Dear Shareholders,
I am delighted to present IDFC FIRST Bank's Integrated Annual
Report for 2023-24.
In 2023, the global economy demonstrated resilience through multiple
headwinds including geopolitical tensions and monetary tightening. It registered a growth
of 3.2%, higher than earlier estimations. The IMF (International Monetary Fund) expects
the world economy to grow 3.2% for 2024 as well as 2025. Inflation is expected to decline
to 9% in 2024 and 4.5% in 2025. The war in Ukraine, conflict in the Middle East, Red Sea
disturbances remain risks which could disrupt trade flows, negatively impacting inflation.
The latest volatility in markets will require careful navigation of systemic risks.
Amid an uncertain global environment, India registered 8.2% growth
during FY24, emerging as the fastest-growing major economy in the world once again, driven
by continued public capital spending, steady consumption and robust manufacturing and
services sector growth. Retail inflation has slowed down, with March 2024 reading at
4.82%, a 10-month low. RBI has now held its policy rate steady at 6.5%, for over a year
and maintained its "withdrawal of accommodation stance".
Despite a higher interest rate environment, bank credit expanded at
16.3%, the highest in a decade. This strong lending appetite has been backed by strong
balance sheets and all-time low NPAs, thanks to regulatory and policy changes. Our
government is expected to continue growth- oriented policies. RBI expects the Indian
economy to grow 7.2% in FY25. India's strong macroeconomic environment provides a
favourable tailwind to your Bank's growth and profitability ambitions.
Advancing on our ESG commitments
I wrote to you last year on our commitment to the highest ESG
standards. I am happy to report that, in the year gone by, we have made significant
progress in our ESG initiatives.
In FY24, we have worked on execution of our ESG goals and targets,
identified a climate action roadmap, and baselined our Greenhouse Gas (GHG) emissions
(including financed emissions for select portfolios). Further, we also progressed on
achieving green certification for our large offices, created awareness among our
employees, and continued to create societal impact through our social outreach activities
under our CSR programmes. As a Bank, we are strongly focused on inclusive and sustainable
finance and continue to operate in deep rural geographies serving the financial needs of
this population. Going forward, we expect to accelerate this focus, including a strong
emphasis on green financing. We have created a culture of regular measurement and
benchmarking of our progress against best-in-class institutions.
I am glad to report that in FY24, the Bank has improved on its key ESG
ratings, including its score in the Corporate Sustainability Assessment (CSA) by S&P,
and ESG Risk Rating by Sustainalytics. In October 2023, the Bank was also accorded the
coveted Golden Peacock Award for ESG (National), a testimony of its ongoing efforts on the
ESG front, which serves as an inspiration for the Bank to do more in this regard.
We realise that as a financial institution, we can play a significant
role in accelerating positive impact across environmental and social aspects. India as a
country has committed to becoming Net Carbon Zero by 2070, and the government is taking
significant steps through policies and programmes to support a fair transition. In fact,
by 2030, India has committed to reduce its emissions intensity by 45%. This will require
sustained efforts from policymakers, businesses, financial institutions and communities
alike. This is further supported and encouraged by the Reserve Bank of India (RBI) and
several schemes of the Government of India. As a Bank, we are aligned to this opportunity,
and we look forward to finance this transition with innovative models and products.
You can read more details of the Bank's ESG strategy, initiatives,
highlights, goals, and performance in this Report.
Continuing focus on Risk Management
IDFC FIRST Bank maintains a robust operational risk management
framework that emphasises the proactive identification and mitigation of risks across its
operations. A strong risk culture is designed to reinforce the Bank's risk resilience
through a holistic approach to management of risk and return and effective management of
risk capital. This approach helps maintain a careful balance between risk and reward,
aiming to protect the interests of all our stakeholders.
Creating an empowered and motivated team
IDFC First Bank's vision to be a strong and sustainable financial
institution is anchored on a foundation of empowered employees and engaged stakeholders.
Your Bank recognises that its employees are among its most valuable assets and strives to
create a strong value system which empowers them to deliver world-class service with a
human touch powered by the latest technology.
On behalf of the Board of Directors, I assure you that all of us on the
Board of your Bank are very focused on the highest standards of corporate governance. We
have created and constantly nurture an environment where all Board members participate in
free and frank deliberations. As the Chairperson of the Board, it is my constant endeavour
to encourage dialogue and ensure robust discussions around multiple viewpoints from the
Board and the Management Team.
We are happy to report that your management team is transparent in
sharing all relevant information with us. In the Board Committee meetings, we invite
leaders from two or three levels down to present and talk to us in a free and frank
atmosphere. This gives us visibility to the talent pool of your Bank and also enables us
to hear of innovative initiatives, successes, and challenges across multiple levels in the
organisation.
We constantly review our understanding of the dynamic financial
landscape and evolving customer needs and are committed to establishing your Bank as a
trusted partner for our customers and other stakeholders. Our diverse expertise and
experiences fuel forward-looking discussions, leading to informed decisions that can drive
sustainable growth and value creation for all stakeholders. Through collective wisdom and
strategic decision-making, we are guiding the Bank towards a future of excellence. We have
inculcated a culture of respect for all control functions at the Bank; I am happy to share
that your MD and CEO and senior management are proactive, with a long-term perspective and
passionate about customer service.
I extend my heartfelt gratitude to each and every one of our
stakeholders. We are particularly fortunate to have very enlightened regulators, and I
take this opportunity to thank them for their continued guidance throughout our journey.
As the Bank embarks on the path ahead, we remain committed to delivering excellence and
upholding the highest standards of corporate governance. Together, let us build a future
that is prosperous, sustainable, and inclusive for all our stakeholders and the society in
which we operate.
Yours Sincerely,
Sanjeeb Chaudhuri
Chairman