Paisalo Digital Ltd Directors Report.

TO

THE MEMBERS OF PAISALO DIGITAL LIMITED

Your Board of Directors have pleasure in presenting the 29th Annual Report together with the Audited Financial Statements for the Financial Year ended March 31, 2021.

Financial Highlights

The standalone financial performance of the Company for the Financial Year 2020-21 is summarized below:

(INR in Million)

Particulars FY 2020-21 FY 2019-20
Revenue from Operations 3,115.48 3374.51
Less: Expenditure 2,316.62 2635.29
Exceptional Item 6.44 -
Profit Before Tax (PBT) 805.30 739.22
Tax Expenses 196.11 198.84
Net Profit After Tax (PAT) 609.19 540.39
Total Comprehensive Income for the Period 609.19 540.39
Transfer to Statutory Reserves (RBI Reserve Fund) 121.84 108.65
Transfer to General Reserve 400.00 390.00
Provisions of Standard Assets (8.20) 1.22
Earnings per Share (EPS) (INR) 14.40 12.78
Net Worth 8,618.83 7,603.20
Assets Under Management (AUM) 21,424.66 19,195.70

Results of Operations and State of Companys affairs

Revenue from operations for the year ended March 31, 2021 has marginally decreased by 7.68 % at INR 3115.47 Million over the corresponding previous year. The Net Profit of your Company for the financial year ended March 31, 2021 stood at INR 609.19 Million as against the Net Profit of INR 540.38 Million for the financial year ended March 31, 2020. Accordingly, the Net Profit for the financial year ended March 31, 2021 reflects a growth of 12.73 % over the corresponding Profit for the financial year ended March 31, 2020.

Transfer to Reserves

As required under Section 45IC of the Reserve Bank of India Act, 1934, 20% of the profits are required to be transferred to a Special Reserve Account. The Company has transferred INR 121.84 Millions (previous year INR 108.65 Million) to Statutory Reserve created and INR 400.00 Million has been transferred to General Reserve for financial year 2020-21.

Subsidiary

Nupur Finvest Private Limited, a registered Non-Deposit taking Non-Banking Finance Company, is the only Subsidiary Company, of which the Company owned hundred percent shares. Nupur Finvest Private Limited is engaged in finance activities. At the year ended March 31, 2021, the net worth of the Company stood at INR 535.57 Million. During the reporting period the subsidiary reported income of INR 346.26 Million and Profit Before Tax (PBT) and Profit After Tax (PAT) at INR 5.19 Million and INR 3.42 Million respectively.

Consolidated Financial Statements

In compliance with the applicable provisions of Companies Act, 2013 including applicable Accounting Standard on Consolidated Financial Statements, this Annual Report also includes Consolidated Financial Statements for the Financial Year 2020-21, Consolidated Income of the Company for financial year 2020-21 stood at INR 3,460.22 Million as against INR 3,747.69 Million in the previous year.

Review of Operations

The Company is providing a number of financial products like Business Loans, SME & MSME Loans, Income

Generation Loans for business/self-employment purpose. During, the year under review Company has posted 12.73 % increase in the Net Profit after tax from the finance business of the Company.

Disbursements

During the Financial Year 2020-21, total disbursements reached to INR 14,238.10 Million.

Number of Customers

During the year under review the Customer outreach increased by 2.39 % and total Customers outreach stood at

12,04,304.

Net Worth and Capital to Risk Adjusted Ratio (CRAR)

The Net Worth of the Company (Standalone) increased to INR 8,618.83 Million as on March 31, 2021 from INR 7,603.20 Million as on March 31, 2020. The Capital to Risk Adjusted Ratio (CRAR) stood at 44.47 % as on March 31, 2021 as against 43.06 % as on March 31, 2020, which is much above the requirement as stipulated by Reserve Bank of India.

Share Capital

During the year under review, the Authorized Share Capital of the Company stood at INR 1250.00 Million. The Issued, Subscribed Share Capital of the Company as on March 31, 2021 was INR 423.05 Million consisting of 4,23,04,699 Equity Shares of INR 10 each and the Paid-up Share Capital of the Company as on March 31, 2021 was INR 422.98 Million consisting of 4,22,92,199 Equity Shares of INR 10 each fully paid-up and 12,500 forfeited equity shares of INR 10 each (amount originally paid-up @ INR 5 each).

In terms of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 and Special Resolution passed by the Shareholders of the Company at Extraordinary General Meeting held on March 8, 2021, on receipt of initial warrant subscription amount of INR 460.01 Millions equivalent to 25% of the warrant issue price as prescribed by the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 for allotment of Fully Convertible Warrants (‘Warrants), on March 20, 2021 the Company considered and allotted 26,10,000 Warrants to Promoter Group entities, on preferential basis. The conversion option can be exercised by Warrant holders at any time during the period of 18 (Eighteen) months from the date of allotment of warrants, in one or more tranches, as the case may be and on such other terms and conditions as applicable.

Disclosure of Utilization of Funds pursuant to Regulation 32(7A) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

During the year under review, the fund raised (intitial subscription amount-25% of issue price) through preferential allotment of Fully Convertible Warrants has been utilized for general working capital, repay of borrowings and other corporate purpose as mentioned in the explanatory statement annexed to the Notice of Extra-Ordinary General Meeting, held on March 8, 2021 in which Special Resolution passed by the Shareholders for preferential issue of Fully Convertible Warrants.

Dematerialization of Equity Shares

Equity Shares of the Company are compulsorily tradable in demat form. As on March 31, 2021, 99.99% of the Equity Shares are held in demat form and only 4,006 Equity Shares out of 4,22,92,199 Equity Shares were held in physical form.

Dividend

Your Board is pleased to recommend a final dividend of INR 1/- (Rupee One only) per share i.e. 10% on each fully paid equity share of INR 10/- (Rupees Ten Only) for Financial Year 2020-21. The dividend, if declared, by the Members at the forthcoming Annual General Meeting (AGM) shall be paid to the eligible Members of the Company.

Unclaimed Dividend and Unclaimed Shares

Pursuant to Rule 5(8) of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, your company furnished a statement / information through Form IEPF 2 to the Ministry of Corporate Affairs, of the unclaimed dividends amounting to INR 2,00,558.00 as on the date of financial year ended on March 31, 2020. During the year under review, there was an amount of INR 53,616.00 of unpaid and unclaimed dividend for a period of 7 years from the date it was lying in the unpaid dividend, accordingly, pursuant to provisions of Section 124(5) of the Companies Act, 2013, INR 53,616.00 has been transferred in the Investor Education and Protection Fund (IEPF) of the Central Government in November 2020.

Dividend Distribution Policy

In terms of Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board

of Directors of the Company at their meeting held on June 4 2021 has approved and adopted Dividend Distribution Policy of the Company. The policy is available on the website of the Company at https://paisalo.in/corporate- governance.php

Fixed Deposit

During the year and review, the Company has not accepted any public deposits and no amount on account of principal or interest on public deposits was outstanding as on the date of balance sheet.

Bank finance

Your Company raised funds for its working capital and business requirements from various banks and the total amount of bank loan outstanding as on March 31, 2021 was INR 7,286.72 Million as against INR 7,983.01 Million on March 31, 2020.

During the year under review, your Company maintained banking relationships with 10 Banks.

Fund Raising Through Issue of Debentures

During the year under review, Company has raised INR 860.00 Million by issuing Listed Secured Rated NonConvertible Debentures of INR 1.00 Million each on private placement basis and INR 590.00 Million Unlisted Unsecured Unrated Non-Convertible Debentures of INR 10.00 Million each on private placement basis. The fund raised from such issue were utilized for the same purpose for which it were raised.

Timely Repayment of Debt Liabilities

During the year under review, the Company has duly serviced all its debts obligations in time.

Credit Rating

M/s Infomerics Valuation and Rating Pvt. Ltd. assigned following rating to Companys instruments:

Sr No. Instrument/Facility Amount (INR in Million) Rating Assigned
1. Fund Based Facilities from Banks 8,900.00 IVR A+ / Stable Outlook (IVR Single
2. Non Convertible Debentures 1,000.00 A Plus with Stable Outlook)

Board of Directors, Board Meetings and Key Managerial Personnel

The Companys Board is duly constituted and is in compliance with the requirements of the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and provisions of the Articles of Association of the Company. The Companys Board has been constituted with requisite diversity, wisdom and experience commensurate to the business of your Company.

Change in Directors or KMP

During the year under review, Mr. Harish Singh (DIN: 00039501), who retired at the 28th Annual General Meeting, was re-appointed as an Executive Director of the Company. In the 28th Annual General Meeting of the Company, Mr. Raman Aggarwal and Mrs. Nisha Jolly, who were appointed by the Board of Directors as Additional Independent Directors, have been appointed as Independent Directors of the Company for term of 5 years commencing from October 15, 2019 and May 30, 2020 respectively.

Appointment/Reappointment of Directors or KMP

Reappointment of Mr. Anoop Krishna retire by rotation:

In terms of Section 152 of Companies Act, 2013, Mr. Anoop Krishna (DIN 08068261), is liable to retire by rotation at the ensuing Annual General Meeting and being eligible for re-appointment, offers himself for re-appointment. The Board of the Company recommends re-appointment of Mr. Anoop Krishna as a Director of the Company, liable to retire by rotation.

Declaration of Independence by Independent Directors:

All Independent Directors of the Company have declared to the Board of Directors that they meet the criteria of Independence as laid down in Sections 149(6) and 149(7) of the Companies Act, 2013; Regulation 16(1) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and RBI Corporate Governance Norms as applicable on the Company. In the opinion of the Board, the Independent Directors possess the requisite expertise and experience and are the person of integrity and repute. They fulfil the conditions specified in the Companies Act, 2013 and the Rules made thereunder and are independent of the management of the Company. The Board also places on records its deep appreciation for their continuous guidance, support and contribution to the Management of the Company.

Board Meetings

During the year under review, a total of Six Meetings of the Board of Directors of the Company were held, i.e., on April 3, 2020; May 30, 2020; June 30, 2020; August 13, 2020; October 31, 2020 and February 6, 2021. Details of Board composition and Board Meetings held during the financial year 2020-21 have been provided in the Corporate Governance Report which forms part of this Report.

Audit Committee

The Audit Committee of the Board consists of Independent Directors namely Mr. Pradeep Agarwal, as Chairperson and Mr. Gauri Shankar and Executive Director Mr. Harish Singh as Members. The composition, terms of reference and details of meetings heLd during the year are discLosed in the Report on Corporate Governance. ALL the recommendations made by the Audit Committee were accepted by the Board of Directors.

Stakeholders Relationship Committee

The Stakeholder Relationship Committee of the Board consists of Independent Directors namely Mr. Naresh Kumar Jain, as Chairperson and Mr. Gauri Shankar, Mr. Sunil Srivatav (till July 29, 2021) and Mr. Raman Aggarwal (w.e.f. August 6, 2021) as Members. The composition, terms of reference and details of meetings held during the year are discLosed in the Report on Corporate Governance.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee (‘NRC) recommends to the Board the suitability of candidates for appointment as Director/Managing Director, Key Managerial Personnel and the remuneration packages payable to them. The composition, terms of reference and details of meetings held during the year are disclosed in the Report on Corporate Governance.

Policy on Directors Appointment and Remuneration

The Company strives to maintain an appropriate combination of Executive, Non-Executive and Independent Directors subject to a minimum of 3 (three) and maximum of 15 (fifteen) Directors, including at least one-woman Director.

The Nomination & Remuneration Committee of the Company leads the process for Board appointments in accordance with the requirements of Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and other applicable rules or guidelines. All the Board appointments are based on meritocracy. Generally, the Managing Director and Whole-time Directors (Executive Directors) are appointed for a period of five years. Independent Directors of the Company are appointed to hold their office for a term of up to five consecutive years on the Board of your Company. Based on their eligibility for reappointment, the outcome of their performance evaluation and the recommendation by the Nomination and Remuneration Committee, the Independent Directors may be re-appointed by the Board for another term of five consecutive years, subject to approval of the Shareholders of the Company. The Directors, Key Managerial Personnel and Senior Management Personnel shall retire as per the applicable provisions of the Companies Act, 2013 and the policy of the Company.

The potential candidates for appointment to the Board are inter-alia evaluated on the basis of personal and professional ethics, standing, integrity, values and character; appreciation of the Companys vision, mission, values; prominence in business, institutions or professions; professional skill, knowledge and expertise; financial literacy and such other competencies and skills as may be considered necessary.

In addition to the above, the candidature of an Independent Director is also evaluated in terms of the criteria for determining independence as stipulated under Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, guidelines issued by RBI and other applicable regulations or guidelines. In case of re-appointment of Director, the Board shall take into consideration the results of the performance evaluation of the Directors and their engagement level.

The Company has Remuneration Policy for Directors, KMPs and other employees, which is reviewed by the Board of Directors of the Company, time to time, the policy represents the overarching approach of the Company for the remuneration of Director, KMPs and other employees.

Company conducts a Board Evaluation process for the Board of Directors as a whole, Board Committees and also for the Directors individually through self-assessment and peer assessment.

Performance of the Board of Directors, Its Committees and Individual Directors

Mounting stakeholders expectations, challenges faced by the Companies to operate under fluctuating economic conditions and increased regulatory requirements have brought the quality of performance of the Board of Directors

under greater scrutiny. The Board of Directors has recognised that it would be important for them to continually assess how effectively they are performing their roles against the objectives and the goals they have set for themselves. This growing recognition has resulted in Board evolutions as a critical structural tool for assessing Board effectiveness and efficiency.

Considering the above fact and in the light of Companys performance, the performance of the Board of Directors and their committees, along with performance of individual Director is reviewed and evaluated from time to time by Nomination and Remuneration Committee and the Board of Directors through various manner like discussion with Directors, by seeking views of one Director from other Directors, inputs from the Directors through structured questionnaires covering the various aspects of the Board functioning such as adequacy of composition of the Board and its Committee, Board culture, execution and performance of specific duties, obligations, participation of Directors in the various matters, skill and knowledge of individual Director and independence of judgment, contribution towards development of the strategy, risk management. The Directors expressed satisfaction with the evaluation process. The performance of the Director individually and collectively and performance of the Committees are found satisfactory.

With the spirit of wealth creation for the Stakeholders of the Company, your Directors are committed to give their efforts towards the development of the Company.

Independent Directors also reviewed the performance of the Board as a whole and assessed the quality and timeliness of the flow of the information between the Company Management and Board. Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, performance evaluation of the Independent Directors was done by the entire Board, excluding the Independent Director being evaluated. Performance of Non-Independent Directors, the Board as whole and that of the Chairman of the Board were also evaluated in a separate meeting of the Independent Directors held on February 4, 2021.

Compliance with the Code of Conduct of Board of Directors and Senior Management

The Board of Directors and Senior Management of the Company have complied with the Companys Code of Conduct applicable to Board of Directors and Senior Management. In this regard declaration signed by the Managing Director is annexed and forms part of this Report.

Directors Responsibility Statement

Pursuant to the requirement under Section 134(3X0), read with Section 134(5) of the Companies Act, 2013 with respect to Directors Responsibility Statement, the Directors, to the best of their knowledge and belief, hereby confirm that:

a) in the preparation of the annual accounts for the financial year ended March, 31, 2021, the applicable accounting standards have been followed and there are no material departures from the same;

b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

c) the Directors had 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 Company and for preventing and detecting fraud and other irregularities;

d) the Directors had prepared the annual accounts on a going concern basis;

e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

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

Auditors & Audit Reports

Statutory Auditor and Statutory Audit Report

On April 27, 2021 Reserve Bank of India (RBI) came with Guidelines for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) vide its notification RBI/2021-22/25 Ref.No. DoS. CO. ARG/SEC.01/08.91.001/2021-22 inter alia, providing the Eligibility Criteria of Statutory Auditors.

In terms para 2.2 of said guidelines the Company is required to adopt these guidelines from H2 (second half) of FY 2021-22 to ensure no disruption.

M/s. D. Tayal & Jain, Chartered Accountants (Firm Registration No. 011181C) ("firm"), who have been appointed as Statutory Auditor of the Company in the 28th Annual General Meeting held on September 8, 2020 until the conclusion of the 31st Annual General Meeting of the Company, are not falling in the category of eligible Statutory Auditor(s) as prescribed in the aforesaid guidelines issued by RBI and accordingly the said firm is not eligible to continue as Statutory Auditor of the Company from the H2 (second half) of FY 2021-22. Therefore, M/s D. Tayal & Jain communicated their intention vide there letter dated August 13, 2021 to resign as Statuary Auditors of the Company and confirmed that resignation will be effective upon conclusion of 29th AGM of the Company or September 30, 2021 whichever is earlier.

Accordingly, to comply with the provisions of aforesaid guidelines regarding appointment of Statutory Auditor, and to fill the vacancy of statutory auditor office, on the recommendation of the Audit Committee, Board of Directors of the Company has recommended M/s Manish Goyal & Co. Chartered Accountants, having Firm Registration no. 006066C who is fulfilling the eligibility norms as per RBI Guidelines, the Companies Act, 2013 and SEBI Listing Regulations, to be appointed as Statutory Auditors of the Company for a period of one year commencing from the conclusion of 29th Annual General Meeting till the 30th Annual General Meeting of the Company.

The same will be placed before the Members, at 29th Annual General Meeting for their approval.

The Report given by the Statutory Auditor M/s D Tayal & Jain, Chartered Accountants, on the financial statement of the Company for the financial year 2020-21 is part of the Annual Report. The Notes on financial statements referred to in the Auditors Report are self-explanatory and do not call for any further comments under Section 134 of the Companies Act, 2013. The Auditors Report does not contain any qualification, reservation or adverse remark.

Secretarial Auditor and Secretarial Audit Report:

In accordance with the provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, and as a measure of good Corporate Governance practice, Board of Directors in their Meeting held on February 6, 2021 has appointed M/s. Satish Jadon & Associates, Practicing Company Secretary, as Secretarial Auditor of the company to conduct Secretarial Audit of the Company for financial year ended March 31, 2021 and to submit Secretarial Audit Report in Form No. MR-3.

A copy of the Secretarial Audit Report received from M/s. Satish Jadon & Associates in the prescribed Form No. MR-3 is annexed to this Boards Report and marked as Annexure A.

Pursuant to circular No. CIR/CFD/CMD1/27/2019 dated February 8, 2019, issued by the Securities and Exchanges Board of India and Regulation 24A(2) of SEBI (LODR) Regulations, 2015, the Company has obtained Secretarial Compliance Report for financial year ended March 31, 2021, from Practicing Company Secretary on compliance of all applicable SEBI Regulations and circular/ guidelines issued thereunder and the copy of same has been submitted with the Stock Exchanges within the prescribed due date.

The Report of Secretarial Auditor is self-explanatory and no explanation is required thereon from the Board of Directors of the Company.

Secretarial Standards

During the year under review, the Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

Fraud reported by auditors under Section 143(12) other than those which are reported to the Central Government

Pursuant to provisions of Section 143(12) of the Companies Act, 2013, the Auditors of the Company have not reported about any fraud, which is being or has been committed in the Company by its officers or employees.

Particulars of Loans, Guarantees or Investments under Section 186 of Companies Act, 2013

Being RBI registered Non-Banking Financial Company, pursuant to Section 186(11) of the Companies Act, 2013 the provisions of Section 186, except Sub-Section 1 of the said Section, shall not apply on the Company, hence disclosure under Section 134 (3) (g) of the Companies Act, 2013, of particulars of the loans given, investments made or guarantees given or securities provided under Section 186 of the Companies Act, 2013 is not applicable to the Company. However, the details of Investment made by the Company have been disclosed in the Note: 6 of the Financial Statement for the year ended March 31, 2021. The Company has given its guarantee only for the credit facilities availed by its Wholly Owned Subsidiary M/s. Nupur Finvest Private Limited.

Particulars of contracts or arrangements with related parties

During the financial year ended March 31, 2021, transactions with the Related Parties as defined under the

Companies Act, 2013 read with Rules framed thereunder and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 were in the ‘ordinary course of business and ‘at arms length basis. During the year under review, your Company did not enter into any Related Party Transactions which require prior approval of the Members. All Related Party Transactions of the Company had approval of the Audit Committee and the Board of Directors, as required under Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Subsequently, the Audit Committee and the Board have reviewed the Related Party Transactions on a quarterly basis. The Company has an internal mechanism for the purpose of identification and monitoring of Related Party Transactions. During the year under review, there has been no materially significant Related Party Transactions having potential conflict with the interest of the Company. Since all Related Party Transactions entered into by your Company were in the ordinary course of business and also on an arms length basis, therefore details required to be provided under the provisions of Section 134(3)(h) of the Companies Act, 2013 in the prescribed Form AOC - 2 is not applicable to the Company. The Directors draw attention of the Members to Note No. 37 to the Financial Statements for the year ended March 31, 2021 which sets out details of related party transactions.

Policy on materiality of related party transactions and on dealing with related party transactions is displayed on the website of the Company at https://paisalo.in/corporate-governance.php.

Material Changes and Commitments, if any, Affecting the Financial Position of the Company

Other than mention hereinunder there were no material changes and commitments affecting the financial position of the Company which occurred between the end of the financial year and the date of this Report ;

• on July 30, 2021 company has issued and alloted 25 Unsecured, Unlisted, Unrated Non-Convertable Debenture of Rs. 1 crore each on Private Placement basis.

Significant and Material Litigations / Orders

During the year, there were no significant and material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations. Further, no penalties have been levied by the RBI or any other regulator during the year under review.

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

Considering the nature of business undertaken by the Company during the year under review, the particulars pursuant to Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, to the extent applicable, are as follows:

• being a Non-banking Finance Company, the particulars regarding conservation of energy and technology absorption as required to be disclosed pursuant to the Rule 8(3) of the Companies (Accounts) Rules, 2014 are not relevant to its activities.

• Foreign Exchange earnings for the Company during the financial year under review was nil and Companys Foreign Exchange outgo during the financial year under review was INR 223,543.87.

Corporate Social Responsibility

In accordance with the provisions of Section 135 of the Companies Act, 2013 read with rules made thereunder, Company has constituted a Corporate Social Responsibility Committee, which framed a CSR Policy for the Company and same has been approved by the Board of Directors of the Company, which is available on the website of the Company. CSR Policy of the Company is reviewed, time to time,

For the financial year 2020-21 the Board of Directors of the Company in their meeting held on June 30, 2020 approved INR 15.90 Million as the budget for CSR activities. During the year Company has spent CSR budget in various activities which are disclosed in the Annual Report on CSR Activities For Financial Year Ended March 31, 2021 annexed with this report as Annexure B. Further, during the financial year ended March 31, 2021 Company has also spent INR 16.90 Million the unspent budget amount of CSR of previous years.

Composition of CSR Committee is disclosed in Corporate Governance Section of this Annual Report as part of Boards Report.

Business Responsibility Report

Pursuant to Regulation 34(2)(f ) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Business Responsibility Report for the year under review is annexed to this Report as Annexure C.

Internal Financial Control

The Company remains committed to improve the effectiveness of Internal Financial Controls and processes

which would help in efficient conduct of its business operations ensure security to its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information.

The Company has put in place adequate internal controls with reference to accuracy and completeness of the accounting records and timely preparation of reliable financial information, commensurate with the size, scale and complexity of operations and ensures compliance with various policies and statutes in keeping with the organizations pace of growth, increasing complexity of operations, prevention and detection of frauds and errors. The Internal Financial Controls with reference to the financial statements are adequate in the opinion of the Board of Directors.

The internal control is supplemented by an extensive program of internal, external audits and periodic review by the Management. This system is designed to adequately ensure that financial and other records are reliable for preparing financial information and other data and for maintaining accountability of assets. An independent firm of Competent Chartered Accountants has been engaged by the Company for conducting internal audit, to examine and evaluate the adequacy and effectiveness of internal financial control system of the Company. The Internal Audit team is responsible to assist the Audit Committee and Risk Management Committee on an independent basis with a complete review of the risk assessments and associated management action plans. The Internal Audit Reports and Risk related report are reviewed periodically by the Audit Committee and Risk Management Committee of the company. Efficacy of Internal control systems are tested periodically by Internal Auditors and Internal Control over financial reporting is tested and certified by Statutory Auditors.

Internal Financial Control System of the Company is modified continuously in accordance with the dynamic changes in the business conditions and to comply with the applicable laws, regulations, statutory and accounting requirements.

Risk Management

Non-Banking Financial Companies (NBFCs) form an integral part of Indian financial system. NBFCs are required to ensure that a proper framework on Risk Management System is formulated and put in place. For this purpose Company, in addition to Audit Committee, has also constituted Assets Liability Management Committee and Risk Management Committee, the details of the functioning of these Committees and its frequency of meetings are provided in Report on Corporate Governance forming part of this Report. These Committees are constituted to facilitate the Board to address the risk associated with the business of the Company and developed and implemented a Risk Management Policy to ensure sustainable business growth with stability and promote a proactive approach in reporting, evaluating and resolving risks associated with the Companys business. The Policy also highlights the functions, responsibilities and role of the Committees and Board to address the risks associated with the Company and to mitigate/reduce the impact of the risk on the Company. Further, in terms of Regulation 21 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as the Company fall in the category of top 1000 listed entities, determined on the basis of market capitalisation, as at the end of the immediate previous financial year i.e. as on March 31, 2021, the Board of Directors has decided that the existing Risk Management Committee of the Company shall also be deemed to be constituted under Regulation 21 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and do the function as prescribed under the listing regulations.

The Company follows a disciplined risk management process and takes business decisions with balanced risk- reward paradigm.

Human Resources

Companys industrial relations continued to be harmonious during the period under review.

The Company strives to provide the best work environment with ample opportunities to grow and explore. Healthy, cordial and harmonious industrial relations have been maintained by the Company at all levels.

Disclosures as per the Provision of Section 197 (12) of Companies Act, 2013

The information required pursuant to the provisions of Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company has been appended as Annexure D of this Report. In terms of first proviso to Section 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees particulars as required pursuant to provisions of Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The said information is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing AGM. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.

Compliance with provisions of Sexual Harassment of Women at Work Place (Prevention, Prohibition & Redressal) Act, 2013

The Company is committed to providing and promoting a safe and heaLthy work environment for aLL its employees. A Policy on Prevention of Sexual Harassment at work place, which in line with the statutory requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013., is in place for ensuring protection against the Sexual Harassment and right to work with dignity. The Directors further state that during the year under review, the Company has not received any compliant in this regard.

Compliance of Reserve Bank of India Guidelines

Your Company is categorized as a Non-Deposit taking Systemically Important Non-Banking Finance Company (NBFC-NDSI). Accordingly, during the year, the Company has not accepted any deposits from the public and there were no deposits which become due for repayment or renewal. The Company has complied with the ‘Master Direction-Non-Banking Financial Company- Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016, as amended from time to time and all other applicable Directions of RBI during FY 2020-21.

Extracts of Annual Return

In compliance with Section 134(3)(a) of the Act, the extract of Annual Return in MGT-9 as required under Section 92(3) of the Act and prescribed in Rule 12 of the Companies (Management and Administration) Rules, 2014 may be accessed on the Companys website at https://www. paisalo.in/pdf/MGT-9_PAISALO_2020-21.PDF.

Management Discussion and Analysis

The Management Discussion and Analysis report for the year under review as required under Regulation 34(2)(e) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations,2015 is provided as a separate section forming part of the Annual Report.

Corporate Governance

Your Company strives to ensure that best corporate governance practices are identified, adopted and consistently followed. It is ensured, that the practices being followed by the Company are in alignment with its philosophy towards Corporate Governance. Your Company believes that good corporate governance is the basis for sustainable growth of the business and effective management of relationship among constituents of the system and always works towards strengthening this relationship through corporate fairness, transparency and accountability. Your Company give prime importance to reliable financial information, integrity transparency, fairness, empowerment and compliance with law in letter and spirit.

In compliance with the provisions of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 read with Schedule V to the said Regulations, The report on corporate governance forms an integral part of this report and is set out as separate section of this Report. The certificate from the Secretarial Auditor of the Company confirming compliance with the conditions of Corporate Governance is annexed to the Report on Corporate Governance.

Acknowledgments

Your Board acknowledges and appreciates the relentless efforts of the employees and staff including the management team headed by the Executive Directors who always lead from the front in achieving a commendable business performance year on year despite a challenging business environment. Your Board is indebted for the unstinted support and trust reposed by you, the Members. Your Board wishes to place on record its deep appreciation of the Non-Executive Directors of the Company for their immense contribution by way of strategic guidance, sharing of knowledge, experience and wisdom, which helps your Company to take right decisions in achieving its business goals. Your Board acknowledges the support and co-operation received from all regulatory authorities of the Central Government and all State Governments in India. Your Board takes this opportunity to thank all its Banks and other stakeholders as it considers them essential partners in progress and your Board is also looking forward to continued support and co-operation in future.

Date : August 14, 2021 For & on behalf of the Board of Directors of
Place : New Delhi Paisalo Digital Ltd.
Sd/- Sd/-
(Sunil Agarwal) (Harish Singh)
Managing Director & CEO Executive Director
DIN : 00006991 DIN:00039501