To the Members,

Your Directors are pleased to present the 16th Annual Report of Ujjivan Financial Services Limited together with the audited financial statements For the financial year ended March 31, 2020.

1. FINANCIAL RESULTS

The Directors submit the Annual Report of Ujjivan Financial Services Limited (the "Company" or "Ujjivan") together with the audited financial statements for the financial year (FY) ended March 31, 2020.

Particulars	Standalone*		Consolidated*
	FY 2019-20	FY 2018-19	FY 2019-20	FY 2018-19
Operating Income	11.00	22.00	2,859.76	1,944.27
Other Income	10.24	8.62	109.62	69.36
Total Income	21.24	30.62	2,969.38	2,013.62
Less: Operational Expenses
Personnel Expenses	3.16	1.63	734.71	540.53
Administrative & CSR Expenses	7.88	5.08	363.39	415.58
Finance Charges	-	-	1,114.92	727.03
Depreciation	0.02	0.02	165.99	60.62
Impairment Losses on Financial Instruments	-	-	174.46	65.76
Total Operational Expenses	11.06	6.73	2,553.47	1,809.52
Profit/(Loss) Before Tax	10.18	23.89	415.91	204.10
Less: Income tax	1.37	2.31	115.76	37.22
Less: Deferred tax	0.00*	0.00*	1.49	16.44
Profit/(Loss) After Tax	8.81	21.58	298.66	150.44

*as per Indian Accounting Standards (Ind-AS) Represents the figures below the rounding off norms

2. DIVIDEND

The Directors are pleased to recommend a dividend at the rate of Rs 0.80 per share (8%) for the FY 2019-20. The dividend will be subject to the approval by the members of the Company at the ensuing 16th Annual General Meeting ("AGM") of the Company.

The aforesaid dividend as recommended by the Board is in excess of current years distributable profit after transferring to statutory reserves in accordance with the provisions of Section 45 - IC Reserve Bank of India Act, 1934 and hence if approved by the members will be paid partly out of the accumulated profits earned by the Company in the previous financial years and transferred to free reserves. This is in accordance and compliance with the Companies (Declaration and Payment of Dividend) Rules, 2014.

The aforesaid dividend, if approved by the shareholders would involve a cash outflow of ~ Rs h9.73 Crores.

3. TRANSFER TO RESERVES

The Company transferred Rs 1.76 Crores to Statutory Reserves. Transfer of 20% of the Profit after Tax to the statutory reserves is in accordance with the provisions of Section 45 - IC Reserve Bank of India Act, 1934.

4. CREDIT RATING

The Company has zero debt; hence no rating has been obtained from any rating agencies during the year.

5. CAPITAL REQUIREMENTS

Adjusted Net Worth of a CIC-ND-SI shall at no point of time be less than 30% of its aggregate risk weighted assets on balance sheet and risk adjusted value of off-balance sheet items as on the date of the last audited balance sheet as at the end of the financial year as per RBI CIC Master Directions.

The Company as of March 31, 2020 is in compliance with the below capital requirements and all other

mandatory ratios as required under RBI CIC Master Directions:

Ratios	RBI Requirement	Actuals (%)
CAR	>30% of RWA	100.18%
Investment ratio	>90% of Net Assets	97.85%
Equity Investment Ratio	>60% of Net assets	85.92%
Leverage Ratio	<2.5 Times	0.09%

6. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In accordance with SEBI LODR Regulations, Management Discussion and Analysis Report and Corporate Governance Report together with the Certificate thereon from the Independent Practicing Company Secretary is provided separately and forms part of this Directors Report.

7. EXTRACT OF ANNUAL RETURN

In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the Annual Return in the prescribed format (MGT-9) is appended as "Annexure 1" to the Boards Report. The complete annual report including the annual return is being placed on our website www.ujjivan.com.

8. NO. OF MEETINGS OF THE BOARD DURING THE FY 2019-20

During the Financial Year 2019-20, our Board has met 5 (five) times and the meetings of our Board of Directors were held on May 30, 2019, August 02, 2019, October 21, 2019, February 03, 2020 and March 23, 2020. For further details, please refer to the Corporate Governance Report, which forms part of this report.

9. APPOINTMENT / REAPPOINTMENTS / RETIRING DIRECTOR

(a) Re-appointment of director retiring by rotation

As per the provisions of the Companies Act, 2013, Mr. Jayanta Basu (DIN: 01268046) retires by rotation at the ensuing 16th AGM and being eligible, seeks his re-appointment. The Board recommends his re-appointment. Please refer item no. 3 of the 16th AGM Notice for further details.

(b) Appointment of Ms. Mona Kachhwaha as an Independent Director

On the recommendation of the Nomination and Remuneration Committee, the Board has appointed Ms. Mona Kachhwaha (DIN: 01856801) as an additional director (independent category) with effect from September 22, 2019. She is holding office till the ensuing 16th Annual General Meeting of shareholders of the Company. The proposal for her appointment is being placed for consideration of shareholders of the Company. Ms. Mona Kachhwaha

is eligible for appointment and in respect of whom the Company has received a notice in writing from a member under Section 160(1) of the Act proposing her candidature for the office of Director of the Company. Her office will not be liable to retire by rotation. The Board recommends the shareholders to approve her appointment. Please refer item no. 4 of the 16th AGM Notice for further details.

(c) Appointment of Mr. Samit Ghosh as a Non-Executive Director

On the recommendation of the Nomination and Remuneration Committee, the Board has appointed Mr. Samit Ghosh (DIN: 00185369) as an additional director (non-executive, non-independent category) with effect from April 01, 2020. He is holding office till the ensuing 16th Annual General Meeting of shareholders of the Company. The proposal for his appointment is being placed for consideration of shareholders of the Company. Mr. Samit Ghosh is eligible for appointment and in respect of whom the Company has received a notice in writing from a member under Section 160(1) of the Act proposing his candidature for the office of Director of the Company. His office will be liable to retire by rotation. Further, as part of Board succession plan, Mr. K. R. Ramamoorthy, the present Chairman of the Board and the Company has expressed his desire to step down from the position of non-executive Chairman of the Board and the Board intends to appoint Mr. Samit Ghosh as Chairman of the Board and the Company in place of Mr. K. R. Ramamoorthy, subject however to the approval of the shareholders for his appointment as non-Executive Director. Mr. Ramamoorthy will continue as non-executive Independent Director on the Board for the remainder of his tenure. The Board recommends the shareholders to approve his appointment. Please refer item no. 5 of the 16th AGM Notice for further details.

10. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors of the Company confirms and state that:

(i) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

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

(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of

this Act For safeguarding the assets of the Company and For preventing and detecting Fraud and other irregularities;

(iv) they have prepared the annual accounts on a going concern basis;

(v) they have laid down internal financial controls to be Followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, audit of internal financial controls and the reviews perFormed by management and the audit committee oF the board, the board is oF the opinion that the Companys internal financial controls were adequate and effective during the FY 2019-20.

11. DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary declarations oF independence From each oF its Independent Directors under Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independent director envisaged in Section 149 (6) of the Companies Act, 2013.

All Independent Directors have submitted the declaration of Independence, as required pursuant to Section 149(7) of the Act and including the added criteria prescribed under SEBI LODR Regulations, stating that they meet the criteria of Independence as provided in Section 149(6) of the Companies Act, 2013 and they are not disqualified from continuing as Independent Directors of our Company.

12. NOMINATION AND REMUNERATION POLICY

The Company pursuant to the provisions of Section 178 of the Companies Act, 2013 has formulated and adopted a nomination and remuneration policy which is disclosed on our website at the below link- http://ujjivan.com/html/ujjivan_policies.php

13. EXPLANATIONS OR COMMENTS BY THE BOARD ON EVERY QUALIFICATION, RESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE

(i) Statutory Auditors Report

There are no disqualifications, reservations, adverse remarks or disclaimers in the auditors report for the FY 2019-20.

(ii) By the Company Secretary in practice in his secretarial audit report;

Secretarial Auditor

Mr. K. Jayachandran, Practicing Company Secretary (ACS No. 11309 and Certificate of Practice No. 4031) was appointed as the Secretarial Auditor of the Company to conduct secretarial audit of the Company for the year ended March 31, 2020 as required under Section 204 of the Companies Act, 2013 and the Rules made thereunder. The secretarial audit report for FY 2019-20 is appended as "Annexure 2" to the Boards Report.

As required under regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate secretarial audit report for the year ended March 31, 2020 given by the Secretarial Auditor Mr. K. Jayachandran, in the format as prescribed by SEBI in this regard is appended as "Annexure 3".

The Secretarial Audit Report does not contain any qualification, reservation or adverse remark made by the Secretarial Auditor.

Further, Mr. K. Jayachandran, Practicing Company Secretary (ACS No. 11309 and Certificate of Practice No. 4031) has through his certificate dated May 27, 2020 has certified that none of the directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as director of companies by the Board/Ministry of Corporate Affairs or any such statutory authority. The said certificate is appended as "Annexure 4" to the Boards Report and should also form a part of the Corporate Governance Report of the Board as required under the SEBI Listing Regulations.

14. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

During the FY 2019-20, the Company has not given any loans and guarantees to any-body corporate and has not made any investment under Section 186.

15. TRANSACTION WITH RELATED PARTIES

Pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014, there are no transactions to be reported under Section 188(1) of the Act in Form AOC-2.

There were no contracts or arrangements or transactions entered into during the year ended March 31, 2020, which were not at arms length basis.

Your Directors draw attention of the members to Note 25 to the Financial Statements which sets out other related party disclosures.

All Related Party Transactions as required under Accounting Standards AS-18 are reported in

Note 25 - Notes to Accounts of the Standalone financial statements of the Company.

16. THE STATE OF THE COMPANYS AFFAIRS

The Company is registered with RBI as a Non Deposit taking Systemically Important Core Investment Company (NBFC-ND-SI-CIC). The Company is in compliance with the conditions of the Master Direction - Core Investment Companies (Reserve Bank) Directions, 2016 as amended. Prior to its conversion to a Core Investment Company, the Company was one of the largest microfinance institutions in the country. The conversion was done based on the stipulation of the Reserve Bank of India while approving the Company to set up the small finance bank business.

The Company is the promoter of Ujjivan Small Finance Bank Limited (hereinafter referred to as "USFB") and being a CIC, the Company has its investments primarily in USFB.

During the FY 2019-20, USFB in compliance with the listing condition stipulated by the RBI, completed its maiden initial public offering (IPO) and allotted 20,27,02,702 Equity Shares at an offer price of Rs 37 per Equity Share including a premium of Rs 27 per Equity Share and the Bank has given discount of Rs 2 per Equity Share on the issue price offered to eligible shareholders of Ujjivan Financial Services Limited in the reservation portion. Pursuant to its IPO, USFB listed its 1,728,223,169 Equity Shares of Rs 10/- each on BSE and NSE on December 12, 2019. The Company as on March 31, 2020 holds 83.32% equity in USFB and all corporate governance requirements as regards to its unlisted material subsidiary as enumerated under Regulation 24 of SEBI listing Regulation was duly adhered to by the Company until the listing of USFB.

17. MATERIAL CHANGES AND COMMITMENTS,

IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT;

I t is pertinent to note that the investments of the Company are primarily in the shares (equity and preference) of USFB and hence receipt of dividend income constitutes a significant part of the income of the Company. However, RBI vide its circular dated April 17, 2020 has issued a directive that in an environment of heightened uncertainty caused by COVID-19, it is important that banks conserve capital to retain their capacity to support the economy and absorb losses and RBI has accordingly decided that all banks shall not make any further dividend payouts from the profits pertaining to the financial year ended March 31, 2020 until further instructions. This restriction shall be reassessed by the Reserve

Bank based on the financial results of banks for the quarter ending September 30, 2020.

The aforesaid RBI directive is likely to effect the dividend income of the Company for the FY 20-21 which it would have received had this directive was not in force.

18. THE CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO, IN THE MANNER AS PRESCRIBED IN RULE 8(3) OF THE COMPANIES (ACCOUNTS) RULES, 2014

Conservation of energy and technology absorption

Since the Company does not own any manufacturing facility, the particulars relating to conservation of energy and technology absorption are not applicable.

The Foreign Exchange earnings and outgo

There was no Foreign Exchange inflow and outflow during the year.

19. DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY

The Company is a non-operating holding Company and its main objects are to carry on the business of making investments in group company(ies) in the form of securities and providing guarantees etc. and to carry on financial activities, whether in India or outside, in the nature of investment in bank deposits, money market instruments (including money market mutual funds and liquid mutual funds), government securities, and to carry on such other activities as may be permitted and prescribed by the relevant statutory authorities for core investment companies from time to time.

As a Core Investment Company with its key investment in the bank, the Companys Board has an oversight function of USFB within the permitted ambit. USFB has a Risk Management Committee in place which consists of well experienced Directors from diverse background who bring in the best risk practices to the organisation and that the Committee of the bank reviews its risk management framework and verifies adherence to various risk parameters and compliances.

The Company is satisfied that its material listed subsidiary has a well-defined risk management strategy based on clear understanding of various risks, disciplined risk assessment and continuous monitoring.

The risk management Committee of the subsidiary approves and makes recommendations to its Board regarding all its risk-related responsibilities, including the review of major risk management and regulatory compliances.

The Company has a duly constituted Risk Management Committee of the Board and its terms of reference comprises of the following:

• To review its investment in its subsidiary and to evaluate overall risks faced by its subsidiary and help in mitigating the risks

• To oversee the risk management policies and procedures of its subsidiary

• As the listed holding Company of the Bank, to closely monitor the reputational risk of both entities and review the risk management plan and specifically oversee matters related to cyber security

• To do such other acts, deeds and things as may be directed by the Board and required to comply with the applicable laws.

The Company has in place an effective risk management policy which highlights the functions, implementation and the role of the committee and the board.

20. CORPORATE SOCIAL RESPONSIBILITY

The Corporate Social Responsibility (CSR programmes were started by the Company in the year 2010 much before it was made mandatory under the Companies Act, 2013.

During the year, the Company has continued its partnership with Parinaam Foundation and Piramal Foundation to undertake various community development programs, free healthcare and clean drinking water facility for and on behalf of the Company. Please refer the separate Section on Corporate Social Responsibility in the annual report for a detailed write up on the CSR activities of the Company during the year.

A brief outline of the Companys CSR policy is disclosed on our website at the below link- http://ujjivan.com/html/ujjivan_policies.php

The initiatives undertaken by the Company on CSR activities are set out in "Annexure 5" of the Boards Report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which forms part of the Boards Report.

21. BOARD EVALUATION

The board of directors has carried out an annual evaluation of its own performance, board committees and individual directors pursuant to the provisions of the Companies Act, 2013 and the corporate governance requirements as prescribed by Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 ("SEBI Listing Regulations") and SEBI guidance note on Board Evaluation.

Performance evaluation criteria for Board, Committees of the Board and Directors were adopted by the Nomination Committee of the Board at its meeting held on March 23, 2020. Evaluation formats and criteria of evaluation duly incorporated the criteria and other parameters as suggested by SEBI vide their guidance note on evaluation through their circular dated January 05, 2017.

The Board was evaluated comprehensively inter alia on the structure of the Board, competency, experience and qualifications of directors, diversity in board, regularity of the board meetings, effectiveness of board processes, independence of Board, information sharing and overall functioning of the Board.

The performance of the board was evaluated by the board after seeking inputs from all the directors on each of the above parameters of evaluation and the performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the above parameters of evaluation.

The Board committees were evaluated inter alia on the basis of their mandate, composition, attendance, functioning and independence.

Independent Directors Evaluation of Non-Independent Directors

In a separate meeting of independent directors held on March 23, 2020, performance of non-independent directors, performance of the board as a whole and performance of the chairman was evaluated, taking into account the views of executive directors and non-executive directors. The Independent Directors also assessed the quality, quantity and timeliness of flow of information between the Company management and the Board.

Performance of independent directors was evaluated by the entire board, excluding the independent director being evaluated and was satisfied that each of the independent director fulfills the independence criteria as specified in SEBI regulations and that they are independent of the management.

22. DETAILS AS REQUIRED UNDER RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014

(i) The financial summary or highlights

Particulars	Standalone*		Consolidated*
	FY 2019-20	FY 2018-19	FY 2019-20	FY 2018-19
Operating Income	11.00	22.00	2,859.76	1,952.98
Other Income	10.24	8.62	109.62	60.64
Total Income	21.24	30.62	2,969.38	2,013.62
Less: Operational Expenses
Personnel Expenses	3.16	1.63	734.71	540.53
Administrative Expenses	7.88	5.08	363.39	415.58
Finance Charges	-	-	1,114.92	727.03
Depreciation	0.02	0.02	165.99	60.62
Impairment Losses on Financial Instruments	-	-	174.46	65.76
Total Operational Expenses	11.06	6.73	2,553.47	1,809.52
Profit/(Loss) Before Tax	10.18	23.89	415.91	204.10
Less: Income tax	1.37	2.31	115.76	37.22
Less: Deferred tax	0.00*	0.00#	1.49	16.44
Profit/(Loss) After Tax	8.81	21.58	298.66	150.44

• as per Indian Accounting Standards (Ind-AS)

• represents the figures below the rounding norms

(ii) highlights of performance of subsidiaries, associates and joint venture companies and their contribution to the overall performance of the Company during the period Ujjivan Small Finance Bank Limited ("USFB") is a material listed subsidiary of the Company and is a small finance bank licensed by the RBI in terms of Section 22 of the Banking Regulation Act, 1949. USFB was incorporated on July 04, 2016 and commenced its operations as a small finance bank w.e.f. February 01, 2017. The Company as on March 31, 2020 holds 83.32% equity in USFB.

Key business and financial performance highlights of

the material listed subsidiary Ujjivan Small Finance

Bank Limited (USFB) (in I-GAAP):

USFB Business and Operational Highlights

• Gross advances at Rs 14,153 Crores as on March 31, 2020 as against Rs 11,049 Crores as on March 31, 2019; growth of 28%

• Disbursement during the FY 2019-20 was Rs 13,221 Crores as against Rs 11,089 Crores during FY 2018-19; an increase of 19%

• Total deposit of Rs 10,780 in March 2020 as against Rs 7,379 Crores in March 2019; growth of 46%; retail deposits grew 72% during the year from Rs 2,736 Crores in March 2019 to Rs 4,724 Crores in March 2020

• CASA increased by 86% from Rs 784 Crores in March 2019 to 1,459 Crores in March 2020

• 54.4 Lakhs customers in March 2020 as against 46.7 Lakhs customers in March 2019

• 43.5 Lakhs borrowers in March 2020 as against 40.2 Lakhs in March 2019

• CRAR of 28.8% in March 2020 as against 18.9% in March 2019

• Number of branches increased from 524 to 575 and number of ATMs increased from 385 to 475 during the year

• Total income increased from Rs 2,038 Crores in March 2019 to Rs 3,026 Crores in March 2020; an increase of 49%

• Net interest income grew from Rs 1,106 in March 2019 to 1,634 Crores in March 2020; an increase of 48%

• Profit after Tax (PAT) increased from Rs 199 Crores in March 2019 to Rs 350 Crores in March 2020; an increase of 76%

• Return on Asset (ROA) improved from 1.7% in FY 18-19 to 2.2% in FY 2019-20

• Return on Equity (ROE) increased from 11.5% in FY 2018-19 to 13.9% in FY 2019-20

• GNPA at 1.0% in March 2020 as against 0.9% in March 2019

• NNPA at 0.2% in March 2020 as against 0.3% in March 2019

• Cost to income ratio improved from 77% in FY 2018-19 to 67% in FY 2019-20

• Cost of fund improved from 8.5% in March 2019 to 8.2% in March 2020.

• Ranked 5th among Asias Best Companies to Work For 2020 by Great Places to Work

• Received the IBA Banking Technology Innovation • Won the award For Best Microfinance Bank by Asia Awards For The Best IT Risk Management and Cyber Money security Initiative

Key Ratios - USFB

Particulars	FY 19-20
Average Yield - across segment	20.0%
Cost of Funds (CoF)	8.2%
Net Interest Margin (NIM)	10.8%
Return on Assets (RoA)	2.2%
Return on Equity (RoE)	13.9%
Cost to income	67.0%
Capital Adequacy (CRAR)	28.8%

USFB contributes 99.3% of the consolidated total income of the Company

(iii) The change in the nature of business, if any

There is no change in the nature of the business of the Company during the FY 2019-20. The Company continues to be a Non-Deposit taking Systemically Important Core Investment Company (NBFC-ND-SI-CIC).

(iv) The details of directors or key managerial personnel who were appointed or have resigned during the year

Name	Designation	DIN	Date of Appointment/ Change/ Cessation	Reason
1. Mr. Narayan Anand	Non-Executive, Non-Independent	02110727	May 01,2019	Appointment
2. Mr. Amit Gupta	Non-Executive, Non-Independent	02282600	August 02, 2019	Cessation
3. Ms. Vandana Viswanathan	Non-Executive Independent	05192578	September 22, 2019	Cessation
4. Ms. Mona Kachhwaha	Non-Executive Independent	01856801	September 22, 2019	Appointment
5. Mr. Deepak Khetan	Chief Financial Officer (KMP)	-	August 02, 2019	Cessation
6. Mr. Barun Kumar Agarwal	Chief Financial Officer (KMP)	-	August 03, 2019	Appointment

(v) the names of companies which have become or ceased to be its Subsidiaries, joint ventures or associate companies during the year

None

(vi) Deposits from public

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

However, the subsidiary of the Company Ujjivan Small Finance Bank Limited which is a Small Finance Bank has outstanding deposits of Rs 10,780 Crores as on March 31,2020.

(vii) The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companys operations in future

None

(viii) The details in respect of adequacy of internal financial controls (IFC) with reference to the Financial Statements

In respect of internal financial control, the Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, the safeguarding of its assets, the timely prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

Further, the management regularly reviews the control for any possible changes and takes appropriate actions.

23. ESOP RELATED & OTHER DISCLOSURES

(i) Details of equity shares with differential rights

The Company has not issued any equity shares with differential rights during the year.

(ii) Details of sweat equity shares issued

The Company has not issued any sweat equity shares during the year.

(iii) Details of employee stock option scheme

The Company has established Employee Stock Option Plan (ESOP) for compensation to its employees, being ESOP 2006, ESOP 2007, ESOP 2008, ESOP 2010, MD-ESOP 2010 and ESOP 2015. For all ESOP Schemes, each option on exercise is eligible for one equity share on payment of exercise price.

ESOP 2006

The ESOP 2006 was for a total of 64,000 Equity Shares for all the eligible employees of the Company. As on March 31, 2020, out of the 64,000 options granted, 28,629 options has been exercised and 35,371 options were lapsed. All the 35,371 lapsed options have been added to the pool of ESOP 2015 with the approval of the shareholders at their meetings held on November 03, 2015 and June 27, 2018. As on March 31, 2020, there is no outstanding option left to be exercised under ESOP 2006.

ESOP 2007

The ESOP 2007 was for a total of 1,89,440 Equity Shares for all the eligible employees of the Company. As on March 31, 2020, out of the 1,89,440 options granted, 1,44,940 options has been exercised and 44,500 options lapsed. All the 44,500 lapsed options have been added to the pool of ESOP 2015 with the approval of the shareholders at their meetings held on November 03, 2015 and June 27, 2018. As on March 31, 2020, there is no outstanding option left to be exercised under ESOP 2007.

ESOP 2008

The ESOP 2008 was for a total of 3,96,680 Equity Shares for all the eligible employees of the Company. As on March 31, 2020, out of the 3,96,680 options granted, 2,42,550 options has been exercised and 1,54,130 options lapsed. All the 1,54,130 lapsed options have been added to the pool of ESOP 2015 with the approval of the shareholders at their meetings held on November 03, 2015 and June 27, 2018. As on March 31, 2020, there is no outstanding option left to be exercised under ESOP 2008.

ESOP 2010

The ESOP 2010 was for a total of 33,84,300 Equity shares for all the eligible employees of the Company. As on March 31, 2020, out of the 33,84,300 options granted, 17,62,273 options has been exercised and 16,22,027 options lapsed. Out of the 16,22,027 lapsed options,

15.63.769 options were added to the pool of ESOP 2015 with the approval of the shareholders at their meetings held on November 03, 2015 and June 27, 2018. As on March 31, 2020, there is no outstanding option left to be exercised under ESOP 2010.

MD-ESOP 2010

The MD-ESOP 2010 was for a total of 12,49,172 options. As on March 31, 2020, all the 12,49,172 granted options under MD-ESOP 2010 have been exercised. There is no outstanding option left to be exercised under MD-ESOP 2010.

ESOP 2015

The ESOP 2015 pool comprises of 65,79,899 options which includes the original pool of 47,82,129 options and

17.97.770 options added from the lapsed options of ESOP 2006, ESOP 2007, ESOP 2008 and ESOP 2010 with the approval of the shareholders at their meetings held on November 03, 2015 and June 27, 2018.

As on March 31, 2020, out of the 55,15,880 options granted, 7,53,314 options has been exercised, 13,56,718 options are lapsed, 21,40,503 vested options are unexercised and 12,65,345 options are yet to be vested. Out of the 13,56,718 options which are lapsed under ESOP 2015, 4,55,388 options were added back to the pool of ESOP 2015 with the approval of the shareholders at the AGM held on June 27, 2018.

The Board (including its authorised committee) has been authorised by the shareholders to include the lapsed/ cancelled options under its ESOP 2010 and ESOP 2015 back to the pool of ESOP 2015 and that the Board is hereby authorised to grant such added back options to its eligible employees (which includes the employees of its subsidiary).

The vesting period for the options granted under ESOP 2015 is for a period of three years as under:

Tranche	Year of Grant	Options Granted	Year 1	Year 2	Year 3
ESOP 2015 (Tranche 1)	2015	14,69,800	34%	33%	33%
ESOP 2015 (Tranche 2)*	2016	16,96,850	33%	33%	34%
ESOP 2015 (Tranche 3)	2018	23,37,670	34%	33%	33%
ESOP 2015 (Tranche 4)	2018	11,560	34%	33%	33%
Total		55,15,880

* Post IPO, options were granted subsequent to the ratification of the shareholders

No options were granted by the Company during the FY 19-20.

The ESOP 2015 is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (SEBI ESOP Regulations), the Companies Act, 2013, and is implemented in accordance with guidance notes issued by ICAI and the relevant accounting standards.

Revisions in the ESOP Schemes during the Year

None

ESOP Schemes Compliance Status

ESOP 2006, ESOP 2007, ESOP 2008, ESOP 2010 and MD-ESOP 2010 were adopted prior to the commencement of the Companies Act, 2013.

The ESOP 2015 is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (SEBI ESOP Regulations) and the Companies Act, 2013. The Company has received a certificate from the Statutory Auditors of the Company certifying that ESOP 2015 Scheme of the Company is being implemented in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and is in accordance with the resolutions passed by the Members of the Company at a general meeting.

The ESOP Schemes are implemented in accordance with guidance notes issued by ICAI and the relevant accounting standards.

The weighted average fair value of the share options granted during the financial year is Nil; for the FY 2018-19 it was Rs 132.18. Options were priced using Black and Scholes Model. Vested ESOPs can be exercised within three years from their corresponding dates of vesting. ESOPs vested can be exercised between dates of vesting and on or before option expiry date. The term of the option is assumed to be the sum of a) duration till vesting; and b) the midpoint of the remaining exercise period from date of vesting, in absence of historical exercise pattern. While the Company has been listed since 2016, the period of listing up to the Grant Dates is not commensurate with the expected term of the granted ESOPs. Accordingly, volatility of comparable companies has been considered for the purposes of valuation.

ESOP arrangement with subsidiary

With effect from February 1, 2017, the business undertaking of the Company was transferred to USFB and all the employees of the Company except few identified personnel have been transferred to USFB as part of the transfer of the business undertaking. This has

resulted in the transfer of options from the employees of the Company to the employees of USFB. As per Ind AS 102 Share-based Payment, stock options have to be fair valued on the grant date and expense has to recognised over the vesting period. Pursuant to management decision, Impact of Ind AS 102 on account of options granted to the employees of subsidiary is treated as deemed investment in subsidiary in the Companys books.

During the year, UFSB has approved an ESOP scheme and an Employee Share Purchase Scheme (ESPS) for employees of UFSB and its holding company, i.e., Ujjivan Financial Services Limited, being ESOP 2019 and ESPS 2019. Under ESOP 2019, total 4,73,240 options were granted to the employees of the Company to be vested over a period of 5 years and total 211,200 shares were purchased by the employees of the Company under ESPS 2019 scheme. As per Ind AS 102 Share-based Payment, the fair value cost of the options for the period expired out of the vesting period and shares purchased were recognised in the statement of profit and loss and reimbursed to the subsidiary entity, i.e., UFSB.

Administration of ESOP Schemes

The Governance, Nomination and Remuneration Committee of the Board administer the Employee Stock Option Schemes, formulated by the Company from time to time.

Mandatory ESOP Disclosures

Disclosures as required under Section 62 of the Companies Act, 2013 (to be read with Rule 12 of the Companies (Share Capital and Debenture) Rules, 2014, and SEBI ESOP Regulations:

Particulars	March 31, 2020
1. Number of options granted and outstanding at the beginning of the year (A)	43,91,861
2. Number of options granted during the year (B)	Nil
3. Number of options vested during the year	7,39,195
4. Number of options exercised during the year	4,36,529
5. Number of shares arising as a result of exercise of options (C)	4,36,529
6. Money realised during the year by exercise of options (in )	4,74,71,067
7. Number of options Forfeited/Expired during the year (D)	5,49,484
8. The exercise price of the outstanding options (in )	146.35, 417.15, 385.05 & 290.60
9. Number of options granted and in force at the end of year = (A)+(B)-(C)-(D)	34,05,848
10. Weighted average of remaining contractual life (years) at the year end	1.35
11. Variation of terms of the options	None

* Please refer to note 24 of the standalone financials for further details on ESOP data

Options Granted to Key Managerial Personnel (KMP) during the year

No option was granted to any of the KMP or to any other employee of the Company or its subsidiary (USFB) during the year.

However, USFB on August 08, 2019 has granted its stock options to the below KMPs of the Company to be vested in 5 years i.e. 20% vesting every year:

Employee Name	Designation	Options Granted	Exercise Price (in )
Mr. Ittira Davis	MD & CEO	2,82,176	35.00
Mr. Sanjeev Barnwal	CS and Compliance Officer	1,38,472	35.00
Mr. Barun Agarwal	Chief Financial Officer	25,082	35.00

Any other employee who receives a grant of options in any one year of options amounting to five percent or more of options granted during that year - - None

Identified employees who were granted options during any one year, equal to or exceeding one percent of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant.

- None

24. VIGIL MECHANISM

The Company in compliance with Section 177 of the Companies Act, 2013 has a duly constituted Audit Committee of the Board. The composition of the Audit Committee as at the end of the year is as under:

Sr. No. Directors	Designation
1. Mr. K. R. Ramamoorthy	Chairman (Independent Director)
2. Mr. Abhijit Sen	Independent Director
3. Ms. Mona Kachhwaha	Independent Director
4. Mr. Jayanta Basu	Non-Independent, Non-Executive

Please refer to the Section on Corporate Governance for further details on the Board Committees.

Further in compliance to Section 177 of the Companies Act, 2013 and Regulation 22 of SEBI Listing Regulations, the Company has established a Whistle-Blower policy/Vigil Mechanism for the directors and employees to report genuine concerns or grievances about unethical behaviour, actual or suspected fraud or violation of the Companys Code of Conduct or Ethics Policy. The Company has a vigil mechanism process wherein the employees are free to report violations of laws, rules, regulations or unethical conduct to the whistle and ethics officer of the Company. Further, this policy also specifically enables the employees of the Company and those of its subsidiary to report instances of any leak of unpublished price sensitive information by the employees of the Company and its subsidiary to any outsider which is not for legitimate business purposes. This is to ensure the compliance of SEBI (Prohibition of Insider Trading) Regulations, 2015 and Code of Conduct for Prevention of Insider Trading of the Company.

Name and Address of the Whistle and Ethics Officer

Mr. Sanjeev Barnwal - Company Secretary and

Compliance Officer

Ujjivan Financial Services Limited

Grape Garden, No. 27, 3rd A Cross, 18th Main,

6th Block, Bengaluru - 560 095, Karnataka

E-mail: sanjeev.barnwal@ujjivanfin.com

Protected Disclosure against the Whistle and Ethics Officer should be addressed to the MD & CEO of the Company and the Protected Disclosure against the MD & CEO of the Company should be addressed to the Chairman of the Audit Committee.

Name and Address of MD & CEO of the Company:

Mr. Ittira Davis

Ujjivan Financial Services Limited Grape Garden, No. 27, 3rd A Cross, 18th Main, 6th Block, Bengaluru - 560 095, Karnataka E-mail: ittira.davis@ujjivanfin.com

Name and Address of the Chairman (Audit Committee):

Mr. K. R. Ramamoorthy

D - 302, Mantri Gardens, Jayanagar, 1st Block, Bengaluru - 560 011, Karnataka E-mail: ram@bankconsult.co.in

The confidentiality of those reporting violations is maintained and they are not subjected to any discriminatory practice.

The Whistle-Blower policy of the Company is disclosed on our website at the below link- http://ujjivan.com/html/ujjivan_policies.php

25. REMUNERATION DETAILS OF DIRECTORS, KMPS, EMPLOYEES

Particulars	Disclosures
1. The ratio of the remuneration of each Whole-time Director to the median remuneration of the employees of the Company for the financial year	MD& CEO: 4.66x
2. The percentage increase in remuneration of each director, Chief Financial	1KMP % increase in remuneration!
Officer, Chief Executive Officer, Company Secretary or Manager, if any,	Mr. Ittira Davis - MD & CEO 15%
in the financial year	Mr. Sanjeev Barnwal - CS 15%
	Mr. Barun Agarwal - CFO Nil* (designated as CFO w.e.f. August 03, 2019)
3. The percentage increase in the median remuneration of employees in the financial year	15% increase in the median remuneration of employees in the FY 2019-20.
4. The number of permanent employees on the rolls of company as on March 31,2020	5
5. Average percentile increase already made in the salaries of employees	The average increase in the salaries of employees
other than the managerial personnel in the last financial year and its	was 10.75% and the average increase in the
comparison with the percentile increase in the managerial remuneration	managerial remuneration during the last financial
and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration	year was 10.00%.
6. Affirmation that the remuneration is as per the remuneration policy of the Company	Yes

* Joined the Company on June 01, 2019

A statement showing the name of every employee of the Company other than disclosed above, who

a. if employed throughout the financial year, was in receipt of remuneration for that year which, in the aggregate, was not less than one Crores and two Lakhs rupees;

- None

b. if employed for a part of the financial year, was in receipt of remuneration for any part of that year, at a rate which, in the aggregate, was not less than eight Lakhs and fifty thousand rupees per month;

- None

c. if employed throughout the financial year or part thereof, was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the Company.

- None

Information as per Rule 5(2) of Chapter XIII, the Companies (Appointment and Remuneration of Managerial

Personnel) Rules, 2014

The names of the top ten employees in terms of remuneration drawn:

The Company as on March 31, 2020 had only the following 5 (five) employees:

Sr. : Employee Name	Ittira Davis	Sanjeev Barnwal	Barun Agarwal	Shashidhara S.	Aakash Jaiswal
i. Designation	MD & CEO	Company Secretary and Compliance	Chief Financial Officer (w.e.f.	Assistant Company Secretary	Assistant Manager - Investor
		Officer	August 03, 2019)		Relations
ii. Remuneration received	1,18,62,000	53,63,528	38,33,330 **	12,56,905	9,68,294
iii. Nature of employment, whether contractual or otherwise;	Permanent	Permanent	Permanent	Permanent	Permanent
iv. Qualifications and	MBA (IIM	CS, LLB, DBM	Chartered	CS, LLB, M.Com	MBA (Finance)
experience of the	Ahmedabad)	16+ years	Accountant	12+ years	3 years
employee	37+ years experience	experience	12+ years experience	experience	experience
v. Date of commencement of employment	July 01,2018	August 12, 2014	June 01,2019	November 01,2017	May 20, 2019
vi. The age of such employee	65	39	35	35	29
vii. The last employment held by such employee before joining the Company	Ujjivan Small Finance Bank Limited	SMC Capitals Limited	S. R. Batliboi & Associates LLP	GMR OSE Hungund Hospet Highways Private Limited	State Bank of India
viii. The percentage of equity shares held by the employee in the Company	0.03%*	Negligible	Nil	Nil	Nil
ix. Whether any such employee is a relative of any director or manager of the Company	No.	No	No	No	No

*as a second holder with his wife Ms. Anna Ittira Davis **Remuneration is from the date of his employment on June 01, 2019

Compliance of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has only 5 employees as on March 31, 2020 and the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 is not applicable. However, the Company has a policy for prevention of sexual harassment at workplace.

Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

a. Number of complaints filed during the year	: Nil
b. Number of complaint dismissed during the year	: Nil
c. Number of complaint pending as on end of the financial year	: Nil

GREEN INITIATIVES

Electronic copies of the Annual Report for the FY 2019-20 and the Notice of the 16th AGM are being sent to all the members whose email addresses are registered with the Company / Depository Participants. As per the relaxation given by SEBI on account of COVID-19 situation, physical copies of the Annual Report are not being sent to members who have not registered their e-mail address with their depositories. We request all the shareholders who have not updated their e-mail addresses to update the same with their respective Depository Participants (DPs) or communicate their e-mail address to the Registrar and Share Transfer Agent i.e. KFin Technologies Private Limited or to the Company so that future communications can be sent to shareholders in electronic mode.

ACKNOWLEDGEMENT

Your Directors wishes to gratefully acknowledge the assistance and guidance received from the RBI, ROC, Investors, Banks, Auditors, Lawyers, Accountants, Vendors, Partner NGOs, Institutions and Foundations and Government Authorities and all our well-wishers. The Board also wishes to place on record their warm appreciation for the creative and dedicated efforts of staff at all levels.

	For and on behalf of the Board of Directors
K.R. Ramamoorthy	Ittira Davis
Chairperson	Managing Director & Chief Executive Officer
DIN:00058467	DIN: 06442816
Date: May 27, 2020
Place: Bengaluru