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