Federal Bank Ltd

To

The Members of The Federal Bank Ltd.,

Your directors are pleased to present the 93^rd Annual Report on the business and operations of The Federal Bank Limited ("the Bank"), together with the audited accounts for the Financial Year (FY) ended March 31, 2024. Your Board is voluntarily publishing its first Integrated Report prepared as per Integrated Reporting framework laid down by the International Integrated Reporting Council. It outlines Bank's commitment to stakeholder value creation and defines the actions it takes and outcome it achieved for its stakeholders.

Your Bank is driven by the quest to be one of the most admired banking institutions in the country and is the preferred Personal, NRI and Business banking partner for a growing expanse of customers across India, in both urban and rural areas. Bank's mantra is "Digital at the Fore and Fluman at the Core". That means Redefining human experience, the digital way has been our constant goal for a while now.

(Rs. in Crore)

(Rs. in Crore)

(Rs. in Crore)

Notes:

* Working Funds represent average of total assets as reported to RBI in Form X under Section 27 of the Banking Regulation Act, 1949 during the year. ** Net Interest Income / Average Earning Assets. (Net Interest Income = Interest Income - Interest Expense).

“^Productivity ratios are based on average number of employees for the year.

$ Operating profit represents total income as reduced by interest expended and operating expenses.

Subsidiaries and the Associate Companies of the Bank continued to deliver steady performance. Consolidated net profit attributable to the group for FY 2023-24 is Rs. 3,880.A3 Crore as against Rs. 3.164.72 Crore in FY 2022-23.

As on March 31, 2024, the Bank has following subsidiaries and associate companies:

Federal Operations and Services Limited (FedServ) is a wholly owned subsidiary company of The Federal Bank Limited (the Bank) incorporated on October 26, 2018. FedServ received approval from RBI on November 09, 2018, for commencing its operations. FedServ started its operations w.e.f. December 01, 2018.

As on March 31, 2024, FedServ's Board of Directors has following five members-

? Mr. Siddhartha Sengupta, Non-Executive Director & Chairman

? Mr. Venkatraman Venkateswaran, Non- Executive Director

? Mr. Ajith Kumar K. K., Non- Executive Director

? Mr. Johnson K Jose, Non- Executive Director

? Mr. Prashant Preman, Wholetime Director

During the year ended on March 31, 2024, FedServ has taken significant operational activities of the Bank which includes LCRD back office, document scanning and application support. FedServ is carrying out 125 operational activities of the Bank as on March 31, 2024. The Company does not deal in loans and advances, nor does it accept deposits. FedServ is operating from three locations: - Kochi in Kerala, Visakhapatnam in Andhra Pradesh, and Bengaluru in Karnataka.

The total revenue of FedServ for the year ended on March 31, 2024, was Rs. 78.51 Crore. Rs. 76.47 Crore pertains to services provided by the Company to the Bank and Rs. 2.04 Crore relates to the indirect incomes. The Company had a profit before tax of Rs. 7.18 Crore for the year ended on March 31, 2024. The Net worth of FedServ at the beginning of the year was Rs. 20.62 Crore and closing net worth of FedServ as on March 31, 2024, wasRs. 26.18Crore.

FedServ will help the Bank in servingthe customers better and reducing the cost of operations significantly. FedServ will also help the Bank to improve turnaround time of various operational processes, improve First Time Right (FTR) rate and enable the Bank to become FIRST CHOICE Bank of customers.

The Profit after tax of the Company for the year ended March 31, 2024, increased to Rs. 5.98 Crore from Rs. 4.78 Crore for the year ended March 31,2023. The total assets of the Company increased to Rs. 35.54 Crore as on March 31, 2024, from Rs. 26.07 Crore as on March 31, 2023.

Fedbank Financial Services Limited ("Fedfina") is a subsidiary company of The Federal Bank Limited (the "Bank"), which was incorporated on April 17, 1995, in Kerala at Kochi under the Companies Act, 1956, and was granted a certificate of incorporation by the Registrar of Companies, Kerala at Kochi.The Reserve Bank of India has, pursuant to the certificate of registration dated August 24, 2010, granted approval to Fedfina, to carry on the business of a non-banking financial institution without

accepting public deposits. Presently, the registered and corporate office of Fedfina is at Mumbai, Maharashtra. Fedfina has a well-tailored suite of products targeted to match our customers' needs, which includes mortgage loans, business loans, and gold loans. It also distributes loan products of the Bank. It has 621 branches as of March 31, 2024, across India providing multiple loan products to various segments of borrowers.

Fedfina's Board of Directors comprises of the following eight members as on March 31, 2024:

? Mr. Balakrishnan Krishnamurthy- Chairman and Independent Director

? Mr. Anil Kothuri - Managing Director and Chief Executive Officer

? Mr. Shyam Srinivasan - Non-Executive Director

? Ms. Gauri Rushabh Shah - Independent Director

? Mr. Maninder Singh Juneja - Non-Executive Nominee Director

? Mr. Ashutosh Khajuria - Non-Executive Nominee Director

? Mr. Ramesh Sundararajan - Non-Executive -

Independent Director

? Mr. Sunil Satyapal Gulati - Non-Executive -

Independent Director

The successful launch of Initial Public Offer (IPO) of Fedfina marked a significant milestone in the Company's journey of growth and development. The IPO debuted on both the National Stock Exchange Limited and BSE Limited in November 2023. With an IPO size of Rs. 10.9 Billion, it was oversubscribed by over 2.24 times, with roughly 2.5 Lakhs investors choosing to participate in our goal to empower India. Fedfina's credit ratings also improved to AA+/ Stable by CARE ratings and India Ratings, while CRISIL assigned us AA/Positive rating, highlighting the increased confidence of our stakeholders.

The total revenue of Fedfinafor the financial year ended on March 31, 2024, is Rs. 1,623.00 Crore as against Rs. 1,214.67 Crore for the financial year ended March 31, 2023. The revenue increased by 34% on the back of growth of 22% in loan book during the year. The net profit of the Company increased by 36% to Rs. 244.70 Crore for the financial year ended March 31, 2024, as against Rs. 180.13 Crore for the financial year ended March 31, 2023. The Net worth of Fedfina at the beginning of the financial year, that is, April 1, 2023, was Rs. 1,355.68 Crore and closing Net worth of Fedfina as on March 31, 2024, was Rs. 2,260.83 Crore.

The total AUM of Fedfina as on March 31, 2024, was Rs. 12,191.9 Crore as against Rs. 9,069.6 Crore as on March 31, 2023. The net profit for the company stood at Rs. 244.7 Crore for the year ended on March 31, 2024 as against Rs. 180.1 Crore in the previous year.

Note: The figures reported above for Fedfina are as per the audited IndAS financial statements.

As on March 31, 2024, the Bank has two Associate Companies named M/s. Ageas Federal Life Insurance Company Limited (Formerly known as IDBI Federal Life Insurance Co Ltd.) and M/s. Equirus Capital Private Limited.

The Bank's Joint Venture Life Insurance Company, in association with Ageas Insurance International N.V., namely Ageas Federal Life Insurance Company Limited, commenced the operations in March 2008. As on March 31, 2024, the Bank has a total stake of Rs. 208 Crore in the equity of the Company holding 26% of the equity capital. The total premium collected by Ageas Federal Life Insurance Company Limited during the period ended March 31, 2024, was Rs. 2,697.4 Crore. The Company has declared final dividend of 10.70% for the FY 2023-24.

On the financial front, the company has made a net profit of Rs. 106.97 Crore in FY2023-24. This was the 12^th consecutive year of profit for the company. The total premium rose by 17.8% to Rs. 2,697.40 Crore in FY 2023-24 from Rs. 2,289 Crore in FY2022-23.

Mr. Shyam Srinivasan, Managing Director, and Chief Executive Officer and Ms. Shalini Warrier, Executive Director of the Bank are Non-Executive Directors in Ageas Federal Life Insurance Company Limited.

As of March 31, 2024, Bank holds 19.59% equity stake in Equirus Capital Private Limited. Pursuant to the right of proportionate representation on the Board as well as the power to participate in the financial, operational matters like approval of the business plans, policies, budgets, managerial remuneration, change in KMP etc., the same has been treated as an associate concern as per AS 23 Accounting for Investments in Associates in Consolidated Financial Statements. Equirus Capital Private Limited is a private company domiciled in India and is engaged in the business of Investment banking. It has 4 subsidiaries named Equirus Securities Private Limited, Equirus Insurance Broking Private Limited, Equirus Wealth Private Limited and Equirus Finance Private Limited. The total turnover of Equirus Capital Private Limited on a consolidated basis was Rs. 235.18 Crore in FY 2024 against Rs. 157.60 Crore forFY 2023.

Mr. Lakshmanan Venkateswaran, EVP & Head - Treasury (Treasurer) of the Bank is a Nominee Director on the Board of Equirus Capital Private Limited.

The Consolidated Financial Statements of the Bank along with its Subsidiaries and Associate prepared for the year 2023-24 in accordance with relevant Accounting Standards issued by ICAI forms part of this Annual Report.

The financial position and performance of its Subsidiaries & Associates are given in Form AOC-1, the statement

containing salient features of the financial statements of the subsidiaries/Associate Companies/Joint Venture form part of the Annual Report.

In accordance with third proviso to Section 136(1) of the Companies Act, 2013, the Annual Report of the Bank, containing therein its Standalone and the Consolidated Financial Statements has been hosted on its website, www.federalbank.cQ.in. Further, as per fourth proviso to the said Section, the Audited Annual Accounts of the said Subsidiary Companies of the Bank, considered as part of the Consolidated Financial Statements have also been hosted on the Bank's website, www.federalbank.co.in. The said documents have been hosted on the website of the Subsidiary Companies of the Bank also, in compliance with the said Section.

During the year under review, some of the significant events are listed below:

(i) Broad-based robust credit growth of 20% on a YoY basis.

(ii) Balance Sheet size crossed Rs. 3.08 Lakh Crore.

(iii) Total Deposit crossed Rs. 2.52 Lakh Crore.

(iv) The Total Advances (Net) at Rs. 2.09 Lakh Crore.

During the year under review, CRAR of the Bank has increased to 16.13% for the FY 2023-24 as against 14.81% in the previous year, after considering dividend @ 60% of paid-up capital. Net worth has improved to Rs. 29,089.41 Crore from Rs. 21,419.49 Crore. Total Debts to Total Assets has reduced to 5.85% from 7.42%.

As on March 31, 2024, Gross advances increased by Rs. 35,246.13 Crore (20%) to Rs. 212,622.66 Crore as compared to Rs. 177,376.53 Crore as March 31, 2023. Wholesale Book (gross of IBPC sale) of the Bank grew by 15% with Corporate Institutional Banking growing at 12% and Commercial Banking at 27% on Year-on-Year basis. Retail Book up by 25% with 20% growth in Core Retail segment, 28% growth in Agriculture segment, 21% growth in Business Banking segment, 57% growth in Commercial Vehicle/ Construction Equipment segment, 27% growth in gold loan segment and 141% growth in Micro Finance segment on a Year-on-Year basis.

With the expanding network of banking outlets and customers, the total deposits grew further from Rs. 2.13 Lakh Crore as on March 31, 2023, to Rs. 2.52 Lakh Crore as on March 31, 2024, registering a growth of 18%. The Current Account and Savings Account ('CASA') deposits have recorded an increase of 6% from Rs. 69,740.98 Crore as on March 31, 2023, to Rs. 74,199.74 Crore as on March 31, 2024. Investments increased by Rs. 11,876.18 Crore to Rs. 60,859.53 Crore for FY 2023-24 from Rs. 48,983.35 Crore as on March 31, 2023, which is up by 24%.

During the FY under review, the total income of the Bank has increased by 32% to Rs. 25,267.53 Crore as against the total income of Rs.19,133.63 Crore for FY 2022-23. The Net Profit of the Bank grew by 24% to Rs. 3,720.60 Crore as against Rs. 3,010.59 Crore in the previous year. Operating profit for the year ended increased by 8% to Rs. 5,174.48 Crore from Rs. 4,794.39 Crore. The profit margin for the year ended decreased to 14.72% as against 15.73 % in the previous year.

Consequently, Return on Average Equity ('ROAE') was 14.73 as against 15.02 for FY 2022-23 and Return on Average Asset ('ROAA') was 1.32% as against 1.28% for FY 2022-23. Correspondingly, Basic earnings per share ('EPS') increased from Rs. 14.27 to 16.07 as at the end of FY 2023-24 in comparison to FY 2022-23 whereas diluted earnings per share ('DEPS') is up from Rs. 14.13 to 15.87.

The Gross NPA of the Bank as on March 31, 2024, stood at Rs. 4529 Crore. Gross NPA as a percentage to Gross Advances is at 2.13%. The Net NPA stood at Rs. 1255 Crore and Net NPA percentage is at 0.60% as on March 31, 2024. The Provision Coverage Ratio (excluding technical write offs) stood at 71.08 as on March 31, 2024.

During the FY under review, the Bank has added 141 new banking outlets taking the total count of banking outlets to 1504 as on March 31, 2024. Out of the total banking outlets, 259 are in metros, 216 are in rural, 742 in semiurban and 287 in urban.

Apart from above, the Bank has 2015 ATMs/ Recyclers Including 2 mobile ATMs as on March 31, 2024. The Bank also has its Digital Banking Unit at Kolkata, Representative Office at Abu Dhabi & Dubai and an International Financial Service Centre (IFSC) Banking unit (IBU) in Gujarat International Finance Tec-City (GIFT City).

There is no change in the nature of business of the Bank for the year under review. Further information on the business overview and outlook and state of the affairs of the Bank is discussed in detail in the Management Discussion & Analysis Report.

No material changes and commitments which could affect the Bank's financial position have occurred between the end of the financial year of the Bank and date of this report.

In accordance with Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI Listing Regulations) as amended, the Bank has formulated and adopted a dividend distribution policy,

which was reviewed by the Board. The policy is available on the website of the Bank at https://www.federalbank. co.in/our-commitments. During the year under review, Rs. 554.25 Crore was transferred to Revenue Reserves by the Bank.

In view of the overall performance of the Bank and while retaining capital to support future growth, the Board at its meeting held on May 2, 2024, recommended a final dividend of Rs. 1.20 (60 %) per equity share of Rs. 2/- each fully paid-up, subject to the approval of members at the ensuing 93^rd Annual General Meeting (AGM). The record date for payment of dividend is mentioned in the notice of the ensuing 93^rd AGM of the Bank. In terms of Accounting Standard (AS) - 4 'contingencies and events occurring after the balance sheet date' as notified by the Ministry of Corporate Affairs (MCA) under Section 133 of the Companies Act, 2013 (Act) read together with the Companies (Accounts) Rules, 2014 and the Companies (Accounting Standards) Rules, 2021, such proposed dividend has not been recognised as a liability as on March 31, 2024. Further, shares issued on exercise of stock options after March 31, 2024, till record date will also be eligible for such proposed dividend. In terms of the Income Tax Act, 1961, the dividend income is taxable in the hands of the members. Therefore, the dividend will be paid to the members after deduction of applicable tax, if any. For details, shareholders are requested to refer to the Notice of 93^rd Annual General Meeting of the Bank.

Consequent to the allotment of equity shares as mentioned below, the total issued, and paid-up equity share capital of the Bank increased by Rs. 63.83 Crore to Rs. 487.07 Crore as on March 31, 2024, as compared to Rs. 423.24 Crore, as on March 31, 2023. The equity shares allotted on exercise of Stock options pursuant to Employee Stock Option Scheme rank pari-passu with the existing equity shares of the Bank.

Pursuant to the provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 and considering the growth aspirations, your Bank successfully completed Qualified Institutions Placement ("QIP") of 23,04,77,634 equity shares of face value of Rs. 2 each at an issue price of Rs. 131.90 per Equity Share (including a security premium of Rs. 129.90 per Equity Share) on subscription by Qualified Institutional Buyers ("QIB") aggregating to Rs. 3040 Crore. The issue was opened on July 19, 2023, and closed on July 24, 2023. The allotment of Equity shares was made on July 25, 2023. With respect to disclosure under Regulation 32(7A) of SEBI Listing Regulations, the Audit Committee of the Board at its meeting held on October 16, 2023, had reviewed, and confirmed that the funds raised through QIP issue during the year have been fully utilised for the intended object as mentioned in the offer document and there was no deviation or variation in utilisation of the said funds. Further, no allotment was made to Promoter and Promoter Group under QIP.

During the year under review, the Bank had successfully raised funds of Rs. 958.75 Crore by issue of 7,26,82,048 equity shares of face value of Rs. 2 each at an issue price of Rs. 131.91 per Equity Share (including a security premium of Rs. 129.91 per Equity Share) on subscription by way of preferential allotment. Also, Bank has received an intimation from the Reserve Bank of India on September 28,2023, that it has accorded its approval to International Finance Corporation (IFC) for acquiring aggregate holding of up to 9.70% of the paid-up share capital or voting rights of the Bank subject to the conditions specified therein. Accordingly, the allotment of Equity shares was made on October 11, 2023. The Audit Committee of the Board at its meeting held on January 16, 2024, had reviewed, and confirmed that pursuant to the Regulation 32(7A) of SEBI Listing Regulations, the funds raised through Preferential Allotment during the year have been fully utilised for the intended object as mentioned in the offer document and there was no deviation or variation in utilisation of the said funds. Further, no allotment was made to Promoter and Promoter Group under Preferential Allotment.

The Bank has instituted Employee Stock Option Schemes, duly approved by the shareholders of the Bank to enable its employees including Whole Time Directors to participate in the future growth and financial success of the Bank. The Employee Stock Option Schemes are formulated in accordance with the SEBI guidelines, as amended from time to time. The eligibility and number of options to be granted to an employee is determined based on various parameters such as scale, designation, performance, grades, period of service. Bank's performance and such other parameters as may be decided by the Nomination, Remuneration, Ethics and Compensation Committee of the Board from time to time in its sole discretion.

The Bank's shareholders had approved The Federal Bank Limited Employee Stock Option Scheme 2010 (ESOS 2010) on December 24, 2010, The Federal Bank Limited Employee Stock Option Scheme 2017 (ESOS 2017) on July 14, 2017, and The Federal Bank Limited Employee Stock Option Scheme 2023 (ESOS 2023) and The Federal Bank Limited Employee Stock Incentive Scheme 2023 (ESIS 2023) on August 18, 2023. Whereas the approval for extension of The Federal Bank Limited Employee Stock Option Scheme 2023 and The Federal Bank Limited Employee Stock Incentive Scheme 2023 to employees of subsidiary company(ies) / associate company(ies) was not passed as per the voting results in the 92^nd AGM held on August 18, 2023. Consequently, the respective clauses/ statements in the Scheme Documents are deemed non- operational and invalid.

Under ESOS 2010, the Nomination, Remuneration, Ethics and Compensation Committee granted 3,47,20,200 options during the year 2011-12, 2,44,84,750 options during the year 2012-13, 2,60,94,250 options during the year 2013-14, 1,11,56,450 options during 2014-15,

10,25,000 options during the year 2015-16, 9,65,000 options during the year 2016-17, 1,00,000 options during the year 2017-18 and 55,29,550 options during the year 2023-24. The options granted which are non- transferable, with vesting period of 1 to 5 years subject to standard vesting conditions, must be exercised within five years from the date of vesting. During FY 2024,11,39,220 options had been exercised and as on March 31, 2024 58,97,550 options were in force.

Under ESOS 2017, the Nomination, Remuneration, Ethics and Compensation Committee granted 2,23,18,348 options during the year 2017-18, 3,72,31,307 options during the year 2018-19, 3,05,24,986 options during the year 2019-20,1,68,84,159 options during the year 2020- 21, 37,33,250 options during the year 2021-22,45,03,375 options during the year 2022-23 and 1,05,000 options during the year 2023-24. The options granted which are non-transferable, with vesting period of 1 to 4.25 years subject to standard vesting conditions, must be exercised within five years from the date of vesting. During FY 2024, 1,48,51,893 options had been exercised and as on March 31, 2024, 5,58,27,490 options were in force.

Under ESIS 2023, the Nomination, Remuneration, Ethics and Compensation Committee granted 25,000 options during the year 2023-24. The options granted which are non-transferable, with vesting period of 1 to 3 years subject to standard vesting conditions, must be exercised within four years from the date of vesting. As on March 31, 2024, no options had been exercised and 25,000 options were in force.

Other statutory disclosures as required Regulation 14 of Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 on ESOS are given in website of the Bank in the link: https://www.federalbank.co.in/web/guest/ share holder-information.

As on March 31, 2024, Bank has an outstanding of 4,695 units rated, unsecured, redeemable, non-convertible, Basel III compliant tier II subordinated bonds aggregating toRs. 1995 Crore.

The Bank's overall Capital Adequacy Ratio (CAR) under Basel III stood at 16.13% at the end of fiscal 2024, well above the benchmark requirement stipulated by the RBI. Of this, the common equity tier I (CET I) CAR was 14.61% tier II CAR under Basel III stood at 1.52%.

Pursuant to Sections 124 and 125 of the Act read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ('IEPF Rules'), all unpaid or unclaimed dividends are required to be transferred by the Bank to the Investor Education and Protection Fund ("IEPF" or "Fund") established by the Central Government, after completion of seven years from the date the dividend is transferred to unpaid/unclaimed account.

As a result, the unclaimed/ unpaid dividend for the year 2015-16amountingtoRs.77,51,170 which remained unpaid and unclaimed for a period of 7 years has been already transferred by the Bank to the IEPF.

Further, the unpaid dividend amount pertaining to the financial year 2016-17 will be transferred to IEPF during the Financial Year 2024-25 within statutory timelines. Members are requested to ensure that they claim the dividends referred above before they are transferred to the said Fund. The due dates for transfer of unclaimed dividend to IEPF are provided in the report on Corporate Governance.

The Bank has uploaded the details of unclaimed/ unpaid dividend for the financial year 2016-17 onwards on its website viz., https://www.federalbank.co.in/unclaimed- dividend-warrants and on website of the Ministry of Corporate Affairs viz., www.iepf.gov.in and the same gets revised/updated from time to time pursuant to the provisions of IEPF (Uploading of Information Regarding Unpaid and Unclaimed Amount lying with Companies) Rules, 2012.

Pursuant to the provisions of Section 124(6) of the Act and the Investor Education and Protection Fund (IEPF) Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 notified by the Ministry of Corporate Affairs on September 7, 2016 and subsequently amended vide notification dated February 28, 2017, all the equity shares of the Bank in respect of which dividend amounts have not been paid or claimed by the shareholders for 7 consecutive years or more are required to be transferred to demat account of IEPF Authority. The said requirement does not apply to shares in respect of which there is a specific Order of Court, Tribunal or Statutory Authority, restraining transfer of the shares.

Upon transfer of such shares, all benefits (like dividend, bonus, split, consolidation etc.), if any, accruing on such shares shall also be credited to the Account of IEPF and the voting rights on such shares shall remain frozen till the rightful owner claims the shares. Shares which were transferred to the demat account of IEPF Authority can be claimed back by the shareholder by following the procedure prescribed under the aforesaid rules.

Accordingly, 11,75,439 equity shares of were transferred to demat account of IEPF Authority. The Bank had sent individual notice to all the members concerned and has also published the notice in the leading English and Malayalam newspapers.

The details of the nodal officer appointed by the Bank under the provisions of IEPF are disseminated in the website of the Bank viz., https://www.federalbank.co.in/ unclaimed-dividend-warrants.

As on March 31, 2024, the Fixed Assets stood at Rs. 2386.45 Crore and net fixed assets of Rs. 1,020.06 Crore. Additions during the year amount to Rs. 318.65 Crore.

Building on a strong year gone by, your Bank is set to turn the flywheel further, boosting momentum and forging a path to a whole new trajectory of growth. A pristine balance sheet, best ever profit figures and tailwinds from a booming economy will form the launchpad, from which the organization will catapult itself. And in true Federal fashion it will be a responsible growth, maintaining your Bank's commitment to the environment and other stakeholders, while ensuring value enhancement for its shareholders.

Taking cognizance of the acute competition, especially for deposits, FY25 will be the year of 'More Federal Per Federal'. Spreading customer delight to new markets while at the same time deepening existing relationships, your Bank aspires to become a complete banking partner for its patrons. Robust IT infrastructure, best in class Customer Relationship Management systems, growing Feet on Street with increasing branch network as well as an expanding repertoire of partners, together will aid your Bank in achieving its coveted goal. The coming years will be an exciting time to be part of the Federal brand.

The Bank has received several prestigious awards and recognitions from various revered institutions during the FY 2023-24. Read detailed coverage on pages 10-11

The Equity Shares of the Bank continue to remain listed on BSE Limited and the National Stock Exchange of India Limited. The global depository receipts of the Bank are listed on the London Stock Exchange.

Being a Banking Company, the disclosures relating to deposits as required under Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, 2014, read with Sections 73 and 74 of the Act, are not applicable to the Bank.

The details of Credit Ratings of the Bank as on March 31, 2024, are as follows:

During the year under review, Outlook for fixed deposits was changed from Stable to Positive and credit rating for Tier II bonds was upgraded to AA+ from AA.

The Annual Return for the Financial Year ended March 31, 2024 as required under Section 92 and Section 134 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is available on the Bank's website, https://www.federalbank.co.in/ shareholder-information.

The Bank complies with all applicable secretarial standards.

Pu rsuantto the provisions of Section 186 of the Act, except sub-section (1), do not apply to a loan made, guarantee given, or security provided by a banking company in the ordinary course of its business.

During FY 2023-24, pursuant to the recommendation of the Nomination, Remuneration, Ethics and Compensation Committee (NRC), the Board appointed/ re-appointed the following directors:

? RBI had vide its letter no DoR.GOV. No.1676/08.38.001/2023-24 dated June 26, 2023 accorded its approval for the appointment of Mr. A P Hota (DIN- 02593219), Independent Director, as Part Time Chairman of the Bank with effect from June 29, 2023, till January 14,2026 consequent to retirement of Mr. C Balagopal (DIN: 00430938), Part time Chairman and Independent Director from the Board of the Bank with effect from end of June 28, 2023 upon completion of his tenure of 8 years on the Board of the Bank, in accordance with the regulatory requirements.

? Mr. Harsh Dugar (DIN: 00832748) was appointed as Executive Director of the Bank for a period of three years with effect from June 23, 2023, for a period of 3 years with the approval of Reserve Bank of India vide letter DoR.GOV.No. 1627/08.38.001/2023-24 dated June 22, 2023. The said appointment was approved by the shareholders at its meeting held on August 18, 2023.

? Mr. Elias George (DIN: 00204510) was appointed as Independent Director of the Bank for a period of five years with effect from September 05, 2023. The shareholders through Postal Ballot vide Special Resolution approved appointment of Mr. Elias George for a period of 5 years w.e.f. November 19, 2023.

? Mr. Siddhartha Sengupta (DIN: 08467648) and Mr. Manoj Fadnis (DIN: 01087055) were appointed as an Independent Director of the Bank on June 13, 2019, for a period of 5 years with effect from June 13, 2019, up to June 12, 2024 (both days inclusive). The shareholders of the Bank have given their approval vide Postal Ballot results dated result dated May 18, 2024, for the re-appointment of Mr. Siddhartha Sengupta and Mr. Manoj Fadnis for a period of 3 years w.e.f June 13, 2024, to June 12, 2027.

In accordance with the provisions of the Act and the Articles of Association of the Bank, Ms. Shalini Warrier (DIN: 08257526) Executive Director of the Bank, is liable to retire by rotation at the ensuing Annual General Meeting and being eligible have offered herself for re-appointment.

The Board is of the opinion that the independent directors appointed on the Board possesses necessary integrity, expertise and experience (including the proficiency).

Necessary information pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, in respect of directors to be appointed and reappointed at the ensuing Annual General Meeting are given in the Annexure to the Notice convening the 93^rd Annual General Meeting.

None of the Directors of the Bank are disqualified for being appointed as directors, as specified in Section 164(2) and Rule 14(1) of Companies (Appointment and Qualification of Directors) Rules, 2014.

? Mr. C Balagopal (DIN: 00430938) ceased to be Part time Chairman and Independent Director with effect from June 28, 2023, upon completion of the maximum permissible tenure of eight continuous years, in terms of the provisions of Section 10A(2A) of the Banking Regulation Act, 1949.

? Mr. Ashutosh Khajuria (DIN: 05154975), has retired from the position of Executive Director and Key Managerial Personnel of the Bank upon completion of his term of office from end of day, April 30, 2023.

As on March 31,2024, the following Directors/ Executives continued as Key Managerial Personnel of the Bank:

? Mr. Shyam Srinivasan - Managing Director & Chief Executive Officer.

? Ms. Shalini Warrier - Executive Director.

? Mr. Harsh Dugar - Executive Director.

? Mr. Venkatraman Venkateswaran - Chief Financial Officer.

? Mr. Samir P Rajdev - Company Secretary.

The Bank has received declaration from all the Independent Directors that they continue to meet the criteria of independence as provided under the Companies Act, 2013 (the Act) and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and comply with the Code for Independent Directors as specified under Schedule IV of the Act. In terms of the Companies (Creation and Maintenance of databank of Independent Directors) Rules, 2019 read with the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019, the Independent Directors of the Bank has enrolled his/ her name in the online databank of Independent Directors maintained by the Government.

The Independent Directors have also confirmed that they are not aware of any circumstance or situation, which exists or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgement and without any external influence.

In the opinion of the Board, the Independent Directors are persons of high repute, integrity and possess the relevant expertise and experience in their respective fields. They fulfil the conditions specified in the Act and the Rules made thereunder and are independent of the Management.

Detailed composition of the mandatory Board committees namely Audit Committee, Credit Investment & Raising Capital Committee, Risk Management Committee, Nomination Remuneration, Ethics & Compensation Committee, Stakeholders Relationship Committee, Customer Services, Marketing Strategy and Digital Banking Committee, Special Committee of the Board for monitoring and follow up of cases of frauds, Information Technology & Operations Committee, HR Committee, CSR Committee and the Review Committee of the Board on Non-Cooperative Borrowers & identification of Wilful Defaulters, its number of meetings held during the year

under review and other related details are set out in the Corporate Governance Report which forms part of this Report. There have been no situations where the Board has not accepted any recommendation of the Audit Committee.

To the best of our knowledge and belief and according to the information and explanations obtained to us, the Directors make the following statements in terms of Section 134 (3) (c) of the Companies Act, 2013:

i. that in the preparation of the annual financial statements for the year ended March 31, 2024, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii. that such accounting policies as mentioned in the Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bankas at March 31, 2024 and of the profit of the Bank for the year ended on that date;

iii. that proper and sufficient care has been taken 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;

iv. that the annual financial statements have been prepared on a going concern basis;

v. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;

vi. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively;

The Bank has formulated and adopted a comprehensive 'Compensation Policy' for its Directors, Key Managerial Personnel and Employees, in terms of relevant provisions of the Companies Act, 2013 read with the rules made thereunder, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the guidelines/ circulars issued by the RBI, in this regard, from time to time. The Compensation Policy is reviewed on annual basis and accordingly, the Policy was reviewed by the Board on the recommendation of the Nomination Remuneration and Ethics Committee to align with the regulatory requirements.

We affirm that remuneration paid to the directors is as per the terms laid out in the Nomination and Remuneration Policy of the Bank.

The updated Compensation Policy of the Bank is available on the Bank's website at: https://www. federalbank.co. in/documents/l 018 0/81 6529059/ Comprehensive+Compensa%F4%80%86%9Fon+Policy. pdf/d845aUc-33d8-fd0d - 9 c 3 5 - 1ffef66de995Rs.t=1713416984471

In accordance with relevant provisions of the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 and SEBI Guidance Note on Board Evaluation, the Board has carried out an annual performance evaluation of its own performance and of the directors individually, as well as the evaluation of the working of its various Committees for the year under consideration.

The evaluation process was initiated by putting in place, a structured questionnaire after taking into consideration inputs received from the Directors, covering various aspects of the Board's functioning, such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations, and governance.

Thereafter an exercise was carried out in digital mode using a board evaluation software to evaluate the performance of individual Directors, including the Chairman of the Board, who were evaluated on specified parameters. The performance evaluation of the Independent Directors was carried out by the entire Board, other than the Independent Director concerned. The performance evaluation of the Chairman and the Non-Independent Directors were carried out by the Independent Directors. The Directors expressed their overall satisfaction with the evaluation process.

? If Board is of appropriate size and has the appropriate balance and diversity of background, business experience, industry knowledge, skills and expertise in areas vital to the Bank's success, representing sectors laid down by the regulators, given its current and future position.

? New Board members participate in an orientation program to educate them on the organization, their responsibilities, and the organization's activities, the Board encourages a culture that promotes candid communication.

? The Board oversees management's procedures for enforcing the organization's code of conduct, Action Taken Reports on the discussion/directions of the Board are submitted at regular intervals to the Board.

? The Board oversees risk management through inputs from the Risk Management Committee.

? The Board considers the quality and appropriateness of financial reporting, including the transparency of disclosures.

? The Board ensures compliance with the relevant provisions of the Companies Act and other regulatory provisions as applicable to the Bank.

? The Board oversees the compliance processes.

? The Board views the organization's performance from the competitive perspective - industry and peers' performance, industry trends and budget analysis and with reference to areas where significant differences are apparent etc.

? The Board ensures compliance with the relevant provisions of the Companies Act and other regulatory provisions as applicable to the Company.

? The Board has defined an effective Code of Conduct for the Board and Senior Management.

? Whether the Board monitors and manages potential conflicts of interest of management, members of the board of directors and shareholders, including misuse of corporate assets and abuse in related party transactions.

22.1.2. Board Committee

? The Committee Terms of Reference and composition continue to be appropriate.

? The mandate, composition and working procedures of committees of the Board of Directors is clearly defined and disclosed.

? Committee meetings are organized properly in number, timing and location.

? The Committee is effective in carrying out its mandate.

? The Committee members receive adequate material in advance of Committee meetings, in sufficienttimeand detail to permit members to effectively consider issues to be dealt with.

? The Committee allocates the right amount of time for its work.

? Whether the Committee has fulfilled its functions as assigned by the Board and laws as may be applicable.

? Whether adequate independence of the Committee is ensured from the Board.

? Whether the Committee's recommendations contribute effectively to decisions of the Board.

? Attendance at the Board and Committee meetings.

? Study of agenda in depth prior to meeting and active participation at the meeting.

? Contributes to discussions on strategy as opposed to focus only on agenda.

? Participate constructively and actively in the Committees of the Board in which they are Chairpersons or Members.

? Exercises his skills and diligence with due and reasonable care and brings an independent judgement to the Board.

? Knowledge and Competency: i) How the person fares across different competencies as identified for effective functioning of the entity and the Board ii) Whether the person has sufficient understanding and knowledge of the entity and the sector in which it operates.

? The Director remains abreast of developments affecting the company and external environment in which it operates independent of his being apprised at meetings.

? Whether person is independent from the entity and the other directors and there are no conflict of interest

? Whether the person demonstrates highest level of integrity (including conflict of interest disclosures, maintenance of confidentiality, etc.)

? Works effectively with the Board as a whole.

? Ability to elicit inputs from all Board Members and steerthe discussions to a logical conclusion.

? Works with the Board and directs the management for creating an effective process for long-range or strategic planning for the Company.

? Whether the Chairperson displays efficient leadership, is open-minded, decisive, courteous, displays professionalism, able to coordinate the discussion, etc. and is overall able to steerthe meeting effectively.

? Whether the Chairperson is able to keep shareholders' interest in mind during discussions and decisions.

? Whether the Chairperson is impartial in conducting discussions, seeking views and dealing with dissent, etc.

? Handling of critical situations concerningthe Bank.

? Thinks strategically to promote growth, improve financial performance and gain competitive advantage.

? Understands financial planning, budgeting and management of the organization's investments and overall organization financial perspective.

? Achievements of performance againsttargets set.

b. Qualitative Targets:

? Apprises the Board regarding the organization's financial position and operational budget so as to enable the Board to make informed financial decisions.

? Provides Leadership in developing strategies and organizational plans with the management and the Board of Directors.

? Ensures that the Board is kept informed about all issues concerning the Bank.

? Media interaction and ability to project positive image of the Company.

? Effectively pursues the performance goals in relation to mission and objective of the organization.

? Motivating employees, providing assistance & directions and supervising & safeguard of confidential information.

? Establishment of internal control processes, monitoring policies and encouraging suggestions.

? Cultivates effective Relationship with Industry Foras, Community and business leaders and Regulatory Bodies and Public Officials.

? Ensures compliance with all legal and regulatory requirements.

? Undertaking of various Developmental initiatives within the organisation.

? Compliance with ethical standards & code of conduct and exercising duties diligently.

The agenda and related information are circulated in advance of meetings to allow board members sufficient time to study and understand the information, Information on the annual operating plans and budgets and other updates are provided to the Board; Updates on operating results of the Bank is furnished to the Board, periodically etc. Update on the compliance with the regulatory, statutory or listing requirements are placed before the Board.

The details of familiarization programmes are disclosed on the Bank's website, https://www.federalbank.co.in/ shareholder-information

The Bank recognizes the growing importance stakeholders assign to ESG practices and is always in the forefront to adopt the best practices. The core values

'CARES' reflect the ESG commitment of the Bank and the way in which it operates, and relevant policies are published on the website of the Bank. Details of the ESG initiatives undertaken by the Bank duringthe Financial Year is included in the Annual report as part of the ESG section/ Business Responsibility and Sustainability Report.

The Bank has been formally undertaking Corporate Social Responsibility (CSR) activities well before the provision of CSR under Companies Act, 2013 which had come into effect. With the introduction of Section 135 of the Act making CSR mandatory, the Bank extended its ambit of activities to undertake interventions across India in identified themes directly by the Bank or indirectly through its trust. Our founder's values & ethos based on trust got embedded in the Bank's policies & principles. CSR in the Bank began with the first act of cultivating banking habits in the agrarian society to effectively utilize idle money for productive purposes.

Pursuant to the provisions of Section 135 of the Act, read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 (CSR Rules), as amended, the Bank has constituted the CSR Committee of the Board.

The Bank has constituted and adopted a CSR policy which provides the focus areas (in accordance with Schedule VII of the Act) under which various developmental initiatives are undertaken.

The composition of the CSR Committee, CSR policy and projects/programs approved by the Board are available on the website of the Bank at https://www. f ed era I ban k.co.in/d oc u me nts/10180/24485300 9/ CSR+Policy+2022-23.pdf/b4802e4d-6e8d-3b50-f5a6- e043c97ea340Rs.t=1667373939724

The details of the CSR initiatives undertaken during the financial year ended March 31, 2024, and other details required to be given under section 135 of the Companies Act, 2013 read with rule 8(1) of the Companies (Corporate Social Responsibility Policy) Rules, 2014 are given in Annexure A forming part of this Report.

In compliance with the Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, separate Section on Management Discussion and Analysis, as approved by the Board, which includes details on the state of affairs of the Bank, forms part of this Annual Report.

In terms of Regulation 34(2)(f) of the SEBI Listing Regulations, top 1,000 listed entities based on their market capitalisation as on 31 March, every fiscal year, were required to submit Business Responsibility and

Sustainability Report (BRSR), as part of their annual report in the format prescribed by SEBI.

The Bank has provided BRSR, which indicates the Bank's performance against the principles of the 'National Guidelines on Responsible Business Conduct'. This would enable the Members to have an insight into environmental, social and governance initiatives of the Bank.

The Bank believes that Corporate Governance derives from value system, best management practices, adherence of ethical standard, encompassing its culture, its policies, and its relationships with the stakeholders. Your Bank is committed to achieving and adhering to the highest Corporate Governance standards and has been an integral part of its business. Integrity, transparency, and accountability are the important ingredients of Corporate Governance. The Bank gives importance to uphold the integrity of every transaction which it enters into and the honesty in its internal conduct would be evaluated by stakeholders.

Pursuant to Regulation 34 of the SEBI Listing Regulations, a separate section ie., 'Report on Corporate Governance' has been annexed to this Annual Report along with the certificate issued by the Secretarial Auditor of the Bank confirming compliance with the mandatory requirements relating to Corporate Governance under the SEBI Listing Regulations. The corporate governance framework of the Bank incorporates all the mandatory requirements as prescribed in the SEBI Listing Regulations.

The Bank also files with the Stock Exchanges, the quarterly Report on Corporate Governance in terms of Regulation 27(2) of the SEBI Listing Regulations. The said Reports are available on the Bank's website viz., URL: https://www. federalbank.co.in/shareholder-information

All related party transactions that were entered during the financial year were in the ordinary course of the business of the Bank and were on arm's length basis. Hence, pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014, there are no related party transactions to be reported under Section 188(1) of the Act and Form AOC-2 is not applicable to the Bank. During the year under review, the Bank has not entered any materially significant transaction with its related parties, which could lead to a potential conflict of interest between the Bank and these parties.

All Related Party Transactions were placed before the Audit Committee of the Board for approval. Prior omnibus approval for transactions which are of repetitive nature is obtained from the Audit Committee and accordingly the required disclosures are made to the Committee on quarterly basis in terms of the approval of the Committee.

The policy on Related Party Transactions as approved by the Audit Committee and the Board of Directors

is uploaded on the website of the Bank and the link for the same is https://www.federalbank.co.in/our- commitments.

The details of related party transactions are provided in the notes forming part of the standalone financial statements and the consolidated financial statements.

The Bank has through the years developed and stabilized an effective internal control system calibrated to the risk appetite of the Bank and aligned to the scale, size and complexity of its operations. The scope and authority of the internal audit function is defined in the Internal Audit Policy of the Bank, duly approved by the Board of Directors. In order to help Bank in achieving its mission of adopting the best professional practices prevailing in the industry, while framing the policy, substantial inputs are taken from - RBI guidance note on Risk Based Internal Audit, The internal audit function in Banks' published by Basel Committee on Banking Supervision and RBI Circular on 'Concurrent Audit System'. Internal Audit Policy is reviewed annually. Policy is reviewed considering changes in the guidelines of RBI, Basel Committee recommendations, ICAI guidelines, other statutory / regulatory guidelines, directions of Board/ Audit Committee of the Board issued from time to time and periodic internal guidelines/ instructions issued by the Bank. Risk based Audit framework is reviewed in line with the present business model and industry best practices. At the enterprise level, the Internal Audit Department, on a continuous basis, assesses and monitors the effectiveness of the control systems and its adequacy to meet the growing complexities. The audit function essentially validates the compliance of Bank's processes and operations with regulatory guidelines, accounting procedures and Bank's own internal rules and guidelines. A department level group meets on periodical intervals to discuss latest internal/ RBI/ regulatory guidelines for ensuring that the required changes are implemented for making the audit function updated and dynamic.

The Bank has a robust system towards escalating the audit findings to appropriate levels in the hierarchy of Management and discussions in various committees towards suggesting corrective action and its follow up. The Bank in compliance of the requirements of Section 138 of the Companies Act, 2013, has designated the Head of Internal Audit Department as Chief Internal Auditor of the Bank. Chief Internal Auditor of the Bank directly reports to the Managing Director & CEO of the Bank. Audit Committee of the Board reviews the adequacy and effectiveness of the Internal Audit Function. The Bank has various types of audits which inter-alia include Risk Based Internal Audit, Information System Audit, Third Party Risk Audit, Offsite Audit (audit through use of technology and data analysis), Concurrent Audit, Gold Loan Audit and Management Audit. Branches / Departments are risk rated and the frequency of Risk Based Internal Audit /

Management Audit is decided based on the Risk Rating of the unit. Significant Audit findings and observations are presented to Internal Audit Review Committee of Executives and a report on the meetings of Internal Audit Review Committee of Executives along with significant audit findings, directions / suggestions of the Committee and action taken in such cases are placed to the Audit Committee of the Board for review periodically. Other findings are placed before a department level committee called the 'Internal Audit Department Review Committee' for review and its observations are placed before Internal Audit Review Committee of Executives.

As per the requirement of Companies Act, 2013, Bank has formulated Internal Financial Controls framework. Risk and Controls associated with each process in the Bank are documented under the Internal Financial Controls Framework. Internal Audit Department plays a significant role in testing the control effectiveness for each process under the framework.

The Internal Audit function provides independent assurance to the Board of Directors and Senior Management on the quality and effectiveness of the bank's internal control, risk management and governance systems and processes, thereby helping the Board and Senior Management protect the Bank and its reputation.

The information on conservation of energy and technology absorption pursuant to Section 13A (3) (m) of the Companies Act, 2013 read with the Rule 8 (3) of the Companies (Accounts) Rules, 201A, is mentioned below.

Your Bank has undertaken various initiatives for the conservation of energy and have taken efforts to contribute to low carbon economy. Details of the same are available in the Business Responsibility and Sustainability Report of the Bank which is part of the Annual Report of the Bank and is also available on the Bank's website https://www.federalbank.co.in/shareholder-information

Your Bank is also using better technology to improve energy efficiency, recycling and generating energy from renewable sources. Details of the same are available in the Business Responsibility and Sustainability Report of the Bank which is part of the Annual Report of the Bank and is also available on the Bank's website https://www. federalbank.co.in/shareholder-information

The provisions relating to 13A(3)(m) of the Companies Act, 2013, on particulars relatingto Foreign Exchange Earnings and Outgo are not applicable to a Banking company and as such, no disclosure is being made in this regard.

IT provides the strong foundation that enables your Bank to grow extensively and gain market share. In the following paragraphs, we provide more details of the entire governance structure over IT, with focus on information security.

IT governance comprise processes that ensure the effective and efficient use of IT in enabling our organization to achieve its goals. It is an integral part of corporate governance and consists of the organizational structures, leadership and process that ensure IT sustains and extends the organization's strategy and objectives.

The governance of IT is effectively supervised by the Board of Directors through the IT & Operations Committee consisting of minimum three Directors with at least one Independent Director. All members of the Committee have extensive experience in IT & Operations and are able to provide effective guidance and direction to the management team.

Executive Level Committee which oversees the IT governance function include the Operational Risk Management Committee (ORMC), the Information Security Committee (ISC) and the Project Steering Committee (PSC).

Your Bank has a well-defined Information System Security Policy and a Cyber Security Policy. The effective implementation of these policies is supervised by the Information Security Committee and by the IT & Operations Committee of the Board.

In recognition of the need for enhanced systems security, your Bank conducts a wide range of system audits, using internal and external auditors. These range from the half yearly Vulnerability Assessments (VA) and Penetration Testing (PT) to concurrent audits to an annual end to end audit of IT infrastructure. All the applications, both web based, and mobile based apps exposed to internet are subjected to external penetration testing (PT) before releasing to use.

Bank has deployed best in the class infrastructure to provide availability of service to users and customers without fail. The installed infrastructure is tested for its reliability and robustness by periodic audits. In addition, periodic Disaster Recovery Tests are conducted to ensure the ability to move to the Disaster Recovery infrastructure in the event of downtime in the main production capability.

More details on digital initiatives of the Bank are available in the Management Discussion and Analysis Report, forming part of this Annual Report.

The Bank's Risk Management framework is based on a clear understanding of various risks, robust risk

assessment and measurement procedures and constant monitoring. The Board of Directors oversees all the risks assumed by the Bank. Specific Committees are constituted to facilitate focused oversight of various functions. The Risk Management Committee of the Board sets the standards and governs the risk management functions, thereby bringing in a top to down focus on risk management. The Risk Management Committee of the Board reviews all risk management policies of the Bank. The Committee reviews the Risk Appetite framework. Internal Capital Adequacy Assessment Process (ICAAP) and Stress testing. The Committee oversees setting up of risk limits and exposure ceilings, implementation of Basel III guidelines and the activities of the executive level risk management committees. The Committee assesses the level and direction of major risks pertaining to credit, market, liquidity, operational, reputation, technology, information security, compliance and capital as a part of the risk dashboard. In addition, the Committee oversees risks of subsidiaries covered under the Group Risk Management Framework.

The Risk Management Policies approved by the Board of Directors and reviewed from time to time with updated regulatory and internal guidelines form the governing framework for each type of risk.

The Integrated Risk Management Department of the Bank co-ordinates and administers the risk management functions in the Bank. The Department has four divisions for managing the main risk streams, Credit risk, Market risk, Operational risk and Information Security Division. Dedicated teams within the divisions are responsible for assessment, monitoring and reporting of various material risks. Default risk and asset quality of loan portfolio are monitored and managed by the Credit Risk Division. Market Intelligence Unit (MIU) formed for the purpose of monitoring large value accounts is linked to Credit Risk Division. The Bank has established an independent Mid Office as part of Market Risk Division for monitoring and management of risks in Bank's Treasury portfolio. A dedicated ALM team manages the liquidity risk and interest rate risk. A dedicated E&5/ ESG team is also established as part of the Integrated Risk Management Department. Operational Risk Management, Business Continuity Management and Third Party Risk Management taken care by Operational Risk Division. Governance, Risk and Compliance related to Information Security and Security Event Management is handled by Information Security Division. All the divisions are independent of business operations and coordinate with representatives of the business units to implement the Bank's risk management policies and frameworks. Executive level risk management committees namely, Credit Risk Management Committee, Asset Liability Management Committee, E&S Committee, Operational Risk Management Committee and Information Security Committee regularly assess the respective risks and direct corrective actions wherever required. The risk management functions are coordinated by a Senior

Executive designated as Chief Risk Officer who reports directly to the Managing Director & CEO. All material risks of the Bank emerging in the course of its business are identified, assessed and monitored in the Internal Capital Adequacy Assessment Process (ICAAP). In our view, all the material risks of the Bank are identified, assessed and managed adequately.

As mandated by RBI guidelines for Entities with asset size of Rs. 15,000 Crore and above as at the end of the previous year, the Statutory Audit of the Bank shall be conducted under joint audit of a minimum of two audit firms (Partnership firms / Limited Liability Partnerships (LLPs)).

RBI vide its letter D0S.RP0.l\lo.S2722/08.09.005/ /2022-23 dated 28.07.2022 had granted approval for appointment of M/s. Varma & Varma, Chartered Accountants and M/s. Borkar & Muzumdar, Chartered Accountants as the Joint Statutory Auditors oftheBankfor FY 2022-23 for their third year. Accordingly, M/s. Varma & Varma, Chartered Accountants, Kochi and M/s. Borkar & Muzumdar, Chartered Accountants, Mumbai had retired at the conclusion of the 92^nd Annual General Meeting after completion of their term for three years.

The Shareholders in the 92^nd Annual General Meeting held on August 18, 2023, approved the appointment M/s. Suri & Co, Chartered Accountants (Registration No. 004283S), Chennai, together with M/s. MSKA & Associates, Chartered Accountants (Registration No. 105047W), Mumbai for a period of three (3) years as Joint Statutory Auditors of the Bank from the conclusion of 92^nd AGM till the conclusion of 95^th AGM respectively.

As per the requirement of the Companies Act, 2013, M/s. Suri & Co, Chartered Accountants and M/s. MSKA & Associates, Chartered Accountants have confirmed that their appointment if made would be within the limits specified under Section 141(3) (g) of the Act and they are not disqualified to be appointed as statutory auditor/s in terms of the provisions of the proviso to Section 139(1), Section 141(2) and Section 141(3) of the Act and the provisions of the Companies (Audit and Auditors) Rules, 2014.

RBI vide letter Ref CO.DOS.RPD. No.S2374/08.09.005/2023-24 dated June 27, 2023, had granted approval for appointment of M/s Suri & Co, Chartered Accountants (FRN 004283S) and M/s. MSKA & Associates, Chartered Accountants (FRN 105047W) as the Joint Statutory Auditors of the Bank.

As required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, M/s. Suri & Co, Chartered Accountants (Registration No. 004283S), Chennai, and M/s. MSKA & Associates, Chartered Accountants (Registration No. 105047W), Mumbai have

confirmed that they hold a valid certificate issued by the Peer Review Board of ICAI.

There is no qualification or adverse remark in Auditors' Report. There were few incidents of fraud requiring reporting by the Auditors under Section 143(12) of the Act.

Pursuant to the provisions of Section 204 of The Companies Act, 2013, the Bank has appointed M/s. M Damodaran & Associates LLP, Company Secretaries, Chennai as Secretarial Auditor to conduct Secretarial Audit of the Bank for the FY 2023-24. Accordingly, the Secretarial Audit Report for FY 2023-24 is annexed to this report as Annexure B. The Audit Report issued by the Secretarial Auditors for the said FY form part of this Report which is self-explanatory.

No offence of fraud was reported by the Secretarial Auditor of the Bank.

Pursuant to Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with SEBI Master Circular No. SEBI/FIO/CFD/PoD2/ CIR/P/2023/120 dated July 11, 2023, the Bank has obtained Secretarial Compliance Report, certified by CS M. Damodaran, M/s M Damodaran & Associates LLP for Financial Year ended March 31, 2024, on compliance of all applicable SEBI Regulations and circulars/ guidelines issued thereunder and the copy of the same was submitted with the Stock Exchanges.

Bank has a robust Fraud Risk Management Framework which provides guidance on managing the Fraud Risk methodically. Various mitigation measures and surveillance mechanisms are deployed to combat both internal and external frauds. Employees and Public are periodically sensitized on the various frauds and the prevention techniques, with a view to create an atmosphere of alertness.

Preventive Vigilance Workshop is a flagship program designed by Vigilance Department for the employees, which explicates different gaps exploited by the miscreants to perpetrate fraud in the banking industry. The program also ensures deliverance of strategies to be taken to avert such frauds. Fraud Prevention Committee meetings are conducted at Branches on a regular basis to familiarize the various modus operandi of trending frauds and their corresponding preventive measures. Branches are identified based on risk rating and Preventive Vigilance Audits are conducted annually in the identified Branches.

Customer awareness on financial frauds is another area that is well covered by the Bank through multiple communication channels including SMS, E-Mails, posters at Branches, ribbon messages on the Bank's website, internet banking webpage, etc. Bank is also giving special focus to Cyber related frauds and awareness messages are disseminated among the public through various mediums including social media, website, etc. A dedicated campaign is launched, titled "TwiceisWise", with an aim to spread awareness among the public, on cyber related frauds. Posters and videos cautioning the public about novel fraud incidents are shared through social media handles, TV channels, web channels, etc.

All cases detected / reported in the Bank are investigated in detail and appropriate process refinements/systemic corrections are ensured to avert similar incidents in future.

Bank has also implemented a robust Whistle Blower Policy termed as Protected Disclosure Scheme (PDS). The policy aims at establishing an effective vigil mechanism in the Bank to quickly spot aberrations and deal with it at the earliest. Policy assures confidentiality and protection to the whistle blower against any personal vindictive actions such as humiliation, harassment or any other form of unfair treatment. Directors and Employees of the Bank, employee representative bodies, customers, stakeholders, non-governmental organizations (NGO) and members of the public can lodge complaints / disclosures under this scheme. A dedicated e-mail ID is provided for sending complaints/disclosures under PDS. PDS policy is made available in Bank's website and Intranet. To access Bank's Whistle Blower Policy- https:// www.federalbank.co.in/documents/10180A5777/ Whistle+Blower+po lie y+or+PDS. pdf/558aea51-1335- 4546-9c9a-28c5030377a1Rs.t=1688463892328.

During the financial year under review, the Bank has not received any significant or material orders passed by any Regulatory Authority, Court orTribunal which shall impact the going concern status and Bank's operations in future.

In terms of Section 136 of the Companies Act, 2013, the copy of the financial statements of the Bank, including the consolidated financial statements, the auditor's report and relevant annexures to the said financial statements and reports are being sent to the Members and other persons entitled thereto, excluding the information in respect of the employees of the Bank containing the particulars as specified in Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5 (2) of the said Rules is available on the website: https:// www.federalbank.co.in/shareholder-information.

The ratio ofthe remuneration of each Directorto the median remuneration of the employees of the Bank and other details in terms of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report as Annexure C.

The Bank had constituted Internal Complaints Committee, as per letter and spirit contained in the provisions of "The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013", at 9 Zones and Head Office to prevent and redress the complaints relating to sexual harassment and to organize workshops/ awareness programs to empower women employees while handling cases relating to sexual harassment. Workshops/ awareness programs regarding women empowerment were conducted at various locations pan India. The data with regard to the redressal of complaints by the Internal Complaints Committee are as follows:

As per section 3(7) of The Insolvency and Bankruptcy Code, 2016, Corporate person does not include any financial service provider, thereby the Bank is excluded from the purview of the Code. There have been several applications made or are pending in the name of the Bank as a Financial creditor against any default occurred as part of the course of business. The particulars of the corporate debtor and claim value is annexed to this report as Annexure D.

Policy on Board Diversity of the Bank mainly depends on the qualifications for appointment of Directors of the Bank as contained in the Banking Regulation Act, 1949 and satisfying the Fit and Proper Criteria for directors as per the regulatory requirement of RBI.

The Bank continuously seeks to enhance the effectiveness of its Board and to maintain the highest standards of corporate governance and recognizes and embraces the benefits of diversity in the boardroom. Diversity is ensured through consideration of a number of factors, including but not limited to skills, regional and industry experience, background and other qualities. In forming its perspective on diversity, the Bank also takes into account factors based on its own business model and specific needs from time to time.

Board Diversity enhances the quality of performance of the Board; ushers in independence in the performance of the Board; eradicates the gender bias in the Board; achieves sustainable and balanced performance and development; supports the attainment of strategic objectives & also ensures compliance of applicable laws and good corporate practices.

Nomination, Remuneration, Ethics and Compensation Committee has the responsibility for leading the process for Board appointments and for identifying and nominating, for approval by the Board, candidates for appointment to the Board. The benefits of diversity continue to influence succession planning and continue to be the key criteria for the search and nomination of directors to the Board. Board appointments will be based on merit and candidates will be considered against objective criteria, having due regard for the benefits of diversity on the Board, including gender. While making Board appointments, the regulatory requirements for appointment of at least one-Woman Independent Director on the Board of the Bank is also considered.

Your directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

? Neither the Managing Director nor the Whole-time Directors of the Bank received any remuneration or

commission from any of its subsidiaries.

? Issue of equity shares with differential rights as to dividend, voting or otherwise.

? There were no revisions in the financial statements.

? Issue of share (including sweat equity shares) to employees of the Company under any scheme as permitted under any provision of Companies Act, 2013 except Employee Stock Option Scheme (ESOS) as mentioned elsewhere in the Directors' Report.

? The Bank is not required to maintain cost records as specified by the Central Government under section 148(1) of the Companies Act, 2013.

? The requirement to disclose the details of difference between amount of the valuation done at the time of onetime settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof, is not applicable.

Your Directors place on record their deep appreciation to every member of Federal family for their hard work, dedication and commitment, to whom the credit for the Bank's achievements goes, particularly during this unprecedented year.

The Board of Directors take this opportunity to express their deep sense of gratitude to Government of India, Reserve Bank of India, various State Governments and regulatory authorities in India and overseas for their valuable guidance, support and cooperation. The Directors also wish to express their gratitude to Investment Banks, Rating Agencies and Stock Exchanges for their wholehearted support. The Directors record their sincere gratitude to the esteemed customers and all other well- wishers for their continued patronage.

And to you, our shareholders, we are deeply grateful for the confidence and faith that you have always reposed in us.

For and on behalf of the Board of Directors of The Federal Bank Limited