Fedbank Financial Services Ltd

To the Members,

Your Directors take pleasure in presenting the 29^th Annual Report on the business and operations of the Fedbank Financial

Services Limited ("Fedfina") together with the Audited Financial Statements for the Financial Year ended 31^st March, 2024 ("year under review").

The key highlights of the Audited Financial Statements are presented in the table below:

(Rs in Lakhs)

The successful launch of Initial Public Offer (IPO) of your Company marked a significant journey of growth and development. The IPO debuted on both the Stock Exchanges namely National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) on 30th November, 2023. With an IPO size of Rs 109,226 Lakhs, it was oversubscribed by over 2.2 times, widening our investor base to over 2.5 Lakhs.

The total revenue of the Company for the financial year ended 31^st March, 2024 has increased to Rs 1,62,300 Lakhs as against Rs 1,21,467 Lakhs for the previous year ended 31st March, 2023. Similarly, Net Interest Income (NII) grew by 27.29% from Rs 63,801 Lakhs in FY 2022-23 to Rs 81,212 Lakhs this year. 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 24,470 Lakhs for the financial year ended 31^st March, 2024, as against Rs 18,013 Lakhs for the financial year ended 31 st March, 2023. The Net worth of Companyatthebeginningofthefinancialyear, i.e 1st April, 2023 was Rs 1,35,568 Lakhs and closing Net worth of Fedfina as on 31 st March, 2024, was Rs 2,26,083 Lakhs.

As of 31st March, 2024, the AUM increased by 34% compared to FY 2022-23, reaching Rs 12,19,188 Lakhs while disbursements improved by 26% to Rs 13,57,828 Lakhs.

The net profit rose by 36% over the previous year, reaching Rs 24,470 Lakhs.

Over the past year, Rs 52,213 Lakhs of the gold loan AUM was through co-lending, and your Company conducted portfolio sell-down transactions totaling Rs 1,46,089 Lakhs. At the end of the year, 18.7% of the AUM was off the books.

Your Company?s credit ratings has upgraded to AA+/ Stable by CARE ratings and India Ratings, while CRISIL assigned AA/Positive rating, boosting the confidence of our stakeholders at large.

The details of Credit Ratings are as follows:

Your Company has broadened its geographical presence by establishing new branches in different locations, thereby enhancing accessibility for its customers. With the opening of 46 branches, the branch network has now reached to 621 branches as on 31st March, 2024 across 19 states for different products and the break-up is as follows:

Your Company is well positioned to achieve steady growth, enhance credit quality, and deliver higher returns. Company?s strong parentage and credit rating enables it to raise equity and debt on competitive terms. Your Company offers a range of products that have significant in underpenetrated market segments. Your Company has a management team with over 20 years of experience and a dedicated workforce of 4,298 employees spread across 18 states and union territories.

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

In view of the planned business growth, your Directors deem it proper to preserve the resources of the Company for its activities and therefore, do not propose any dividend for the financial year ended 31st March, 2024.

Since your Company is one of the top 1000 listed Companies as per market capitalisation as on 31^st March, 2024 and in accordance with the Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated and adopted a Dividend Distribution Policy, which was reviewed and approved by the Board and the same is available on the website of the Company at https:// www.fedfina.com/corporate-governance/

Your Board of Directors have proposed a transfer of Rs 4,894 Lakhs to the Statutory Reserves maintained under Section

45IC of the RBI Act, 1934.

Your Company follows a well-defined Asset Liability Management (ALM) system, driven by Asset Liability Committee (ALCO), to monitor efficiently appropriate policy initiatives.

Liquidity positions are examined regularly across the specified time buckets to assess and manage mismatches.

The ALM policy and practices of your Company are in line with the regulatory guidelines, designed to protect against liquidity as well as interest rate risk challenges and to optimise cost of funds at all times to fund growth requirements.

The Authorised Share Capital of the Company is

Rs 1000,00,00,000/- (Rupees One Thousand Crores only) consisting of 99,00,00,000 (Ninety nine Crores) equity shares of Rs 10/- (Rupees Ten) each and 1,00,00,000 (One Crore) 0.01% non-cumulative redeemable preference shares of face value Rs 10 (Rupees Ten) each.

The Issued, Subscribed and Paid up share capital of the Company as on 31st March, 2023 was Rs 321,91,16,050/- divided into 32,19,11,605 equity shares of face value of Rs 10 each.

During the year under review, 45,94,146 equity shares of face value of Rs 10/- each were allotted to employees pursuant to exercise of stock options by the employees of the Company under Fedbank Financial Services Limited - Employees Stock Option Plan 2018, as amended. As a result, the Issued,

Subscribed and Paid up share capital of the Company stood at Rs 3,26,50,57,510/- divided into 32,65,05,751 equity shares of face value of Rs 10 each.

During the year under review, the Company successfully launched an Initial Public Offer ("IPO") by way of fresh issue and Offer for Sale aggregating to Rs 109,226 Lakhs. The Company alloted 4,28,81,148 equity shares to the eligible applicants on 29^th November, 2023. The equity shares of the Company were listed and trading of the equity shares commenced on 30th November, 2023 on the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) after the IPO.

As on 31^st March, 2024, the Issued, Subscribed and Paid up share capital of the Company stood at Rs 369,38,68,990/- divided into 36,93,86,899 equity shares of face value of Rs 10 each.

The Board of Directors at their meeting held on 26^th May, 2023, approved the issue of 10,000 (Ten Thousand) Rated, Listed, Unsecured, Redeemable, Sub-Ordinated, Fully Paid-Up, Non-Convertible Debentures of Rs 1,00,000/- (Rupees One Lakh Only) each aggregating to Rs 100,00,00,000/- (Rupees One Hundred Crores Only) with the Green Shoe Option of 10,000 (Ten Thousand) Rated, Listed, Unsecured, Redeemable, Sub-Ordinated, Fully Paid Up, Non-Convertible Debentures of Face Value of Rs 1,00,000/- (Rupees One Lakh

Only) each, aggregating to Rs 100,00,00,000/- (Rupees One Hundred Crores Only) on private placement basis (ISIN INE007N08023).

Further, The Board of Directors at their meeting held on 26^th June, 2023 approved the issue of 10,000 (Ten Thousand) Rated, Listed, Senior, Secured, Redeemable, fully paid-up, non-convertible debentures of Rs 1,00,000/- (Rupees One

Lakh Only) Each, aggregating to Rs 100,00,00,000/- (Rupees One Hundred Crores Only) on private placement basis (ISIN INE007N07041).

All the Non-Convertible Debentures issued by the Company are listed on BSE. The details of all the outstanding Non-convertible Debentures as on 31^st March, 2024 are mentioned below:

In compliance with the Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements), 2015 ("SEBI Listing Regulations"), a separate section on Management Discussion and Analysis which includes details on the state of affairs of the Company forms part of this Annual Report.

Corporate Governance has been an integral part of the way your Company has been doing business since inception. The

Company believes that good Corporate Governance emerges from the application of the best and sound management practices and compliance with the laws coupled with adherence to the highest standards of transparency and business ethics.

Your Company seeks to embed and sustain a culture that will enable us to achieve our objectives through effective corporate governance and enhance transparent engagement with key stakeholders.

A separate report on Corporate Governance setting out the governance structure, principal activities of the Board and its Committees and the policies and practices that enable the Board to fulfil its stewardship responsibilities together with a Certificate from the Secretarial Auditor of the

Company regarding compliance of conditions of Corporate

Governance as stipulated under SEBI Listing Regulations forms part of this Annual report.

The Ministry of Corporate Affairs, Government of India, came out with the ‘National Voluntary Guidelines on Social,

Environmental and Economic Responsibilities of Business in July 2011. These guidelines contained certain principles that are to be adopted by companies as part of their business practices and requires disclosures regarding the steps taken to implement these principles through a structured reporting format, viz. Business Responsibility Report. Pursuant to Regulation 34(2)(f) of SEBI Listing Regulations the requirement of submitting a Business Responsibility Report shall be discontinued after the financial year 2021 22 and thereafter, with effect from the financial year 2022 23, the top one thousand listed entities based on market capitalisation shall submit a Business Responsibility and Sustainability report in the format as specified by the SEBI from time to time. Since your Company is one of the top 1000 listed Companies as per market capitalisation as on 31^st March, 2024, this Annual Report includes a separate report on the Business Responsibility and Sustainability Report, which outlines the Company?s environmental, social and governance initiatives.

The Company had formulated the Employees Stock Option

Plan, 2018 (ESOP Scheme, 2018), duly approved by the shareholders of the Company to enable its employees to participate in the future growth and financial success of the Company. The Company also intends to use this ESOP Scheme, 2018 to attract and retain talent in the organisation. The ESOP Scheme, 2018 was 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 on the basis of various parameters such as scale, designation, performance, grades, period of service, Company?s performance and such other parameters as may be decided by the Nomination & Remuneration Committee of the Board from time to time in its sole discretion.

The Shareholders of the Company had approved the

Employees Stock Option Plan, 2018 ("ESOP Scheme 2018") on 13th November, 2018 with the overall ceiling of 1,54,05,405 stock options to be granted.

During the year under review, the ESOP Scheme 2018 was approved vide special resolution passed by the members in their Extra Ordinary General Meeting on 21st July, 2023 to vary the exercise period in the interest of the employees of the Company. Subsequently, post listing of equity shares of the Company on 30th November, 2023, BSE and NSE, in compliance with the regulatory requirements in terms of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) the ESOP Scheme 2018 was ratified by the members vide special resolution passed in the Extra Ordinary General meeting held on 22^nd February, 2024.

During the year under review, 45,94,146 equity shares of face value of Rs 10/- each were allotted to employees pursuant to exercise of stock options by the employees of the Company under ESOP Scheme 2018.

Other statutory disclosures as required under 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 Company at https://www.fedfina.com/investors-relations/overviews/ annual-report/?page=other-disclosures-reports Your Company is also proposing to formulate a new scheme titled "Fedbank Financial Services Limited- Employees Stock Option Scheme, 2024" in accordance with the SEBI regulations for the benefit of employees. The said scheme was recommended/ approved by the Nomination & Remuneration Committee (NRC) and Board of Directors respectively subject to the approval of the Shareholders of the Company.

The Company has formulated Nomination and

Remuneration Policy under the provisions of section 178 of the Act and SEBI Listing Regulations and the same is uploaded on the website of the Company at https://www. fedfina.com/corporate- .

The Company has also formulated Compensation Policy in accordance with the RBI circular dated 29^th April, 2022

During the year under review, there were no changes in the Memorandum of Association of the Company. However, prior to the IPO, the Company had altered the Articles of Association of the Company ("AOA") in conformity to the SEBI regulations as amended vide special resolution in the Extra Ordinary General Meeting of the members held on 21st July, 2023.

The Company had also altered its AOA vide special resolution at its 28^th AGM held on 27th September, 2023 to align with the amendment brought out vide the Regulation 23(6) of Securities Exchange Board of India (Issue and Listing of Non-Convertible Securities) (Amendment) Regulations, 2023 dated 2nd February, 2023.

Further, to align with the post-listing requirements stipulated by SEBI, the AOA was again amended by reinstating certain key clauses which survived post listing vide special resolution in the Extra Ordinary General Meeting of the members held2021, on 22^nd February, 2024.

Your Company has a diverse and inclusive Board of Directors which endeavors to protect the interest of all the stakeholders. The composition of the Board is in accordance with section 149 of the Companies Act, 2013 and Regulation 17 of the SEBI Listing Regulations with an optimum combination of Executive, Non-executive and Independent Directors including one woman director.

As on 31st March, 2024, the Board of Directors of your Company comprised of four (4) Independent Directors, one (1) Non-executive Director, two (2) Nominee Directors and one (1) executive Director. The Company has a Non-executive Chairman who is not related to the MD & CEO.

• Appointment/re-appointment of Directors

During the year under review, Mr. Anil Kothuri (DIN: 00177945), Managing Director & CEO (MD & CEO) was re-appointed as MD & CEO for a further term of five years with effect from 11 th December, 2023 till 10th December, 2028. The said re-appointment was approved by shareholders vide special resolution passed in the Annual General Meeting(‘AGM?) held on 27th September, 2023.

On the recommendation of the Nomination and Remuneration Committee, the Board of Directors appointed Mr. Sunil Satyapal Gulati(DIN: 00016990) and Mr. Ramesh Sundararajan (DIN: 10500779) as Additional Directors in the capacity of an Independent Director effective from 15th March, 2024.

• Resignation of Directors

During the year under review, Mr. Peruvemba Ramachandran Seshadri had resigned from the Directorship of the Company with effect from 22^nd August, 2023 due to his appointment as Managing Director & CEO in South Indian Bank by RBI. The Director has confirmed that there are no material reasons apart from the reasons given in his resignation letter.

As on the date of the report, Mr. Anil Kothuri, MD & CEO has tendered his resignation as MD & CEO of the Company on August 09, 2024 and the Board of Directors of the Company at their meeting held on August 09, 2024 had considered, noted and accepted his resignation and the effective date of resignation shall be 8^th November, 2024 after serving his entire notice period of 3 months from the date of his resignation.

• Directors retirement by rotation

Mr. Shyam Srinivasan (DIN: 02274773), who retired by rotation and offered himself for re-appointment was reappointed in the AGM held on 27th September, 2023. In accordance with the provisions of section 152(6) of the Act and the Articles of Association of the Company, Mr. Anil Kothuri (DIN: 00177945), Managing Director & CEO is liable to retire by rotation and being eligible, offers himself for re-appointment at the ensuing AGM.

However, Mr. Anil Kothuri has tendered his resignation as MD & CEO of the Company on 9^th August, 2024 and the Board of Directors of the Company at their meeting held on 9^th August, 2024 had considered, noted and accepted his resignation. Further, as per the HR policy of the Company, the effective date of resignation of Mr. Anil Kothuri, MD & CEO after serving his entire notice period of 3 months from the date of his resignation shall be 8^th November, 2024. His re-appointment shall be subject to his tenure ending on 8^th November, 2024.

Apart from the aforesaid, there were no other changes in the composition of the Board of Directors and Key Managerial Personnel of the Company during the year under review.

Subsequently, additional changes that took place in composition of the Board of Directors from the financial year ended 31^st March, 2024 and as on the date of this report are as follows: Mr. Ashutosh Khajuria ceased to be the Nominee Director representing The Federal Bank Limited on the Board of the Company after completion of his term of nomination on 30th April, 2024.

Further, The Federal Bank Limited nominated Mr. Harsh Dugar(DIN: 00832748) as Nominee Director on the Board of the Company in place of Mr. Ashutosh Khajuria.

Based on the recommendation of the Nomination and Remuneration Committee and in accordance with the Articles of Association of the Company, the Board of Directors of the Company appointed Mr. Harsh Dugar as Nominee Director on the Board effective from 1^st May, 2024.

The members of the Company confirmed and approved these special resolutions pertaining to appointment of

Mr. Sunil Satyapal Gulati and Mr. Ramesh Sundararajan as Independent Directors on 6^th June, 2024 by means of Postal Ballot, through remote e-voting only.

The appointment of Mr. Harsh Dugar as Nominee Director and continuation of Mr. Maninder Singh Juneja (DIN: 02680016) as Nominee Director in accordance with regulation 17 of SEBI Listing Regulations were also approved by the Shareholders of the Company through postal ballot on 6th June, 2024.

During the year under review, your Board of Directors met 18 times and the gap between any two meetings did not exceed one hundred and twenty days.

The dates on which the meetings were held are 28^th April, 2023, 8th May, 2023, 26th May, 2023, 21st June, 2023, 17^th July, 2023, 19th July 2023, 26th July 2023, 8th August, 2023, 5^th September, 2023, 6th November, 2023, 15th November, 2023, 16th November, 2023, 21st November, 2023, 23^rd November, 2023, 25th November, 2023, 29th November, 2023, 11th December, 2023 and 15th January, 2024.

There are four (4) Independent Directors on the Board of the Company. The Independent Directors have submitted declarations that they continue to fulfil independence laid down under Section 149 of the Companies Act, 2013, Regulation 16 of SEBI Listing Regulations and complied with the Code for Independent Directors as prescribed in Schedule IV to the Act.

The Independent Directors have 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 judgment and without any external influence.

In the opinion of the Board, the Independent Directors are eminent persons and possess requisite qualifications, integrity, expertise and experience in the relevant functional areas.

All the Independent Directors have a valid registration in the Independent Director?s databank of the Indian Institute of Corporate Affairs as required under Rule 6(1) of the Companies (Appointment and Qualification Amendment Rules, 2019.

The Company has defined a manner of evaluation as per the provisions of the Act and SEBI Listing Regulations and formulated a method for the evaluation of the performance of the Board, its Committees and individual Directors. The annual evaluation of the performance of the individual

Directors (including the Chairman of the Board) were conducted on parameters such as level of engagement and contribution and independence of judgment - thereby safeguarding the interests of the Company.

The performance evaluation of the Independent Directors were carried out by the entire Board, excluding the director being evaluated. The performance evaluation of the Chairman, the Non-Independent Directors and Board as a whole were carried out by the Independent Directors. The Board also carried out annual performance evaluation of the working of each of its Board constituted Committees.

Your Company has received declaration from each

Director on fulfilling the fit and proper criteria in terms of the provisions of Master Direction - Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023 ("RBI NBFC Master Directions"). The Board of Directors has confirmed that all the existing Directors are fit and proper to continue to hold the appointment as Directors on the Board, as reviewed and recommended by the Nomination and Remuneration Committee on fit and proper criteria under RBI NBFC Master Directions. The Directors have expressed their satisfaction with the evaluation process. The Board opined that the Board Committees? composition, structure, processes and working procedures are well laid down and that the Board Committees members have adequate expertise drawn from diverse functions, industries and business and bring specific competencies relevant to the Company?s business and operations.

All Board members and senior management personnel have affirmed compliance with the Company?s code of conduct for the FY 2023-24.

Details on composition of various Committees of the Board, terms of reference and number of meetings of the Committees held are given in the Corporate Governance Report which forms part of the Annual Report.

COMPLIANCE WITH THE SECRETARIAL STANDARDS of Director) Fifth During the year under review, the Company has complied with the applicable secretarial standards issued by the Institute of Company Secretaries of India.

There was no change in the nature of business of the Company during the financial year ended 31st March, 2024.

As on the date of this report, the Company has received the Corporate Agent (Composite) license dated 10^th June, 2024 issued by Insurance Regulatory and Development

Authority of India ("IRDAI") for soliciting life, general and health insurance ("Composite") as Corporate Agent under Insurance Regulatory and Development Authority of India (Registration of Corporate Agents) Regulations, 2015.

Your Company has been always prided itself in being a people first organisation. assisted us in seamless joining for new joiners in different geographies where we have expanded our presence. Our employee strength has grown by 19.2% as compared to the previous year in line with our expansion plans.

Our concentration revolves around continuous growth, culture and a learning experience. To nurture this talent, your Company have implemented practices focused on skill enhancement through regular training sessions, leadership development programmes, and a transparent performance management system. Additionally, it is given priority on healthy work-life balance for our employees, believing it enhances their productivity and motivation.

In continuation to our endeavor to promote Gender Diversity at workplace, your Company continue the Restart with Fedfina initiative to help women with career breaks to restart their career.

Women Leadership Program was launched where the women leaders participating in the program were from different industries, providing them an additional dimension towards their learning. The objective of the program is to equip our women employees in Manager and above grades to grow further as leaders. They went through a 3 months long transformational journey focused towards developing leadership mindset, strategic thinking and building an executive presence.

Further, Professional development policy is designed to empower our workforce with the skills and knowledge necessary for career advancement. Additionally, the well-being of our employees through regular health checkups is prioritised, ensuring their physical and mental health is diligently monitored.

Disclosures relating to remuneration and other details as required in terms of the provisions of Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure I which forms part of this Report. Further, in accordance with the provisions of Sections 197(12) & 136(1) of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the list pertaining to the names and other particulars of employees drawing remuneration in excess of the limits set out in the aforesaid Rules, is kept open for inspection during working hours at the Registered Office of the Company and the Report & Accounts as set out therein are being sent to all the Members of the Company. Any Member, who is interested in obtaining these, may write to the Company Secretary at the Registered Office of the Company.

Your Company?s capital adequacy ratio stood at 23.46% as on 31st March, 2024 which is well above the threshold limit of 15% prescribed by the Reserve Bank of India. Tier-I Capital ratio alone stood at a healthy 19.72%.

Your Company is a Non- Deposit taking Systematically Important NBFC and has not accepted public deposits falling under purview of provisions of section 73 of the Act during the year. Hence the requirement of furnishing the details in terms of Chapter V of the Companies Act, 2013 is not applicable.

Risk management forms an integral part of our business. Your Company has a Board approved Risk Management Policy that lays down the overall framework for identifying, assessing, measuring and monitoring various elements of risk involved in the businesses and for formulation of procedures and systems for mitigating such risks. Themain of objective of this policy is to ensure sustainable and prudent business growth. The Risk Management Committee, a dedicated board-level committee, plays a pivotal role in continuously reviewing, approving, and refining our risk management policies and procedures and governing framework for each type of risk on a regular periodicity. The Committee monitors the compliance of risk parameters and aggregate exposures within the defined limits.

Your Company continues to invest in people, processes, training and technology; so as to strengthen its overall Risk Management Framework.

Detailed discussion on risk management is disclosed in the Management Discussion and Analysis which forms part of this report.

1. STATUTORY AUDITORS & THEIR REPORT

M/s BSR & Co. LLP, Chartered Accountants (Firm Registration No. 101248W / W- 100022) were appointed as Statutory Auditors of your Company at the Twenty sixth Annual General Meeting (AGM) held on 24^th September, 2021 for a tenure of three years till the conclusion of the Twenty ninth Annual General Meeting to be held for the year 2024.The Audit Report submitted by M/s BSR & Co. LLP, Chartered Accountants, for the financial year 2023-24 does not contain any qualification,reservation or adverse remark.

2. SECRETARIAL AUDITORS & THEIR REPORT

M/s. DM & Associates Company Secretaries LLP were appointed as the Secretarial Auditors to conduct the Secretarial Audit for the financial year ended 31 ^st March, 2024. The Report of the secretarial auditors in the prescribed Form MR-3 is set out in Annexure-II to this Report. The Secretarial Audit Report does not contain any qualifications, reservation or adverse remark except to the extent stated below: The Bombay Stock Exchange Limited (BSE) vide their email dated 15th December, 2023 imposed a fineof Rs 1,53,400/- under Regulation 52(1) of the SEBI Listing Regulations applicable for debt listed companies for delayed submission of Unaudited Financial results for the quarter and half year ended 30th September, 2023 beyond the prescribed timelines. The Company has paid the fine on th December, 2023. BSE vide their email dated 30th October, 2023 imposed a fine Rs 11,800/- under Reg 60(2) of the SEBI Listing Regulations for delay in submission of notice of record date for repayment of debentures for ISIN INE007N07041. Further, the Company has submitted a waiver application to BSE in this regard which is currently under consideration by BSE. The Reserve Bank of India, in exercise of powers conferred under section 58G(1)(b) read with section 58B (5) (aa) of the Reserve Bank of India Act, 1934 on 20^th September, 2023 imposed a monetary penalty of Rs 8.80 Lakhs on the Company for delay in reporting of one fraud case through FMR-1 within the prescribed period. The Penalty amount of Rs 8.80 Lakhs has been remitted to RBI Enforcement Department on 28th September, 2023.

Your Company?s equity shares have been listed on National Stock Exchange of India Limited (NSE) and on BSE Limited (BSE) on 30th November, 2023 on account of completion of the Initial Public Offering ("IPO") of 7,80,42,871 equity shares of face value of Rs 10 each at an issue price of Rs 140 (issue price for employees was Rs 130/-) per equity share, consisting of fresh issue of 428,81,148 equity shares amounting lo Rs 60,000 Lakhs and through an offer for sale of 3,51,61,723 equity shares amounting to Rs 49,226 Lakhs. The Company has Non-convertible Debentures listed on BSE. As a debt listed Company, pursuant to Regulation 52 of the SEBI Listing Regulations, your Company is required to submit quarterly financial results within 45 days from the end of the quarter. Due to the aforesaid IPO process, the submission of the unaudited limited review results for the quarter and half year ended 30^th September, 2023 has got delayed and is being submitted after 45 days, the period stipulated by Regulation 52 of the SEBI Listing Regulations, subsequent to the results being approved by the Board of Directors at its board meeting held on 11th December, 2023.

The Company intimated the record date on 31^st August, 2023 instead of 30th August, 2023 to BSE. The delay of audit observations of the internal auditors one working day was purely unintentional miss out as the period was inadvertently calculated as 7 working days of the Company excluding the date of intimation and the date of meeting. The fraud case occurred during the period when the Country was going through a COVID wave disrupting regular functioning of Sub-Registrar offices,restrictions ontraveloffices capacity. The Pandemic also caused irregular and untimely access to the developer?s office for seeking further inputs for reconciling records etc. thus delaying the final conclusion of the fraud. The moment all the facts were in place to reach the conclusion, the fraud incident was immediately reported to RBI on 11th May, 2021.

The observations made in the Secretarial of Chartered Auditors report are self-explanatory and therefore do not call for any further comments.

Pursuant to the Board approved ‘Fraud Risk Management and Fraud Investigation Policy? of the Company, the information relating to all frauds of Rs 1 Lakhs and above are reported to the Board on quarterly basis.

During the year under review, the frauds detected and the same has been timely reported to the Audit Committee/ Board as well as to the Reserve Bank of India (RBI) amounting to Rs 321.84 Lakhs. Pursuant to the section 143(2) of the Companies Act, 2013, no frauds were reported by the Auditors of the Company to the Audit Committee during the year under review.

Your Company believes that strong internal control system and processes play a critical role in the health of the Company. Your Company has instituted adequate internal control systems commensurate with the nature of its business and size of operations. Your Company?s well-defined organisational structure, documented policy guidelines, defined authority matrix and internal controls ensure efficiency of operations, compliance with internal policies and applicable laws and regulations as well as protection of resources. The internal control system is supplemented by internal audits, regular reviews by the management and standard policies and guidelines which ensure reliability of financial and all other records. Your Company?s Internal Audit department performed regular reviews of business processes to assess the effectiveness and adequacy of the internal control systems, compliance with policies and procedures. andAll significant follow up actions were duly reported to the Audit Committee.

Internal Financial Controls laid down by the Company is a systematic set of controls and procedures to ensure orderly and efficient conduct of its business including adherence to the Company?s policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information. Internal financial controls not only require the system to be designed effectively but also to be tested for operating effectiveness periodically.

During the year under review, your Company had engaged firm to evaluate the internal financial control framework and to test its operating effectiveness. Based on the testing conducted by the aforesaid firm, the Board is of the view that the Company has laid down adequate internal financial controls commensurate with the nature and size of its business operations and these controls are adequate and operating effectively and no material weaknesses have been observed.

All the related party transactions that were entered into during the financial year were on arm?s length basis and in the ordinary course of business.

The related party transactions were placed before the Audit Committee on quarterly basis. Transactions with related parties, as per the requirements of Accounting Standards, are disclosed in the notes to accounts annexed to the financial statements.

Particulars of all contracts or arrangements with related parties referred to in sub-section (1) of section 188 in the prescribed form are provided in the form AOC-2 in accordance with the Rule 8 (2) of the Companies (Accounts), 2014 Rules. Form AOC-2 is set out in Annexure III to this report.

No material changes and commitments affecting the financial position of the Company have occurred between the Financial year ended 31^st March, 2024 till the date of this report.

The Company, being a NBFC registered with RBI, is exempted from complying with the provisions of section 186 of the

Act related to loans made, guarantees given and securities provided. However, the details of investments made by the Company pursuant to the provisions of Section 186 (4) of the Act are given in Note 9 to the Financial Statements.

Your Company has Prevention of Sexual Harassment (POSH) policy which is in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. Your Company is in compliance with the constitution of Internal Complaints Committee (ICC) to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. The following is a summary of sexual harassment complaints received and dealt with during FY 2023-24:

No. of complaints received: Nil

No. of complaints disposed of: Not Applicable.

The Company has a Corporate Social Responsibilty (CSR) Committtee in place in accordance with section 135 of the Act. The CSR Committee has formulated and recommended to the Board, a Corporate Social Responsibility Policy ("CSR Policy") indicating the activities to be undertaken by the Company, which has been approved by the Board. The CSR Policy is available on the Company?s website at https://www. fedfina.com/csr/. The Company has spent Rs 3,10,06,228/- on CSR activities during the year under review.

The required disclosure as per Rule 8 of Companies

(Corporate Social Responsibility Policy) Rules 2014 is attached as Annexure IV to this report.

The Reserve Bank of India (RBI) granted the Certificate of Registration to the Company in August 2010 vide Registration No. N-16.00187, to commence the business of a non-banking financial institution without accepting public deposits. Your Company is categorised as NBFC in Middle layer pursuant to Master Direction Reserve Bank of India (Non-Banking Financial Company Scale Based Regulation) Directions, 2023 and has complied with and continues to comply with all the applicable regulations and directions of the RBI.

Details of auctions pertaining to gold loans conducted during the year under review are set out below:

Note: No entity within the Company?s group including any holding or associate Company or any related party had participated in any of the above auctions.

As per the provisions of Section 177(9) of the Companies Act, 2013, the Company is required to establish an effective Vigil Mechanism for Directors and employees to report genuine concerns. The Company as part of this has in place a Board approved "Whistle Blower Policy" to deal with the instances of fraud and mismanagement, if any. The said policy is available on the website of your Company at https://fedfina. com/corporate-governance/ This Vigil mechanism of the Company is overseen by the Audit Committee and provides adequate safeguard against victimisation of employees and also provide direct access to the Chairman of the Audit Committee.

Out of 18 complains received, 3 complaints were pertaining to vigil mechanism framework/policy. All the said complaints received were resolved.

Your Company affirms that no personnel has been denied access to the Audit Committee.

Pursuant to section 92 (1) of the Companies Act 2013, the Annual Return for the year 2023 24 is placed on the website of the Company (https://www.fedfina.com)

The requirements of disclosure with regard to Conservation of Energy and technology absorption in terms of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules 2014, are not applicable to the Company as it does not engage in any manufacturing activity.

Your Company is continued to invest in technology and digitisation to support various functions, including loan origination, credit underwriting, risk management, collections, customer service, and retention. Enabling measures by RBI and the Government of India, such as implementing IndiaStack, Aadhaar-based eKYC, and scaling up UPI, have helped transform digital infrastructure for the industry.

Our ‘Phygital? doorstep model blends digital and physical approaches, offering tailored services and ensuring continuous customer engagement. We prioritise data and system security and have invested in superior infra and support like next-generation firewall, 24x7 SOC (Security Operations Centre) and automated security tools. No foreign exchange was earned orspentintermsofactual and material orders passed inflows or outflows during the year under review.

Pursuant to Section 134 of the Companies Act, 2013, the Directors confirm I. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; II. such accounting policies have been selected and applied 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 Company as at 31st March, 2024 and the profits of the Company for the financial year ended on that date; III. proper and sufficient care had been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; IV. the annual accounts have been prepared on going concern basis; and V. proper systems had been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. VI. internal financial controls to be followed by the company had been laid down and that such internal financial controls were adequate and operating effectively.

In terms of applicable provisions of the Act, the Company discloses that during the year under review: i. The Company has not issued any shares with differential rights and hence no information as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished. ii. The Company has not issued any sweat equity shares and hence disclosure as per Section 54(1)(d) of the Act read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014 is not provided. iii. There were no instances of non exercising of voting rights in respect of shares purchased directly by employees under a scheme hence no information pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014 is furnished. byiv. There are no significant the regulators or courts or tribunals that would impact the going concern status of the Company and its future operations. v. The Company has not made any application nor any proceedings are pending under the Insolvency and Bankruptcy Code, 2016. vi. There were no instances of one-time settlement for any loans taken from the Banks or Financial Institutions. vii. There were no amounts required to be transferred to Investor Education and Protection Fund (IEPF) pursuant to section 124 and 125 of the Companies Act, 2013 read with Rules made thereunder. viii. The Company being, a Non-Banking Financial Company is not required to maintain cost records as prescribed under section 148(1) of the Act. ix. The Company does not have any subsidiary, joint venture or associate Company. x. The Company has shifted its registered office from one locality to another within the same city i.e. from ‘Kanakia Wall Street, A Wing, 5th Floor, Unit 511, Andheri Kurla Road, Chakala, Andheri East, Mumbai- 400093, Maharashtra? to ‘Unit no.: 1101, 11th Floor, Cignus, Plot No. 71A, Powai, Paspoli, Mumbai 400 087, Maharashtra? effective from 25th April, 2024.

Certain statements in this Report may be forward-looking and are stated as may be required by applicable laws and regulations. Actual results may vary from those expressed or implied, depending upon economic conditions, Government policies and other incidental/related factors.

The employees at all grades of the Company have extended their whole-hearted cooperation to the Company for the smooth conduct of the affairs of the Company and the employee relations of the Company have been cordial. Your Directors wish to place on record their deep sense of appreciation for all the employees whose commitment, cooperation, active participation, dedication and professionalism has made the organisation?s significant growth possible.

Your Directors would like to place on record, their gratitude for the cooperation and guidance received from all the statutory bodies, especially the RBI. The Directors also thank the shareholders, clients, vendors, investors, banks and other stakeholders in placing their faith in the Company and contributing to its growth.