Fino Payments Bank Ltd

Your Directors take pleasure in presenting the 9th (Ninth) Annual Report of Fino Payments Bank Limited ("Bank") covering business and operations together with the Audited Financial Statements for the Financial Year ended March 31, 2025.

FINANCIAL HIGHLIGHTS

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

BUSINESS OPERATIONS AND STATE OF AFFAIRS OF THE BANK

The brief details on business operations during the financial year ended March 31, 2025 and state of affairs of the Bank as on March 31, 2025 are given below:

1. Throughput grew by a whopping 29% year-on-year basis in FY2024-25.

2. The Bank processed 337.9 Crore + transactions in FY2024-25, a 60% growth compared to the previous year.

3. Digital throughput grew exponentially by 70% to touch nearly 49% of overall throughput in FY2024-25 at H2,25,482 Crore.

4. The Bank opened approx. 0.33 Crore current and savings accounts of customers in FY2024-25, of which 96.07% + were subscription based accounts.

5. The Bank delivered a robust ROE of 15.4% in FY2024-25.

6. Merchant network went up by 9%, the Bank's physical outreach reached to 0.19 Crore banking points in FY2024-25.

The total revenue of the Bank was H1847.1 Crore for the year ended March 31, 2025 as compared to H1,478.4 Crore in previous financial year. The Bank's profit after tax stood at H92.5 Crore for the year ended March 31, 2025 as compared to H86.2 Crore in previous financial year.

Your Bank is a public limited company and has a license from the Reserve Bank of India ("RBI") to carry on business of Payments Bank in India. The Bank became a Scheduled Bank with effect from January 01, 2021 vide Notification dated January 01, 2021 published in the Government of India Gazette and continues to comply with all the applicable regulations and guidelines prescribed by RBI from time to time.

The detailed operational performance of the Bank during the year has been discussed in the Management Discussion and Analysis Report which forms an integral part of this Annual Report.

CHANGE IN NATURE OF BUSINESS

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

The Bank believes that it has the relevant expertise, technology and team to cater to additional dimensions of the Banking sector and contribute further towards the Government led initiatives of financial inclusion. You are aware that the Bank had, in the previous financial year, filed an application for transition into a Small Finance Bank ("SFB") with the RBI. The approval of RBI is awaited.

TRANSFER TO RESERVES

The Bank has appropriated H23.13 Crore to statutory reserves and H12.87 Crore to Investment Fluctuation Reserve for the financial year ended March 31, 2025.

DIVIDEND

In accordance with Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended ("SEBI Listing Regulations"), the Bank has formulated a Dividend Distribution Policy, which ensures a fair balance between rewarding its shareholders and retaining enough capital for the Bank's future growth and expansion plan. The Dividend Distribution Policy is available on the Bank's website at https://web4.finobank.com/investors/ corporate-governance#code-policies.

Your Bank is in its growing stage and with a view to conserve capital to support its future growth, your Directors do not recommend any dividend for the financial year ended March 31, 2025.

CAPITAL STRUCTURE

During the year under review, there has been no change in the authorised share capital of the Bank. The authorised share capital of the Bank stood at H90,00,00,000/- (Rupees Ninety Crore only) divided into 9,00,00,000 (Nine Crore) Equity Shares of face value of H10/- (Rupees Ten Only) each.

The issued, subscribed and paid up share capital of the Bank as on March 31, 2025 was H83,21,84,020/- (Rupees Eighty Three Crore Twenty One Lakh Eighty Four Thousand and Twenty Only) comprising of 8,32,18,402 (Eight Crore Thirty Two Lakh Eighteen Thousand Four Hundred and Two) Equity Shares of face value of H10/- (Rupees Ten Only) each.

This includes 4,100 (Four Thousand and One Hundred) fully paid-up Equity Shares of H10/- (Rupees Ten only) each allotted by the Bank during the year under review to eligible employees pursuant to the exercise of stock options under Fino Payments Bank Limited-Employee Stock Option Policy-2023.

Your Bank has not issued any Equity Shares with differential voting rights.

CAPITAL ADEQUACY RATIO

Your Bank is well capitalised and has a strong capital adequacy ratio. As on March 31, 2025, the Capital to Risk Assets Ratio ("CRAR") of your Bank was 80.45% which is well above the minimum regulatory requirement of 15% CRAR prescribed by the RBI.

Out of the above, Tier I capital adequacy ratio stood at 73.87% and Tier II capital adequacy ratio stood at 6.58%.

MATERIAL CHANGES AND COMMITMENTS

Apart from the details given in this Report, there were no material changes or commitments affecting the financial position of the Bank which have occurred between the end of the financial year i.e. March 31, 2025 and up to the date of this Report.

TRANSFER TO INVESTORS EDUCATION AND PROTECTION FUND

During the year under review, the Bank was not required to transfer any fund or Equity shares to the Investor Education and Protection Fund as per the provisions of Section 125 of the Companies Act, 2013 ("Act") read with applicable rules framed thereunder, as amended from time to time.

EMPLOYEES STOCK OPTION SCHEMES

The Bank has formulated and implemented Fino Payments Bank Limited - Employees Stock Option Policy, 2020 ("ESOP 2020") and Fino Payments Bank Limited - Employees Stock Option Policy, 2023 ("ESOP 2023") with a view to attract, retain, incentivize and motivate employees of the Bank by way of rewarding their performance and promoting their increased participation in the overall corporate growth and profitability. The ESOP 2020 has been amended from time to time in view of regulatory changes/ business requirements. None of these amendments were prejudicial to the interest of the employees. During the year under review, the Board of Directors of Fino Payments Bank Limited at its meeting held on December 18, 2024, approved the adoption of Fino Payments Bank Limited - Employee Stock Option Policy, 2024 ("ESOP 2024").

The shareholders through Postal Ballot on February 15, 2025 approved the ESOP 2024. The key objectives of the ESOP 2024 are to reward the employees for their past association and performance as well as to motivate them to contribute to the growth and profitability of the Bank.

The Nomination and Remuneration Committee ("NRC") which also acts as a Compensation Committee of the Board is entrusted with the responsibility of implementation and administration of the ESOP policies of the Bank.

The details and disclosures as required under Regulation 14 of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("SBEB & SE Regulations") and circulars issued thereunder, have been uploaded on the Bank's website at www.finobank.com under the ‘Investors' section. The Equity Shares issued and allotted under

ESOP 2020, ESOP 2023 and ESOP 2024 shall rank pari-passu with the existing equity shares of the Bank.

Further, disclosure as per the ‘Guidance Note on Accounting for Employee Share-based Payments' issued by the Institute of Chartered Accountants of India, are disclosed in the Notes to the Financial Statements of the Bank for the financial year ended March 31, 2025, which forms an integral part of this Annual Report. ESOP 2020, ESOP 2023 and ESOP 2024 are in compliance with the SBEB & SE Regulations. A certificate from the Secretarial Auditor of the Bank that the ESOP Schemes of the Bank have been implemented in accordance with the SBEB & SE Regulations and in accordance with the resolutions passed by the shareholders of the Bank, shall be placed before the members at the 9th Annual General Meeting ("AGM") of the Bank.

UTILIZATION OF NET PROCEEDS FROM THE INITIAL PUBLIC OFFER ("IPO")

The net proceeds from the IPO of the Bank in November 2021 were utilised towards the objects stated in the Red Herring Prospectus dated October 22, 2021 i.e. towards augmenting its Tier – I capital base to meet its future capital requirements. Further, the proceeds from the Fresh Issue were also used towards meeting the expenses in relation to the IPO. The Bank on a quarterly basis a_irms that there is no deviation in utilisation of the issue proceeds from the objects stated in offer documents and submits the same to Stock Exchanges in compliance with the SEBI Listing Regulations.

The Bank would require additional capital for expanding its operations and modernization of its banking technology platform and keeping su_icient capital to meet the regulatory and compliance requirements to operate as a Payments Bank. Further, in the event of the Bank obtaining a SFB licence, additional funds would be required in the current financial year to support additional activities as an SFB. This future need for capital is expected to be met through internal accruals.

HOLDING, SUBSIDIARY & ASSOCIATE COMPANIES

The Bank does not have any subsidiary, joint venture or associate Company. The details of Holding Company are given below:

ANNUAL RETURN

In accordance with the provision of Section 92 (3) of the Act, the Annual Return in the prescribed form MGT-7 is uploaded on Bank's website at https://web4.finobank.com/investors/ financials#annual-report.

CREDIT RATING

The details of credit rating as on March 31, 2025 along with its outlook are given hereunder:

ICRA Ratings Limited has re-a_irmed credit rating of [ICRA] BBB+ (Stable) and [ICRA] A2+, for long-term and short-term overdra_ facilities of the Bank, respectively vide its press-release dated May 22, 2025.

DEPOSITS

Being a banking company, the disclosures relating to deposits as required in accordance with Sections 73 and 74 of the Act read with Companies (Accounts) Rules, 2014 and other applicable provisions of the Act are not applicable to the Bank.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

As on March 31, 2025, the composition of the Board was in compliance with the provisions of the Act, the SEBI Listing Regulations and the Guidelines for Licensing of "Payments Banks" dated November 27, 2014 and Circular on Corporate Governance in Banks - Appointment of Directors and Constitution of Committees of the Board dated April 26, 2021 issued by the RBI and the Articles of Association of the Bank.

The Board of the Bank is duly constituted with an optimum combination of Executive and Non-Executive Directors including Independent Directors and Women Directors. The changes in the composition of the Board that took place during the period under review were carried out in compliance with the provisions of the Act, SEBI Listing Regulations and applicable RBI Regulations/ Guidelines.

In terms of the requirement of the SEBI Listing Regulations and Banking Regulation Act, 1949, the Board has identified core skills, expertise and competencies of the Directors in the context of the Bank's businesses for effective functioning. The list of key skills, expertise and core competencies of the Board of Directors is detailed in the Corporate Governance Report.

In the opinion of the Board, all the directors possess the requisite qualifications, experience and expertise and hold high standards of integrity.

In terms of SEBI Listing Regulations, the Bank has received Certificate from M/s. DM & Associates Company Secretaries LLP, Practicing Company Secretaries, the Secretarial Auditors of the Bank, that none of the Directors on the Board of the Bank have been debarred or disqualified from being appointed or continuing as a Director of any Company by the Securities and Exchange Board of India/ Ministry of Corporate Affairs or any such other statutory authority. The said certificate is annexed to the Corporate Governance Report forming part of this Annual Report.

Appointment/re-appointment of Directors made during the FY2024-25 and till the date of this report.

Based on the recommendation of the NRC, the Board and the shareholders approved the following appointments/ reappointment during FY2024-25 and till the date of this report:

1. Shareholders approved the appointment of Mrs. Anita Sudhir Pai (DIN: 07651059) as an Independent Director of the Bank for a period of five consecutive years with effect from January 11, 2024 up to January 10, 2029 (both days inclusive) vide special resolution passed through postal ballot on April 07, 2024.

2. Shareholders approved the appointment of Mrs. Neeta Mukerji (DIN: 00056010) as an Independent Director of the Bank for a period of five consecutive years with effect from March 05, 2024 up to March 04, 2029 (both days inclusive) vide special resolution passed through postal ballot on May 25, 2024.

3. Mrs. Deena Asit Mehta (DIN: 00168992) was re-appointed as an Independent Director of the Bank, for the second term of three consecutive years with effect from March 19, 2025 up to March 18, 2028 (both days inclusive) vide special resolution passed through postal ballot on May 18, 2025.

Re-appointment of Independent Director and Part-time Chairperson

The NRC and Board at its meetings held on July 29, 2025 and July 30, 2025 respectively recommended the re-appointment of Mr. Rajat Kumar Jain (DIN: 00046053) as an Independent Director for a second term of three years to hold office from November 02, 2025 to November 01, 2028 (both days inclusive), not liable to retire by rotation, subject to members' approval. The reappointment of Mr. Rajat Kumar Jain as an Independent Director is being put up for your approval at the ensuing AGM.

The profile and particulars of experience, attributes, skills of Mr. Rajat Kumar Jain together with his other directorships and committee memberships in terms of Regulation 36 of SEBI Listing Regulations and Secretarial Standard on General Meetings ("SS-2") issued by the Institute of Company Secretaries of India forms part of the Notice of the 9th AGM.

The NRC and Board have also recommended Mr. Jain's appointment as Part-time Chairperson of the Bank, subject the approval of RBI.

Re-appointment of Director retiring by rotation

In accordance with the provisions of Section 152 of the Act and the Articles of Association of the Bank, Mr. Rishi Gupta (DIN:01433190), Managing Director & CEO of the Bank retires by rotation at the ensuing AGM and being eligible, has offered himself for re-appointment. The re-appointment of Mr. Rishi Gupta is being put up for your approval at the ensuing AGM. The profile and particulars of experience, attributes, skills of Mr. Rishi Gupta together with his other directorships and committee memberships in terms of Regulation 36 of SEBI Listing Regulations and SS-2 issued by the Institute of Company Secretaries of India forms part of the Notice of the 9th AGM.

Declaration of Independence

All Independent Directors ("IDs") of the Bank have submitted a declaration that each of them meets the criteria of independence as provided in Section 149(6) of the Act read with Rules framed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations. There has been no change in the circumstances affecting their status as IDs of the Bank. In the opinion of the Board, the IDs possess the requisite integrity, experience, expertise and proficiency required under all applicable laws and the policies of the Bank.

All IDs of the Bank have complied and a_irmed to abide by Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended, with respect to enrolling their name in the online databank of independent directors maintained by Indian Institute of Corporate Affairs ("IICA") and qualifying the online proficiency self-assessment test, as applicable.

Key Managerial Personnel and changes therein

As of March 31, 2025 following were the ‘Key Managerial Personnel' pursuant to the provisions of Section 203 of the Act:

Mr. Rishi Gupta

Managing Director & CEO

Mr. Ketan Merchant

Chief Financial Officer

Mr. Basavraj Loni

Company Secretary & Compliance Officer

Mr. Basavraj Loni resigned from the services of the Bank with effect from May 31, 2025.

POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

The appointment of Directors and Key Managerial Personnel is in accordance with the provisions of the Companies Act, 2013, SEBI Listing Regulations, Banking Regulation Act, 1949 and RBI guidelines on appointment/re-appointment of Directors.

In accordance with the provisions of Section 178(3) of the Act read with rules made thereunder, SEBI Listing Regulations and applicable RBI guidelines dated November 04, 2019 on Compensation of Whole-Time Directors/ Chief Executive Officers/ Material Risk Takers and Control Function staff, the Board of Directors has formulated and adopted a comprehensive Compensation Policy which inter-alia covers criteria for remuneration of its Directors, Key Managerial Personnel, Material Risk Takers and Senior Management Personnel of the Bank. The proposals for appointment/re-appointment of Directors are submitted to the NRC along with requisite documents/ disclosures received in the prescribed format from proposed candidates as Director. The NRC carries out the fit and proper assessment after ascertaining the veracity of documents submitted, experience and qualifications required for the post and if deems fit, recommends the profile of the proposed candidate for appointment to the Board for its approval.

The terms of reference of the NRC are available on the website of the Bank at https://web4.finobank.com/investors/corporate-governance#code-policies.

The NRC and the Board ensures that the remuneration to be paid to the proposed appointee is in accordance with the Compensation Policy of the Bank and applicable RBI guidelines issued in this regard. During FY2024-25, the Board reviewed the Compensation Policy, which regulates the appointment and remuneration of Directors, Key Managerial Personnel, Material Risk Takers and Senior Management Personnel of the Bank. Remuneration of Directors, Key Managerial Personnel, Material Risk Takers and Senior Management Personnel are reviewed by the NRC and approved by the Board in accordance with the applicable laws. The Compensation Policy of the Bank is available on the Bank's website at https://web4.finobank.com/ investors/corporate-governance#code-policies.

MEETINGS OF THE BOARD AND COMMITTEES

In compliance with the statutory requirements, the Board has eight mandatory Committees viz. Audit Committee, Nomination & Remuneration Committee, Corporate Social Responsibility and Environmental, Social, and Governance Committee, Risk & Asset Liability Management Committee, Stakeholders Relationship Committee, IT Strategy Committee, Customer Service Committee and Special Committee of Board on Fraud Monitoring. The Bank also has three operating/ special purpose Committees for better administration viz. Committee of Directors (Operations), Strategic Investment Committee and Business & Corporate Restructuring Committee.

The Board met 07 (seven) times during the year and the details of meeting dates, attendance etc. are given in the Corporate Governance Report.

All the recommendations made by all Board Committees were accepted by the Board. A detailed update on the composition, governance and terms of reference of Board Committees, attendance of Directors at Board and Committee meetings held during FY2024-25 is provided in the Corporate Governance Report forming part of this Annual Report.

BOARD PERFORMANCE EVALUATION

In accordance with the provisions of the Act and SEBI Listing Regulations, the annual Performance Evaluation of the Board, its Committees, Part-time Chairperson, Managing Director & CEO and individual Directors has been carried out for the year under review. The performance evaluation was carried out internally through circulation of questionnaires covering various aspects of the performance of the Board and its Committees, including composition, roles and responsibilities, Board processes, quality and flow of information etc. The responses received to the questionnaires were discussed at the Independent Directors meeting held on May 27, 2025, NRC and Board meetings held on May 29, 2025 and performance of Board as a whole including its Committees and individual Directors was found to be satisfactory. The areas for improvement were also discussed for implementation.

The policy on the Board's Evaluation framework is made available on the Bank's website at https://web4.finobank.com/ investors/corporate-governance#code-policies.

SUCCESSION PLANNING

Pursuant to the recommendation of NRC, the Board has framed a Policy on Succession Planning at the Board and Senior Management levels. The Policy is periodically reviewed by the NRC and the Board. The Board composition and the desired skill sets/ areas of expertise at the Board level are continuously reviewed and vacancies, if any, are reviewed in advance through a systematic due diligence process.

Succession planning at Senior Management levels, including business and assurance functions, is continuously reviewed to ensure continuity and depth of leadership at one level below the Managing Director & CEO. Successors are identified prior to the position being vacant to ensure a smooth and seamless transition. In the event of any unexpected occurrence in respect of any member in the senior management team, the next person as per the organisation chart and hierarchy shall take interim charge of the position subject to the approval of the NRC, pending a regular appointment in terms of the succession plan. The Policy on Succession Planning is made available on the Bank's website at https://web4.finobank.com/investors/ corporate-governance#code-policies.

FAMILIARISATION PROGRAMME

In accordance with Regulation 25(7) of the Listing Regulations and RBI guidelines, various training programmes were organized for the Board Members, which inter-alia covered topics related to corporate governance, generative artificial intelligence & risk management and overview of the fintech functions.

The details of familiarization programme for Independent Directors is available on the Bank's website at https://web4. finobank.com/investors/corporate-governance#code-policies.

DIRECTOR'S RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(3)(c) of the Act, it is hereby confirmed that: a. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; b. the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as on March 31, 2025 and of the profit of the Bank for that period; c. the Directors have taken proper and su_icient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities; d. the Directors have prepared the annual accounts on a going concern basis; e. the Directors have laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and f. the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

INTERNAL CONTROLS AND THEIR ADEQUACY

The Bank has an Internal Control System commensurate with the size, scale and complexity of its operations. Internal Audit Control System ensures that the regular internal audits are conducted at both the branches and other functional areas. The findings are then taken up by the Audit Committee along with management response for suitable action. The Bank has an adequate and effective Internal Audit System, covering on a continuous basis, the entire gamut of operations and services spanning all locations, business and functions. The Audit Committee monitors the Internal Audit System at regular intervals and directs necessary steps to further improve the Internal Control System.

Statutory Central Auditors and their Report

M/s. A P Sanzgiri & Co, Chartered Accountants (ICAI Firm Registration Number: 116293W) the Statutory Central Auditors of the Bank have conducted Statutory Audit of the Financial Statements of the Bank for the year ended March 31, 2025. The Notes referred in the Auditors' Report are self-explanatory. The Auditors' Report forms an integral part of this Annual Report. There are no qualifications or reservations or adverse remark or disclaimers given by the Statutory Central Auditors.

The total fees paid to the Statutory Central Auditors of the Bank for the financial year ended March 31, 2025 is disclosed in Note No. 55 to Financial Statements for the financial year ended March 31, 2025 forming part of this Annual Report.

The tenure of M/s. A P Sanzgiri & Co, Statutory Central Auditors expires at the ensuing AGM of the Bank.

As recommended by the Audit Committee, the Board has proposed the appointment of M/s. Bilimoria Mehta & Co., Chartered Accountants (FRN 101490W) as the Statutory Central Auditors of the Bank for a tenure of three years to hold office from the conclusion of 9th(ninth) Annual General Meeting ("AGM") until the conclusion of the 12th (twel_h) AGM of the Bank. Their appointment has been approved by RBI on June 13, 2025 and is being put up for your approval at the ensuing AGM.

M/s. Bilimoria Mehta & Co., have confirmed that they satisfy the independence criteria and other eligibility norms required under the applicable laws and the Code of Ethics issued by the Institute of Chartered Accountants of India.

Secretarial Auditors and their Report

In compliance with the provisions of Section 204 of the Act and the rules framed thereunder, M/s. DM & Associates Company Secretaries LLP, the Secretarial Auditors of the Bank, conducted the Secretarial Audit for the financial year ended March 31, 2025. There were no qualifications made by the Secretarial Auditors in their Report. The Secretarial Audit Report for FY2024-25 is annexed as Annexure-1 to this Report.

Pursuant to Regulation 24A of the Listing Regulations read with Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Bank based on recommendation of the Audit Committee proposed the appointment of M/s. Alwyn Jay & Co., Company Secretaries (Firm Registration No.: P2010MH021500) as the Secretarial Auditors of the Bank for a term of 5 (five) consecutive years, commencing from FY2025-26 till FY2029-30, subject to approval of members. Accordingly, a resolution seeking your approval for the appointment of M/s. Alwyn Jay & Co. as Secretarial Auditors is being put up in the Notice of the 9th AGM. M/s. Alwyn Jay & Co., have confirmed their eligibility under Section 204 of the Act and the rules framed thereunder and Regulation 24A of the SEBI Listing Regulations for appointment as Secretarial Auditors of the Bank. As required under the SEBI Listing Regulations, the Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of The Institute of Company Secretaries of India.

Cost Auditor

The provisions for maintenance of cost records as specified by the Central Government under Section 148(1) of the Act are not applicable to the Bank.

Internal Auditor

As per the provisions of Section 138 of the Act read with Rule 13 of the Companies (Accounts) Rules, 2014, the Internal Auditors report was presented to the Audit Committee on a quarterly basis. The scope, functioning, periodicity and methodology for conducting the Internal Audit have been formulated under the applicable RBI guidelines and in consultation with the Audit Committee.

REPORTING OF FRAUDS

There was no instance of fraud during the year under review, which required the Statutory Auditors to report to the Audit Committee and / or Board under Section 143(12) of Companies Act, 2013 and Rules framed thereunder.

Further, during the year under review, the Statutory Auditors of the Bank have not reported any instance of fraud committed in the Bank by its officers or its employees.

LOANS, GUARANTEES AND INVESTMENTS

The particulars of investments made by the Bank are disclosed in Note no. 2 of notes forming part of financial statements.

During the year under review, no loans or guarantees were given or security provided on any loans or guarantees and hence, no disclosure is required to be made thereon.

RELATED PARTY TRANSACTIONS

All the Related Party Transactions ("RPTs") that were entered into during the financial year were on arm's length basis and were in the ordinary course of business. Prior omnibus/specific approvals for transactions were also obtained from the Audit Committee for the RPTs which are repetitive in nature as well as for the normal banking transactions which cannot be foreseen. A statement giving details of all RPTs entered pursuant to the omnibus approval granted is placed before the Audit Committee for their review on a quarterly basis.

The Bank has not entered into any material financial or commercial transactions with any related parties as per AS-18 and the SEBI Listing Regulations that may have potential conflict with the interest of the Bank at large.

In terms of Regulation 23(9) of the SEBI Listing Regulations, the Bank submits the disclosure of RPTs in the prescribed format on a half yearly basis to the Stock Exchanges and updates its website accordingly.

There were no material transactions with related parties, which were not in the ordinary course of the business nor were there any transactions which were not 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 RPTs to be reported under Section 188(1) of the Act. Hence, e-Form AOC-2 is not applicable to the Bank.

Pursuant to the provisions of the Act and the Rules made thereunder and SEBI Listing Regulations, the Bank has in place a Board approved policy on related party transactions. The said policy is also uploaded on the Bank's website at https://web4. finobank.com/investors/corporate-governance#code-policies.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO

Your Bank remains steadfast in its commitment to sustainable growth, energy e_iciency, and technological innovation. By integrating cutting-edge digital solutions with eco-conscious practices, the Bank continues to enhance operational e_iciency, reduce environmental impact, and deliver superior customer experiences.

A. Energy Conservation Initiatives

In line with global sustainability goals, the Bank has implemented several measures to optimize energy consumption across its operations: i. Payments Bank

Green Infrastructure: Migrated to energy-e_icient servers with capability of cloud-based solutioning, reducing on-premise data centre dependency and lowering carbon footprint.

Paperless Banking: Expanded digital on-boarding (e-KYC, Video KYC) and electronic documentation. Paperless banking is the core, on which entire banking solutioning is being built up.

Smart Branch Operations: Now electricity and water consumption monitoring system is in place though it is at nascent stage at all our offices to keep this under check.

Core Business Model: Allows the small entrepreneurs and shop owners to enable their outlets to offer basic neighbourhood banking. These banking correspondents spread across 97% of India's pincodes serve the masses in their neighbourhood, allowing them to save on travel, time and fuel.

B. Technology Absorption & Innovation

The Bank has aggressively embraced digital transformation, ensuring seamless adoption of emerging technologies.

1. The Bank's R&D focus remains on scalability, security, and customer-centric innovation:

API Banking & Fintech Partnerships

Generative AI, Data Science & Analytics

Deployed predictive analytics for hyper-personalized customer offers, risk models to identify mule accounts and fraudulent transactions.

Enabled Machine Learning (ML) and Artificial Intelligence (AI) libraries on our Big Data Hadoop platform that allows our data scientists to work with higher number of model parameters. This in turn has improved the robustness of the deployed ML models and also reduced the time to go-live.

Our pioneering efforts towards deploying ML models to detect anomalous transaction patterns helped identify mule accounts with high accuracy across 70+ transaction parameters. This in turn helped minimize fraud risk.

Automation & E_iciency:-Scaled Robotic Process Automation (RPA) for back-o_ice operations (account verification, payment verification etc).

Workflow engine for automation reconciliation process.

STP process with security enablement for automation and data security.

2. Digital & Self-Service Channels:

Cash Bazar 2.0: The on-demand cash platform is being upgraded with real time liquidity tracking of rural markets to locate merchants with ease for B2C and B2B.

Mobile Banking Suite: Biometric login and an enhanced platform with additional features for inclusive banking.

3. Cyber security & Future readiness:

Next-Gen SOC (Security Operations Center): 24/7 threat monitoring with AI-driven anomaly detection.

Disaster Recovery (DR): Achieved 99.99% uptime with multi-cloud redundancy and biannual DR drills.

Implementation of various perimeter security, End point security and Forensic mechanism for monitoring and review mechanisms.

C. Future Roadmap

1. AI-First Strategy: Expanding generative AI for:

Customer Service

Accurate Predictive Analysis

FRM and AML

Security Ops

CRM Platform for Channel, Product and Call Centre

Reconciliation

Data Management

2. ESG Strategy:

Our purpose is to drive financial inclusion while fostering trust, sustainability, and community empowerment. Guided by our vision and mission, we strive to balance profitability with long-term environmental and social impact. Through innovative, customer-centric, and digitally enabled banking solutions, we promote equity, enhance financial accessibility, and contribute to a more sustainable and inclusive future for all. As we progress on executing our ESG strategy with ethical governance, measurable targets and stakeholder engagement, the objective will be to boost operational stability, enhance business performance and build trust among stakeholders. Commitment to financial inclusion, responsible growth and value creation remain at the core of our ESG strategy.

D. Foreign Exchange Earnings and Outgo

During the year under review, there were no foreign exchange earnings, however, there was foreign exchange outgo of H0.74 Crore.

Byharmonizingtechnologyabsorption,energyconservation, corporate governance and strategic innovation, the Bank is poised to lead the next wave of sustainable, digital-first banking.

RISK MANAGEMENT

The Bank being a Payments Bank is required to largely follow/ implement directives issued by RBI for scheduled commercial banks in addition to those forming part of the operating guidelines for Payments Banks. Accordingly, the Bank has adopted risk management processes to identify, assess, monitor, manage and mitigate risks in its day-to-day activities/functions through the effective use of processes, information and technology.

The risk management process is monitored under the various Risk Management Policies and the delegation matrix as approved by the Board. The Board is supported by Board Committees, the management team, and Board delegated executive level Committees as part of the risk governance framework. The Board has an oversight of the management's efforts to balance growth and prudent risk management, while creating value for stakeholders.

Pursuant to RBI Regulations, the Bank has constituted a Risk

& Asset Liability Management ("RALM") Committee of the Board and as mandated by the regulatory provisions, the Bank has appointed a Chief Risk Officer, who administers the risks associated key verticals through dedicated divisions i.e. Market Risk, Operational Risk, Fraud Risk and other Risks under the aegis of the Board approved risk management policies and in accordance with the approval and responsibility delegation matrix.

The details of the RALM Committee are disclosed in the Corporate Governance Report forming part of this Annual Report and the terms of reference are available on the Bank's website at https:// web4 .finobank.com/investors/corporate-governance#code-policies.

The risk management framework within the Bank is a layered structure and broadly consists of the following aspects for effective risk management across the Bank:

(a) Operational Risk Management

The Bank is exposed to significant operational risk viz. risks arising due to use of technology, introduction of new products/services, processes, channels like mobile, internet banking, cash handling, etc. The Bank's operational risk management policies provide guidance on operational risk management issues and serves as a one-point reference and creates awareness amongst all employees within the Bank. The policies set out the broad parameters for identification of various operational risks that the Bank is exposed to on an ongoing basis and to put in place systems and procedures to mitigate such risks.

For the effective management of operational risks, the Bank hasconstitutedanOperationalRiskManagementCommittee ("ORMC"), an Executive Committee that supports the RALM Committee. The main functions of the ORMC are to monitor and ensure appropriateness of operational risk management and recommend suitable control measures for mitigating the same besides monitoring them.

For the effective management of fraud risk, the Bank has constituted a Fraud Risk Management Committee ("FRMC"), an Executive Committee that supports the Special Committee of the Board for Fraud Monitoring and Audit Committee. The main functions of the FRMC are to monitor and ensure appropriateness of fraud risk management and recommend suitable control measures for mitigating the same besides monitoring them.

The Bank also outsources certain functions / activities to third parties subject to compliance with RBI guidelines. These functions/activities and associated issues are being overseen by the Outsourcing Committee, an Executive Committee that supports the RALM Committee.

(b) Market Risk, Liquidity and Asset Liability Management

The Bank is significantly exposed to market risk, i.e. possibility of loss caused by changes in the market variables in addition to liquidity and mismatches in asset liability. Your Bank has put in place a Board approved Market Risk Management, Asset Liability Management (ALCO)

& Investment policies aligned with RBI regulations and operating guidelines governing Payments Banks and two Executive level Committees, viz. Investment and Market Risk Committee and ALCO that support the RALM Committee in dealing with the day-to-day risk matters, associated issues/ concerns, if any, in a comprehensive manner.

(c) IT Risk Management

The Bank has put in place adequate perimeter level security protection devices, internal data protection solutions and a 24x7 monitored Security Operations Centre ("SOC"). Various security solutions such as threat monitoring and subscription to other global solutions are put in place to monitor and act on any critical alerts. However, cyber threats are evolving and various types of attacks are executed such as ‘Zero Day' and many new variants of malware attacks. Any of the new variant attacks may impact the network or data protection. To mitigate such risks on the technology stack, adequate security crisis management processes are in place as per regulatory requirements and internal processes. Further, the Bank has a pool of technical resources which faces the risk of attrition. To mitigate this risk, the Bank has a set of hiring and training process with multiple technology streams.

The Bank has put industry standard perimeter technologies, end point protection mechanism and forensic tools to strengthen the security posture and monitoring mechanism.

For the effective management of IT Risk, the Bank has constituted Information System and Security Committee ("ISSC") as an Executive Committee that supports the IT Strategy Committee dealing with the day-today affairs, associated issues/concerns, if any, in a comprehensive manner.

(d) Reputation Risk Management

Your Bank has identified Reputation Risk as one of the material risks which is periodically monitored in terms of its sources and risk level.

(e) Compliance Risk Management

Compliance risk is the risk of failure (or perceived failure) by the Bank to comply with applicable laws, regulations, guidelines and standards, leading to damage to the reputation of the Bank, legal or regulatory sanctions, or financial loss. The Bank has a Compliance Policy to ensure the highest standards of compliance. A dedicated team of subject matter experts work to ensure active compliance risk management and monitoring. The team also advises on regulatory matters. The focus is on identifying and reducing risk by rigorously testing products and putting in place robust internal policies. Internal policies are reviewed and updated periodically as per agreed frequency or based on market actions or regulatory guidelines/actions.

For the effective management of Compliance Risk, the Bank has constituted Committee of Executives ("COE") an Executive Committee that supports the Audit Committee dealing with the day-to-day compliance risks, associated issues/concerns, if any, in a comprehensive manner.

CORPORATE SOCIAL RESPONSIBILITY

The Bank has in place a Corporate Social Responsibility ("CSR") policy and constituted CSR and ESG Committee in accordance with the provisions of Section 135 of the Act read with rules framed thereunder and Schedule VII to the Act. The CSR policy outlines the Bank's philosophy to play a positive role in the community at large and consider the environmental and social impact of business decisions in which it operates. The CSR Policy is available on Bank's website at https://web4.finobank.com/ investors/corporate-governance#code-policies.

The key areas identified by the Bank include eradicating hunger, promoting health care, primary education and skill development. In terms of the provisions of the Act, for FY2024-25, the Bank has spent H1.30 Crore (including the set off of the excess amount spent by the Bank in the previous financial year) based on its commitment to CSR programmes.

The Annual Report on CSR activities as prescribed under the Act and rules framed thereunder is annexed as Annexure – 2 to this Report.

The details of the CSR Committee are disclosed in the Corporate Governance Report forming part of this Annual Report and its terms of reference are available on the Bank's website at https://web4.finobank.com/investors/ corporate-governance#code-policies.

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

The Bank has formulated and adopted a Policy on Prevention of Sexual Harassment of Women at workplace. The Bank has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. No complaints were pending with the Internal Complaints Committee for more than ninety days. The information as required pursuant to Rule 8 of Companies (Accounts) Rules, 2014 relating to complaints received, redressed and pending during FY2024-25 forms part of the Corporate Governance Report. Further, your Bank is in compliance with the provisions of the Maternity Benefit Act, 1961.

VIGIL MECHANISM / WHISTLE BLOWER

The Bank has implemented a Whistle Blower Policy in compliance with the provisions of the Act and SEBI Listing Regulations. Pursuant to this policy, the Whistle Blowers can raise concerns relating to reportable matters (as defined in the policy) such as breach of Fino Payments Bank's Code of Conduct, employee misconduct, fraud, illegal unethical imprudent behaviour, leakage of Unpublished Price Sensitive Information, corruption, safety and misappropriation or misuse of Bank's funds/ assets etc. The Whistle Blower Policy is available on the Bank's website at https://web4.finobank.com/investors/corporate-governance#code-policies.

Further, the mechanism adopted by the Bank encourages the Whistle Blower to report genuine concerns or grievances and provides for adequate safeguards against victimization of Whistle Blower to those who avail such mechanism and also provides for direct access to the Chairperson of the Audit Committee.

The Audit Committee reviews the functioning of the Vigil Mechanism from time to time. The report of Whistle Blower complaints is placed before the Audit Committee on a quarterly basis. None of the Whistle Blowers has been denied access to the Audit Committee.

The Bank was in receipt of 1 Whistle blower compliant during the year under review and the same was investigated thoroughly. The case was closed after taking appropriate action. There was no complaint pending as on March 31, 2025.

CORPORATE GOVERNANCE

The Bank's activities are carried out in accordance with the good Corporate Governance practices and the Bank is constantly striving to make them better with time. The Bank believes that governance framework and good practices helps in creating right culture and in turn enhances long-term sustainable value for all its stakeholders. The Bank adheres to the Corporate Governance requirements set out by the Securities and Exchange Board of India ("SEBI")/ Ministry of Corporate Affairs ("MCA")/RBI. The Corporate Governance Report for financial year 2024-25 along with a certificate issued by M/s. DM & Associates Company

Secretaries LLP, confirming the compliance to applicable requirements related to Corporate Governance as stipulated under the SEBI Listing Regulations is annexed to the Corporate Governance Report which forms part of this Annual Report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

In terms of Regulation 34(2)(f) of the SEBI Listing Regulations, as amended the Business Responsibility and Sustainability Report describing the initiatives taken by the Bank from an Environmental, Social and Governance perspective is presented in a separate section which forms a part of this Annual Report.

DISCLOSURE OF AGREEMENTS BINDING THE BANK

In terms of Regulation 30A(2) of the SEBI Listing Regulations, agreements specified in clause 5A of paragraph A of Part A of Schedule III of SEBI Listing Regulations, along with its salient features, are available at the website of the Bank at www. finobank.com.

COMPLIANCE WITH SECRETARIAL STANDARDS

During the year under review, the Bank has complied with the applicable Secretarial Standards on meetings of the Board of Directors (SS-1) and Secretarial Standard on General Meetings (SS-2) issued by the Institute of Company Secretaries of India.

STATUS OF IND AS IMPLEMENTATION

As per RBI circular RBI/2015-16/315 DBR.BP.BC. No.76/21.07.001/2015-16 dated February 11, 2016, Implementation of Indian Accounting Standards ("Ind AS"), Banks are advised that scheduled commercial banks (excluding RRBs) shall follow the Indian Accounting Standards as notified under the Companies (Indian Accounting Standards) Rules, 2015, subject to any guidelines or directions issued by the RBI in this regard. Banks in India currently prepare their financial statements as per the guidelines issued by RBI, the Accounting Standards notified under Section 133 of the Act and generally accepted accounting principles in India ("Indian GAAP"). In January 2016, the MCA issued the roadmap for implementation of new Ind AS, which was based on convergence with the International Financial Reporting Standards (IFRS) for scheduled commercial banks, insurance companies and non-banking financial companies (NBFCs). In March 2019, RBI deferred the implementation of Ind AS for banks till further notice as the recommended legislative amendments were under consideration of the Government of India. The Bank had undertaken preliminary diagnostic analysis of the differences between Indian GAAP and Ind AS and shall proceed for ensuring the compliance as per applicable requirements and directions in this regard.

PARTICULARS OF EMPLOYEES

The information in terms of Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure –3 to the Board's Report.

Further, the statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended, forms part of this Annual Report; however, in terms of section 136(1) of the Act, the Annual Report is being sent without this Annexure. This Annexure is available for inspection and any member interested in obtaining a copy of the statement may write to the Secretarial Department of the Bank at cs@finobank.com.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report for the year under review, as stipulated under Regulation 34 of the SEBI Listing Regulations is presented in a separate section and forms part of this Annual Report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNALS

During the year under review, no material orders have been passed by the Regulators/Courts/Tribunals which would impact the going concern status of the Bank and its future operations.

The Bank has not made any application under the Insolvency and Bankruptcy Code, 2016 and no proceeding is pending under the said Code.

Further, no one time settlement was done with any Bank/ Financial Institution with respect to loans taken by the Bank, hence disclosure on the difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking such loans is not applicable.

ACKNOWLEDGEMENT AND APPRECIATION

The Board of Directors of your Bank would like to place on record their gratitude for the guidance and co-operation received from the Reserve Bank of India and other regulatory bodies and thank all the stakeholders of the Bank including its investors, customers, merchants, bankers, shareholders, vendors, registrars and all other valued partners for their continued support.

The Board would like to express its appreciation for the sincere and dedicated efforts put in by all the employees of the Bank, exhibiting strong professionalism, teamwork and initiative and look forward to their continued contribution in building this Bank into a great institution.