PNB Housing Finance Ltd Management Discussions

The economic perspective

The global economy showed notable resilience in 2025, achieving growth of 3.4% as highlighted by the International Monetary Fund (IMF), despite a challenging backdrop of policy shifts and trade tensions. During 2025, tariffs imposed by the United States on key partners, including China and India, disrupted global trade flows. However, swift action by private enterprises through front-loading imports and reorganising supply chains helped to stabilise trade and keep the trading system open. This was further supported by renewed trade engagements and a measured global response, preventing a broader downturn.

Inflation moderated to 4.1% in 2025, according to the IMF¹, enabling major central banks such as the Federal Reserve and the European Central Bank to initiate rate cuts, boosting liquidity, credit flow, and investment activity. At the same time, increased investments in advanced technologies like artificial intelligence (AI) supported growth across major economies. Global trade volumes rose by 5.1%, reflecting early-year front-loading and subsequent supply chain adjustments, while emerging markets, led by India and Southeast Asia, continued to drive growth.

Entering 2026, the global economy faced renewed challenges from geopolitical tensions in West Asia, which impacted supply chains and energy prices. Global growth remains exposed to risks from geopolitical tensions and trade uncertainties, though easing trade tensions and faster AI- driven productivity gains could support economic activity.

India, being one of the largest economies, outpaced the global average with its real GDP expanding 7.7% in FY26 from 7.1% a year back. Stable fundamentals, proactive policy measures, and a firm domestic demand helped the economy to stay homed in on its growth trajectory. The countrys Private Final Consumption Expenditure (PFCE) scaled a decade-high of 61.5% of the GDP, increasing by 7%, supported by rising household disposable income, personal income tax cuts and Goods and Services Tax (GST) rationalisation which has reduced the effective indirect tax rate. Along with that, capital expenditure also increased from H2 lakh crore in FY15 to H11.21 lakh crore in FY26, according to the Union Budget tabled in February 2026.

The Economic Survey 2025-26 claimed that India recorded one of the steepest declines in headline inflation among emerging markets and developing economies (EMDEs) to 1.8%. The Reserve Bank of India (RBI) too lowered the repo rate from 6.5% to 5.25% through a series of rate cuts in FY26, facilitating credit growth, boosting liquidity, and supporting the overall economic momentum.

The financial sector continued to be pivotal to Indias economic resilience by backing capital formation, credit expansion, and financial inclusion. The growth has been supported by the expansion of existing institutions, entry of new players, and surge in financial technologies.

Structural developments such as digital payments and the rise of fintech Non-Banking Financial Companies (NBFCs) have significantly enhanced financial inclusion across the country. India has recorded 206 billion UPI transactions in 2025 with a value of nearly H300 trillion.

A steady growth in digital infrastructure, sustained demand from retail and micro, small, and medium enterprises (MSME) segments, improving rural economic activities, and positive consumption trends created room for bank credit to grow 16% and deposits by approximately 13.5% at the end of the fiscal year on 31^st March 2026, data released by RBI showed.

Going forward, global growth is expected to be 3.1% in 2026 and 3.2% in 2027². Headline inflation is likely to rise slightly in 2026 before resuming its downward trend in 2027. As per the World Bank Group, Indias economy is projected to grow at 6.6% in FY27³. However, private consumption may moderate slightly, as higher global oil prices could increase inflationary pressures and reduce household disposable income. The GST rate reductions introduced in September 2025 are expected to partly offset these pressures, helping to cushion the impact on consumers. In this environment, strengthening policy credibility, enhancing adaptability, and fostering international cooperation remain critical to manage current economic shocks and building resilience against future uncertainties.

Industry dynamics and trends

The residential market remained resilient in 2025, supported by lower interest rates, stable inflation, and sustained demand for premium housing. Demand for premium homes continued to rise, prompting developers to optimise new launches and offer attractive financing and sales incentives. In the residential segment, government support for affordable housing, urbanisation, easing financial conditions and probusiness reforms will continue to support end-user confidence.

Rapid urbanisation is a key growth driver for Indias consumer economy, supported by an expanding middle class and favourable demographics. According to IBEF, Indias consumer market is projected to grow by about 46% to reach roughly USD 4.3 trillion by 2030, becoming the worlds second-largest, underpinned by a young population with a median age of around 28.

The housing sector growth in 2025 was driven largely by demand for premium homes. High-value homes — costing above H1 crore — dominated, making up 78% of total sales value, despite a 3.58% rise in prices during the year, according to the All-India House Price Index published by the RBI.

The growth momentum has also extended to Tier 2 and Tier 3 cities, setting developers in a rush to expand both premium and affordable housing projects in these markets.

Policy measures, including tax rationalisation and easing of monetary policies, have improved liquidity and reduced borrowing costs, while lower interest rates and enhanced credit availability have supported affordability, sustaining the demand across urban and semi-urban markets.

Affordable Housing Finance Companies (AHFCs) continued to grow steadily at a rate of 17% YoY, marginally higher than the overall Housing Finance Company (HFC) industry growth of 14%. The total on-book portfolio of AHFCs stood at approximately H1.35 lakh crore as on 31^st December 2025, compared to H1.23 lakh crore as on 31^st March 2025.

As per a report by National Housing Bank (NHB), the outstanding individual housing loan extended by banks and

HFCs increased from H28.26 lakh crore in March 2023 to H39.42 lakh crore in May 2026⁴. In the first half of FY26, housing credit growth stood at 12% for HFCs, 11% for NBFCs and 10% for scheduled commercial banks.

HFCs have played a key role in the development and expansion of the residential real estate sector in India. Initiatives such as Pradhan Mantri Awas Yojana Urban 2.0 (PMAY-U 2.0) and fundamentals like higher affordability supported this growth. Individual housing loan outstanding for HFCs increased from H6.72 lakh crore in March 2025 and to H7.27 lakh crore in May 2026⁴.

Affordable housing finance sector

Affordable housing has emerged as a high-growth segment within the home loan market, with AHFCs outpacing the broader industry. Growth is driven by rapid urbanisation, rural-to-urban migration, rising participation of younger homebuyers, increasing nuclear families, and evolving lifestyle aspirations. The growth in self-construction activity in semi-urban and rural areas has also supported this momentum, owing to cost efficiency resulting from the rationalisation of GST on key materials such as cement, sand-lime bricks, and marble/granite.

At the central level, initiatives such as PMAY-U 2.0 have significantly boosted credit flow through subsidies and financial assistance. Since 2015, the scheme has supported around 1.12 crore houses, having completed 96 lakh houses, and aims to support an additional 1 crore houses by 2029. State-level initiatives, including those by Tamil Nadu Housing Board, Maharashtra Housing and Area Development Authority, Basava Vasati Yojana, and Mukhyamantri GRUH Yojana, have further strengthened the ecosystem through targeted incentives.

According to an ICRA estimate, the AUM of AHFCs increased by 19% in this period to H1.58 lakh crore, setting the pace of growth in the Loan Against Property segment on a higher trajectory. The agency expects the AUM of AHFCs to rise 19-21% between FY26 and FY27.

The share of AHFCs in the overall HFC on-book portfolio was estimated at 15% as on 31^st December 2025. This has increased by 1% in comparison to the share as on 31^st December 2024.

Asset quality indicators showed a slight erosion in Q1 FY26 due to seasonal factors but stabilised in Q2 and Q3 on account of controlled slippage and consistent recovery. The potential impact of disruptions stemming from the ongoing conflict in West Asia on asset quality will need to be monitored closely.

As per ICRA, bank borrowing and NHB refinance formed 59% of the overall borrowing mix as on 31^st December 2025. Capital market funding remained limited, with only a few higher-rated entities tapping this segment. The overall cost of funds could be impacted by external factors like inflationary pressure and geopolitical conditions.

Profitability indicators were supported by healthy business margins, controlled credit costs (0.5%) and stable operating expenses (3.5%) in 9M of FY26. The impact of leverage, competition and seasoning on earnings, calls for a close watch over the medium term.

During the nine months to December 2025, AHFCs improved their cost-to-income ratio to 46% as the lenders slowed down on incremental branch expansion in the past three years from 48% in FY25. Their liquidity profile remained comfortable as they maintained a sizeable on-balance sheet liquidity.

AHFCs are expected to continue their growth, reaching a market size of H14.1 trillion by FY27, supported by an underpenetrated market, government push for Housing for All, favourable demographic profile, tax incentives, and a supportive regulatory environment. Asset quality is also anticipated to improve marginally. The RoMA is projected to remain in the range of 2.7-2.9% in the coming years.

Budget boost to affordable housing

The Ministry of Housing and Urban Affairs (MoHUA) rolled out PMAY-U 2.0 in September 2024, where the government stepped up its focus on the Housing for All mission, which is being implemented through four verticals: Beneficiary-Led Construction (BLC), Affordable Housing in Partnership (AHP), Affordable Rental Housing (ARH), and the Interest Subsidy Scheme (ISS).

As per ISS, households with an annual income of up to H9 lakh, availing loans up to H25 lakh for properties valued up to H35 lakh, are eligible for a 4% subsidy on the first H8 lakh of the loan for a tenure of up to 12 years.

The government has restructured the Credit Risk Guarantee Fund Trust for Low-Income Housing (CRGFTLIH) for the Economically Weaker Section/ Low-Income Group (EWS/LIG) segment. The scheme aims to enhance credit accessibility and improve the creditworthiness of eligible households by providing guarantees on housing loans extended by Scheduled Commercial Banks, HFCs, and other financial institutions. It also supports beneficiaries under PMAY-U 2.0 to secure affordable housing finance. Launched on 15^th January 2025, the scheme has, as of 31^st January 2026, guaranteed 6,205 loans amounting to H614.76 crore⁵.

These new measures, along with the existing schemes, reflect the governments commitment to strengthening the sector and promoting its Housing for All initiative at an accelerated pace.

Opportunities for housing financiers

? Prosperity fuelling housing demand: Indias expanding middle class, backed by rising incomes and improving affordability, is set to drive strong housing demand — including growing interest in vacation and second homes. This is backed by Indias rising Purchasing Power Parity (PPP), with an Ernst and Young study projecting India to become the worlds second-largest economy by 2038, at a PPP-based GDP of USD 34.2 trillion.

? Urban migration: With an increasing number of people migrating to cities, there is a rise in demand for dwelling units. The Economic Survey 2025-26 projected that urban areas will be home to 40% of the population, while contributing almost 70% to GDP.

? Growing pool of skilled professionals: Technology-led growth, entrepreneurship and rising incomes are driving demand for asset creation and quality housing in India.

? Affordable housing: Indias housing market is witnessing demand for compact and affordable formats such as

1 BHKs, studio apartments, loft apartments, and compact

2 BHKs, particularly among first-time homebuyers, young professionals, and small families because of their limited affordability, efficient space utilisation, and lower maintenance costs.

? Growing self-employment: The economy is supported by stable employment trends and improving labour force participation. Employment reached 56.2 crore in Q2 FY26, with 8.7 lakh jobs added over the previous quarter.⁷ Organised manufacturing contributed ~57 lakh jobs between FY16 and FY25. Nearly 60% of workers were self-employed in Q2 FY26, highlighting a shift towards entrepreneurship.

? Self-construction: Self-construction offers a strong

opportunity for HFCs, especially in the Affordable Housing segment. It helps in creating continuous and flexible credit demand rather than one-time loans, which aligns well with the business models of AHFCs.

? Loan Against Property (LAP): The LAP segment has grown at 21.46% CAGR from FY21 to FY25. The market size has expanded from H7.43 trillion to H16.17 trillion over the period and is expected to grow at 18-20% between 2025 and 2028. LAP is well-suited for selfemployed borrowers, offering lenders the advantage of secured financing, moderate ticket sizes, and portfolio diversification. Supported by rising property ownership and income formalisation, LAP is poised to drive growth for HFCs.⁸

Risks and mitigation strategies of housing financiers

? War and geopolitical instability: Ongoing global

uncertainties may pose risks to the economic outlook. Such developments could exert upward pressure on inflation, leading to a tightening of monetary policy by the central bank. A higher interest rate may moderate borrowing demand for housing loans, thereby impacting disbursement growth and profitability of HFCs.

? Income instability: External factors, such as changes in foreign regulations affecting sectors like tourism and international trade may pose risks to housing finance growth by causing income instability among potential customers, especially in semi-urban and rural areas. Individuals engaged in contractual or informal employment are more susceptible to irregular income streams, which can affect their repayment capacity.

? Cost of funds/liquidity concerns for housing financiers:

Liquidity remains a critical requirement for HFCs to support the growth in loan disbursement volumes and

value. Further, an increase in the cost of funds may lead to higher loan pricing, thus discouraging borrowers from availing loans from HFCs.

? Market saturation: HFCs must focus on bringing

innovation and differentiation to gain a competitive edge over their peers. HFCs can leverage digitalisation to streamline operations and simplify the loan process for borrowers, adapting to the evolving needs of customers. Through customised underwriting and assessment models, HFCs serve varied customer segments, including self-employed borrowers, enhancing credit decisions and strengthening customer acquisition.

? Regulatory changes: The sector operates under a strict framework laid out by the banking regulator and the government. Adherence to those guidelines and continuous monitoring of compliance are essential to ensuring stability and transparency within the system.

Company overview

PNB Housing Finance has a simple belief — owning a home is one of the most meaningful aspirations for individuals and families.

For nearly four decades, the Company has steadily grown into becoming one of the countrys leading housing finance players. The long journey reflects a continuous effort to simplify and strengthen the financing process, making it more accessible, seamless, and dependable for customers aspiring to own a home.

We began as a housing-focused lender and evolved into a diversified financial solutions provider. We support customers not only in purchasing homes, but also in constructing, renovating, and improving their properties. As customer needs have changed, so has our portfolio, widening to finance commercial real estate, residential realty, and loans against property.

We are also backed by the strong legacy of Punjab National Bank, Indias first Swadeshi bank. Our genes are designed to combine trust and capability, helping us adapt to the changing market dynamics while continuing to strengthen our presence across geographies.

Registered with the National Housing Bank (NHB), PNB Housing Finance went listed after a successful IPO in November 2016. Our equity shares are listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).

PNB Housing Finance operates through a strong and expanding footprint across India, with 392 branches as on 31^st March 2026.

We remain focused on scaling our Affordable Housing (Roshni) and Emerging Markets segments, recognising their strong underlying demand and long-term growth potential. These segments have seen steady growth and continue to constitute a significant share of our retail disbursements. We are also strategically expanding our footprint in underserved markets, particularly across Tier 2, Tier 3, and Tier 4 cities.

We increased our PAT by 18% YoY while achieving an RoA of 2.66% and RoE of 12.73%. Our strong financial performance has helped us secure a credit rating upgrade by India Ratings from IND AA+ to IND AAA with a Stable Outlook and continue to be rated AA+ with Stable outlook from Care, Crisil and ICRA.

Recoveries remained strong, supported by focused collection and resolution efforts, with total recoveries from written-off pool accounts standing at H332 crore in FY26. Our momentum strengthened further with the sale of 689 retail properties during the year in comparison to 537 in FY25, underscoring improved execution across recoveries.

The Company maintains a strong governance framework, underpinned by robust internal controls and risk management practices. This has helped us maintain asset quality and minimise the risk of non-compliance. Regular quarterly reviews help identify gaps and implement corrective actions, while a zero-tolerance approach to operational lapses and strict data security measures ensure the highest standards of compliance and customer protection.

We have accelerated our digital transformation to enhance operational efficiency, customer experience and accessibility. By leveraging advanced technology platforms, we enable seamless, end-to-end service delivery across channels, with data analytics driving deeper customer insights and more tailored solutions. The Company has moved towards enhancing its onboarding and customer acquisition processes to offer a paperless customer journey. The fully digitised workflow, now widely adopted by the in-house sales team, has helped reduce turnaround times and operating costs while improving customer experience.

We have strengthened engagement with our partners to promote our retail business by actively interacting with branch teams, understanding market sentiment, and addressing operational challenges. Our focus remains on deepening relationships with partners engaged in the housing finance business while improving the productivity of the existing distribution network.

Financial performance

Particulars	FY26	FY25	Change
Net Interest Income	3,109.77	2,749.63	13.1%
Fee and Commission Income (Net of Fees and Commission Expense)	383.24	350.50	9.3%
Other Income	0.52	26.30	-98.0%
Gross Income	3,504.79	3,140.23	11.6%
Operating Expenditure	909.08	798.88	13.8%
Operating Profit	2,584.45	2,327.53	11.0%
Impairment of Financial Instruments and Write Offs	(386.15)	(158.24)	-144.0%
Profit Before Tax	2,970.60	2,485.77	19.5%
Profit After Tax	2,291.24	1,936.14	18.3%
Other Comprehensive Income (Net of Taxes)	146.51	(69.66)	-
Total Comprehensive Income	2,437.75	1,866.48	30.6%
Basic Earnings Per Share (H)	88.01	74.52	-

Net interest income grew by 13% YoY, due to 17% increase in average retail loan book as compared to the previous year. Fee and commission income grew in proportion with the increase in disbursements during the year.

Operating expenses increased by 13% YoY, mainly on account of investments towards expansion of the affordable housing business, increase in the employee base in line with the expansion of branches & growth of loan book, and technological upgradation. During the year, the Company added 36 branches, taking its network to 392 branches/outreach locations as on

31^st March 2026, compared to 356 branches/outreach locations as on 31^st March 2025.

In FY26, provision reversals arising from improved asset quality and recoveries from written-off accounts led to a negative credit cost of 45 bps. Recoveries were supported by improved collection efficiency and focused recovery initiatives, including one-time settlements and property sales, among others.

Profit Before Tax (PBT) and Profit After Tax (PAT) increased by 20% and 18% YoY, respectively, driven by business growth and lower credit cost.

Key financial ratio

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Particulars	FY26	FY25	Change
Average Yield	9.77%	10.05%	-28 bps
Average Cost of Borrowing	7.57%	7.86%	-29 bps
Spread	2.20%	2.19%	1 bps
NIM	3.68%	3.70%	-2 bps
Gross Margin	4.04%	4.11%	-7 bps
Cost-to-Income	24.80%	24.58%	22 bps
Return on Asset	2.66%	2.55%	11 bps
Return on Equity	12.73%	12.19%	51 bps
Total Provision/Total Asset Ratio	1.05%	1.48%	-43 bps
Gearing (x)	3.70	3.70	-
Book Value Per Share	738	649	-
CRAR	27.26%	29.38%	-212 bps
Tier 1 Capital	26.89%	28.39%	-150 bps
Tier 2 Capital	0.37%	0.99%	-62 bps
Net Worth (H crore)	19,219.13	16,863.13	14.0%

Growth across key segments

In FY26, PNB Housing Finance delivered a robust performance, driven by a strong customer-centric approach, operational excellence, and sustained momentum across key business segments. Throughout the year, we witnessed healthy growth across critical performance parameters. We sanctioned 1,27,055 loans during FY26, registering a growth of 10% over the previous year. Total disbursements increased by 21% to H26,548 crore, compared to H21,972 crore in FY25.

We delivered strong growth across our loan portfolio during FY26. Total loan assets increased by 15% YoY to H87,347 crore as on 31^st March 2026. Retail loan assets grew by 16% YoY to H86,946 crore, while retail disbursements rose by 19% YoY to H26,213 crore. Growth was led by the Affordable Housing segment, where loan assets increased by 61% YoY to H8,153 crore, followed by the Emerging Markets segment, which grew by 21% YoY to H26,820 crore. The Prime segment also recorded steady growth, with loan assets increasing by 9% YoY to H51,953 crore. The retail portfolio remained well-diversified, with 68% comprising individual housing loans, and salaried customers accounting for 59% of the segment. Our focus continues to remain on the Emerging Markets and Affordable Housing segments. Together, they contribute 48% of the retail disbursement and 40% of the retail loan asset.

Our asset quality improved during FY26, with Gross NPA declining by 15 bps to 0.93% as on 31^st March 2026 from 1.08% a year earlier, while Net NPA declined to 0.57% from 0.69%. Recoveries from the written-off pool stood at H332 crore, contributing to an improvement in credit costs to -45 bps from -21 bps in the previous year.

Return on Equity (RoE) stood at 12.73%, while Return on Assets (RoA) improved by 10 bps YoY to 2.66%. Our capital position remained robust, with a capital adequacy ratio of 27.26% as on 31^st March 2026, comprising Tier 1 capital of 26.89% and Tier 2 capital of 0.37%. We maintained a strong liquidity position of H3,333 crore as on 31^st March 2026, providing ample financial flexibility to support business growth and meet funding requirements.

We also entered into a partnership with India Mortgage Guarantee Corporation (IMGC) to strengthen risk management and expand responsible lending in the affordable housing segment. This association has enabled us to enhance borrower eligibility while ensuring robust risk management, and expand access to first-time homebuyers while maintaining prudent underwriting standards, portfolio resilience, and strong asset quality.

The Company is also planning to introduce micro housing to extend small-ticket loans to informal customer groups. This initiative is expected to grow in the coming quarters, particularly for self-construction purposes across semiurban towns and cities.

In line with the Governments vision of financial inclusion, PNB Housing Finance supports key affordable housing initiatives such as the Pradhan Mantri Awas Yojana (PMAY), enabling economically weaker and low-income groups to access interest subsidies on home loans. Building on this commitment, we are targeting a retail loan asset book of H1 lakh crore by FY27, with a higher contribution from the Affordable Housing and Emerging Markets segments.

Developer Finance loans

The Company has restarted the Developer Finance segment in a calibrated way from the current financial year. As on 31^st March 2026, the developer finance portfolio stood at H401 crore, which includes fresh disbursements amounting to H335 crore in Q4 FY26. Our sustained focus on resolution and recovery ensured Nil GNPA in the corporate book for FY26.

Advancing with responsible credit practices

Credit underwriting is a key pillar of PNB Housing Finances strategy to drive sustainable growth while maintaining a high-quality portfolio. Functioning as an independent unit, the underwriting team carries out a detailed assessment of a borrowers financial strength and collateral adequacy by dedicated legal and technical teams. This disciplined framework helped us maintain a resilient and well-seasoned portfolio with steady YoY growth.

In FY26, we recorded growth in disbursals, with approximately 76% of it below H1 crore. Notably, 86% of incremental business originated from customers with bureau scores above 700, reflecting the Companys prudent credit standards.

The Company caters to a diverse customer base, including both salaried and non-salaried segments with formal and informal income documentation. Tailored underwriting approaches for each segment ensure a balanced evaluation of risk and opportunity, reinforcing the commitment to a stable and inclusive loan portfolio. Continuous improvements in turnaround time further underscore the Companys focus on better operations, faster deliveries, and smarter services to customers.

The Company continues to strengthen its technology-led credit ecosystem through advanced digitalisation, AI-powered intelligence, and automated decision-making capabilities.

The adoption of Straight Through Processing (STP) for salaried customers, along with fully digitised credit lifecycle processes from login to disbursement, has significantly improved the operational efficiency. Key processes including e-verification, automated Credit Appraisal Memorandums (CAMs), and bank statement analysis have streamlined execution.

The Credit Policy GenAI Bot enables natural-language access to policies and deviations through a centralised and version- controlled framework, improving policy consistency and accelerating decision-making across branches. The initiative is expected to reduce SME clarification load by 25-35%, improve loan processing time by 10-20% and ensure 100% policy version consistency across the organisation.

The Agentic AI Bureau Summarisation & Scoring framework leverages machine learning-driven bureau synthesis, red-flag detection, and internal risk scoring to strengthen underwriting quality and pricing precision. The platform is expected to reduce underwriting turnaround time by 15-20%, improve underwriter productivity by 15%, and enhance STP rates by 5-12%.

Credit underwriting process flow

PNB Housing Finance has embedded digital interventions across the loan lifecycle to enhance efficiency and strengthen risk assessment. At the login stage, customers can submit key information digitally, including e-KYC, financial details, income tax records, and property-related documents.

This is backed by Aadhaar-based e-KYC from UIDAI, automated bureau and de-duplication checks, as well as credibility assessments through alternate KYC and work email verification.

Credit appraisal process evaluates the three pillars of lending — credibility, capacity to repay, and capital adequacy. This is enabled through a decentralised credit model with underwriter mapping, automated eligibility assessment using Credit Assessment Memo (CAM) and Bank Statement Analysers, validation through a Business Rule Management Engine (BRME) and Straight Through Processing (STP), and integration with the Account Aggregator ecosystem.

For collateral assessment, we undertake verification through specialised vendors, with digital output integrated into the Loan Operating System.

The underwriting process is supported by teams across legal, technical, and Fraud Control Unit (FCU) functions. The disbursement is done through system-based validation of Loan-To-Value (LTV) and regulatory requirements, along with decentralised branch-level disbursement capabilities.

Digital intervention at each step

Collection and recovery

Retail segment

From an asset quality standpoint, we have maintained a strong focus on proactive portfolio monitoring, supported by data-driven insights, peer benchmarking, and real-time intelligence from credit bureaus and industry partners. This comprehensive approach enables timely decision-making and helps pre-empt risks.

The collections and recovery performance have shown steady and measurable improvement. Focused initiatives, including the deployment of pre-delinquency models, enhancement of call centre efficiency, and strengthening of field resolution teams, have resulted in a sequential reduction in NPA across quarters. Early bucket recoveries have improved meaningfully, driven by better curtailment within the first week of delinquency. Tech-powered collections application facilitates real-time tracking of field operations and digital payment collections, creating a more transparent and data-driven resolution process.

Recoveries from the technically written-off pool have been a key highlight. During the year under review, the Company recovered H332 crore, compared to H336 crore in FY25.

The entire recovery was achieved without any incremental manpower. Structured man-to-man case mapping and bundling of lower-ticket accounts enabled faster resolution of cases. Legal actions under the SARFAESI framework have also been scaled up significantly, further strengthening enforcement effectiveness. These measures have enhanced the Companys market reputation and reinforced a strong deterrent against delinquency.

We have further strengthened our recovery efficiency by optimising auction processes through enhanced OTS frameworks and refined pricing strategies, enabling consistent month-on-month sale of repossessed assets. These recoveries have increased profitability and reduced bad debt. The technology-enabled and strategically designed resolution framework supports the maintenance of a high-quality, well-diversified portfolio and underpins the Companys focus on steady and sustainable growth.

Our collection strategy

Collections supported by technology, data and analytics

Corporate segment

In the corporate segment, the Company maintained Nil Gross NPAs as on 31^st March 2026.

Credit loss provision

Driven by improved resolution efficiency and disciplined recovery efforts, credit cost for FY26 stood at -45 bps, a significant improvement compared to -21 bps in FY25. As on 31^st March 2026, total provisions were H913 crore, accounting for 1.05% of total assets, as against H1,119 crore (1.48% of total assets) as on 31^st March 2025. The Stage 3 provision coverage ratio remained robust at 38.33% as on year-end, reflecting prudent risk management practices and a continued focus on strengthening portfolio resilience.

Liquidity management and borrowing profile

At PNB Housing Finance, we continue to maintain a diversified and cost-efficient funding strategy that supports long-term financial strength and flexibility. Our borrowing profile remains well-balanced, comprising bank loans, retail deposits, debt market instruments such as NCDs and CPs as well as NHB refinance and external commercial borrowings, with a well-distributed maturity profile that ensures prudent Asset Liability Management (ALM) management. Our robust ALM framework ensures that every funding decision aligns with our broader stability objectives.

As of 31^st March 2026, bank borrowings accounted for 39.2% of total borrowings, followed by deposits at 25.3%, NHB refinance at 14.4%, NCDs at 10.6%, ECBs at 7.6%, and CPs at 2.9%. With 70% of borrowings in the floating rate segment, the Company retains the flexibility of efficiently repricing funds in line with market movements.

Credit rating

Our continued focus on strong credit performance reinforces our credit ratings, enabling access to lower-cost capital, reducing refinancing risk, and supporting sustainable growth. During the year, India Ratings upgraded our rating to AAA with Stable outlook.

Particulars	As at 31st March, 2026	Migration during the year
Deposits	CRISIL AA+ (Outlook-Stable)	No Change
	CARE AA+ (Outlook-Stable)	No Change*
Long-term bonds and debentures	CRISIL AA+ (Outlook-Stable)	No Change
(Secured and Tier 2 Bonds)	CARE AA+ (Outlook-Stable)	No Change*
	IND AAA (Outlook-Stable)	Upgraded
	ICRA AA+ (Outlook-Stable)	No Change
Commercial paper	CRISIL A1+	No Change
	CARE A1+	No Change
	CRISIL AA+ (Outlook-Stable)/ CRISIL A1+	No Change No Change
Long-term bank loans/short-term bank loans	CARE AA+ (Outlook-Stable)/ loans	No Change*
		No Change
	IND AAA (Outlook-Stable)	Upgraded
	ICRA AA+ (Outlook-Stable)	No Change

*CARE Ratings Limited has upgraded the Companys long-term rating from AA+ Stable to AAA Stable on 7^th May 2026 with respect to deposits, bonds (including Tier 2 bonds), debentures and bank facilities.

Expanding access through a diversified distribution model

We have a well-diversified, multi-channel sourcing strategy to broaden our reach and cater to a wide and varied customer base across key markets. Our in-house teams collaborate closely with a strong network of direct selling agents (DSAs) to drive customer acquisition across both loan and deposit businesses.

This is complemented by an extensive ecosystem of over 14,000 channel partners nationwide. We continue to strengthen our engagement with DSAs through regular interactions and structured training programmes, enhancing effectiveness and alignment. Our robust digital infrastructure enables an end-to-end paperless process, improving

speed, transparency, and convenience for both partners and customers, while ensuring a seamless sourcing and onboarding experience. During the year, we added 36 branches across Prime, Emerging Markets and Affordable Housing segments to bolster our existing footprint.

In the Affordable Housing segment, the Company has made notable progress in expanding and deepening its distribution network. Under the Roshni Saarthi programme, 2,300+ grassroots connectors have been empanelled, significantly improving last-mile connectivity in underserved regions. In addition, around 680+ channel partners were onboarded the DSA model to widen customer outreach.

To support this expanding network, we have built a strong vendor ecosystem across legal, technical, field investigation, and field credit unit functions. Technology continues to play a central role in this journey, enabling process automation, faster turnaround times, and greater accuracy in credit evaluation and decision-making.

Driving customer acquisition through strategic distribution

PHFL Home Loans and Services Limited, a wholly owned subsidiary of PNB Housing Finance Limited, plays a strategic role in reducing the Companys reliance on external sourcing channels for customer acquisition. Operating as a dedicated distribution arm, PHFL provides doorstep services to prospective customers and offers a comprehensive suite of financial solutions, including home loans, property-related services, and fixed deposits. During the year, over 70% of customer sourcing was driven by PHFL.

PHFL has been instrumental in scaling the Affordable Housing segment by seamlessly managing both front-end customer engagement and back-end operational support.

Its ability to scale operations efficiently, supported by a seasoned ecosystem and a skilled workforce, has reinforced its position as a key strategic enabler for the parent Company.

PHFL has also made significant investments in strengthening its Property Services Group (PSG), which plays a critical role in the recovery of stressed assets. PSG focuses on identifying and connecting with potential buyers for NPAs and written-off assets, thereby contributing directly to improving the parent companys financial performance. This process is supported by a dedicated team across key locations and a well-established broker network that manages auction properties.

Centralised operations

The Companys operating model has been a key driver of efficiency, enabling process standardisation, elimination of redundancies, and cost optimisation across functions. Our operations are organised under two core verticals: Central Processing Centres (CPCs) and Centralised Operations (COPS).

The CPCs, strategically located in Mumbai, Bengaluru, and Noida, serve as dedicated hubs for processing and securely maintaining customer documentation, including loan files, deposit applications, and repayment records. Each centre is equipped to handle over 26,000 service requests every month. As part of our ongoing digital transformation efforts, we have digitised customer records, with documents for more than 3.82 lakh customers securely stored on cloud. This has improved accessibility and reduced risks associated with physical document handling.

The COPS function supports seamless back-end operations by overseeing activities such as deposit insurance reconciliation, pay-outs, vendor bill processing, and channel partner empanelment. The team uses image- based processing and electronic payment systems to enhance efficiency and accuracy in a paperless process.

In FY26, we successfully mobilised fixed deposits from 80,000 customers.

Reinventing customer experience through technology

We continued to strengthen our digital capabilities through multiple technology-led initiatives focused on enhancing customer experience, operational efficiency, and scalable growth. To make the process seamless for DSAs and direct sales team, our sales app Infinity was developed for Prime, Emerging Markets, and Affordable Housing segments with integrated features such as end-to-end application processing, Salesforce LOS integration, API-based validations, document uploads, and query management. Following a successful pilot across 30+ branches, the launch was initiated for wider deployment.

The Company also strengthened its partner and compliance ecosystem through the launch of VConnect 2.0 for vendors and the relaunch of the broker portal integrated with Kiya for deposit sourcing. All the payments to vendors are now processed through VConnect 2.0. To enhance risk monitoring and regulatory compliance, the Intelliwings AML solution was implemented for transaction monitoring and risk assessment across loans and deposits.

Digitalisation initiatives further expanded across the loan journey with the implementation of e-Sign and e-Stamp solutions through Leegality, enabling Aadhaar-based digital execution of agreements. Additional technology integrations included DigiLocker, payment gateways, real-time credit query updates, CRM workflow integration, Salesforce Loan Origination System, and operational data store frameworks, enabling seamless and paperless processes with complete digital audit trails.

Accelerated adoption of AI-led solutions across sales, servicing, collections, and support functions has been one of our key focus areas. Our first voice-based AI pilot for Sanction Undisbursed (SUD) calling achieved a success rate of nearly 30%, while additional AI projects for re-KYC calling and fresh sales lead calling will be taken live in the coming year. AI-driven initiatives such as customer interaction automation, product policy chatbots, intelligent retention management, automated profiling, and collections-focused AI agents are also being leveraged to enhance efficiency and customer engagement.

Elevating customer journeys

At PNB Housing Finance, we place customer experience at the core of our thinking, letting it define how we operate, engage and deliver value. In line with evolving customer expectations and regulatory guidelines, the Company has re-engineered its processes and digital interfaces to simplify, standardise, and ease the overall customer journey.

Our Affordable Housing business has been seamlessly integrated with a Salesforce-enabled Loan Origination System (LOS) and regulatory APIs, significantly improving transparency and processing efficiency. Customers now benefit from system-generated interest rates based on realtime profile assessments. With eNACH penetration reaching 88.55%, repayment processes have become more seamless through debit card or Aadhaar-based mandates. Additionally, the introduction of RPD functionality enables instant bank verification, reducing processing timelines.

On the deposits side, the D2C platform has transformed the fixed deposit journey into a quick and efficient process, supported by digital onboarding, CKYC integration, and enhanced compliance on a robust technology platform.

To further strengthen the service delivery, we have introduced dedicated centres at select branches, enabling faster and more efficient resolution of customer queries.

In metro cities such as Mumbai and Delhi, multiple subcentres have been set up to further enhance service turnaround and customer convenience.

The rollout of PMAY-U 2.0 has enabled fully digital application processing for over 5,000 customers as on 31^st March 2026, supported by vernacular communication through WhatsApp, email, and SMS channels.

The Company aims to further democratise access, particularly in the non-prime segment, through innovations such as paperless onboarding enabled by e-Sign and e-Stamp via the Leegality platform. Its active presence across social media platforms also facilitates real-time grievance redressal and customer engagement, reinforcing its commitment to delivering excellence at every touchpoint.