Paisalo Digital Ltd Directors Report

To The Members,

PAISALO DIGITAL LIMITED

It is our pleasure to present the 33^rd Annual Report together with the Audited Standalone and Consolidated Financial Statements for the Financial Year ended March 31, 2025. This report read with Corporate Governance Report and Management Discussion & Analysis Report includes macro economic scenario, governance philosophy, financial performance of the Company, business overview, opportunity and threats and various initiatives taken by the Company.

Company Overview

Paisalo Digital Limited, is a Public Limited Company incorporated on March 5, 1992 under the Companies Act, 1956 and has its registered office at Delhi, India. It is registered as a Non-Deposit taking Non-Banking Financial Company vide the Reserve Bank of India (‘RBI) registration number B-14.02997 and classified as a Non-Deposit Taking Middle Layer NBFC. The Company launched its Initial Public Offering of equity share and was listed on UP Stock Exchange; Ahmedabad Stock Exchange and Delhi Stock Exchange in the year 1996. Subsequently, shares of the Company got listed on BSE Limited (“BSE”) in the year 2007 and National Stock Exchange of India Limited (“NSE”) in the year 2009. Currently equity shares are listed on BSE and NSE.

Financial Highlights

The Standalone financial performance of the Company for the Financial Year 2024 25 is summarized below:

(_in Million)

Boards Report

			(_in Million)
Particulars	FY 2025	FY 2024	% change over FY2024
Total Revenue	7,348.32	6,050.43	21.45
Less: Total operating expenses & Provisions	1,367.79	1,214.06	12.66
Pre-impairment operating profit	5,980.53	4,836.37	23.66
Less: Impairment on financial instruments	186.84	24.66	657.68
Profit before Interest, Depreciation & Taxes (PBIDT)	5,793.69	4,811.71	20.41
Less: Depreciation	54.69	33.96	61.04
Less: Interest & Finance Charges	3,093.00	2,398.23	28.97
Profit Before Exceptional items and Tax	2,646.00	2,379.51	11.20
Exceptional items	_5.95	_5.83	_2.06
Profit Before Tax	2,651.95	2,385.34	11.18
Less: Tax Expense	675.08	615.16	9.74
Profit After Tax (PAT)	1,976.87	1,770.19	11.68
Statutory Reserve pursuant to Section 45-IC of the RBI Act, 1934	395.37	354.04	11.67
Transfer to General Reserve	1,400.00	1,250.00	12.00
Earnings per Share (EPS) (_) Basic	2.20	3.83	_42.56
Earnings per Share (EPS) (_) Diluted	2.20	3.83	_42.56
Net Worth	15,257.07	13,210.58	15.49
Assets Under Management (AUM)	50,290.87	43,320.88	16.09

Results Of Operations And State Of Companys Affairs

Revenue from operations for the year ended March 31, 2025 has increased by 21.5% at 7348.32 Million over the corresponding previous year. The Net Profit of your Company for the financial year ended Million as against the Net Profit of 1,770.19 Million for the financial year ended March 31, 2024 for the financial year ended March 31, 2025 reflects a growth of 11.7 % over the corresponding ended March 31, 2024.

Transfer to reserves

Under Section 45IC of the Reserve Bank of India Act, 1934, Non-Banking Financial Companies (NBFC) are required to transfer a sum not less than 20% of its net profits every year to Reserve Fund before declaration of any dividend. Accordingly, the Company has transferred 395.37 Million (previous year 354.04 Million) to Statutory Reserve. Further, 1400 Million has been transferred to General Reserve for FY25.

Pursuant to provisions of Companies Act, 2013 (the ‘Act) read with relevant rules thereunder, the Company, being a NBFC, is exempt from creating debenture redemption reserve in respect of privately placed debentures including the requirement to invest up to 15% of the amount of debentures maturing during the next financial year. However, the Company maintains sufficient liquidity buffer to fulfill its obligations arising out of debentures.

Subsidiary company

The Company has only one Wholly Owned Subsidiary viz. Nupur Finvest Private Limited, a registered Base Layer Non Deposit taking Non Banking Finance Company. Nupur Finvest Private Limited is engaged in finance activities. At the year ended March 31, 2025, the net worth of the Company stood at 603.81 Million. During the reporting period, the subsidiary reported income of 366.31 Million and Profit Before Tax (PBT) and Profit After Tax (PAT) at 31.61Million and 24.34 Million respectively.

During the FY25, no new Subsidiary was incorporated/acquired. The Company neither has any Associate Company nor has entered into a Joint Venture with any other Company.

The Financial Statement of Subsidiary Company is also available in a downloadable format under the Investor Section on the Companys website at www.paisalo.in.

Pursuant to the provisions of Regulation 16 of SEBI (LODR) Regulations, 2015, Company has a Policy for Determining Material Subsidiary which is available at Companys website at https://www.paisalo.in/pdf/corporate_governance/ policy/Policy_For_Determining_Material_Subsidiary25.pdf

Consolidated Financial Statements

In compliance with the applicable provisions of Companies Act, 2013 including applicable Accounting Standards on Consolidated Financial Statements, this Annual Report also includes Consolidated Financial Statements for the Financial Year ended March 31, 2025.

Consolidated financial performance of the Company financial yearended March 31, 2025 is summarized below:

(_in Million)

Particulars	FY 2025	FY 2024	% change over FY2024
Revenue from Operations	7,711.07	6,587.46	17.06
Less: Expenditure	5,035.35	4,180.38	20.45
Exceptional Item	_7.84	_4.76	64.71
Profit Before Tax (PBT)	2,683.56	2,411.84	11.27
Tax Expenses	682.35	622.11	9.68
Net Profit After Tax (PAT)	2,001.21	1789.73	11.82
Total Comprehensive Income for the Period	2,001.21	1789.73	11.82
Earnings per Share of Re. 1 each (EPS) (INR)	2.23	3.87	_42.38
AUM	52,328.47	45860.3	14.10

Review Of Operations

Paisalo is engaged in the business of providing convenient and easy loan to financially

2025 stoodat 1,976.87 economic pyramid through its numbers of financial products which inter-alia includes SME & MSME Loans, Income theNetProfit Generation Loans for business/self employment purpose. In FY25, the company has added highest ever record 5.16 for the financial million customers to its customer franchise. Total Customer franchise stood at 9.45million as of FY25 as compared to year 4.29 million as of FY 2024.

Total geographic footprint as at FY25 stood at to 3,565 touchpoints (351 Branches, 1900 Distribution Points and 1314 CSPs) across 22 states as compared to 2,455 touchpoints as at FY24. During the period under review, Companys total disbursements reached 37,198.50 Million and it has posted 11.7 % increase in the Net Profit after tax for FY25 over FY24. During this period Gross NPA and Net NPA stood at 0.99% and 0.76% respectively.

The Company delivered its FY25 assessment on customer franchise, geographic expansion, Opex to NTI, GNPA and NNPA. Credit cost was elevated, but within the long-term outlook of less than 2%. The Company took significant through FY25 and is optimistic about its impact on P&L in FY 26. The Company also saw slight NIM compression of 2 bps.

Key Ratio

The Key Ratio (standalone) for Financial Year ended March 31, 2025:

Current Ratio	4.79
Debt– Equity Ratio	2.25
Debt Service Coverage Ratio	0.64
Return on Equity Ratio	12.96%
DE Ratio (TOL/ATNW)	2.07
Net Profit Ratio	36.09%
GNPA	0.99%
NNPA	0.76%

Net Worth and Capital Risk Adequacy Ratio (CRAR)

The Net Worth of the Company (Standalone) increased to 15257.07 Million as on March 31, 2025 from INR 13210.58 Million as on March 31, 2024.

The Capital Risk Adequacy Ratio (CRAR) stood at 39.16% as on March 31, 2025 as against 35.92% as on March 31, 2024, which is much above the requirement as stipulated by Reserve Bank of India.

Awards and Recognition

For the period under review, Company was awarded "Prashasti Patra" by Financial Inclusion and Microfinance Department of State Bank of India, Local Head Office Jaipur, for excellentwork in Pradhan Mantri Suraksha Bima Yojana (PMSBY).

Issue of Foreign Currency Convertible Bonds (FCCBs)

During the FY25 Company has raised funds by issuance of 50,000 7.5 per cent. Secured Foreign Currency Convertible Bonds due in 2029 (FCCBs) having face value of US $1000 each. Out of 50,000 FCCBs, 2000 FCCBs have been converted into Equity Shares. FCCB Holders have the option to convert these FCCBs into Equity Shares at a conversion floor price of 45.74 per Equity Share. Outstanding FCCBs are listed on Afrinex Exchange, Mauritius.

Issue of Equity Shares

During the FY25 Company has issued Equity Shares as follows:

1. Allotment of 37,01,792 equity shares having face value of 1/- (Rupee 1) each at a premium of 44.74 per share on January 15, 2025 on conversion of Foreign Currency Convertible Bonds of US $2 Million.

2. Allotment of 3,72,517 equity shares having face value of 1/- (Rupee 1) each fully paid up for cash at a premium of 33.69 (Rupees Thirty-Three and Sixty Nine Paisa) to the Employees of the Company and its Wholly Owned Subsidiary M/s Nupur Finvest Private Limited, on February 28, 2025. The requisite details are available at the website of the Company and the required Certificate in respect of Compliance is of this Report.

Share Capital

The Authorized Share Capital of the Company stood at 1,80,00,00,000.00 consisting of 1,75,00,00,000 Equity Shares of 1/- (Rupee One only) each and 50,00,000 Preference Shares of 10/- (Rupees Ten only) each. Consequent to allotments made during the year, the Issued Share Capital, Subscribed Share Capital and Paid-up Share Capital of the Company has been increased and accordingly as on March 31, 2025, the same stood as under:

	_90,22,43,289
1. Issued Share Capital	Consisting of 90,22,43,289 Equity Shares of face value of _1/– each
	_90,22,43,289
2. Subscribed Share Capital	Consisting of 90,22,43,289 Equity Shares of face value of _1/– each
	_90,21,80,789
3. Paid–up Share Capital	Consisting of 90,21,18,289 Equity Shares of face value of _1/– each fully paid–up and _62,500 for 1,25,000 forfeited equity shares of face value of _1/– each (amount originally paid–up @ _0.5 each)

Debt Securities/Instruments and Utilization of Fund Raised from it

During the year under review, Company has raised 700 Million by issuing Listed Secured Rated Non Convertible Debentures on private placement basis. The fund raised from such issue were utilized for the same purposes as mentioned in the Issue Documents. For Secured Debentures prescribed asset cover is maintained at all times.

During the year, the Company has also raised funds for short term purpose through listed Commercial Papers.

The Fund so raised during the year from debt securities/instruments had been utilized for the same purpose as mentioned in the issue/ offer documents.

As on March 31, 2025 outstanding debt securities/instruments were as under:

Sr. No. Securities/Instruments	Face value of Outstanding Securities/Instruments
1. NON_CONVERTIBLE DEBENTURES	_5,238.50 MILLION
2. COMMERCIAL PAPERS	_1,030.00 MILLION
3. FOREIGN CURRENCY CONVERTIBLE BONDS	US $48.00 MILLION

Borrowing from Banks and Financial Institutions

Your Company raised funds for its working capital and business requirements from various banks and financial institutions. The total amount of loan outstanding from Banks/FIs as on March 31, 2025 was 22,982.48 Million as against 17,494.45 Million on March 31, 2024.

Timely Repayment of Debt Liabilities

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

During the year the Company has also made payment of interest and principal amount on Non Convertible Debentures as per the terms of issue(s).

Accordingly, there is no event of default of interest/principal payment during the year.

Dematerialization of Equity Shares

Equity Shares of the Company are compulsorily tradable in demat form. As on March 31, 2025, 99.99% of the Equity Shares of total outstanding fully paid-up equity shares of the Company were in Dematerialized from and only 10 Equity Shares of 1/- each out of total Equity Shares are in physical form.

Dividend Distribution Policy

In terms of Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Company had formulated a Dividend Distribution Policy of the Company, which sets out the parameters and circumstances to be considered by the Board in determining the distribution of dividend to its shareholders and/or retaining profit earned. The policy is available on the website of the Company at https://www.paisalo.in/pdf/corporate_governance/policy/ Dividend_Distribution_Policy25.pdf

Dividend

RBI vide its circular dated June 24, 2021 has laid down a framework for declaration of dividend by NBFCs. Accordingly, the Board of Directors, after taking into account various aspects and in compliance with the said circular, recommend for consideration of the members at the ensuing Annual General Meeting (‘AGM), payment of final dividend of 0.10 (10%) per Equity Share of face value of 1.00. The dividend recommended is in accordance with the principles and criteria set out in the Companys dividend distribution policy. Total dividend proposed for the year does not exceed the ceilings specified in said circular/ RBI Master Directions.

The dividend, if declared, at the ensuing AGM will be taxable in the hands of the Members of the Company pursuant to Income Tax Act, 1961.

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 of the unclaimed dividends amounting to 1,33,367.47 as on March 31, 2024 in Form IEPF 2 to the Ministry of Corporate Affairs. For the year under review, there was an amount of 19,859.00 as unpaid and unclaimed dividend for a period of 7 years, accordingly, pursuant to the provisions of Section 124(5) of the Companies Act, 2013, 19,859.00 has been transferred to the Investor Education and Protection Fund (IEPF) of the Central Government on November 4, 2024.

The Company has uploaded the details of unclaimed dividend on the Companys website at https://www.paisalo.in and also on website specified by the Ministry of CorporateAffairshttps://www.iepf.gov.in/IEPF/services.html. IEPF is holding 11,740 Shares of the Company, at the end of the year under review.

Deposits

Your Company is registered with the Reserve Bank of India (RBI), as a Non-Deposit taking Middle Layer NBFC (NBFC-ML) under Section 45-IA of the RBI Act, 1934. Your Directors hereby report that during the year under review, the Company has not accepted any deposits from the public, within the meaning of provisions of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016 and the provisions of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 and it continues to be a Non-Deposit taking Non-Banking Financial Company in conformity with the guidelines of the RBI.

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- Long Term	27,000.00	IVR AA/Stable Outlook (IVR Double A with Stable Outlook)
2 Non-Convertible Debentures	5,400.00
3 Commercial Paper	5,400.00	IVR A1+ (IVR A One Plus)

Board of Directors, Key Managerial Personnel (KMP) and Board Meetings

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, RBIs Corporate Governance provisions as applicable on the Company 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. As on March 31, 2025, the Board of Directors of the Company consist of 10 (Ten) Directors, out of whom five are Non Executive Independent Directors.

Details of the Directors are as follows:

S. No. Name of Directors	DIN	Designation	Category
1. Mr. Sunil Agarwal	00006991	Managing Director	Whole Time Director
2. Mr. Harish Singh	00039501	Executive Director	Whole Time Director
3. Mr. Anoop Krishna	08068261	Executive Director	Whole Time Director
4. Mr. Santanu Agarwal	07069797	Deputy Managing Director	Whole Time Director
5. Mr. Vinod Kumar	10230437	Executive Director	Whole Time Director
6. Mr. Gauri Shankar	06764026	Independent Director	Non-Executive Director
7. Mr. Raman Aggarwal	00116103	Independent Director	Non-Executive Director
8. Mrs. Nisha Jolly	08717762	Independent Director	Non-Executive Director
9. Mr. Vijuy Ronjan	09345384	Independent Director	Non-Executive Director
10. Dr. Dharmendra Singh Gangwar	08299862	Independent Director	Non-Executive Director

During the year under review, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees and reimbursement of expenses, if any.

Appointment/Reappointment of Directors: Executive Director

During the year under review, the Board of Directors vide their resolution dated February 4, 2025 appointed Mr. Vinod Kumar (DIN: 10230437) as Additional Executive Director of the Company and his appointment as Executive Director was approved by the Shareholders at the Extra-Ordinary General Meeting of the Company held on May 2, 2025.

Further, Mr. Jitendra Kumar Ojha has been appointed as an Independent Director on the Board of the Company at the Extra-Ordinary General Meeting held on May 2, 2025.

Independent Director

Shareholders in the 32nd Annual General Meeting held on September 23, 2024 has approved the re- appointment pursuant to Section 152 of the Companies Act, 2013:

1. Mr Vijuy Ronjan (DIN:09345384) as Non-Executive Independent Director of the Company for a period of five years commencing from October 8, 2024.

2. Mr. Raman Agarwal (DIN: 00116103) as Non-Executive Independent Director for a period of five years commencing from October 15, 2024.

Retirement by Rotation

During the year under review, Mr. Santanu Agarwal (DIN 07069797), who retired at the 32nd Annual General Meeting, was re appointed as a Director of the Company.

In terms of Section 152 of Companies Act, 2013, Mr. Harish Singh, Executive Director (DIN 00039501), is liable to retire by rotation at the 33rd Annual General Meeting and being eligible for re appointment, offers himself for re appointment as Director. The Board of Directors of the Company in its meeting held on July 21, 2025 based on the recommendation of Nomination and Remuneration Committee recommended to the Members re appointment of Mr. Harish Singh as a Director of the Company, liable to retire by rotation.

Brief particulars of Mr. Harish Singh as required under the Secretarial Standards on General Meetings issued by the Institute of Company Secretaries of India and Regulation 36 of the SEBI (Listing Obligations and Disclosure Requirements Regulations, 2015 is provided in the Notice convening the 33^rd Annual General Meeting.

Retirement as an Independent Director

Mr. Naresh Kumar Jain (DIN: 01281538) has completed two consecutive terms of five years each (total ten years) as an Independent Director on August 13, 2024. In accordance with Section 149(11) of the Companies Act, 2013, which stipulates that no person can hold the office of Independent Director for more than two consecutive terms, he ceased to be a Director of the Company effective August 13, 2024.

Mr. Gauri Shankar (DIN: 06764026) has served as an Independent Director of the Company for two consecutive terms which will conclude on July 21, 2025. As per Section 149(11) of the Companies Act, 2013, no person can hold office as an

Independent Director for more than two consecutive terms. Accordingly, Mr. Gauri Shankar cannot be re-appointed for a further term, and his current association with the Company as an Independent Director will end on July 21, 2025. The Board of Directors places on record their sincere appreciation for the valuable services rendered by him as an Independent Director and is grateful for his advice and guidance to the Board and Management during his tenure as Independent Director. The Board wishes him good health, happiness, and continued success in all his future endeavors.

KMPs

Save and except as stated above, there are no other changes in the KMPs during financial year 2024-25.

Declaration of Independence by Independent Directors & adherence to the Companys Code of Conduct for Independent Directors

Pursuant to Section 149 (7) of the Companies Act, 2013, all Independent Directors had given declaration and necessary confirmation of eligibility under Section 149(6) of the Companies Act, 2013, and that they qualify to be Independent Directors pursuant to the Rule 5 of the Companies (Appointment and Qualification of Directors) Rules, 2014. In terms of Regulation 25(8) of SEBI Listing Regulations, the independent directors have confirmed their eligibility as per Regulation 16 (1) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and that they are not aware of any circumstance or situation which exists or may be reasonably anticipated that could impair or impact their ability to discharge their duties. Further, the Board has ensured the veracity of the disclosures and opines that there has been no change in the circumstances which may affect their status as Independent Directors of the Company and the Board is satisfiedof the integrity, expertise, and experience (including proficiency applicable rules thereunder) of all Independent Directors on the Board.

Further, all the Independent Directors have affirmed that they have adhered and complied with the Companys Code of Conduct for Independent Directors which is framed in accordance with Schedule IV of the Act. All the Directors meet the ‘Fit and Proper criteria as per the policy of the Company and as stipulated by RBI.

Meetings of Board

During the year under review, a total of Seven Meetings of the Board of Directors of the Company were held, i.e., on April 26, 2024; July 25, 2024; August 9, 2024; October 30, 2024; December 23, 2024, January 16, 2025 and February 04, 2025. Details of Board composition and Board Meetings held during the financial year 2024 25 have been provided in the Corporate Governance Report which forms part of this Report.

Audit Committee

The Company has an Audit Committee duly constituted in accordance with the provisions of Section 177 of the Companies Act, 2013, RBI Guidelines and Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended. All the members of the Committee have expertise in finance and have knowledge of accounting and financial management. The scope of the activities of the Audit Committee, as Obligations and Disclosure Requirements) Regulations, 2015 and read with Section 177 of the Companies Act, 2013 and the RBI Regulations for NBFCs.

The present composition of the Committee is as follows: Mr. Gauri Shankar, (Independent Director) Chairman, Mr. Vijuy Ronjan (Independent Director) Member and Mr. Harish Singh (Executive Director) Member.

The detailed composition of the Audit Committee & its terms of reference and the details of meetings attended by the Audit Committee members are provided in Corporate Governance Report which forms part of this Annual Report.

During the year under review, all the recommendations of the Audit Committee were accepted by the Board of Directors of the Company.

Stakeholder Relationship Committee

The Stakeholder Relationship Committee of the Board consists of Independent Directors namely Dr. Dharmendra Singh Gangwar, as Chairperson and Mr. Raman Aggarwal, Mr. Vijuy Ronjan are as Members of the Committee. 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 of the Nomination and Remuneration Committee & its terms of reference and the details of meetings attended by the members are provided in Corporate Governance Report which forms part of this Annual Report.

Annual Evaluation of Board, its Committees, and Individual Directors:

Pursuant to the provisions of Section 178 of the Companies Act, 2013 and Regulation 17(10) read with Part D of Schedule II of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with SEBI guidance note on Board Evaluation for listed companies issued vide circular (Ref. no. SEBI/HO/CFD/CMD/ CIR/P/2017/004) dated January 5, 2017, the Board has carried out an annual evaluation of its own performance, the Board committees and individual Directors. Structured questionnaire feedback was obtained from each Director as a part of performance evaluation. Basis the feedback received from the directors, the Board and the Nomination and Remuneration Committee reviewed the performance of the individual Directors, the Managing Director including various committees established by the Board at their respective meetings.

The performance evaluation of individual Directors, including the Managing Director, was conducted based on several criteria. These included professional conduct, fulfillment of roles and responsibilities, effective discharge of duties, contributions to Board/Committees/Senior Management, preparedness on agenda items, and their contribution to decision-making processes. Similarly, the performance evaluation of the Board as a whole and its Committees involved soliciting feedback from Directors and Committee members. This feedback encompassed various criteria such as the structure and composition of the Board, effectiveness of Board processes, adequacy of information provided, clarity of roles and responsibilities, opportunities for professional development, functioning of both the Board and its Committees, establishment and determination of Committee responsibilities, and the quality of the relationship between the Board and management. These evaluations are integral to ensuring continuous improvement and effectiveness in governance practices within the Company.

The Independent Directors in their separate meeting held on January 31, 2025 under Regulation 25(4) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Schedule IV of the Companies Act, 2013 had: i. reviewed the performance of Non-Independent Directors and the Board of Directors as a whole; ii. reviewed the performance of the Managing Director of the Company, taking into account the views of executive and non-executive Directors; and iii. assessed the quality, quantity and timelines of flow of information between the Companys management and the Board of Directors that was necessary for the Board of Directors to effectively and reasonably perform their duties.

The entire performance evaluation process was completed to the satisfaction of Board.

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

Policy on Directors Appointment and Remuneration

To manage the Companys affairs effectively and efficiently, the Company has always maintained a well-balanced composition of Executive and Independent Non-Executive Directors at Board level. All appointments at Board level are made adhering to the mandates of the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and guidelines issued by the Reserve Bank of India.

Generally, Managing Directors and Whole-time Directors (Executive Directors) are appointed for a term of five years. Independent Directors serve a term of up to five consecutive years on the Board. Based on their performance evaluation, eligibility for reappointment, and recommendations by the Nomination and Remuneration Committee, Independent Directors may be reappointed by the Board for another consecutive term of five years, subject to shareholders approval. Candidates considered for Board appointments undergo thorough evaluation based on criteria including personal and professional ethics, integrity, values, and character; understanding and alignment with the Companys vision, mission, and values; prominence in their respective fields; professional skills, knowledge, expertise, and financial literacy. Additional competencies and skills deemed essential for effective governance are also taken into account during the evaluation process.

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.

All appointments at senior level are strictly based on meritocracy. Directors, Key Managerial Personnel, and Senior Management Personnel retire in accordance with the provisions of the Companies Act, 2013 and the Companys policies.

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.

The relevant Policy(ies) have been uploaded on the website of the Company and can be accessed through the link https://paisalo.in/home/investorrelation.

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(3)(c), 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, the applicable accounting standards have been followed and that no material departure has been made in following the same; b) appropriate accounting policies have been selected and applied consistently and judgements and estimates made 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 of the Company for that period; c) proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 have been taken for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; d) the annual accounts have been prepared on a going concern basis; e) internal financial controls to be followed by the Company had been laid down and such internal financial controls are adequate and operating effectively; and f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Auditors & Audit Reports

Statutory Auditor and Statutory Audit Report:

On April 27, 2021 Reserve Bank of India (RBI) 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 for appointment of Statutory Central Auditors (SCAs)/ Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs including HFCs.

In terms para 8 of said guidelines, the Company can appoint Statutory Auditor for a continuous period of three years, therefore, the Company in the 32nd Annual General Meeting held on September 23, 2024 appointed M/s Saket Jain & Co., Chartered Accountants, having firm registration no. 014685N as the Statutory Auditors of the Company until the conclusion of the 35th Annual General Meeting of the Company.

The Report given by the Statutory Auditor M/s Saket Jain & Co., Chartered Accountants, on the financial the Company for the financial year 2024-25 is part of the Annual Report. The the Auditors Report are self explanatory and do not call for any further comments under Section 134 of the Companies Act, 2013. There are no qualifications, reservations, adverse remarks or disclaimers in Auditors Report for the financial year 2024-25.

Secretarial Auditor and Secretarial Audit Report of the entity:

Pursuant to Section 204 of the Act read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of the SEBI Listing Regulations, the Company had appointed M/s. Satish Jadon & Associates, Practicing Company Secretaries for conducting Secretarial Audit for the financial 2025 and to submit Secretarial Audit Report in Form No. MR 3. There are no qualifications, reservations, adverse remarks or disclaimers made by the Secretarial Auditors, in their Audit Report for the financial year 2024-25.

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 Exchange 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, 2025, 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.

Further, pursuant to the requirements of Regulation 24A of the SEBI Listing Regulations, the Board of Directors of the Company at its meeting held on July 21, 2025 has recommended to the Members, for their approval, at the ensuing Annual General Meeting, the appointment of M/s. Satish Jadon & Associates, a peer-reviewed Company Secretaries as the Secretarial Auditors of the Company for the first term of five consecutive financial years commencing from April 1, 2025 till March 31, 2030 to conduct Secretarial Audit of the Company.

Fraud Reported by Auditors under Section 143(12) of the Companies Act, 2013

During the period under review, neither the Statutory Auditors nor the Secretarial Auditors have reported to the Audit Committee/ Board or Central Government any instances of fraud in the Company by its officers or employees under Section 143(12) of the Companies Act, 2013 and therefore, no detail is required to be disclosed under Section 134(3)(ca) of the Companies Act, 2013.

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.

Maintenance of Cost Records

The maintenance of cost records, for the services rendered by the Company, is not required pursuant to Section 148 (1) of the Companies Act, 2013 read with Rule 3 of the Companies (Cost Records and Audit) Rules, 2014.

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

Being RBI registered Non Banking Financial Company and engaged in the business of giving loans in ordinary course of its business, accordingly, 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 securities provided under Section 186 of the Companies Act, 2013 is not applicable to the Company.

The details of Investment made by the Company have been disclosed in the note no. 6 of the Standalone Financial Statement for the year ended March 31, 2025. 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

The Board of Directors of the Company has formulated a policy on materiality of Related Party Transactions and dealing with Related Party Transactions (“RPT Policy”), pursuant to the applicable provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended. The same is displayed on the website of the Company. This policy deals with the review and approval of related party transactions. All related party transactions are placed before the Audit Committee for review and approval.

Since all related party transactions entered into by your Company during the year 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 of the Notes to Standalone Financial Statements for the year ended March 31, 2025 which sets out details of related party transactions pursuant to Indian Accounting Standard-24 (Ind AS-24).

Policy on materiality of related party transactions and on dealing with related party transactions is displayed on the business website of the Company at https://www.paisalo.in/pdf/corporate_governance/policy/Policy_on_Related_Party_ Transactions25.pdf

Change in the Nature of Business, if any

During the period under review, there was no change in the nature of business of the Company.

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

There have been no material changes and commitments affecting the financialposition of the Company which occurred between the end of the financial year and the date of this Report.

Information on Material Orders Passed by the Regulators or Courts or Tribunal

During the period under review, there were no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and the Companys operations in future.

Furthermore, no penalties were imposed by the RBI or any other regulatory authority during the year under review.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo services activities, its operations are not energy intensive nor does it require AstheCompanyisengagedin thefinancial adoption of specific technology and hence information in terms of Section 134(3)(m) of the Companies Act, 2013, read with 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 earningsfortheCompanyduringthefinancialyear under review was nil and Companys Foreign

Exchange outgo during the financial year under review was equal to 15,24,87,424 previous year

Corporate Social Responsibility

Your Company aspire to contribute positively to the communitys wellbeing as a part of Companys vision and accordingly carries CSR initiatives in line with Schedule VII of the Companies Act, 2013. In compliance with Section 135 of the Companies Act, 2013 read with Rules made thereunder and as amended from time to time, the Company has established the Corporate Social Responsibility Committee (“CSR Committee”) and formulated Companys CSR Policy, which is available on the website of the Company at https://paisalo.in/pdf/corporate_governance/policy/CSR_Policy25. pdf. The Company undertakes its CSR initiatives directly and/or through partnering with a trust/foundation, qualified to undertake CSR activities in accordance with Schedule VII of the Companies Act, 2013 (includes amendments thereto).

For the financial year 2024 25 the Board of Directors of the Company in their meeting held on April 26, 2024 approved 31.80 Million as the budget for CSR activities. During the financial year 2024-25, Company has spent 32.08 Million CSR fund in various activities which are disclosed in the Annual Report on CSR activities for financialyear ended March 31, 2025 under Section 135 annexed with this report as Annexure B.

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

Business Responsibility and Sustainability Report

In adherence to Regulation 34(2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, read with SEBI Circular No. SEBI/HO/CFD/CMD-2/P/CIR/2021/562 dated May 10, 2021, the Business Responsibility and Sustainability Report (BRSR) for Financial Year 2025, outlining the environmental, social, and governance (ESG) initiatives of your Company, is an integral part of this Annual Report. Additionally, this report provides comprehensive insights into the diverse ESG endeavors undertaken by your Company.

A comprehensive “Business Responsibility and Sustainability Report” (BRSR), formatted as per SEBI guidelines, detailing the Companys initiatives, actions, and processes towards ESG endeavors, is appended as Annexure C and forms part of this Report and can also be accessed on the Companys website at www. paisalo.in.

Internal Financial Control

The Company remains unwavering in its commitment to strengthening internal financial controls and processes. This operations, safeguarding assets, preventing and detecting fraud strategicfocus isaimedatenablingefficient and errors, maintaining the integrity and completeness of accounting records, and ensuring the timely generation of reliable financial information.

To support the same the Company has instituted a comprehensive internal control framework tailored to the size, scale, and complexity of its operations. These controls uphold compliance with applicable policies and legal requirements and are continually enhanced to address the evolving nature of the business. As the organization expands, these controls play a pivotal role in bolstering the detection and prevention of fraud and discrepancies. The Board of Directors affirms that the internal financial controls over financial statements are adequate and effective.

This framework is further reinforced by a structured regimen of internal and external audits and ongoing management reviews. These mechanisms ensure that financial records remain reliable and that assets are accurately accounted for. The Company engages qualified professionals to carry out internal audits, assessing the sufficiency of the internal control system.

The Internal Audit function supports both the Audit Committee and the Risk Management Committee by conducting detailed evaluations of risk assessments and related management action plans. Outcomes from these audits and risk reports are periodically reviewed by the respective committees to maintain oversight and drive improvements.

Additionally, the robustness of internal controls is validated through periodic testing by Internal Auditors and independent certification of financial reporting controls are carried out bythe Statutory Auditors.

The Internal Financial Control System is continuously refined to respond to changes in the business comply with evolving regulatory and accounting standards. Notably, throughout the reporting period, there have been no significant observations indicating inefficiencies or shortcomings in the internal control systems.

Risk Management

In compliance with regulatory requirements applicable to Non-Banking Financial Companies (NBFCs), the Company has established a robust Risk Management framework to ensure systematic identification, assessment, and mitigation of risks across all levels of operations.

The Company has constituted the Risk Management Committee, the Audit Committee, and the Asset-Liability Management Committee (ALCO). The functioning and meeting frequency of these Committees are disclosed in detail in the Report on Corporate Governance, which forms an integral part of this Annual Report.

These Committees support the Board in evaluating and addressing business risks in a structured manner. The Company has adopted a comprehensive Risk Management Policy that focuses on maintaining sustainable growth with stability. The Policy outlines the process for identification of key risk events, assessment of their potential impact, and timely reporting, mitigation, and monitoring.

The Risk Management framework includes:

Clearly defined risk governance structure with assignedrolesan d responsibilities;

Identification and evaluation of principal business risks;

Implementation of control measures to manage and mitigate these risks;

A detailed Business Continuity Plan (BCP) to ensure resilience in adverse scenarios;

Periodic monitoring and review of risk exposures and mitigation strategies.

The Company follows a disciplined approach to risk management, aligning business decisions with a well-balanced risk-reward strategy, thereby safeguarding stakeholder interests and supporting long-term value creation.

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

Disclosure pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed as Annexure D of this Report. As per the provisions of Section 136(1) of the Companies Act, 2013, the reports and accounts are being sent to the Members of the Company excluding the information regarding employee remuneration as required pursuant to Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The same is available for inspection and any Member interested in obtaining such information may write an email to the Company Secretary at cs@paisalo.in and the same will be furnished on such request. The Board of Directors affirm that the remuneration paid to employees of the Company is as per the Remuneration Policy of the Company.

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. In adherence to the Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013 (“POSH Act”), the Company has formulated a Policy for Prevention, Prohibition and Redressal of Sexual Harassment at Work Place. The Company has complied with the provisions relating to the constitution of Internal Complaints Committee andeffectiveness under (“POSH Act”).

Throughout the financial year 2024 25, the Company received no complaints from employees concerning sexual harassment.

Number of complaints of sexual harassment received in the year;	NIL
Number of complaints disposed off during the year	Not Applicable (No Complaints received)
Number of cases pending for more than ninety days	Not Applicable (No Complaints received)

Compliance with Maternity Benefits Act, 1961.

The Company has complied with the provisions of Maternity Benefits Act,1961.

Compliance of Reserve Bank of India Guidelines

Paisalo Digital Limited is categorized as a Non Deposit taking Middle Layer Non Banking Finance Company. The Company continues to fulfil all the norms and standards laid down adequacy, statutory liquidity assets, etc. The Company has complied with the applicable provisions of Master Directions-Non-Banking Financial Company Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions 2016 and Master Direction Reserve Bank of India (Non-Banking Financial Company Scale Based Regulation) Directions, 2023 and all other applicable directions/regulations/circulars of RBI during the Financial Year 2024-25.

Annual Return

In accordance with the provisions of Section 92(3) read with Section 134(3) (a) of the Act and the applicable rules, Annual Return of the Company for the financial year March 31, 2025, in the prescribed form, is hosted on website of the Company at https://paisalo.in/pdf/annual_report/MGT-7_PAISALO_2024-25.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 SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is provided as a separate section forming part of the Annual Report.

Vigil Mechanism/Whistle Blower Policy

Company in accordance with the provisions of Section 177(9) of Companies Act, 2013 read with Rule 7 of Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 has established a vigil mechanism through the Companys Whistle Blower Policy to deal with instances of fraud and mismanagement and to enable the Directors and Employees of the Company to report genuine concerns, about unethical behaviour, actual or suspected fraud or violation of Code of Conducts. The Policy also provide adequate safeguards against victimisation and make provision for direct access to the Chairman of the Audit Committee. The Policy is available on the website of the Company at www.paisalo.in. Details of vigil mechanism/whistle blower are included in the Corporate Governance Report, forming part of this Report.

During the financial year 2024 25, no cases under this mechanism have been reported.

Listing with Stock Exchanges

The equity shares (ISIN INE420C01059) of the Company are listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). The listing fees payable to both the exchanges for the Financial Year 2025-26 have been paid.

The Secured Non-Convertible Debentures (NCDs) issued on Private Placement basis and Commercial Papers (CPs) are listed on BSE.

Companys Foreign Currency Convertible Bonds (FCCBs) are listed on Afrinex Exchange, Mauritius.

Prevention of Insider Trading

The Company has implemented a Code of Conduct for Prevention of Insider Trading to regulate securities trading by Directors and designated employees. As part of this framework, the Company utilizes software with a structured digital database to maintain records of individuals with whom unpublished price sensitive information has been shared. This database includes details of the information shared and the names of such individuals, along with their Permanent Account Numbers (PAN). Company is also complied with the extending framework for restricting trading by Designated Persons (“DPs”) by freezing PAN at security level. The full text of the Code of Conduct for Prevention of Insider Trading is accessible on the Companys website at: https://paisalo.in/pdf/corporate_governance/policy/Code_of_practices_ and_procedures_for_prevention_of_Insider_Trading25.pdf

Disclosures Under the Insolvency and Bankruptcy Code, 2016

No application for Bankruptcy under the Insolvency & Bankruptcy Code, 2016 (“IBC”) was made against the Company during the financial year under review.

Further, there are no details required to be reported with regard to difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions as your Company has not done any settlement with any Bank or Financial Institutions since its inception.

Corporate Governance

The Company firmly believes that robust corporate governance forms the foundation for sustainable business growth and the effective management of relationships among all stakeholders. It consistently strives to strengthen these relationships through principles of fairness, transparency, and accountability. The Company places utmost importance on the integrity of financial reporting, transparency, fairness, empowerment, and full compliance with the law-both in letter and spirit.

In adherence to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, read with Schedule V thereof, the Report on Corporate Governance for the financial year ended March 31, 2025, is included as a distinct section of this Annual Report. A certificate from the Companys the prescribed corporate governance norms, is annexed to the Report.

Certificate from the Managing Director and Chief Financial Officer

The certificate received from Mr. Sunil Agarwal, Managing Director & CEO and Mr. Harish Singh, Executive Director and the financial statements and other matters as required under Part B of Schedule II ChiefFinancialOfficer to the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 forms part of this Report.

Acknowledgments

The Board extends its sincere appreciation for the steadfast support and cooperation received from all regulatory authorities of the Governments. We are also profoundly grateful to our banking partners and other stakeholders, whose continued collaboration remains integral to our growth and success.

We recognize and deeply value the unwavering commitment of our employees and staff, including the management team under the leadership of the Executive Directors. Their consistent pursuit of excellence and resilient performance amid a dynamic and often challenging business environment have been commendable. To our esteemed Members, we thank you for your enduring trust and support.

We also wish to place on record our sincere thanks to our Non-Executive Independent Directors. Their strategic insights, rich experience, and wise counsel have been instrumental in guiding the Company towards informed decision-making and the achievement of key business goals.

As we move forward with optimism, we look ahead with confidence and continue to count on your valued

Place : New Delhi		For & on behalf of the Board of Directors of
Date : July 21, 2025		Paisalo Digital Ltd.
	Sd/-	Sd/-
	Sunil Agarwal	Harish Singh
	Managing Director & CEO	Executive Director
	DIN : 00006991	DIN : 00039501