Satin Creditcare Network Ltd

This year's efforts were guided by a simple yet powerful theme: 'Growing with Grit. Conquering with Capability.' Throughout the year, we focused on expanding our services and refining our operations to better serve our clients. Our commitment to improving access to financial services in rural areas has helped us make a real difference in the lives of millions of households.

Dear Shareholders,

I am pleased to present the 5^th Integrated Annual Report of our Company. Over the past year, we have reinforced our commitment to excellence and dedication to fostering financial inclusion for women from low-income groups, empowering them to pursue their aspirations. This year has been characterized by more than just business growth; it has been defined by our determination to serve and succeed. We have significantly enhanced the quality of our services and expanded our reach to underserved communities across India, making a meaningful impact on countless lives.

This year's efforts were guided by a simple yet powerful theme: 'Growing with Grit. Conquering with Capability.' Throughout the year, we focused on expanding our services and refining our operations to better serve our clients. Our commitment to improving access to financial services in rural areas has helped us make a real difference in the lives of millions of households, demonstrating our role as a catalyst for positive change.

Macro-Economic Optimism

India witnessed a remarkable GDP growth rate estimated at 7.6% in

2023- 24, validating its resilience and potential. However, looking ahead, the outlook is cautious, with GDP growth expected to moderate to 6.8% in

2024- 25. This anticipated moderation in growth can be attributed to a range of factors that showcases the

country's commitment to balancing robust economic activity with necessary fiscal measures to ensure long-term stability. So far, strategic fiscal consolidations and higher interest rates have been pivotal in stabilizing the broader economic environment. While these measures may temper some immediate economic activities, they are crucial for sustainable growth. Moreover, a disciplined fiscal policy aimed at reducing the fiscal deficit to 5.1% of GDP has strategically positioned India to navigate the complexities of the global economic landscape effectively.

Despite these macro-economic adjustments, India's growth trajectory is favored by various factors that also increase our resilience. Increased consumer purchasing power, buoyed by lower inflation, lays a solid foundation for sustained economic activity. Additionally, strong agricultural outputs and a revival in private capital spending contribute significantly to our economic strength. Further bolstering this growth are government initiatives aimed at boosting rural incomes and enhancing infrastructure spending. These not only stimulate economic development but also foster inclusive growth, ensuring that the benefits of progress reach every corner of our nation. Together, these elements reinforce India's position as the world's fastest-growing major economy.

Microfinance Industry Trends

Microfinance institutions (MFIs) have been instrumental in promoting financial inclusion by extending credit to disadvantaged communities, thereby enhancing these macroeconomic strengths.

The sheer size of the market, characterized by financially excluded households, presents significant growth opportunities for MFIs. This year, we witnessed an unprecedented surge in credit demand from rural areas. This can be attributed to factors such as increased internet penetration, rising income levels, increased consumption of FMCG products and evolving lifestyles. Moreover, the optimistic economic forecast, including predictions of an above-normal monsoon, shall bode well for agricultural productivity and disposable income in rural regions. These favorable conditions augur positively for MFIs like us, primarily serving rural communities and catering to the needs of those at the bottom of the economic pyramid. As we continue to expand our presence in this burgeoning market, the potential for growth and impact is immense. This integrates deeply with the broader economic strategies of enhancing India's overall economic vigor.

Acknowledging the dynamism of 2023-24, the microfinance sector has demonstrated formidable growth and resilience. As of March 31,2024, the Gross Loan Portfolio

(GLP) surged to INR 4,33,697 Crores, marking a robust annual growth rate of 24.5% over the previous year. This significant expansion can be partly attributed to rural India's contribution, which, while constituting 47% of India's GDR drew only 8% of overall banking credit.

This is indicative of a vast market ripe for deeper credit penetration. Amidst regulatory evolutions and economic fluctuations, non-banking financial companies-microfinance institutions (NBFC-MFIs) have adeptly navigated the landscape, continuing to maintain their position as leaders in lending to economically weaker sections. They now hold a market share of 39.4%, outstripping banks and small finance banks (SFBs) which hold 33.2% and 17.1%, respectively, as of March 31,2024. This shift is indicative of the sector's agility and its critical role in financial inclusion.

Continuing this trajectory, the RBI has introduced several initiatives aimed at strengthening the sector. The adjustment of risk weights on unsecured lending has facilitated a healthier credit distribution. At the same time, strategic regulatory changes have improved asset quality and reduced credit costs across the board. Recent data indicates that disbursements have grown significantly, with NBFC-MFIs achieving faster growth rates than SFBs, highlighting their vital role in the financial ecosystem. The above-mentioned RBI reforms have streamlined the operational frameworks for MFIs, enhancing their capacity to serve the underbanked with greater efficiency and stability. These concerted efforts

ensure that the microfinance sector remains an important element of India's economic framework, poised for continued growth and broader societal impact.

Our Performance

During 2023-24, SCNL achieved robust financial and operational milestones, underscoring our commitment to strategic growth and spearheading financial inclusion.

Our consolidated Assets Under Management (AUM) escalated impressively to INR 11,850 Crores, marking a substantial 30% year- over-year (y-o-y) growth, driven by strong focus on new client additions and strategic expansion in new and existing geographies. This was further strengthened by our record yearly consolidated disbursement of INR 10,549 Crores, reflecting our deepened market penetration and enhanced service delivery.

The addition of 6.3 Lakhs new customers on a consolidated basis in 2023-24 reflects the growing trust in our services and our expanding reach across India. During the reporting year, we maintained a trend of healthy collection rates, while maintaining a superior asset quality. The on-book GNRA of the company stood at INR 198* Crores, representing 2.5%,* of the on-book portfolio. As of March 31,2024, we had an on-book provision of INR 164* Crores, i.e. 2.1% of our on-book portfolio, exceeding the RBI-mandated provision requirement of INR 148* Crores. Furthermore, the overall provision coverage ratio stood at 83%* as of March 31,2024, a significant increase from the 64%* recorded in March 31,2023. Despite

facing challenges in our Punjab portfolio, where local issues affected our exposure totalling INR 369 Crores, we managed a commendable collection efficiency of 97% in the region. This not only demonstrates our robust risk management capabilities, but also our ability to maintain operational continuity in the face of adversities.

Our financial prowess was further highlighted by a significant 43% increase in consolidated net interest income, reaching INR 1,340 Crores for 2023-24. This surge was supported by an improved Net Interest Margin (NIM) of 12.8%, highlighting the effectiveness of our financial management strategies.

It complements our solid financial performance, as evidenced by the significant leap in Profit After Tax (PAT) on a consolidated basis to INR 436 Crores. The profitability performance is a testament to our operational efficiencies and the effective implementation of strategic initiatives. Our financial foundation remains strong, supported by a well-capitalized balance sheet and a capital adequacy ratio of 27.7%*, ensuring our readiness for future expansions and market challenges.

Our subsidiaries, Satin Housing Finance Limited (SHFL) and Satin Finserv Limited (SFL), played a pivotal role in diversifying our financial services, contributing significantly to our overall success. SHFL's AUM, for instance, grew by 50% y-o-y to INR 756 Crores in 2023-24, whereas SFL's MSME book grew by 45% y-o-y in the same period. This emphasizes our effective cross-sector integration and the synergistic benefits of

During 2023-24, SCNL achieved robust financial and operational milestones, underscoring our commitment to strategic growth and spearheading financial inclusion.

We remain focused on deepening our impact by expanding into new territories and enhancing our presence in the existing ones. We are dedicated to extending our inclusive charter to empower more individuals from low-income groups to pursue their aspirations.

our extended financial offerings in housing and MSME finance. These achievements not only reflect our operational excellence but also highlight our commitment to fostering economic empowerment across varied financial sectors.

Moreover, the upgrade of our longterm credit rating to A (Stable) by ICRA from A- (Stable) reaffirms our strong risk management and sustained financial health. Both of our subsidiaries SHFL and SFL were assigned A- (stable) credit rating from ICRA. This year, we surpassed our financial targets across multiple key performance indicators, setting the stage for leveraging forthcoming opportunities. Our strategic initiatives are geared to sustain growth and enhance stakeholder value, ensuring that we continue to serve as a preferred financial ally for low-income households. This is particularly evident from the healthy proportion of first-cycle customers at 54%,*.

Going forward, our focus remains on optimizing operational efficiencies, enhancing customer value, and driving sustainable growth. The solid foundation of our diversified liability profile, continuous access to domestic and international funds, and robust capitalization endeavours underscore our preparedness for future challenges and opportunities. We have raised

15 rounds of capital since 2008, culminating in substantial liquidity. This makes us well-equipped to navigate the complexities of the financial sector while continuing our mission of financial inclusion and socioeconomic upliftment.

Expanding our Footprint

We have expanded our reach into two new states: Andhra Rradesh and Telangana. This is in alignment with our commitment to broaden our inclusive initiatives for individuals from low-income backgrounds. With this expansion, we are now present in 26 states and union territories, strengthening our nationwide footprint. The addition of 107 new branches across 421 districts has increased our branch infrastructure to 1,393, facilitating greater access to financial services for underserved communities.

We remain focused on deepening our impact by expanding into new territories and enhancing our presence in the existing ones. We are dedicated to extending our inclusive charter to empower more individuals from low-income groups to pursue their aspirations. As we continue to grow, our aim is to become the preferred partner for financial inclusion, serving the underserved segments of society across the nation.

Improved Underwriting Capability through Technology

At SCNL, we uphold the highest standards in customer onboarding processes. Adhering to stringent guidelines and protocols is fundamental to ensuring the authenticity of our customers' operations and maintaining transparency. We take pride in our robust internal processes, which have been instrumental in safeguarding against fraud, noncompliance, and other potential issues.

To address the evolving landscape, we have invested in cutting-edge technologies such as iris-based verification, geo-tagging, and e-signatures. These advancements enhance our underwriting capabilities and streamline customer onboarding, improving both security and efficiency. Our commitment to digitization has yielded tangible results over the past two years.

For example, we have significantly reduced our reliance on manual processes, decreasing the number of branch manual registers from twenty to just six. This shift has led to increased efficiency and streamlined operations across our organization. With an impressive uptime of 99.6%, we have established a strong

At SCNL, we have embraced a strategic and holistic approach to learning and development, recognizing that our employees are central to our success. Throughout the past year, we have implemented a range of innovative programs aimed at skill development, employee engagement, diversity, and inclusion.

technological advantage, positioning us for success in today's dynamic business landscape. By combining technological advancement with operational excellence, we are well-equipped to thrive in an ever- evolving digital world, paving the way for lasting growth and success.

People-the Driving Force of our Success

At SCNL, we have embraced a strategic and holistic approach to learning and development, recognizing that our employees are central to our success. Throughout the past year, we have implemented a range of innovative programs aimed at skill development, employee engagement, diversity, and inclusion. For the fifth consecutive year, SCNL has been recognized as a Great Place to Work. This recognition affirms our ongoing efforts to foster a positive and supportive work environment and our dedication to creating an inclusive and rewarding workplace culture.

Our talent development initiatives are carefully structured to identify and cultivate high-potential employees, preparing them for future leadership roles within the organization. Additionally, our role change program has been instrumental in optimizing manpower allocation, thus enhancing overall productivity. Moreover, our assessment development program plays a vital role in nurturing internal talent, facilitating their progression to the next level within the organization. This not only fosters a culture of growth and advancement but also ensures that our employees are continuously challenged and motivated to excel.

At SCNL, we deeply value the contributions of our employees and make it a priority to recognize and reward their efforts. Through these comprehensive learning and development initiatives, we aim to empower them to reach their full potential, driving both individual success and organizational growth.

Achievements

As mentioned earlier, this year has been a resounding success for us. We have been honored with numerous accolades recognizing our dedication to robust processes, compliance, innovation, and consistently strong performance. Among these achievements, the Company has been awarded the

‘Gold'

for Best API Project at the prestigious 2023 Treasury Management International Awards for Innovation and Excellence.

Received the

Highest 'AA'

ESG rating, and a Gold-Level certification

for our commitment to ESG practices and client protection principles

latest standard of ISO 27001:2022 for information security. This is a testament to our efforts in safeguarding data and ensuring the highest standards of security. We have also been awarded the 'Gold' for Best API Project at the prestigious 2023 Treasury Management International Awards for Innovation and Excellence.

Additionally, we are proud to have received the highest 'AA' ESG rating, and a Gold-Level certification for our commitment to client protection principles. We have won the Best

Innovative Financial Accessibility model for WASH at the ISC-FICCI sanitation award ceremony. This prestigious award highlights our innovative approach to enhancing financial accessibility in the sanitation sector. All this further solidifies our position as a leader in promoting financial inclusion and sustainable development.

These accolades serve as a testament to the hard work and dedication of our team members, whose unwavering commitment to excellence drives our continued success. We are honored to be recognized for our achievements and remain firm in our pursuit of excellence in all aspects of our operations.

Our Focus on Sustainability

Our sustainability focus shows our dedication to societal well-being. The Clean Energy Program exemplifies our commitment to tailored financial solutions addressing pressing environmental concerns. Moreover, we have been continuously evolving our risk framework, integrating

stringent policies, and refining processes to ensure resilience in the face of emerging challenges. The recent addition of Mr Anil Kaul, former MD of Tata Capital Housing Finance and Mr Joydeep Datta Gupta, a former Partner of Deloitte India and Board Member c Deloitte Asia Pacific, to the Board further strengthens our governanc structure with more expertise and strategic guidance. Notably, our focus on community development extends to empowering women entrepreneurs, recognizing their pivotal role in driving sustainable economic growth. Through these multifaceted initiatives, we not only demonstrate our dedication ti sustainability but also underscore our role as a catalyst for positive

change, driving meaningful impact within communities and beyond.

Way Forward

To navigate the constantly changing business landscape, we will continue to monitor emerging technologies and aim to adopt them early to gain a first-mover advantage. Our experienced Board and management team are dedicated to further strengthening our risk management structure and processes in the coming years to safeguard against future business uncertainties.

Our strategic focus remains on maintaining our Net Interest Margin (NIM) in alignment with the current cost of borrowing.

Our goal is clear: to become the premier one-stop financial services provider, particularly in rural India, marked by our innovative processes and technology. We are committed to emerging as the preferred financial partner for millions of underserved low-income households, empowering them to achieve their financial goals.

Thank you for being an integral part of our success story.