Bank has installed solar panels at the Corporate Office, a few Regional Offices and the few owned premises of the Bank.

b) During the year ended MarcRs. 31,2025, the Bank earned Rs. 23.57 crore and spent Rs. 9.40 crore in foreign currency.

c) There were no significant and material orders passed by the regulators or courts of tribunals impacting the going concern status and the operations in future of the Bank.

d) Internal financial control systems and their adequacy: Your Bank has laid down standards, processes and structure facilitating the implementation of internal financial control across the Bank and ensure that same are adequate and operating effectively.

e) Key Managerial Personnel:

Mr. Srikrishnan H, Managing Director & CEO, Mr. Sekhar Rao, Executive Director, Mr. Abhishek S Bagchi, CFO and Mr. Sham K, Company Secretary, were the Key Managerial Personnel of the Bank as on MarcRs. 31, 2025, as per the provisions of the Companies Act, 2013.

f) Remuneration of Directors: Disclosure pursuant to Section 197 (12) of the Companies Act, 2013, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure-X to this report.

g) During the financial year 2024-25, no employee received remuneration requiring disclosure as per the limits prescribed under Section 197 of the Companies Act, 2013, read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. However, the remuneration (including variable pay determined in the subsequent financial year) pertaining to the Whole Time Directors is subject to prior approval of the Reserve Bank of India. The details of remuneration paid to Mr. Srikrishnan H, the then Managing Director & CEO (up to July 15, 2025), Mr. Sekhar Rao, the then Executive Director (up to July 31,2025) is provided in the Corporate Governance attached to this report in Annexure-IV.

h) In terms of Section 197(12) of the Act, read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the Top 10 employees in terms of remuneration drawn forms part of this annual report. In accordance with the provisions of Section 136(1) of the Act, the annual report excluding the aforesaid information, is being sent to the members of the Bank and others entitled thereto. The said information is available for inspection by the members at the Registered Office of the Bank during business hours of the Bank up to the date of the ensuing Annual General Meeting. Any member interested in obtaining a copy thereof, may write to us at investor.grievance@ktkbank.com.

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

j) Particulars of loans, guarantees or investments under section 186: Nil.

k) Any changes in nature of business during the year under review: Nil

NUMBER OF BOARD MEETINGS

During the financial year under review the Board met 18 times and the details thereof are provided in the report on Corporate Governance attached to this report. The maximum gap between any two Board Meetings was less than one Hundred and Twenty days.

COMMITTEES OF THE BOARD

As on MarcRs. 31,2025, the Bank had 9 Committees of the Board which were constituted to comply with the requirements of relevant provisions of the applicable laws and for operational efficiency. The details of the meetings of the Board and the Committees, their composition (as on MarcRs. 31, 2025), terms of reference, powers, roles etc., are furnished in the report on Corporate Governance attached to this report in Annexure-IV.

PROCEEDINGS PENDING UNDER THE INSOLVENCY AND BANKCRUPTCY CODE,2016:

No application has been made or any proceeding is pending under the IBC, 2016.

MAINTENANCE OF COST RECORDS

Being a banking Company, the Bank is not required to make and maintain such accounts and cost records as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014.

INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

The details of transfer of unclaimed dividend, shares, share application money to IEPF are given in Report on Corporate Governance given as Annexure-IV to this report.

SECRETARIAL STANDARDS

The Company complies with all applicable secretarial standards issued by the Institute of Company Secretaries of India.

BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT:

The Bank has adopted various policies that imbibe the best practices with regard to environmental, social and governance (ESG) principles. In this context, Bank has prepared a Business Responsibility and Sustainability Report (BRSR) for the Financial Year 2024-25, prepared in accordance with the requirements under Regulation 34(2)(f) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and as per the format devised by the Securities and Exchange Board of India vide Circular SEBI/HO/CFD/CFD-SEC-2/P/CIR/2023/122. The same is provided under Annexure-XI.

MANAGEMENT DISCUSSION AND ANALYSIS:

In compliance with the Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, separate Section on Management Discussion and Analysis, as approved by the Board, which includes details on the state of affairs of the Bank, forms part of this Boards Report.

ACKNOWLEDGEMENTS

The Board of Directors would like to place on record their sincere gratitude to the customers of the Bank, depositors, shareholders for their unwavering support, patronage and goodwill. Your Directors also place on record their gratitude for the continued guidance and support provided by the Reserve Bank of India, other government and regulatory authorities, financial institutions and correspondent banks. Your Directors express their deep sense of appreciation to all the staff members, for their contribution to the quest for sustained growth and profitability of the Bank and look forward to their continued contribution to scaling greater heights.

Place: Bengaluru	For and on behalf of the Board of Directors P Pradeep Kumar
Date: August 22, 2025	Chairman