CSB Bank Ltd

Dear Shareholders,

Your Board of Directors (the "Board") have pleasure in presenting you the 103rd Annual Report of CSB Bank Limited ("CSB Bank/ the Bank") together with the Audited Financial Statements, Independent Auditors' Report and the Report on the business and operations of the Bank for the financial year ended March 31, 2024.

FINANCIAL PERFORMANCE AND STATE OF THE BANK'S AFFAIRS

The financial highlights of the Bank for the financial year under review, are presented below:

(Rs. in Cr)

(Rs. in Cr)

BUSINESS STRTGEY OVERVIEW

To position the Bank on the lines of successful New Gen Private Sector Banks, your Bank had rolled out a change management theme of Sustain Build Scale 2030 (SBS 2030) in FY 2021-22. The key milestones that were set for the initial years were to sustain the core strengths and to build the right platforms and foundations for the scale phase. Bank could complete the milestones set for FY 2023-24, as per the timelines and progressed well. During FY 2023-24, we continued to sustain our core competencies and strengths especially in the gold loan portfolio. The key levers and enablers that are in place/WIP include verticalisation, good governance structure, sound risk management practices, growth-oriented policies, geographic expansion, customer centric processes, strong and experienced leadership team, implementation of new CBS etc. The setting up of the Service Governance Council is aimed towards ensuring the right culture and mindset among the team members. On the leadership front, your Bank is having a team with relevant experience to build and scale the franchise with long-term vision and commitment. Your Bank is aiming for a Pan India presence by shedding its image of a Regional Player and during FY 2023-24, 76 new branches were opened taking the total branch network to 779. Bank has 731 ATMs as on March 31, 2024, as against 528 in the previous year. On the technology front, your Bank has kick started the Core Banking Migration Project including OGL and OFSAA rollouts. Your Bank is undertaking a complete transformational journey on the tech side with a motto of "Incremental to Transformational" mindset with active participation from all the teams. Currently, the Bank is putting in place the basic platforms like Loan Origination System (LOS), Lead Management System (LMS), product management tool, liability systems, payment/ channel systems, cyber security etc. The digital journey is picking up pace as the tech platform is getting ready. The roll out of the first phase of the new CBS is expected in H2 of FY 2024-25, which will benefit immensely by way of universal financial solutions, holistic view of customers, Omni channel delivery, simplified & centralised processes, reduced operational expenses etc. Once the migration work is completed, the scale up phase will gain momentum in alignment with the vision set forth as part of SBS journey.

PERFORMANCE OVERVIEW

During the period under review, your Bank continued to deliver on stakeholder expectations both in terms of topline and bottom line and registered a net profit of Rs. 566.82 crore. Overall growth was backed by 20% business growth, 18% net loan book growth, and 21% deposit growth. Your Bank was able to grow faster than the average industry growth trend in terms of deposits and advances.

In the Financial year 2023-24, the total income grew by Rs. 876.17 crore to Rs. 3,511.83 crore from Rs. 2,635.66 crore in the corresponding previous financial year. During the same period, Interest Income increased by Rs. 607.89 crore to Rs. 2,927.54 crore from Rs. 2,319.65 crore and Non-Treasury Other Income Increased by Rs. 223.07 crore to Rs. 536.64 crore from Rs. 313.57 crore in the corresponding previous financial year. During the same period, Net Treasury Income increased by Rs. 45.21 crore to Rs. 47.65 crore from Rs. 2.44 crore in the corresponding previous financial year.

During FY 2023-24, the total Operating Profit of the Bank increased by Rs. 72.52 crore to Rs. 779.92 crore from Rs. 707.40 crore and Net Profit increased by Rs. 19.46 crore to Rs. 566.82 crore from Rs. 547.36 crore in the corresponding previous financial year. The profit came in the backdrop of a strong growth in net interest income (NII). Non- interest income, backed by processing fee, commissions on selling third party products and charges collected from deposit accounts.

In the same period, the Bank's gross advances grew by Rs. 3,730.08 crore to Rs. 24,571.75 crore led by 82% growth in retail loan to Rs. 2,115 crore from Rs. 1,162 crore, 28% growth in SME/MSME to Rs. 3,200 crore from Rs. 2,507 crore and 22% growth in gold loans to Rs. 11,818 crore from Rs. 9,694 crore.

Deposits grew by Rs. 5,212.99 crore to Rs. 29,718.80 crore from Rs. 24,505.81 crore in the corresponding previous financial year.

Gross non-performing assets (GNPAs) increased by Rs. 98.51 crore to Rs. 361.07 crore as on March 31, 2024, from Rs. 262.56 crore as on March 31, 2023. Net non-performing assets (Net NPAs) increased by Rs. 53.08 crore to Rs. 124.90 crore as on March 31, 2024, from Rs. 71.82 crore as on March 31, 2023. The gross NPA as percentage of advances increased by 21 basis points to 1.47% as on March 31, 2024 as against 1.26% as on March 31, 2023. Net NPAs increased by 16 basis points to 0.51% as of March 31, 2024, from 0.35% as on March 31, 2023. Provision Coverage Ratio (including write-off) stood at 86.44% at the end of the financial year as against 92.11% in the corresponding previous financial year.

Total Assets have increased by Rs. 6,893.71 crore and stood at Rs. 36,055.99 crore as on March 31, 2024, as against Rs. 29,162.28 crore as on March 31, 2023. Net Advances have increased by Rs. 3,684.93 crore and stood at Rs. 24,335.58 crore as on March 31, 2024, as against Rs. 20,650.65 crore as on March 31, 2023.

FINANCIAL PERFORMANCE

Net Interest Income (NII) increased to Rs. 1,476.41 crore in FY 2023-24, from Rs. 1,333.85 crore in FY 2022-23. Non-Treasury Other Income increased to Rs. 536.64 crore in FY 2023-24 from Rs. 313.57 crore in FY 2022-23. Net Treasury Income also increased to Rs. 47.65 crore in FY 2023-24, from Rs. 2.44 crore in FY 2022-23.

Provisions other than taxes decreased by Rs. 44.69 crore from Rs. (26.21) crore to Rs. 18.48 crore. The Operating Profit for the FY 2023-24, was Rs. 779.92 crore before taxes and provisions as against Rs. 707.40 crore in the FY 2022-23 mainly on account of increased net interest income and other income excluding treasury profits.

The Net Profit for the FY 2023-24, was Rs. 566.82 crore as compared to a Net Profit of Rs. 547.36 crore in the FY 2022-23.

DIVIDEND

Your Bank has formulated the Dividend Distribution Policy as per the requirements of Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, ("SEBI Listing Regulations") and guidelines issued by Reserve Bank of India.

The objective of the Policy is to lay down the criteria to be considered by the Board, before recommending dividend to its shareholders, whether it be Interim/Special Dividend or Final Dividend. The Bank believes in optimising the shareholder's wealth by offering them various corporate benefits from time to time after considering the Capital to Risk (Weighted) Assets Ratio (CRAR) and reserve requirements subject to regulatory stipulations.

Though the Bank posted a highest ever net profit in its history during the financial year under review, with the object of conserving profits in the form of reserves for future expansion plans as well as strengthening its balance sheet, your directors do not propose to recommend any dividend for the financial year ended March 31, 2024.

The Dividend Distribution Policy is available on the Bank's website at https://www.csb.co.in/sites/default/files/annexure- IX 17 dividend distribution policv.pdf.

CHANGE IN THE NATURE OF BUSINESS

During the financial year under review, there has been no change in the nature of business of the Bank.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE BANK

There are no material changes and commitments affecting the financial position of the Bank which has occurred between the end of the financial year of the Bank i.e., March 31, 2024 and the date of the Directors' Report.

CAPITAL STRUCTURE

The Authorised share capital of the Bank stood at '220.00 crore divided into 22 crore equity shares with a face value of Rs. 10/- each as on March 31, 2024. During the financial year under review, there has been no change in the Authorised share capital of the Bank.

The Paid-up Equity Capital of the Bank stood at '173.49 crore comprising 17,34,85,827 fully paid-up Equity Shares of '10/- each as on March 31, 2024. The Bank has not allotted any shares during the FY 2023-24, and as a result, the paid-up capital of the Bank remains unchanged, i.e., '173.49 crore, in the said period.

RESERVES

The free reserves and surplus stood at Rs. 2,736.63 crore as on March 31, 2024, as against '2,309.41 crore as on March 31, 2023.

The Bank's Net owned funds grew to Rs. 3,563.64 crore from Rs. 2,964.10 crore as of the previous financial year, and market capitalisation stood at Rs. 7,000.15 crore as on March 31, 2024 as against Rs. 4,252.14 crore as on March 31, 2023.

CAPITAL ADEQUACY RATIO

The Bank's overall Capital Adequacy Ratio (CRAR) under Basel III stood at 24.47% at the end of fiscal 2024, well above the benchmark requirement of 11.50% stipulated by Reserve Bank of India. Of this, the Common Equity Tier I (CET I) CRAR was 23.10% (against minimum regulatory requirement of 8.00%) and Tier I CRAR was 23.10% (against minimum regulatory requirement of 7.00%). As on March 31, 2024, the Bank's Tier II CRAR under Basel III stood at 1.37% as against 1.23 % as on March 31, 2023.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134 (3) (c) read with Section 134 (5) of the Companies Act, 2013, the Board of Directors, to the best of its knowledge and ability, confirm that;

a. In the preparation of the annual accounts for the financial year ended March 31, 2024, the applicable accounting standards had been followed along with proper explanation relating to material departures.

b. The directors have selected such accounting policies and applied them consistently and made judgments 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 2023-24 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, 2013, for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities.

d. The directors had prepared the annual accounts for the financial year ended on March 31, 2024 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.

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.

PROMOTER HOLDING - FIH MAURITIUS INVESTMENTS LTD

FIH Mauritius Investments Ltd (FIHM), the promoter of the Bank holds 49.72 % of the paid-up capital of the Bank in line with Reserve Bank of India Master Direction, viz., (Acquisition and Holding of Shares or Voting Rights in Banking Companies) Directions, 2023 ("Master Direction") read with Reserve Bank of India Guidelines on Acquisition and Holding of Shares or Voting Rights in Banking Companies ("Guidelines"), dated January 16, 2023. FIHM holding in the Bank is subject to dilution schedule as mandated by Reserve Bank of India as part of the terms of the approval and the relevant RBI guidelines as applicable, from time to time, subject to the permission to hold 26% in the paid-up equity capital of the Bank beyond 15 years from the date of completion of investments. There is no change in the promoter holding during the financial year under review.

Pursuant to Section 12(2) of Banking Regulation Act and a Gazette Notification no. DBR.PSBD. No. 1084/16.13.100/2016- 17 dated July 21, 2016, read with Guidelines dated January 16, 2023, voting rights of FIHM is currently capped at 26% of the total voting rights of the Bank.

DISCLOSURE OF CERTAIN TYPE OF AGREEMENTS BINDING THE BANK

The Bank has entered into an Investment Agreement ("Agreement") dated February 20, 2018, with FIH Mauritius Investments Ltd (FIHM), the promoter of the Bank, which was superseded and replaced by Amended and Restated Investment Agreement dated October 15, 2018, read with Addendum No. 1 dated October 19, 2020 ("Addendum") to the Amended and Restated Investment Agreement dated October 15, 2018. The salient features of the agreement in terms of Regulation 30A of SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 read with clause 5A of paragraph A of Part A of Schedule III of the SEBI Listing Regulations is as follows:

Subject to the terms of the Investment Agreement, FIHM is entitled to the following rights:

[For the purpose of this disclosure, the term ‘Investor' wherever mentioned should mean ‘FIH Mauritius Investments Ltd', the promoter of the Bank.]

Board Composition. Unless otherwise agreed to in writing by the Bank and the Investor, the Board of Directors shall consist of a maximum of 11 (eleven) Directors, including the Investor Directors. The majority of the Board of Directors shall be independent directors. The maximum number of 11 (eleven) Directors does not include the directors appointed by the RBI, if any pursuant to Section 36AB of the Banking Regulation Act, 1949. Not less than 51% (fifty one per cent) of the total number of Directors on the Board of Directors shall be persons who satisfy the conditions laid down in Section 10A(2) of the Banking Regulation Act, 1949.

Investor Directors. For as long as the Investor holds such number of Equity Securities as represents 12% (twelve per cent) of the Equity Share Capital on a Fully Diluted Basis, the Investor shall have the right to nominate to the Board of Directors, up to 4 (four) Directors (collectively, the "Investor Directors"). The Investor Directors nominated to the Board will be required to comply with such provisions as may be applicable to Non-Executive Directors of a banking company in India under applicable Law. The Investor Directors, if required to retire by rotation under the Act, shall be required to retire by rotation and shall be eligible for re-appointment to the Board in accordance with the provisions of the Act.

Anti-Dilution. Notwithstanding anything contained under this Agreement and unless otherwise agreed to in writing by the Bank and the Investor, the Bank shall not, at any time after the Completion Date and until the Fall Away Date, issue any Equity Securities of any type or class to any Person ("Proposed Issuance") unless the Bank has offered the Investor the right to subscribe for up to such number of Equity Securities as would result in the percentage of the Investor's shareholding in the Bank immediately following the completion of the Proposed Issuance, on a Fully Diluted Basis, being maintained at the same percentage as the percentage of the Investor's shareholding in the Bank immediately prior to the completion of the Proposed Issuance, on a Fully Diluted Basis ("Investor's Pro Rata Share"), in accordance with the provisions of the articles of association of the Bank, Section 12B of the Banking Regulation Act, 1949, and master directions and circulars issued by the RBI, from time to time, on shareholding and voting rights of shareholders in private sector banks. The Investor may, subject to applicable Law, rules and regulations, choose to exercise such right itself or through renunciation in favour of an Affiliate.

Issuance of Equity Shares pursuant to the ESOP Plans. In the event that the Bank proposes to issue any Equity Shares pursuant to the exercise of any Employee Stock Options under the ESOP Plans, such issuance of Equity Shares shall also be deemed a Proposed Issuance, and the Bank shall be required to comply with the relevant clauses of Investment Agreement, provided that in such instance, the price at which the Investor shall be entitled to subscribe to the Investor's Pro Rata Share of the Proposed Issuance shall be the fair market value of such Equity Shares."

Committee Composition. For as long as the Investor holds such number of Equity Securities as represents 12% (twelve per cent) of the Equity Share Capital on a Fully Diluted Basis, the Investor shall have the right to nominate an Investor Director to be a member of each committee constituted by the Board ("Committees"). The relevant provisions shall apply mutatis mutandis to all Committees constituted by the Board, and all meetings of such Committees. Any Committees required to be constituted by the Board under Applicable Law shall be so constituted in the manner required under Applicable Law.

Nomination & Remuneration Committee.

(a) The Board shall re-constitute its nomination and remuneration committee ("NRC") to provide that, for as long as the Investor holds such number of Equity Securities as represents 12% (twelve per cent) of the Equity Share Capital on a Fully Diluted Basis, at least one of the members of such NRC shall be an Investor Director.

(b) For as long as the Investor holds such number of Equity Securities as represents 12% (twelve per cent) of the Equity Share Capital on a Fully Diluted Basis (i) all decisions in relation to the appointment, termination or replacement of any Directors, key managerial personnel (as defined under the Act), officers or senior executives of the Bank, or any alteration in the terms of their appointment or engagement ("NRC Matters"), shall, require an approval from a majority of the members of the NRC; and (ii) any matter which constitutes an NRC Matter may only be tabled for the Board for consideration if such matter has first been tabled before the NRC, approved by the NRC and thereafter referred to the Board for approval by the NRC.

Reporting requirements: Ongoing annual and quarterly reporting requirements relating to financial statements (in accordance with IFRS), certifications from CEO and CFO relating to internal controls, business performance reports and any other financial information as required to be disclosed to Fairfax India Holdings Corporation ("FIHC") for regulatory filings by FIHC and / or any of its affiliates under Canadian securities laws or as may be deemed necessary by FIHC or FIHM.

The agreement entered with FIHM is hosted at https://www. csb.co.in/pdf/Reg30FIHMAgreement

The Bank has not entered into any other subsisting material agreement, other than in the ordinary course of business. Further, neither the shareholders, promoters, promoter group entities, related parties, directors, key managerial personnel, employees of the Bank, have entered into an agreement among themselves or with the Bank or with a third party, solely or jointly, which, either directly or indirectly or potentially or whose purpose and effect is to, impact the management or control of the Bank or impose any restriction or create any liability upon the Bank.

QUALITY INITIATIVES

Bank focuses on maintaining highest standards of quality through innovative technology platforms thereby ensuring superior services to customers and other stakeholders. Bank is having ISO 27001:2013 certification for Information Technology, Information Security, Primary and Secondary and Near Disaster Recovery Centres.

CSB Institute of Learning & Development (CSBILD) has achieved a remarkable milestone with 100% of employees trained in various online, campus, and external programs. For the fiscal year 2023-24, the total training hours for all employees was 1,97,259.56 with a per-person learning average of 25.09 hours. For male employees, this average was at 24.53 hours and 26.30 hours for females.

Among the various initiatives undertaken in the current financial year, CSBILD introduced ‘Neev', a structured onboarding program lasting 5 days, held every first day of the week for new joiners. CSB Institute of Learning &

Development (CSBILD) has retained its ISO 9001:2015 certification obtained during the previous financial year.

CREDIT RATINGS OF DEBT INSTRUMENTS

CRISIL, vide letter dated May 22, 2024, has reaffirmed the rating ‘CRISIL A1+' to the Rs. 2,000 crore Certificate of Deposits Programme and Rs. 2,000 crore Short Term Fixed Deposits Programme of the Bank.

CRISIL, vide letter dated May 22, 2024, has reaffirmed ‘CRISIL A /Stable' rating to the proposed Rs. 500 crore Tier II, Basel III compliant bonds issue Programme of the Bank.

India Ratings and Research, vide letter dated August 17, 2023, has reaffirmed its rating of ‘IND A' with Outlook Stable, to the proposed Rs. 500 crore Tier II, Basel III compliant bonds issue Programme of the Bank.

The Bank has not yet issued any bonds as part of the programme.

The further details of all credit ratings obtained by the Bank along with revisions thereto, if any, during fiscal 2024, for all the debt instruments outstanding as on March 31, 2024, are provided in the Report on Corporate Governance, forming part of this annual report.

DEPOSITS ISSUANCE PROGRAMME

During the period under review, your Bank raised Rs. 2,910 crore (FV) under the Certificate of Deposits programme from various mutual funds and banks, and out of the same, the outstanding as on March 31, 2024, was Rs. 1,030 crore (FV). The Bank has not raised deposits under the Short Term Fixed Deposits Programme during the period under review.

ISSUE OF EQUITY SHARES WITH DIFFERENTIAL VOTING RIGHTS

As on the date of this Report, the Bank has not issued any equity shares with differential voting rights.

ISSUE OF SWEAT EQUITY SHARES

As on the date of this Report, the Bank has not issued any sweat equity shares.

EMPLOYEES STOCK OPTION SCHEME CSB Employees Stock Option Scheme 2019

The Bank, on receipt of approval of the shareholders by postal ballot on May 04, 2019, formulated and adopted a stock option scheme called "CSB Employees Stock Option Scheme 2019" ("ESOS 2019" or "Scheme"). The Scheme is in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014 which was subsequently repealed and replaced with the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021.

The scheme is intended to enable the employees, present and future, to get a share in the value that they help to create for the organisation over a period of time, aligning the objectives of an individual with those of the Bank as well as to attract and retain critical senior talents with Employee Stock Options as a compensation tool.

The Scheme shall be administered through an employee stock option trust ("ESOS Trust") in the nature of an irrevocable employee welfare trust in due compliance with the applicable laws.

Under the Scheme, 8,63,972 stock options were granted in the FY 2023-24. All the options were granted at market price, to be vested subject to the vesting conditions/ malus and claw back arrangements and be exercised within the period as per the terms of the grant and the Scheme.

During the period under review, 4,96,537 options were vested in line with the vesting schedule. In the same period 5,97,318 options were exercised by the grantees, which includes 1,00,781 options that were vested in the previous period. In the same period, 45,672 options were lapsed prior to its vesting schedule due to the resignation/separation of employment by the grantees. As on March 31, 2024, the number of options in force is 23,53,456 of which 1,87,957 are vested options.

Pursuant to the approval received from Reserve Bank of India on May 4, 2023, the Nomination & Remuneration Committee of the Board on May 10, 2023, granted 13,145 stock options to Mr. Pralay Mondal, Managing Director & CEO, at an exercise price of Rs. 293.80 per option, for the period from February 17, 2022 to September 14, 2022, he held the position of Deputy Managing Director of the Bank.

Pursuant to the approval received from Reserve Bank of India on December 20, 2023, the Nomination & Remuneration Committee of the Board on January 08, 2024, granted 39,123 stock options to Mr. Pralay Mondal, Managing Director & CEO, at an exercise price of Rs. 407.50 per option for the performance period from September 15, 2022 to March 31, 2023.

Amendment proposed in the CSB Employees Stock Option Scheme 2019

No amendment is proposed to the CSB Employees Stock Option Scheme 2019 in the ensuing Annual General Meeting of the Bank.

CSB Employees Stock Option Scheme - Statutory Compliance

A Certificate of Secretarial Auditors of the Bank pursuant to Regulation 13 of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, that the CSB Employees Stock Option Scheme 2019 has been implemented in the Bank in accordance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, and the resolution passed by the Shareholders for the Scheme, will be placed to the Annual General Meeting for the scrutiny of Shareholders.

The statutory disclosures as required as per rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014 and Regulation 14 of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, are given on the website of the Bank at www.csb.co.in which forms part of this report as Annexure-I.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

CSB Bank's century-long legacy is steeped in trust, ethics, and transparency. Throughout its history, the Bank has prioritised serving the needs-based sections of society, by delivering banking services responsibly and transparently. This unwavering commitment has made a significant impact on the communities it serves. While maintaining focus on its core business, CSB Bank consistently emphasises environmental, social, and governance concerns, evident in its approach and activities. Upholding exemplary corporate governance standards, the Bank ensures transparency and disclosure as fundamental principles.

The Bank in compliance with Regulation 34(2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") read with the SEBI circular no. SEBI/HO/CFD/CFD - SEC - 2/P/ CIR/2023/122 dated July 12, 2023, presents the Business Responsibility and Sustainability Report (BRSR) of the Bank for the FY 2023-24, being the third report of its kind, in the format as specified by SEBI, describing the initiatives taken by the Bank from an environmental, social and governance perspective, forms part of this Report as Annexure-II.

The Report indicates the Bank's performance against the nine principles of the ‘National Guidelines on Responsible Business Conduct'. Reporting under each principle is divided into essential and leadership indicators. The essential indicators are required to be reported on a mandatory basis while the reporting of leadership indicators is on a voluntary basis.

The report has also been hosted on the website of the Bank and can be accessed at https://csb.co.in/investor- relations>General meetings>Annual General Meeting- 2024.

BUY-BACK OF SHARES OR PROVISION OF FINANCIAL ASSISTANCE FOR PURCHASE OF THE BANK'S SHARES

The Bank has not effected any buy-back of its shares or provided any financial assistance for purchase of its shares, to any persons including directors and employees of the Bank in terms of Section 67 of the Companies Act, 2013.

DISCLOSURE RELATED TO DETAILS OF DEPOSITS ACCEPTED

Being a banking company, the disclosures required as per Rule 8(5)(v)&(vi) of the Companies (Accounts) Rules, 2014, read with Sections 73 and 74 of the Companies Act, 2013, are not applicable to the Bank.

SUBSIDIARIES AND ASSOCIATES

Your Bank does not have any subsidiaries, joint ventures or associate companies.

There are no companies which have become or ceased to be its subsidiaries, joint ventures or associate companies during the year under review.

Bank has formulated a Policy for determining material subsidiaries pursuant to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the same is displayed on the website of the Bank at:https://www.csb.co.in/pdf/Annexure-I_Policy_ for_Determining_Material_Subsidiaries_15072024.pdf

RISK MANAGEMENT POLICY

The Bank has a comprehensive policy framework which contains separate policies for identification, measurement, monitoring & control and mitigation of all material risks including but not limited to credit, market, operational, liquidity and other Pillar- II risks. The Bank has put in place an integrated risk management policy which ensures independence of the risk governance structure. IRMD Charter is included in the Integrated Risk Management policy. The risk management policy details the principles, rules and guidelines to be adopted by the Bank for managing and controlling various kinds of risks through various subpolicies. The policies are implemented in an uninterrupted, reliable and comprehensive manner across the entire Bank. The details of risk management practices are provided in the Management Discussion and Analysis Report annexed to the Director's Report.

WHISTLE BLOWER POLICY / VIGIL MECHANISM

A set of Policies, that include Fraud Risk Management Policy, Whistle Blower Policy and Anti-Bribery & Anti-Corruption Policy, are devised and formulated by the Vigilance Department as part of its ongoing Vigilance mechanism. These are scrupulously followed, for surveillance, control, and monitoring of day-to-day activities, in order to prevent frauds and thereby manage the risk of eventual financial loss or damage to the reputation of the Bank. These policies are in tune with the directions of RBI, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Companies Act, 2013 and SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended.

One such policy, the Whistle Blower policy is an effective tool to report concerns regarding unethical behaviour, violation of systems & procedures, questions of law, wrong business practices or grave misconduct by the employees. As per this Policy /Mechanism, all stake holders viz. Directors and Employees of the Bank, Customers, Non-Governmental Organisations (NGO) and others can lodge complaints. It is published on the Website of the Bank to create awareness amongst all the stake holders. The Audit Committee of the Board (ACB) oversees the vigil mechanism through its committee processes. The Chairman of ACB directly hear grievances/ victimisation of employees, who use this mechanism to report such genuine concerns. No employee who is aggrieved is denied access to ACB under this policy. It provides reassurance/protection to the whistle blower from victimisation, discrimination or reprisals for having blown the whistle, in good faith and in the interest of the Bank. The investigation under this policy shall be completed within 60 days from the date of receipt of the complaint and the report thereof should be placed before the ACB.

As part of the awareness program, the said Policies as well as the Ethics & Code of conduct for staff, are included in every session of the training programme conducted at the Bank's staff Training College, for enhancing awareness of fraud risk and for promoting a culture of compliance amongst the employees.

Similarly, another policy devised as part of the said Vigilance mechanism is the Fraud Risk Management policy. Under this policy every instance of fraud reported, is thoroughly investigated. It ensures that all the systems and procedures are scrupulously followed by all its employees. Bank is taking stringent action against those employees who fail to comply with the instructions of the Bank. Deficiencies/ irregularities/Lacunae in the system and procedures, if any observed during the investigation, are plugged and wherever necessary systemic corrections are suggested and placed before the ACB, for necessary directions. Further, with regard to the irregularities committed, the concerned branch officials are suitably cautioned so that such deficiencies do not recur, and incidents of frauds are prevented. Vigilance Department issues Caution Note on a regular basis that create awareness with regard to the different modus operandi adopted by the fraudsters, including those that have occurred in our Bank. This enables the Branches / Offices to prevent similar kind of fraudulent attempts in future. This policy is reviewed every year by the Board and suitably amended, as required. A reference to the Whistle Blower Policy/Vigil Mechanism is also made in every caution note issued by the Vigilance Department.

Further the Anti-Bribery and Anti-Corruption Policy ensures that the stakeholders including Employees (whether full-time or contractual, including trainees and interns), Directors, Agents, Associates, Vendors, Consultants, Advisors, Representatives, or Intermediaries do not indulge in any act of ‘Bribery' or ‘Corruption' while discharging their official duties, either in their own name or in the name of the Bank.

As part of the preventive mechanism, the department also undertakes Preventive Vigilance Audits, to ensure that all the checks and balances are in place. This promotes a culture of compliance amongst its employees. Moreover, the Bank is making all out efforts to prevent frauds by strengthening the existing control measures and by reiterating the systems and procedures, to update and alert its employees. Bank has a well-organised Inspection Department which conducts regular and comprehensive Inspection (RBIA) of branches and offices at specified intervals and also oversees all other Audits and Inspection of the Bank. The Bank is taking several measures to plug the gaps in the areas of appraisal, monitoring, internal systems, etc., to strengthen the overall control system on loan assets. The Bank has strengthened the internal audit system, functions of vigilance department and put in place an appropriate mechanism, information system to prevent recurrence, early detection of frauds on an ongoing basis.

MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to the provisions of Regulation 34(2)(e) of the SEBI Listing Regulations, the Management Discussion and Analysis Report for the year under review is provided in a separate section forming part of this Report as Annexure - III.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

Bank has designed and implemented adequate procedures and internal control systems which provide reasonable assurance regarding reliability of financial reporting and preparation of financial statements. For the year ended March 31, 2024, the Board is of the opinion that the Bank has sound Internal Financial Controls to commensurate with the nature and size of its business operations wherein controls are in place and operating effectively and no material weaknesses exist.

Bank is operating in a fully computerised environment with Core Banking System supported by diverse application platforms for handling special business such as treasury, trade finance, retail loans, etc. The process of recording transactions in each application platform is subject to various forms of control such as in-built system checks, maker - checker authorisations and independent post transaction reviews. The financial statements are prepared based on computer system outputs. Responsibility of preparations of financial statements is entrusted to a dedicated unit which is independent of business.

For mitigating risks and for KYC norms compliance, the Bank has put in place centralised processing for opening of CASA accounts and modifications in customer information. For login to CBS, in addition to login passwords, f inger-scan- authentication is implemented and as control measure, dual custody for cash and gold are in place in all branches.

The Bank has a process in place to continuously monitor the existing controls and identify gaps, if any, and implement new and/or improved controls wherever the effect of such gaps would have a material effect on the Bank's operation. During the year under review, there are no material or serious observations of inefficiency or inadequacy of such controls observed/reported.

CORPORATE GOVERNANCE

The Bank continues its endeavor to adopt the best prevalent corporate governance practices. A separate section/ Report on corporate governance standards followed by your Bank and the relevant disclosures as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Companies Act, 2013 and the rules made thereunder are incorporated in the Corporate Governance Report that forms part of this Report.

A certificate from Bhandari & Associates, Company Secretaries, Mumbai, confirming compliance to the conditions of Corporate Governance as stipulated under SEBI Listing Regulations is annexed to this Report as Annexure - IV.

UPDATE ON IND AS IMPLEMENTATION

Reserve Bank of India (RBI) vide press release RBI/2018- 2019/146 DBR.BP.BC.No.29/ 21.07.001/2018-19, dated March 22, 2019, advised all scheduled commercial Banks about deferment of implementation of Ind AS till further notice in the context of legislative amendments recommended by RBI on implementation of Ind AS were under consideration of the Government of India.

The implementation of Ind AS is expected to result in significant changes to the way the Bank prepares and presents its financial statements. The key impact areas during the implementation of Ind AS for the Bank include impairment requirements of Financial Instruments based on Expected Credit Loss, interest recognition using effective interest method and Fair valuation of financial assets.

As directed by the RBI, the Bank is submitting half yearly Proforma Ind AS financial statements within the stipulated timeline.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY THE BANK

Pursuant to Section 186 (11) of the Companies Act, 2013, the provisions of Section 186 of Companies Act, 2013, except sub - section (1), do not apply to a loan made, guarantee given or security provided or any investment made by a banking company in the ordinary course of business, hence being excepted from disclosure requirements under Section 134(3)(g) of the said Act.

The particulars of investments made by the Bank are disclosed in Schedule 8 of the financial statements as per the applicable provisions of the Banking Regulation Act, 1949.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

Your Bank has obtained prior approvals of the Audit Committee, the Board, and the members of the Bank via postal ballot /at the annual general meeting for all related party transactions/material related party transactions. Your Bank has obtained the omnibus approval of the Audit Committee for those transactions with related parties that are repetitive in nature. Further, the Audit Committee of the Board has reviewed all the transactions with the related parties on a quarterly basis.

No transactions were entered into with related parties, which were not in the ordinary course of the business of the Bank or which were not on an arm's length basis.

During fiscal 2024, the Bank has not entered into any materially significant transactions with its related parties, which could lead to potential conflict of interest between the Bank and these parties, other than transactions entered into with them in the ordinary course of its business.

The particulars of contracts or arrangements with related parties entered into during the period under review in terms of Section 188(1) of the Companies Act, 2013, are provided in Form AOC-2 as Annexure -V in terms of 134(3)(h) of the Companies Act, 2013.

The ‘Policy on materiality of Related Party Transactions and on dealing with Related Party Transactions' has been reviewed by the ACB and the Board and the same is available on the website of the Bank at https://www.csb. co.in/pdf/Annexure-II__Policy_on_dealing_with_Related_ Party_Transaction_15072024.pdf

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Bank acknowledges society as a primary stakeholder and consistently places Corporate Social Responsibility (CSR) activities at the forefront of its priorities. The Bank's CSR policy is designed with the primary goal of integrating CSR as a crucial business process for the sustainable development of society. This policy functions as a guiding document, assisting in the identification, execution and monitoring of CSR projects, all in alignment with the spirit of the statute.

I n the FY 2023-24, the Bank budgeted a total of Rs. 10.82 crores for CSR activities, a significant increase from Rs. 6.72 crore in the previous FY 2022-23. Of this budget, Rs. 7.03 crore was expended on various CSR initiatives. The remaining Rs. 3.79 crore has been earmarked for Project Dialysis, a venture undertaken by the Fairfax India Charitable Foundation. This project is set to be an ongoing commitment of the Bank.

The Project Dialysis conducted by Fairfax India Charitable Foundation aims in providing affordable, quality dialysis services to patients in various parts of India where the services are limited/non-existent for dialysis infrastructure. The project was initially approved by the Board as a onetime arrangement with a contribution of Rs. 2.98 crores, however due to unforeseen reasons the project was slightly impleaded and the foundation was able to spend Rs. 2 crore only. The Bank, hence, on request of the foundation, decided to classify the project as an ongoing project with an additional contribution of Rs. 2.81 crore which is proposed to be completed on or before March 31, 2025. The unspent amount of Rs. 3.79 crores pertaining to the said ongoing projects were transferred to Unspent CSR account on April 15, 2024, which will be released in a phased manner up on receipt of request from the foundation or based on the progress of the project on or before March 31, 2025.

The projects identified by the Bank spread across areas such as healthcare, sanitation, education, housing, gender equality etc., as per the annual action plan approved by the Corporate Social Responsibility Committee and the Board of the Bank. As a responsible citizen, the Bank will persist in implementing a slew of measures to honour its commitment to society at large.

The Annual Report on Corporate Social Responsibility Activities of the Bank for the FY 2023-24, has been provided in Annexure - VI to this report.

The Corporate Social Responsibility Policy as recommended by the CSR Committee and as approved by the Board is available on the website of the Bank and can be accessed at https://www.csb.co.in/sites/default/files/annexure-IN_3_ csr_policy.pdf.

a) Statutory Auditors

The members of the Bank in the 102nd Annual General Meeting of the Bank held on August 08, 2023, approved the appointment of Walker Chandiok & Co LLP, Chartered Accountants, Mumbai as one of the Joint Statutory Auditors of the Bank, to hold office from the conclusion of 102nd Annual General Meeting till the conclusion of the 105th Annual General Meeting of the Bank.

Mukund M. Chitale & Co., Chartered Accountants, Mumbai was the other Joint Statutory Auditors of the Bank to audit the accounts for the financial year ended March 31, 2024 and the Bank obtained approval of the shareholders for their appointment in the 100th Annual General Meeting held on August 12, 2021, to hold office from the conclusion of 100th Annual General Meeting till the conclusion of the 103rd Annual General Meetings of the Bank.

Bank in terms of Section 30(1A) of the Banking Regulation Act, 1949, obtained approval of Reserve Bank of India for the appointment of Mukund M. Chitale & Co, Chartered Accountants, Mumbai and Walker Chandiok & Co LLP, Chartered Accountants, Mumbai as the Joint Statutory Central Auditors of the Bank for the FY 2023-24.

As per Reserve Bank of India Guidelines No. DoS. CO.ARG/SEC.01/08.91.001/2021-22 dated April 27, 2021, regarding "Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) in Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs)" read with FAQ dated June 11, 2021 and the Bank's policy with regard to Appointment of Statutory Auditors, Mukund M. Chitale & Co, Chartered Accountants, Mumbai, who will be completing continuous tenure of three (3) years as the Statutory Auditors of the Bank in the ensuing Annual General Meeting, will not be eligible for re-appointment in terms of the said guidelines and in their place, the Board on recommendation of the Audit Committee of the Board, recommends the appointment of Sundaram & Srinivasan, Chartered Accountants, Chennai as the Joint Statutory Auditors of the Bank, to hold office from the conclusion of 103rd Annual General Meeting till the conclusion of the 106th Annual General Meeting of the Bank, subject to the specific approval of Reserve Bank of India for each year during their tenure in terms of Section 30(1A) of the Banking Regulation Act, 1949.

Bank in terms of Section 30(1A) of the Banking Regulation Act, 1949, obtained approval of Reserve Bank of India for appointment of Walker Chandiok & Co LLP, Chartered Accountants, Mumbai together with Sundaram & Srinivasan, Chartered Accountants, Chennai as the Joint Statutory Auditors of the Bank for the FY 2024-25 for their 2nd year and 1st year in the office, respectively.

Pursuant to the amendment made to Rule 3 of the Companies (Audit and Auditors) Rules, 2014 via the Companies (Audit and Auditors) Amendment Rules, 2018, effective from May 07, 2018, the requirement of seeking ratification of the members for the reappointment of the Statutory Auditors has been withdrawn from the Statute. Hence, ratification of the members for re-appointment of Walker Chandiok & Co LLP, Chartered Accountants, Mumbai as one of the Joint Statutory Auditors of the Bank at the ensuing Annual General Meeting is not being sought for. However, the Bank will continue to seek approval of the shareholders for payment of fees/ remuneration to the Auditors on a yearly basis though approval of the shareholders be sought for their appointment for a period of three years together, in line with the extant guidelines.

Pursuant to the Regulation 33(1) (d) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Joint Statutory Auditors have confirmed that they are subjected to the peer review process of the Institute of Chartered Accountants of India (ICAI) and that they hold a valid certificate issued by the Peer Review Board of ICAI.

The Board places on record their appreciation and gratitude to Mukund M. Chitale & Co., Chartered Accountants, Mumbai, for the valuable services rendered by them as Statutory Auditors of the Bank.

b) Independent Auditors' Report

The Joint Statutory Auditors of the Bank viz., Mukund M. Chitale & Co, Chartered Accountants, Mumbai and Walker Chandiok & Co LLP, Chartered

Accountants, Mumbai, have audited the accounts of the Bank for the FY 2023-24 and their Report is annexed.

Pursuant to Section 143(3)(i) of the Companies Act, 2013, the Statutory Auditors have also reported on the adequacy and operating effectiveness of the internal financial controls system over financial reporting, which has been enclosed as "Annexure A" to the Independent Auditor's Report.

There are no qualifications, reservations or adverse remarks made by the Statutory Auditors in their report for FY 2023-24.

c) Secretarial Auditors and Secretarial Audit Report

Pursuant to Section 204 of the Companies Act 2013, the Bank appointed Bhandari & Associates, Company Secretaries, Mumbai as its Secretarial Auditors to conduct the secretarial audit of the Bank for the Financial Year 2023-24. The Bank produced all necessary records to the Secretarial Auditors for the smooth conduct of their Audit.

The Report of Secretarial Auditors for the said period is enclosed to this report as Annexure -VII. There are no qualifications, reservations or adverse remarks made by the Secretarial Auditors in their report for the FY 2023-24.

d) Secretarial Compliance Report

Pursuant to Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with circular No. CIR/CFD/ CMD1/27/2019 dated February 08, 2019, issued by SEBI, the Bank has obtained Secretarial Compliance Report for the financial year ended March 31, 2024, from Bhandari & Associates, Company Secretaries, Mumbai, the Secretarial Auditors of the Bank on compliance of all applicable SEBI Regulations and circulars/ guidelines issued thereunder and the copy of the same was submitted with the Stock Exchanges within the prescribed timelines.

e) Certificate in terms of Regulation 34(3) read with Schedule V of the SEBI Listing Regulations

In terms of Regulation 34(3) read with Schedule V of the SEBI Listing Regulations, the Bank has obtained a Certificate from Bhandari & Associates, Company Secretaries, Mumbai, confirming that none of the Directors on the Board of the Bank have been debarred or disqualified from being appointed or continuing as Directors of the companies either by the Securities and Exchange Board of India or the Ministry of Corporate Affairs or any other Statutory / Regulatory Authorities. The said certificate is Annexed to this Report.

f) Reporting of frauds by Auditors

During financial year ended March 31, 2024, pursuant to Section 143(12) of the Companies Act, 2013, except as detailed below, neither the Statutory Auditors nor the Secretarial Auditor of the Bank have reported any instances of frauds committed in the Bank by its officers or its employees.

Walker Chandiok & Co LLP and Mukund M. Chitale & Co., statutory auditors of the Bank, vide their letter dated March 30, 2024, had reported to the Audit Committee a fraud involving an amount of Rs. 2.79 crore. The disclosures as required under Section 143(12) of the Companies Act, 2013, read with Rule 13 of The Companies (Audit and Auditors) Rules, 2014, is given below:

COMPLIANCE TO SECRETARIAL STANDARDS

Your Bank is in compliance with the relevant Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) related to the Board Meetings (SS-1) and the General Meeting (SS-2) during the FY 2023-24. Further, the Bank has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively.

TRANSFER OF UN-CLAIMED/UN-PAID DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Dividend transferred to Unpaid Dividend account and remaining unpaid or unclaimed for a period of seven years from the date of such transfer, has to be transferred to Investor Education and Protection Fund as per Section 124 (5) of the Companies Act, 2013.

Since the Bank had not declared any dividends since the FY 2014-15, no amount was required to be transferred to the Investor Education and Protection Fund (the "Fund") by the Bank for the financial year ended March 31, 2024.

All the unclaimed dividends pertaining to the prior period/ financial years were transferred to the Fund in the corresponding previous financial years within the stipulated time and in the manner as prescribed in Section 124(6) of the Companies Act, 2013, read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, as amended from time to time.

TRANSFER OF EQUITY SHARES TO INVESTOR EDUCATION AND PROTECTION FUND AUTHORITY

In terms of the provisions of Section 124(6) of the Companies Act, 2013, read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, (as amended) and other applicable rules, notifications and circulars, if any, every company is required to transfer the shares, in respect of which dividend remains unpaid / unclaimed for a period of seven (7) consecutive years, to the Investor Education Protection Fund (IEPF) Authority.

Since the Bank had not declared any dividends since the financial year 2014-15, no shares were required to be transferred to the Investor Education and Protection Fund Authority by the Bank for the financial year ended March 31, 2024.

UNCLAIMED SHARE APPLICATION MONEY

There is no unclaimed Share application money pending with the Bank or to be transferred to Investor Education and Protection Fund.

COMPENSATION/ REMUNERATION POLICY

The Bank has formulated and adopted a Compensation Policy in terms of Reserve Bank of India circular no. DOR. Appt. BC.No.23/29.67.001/2019-20 dated November 04, 2019, the relevant provisions of Section 178 of the Companies Act, 2013, the relevant Rules made thereunder and the SEBI Listing Regulations. The Policy formulates the criteria for determining the remuneration and further deals with the compensation and benefits of Non-Executive Chairman, Non-Executive Directors, Managing Director & CEO, WholeTime Directors, Material Risk Takers, Control Function Staff and all other officials and employees of the Bank.

The details of the policy have been included in the Report on Corporate Governance, which forms part of this Report. The Policy was last reviewed by the Nomination and Remuneration committee and the Board in their respective meetings held on January 29, 2024.

The excerpts from compensation policy are available on the website of the Bank.

NOMINATION POLICY

The Bank has formulated and adopted Nomination policy for appointment and orderly succession of appointment of Part-time Chairman, Managing Director & CEO, Whole-time Directors, Directors, Key Managerial Personnel and Senior Management team in the Bank. The Policy formulates the criteria for determining qualifications, competencies, positive attributes and independence for the appointment of directors. The details of the same have been included in the Report on Corporate Governance, which forms part of this Report.

The Nomination Policy was last reviewed by the Nomination and Remuneration Committee and the Board in their respective meetings held on December 14, 2023 and the same is displayed on the website of the Bank at: https://www.csb.co.in/sites/default/files/annexure-VI_9_ nomination_policy.pdf

PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, in respect of Directors / Employees of the Bank, is attached as Annexure - VIII to this Report.

The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) 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 said Annexure is available for inspection at the registered office of the Bank, and any member interested in obtaining a copy of the Annexure may write to the Company Secretary of the Bank at secretarial@csb.co.in.

BOARD OF DIRECTORS

The Bank has a broad-based Board of Directors, constituted in compliance with the Banking Regulation Act, 1949, Circulars and Guidelines issued by the Reserve Bank of India, from time to time, the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and in accordance with the best practices/principles in corporate governance adopted by the Bank.

As on the date of this report, the Board comprises of ten (10) Directors, out of which six (6) are Independent Directors, two are Non-executive, Non-Independent Directors and two are Executive Directors. The Directors possess rich experience and specialised knowledge in various areas of relevance to the Bank viz. like Agriculture, Rural Economy, Banking, Accountancy, Co-operation, Information Technology, Economics, Finance, MSME, Payment & Settlement Systems, Human Resources, Risk Management and Business Management, etc.

The Board functions as the governing body and also through various Committees constituted to oversee specific areas. Policy formulation, setting up of goals, evaluation of performance and control functions vest with the Board. The Committees have oversight of operational and supervisory issues assigned to them by the Board, from time to time.

Appointment/changes in the Board Directors of the Bank since the last Board's Report dated June 22, 2023 and up to the date of the Report is as given under:

RE-APPOINTMENT OF NON-EXECUTIVE DIRECTORS

Director, Mr. Madhavan Menon (DIN: 00008542), liable to retire by rotation, was re-appointed at the Annual General Meeting held on August 08, 2023.

PART-TIME CHAIRPERSON

The term of appointment of Ms. Bhama Krishnamurthy as the Part-Time Chairperson of the Bank ends on September 28, 2024, which is coterminous with her second term of appointment as Independent Director of the Bank. The Bank has initiated necessary steps for appointment of next Part-Time Chairperson of the Bank with effect from September 29, 2024.

1. Appointment of Ms. Renu Kohli (DIN:07981627) as an Independent Director

Pursuant to the recommendation of the Nomination & Remuneration Committee, the Board of Directors of the Bank in their meeting held on December 14, 2023, appointed Ms. Renu Kohli (DIN:07981627) as an Additional Director (Non-Executive Independent category) of the Bank w.e.f. December 14, 2023 for a period of 5 (five) years pursuant to the provisions of Section 149, 161(1) of the Companies Act, 2013 and Rules made thereunder, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") and Article 133 of the Articles of Association of the Bank. The appointment is subject to the approval of the Shareholders of the Bank and the approval of the shareholders was obtained for the appointment of Ms. Renu Kohli as Independent Director with effect from December 14, 2023 by postal ballot resolution dated March 06, 2024.

Ms. Renu Kohli is representing ‘Majority Sector - Banking, Economics, Agriculture and Rural Economy and Small Scale Industry' on the Board.

Opinion of the Board with regard to integrity, expertise and experience (including the proficiency) of the independent directors appointed during the year:

Board appointed Ms. Renu Kohli, as Additional Director of the Bank under "Non-Executive Independent" category based on the extensive due diligence carried out by the NRC on the declarations submitted by her in terms of fit & proper criteria and other applicable statutory guidelines issued by Reserve Bank of India from time to time.

Board noted that Ms. Renu Kohli, is an economist with research and practitioner experience on macroeconomic policies and issues. She has previously worked with the RBI, the IMF and thinktanks including ICRIER and the Institute of Economic Growth.

Adverting to the above, in the opinion of the Board, the said Independent Director appointed on December 14, 2023, possesses the requisite qualifications, proficiency, expertise, track record, integrity, independence, as well as vast and rich experience in the field of Banking.

2. Appointment of Mr. Deepak Maheshwari (DIN: 08163253) as an Additional Director (Non-Executive Independent category)

Pursuant to the recommendation of the Nomination & Remuneration Committee in their meeting held on June 11, 2024, the Board of Directors of the Bank, vide resolution passed by circulation on June 12, 2024, appointed Mr. Deepak Maheshwari (DIN: 08163253) as an Additional Director (Non-Executive Independent category) of the Bank w.e.f. June 12, 2024, for a period of 3 (three) years pursuant to the provisions of Section 149,161(1) of the Companies Act, 2013 and Rules made thereunder, SEBI Listing Regulations and Article 133 of the Articles of Association of the Bank. The said appointment is subject to the approval of the Shareholders of the Bank.

Mr. Deepak Maheshwari is an experienced banker, with a track record of building best-in-class loan portfolios at HDFC Bank and Axis Bank. Mr. Deepak Maheshwari has a solid track record in credit decision making across banking hemisphere with expert knowledge of Indian banking regulations. Mr. Deepak Maheshwari is currently in the Board of Axis Finance Limited as NonExecutive Director, and in GR Highways Investment Manager Pvt. Ltd. as Independent Director. Prior to that he was the Group Executive and Chief Credit Officer of the Axis Bank and was responsible for credit underwriting, policy and monitoring. He joined at Axis Bank after a stint of two decades at HDFC Bank, where he was Group Head of the Wholesale Credit function, responsible for asset quality, sanctions, policy, and monitoring of the entire wholesale credit portfolio of that Bank. Prior to that he had spent another two decades in SBI in various Credit and Management functions, with his last major posting being as Vice President (Credit) SBI (Canada), Toronto. Mr. Maheshwari is a B.Com. graduate and a Certified Associate of the Indian Institute of Bankers (CAIIB).

Necessary resolution seeking approval of the members in connection with appointment of Mr. Deepak Maheshwari as an Independent Director of the Bank, forms part of the notice of the ensuing Annual General Meeting. The detailed profile of Mr. Deepak Maheshwari recommended for his appointment as Independent Director in the ensuing Annual General Meeting will be provided in the Notice of the Annual General Meeting for the benefit of shareholders as per the provisions of the Companies Act, 2013, SEBI Listing Regulations and the Secretarial Standard on General Meetings (SS-2).

Mr. Deepak Maheshwari has special knowledge/ practical experience in "Agriculture and Rural Economy, Small Scale Industry, Banking and Risk Management" and the same comes under "Majority Sector". However, he is not eligible to represent ‘majority sector' in view of the restriction due to his substantial interest in companies and firms in terms of Section 5(n)(e) and 10A(2)(b) of the Banking Regulation Act, 1949, even though he has special knowledge or practical experience as per Section 10A(2)(a) of the said Act.

Opinion of the Board with regard to integrity, expertise and experience (including the proficiency) of the independent directors appointed during the year:

Board appointed Mr. Deepak Maheshwari as an Additional Director of the Bank under "Non-Executive, Independent" category based on the extensive due diligence carried out by the NRC on the declarations submitted by him in terms of fit & proper criteria and other applicable statutory guidelines issued by Reserve Bank of India from time to time.

Board noted that Mr. Deepak Maheshwari is an experienced banker, with a track record of building best-in-class loan portfolios across wherever he worked. Mr. Deepak Maheshwari has a solid track record in credit decision making across the banking hemisphere with expert knowledge of Indian banking regulations.

Adverting to the above, in the opinion of the Board, the said Independent Director appointed on June 12, 2024, possesses the requisite qualifications, proficiency, expertise, track record, integrity, independence, as well as vast and rich experience in the field of Banking.

RE-APPOINTMENT OF INDEPENDENT DIRECTORS

Mr. Sudhin Bhagwandas Choksey (DIN: 00036085) was reappointed for a second term as a Non-Executive Independent Director of the Bank, at the Annual General Meeting of the Bank held on August 08, 2023, for a period of 5 (five) years commencing January 31, 2024, up to January 30, 2029 (both dates inclusive). Mr. Sudhin Bhagwandas Choksey is not liable to retire by rotation, in terms of Section 149(13) of the Act.

Mr. Sudhin Bhagwandas Choksey has special knowledge/ practical experience in banking, small-scale industry, finance, and accountancy and the same comes under "Majority Sector". However, he is not eligible to represent the majority sector in view of the restriction due to his substantial interest in companies and firms in terms of Section 5(n)(e) and 10A(2)(b) of the Banking Regulation Act, 1949, even though he has special knowledge or practical experience as per Section 10A(2)(a) of the said Act.

APPOINTMENT OF MR. B.K. DIVAKARA AS WHOLE-TIME DIRECTOR (EXECUTIVE DIRECTOR)

Pursuant to the approval received from Reserve Bank of India on March 4, 2024 in terms of Section 35B of the Banking Regulation Act, 1949, for the appointment of Mr. B K Divakara as Whole-time Director (designated as Executive Director) of the Bank for a period of 3 (three) years with effect from taking charge, the Board of Directors of the Bank in its meeting held on March 15, 2024, on the recommendations of the Nomination & Remuneration Committee, elevated and appointed Mr. B K Divakara, Head Strategy & Corporate Legal as the Whole-time Director (designated as Executive Director) of the Bank, for a period of 3 (three) years, with effect from March 15, 2024, up to March 14, 2027 (both dates inclusive).

The approval of the shareholders was obtained on April 18, 2024, for the appointment as well as the terms, including remuneration, of Mr. B K Divakara as Whole-time Director (designated as Executive Director).

Mr. B. K. Divakara, is representing "Majority Sector - Accountancy, Agriculture and Rural Economy, Banking, Economics, Finance, Law, SSI, Risk Management and Human Resources" on the Board of the Bank.

COMPLETION OF TERM OF APPOINTMENT

Mr. Sunil Srivastav (DIN: 00237561) who was appointed as Director (Non-Executive & Independent) on the Board of the Bank for a tenure of 3 (three) years with effect from June 8, 2021, ceased to be a Director of the Bank with effect from close of office hours on June 7, 2024, upon completion of his term as an Independent Director on the said date.

RESIGNATION OF INDEPENDENT DIRECTOR

Mr. Biswamohan Mahapatra (DIN: 06990345) resigned from the position of the Non-Executive Independent Director of the Bank with effect from June 14, 2024, as he was not able to devote sufficient time for the work relating to his role as an Independent Director of the Bank due to his other personal and professional commitments.

Pursuant to Regulation 30 of SEBI (Listing Obligation and Disclosure Requirements) Regulation, 2015 read with Clause 7B of Part A of Schedule III, Mr. Biswamohan Mahapatra confirmed that there are no material reasons for his resignation from the position of Independent Director of the Bank other than on personal and professional commitments.

The Board places on record its appreciation for the valuable contributions made to the Bank and for the support and cooperation extended by Mr. Biswamohan Mahapatra, during his tenure as an independent director of the Bank. The Board also acknowledged with thanks the professional and unbiased approach that Mr. Biswamohan Mahapatra had taken at the Board and the Committee meetings.

WOMAN DIRECTOR

In terms of the provisions of Section 149(1) of the Companies Act, 2013 and Regulation 17 of the SEBI Listing Regulations, the Bank is required to have at least one independent woman director on the board. Currently, there are three independent women directors on the Board of the Bank. Ms. Bhama Krishnamurthy (DIN: 02196839) has been appointed since September 03, 2018, Ms. Sharmila Abhay Karve (DIN: 05018751) since July 20, 2020 and Ms. Renu Kohli (DIN:07981627) since December 14, 2023.

DIRECTORS RETIRING BY ROTATION

In terms of Section 152 of the Companies Act, 2013, NonExecutive Director, Mr. Sumit Maheshwari (DIN: 06920646) shall retire by rotation and being eligible, offers himself for re-appointment at the ensuing Annual General Meeting (AGM).

Mr. Sumit Maheshwari (DIN: 06920646) was at first appointed as an Additional Director of the Bank with effect from September 03, 2018, under Section 161(1) of the Companies Act, 2013 and his appointment was regularised at the 97th AGM held on September 29, 2018 and he was liable to retire by rotation.

Mr. Sumit Maheshwari (DIN: 06920646) was last reappointed as a director to retire by rotation at the 101st Annual General Meeting held on September 27, 2022, in terms of Section 152 of the Companies Act, 2013.

Approval of the members of the Bank is being requested for re-appointment of Mr. Sumit Maheshwari (DIN: 06920646) as Non- Executive, Non-Independent Director of the Bank.

The detailed profile of Mr. Sumit Maheshwari (DIN: 06920646) recommended for reappointment in the ensuing Annual General Meeting will be provided in the Notice of the

Annual General Meeting for the benefit of shareholders as per the provisions of the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Secretarial Standard on General Meetings (SS-2).

INDEPENDENT DIRECTORS - COMPLIANCE STATUS

The Bank fully satisfies the requirements of Section 149 of the Companies Act, 2013 and Regulation 17 of the SEBI Listing Regulations in connection with the appointment of Independent Directors and the following are the Independent Directors of the Bank as on the date of this report.

The performance of the Independent Directors is subject to evaluation as per Section 149(8) of the Companies Act, 2013 and read with Schedule IV to the said Act.

The Board is confident about their integrity, expertise and experience in the relevant functional areas.

DECLARATION BY INDEPENDENT DIRECTORS

All Independent Directors have confirmed of having complied with the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and Regulation 16(1) (b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with 25(8) of the Regulations that they meet the criteria of independence laid down thereunder. Further, they have also complied with the Code for Independent Directors prescribed in Schedule IV to the Companies Act, 2013 and the Code of Conduct and Ethics for Board of Directors and Senior Management Personnel of the Bank. Based on the declarations submitted by the Independent Directors, Board is of the opinion that, they fulfil the conditions specified in the Act and SEBI LODR and are independent of the management. There has been no change in the circumstances affecting their status as Independent Directors of the Bank.

Pursuant to rule 6(3) of the Companies (Appointment and Qualifications of Directors) Rules, 2014, the Independent Directors of the Bank have affirmed that, they had registered as an Independent Director in the Independent Directors Data Bank as required under rule 6(1) and 6(2) of the Companies (Appointment and Qualifications of Directors) Rules, 2014 and had also complied with the requirements of passing the online proficiency selfassessment test/ exempted from online proficiency selfassessment test in terms of Rule 6(4) of the Companies (Appointment and Qualifications of Directors) Rules, 2014, as amended.

Board is of the opinion that Independent Directors appointed since the date of last report and up to the date of this report are persons of integrity, and has the necessary knowledge, experience and expertise and further, the Board has ensured that the independent directors have also complied with the requirements of passing the online proficiency self-assessment test/exempted from online proficiency self-assessment test in terms of Rule 6(4) of the Companies (Appointment and Qualifications of Directors) Rules, 2014, as amended for being appointed/continue to be appointed as an Independent Director of the Bank.

FAMILIARISATION PROGRAMMES OF INDEPENDENT DIRECTORS

All directors, including Independent Directors are familiar with their roles, rights and responsibilities in the Bank at the time of appointment and also on a recurring basis. The Bank facilitates familiarisation programme and other programmes including Certification programme in IT and Cyber Security for its directors.

The details of various programmes undertaken/arranged for familiarising the Independent Directors and other programmes arranged for the directors are disclosed in the Report on Corporate Governance, which forms part of this Report.

Details of familiarisation programmes attended by all Directors including Independent Directors are provided at https://www.csb.co.in/pdf/Disclosure_on_Familiarisation_ Programmes_for_Board_of_Directors_22032024.pdf, pursuant to Regulation 46 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

APPOINTMENT/ CHANGES IN KEY MANAGERIAL PERSONNEL

Mr. B. K. Divakara, Head - Strategy and Corporate Legal has been elevated and appointed as Whole-time Director (Executive Director), for a period of 3 (three), with effect from March 15, 2024 up to March 14, 2027 (both dates inclusive). He has been designated as Key Managerial Personnel of the Bank with effect from his date of appointment as Whole-time Director on March 15, 2024.

Mr. Pralay Mondal, Managing Director & CEO, Mr. Satish Gundewar, Chief Financial Officer and Mr. Sijo Varghese, Company Secretary, continues to be the Key Managerial Personnel as per the provisions of the Companies Act, 2013.

BOARD AND ITS COMMITTEES Board and Number of Meetings

Regular meetings of the Board are held to discuss and decide on various business policies, strategies and other businesses. Due to business exigencies, certain decisions are taken by Board through resolution passed by circulation from time to time.

The Board met 13 (thirteen) times during the FY 2023- 24 and the gap between the said meetings did not exceed the limit of 120 days, as prescribed under the relevant provisions of the Act, the relevant Rules made thereunder and the applicable SEBI Listing Regulations.

The schedule of the meetings of the Board is fixed on a yearly basis and circulated in advance to the members of the Board for their consideration and approval.

Detailed information on the meetings of the Board is included in the report on Corporate Governance, which forms part of this Report.

Committees of the Board

The Bank has eleven sub-committees of the Board and the same have been formed as part of the best corporate governance practices and/or in compliance with the requirements of the relevant provisions of applicable laws and regulatory prescriptions.

The details with respect to the compositions, powers, roles, terms of reference, etc., of the above Committees are given in detail in the ‘Report on Corporate Governance' which forms part of this Report.

AUDIT COMMITTEE

The Bank has constituted the Audit Committee of the Board is in terms of the extant guidelines of Reserve Bank of India (RBI), provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Committee discharges the functions laid down in the Companies Act, 2013 and those prescribed by the Reserve Bank of India and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. It also discharges the functions delegated by the Board of Directors from time to time. The ACB acts as an effective tier to the Board in the matters of inspection, audit and internal control system.

The Board has accepted all the recommendations of the Audit Committee. The composition, role and functions of Committee, are provided in the Report on Corporate Governance, which forms part of this annual report.

ANNUAL EVALUATION OF PERFORMANCE

Pursuant to the provisions of the Companies Act, 2013, the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and also in line with Board evaluation policy, Bank has put in place criteria for annual evaluation of performance of Chairperson, Managing Director & CEO, Executive Directors, Non-executive Directors, Independent Directors, Board Level Committees and the Board as a whole.

The performance of the members of the Board other than independent Directors and the Board as a whole has been evaluated separately at the meeting of the Independent Directors.

The performance of the independent Directors has been reviewed by the Board as provided for under Section 149(8) read with Schedule IV of the Companies Act, 2013.

The Statement indicating the manner in which formal annual evaluation of the Directors, Committees of the Board and the Board are given in detail in the report on Corporate Governance, which forms part of the Annual Report.

The Nomination & Remuneration Committee of the Board annually reviews and approves the criteria and the mechanism for carrying out the said exercise effectively.

The Board evaluation policy is displayed on the website of the Bank at: https://www.csb.co.in/pdf/Annexure-III_Board_ Evaluation_PolicY_15072024.pdf

PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Considering the nature of activities of the Bank, with respect to the provisions of Section 134(3)(m) of the Companies Act, 2013, relating to conservation of energy and technology adoption, the Bank is constantly pursuing and making all-out efforts to achieve the desired goals as contained in the Act.

Ensuring compliance of the provisions of Section 134(3) (m) of the Companies Act, 2013, read with Rule (8)(3) of the Companies (Accounts) Rules, 2014, the relevant disclosures to be made are as under:

a) Conservation of Energy

All attempts are being made to reduce energy consumption to the maximum extent possible. As part of these measures, the Bank is installing LED lights and other energy saving equipments in a phased manner across.

b) Technology Absorption

The required technology absorption is being made considering the nature of activities undertaken by the Bank.

c) Foreign Exchange Earnings and Outgo

Foreign Exchange earnings and outgo are part of the normal banking business of the Bank. Being an Authorised Dealer in Foreign Exchange, the Bank has been taking all possible steps to augment export credit.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS

During the FY 2023-24, no significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and the Bank's operations in future.

MAINTENANCE OF COST RECORDS

Being a Banking Company, the Bank is not required to make and maintain such accounts and cost records as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014.

CEO & CFO CERTIFICATION

Pursuant to Regulation 17(8) of the SEBI Listing Regulations, the Certificate issued by Mr. Pralay Mondal, Managing Director & CEO and Mr. Satish Gundewar, Chief Financial Officer of the Bank, for the financial year ended March 31, 2024, was placed before the Board at its meeting held on April 26, 2024.

INFORMATION UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Bank has formulated and adopted a Policy on Prevention of Sexual Harassment of Women at workplace.

The Bank has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The information relating to complaints received and redressed during the FY 2023-24, is disclosed in the Report on Corporate Governance, which forms part of this Annual report.

STRICTURES AND PENALTIES

There are no instances of non-compliance by the Bank and no penalties or strictures have been imposed on the Bank by the Stock Exchange(s) and/or SEBI and/or any other statutory authorities on matters relating to capital market activities, during the last three years.

DISCLOSURE UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016

Being a banking company, the disclosures required as per Rule 8(5)(xi)&(xii) of the Companies (Accounts) Rules, 2014, on the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the financial year and the details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof, are not applicable to the Bank.

However, being a banking company, during the period under review, your Bank was part of the Corporate Insolvency Resolution Process (CIRP) initiated against the two corporate debtors before NCLT for a total book value of Rs. 4.06 crore.

ANNUAL RETURN

Pursuant to sub-section 3(a) of Section 134 and sub- section (3) of Section 92 of the Companies Act, 2013, read with Rule 11 of the Companies (Management and Administration) Rules, 2014, as amended, the Annual Return (MGT-7) as on March 31, 2024, will be displayed on the website of the Bank at: https://csb.co.in/investor- relations > General meetings > Annual General Meeting - 2024.

ANNEXURES FORMING PART OF THIS REPORT

The following Annexures as referred to in this Report form part of the Board's Report:

ACKNOWLEDGEMENTS AND APPRECIATIONS

The Board of Directors is grateful to the Government of India, Reserve Bank of India, Securities and Exchange Board of India, Ministry of Corporate Affairs, Stock Exchanges, Insurance Regulatory and Development Authority of India, the domestic banking community, the Registrar and Share Transfer Agent, Depositories and rating agencies for their continued support and guidance. The Board of Directors would like to take this opportunity to express sincere thanks to its valued clients and customers for their continued patronage.

The Board also expresses its deep sense of appreciation and heartfelt thanks to every member of the CSB family for their strong work ethics, excellent performance, professionalism, teamwork, commitment and initiatives which has led the Bank towards reinforcing its customer centric image and making commendable progress in today's challenging environment. The Board looks forward to their continued, dedicated and sincere service to take the Bank to new heights.

Finally, the Board of Directors wish to record their deep sense of obligation and gratitude to all the Shareholders, well- wishers and all other stakeholders of the Bank for their patronage and look forward to continuing this mutually supportive and beneficial relationship in future as well.