IDBI Bank Ltd

Directors' Report

Your Bank's Board of Directors are pleased to present the Report on the Bank's business and operations for the financial year ended March 31, 2025.

The global economic activity remained resilient in 2024, notwithstanding persistent geopolitical uncertainties and intermittent financial market volatility. As opposed to the synchronised tightening of monetary policy stance to counter multi-decadal high inflation in the preceding years, the central banks commenced their policy normalisation in 2023 and 2024. However, the pace of easing has been divergent across economies as central banks responded to their own evolving growth-inflation dynamics. Against this backdrop, India continued to be the fastest growing major economy for the fourth consecutive year and registered a growth of 6.5% in FY 2024-25. The overall growth, notwithstanding a deceleration on an annualised basis, remained relatively healthy, underscoring the robustness of India's macroeconomic fundamentals. The country's resilience and inherent strength that allows it to maintain healthy growth momentum even in uncertain business environment, highlights its role as a key driver of global growth even going forward. During the year, overall domestic growth was supported by factors such as revival in investment climate, improvement in domestic demand, sustained bank credit growth, higher capacity utilisation, healthy balance sheet of banks and Government's thrust on infrastructure spending.

The domestic financial market, as opposed to its global counterparts, remained relatively stable and resilient underpinned by strong macroeconomic fundamentals and healthy balance sheets of banks. Factors such as strong Profit ability, improving asset quality and adequate capital and liquidity buffers bolstered the soundness of the banking sector. This aided banks in catering to the expanding credit demand in the economy. During the year, the Reserve Bank of India (RBI) reduced the key policy rates by 25 basis points in its bi-monthly monetary policy review in February 2025. Factors such as declining inflation, a favourable inflation outlook and continued transmission of past monetary policy actions provided the RBI with necessary headroom to reduce the key policy rates after keeping it unchanged for 11 consecutive reviews. Following this, the RBI reduced the key policy rates by another 25 basis points in its bi-monthly monetary policy review in April 2025, marking 2nd consecutive rate cut. Going forward, the reduction in policy rate is expected to lower borrowing costs, which, along with other favourable factors, is likely to fuel credit and investment demand, thereby supporting the overall pace of economic activities.

FINANCIAL HIGHLIGHTS

As on March 31, 2025, your Bank's Aggregate Deposits and Advances touchedRs.3,10,294 crore andRs.2,18,399 crore, respectively. Your Bank's business highlights for the period under review are presented in the following table:

Key Financials

During the year under review, your Bank's Total Income amounted toRs.33,826 crore, comprising Interest Income of Rs.28,902 crore and Other Income ofRs.4,924 crore. Interest Expenses stood atRs.14,276 crore and Operational Expenses atRs.8,472 crore, accounting for Total Expenditure (excluding provisions and contingencies) ofRs.22,748 crore.

The increase in Other Income & Net Interest Income (NII) and reduction in provisions (excluding tax expenses) enabled the Bank to earn a Net Profit ofRs.7,515 crore during FY 2024-25.

While the Earnings per Share (EPS) during the year was Rs.6.99, the Book Value per Share (excluding intangible assets and Deferred Tax Asset (DTA) stood atRs.40.58 as on March 31, 2025. The Board of Directors have recommended a dividend ofRs.2.1 per Equity Share of face value ofRs.10 each of the Bank for the financial year ended March 31, 2025, subject to approval of the shareholders at the Annual General Meeting.

REPORT ON THE PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARIES AND JOINT VENTURE INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENT AS ON MARCH 31, 2025

Note : None of the above subsidiaries have any subsidiary

# The Financials of two associates Viz., North Eastern Development Finance Corporation Limited (25%)and Pondicherry Industrial Promotion Development and Investment Corporation Limited (21.14%) are not considered for consolidation on account of non-receipt of Financial Statements for FY 2025 & in case of 2 associates National Securities Depository Limited (26.10%) and Biotech Consortium India Limited (27.93%) the financials has been taken up to December 2024 and March 2025 respectively, impact of which on the Consolidated Financial Statements is not material. In case of an associate Pondicherry Industrial Promotion Development and Investment Corporation Limited, the bank has not received any financial statements & transactions details from the compnay hence information not consolidated in above. The investment in the said company has been written down to Rupee One.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING FINANCIAL POSITION OF IDBI BANK WHICH HAVE OCCURRED BETWEEN THE END OF FINANCIAL YEAR AND THE DATE OF BOARD REPORT

There were no material changes and commitments affecting the financial position of the Bank, which occurred between the end of the financial year, i.e. March 31, 2025 and the date of the Directors' Report.

THE DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

According to Section 143(3) (i) of the Companies Act 2013, the report of the Statutory Auditors should state whether the Bank has adequate Internal Financial Controls (IFCs) system in place and the operating effectiveness of such controls, in the context of the financial statements. The IFCs are as referred to in Section 143(3) (i) of the Companies Act, relating to Internal Financial Controls over Financial Reporting (IFCO-FR). The Bank's Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Bank considering the essential components of internal control stated in the Guidance Note on Audit of IFCO-FR issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of the Bank's business, including adherence to the Bank's policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information, as required under the Companies Act, 2013, the Banking Regulation Act, 1949 and the guidelines issued by the RBI. The Bank has put in place an IFCO-FR Framework for evaluation of the existing internal financial controls system and appointed a consultant for validating the compliances with respect to the documentation, certification, reporting process of the controls across all business verticals/ departments and ascertaining the adequacy and effectiveness of the controls in the Bank in all material respects with respect to financial reporting. During FY 2024-25, after carrying out the testing and validation of all the underlying processes as per the Bank's IFCO-FR framework, the consultant has submitted the Internal Compliance Certificate for the quarters ended June 2024, September 2024, December 2024 and March 2025.

DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATE PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS, ALONG WITH A DETAILED EXPLANATION THEREOF

CAPITAL ADEQUACY

In adherence to the Pillar 1 guidelines of the RBI under Basel III framework, your Bank computes regulatory capital requirement for credit, market and operational risks on a monthly basis. In addition, banks in India are mandated to maintain the Capital Conservation Buffer (CCB) of 2.50%. Your Bank also keeps a close watch on the movement of Capital to Risk (Weighted) Assets Ratio (CRAR) at monthly periodicity. Your Bank's ‘Total Capital + CCB' ratio was 25.05% as on March 31, 2025 against the regulatory requirement of 11.50%. Similarly, your Bank's ‘Common Equity Tier 1 (CET1) + CCB' ratio was 23.51% as against the regulatory requirement of 8.00%. Your Bank's ‘Tier 1 + CCB' ratio stood at 23.51% as on March 31, 2025 as against the regulatory requirement of 9.50%. Your Bank's Leverage Ratio as on March 31, 2025 was 9.59% against the minimum regulatory requirement of 3.50%.

BUSINESS STRATEGY

Your Bank continued to pursue its strategic objectives of enhancing Profit ability, augmenting its business growth, strengthening its balance sheet, maintaining healthy capital base and improving its operational efficiency. Your Bank has been leveraging its physical and digital infrastructure to expand its reach to ensure easy and convenient access to banking and financial services to its customers. Your Bank has been rolling out deposits and loan products with upgraded features to cater to the requirements of its diverse customer base and in alignment with changing business landscape and evolving consumer preferences. Your Bank continued to focus on augmenting its low-cost deposits base, viz. Current Account & Savings Account (CASA) deposits, especially under the personal savings segment, which is less volatile. The granular low-cost deposit base has also been supplemented by building retail term deposits as well as bulk deposits. In compliance with its objective of driving its business growth through granular and well-diversified asset portfolio, your Bank has been focusing on augmenting its retail asset portfolio by lending to Retail, Agriculture & MSME (RAM) segment. Furthermore, your Bank has also been strategically expanding its corporate loan book with an optimal mix of fund and non-fund exposures. Additionally, the Bank has also set up a Project Appraisal Cell for taking up appraisals of greenfield and brownfield projects of corporate borrowers. While there has been an increased focus on expanding its loan book, your Bank has also placed special emphasis on continuous monitoring for early identification of stress and deployed remedial measures to maintain its asset health. Furthermore, your Bank also strived to control fresh slippages as also focussed on recovery and upgradation measures to reduce delinquency in its asset portfolio. The concerted efforts undertaken by your Bank to maintain its asset quality aided in improving its bottom line. Your Bank, in an effort to further its customer-centric approach, strived to provide seamless multi-channel experience by continuing to expand its physical branch network and broad-base its digital functionalities to provide 24x7 banking services. Furthermore, your Bank also digitalised its internal processes and customer-facing interfaces to improve its employee productivity while enhancing customer convenience. In alignment with the changing business landscape and evolving customer requirements and preference, your Bank periodically reviews and updates its bouquet of products and services and also introduces new products and services offering to remain relevant. Your Bank remains committed to sustain its Profit able growth momentum. Towards this end, your Bank endeavoured to instil a strong risk and compliance culture at the organisational level to inculcate adoption of best practices among the entire workforce. The Bank remains committed to the highest corporate governance standards, promoting ethics, transparency and fairness to maintain stakeholder trust and to be the most trusted and preferred bank.

KEY BUSINESS INITIATIVES

Your Bank continued to keep ‘customer-centricity' at the core of its business strategy by offering products and banking solutions that are aligned with its customers' needs and requirements. Your Bank has been leveraging its scalable hybrid delivery model, viz. its physical touchpoints of 2,128 branches, including fixed Business Correspondent outlets also known as ‘IDBI Sameep' and 3,120 ATMs and its digital channels to connect with its pan-India customers better. Your Bank, in alignment with its business plan of expanding its reach, opened 100 branches in FY 2024-25. Your Bank aims to provide a secure, seamless and convenient digital banking platform to its customers by deploying the best digital experience, technology standards, processes and procedures. Your Bank provides a wide range of services on a round-the-clock basis through a range of digital channels such as Mobile Banking, Internet Banking, WhatsApp Banking, Uni_ed Payments Interface (UPI), Debit Cards, Credit Cards, Point of Sale (PoS) terminals (both physical and digital), Internet Payment Gateway, Automated Teller Machines (ATMs), etc. Your Bank, while promoting use of various digital channels, is also making concerted efforts to increase awareness among its customers regarding safe and secure banking practices while transacting through digital channels to safeguard their interests and hard-earned financial assets.

Your Bank has been augmenting its retail business portfolio in line with its intended positioning as a retail-centric bank. The Bank offers a wide-range of products and services ranging from deposit products, loan products and card products to its retail and NRI customer base. Your Bank, in tandem with the changing customer preferences, has been _ne-tuning its existing products and processes to maintain its competitive edge. Your Bank also offers various value-added products and services to its customers, keeping in view their risk profile, financial goals and investment objectives. The entire gamut of traditional banking products and services is supplemented by a range of new and customised banking and financial solutions to cater to its diverse customer base. Furthermore, as a customer-first approach your Bank has been taking measures such as leveraging its state-of-the-art technology under the Video Account Opening (VAO) platform for digitising the customer onboarding journeys.

Your Bank has also been contributing significantly to priority sectors by providing funding options to its Agriculture and Micro, Small and Medium Enterprises (MSME) customers. To extend its reach, your Bank has been extending banking services to the unserved and underserved areas through its Corporate Business Correspondent (BC)/ Business Facilitator (BF) network. Your Bank has also been proactive in furthering the objective of financial inclusion by ensuring access to financial products and services to the vulnerable sections of the society at an affordable cost in a fair and transparent manner. Furthermore, your Bank has been conducting various outreach programmes to spread awareness among people about various banking products, thereby enhancing financial literary.

Your Bank has been targeting a calibrated growth in its corporate loan book by focussing on fresh acquisition of well-rated corporate accounts. Furthermore, your Bank has been targeting growth in interest and fee-based income through focussed improvement in utilisation of fund-based and non-fund-based sanctioned limits and also cross-selling of third-party products.

Your Bank, while augmenting its loan book, is also committed to maintaining the highest standards of asset quality by continuously striving to keep delinquencies within acceptable limits and ensuring that its Non-Performing Assets (NPAs), write-offs, and provisions are minimised. Towards this end, your Bank has been focussing on enhancing its credit monitoring mechanisms by adopting new technologies and undertaking pre-emptive measures to ensure minimisation of fresh slippages. Your Bank has been endeavouring to upgrade as well as implement timely resolution for its stressed assets as well its NPA cases. Your Bank is also strengthening its collection mechanism to maintain its asset quality and mitigate credit risks. Your Bank's business initiatives are supplemented by various measures such as strengthening and upgrading its IT infrastructure, adopting technological innovation, scaling up investment in technology, equipping itself with latest analytical tools, bringing about process improvement, among others, to improve its operational efficiency and enhance its business potential. These initiatives have aided the Bank in offering secure, seamless and convenient banking platform to its customers, thereby enhancing customer experience and fostering sustained business growth. The detailed description of the Bank's initiatives undertaken during the year is outlined in the Management Discussion and Analysis section of the Annual Report.

IMPACT OF COVID-19 PANDEMIC ON THE BANK'S BUSINESS

The COVID-19 virus, a global pandemic, affected the world's economy over the last couple of years. The extent to which COVID-19 pandemic will further impact the Bank's operations will depend on ongoing as well as future developments. The management of the Bank is closely monitoring the developments in this regard.

BOARD OF DIRECTORS

Your Bank's Board of Directors is broad-based and its constitution is governed by the provisions of the Banking Regulation Act, 1949, guidelines issued by the Reserve Bank of India (RBI), the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI (LODR) Regulations) and the Articles of Association of the Bank. The Board functions directly as well as through various Board-level committees constituted to provide focussed governance in the important functional areas of the Bank. As per the Articles of Association, the Board of Directors shall not be less than three and more than _fteen members consisting of a Chairman, a Managing Director & Chief Executive Officer (MD & CEO), two Deputy Managing Directors (DMDs), two Nominee Directors of Life Insurance Corporation of India (LIC), two Nominee Directors of Government of India (GoI) and eight non-rotational Independent Directors (including the Chairman and one Woman Independent Director).

As on March 31, 2025, the Board comprised _fteen Directors, viz., Shri T. N. Manoharan, Independent Director and Part-Time Chairman, Shri Rakesh Sharma, MD & CEO, Shri Jayakumar S. Pillai, DMD and Shri Sumit Phakka, DMD, as Whole Time Directors; Shri Manoj Sahay and Shri Sushil Kumar Singh, Government Nominee Directors and Shri Sat Pal Bhanoo and Shri Raj Kumar, LIC Nominee Directors, as Non-Executive Directors; Shri Bhuwanchandra B. Joshi, Shri Samaresh Parida, Shri N. Jambunathan, Shri Deepak Singhal, Shri Sanjay Gokuldas Kallapur, Smt. P. V. Bharathi and Shri Ajay Prakash Sawhney as Independent Directors. The strength of 15 (_fteen) Directors on the Board as on March 31, 2025 meets the requirement providedunderArticle114(a)oftheArticlesofAssociationofthe Bank.

APEX COMMITTEES

The Board has a total of twelve committees to oversee various functional areas of your Bank's business and operations. The Board committees include Audit Committee of the Board, CSR & ESG Committee, Customer Service Committee, Executive Committee, HR Steering Committee, Information Technology Strategy Committee, Nomination & Remuneration Committee, Recovery Review Committee, Risk Management Committee, Special Committee of the Board for Monitoring & Follow-up of cases of Frauds, Stakeholders' Relationship Committee and Wilful Defaulters Review Committee-I.

CORPORATE GOVERNANCE

Your Bank is committed to adopting the best Corporate Governance practices. It believes that effective corporate governance is not just a requirement for regulatory compliance, but also a facilitator for excellence in governance including enhancement of stakeholders' value. The details of your Bank's corporate governance practices are given in this Annual Report as a separate section under the Corporate Governance Report.

BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT

The Securities and Exchange Board of India (SEBI) introduced mandatory reporting of the Business Responsibility and Sustainability Report (BRSR) for top 1,000 listed entities in India in May 2021. The SEBI also mandated assurance on select metrics in the BRSR to further enhance the quality and comparability of Environment, Social and Governance (ESG) disclosures. The BRSR is intended towards having quantitative and standardised disclosures on ESG parameters to enable comparability across companies, sectors and time. Accordingly, the Bank's BRSR for FY 2024-25 has been hosted on the website of the Bank (https://www.idbibank.in/ business-responsibility-and-sustainability-report.aspx).

STATEMENT UNDER SECTION 134 OF THE COMPANIES ACT, 2013 READ WITH RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in an Annexure and forms part of this report. In terms of Section 136(1) of the Companies Act, 2013, the Annual Report and the financial statements are being sent to the Members excluding the aforesaid Annexure. The Annexure is available for inspection and any member or shareholder interested in obtaining a copy of the Annexure may write to the Company Secretary of the Bank at idbiequity@idbi.co.in.

a) Conservation of Energy

The Bank has been undertaking several initiatives towards conservation of energy. Various premises of your Bank have been provided with energy efficient light fixtures to save power consumption. The Bank has installed lighting sensors in various cabins for automatic switching–off of the lights when the cabin is unoccupied. The Bank, wherever feasible, promotes use of day light in branches and offices to conserve electricity. The Bank is sensitising its employees to switch-off all electrical gadgets, including photocopier, televisions, printer, shredding machines, etc. when not in use. The Bank is also advising all its branches and offices to operate the Air Conditioners (ACs) at 25?- 26? centigrade. Furthermore, the package AC units have been replaced with energy efficient AC units at the Bank's Head Office in Mumbai. The Bank has also installed inverter type/ Variable Refrigerant Flow (VRF) energy efficient ACs in some of its newly opened branches and Zonal Offices, depending on feasibility. The Bank is also maintaining Power Factor (PF) close to unity through Automatic Power Factor Correction (APFC) panel in the Zonal Offices and some branches. The Bank has installed solar power plants of 30 kilowatt peak (kWp) and 10 kWp, respectively, at its Corporate Park office in Chembur, Mumbai and its Bhubaneshwar Zonal Office, respectively. The Bank is also commissioning a 100 Kwp solar power plant at its staff quarters in Basara, Hyderabad. Furthermore, a 40 Kwp solar power plant is being installed at the Bank's Head

Office, Mumbai. The Bank has identified 18 locations for installation of solar power plant in the Bank's owned properties on a pan-India basis. The Bank, in order to reduce its carbon emissions, has been refurbishing and reusing its old furniture. In order to conserve water, the Bank has been using water treated in the Sewage Treatment Plant at three locations, viz. its Head Office in Mumbai., office in Belapur and its training college in Hyderabad, for gardening and Air Conditioning (AC) condenser. The Bank has been taking proactive measures to carry out all electrical repairs in a timely manner to minimise energy loss. Further, preventive maintenance also is carried out periodically as per schedule for AC systems to minimise loss. In order to reduce losses in the electrical installations, capacitor banks have been upgraded at the Bank's office at Belapur, Navi Mumbai. All these initiatives undertaken by the Bank have contributed towards conservation of energy.

b) Technology Absorption

Your Bank has been proactively evaluating and adopting the latest technology-based innovations which have the potential to empower its business functions, to enrich its customer experience and to optimise its readiness towards opportunities and challenges of the future. During the year, your Bank has successfully commissioned the Central Bank Digital Currency (CBDC). This product is developed on containerised platform which provides the Bank with the flexibility to scale the product on demand. The product also leverages the Blockchain technology for end-to-end visibility, traceability and monitoring of digital transactions. Your Bank has also on-boarded two public Cloud Service Providers (CSP) for cloud adoption, enabling it to leverage on the benefits of manageability and scalability of public cloud. Further, the Bank has completed infrastructure refresh, which includes servers, storages and network, to handle business growth through higher system capabilities with Secured and Redundant Architecture.

Your Bank has envisioned to further strengthen its cyber security posture by implementation of Extended Detection and Response (XDR) and Identity and Access Management solutions, which unify and extend detection and response capabilities across multiple security layers, including endpoints, identity, network, cloud and mobile. It also provides capability to the Bank to centrally control and calibrate the access to its applications by its internal and external stakeholders. These solutions are complemented by the Zero Trust

Network Architecture (ZTNA) and Virtual Desktop Interface (VDI) solutions to support secured access for work from anywhere, which the Bank has implemented during the year. Your Bank has also implemented Transparent Data Encryption (TDE) for Personally Identifiable Information (PII) within the Core Banking System (CBS) database, which significantly enhances data security, ensures regulatory compliance and streamlines encryption management processes. Your Bank Data Centre has been compliant with Payment Card Industry Data Security Standard (PCI DSS), which further enhances the payment data security. Your Bank has also carried out Vendor Risk Assessment, to understand and equip itself in order to mitigate/ respond to indirect impact on the Bank due to risks associated with its vendors. Details of other initiatives taken in the Information Technology ecosphere are provided in the Management Discussion and Analysis section of this Annual Report. c) Foreign Exchange Earnings and Outgo

During the year, the total foreign exchange earned by the Bank wasRs.850 crore (excluding foreign currency cash flows in derivatives and foreign currency exchange transactions) and the total foreign exchange outgo wasRs.654 crore towards the operating and capital expenditure requirements.

DIRECTORS' RESPONSIBILITY STATEMENT

The Board of Directors, hereby, declares and confirms that: a. In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b. The Directors had 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 Bank at the end of the financial year and of the Profit and loss of the Bank for that period; c. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities; d. The Directors had prepared the annual accounts on a going concern basis; e. The Directors had laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and f. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGEMENTS

Your Bank's Board of Directors are sincerely grateful to the Government of India, Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), all other statutory/ regulatory authorities and Life Insurance Corporation of India (LIC) for their valuable co-operation and guidance. The Board also acknowledges, with gratitude, the co-operation and support received from various State Governments and other banks/ financial institutions. The Board thanks various multilateral institutions and international banks/ institutions for their support. The Board takes this opportunity to put on record its deep sense of gratitude to its loyal shareholders and customers for extending their support during the year and looks forward to their continued association in the years ahead. The Board appreciates the sincere and devoted services rendered by its entire staff and highly values their commitment towards the Bank.