Karur Vysya Bank Ltd

To the Members,

The Board of Directors of your Bank is immensely pleased to present the 105th Annual Report on the business and operations of the Bank together with the audited accounts for the financial year ended March 31, 2024.

KEY PERFORMANCE INDICATORS

Your Bank has been able to achieve significant growth in all areas of operation and delivered a striking performance during the financial year 2023-24, which depict the aptness of the strategies implemented during the last few years. The essence of the performance for the financial year 2023-24 is as below:

TOTAL BUSINESS

Your Bank's total business grew by Rs. 22,730.26 Crore and reached Rs. 1,63,535.94 Crore as on March 31, 2024, from Rs. 1,40,805.68 Crore as on March 31, 2023, registering a growth of 16.14%.

DEPOSITS

The Gross Deposits grew by Rs. 12,475.13 Crore and reached Rs. 89,112.72 Crore as on March 31, 2024, from Rs. 76,637.59 Crore as on March 31, 2023, recording a growth of 16.28%.

The Term Deposits grew by Rs. 10,839.01 Crore and reached Rs. 62,027.67 Crore as on March 31, 2024, from Rs. 51,188.66 Crore as on March 31, 2023, registering a growth of 21.17%.

Your Bank's CASA balances grew by Rs. 1,636.13 Crore and reached Rs. 27,085.06 Crore as on March 31, 2024 from Rs. 25,448.93 Crore as on March 31, 2023, recording a growth of 6.43%. The CASA balance as on March 31, 2024 is constituted by Savings Bank deposits of Rs. 18,801.67 Crore and Other Demand Deposits of Rs. 8,283.39 Crore. The CASA ratio of the Bank as on March 31, 2024 stood at 30.39%.

ADVANCES

During the year, your Bank's credit portfolio grew by Rs. 10,255.13 Crore and reached Rs. 74,423.22 Crore as on March 31, 2024, from Rs. 64,168.09 Crore as on March 31, 2023, registering a growth of 15.98%. Growth in Advances is majorly contributed by Commercial, Retail and Agriculture during the period under review along with cautious growth of 4.55% in the Corporate book. The details of the Advances portfolios for financial year 2023-24 and financial year 2022-23 along with their comparative growth is furnished in the table below:

CLASSIFICATION OF ADVANCES PORTFOLIO

As on March 31, 2024, the Priority Sector Lending of your Bank reached Rs. 30,287.61 Crore and constituted 47.39% of its Adjusted Net Bank Credit (ANBC) as against the statutory requirement of 40%.

AGRICULTURE ADVANCES

Your Bank's average Agriculture Advances, in terms of RBI guidelines, reached Rs. 12,269.61 Crore as on March 31, 2024 which constitute 19.72% of Average ANBC as against the regulatory stipulation of 18%. Average Advances to Micro Enterprises and Weaker Sections stood at 8.25% and 13.01% on Average ANBC respectively. Your Bank has continuously achieved and surpassed the statutory Agriculture target by its focused lending strategies to the Agriculture and its allied sectors.

ASSET QUALITY

Your Bank has a dedicated vertical (Credit Monitoring and Recovery Department) that takes care of recovery. It plays a pivotal role in ensuring the health and stability of our bank's loan portfolio. In the face of economic fluctuations and market challenges, your Bank diligently manages Non-Performing Assets (NPAs) to minimize risks and optimize recovery strategies. High value NPA accounts are taken care by eight Asset Recovery Branches spread across India for effective recovery. Your bank has also engaged recovery agencies to assist the Asset recovery Branches to reach the end customers and for continuous follow-up.

The Gross NPAs of your Bank curtailed by Rs. 416.51 Crore and contained to Rs. 1,041.64 Crore as on March 31, 2024, from the level of Rs. 1,458.15 Crore as on March 31, 2023. Correspondingly, Net NPA of your Bank curtailed by Rs. 170.18 Crore and contained to Rs. 297.97 Crore as on March 31, 2024 from the level of Rs. 468.15 Crore as on March 31, 2023. In terms of percentage, your Bank's Gross Non-Performing Assets (Gross NPA) and Net NonPerforming Assets (Net NPA) well contained at 1.40% and 0.40% as against 2.27% and 0.74% of the previous year respectively. Further, your Bank's SMA30+ levels has been managed well and confined to 0.38% as against 0.56% of previous year. Your Bank has carried out focused recovery drive on a continuous basis which resulted in improved recovery performance during the past three years. The Provision Coverage Ratio stood at 94.85% and your Bank is continuously strengthening the ratio for the past five years. Your Bank will take all possible steps to curtail slippages and expedite recovery in existing SMA / NPAs.

Your bank has implemented several measures to minimize slippages and enhance recovery, including strengthening credit risk assessment processes, implementing proactive monitoring systems, offering timely restructuring options for stressed borrowers, collaborating with specialized recovery agencies, leveraging data analytics for early warning signals, and streamlining legal and recovery frameworks. These steps ensure proactive identification of potential defaults, prompt action for resolution, and efficient recovery processes, ultimately contributing to the reduction of slippages and improved recovery rates.

INVESTMENTS

Your Bank's investment portfolio grew by Rs. 3428.72 Crore and reached Rs. 22,840.44 Crore as on March 31, 2024, from Rs. 19,411.72 Crore as on March 31, 2023, registering a growth of 17.66%. The average investment for the financial year 2023-24 stood at Rs. 21,374.82 Crore. The investment portfolio's composition is consistent with the Investment Policy of the Bank and lays stress on liquidity and regulatory management besides providing gains.

Interest income earned on investments during the financial year 2023-24 was Rs. 1,331.01 Crore as against Rs. 1,099.13 Crore in financial year 2022-23. Profit made on sale of investments was at Rs. 39.76 Crore for the fiscal 2023-24. With a view to prevent large volatility, Modified Duration of overall portfolio including Held to Maturity (HTM) was maintained at a lower level of 2.93 years. Liquidity position was maintained at comfortable levels throughout the financial year 2023-24.

FOREIGN EXCHANGE TRANSACTIONS

Your Bank's merchant turnover reached Rs. 25,297 Crore during the financial year 2023-24 as against previous year's achievement of Rs. 23,345 Crore. Bank's Export credit reached Rs. 1,554.30 Crore during the financial year 2023-24 as against previous year's position of Rs. 1,270.50 Crore. Total Income earned through foreign exchange transactions was Rs. 57.85 Crore for the financial year 2023-24 as against Rs. 65.12 Crore for the previous financial year. Exchange Profit of Rs. 30.44 Crore and Commission & others of Rs. 27.41 Crore forms part of total Income earned through foreign exchange transactions.

INCOME

Your Bank's Interest Income grew by Rs. 1,687.39 Crore and reached Rs. 8,203.94 Crore for the financial year 2023-24 from Rs. 6,516.55 Crore for the financial year 2022-23, registering a growth of 25.89%. Net Interest Income of your Bank grew by Rs. 460.39 Crore and reached Rs. 3,809.20 Crore for financial year 2023-24 from Rs. 3,348.81 Crore for the financial year 2022-23, an increase of 13.75%. The growth in Net Interest Income is in tandem with the topline growth in loan books of the Bank. Further, your Bank's Non-Interest Income grew by Rs. 499.75 Crore and reached Rs. 1,658.69 Crore for the financial year 2023-24 from Rs. 1,158.94 Crore for the financial year 2022-23, an increase of 43.12%. The Yield on Advances and Investment stood at 9.93% and 6.23% respectively.

EXPENDITURE

Your Bank's Interest expenditure increased by Rs. 1,227 Crore reached Rs. 4,394.74 Crore for the financial year 2023-24 as against Rs. 3,167.74 Crore for the financial year 2022-23. The Operating expenses also increased to Rs. 2,638.75 Crore during the financial year 2023-24 from Rs. 2,031.96 Crore of the previous financial year in line with the business growth and on account of one-time impact of employees' wage revision arising from the 12th bipartite settlement and various new initiatives taken by the Bank. Your Bank regularly monitored both its operating and establishment expenses during the year and tight controls were exercised on the expenditures.

Your Bank's Cost of deposits for the year increased by 92 bps to 5.19% during the financial year 2023-24, and in tune with the same, yield on advances also improved by 100 bps from 8.93% to 9.93%. Further, yield on investments improved by 43 bps to 6.23%. Hence, spread between yield on funds (8.67%) and cost of funds (5.23%) works out to 3.44%, as against 3.50% a year ago. Accordingly, Net Interest Margin (NIM) of your Bank improved by one bps to 4.19% over the previous year position of 4.18%.

PROFIT

Your Bank's Operating Profit grew by Rs. 353.35 Crore and reached Rs. 2,829.14 Crore for the financial year 2023-24 from Rs. 2,475.79 Crore for the financial year 2022-23, registering a growth of 14.27%.

The Net Profit of your Bank surpassed the historical milestone of Rs. 1,500 Crore and reached Rs. 1,604.81 Crore for the financial year 2023-24 as against Rs. 1,106.09 Crore for the financial year 2022-23, registering a significant growth of 45.09%.

APPROPRIATIONS

The Net Profit of Rs. 1,604.81 Crore along with Rs. 2.69 Crore brought forward from the previous financial year, aggregating to Rs. 1607.50 Crore, was appropriated as follows:

DIVIDEND

Your Bank has formulated the Dividend Distribution Policy as per the requirements of Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, ("SEBI LODR") and guidelines issued by Reserve Bank India. The objective of the Policy is to ensure an equitable balance between rewarding the shareholders through dividend and retaining sufficient funds for future growth of the Bank subject to compliance with the dividend pay-out ratio matrix prescribed as per extant guidelines issued by Reserve Bank of India. The Dividend Distribution Policy is available on the Bank's website at https://www.kvb.co.in/docs/ dividend-distribution-policy.pdf

Accordingly, considering the capital position of the Bank and the quantum of dividend pay-out permitted, Board of Directors of the Bank is pleased to recommend a Dividend of Rs. 2.40/- per equity share of face value of Rs. 2/- each i.e., 120%, for the financial year 2023-24. Your Bank has notified closure of Register of Members and Share Transfer Books from Friday, August 02, 2024 to Wednesday, August 14, 2024 (both days inclusive) for determining the names of members eligible for dividend on Equity shares. The Dividend pay-out is in accordance with Bank's Dividend Distribution Policy and is subject to the approval of the shareholders at the ensuing 105th Annual General Meeting and also any regulatory/statutory authorities, if required.

In accordance with Accounting Standards 4 - Contingencies and Events occurring after the Balance Sheet date - notified by the MCA on March 30, 2016, the proposed dividend amounting to Rs. 193.05 Crore has not been shown as an appropriation from the Profit and Loss account as of March 31, 2024 and correspondingly not reported under Other Liabilities and Provisions as at March 31, 2024 (is reported under balance of profit).

SHARE CAPITAL

The Authorised share capital of the Bank stood at Rs. 200 Crore divided into 100 Crore equity shares with a face value of Rs. 2/- each as on March 31, 2024. During the financial year under review, there has been no change in the Authorised share capital of the Bank.

During the financial year under review, Bank has allotted 23,23,535 Equity Shares of face value Rs. 2/- each to the employees who exercised their options under KVB ESOS 2011 Scheme and KVB ESOS 2018 Scheme. Post allotment of the aforesaid equity shares, the Issued Share Capital increased from Rs. 160,54,38,794 to Rs. 161,00,85,864 comprising 80,50,42,932 equity shares with a face value Rs. 2/- each and the Paid-up Share Capital increased from Rs. 160,41,06,926 to Rs. 160,87,53,996 comprising 80,43,76,998 equity shares with a face value Rs. 2/- each. Other than the aforementioned, there is no change in capital structure of the Bank during the year under review.

The Bank's Net owned funds grew to Rs. 10,040.07 Crore as on March 31, 2024 from Rs. 8,584.05 Crore of the previous financial year. The Market Capitalisation of the Bank stood at Rs. 14,691.41 Crore as on March 31, 2024.

EARNINGS PER SHARE/BOOK VALUE

Bank's Earnings Per Share (Basic) stood at Rs. 19.99 for the financial year 2023-24 as against Rs. 13.81 for the financial year 2022-23. The Book Value of shares was Rs. 122.42 per equity share of face value Rs. 2/- each (fully paid up) as on March 31,2024 as against previous year position of Rs. 105.03.

DEBT INSTRUMENTS & CREDIT RATING

The Bank had issued Basel III Compliant Unsecured, Redeemable Non-Convertible Tier II Bonds to the value of Rs. 487 Crore with a coupon rate of 11.95% p.a. and a tenor of 123 months (maturing on June 12, 2029) in March 2019 through Private Placement, having a call option at 5th Coupon Payment date i.e., March 12, 2024 or on any Coupon Payment date thereafter.

Accordingly, Bank had exercised call option at 5th Coupon Payment date i.e., March 12, 2024 and redeemed the Basel III Compliant Unsecured, Redeemable Non-Convertible Tier II Bonds issued by the Bank and also duly paid the fifth coupon interest along with redemption. The said redemption was in line with the terms of issue of such Bond and prior approval from Reserve Bank of India vide letter no. DOR.CAP.S6441/21-01-002/2023-24 dated February 07, 2024. Bank has not issued any Debt instruments during the year under review.

*The rating was upgraded to ICRA AA- (Stable) from the previous rating ICRA A+ (Stable).

As per the rating schedules of respective Rating Agencies, Instruments with these ratings viz., ICRA A1+ and CRISIL A1+ are considered to have very strong degree of safety regarding timely payment of financial obligations. Such securities carry lowest credit risk.

ICRA AA-(Stable): Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such securities carry very low credit risk.

IND A+/Stable: Instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such securities carry low credit risk.

CAPITAL ADEQUACY

The Bank's Capital Adequacy Ratio stood at 16.67% as on March 31, 2024, as per BASEL III norms. This is well above the statutory limit of 11.50% (9% plus Capital Conservation Buffer of 2.50% is required to be maintained as of March 31, 2024) as prescribed by the Reserve Bank of India Guidelines.

SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

Your Bank does not have any Subsidiaries or Associates/JVs to report during the year under review.

MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to provisions of the Regulation 34(2) (e) of SEBI LODR, the Management Discussion and Analysis Report for the year is forming part of this Annual Report.

NETWORK OF BRANCHES

The selection of new branch and office locations follows a strategic approach focused on identifying high-potential areas. To assess the viability of potential centres, your Bank conducts a detailed analysis leveraging data from various forums and sites. Additionally, we rely on location-based surveys received from respective Divisional Offices, which provide valuable insights. By combining these sources of information, we carefully shortlist the locations for opening new branches or offices, ensuring that our expansion efforts align with the growth prospects of each centre.

Your Bank has added Thirty Nine (39) Regular Branches, Five (5) KVB Smart units, One (1) Digital Banking Unit (DBU) and Two (2) Offices viz. Divisional Office at Tirunelveli and Digital Excellence at Chennai during the financial year 2023-24. Your Bank has 838 Branches as on March 31, 2024. The branch network including Corporate Business Units, Business Banking Units, Asset Recovery Branches, NEO, SMART, Digital Banking Units and Precious Metal Division totals to 877 as on March 31, 2024, excluding three Extension Counters and four Satellite Offices.

During the year under review, your Bank has installed 79 new Automated Teller Machines (ATM), 23 Bunch Note Recycler Machines (BNRM) and 26 Self Service Passbook Kiosks. As of March 31, 2024, 1,642 Automated Teller Machines (ATM), 620 Bunch Note Recycler Machines (BNRM) and 217 Self-Service Passbook Kiosks are providing uninterrupted Banking services to customers.

CURRENCY CHEST

As on March 31, 2024, your Bank has eight Currency Chests across different locations in Tamil Nadu, Andhra Pradesh, Telangana and Karnataka to supply adequate cash to Branches & ATMs in its respective areas and the Clean Note Policy of RBI is being adhered to. Currency Chests also support the branches maintain cash within the retention limit for smooth operations. Bank also conducted soiled note exchange melas and distribution of coins through Currency Chest linked branches.

FINANCIAL INCLUSION

Financial Inclusion ensures availability of basic banking services and products to all, thereby reaching the unreached, un-banked and under-banked areas. Bank has been actively pursuing the agenda of Financial Inclusion with key interventions in offering appropriate financial products, using technology and financial literacy. Bank is providing various Business Correspondents (BCs) services & implementing comprehensive Financial Inclusion programme through effective utilisation of BCs in Sub Service Area (SSA). SSA is a cluster of few villages and is linked to one base branch of the Bank.

Your Bank has reached the underprivileged segment of the society and extended its focused financial services through 153 Bank Mitras in rural villages, 3 Bank Mitras in urban locations including 39 Ultra Small Branches. The Bank Mitra use Micro ATM for providing the banking services to the customers.

Your Bank continues to provide basic financial products including Basic Savings Bank Deposit Account (BSBDA), Social security schemes of Insurances like., Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Pension product like., Atal Pension Yojana (APY) and thereby support the Government in implementation of various social welfare schemes.

Pradhan Mantri Jan Dhan Yojana (PMJDY):

Your Bank has opened 1,624 PMJDY accounts during the year under review. The balances outstanding in the PMJDY accounts as on March 31, 2024 was Rs. 19.98 Crore. The Bank has issued 1,624 Rupay Debit Cards under PMJDY accounts during the year. Micro ATM devices are provided to Bank Mitras for facilitating payments, which are enabled for accepting Rupay Card transactions/Aadhaar enabled Payment system (AePs)/Third Party deposit, Balance enquiry, Mini statement. Bank Mitras have done 5.38 Lakh transactions, amounting to ^ 60.01 Crore during the year under report which includes of DBT/Old Age Pension/ MGNREGS transactions.

Micro credit (SHGS Bank linkage):

Your Bank is providing credit facilities to Self-Help Groups (SHG) / Joint Liability Groups (JLG) to meet the credit needs of the poor.

As on March 31, 2024, the Bank has 41,813 JLG loans with outstanding of Rs. 162.82 Crore.

Financial literacy:

Financial Literacy campaigns are intended to provide basic banking knowledge to people across various corners of the Society. Your Bank has been in the forefront in creating awareness to the rural masses on the financial services and products through the Financial Literacy Campaigns. During the FY 2023-24, your Bank has conducted 108 financial literacy campaigns in Rural, Semi Urban/Urban areas, including RBI Financial Literacy week campaign 2024.

TECHNOLOGY INITIATIVES

Your Bank is always inclined to plan and implement the latest trends, technological advancements, and innovations. Such longterm projects are initially taken up as study projects. Based on their technical feasibility, these study projects are converted into regular action plan projects to benefit our customers. The bank has been integrating AI and ML into its operations to improve decision-making processes, risk assessment, and customer service. These technologies help in providing personalized banking experiences and optimizing operational workflows. Presently your bank is exploring adoption of Do It Yourself (DIY) journeys, Customer Relationship Management (CRM), ONDC (Open Network Digital Commerce) integration in DLite app and redesign of the DLite mobile banking interface.

Your Bank has implemented the following customer centric projects during the financial year 2023-24:

• Mobile Banking and Internet Banking Initiatives - Your bank has significantly upgraded its mobile and internet banking platforms, incorporating new features and enhancing security measures. These upgrades are designed to offer customers a more user-friendly and secure banking experience and digital loan processing systems that reduce turnaround times and simplify the application process for customers.

• Mutual fund Solution - Online mutual fund distribution solution is a digital platform that enables investors to purchase, manage, and redeem mutual fund investments through the Internet and Mobile banking. These platforms offer a convenient and user-friendly interface, allowing users to compare various mutual funds, access detailed performance analytics, and execute transactions seamlessly.

• ICEGATE - It allows customers to pay customs duty through KVB portal, streamlining and digitizing the process of international trade transactions.

• Electronic Bank Guarantee with NeSL Tie Up -The eBG system will replace the traditional paper-based process for issuing and managing bank guarantees, offering an electronic bank guarantee for our bank customers by using the Digital Document Execution (DDE) platform provided by NeSL (National e-Governance Services Limited).

• Instant V-KYC in DLite - Instant VKYC (Video Know Your Customer) in the DLite application is a streamlined process that allows users to complete their KYC verification quickly and remotely via a video call. This feature eliminates the need for physical paperwork and in-person verification, enhancing convenience and speed for users.

• Voice Biometric Implementation in Mobile Banking -

Previously, we are offering three authentication modes for our customers to login to the DLite mobile application viz Login Pin, Finger print based biometric access and face authentication (only for IOS). Voice Biometric has turned up as an additional authentication mechanism wherein the customer's voice is used to verify the identity. This is an alternate for the authentication in addition to entering a text or password.

• Green Deposit in Internet and Mobile Banking - This feature would facilitate customers to open green deposit through Internet Banking and mobile banking. Green Fixed Deposits' are the term deposits where the deposit proceeds will be used to finance or re-finance assets supporting themes under United Nations Sustainable Development Goals (SDGs).

• NPS Integration through DLite app - This feature would facilitate customers to do enrolment in NPS through DLite - Mobile Banking. "NPS integration through DLite app" aims to enable users to manage their National Pension System (NPS) accounts directly through the KVB DLite mobile banking application, providing convenient access to pension fund management and related services.

• DIGI Gold Loan Customization - Kisan Express Overdraft Module - Customization for KVB Kisan Express Phase - I Integration enhancements on Digital Jewel Loan application. The digital gold loan offerings and integrating an overdraft module specifically designed for farmers under the Kisan Express scheme, enhancing their financial flexibility and accessibility to credit.

INFORMATION SECURITY

The Board and Senior Management of your Bank have envisaged the risks associated with adoption of Information Technology and Digital Transformation initiatives to enhance customer service.

Your Bank has established an Information Security Group headed by Chief Information Security Officer (CISO), which is specialised in Information and Cyber Security risk management to protect the Bank's Information Assets.

The CISO is responsible for setting the strategic direction of Information Security initiatives within the bank, and reports to the Chief Risk Officer. Also, responsible for overall security Governance, Risk Management, Policy creation, Security Monitoring on 24x7x365 days, Cyber Incident response, and ensuring that your Bank complies with relevant laws and RBI regulations, relating to Cyber Security.

The CISO Office establish the Information Security Policy, Digital Payment Security controls policy and Cyber Crisis management plan which are approved by the Board and reviewed annually. The CISO office is committed to work towards aligning itself with the evolving threat landscape with dedicated People implementing Processes and Technology.

Your Bank is compliant with ISO/IEC 27001, which is the international standard for Information Security, duly certified by M/s TUV SUD since 2018. Accordingly, the CISO Office has defined documented ISMS procedures which includes the processes to be followed for Change Management and Incident Management. In respect of security issues arising due to any reason, the CISO Office has a robust process for Incident Response which requires Root Cause Analysis (RCA) for each incident and implementation of corrective actions to plug the gaps, if any. Your Bank is also established best practices of Baselines for the IT systems.

Your Bank's ISMS reinforces not only the Confidentiality, Integrity and Availability of information but also other security principles such as Authenticity, Non-Repudiation and Accountability. Thus, your Bank's ISMS ensures the following objectives:

• Safety and privacy of sensitive customer and Bank information.

• Prevent IT Assets and Information System from Unauthorized Access.

• Protect the Data / IT Systems from threats such as Phishing, Ransomware and other malware, malicious actors targeting cloud services and integrated systems in multiple locations over the Internet and zero-day attacks.

• Timely availability of Data / IT Systems to the authorised users.

To provide awareness on recent trends in Information security and understanding on the crucial role in safeguarding the data, Bank has been arranging Virtual training, Cyber awareness workshops, Phishing campaigns, awareness Email and SMS, etc., to its employees and also circulating the awareness Email and SMS to its customers.

CALL CENTRE

The Call Centre of your Bank is a one stop Contact point of the bank which addresses queries / requests from customers and works seamlessly round the clock. Contact Centre handles a wide range of customer interactions including incoming calls, outgoing calls, emails & chat. Contact centre serves a primary point of contact between customers and organisation, by providing support, information & other services. Contact Centre works on Dialer & CRM to record the customer interactions. This includes IVRS, ACD & CRM. The agents are the frontline employees who primarily interact with customers on behalf of the organization. They are trained to handle customer inquiries, resolve issues, provide information & deliver a positive and delightful customer experience.

Inbound Contact Centre:

Inbound contact centre plays a critical role in managing customer interactions via both calls / e-mails round the clock, thereby ensuring excellent customer service, which helps to build strong relationship with customers.

Dedicated team is set to execute the requirements received from customers via calls / email by maintaining a stipulated TAT. The rightness of transactions executed by customers are verified by our employees by performing outbound calls based on the data available in the CrossFraud portal for fraud transaction monitoring. In addition, Inbound contact centre also performs Mobile number change verification calls for the changes in registered Mobile number requested through DLite app & Internet Banking by customers, obtaining feed-back for Doorstep banking services initiated by the branches and outcall IVRS call back requests.

Outbound Contact Centre:

Outbound Contact Centre engages in various functions which includes telesales, debt collection, reminder call, welcome call to customers. Welcome call: Outcall initiated to customers who have newly opened, CASA / loans & Credit cards in order to apprise them of the Product features & Benefits, and also address the customers enquiries on various products of the bank by Crossselling & Upselling. Tele-collection activities are designed with a view to improve the collection efficiency and consist of two segments viz., Pre-due calling and Post-due Calling. Pre-due calling is initiated to remind the customers of their due date and the EMI amount which is due to be paid. This calling helps customer to ensure that the EMI's are serviced on time. Post Due Date calling is initiated to customers who have missed to pay their dues on the stipulated Due date. The intensity of outbound calls for collection are segregated based on Severity of delinquency, No of Days Past Due, Track on repayment and customer's Relationship with bank. Tele Sales to generate Revenue and to service our existing and potential customers. Apart from this, adhoc activities are performed at our Call Centre as and when required by the management.

CHANGE IN NATURE OF BUSINESS

There was no change in the nature of business of the Bank during the financial year under review.

SYSTEM FOR INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY

Your Bank has on par computerized solutions like New-gen Private Sector Banks to serve its customers in respect of all banking requirements. Adequate infrastructure has been established in processing the day to day transactions. "Flexcube" is the CBS platform used in the Bank which is commonly used in several well- known banks in the Country. The CBS platform has well defined set-up to ensure internal financial controls viz maker-checker requirements with adequate credentials. Automation of interest & charges application and accounting transactions ensures necessary internal financial control. IT audit in respect of CBS is also being conducted as per the stipulated periodicity which ensures adherence to the regulatory and mandatory guidelines. Exclusive unswerving reporting software is used by Bank with appropriate systems and protocols which have periodical review. The same ensures reporting of Bank's business without any ambiguity. The Bank has standardised operating procedures in monitoring the account operations to have effective internal controls. Separate monitoring team has been identified to prevent and detect frauds and errors in the Bank. Compliance of regulatory /mandatory requirements are being taken care by an individual team which has its exclusive procedure in adhering to regulated and framed policies besides reporting of financial information in a disciplined manner. These systems enable the Bank to have established internal control over financial information reporting.

The Bank has Board approved policies in respect of various banking activities like lending, investment, borrowing etc. with well-defined hierarchy of officials vested with sanctioning powers. Inspection Department and Risk Management Department review various aspects of internal control, adherence to procedure and review credit assessment protocols periodically.

Internal Financial controls of the branches are verified by the statutory branch auditors during their branch audit and covered in the report. Statutory Central Auditors of the Bank audit the internal controls over financial reporting of the Bank and submit a separate report containing the salient features of their observations to the Board of directors.

RISK MANAGEMENT

Risks are inherent in any business and banking is not an exception to this. Your Bank has adopted a multi-layered risk management process to identify, assess, monitor, and manage risks through the effective use of processes and information technology.

Objective of risk management of the Bank is to balance the trade-off between risk and return and ensure that the Bank operates within the Board approved risk appetite statement. An independent risk management function ensures that the risk is managed through policies and processes approved by the Board of Directors encompassing independent identification, measurement, and management of risks across the various businesses of the Bank. The risk management function in the Bank strives to proactively anticipate vulnerabilities at the transaction as well as at the portfolio level, through quantitative or qualitative examination of the risks. The Bank continues to focus on refining and improving its risk measurement systems including automation of processes, not only to ensure compliance with regulatory requirements, but also to ensure optimal capital utilization with a better risk-adjusted return. The Board reviews the risk profile of the Bank at periodic intervals and ensures that risk levels are within the defined risk appetite.

The Board is responsible for overseeing the overall risk management framework by approving various policies relating to the Risk functions and has delegated powers to Board Level Risk Management and Asset Liability Management Committee (RM & ALM) for monitoring the implementation of Risk Governance Framework, compliance to various policies & processes. The RM & ALM Committee ensures the same by closely monitoring & guiding the functions through Executive Level Credit Risk Management Committee, Market Risk Management Committee, Operational Risk Management Committee and Asset Liability Management Committee, which regularly assess the functional efficiency of the Bank's risk management processes. Minutes of these Committee meetings are placed to the RM & ALM Committee of the Board for its perusal and further guidance. The Board is reviewing the performance of these executive level committees on half yearly basis.

Risk Management department examines various policies of the Bank to ensure risk management aspects are addressed in those policies. Risk department also maintains various risk management policies viz., Credit risk rating, Market risk, Liquidity risk, Operational risk, Risk culture, Strategic risk management, Reputational risk, Integrated risk management, Stress testing and ICAAP.

Bank's risk management objectives broadly cover proper identification, assessment, measurement, monitoring, controlling, mitigation and reporting of the risks across various business segments of the Bank. The risk management strategy adopted by the Bank is based on a clear understanding of the risks and level of risk appetite, which is dependent on the willingness of the Bank to take risks in the normal and stressed course of business operations.

All material risks of the Bank emerging during its business are identified, assessed, monitored, managed, and mitigated with the effective control measures in place.

Bank is well capitalized; CRAR stands at 16.67% as on March 31, 2024. Capital provides the required buffer to manage and meet any unexpected risks / losses that materialize despite prudent and timely risk management actions. In view of the foregoing, apparently there are no material risks which threaten the existence of the Bank.

VIGIL MECHANISM/WHISTLE-BLOWER POLICY

In compliance with RBI Guidelines, provisions of the Companies Act, 2013, SEBI LODR and SEBI (Prohibition of Insider Trading) Regulations, 2015 as amended, your Bank has in place the "Whistle Blower Policy" since 2011. The Policy also incorporates the Protected Disclosure Scheme (PDS) for Private Sector Banks, instituted by the Reserve Bank of India. The Audit Committee of the Board reviews the complaints received through Vigilance Mechanisms on quarterly basis and none of the whistle blowers have been denied access to the Audit Committee of the Board. The Bank's Whistle Blower Policy is in synchronization with all statutory and regulatory guidelines on Vigilance Mechanism. The details of the Whistle Blower Policy is available on the website of the Bank https://www.kvb.co.in/docs/whistle-blower-policy.pdf

Bank is encouraging the staff to share all kinds of unlawful/ unethical instances/practices followed by any employees to take appropriate action upon review. Further, Bank is ensuring that the details shared are kept confidential and protection of staff who blown the whistle. In this regard, awareness programs are being provided to all employees as part of training session.

The details related to Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 are furnished in the Corporate Governance Report that forms part of this Annual Report.

RELATED PARTY TRANSACTIONS

All transactions entered into by your Bank with related parties are not material and repetitive in nature in ordinary course of business and on an arm's length basis. Omnibus approval is obtained from the Audit Committee for transactions which are repetitive in nature and the same are reviewed on periodic basis. The Bank's policy on Related Party Transactions can be viewed at: https:// www.kvb.co.in/docs/related-party-transactions-policy.pdf.

During the year, your Bank has not entered into any materially significant transactions with the related parties, which could lead to potential conflict of interest. Therefore, pursuant to Section 134(3)(h) of the Companies Act, 2013 with Rule 8(2) of the Companies (Accounts) Rules, 2014, there are no related party transactions to be reported under Section 188(1) of the Companies Act, 2013 and Form AOC-2 is not applicable to the Bank.

AUDIT COMMITTEE RELATED DISCLOSURE UNDER SUB-SECTION 8 OF SECTION 177 OF THE COMPANIES ACT, 2013

The Bank has constituted a Board level Audit Committee in line with the requirements of the Companies Act, 2013, SEBI LODR and Reserve Bank of India guidelines, as amended from time to time. Board has accepted all the recommendations of the Audit Committee. The details of the composition of the Audit Committee are disclosed in the Corporate Governance Report that forms part of this Annual Report.

DISCLOSURE RELATED TO DETAILS OF DEPOSITS ACCEPTED UNDER RULE 8(5) (V) OF COMPANIES (ACCOUNTS) RULES, 2014

Being a Banking company, the disclosures required as per Rule 8(5) (V) of Companies (Accounts) Rules, 2014, read with Section 73 and 74 of the Companies Act, 2013 are not applicable.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Pursuant to Section 186 (11) of the Companies Act, 2013, the provisions of Section 186 of the Companies Act, 2013, except sub-section (1), do not apply to a loan made, guarantee given or security provided or any investment made by a banking company in the ordinary course of business. Hence, the particulars of loan and guarantees as required under Section 134(3)(g) of the Companies Act, 2013 are not required to be disclosed. The particulars of investments made by the Bank are disclosed in the Financial Statements as per the applicable provisions of the Banking Regulation Act, 1949.

Statutory Auditors

The present Joint Statutory Central Auditors of the Bank viz., M/s R G N Price & Co., Chartered Accountants (Registration No. FRN 002785S) and M/s Sundaram & Srinivasan, Chartered Accountants (Registration No. FRN 004207S) were appointed at the 102nd Annual General Meeting of the Bank held for FY 2020-21 and continue to hold office till the conclusion of the ensuing AGM of the Bank to be held for FY 2023-24.

Pursuant to the Guidelines for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) dated April 27, 2021 issued by the Reserve Bank of India (‘RBI Guidelines'), Banks may appoint the SCAs/SAs for a continuous period of three years. Since M/s R G N Price & Co., Chartered Accountants (Registration No. FRN 002785S) and M/s Sundaram & Srinivasan, Chartered Accountants (Registration No. FRN 004207S) have already completed three years as Statutory Auditors of the Bank, they are liable to retire on the conclusion of the 105th Annual General Meeting of the Bank and are not eligible for reappointment.

The RBI guidelines mandate that for Banks with an asset size of Rs. 15,000 Crore and above as at the end of previous year, the statutory audit should be conducted under joint audit of a minimum of two audit firms. Accordingly, as the Bank continues to appoint minimum of two joint statutory auditors as per RBI guidelines, the Board of Directors, on the recommendation of the Audit Committee, finalised the list of Audit firms in the order of preference and recommended the same to RBI for its approval.

RBI vide its letter CO.DOS.RPD.NO.S532/08.12.005/2024-25 dated April 19, 2024 had approved the names of M/s. Kalyaniwalla & Mistry LLP, Chartered Accountants (Firm Registration No. 104607W/W100166) and M/s. Varma & Varma, Chartered Accountants (Firm Registration No. 004532S) as Joint Statutory Central Auditors of the Bank for the FY 2024-25.

Accordingly, it is proposed to appoint M/s. Kalyaniwalla & Mistry LLP, Chartered Accountants (Firm Registration No. 104607W/ W100166) and M/s. Varma & Varma, Chartered Accountants (Firm Registration No. 004532S) as Joint Statutory Central Auditors of the Bank, subject to approval of the shareholders at the ensuing Annual General Meeting. The appointments of Joint Statutory Central Auditors along with the relevant details are proposed to the members in the Notice of the 105th Annual General Meeting and the Members are requested to consider the said Appointment of Joint Statutory Central Auditors of the Bank.

Independent Auditors' Report

The Joint Statutory Central Auditors of the Bank viz., M/s R G N Price & Co., Chartered Accountants (Registration No. FRN 002785S) together with M/s Sundaram & Srinivasan, Chartered Accountants (Registration No. FRN 004207S), have audited the accounts of the Bank for the financial year 2023-24 and their Report forms part of this Annual Report. Pursuant to Section 143(3) (i) of the Companies Act, 2013, the Statutory Auditors have also reported on the adequacy and operating effectiveness of the internal financial controls system over financial reporting, which has been enclosed as "Annexure A" to Independent Auditor's Report.

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

During the period under review, no frauds were reported by the Auditors under sub-section (12) of Section 143 of the Companies Act, 2013.

Secretarial Audit and secretarial compliance report

In line with Section 204 of the Companies Act, 2013 and Regulation 24A (1) of the SEBI LODR, your Bank has appointed M/s S.A.E. & Associates LLP, Company Secretaries, Chennai to undertake the Secretarial Audit of the Bank for the financial year 2023-24. The Bank produced all necessary records to the Secretarial Auditors for smooth conduct of their Audit. The Secretarial Audit Report for the financial year 2023-24 is annexed to this report as Annexure - I.

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

Pursuant to regulation 24A (2) of the SEBI LODR and SEBI circular No. CIR/CFD/CMD1/27/2019 dated February 09, 2019, the Bank has obtained Secretarial Compliance Report, from the Secretarial Auditors of the Bank on compliance of all applicable SEBI Regulations and circulars/guidelines issued thereunder and the copy of the same was submitted to Stock Exchange within Sixty days from the end of the Financial Year.

Implementation of Indian Accounting Standards (Ind AS)

Pursuant to RBI guidelines, Proforma IndAS statements have to be submitted on half-yearly basis and accordingly submitted to RBI. During the FY 2022-23, RBI had issued discussion paper on introduction of Expected Credit Loss Framework for provisioning by banks and the final guidelines are awaited. Further details are given in Schedule 18 - Notes to Account of the Balance Sheet.

COMPLIANCE WITH SECRETARIAL STANDARDS

During the financial year 2023-24, your Bank is in compliance with the applicable Secretarial Standards issued by The Institute of Company Secretaries of India.

STATUTORY DISCLOSURES

Disclosures relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Rule (8)(3) of the Companies (Accounts) Rules, 2014 are detailed as under:

Conservation of Energy

Your Bank has undertaken various energy efficiency improvement initiatives for energy conservation at its branches / offices by installing LED lights in a phased manner. VRF (Variant Refrigerant Flow) AC units have been installed in back offices across various cities to save electricity by energy conservation technology.

Your Bank owns a 850 kW Wind Turbine Generator in Govindanagaram, Theni District, Tamilnadu and the said wind mill has generated 13,81,209 units during the year under review. Bank is utilizing the power generated by Wind Turbine for its Central office at Karur and Divisional Office at Chennai. Roof top solar power plant (38 kW) has been installed at our Bank's own building at Hyderabad Divisional Office for utilization of renewable energy.

Your Bank has made a capital investment of Rs. 28,94,346/- and Rs. 45,10,400/- on Solar panels and LED Lights respectively during the financial year 2023-24.

Technology Absorption

Your Bank has always used information technology extensively to deliver quality service to its customer, for more details please refer the section on Technology Initiatives of Directors Report forming part of the Annual Report.

Foreign Exchange Earnings and Outgo

Your Bank continuously supports and encourages the country's export efforts through its export financing operations. The details on foreign exchange earnings and outgo are furnished in the Foreign Exchange Transactions section that forms part of this report.

MATERIAL EVENTS THAT HAVE OCCURRED AFTER THE BALANCE SHEET DATE

There are no material events/changes and commitments, which affect the financial position of the Bank between the end of the financial year of the Bank and the date of the Directors' Report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS

During the financial year 2023-24, no significant and material orders were passed by the Regulators or Courts or Tribunals against the Bank which impacts its going concern status and Bank's operations in future.

MAINTENANCE OF COST RECORDS

Being Banking Company, your Bank is not required to maintain cost records as per sub-section (1) of Section 148 of the Companies Act, 2013

ANNUAL RETURN

The Annual Return for the financial year ended March 31, 2024, as required under Section 92 (3) and Section 134(3)(a) of the Companies Act, 2013 is available on the Bank's website at https://www.kvb.co.in/investor-corner/annual-general-meeting/ annual-return/

DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 (31 OF 2016) DURING THE YEAR ALONG WITH THEIR STATUS AS AT THE END OF THE FINANCIAL YEAR

There is no application or proceeding against the Bank under Insolvency and Bankruptcy Code, 2016 during the financial year under review.

However, Bank has been filing cases in NCLT under IBC, 2016 as a part of its recovery mechanism and the status of the cases as at the end of the financial year 2023-24 is furnished as below:

DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE TIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF

Being Banking Company, the aforesaid provision is not applicable to your Bank.

PARTICULARS OF EMPLOYEES

The information as required under Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 are annexed to this report as Annexure - II.

EMPLOYEE STOCK OPTION SCHEME

Your Bank has formulated and adopted Employee Stock Option Schemes to provide a platform to employees for participating in the ownership of the Bank and in its long-term growth. Bank uses stock options as a compensation tool to attract and retain critical talent and encourage employees to align individual performances with that of Bank's objectives. Currently, the Bank has the following Schemes in compliance with the provisions of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("SEBI SBEB & SE Regulations") erstwhile SEBI (Share Based Employee Benefits) Regulations, 2014.

• Karur Vysya Bank Employees Stock Option Scheme 2011 ("KVB-ESOS-2011")

• Karur Vysya Bank Employees Stock Option Scheme 2018 ("KVB-ESOS-2018")

During the period under review, your Bank has granted 1,97,775 options under KVB-ESOS-2018 to Shri B Ramesh Babu, MD & CEO, Shri J Natarajan, Executive Director (while holding the position as President & COO) and Senior Management towards their variable pay as a part of non-cash component. The said variable pay is in accordance with Bank's Compensation policy read with Reserve Bank of India circular DOR.Appt.BC.No.23/29.67.001/2019-20 dated November 04, 2019. Further, your Bank has allotted 44,326 Equity Shares to Shri B Ramesh Babu, MD & CEO and 37,609 Equity Shares to Shri J Natarajan, Executive Director (while holding the position as President & COO), under KVB ESOS 2018 during the year under review as a part of their noncash component of variable pay for the financial year 2020-21 and 2021-22 in terms of compensation structure. Furthermore, your Bank has allotted 8,60,612 shares to Senior Management towards their variable pay as a part of non-cash component and 13,80,988 Equity Shares of face value Rs. 2 each to the employees who have exercised their options under KVB ESOS 2011 Scheme and KVB ESOS 2018 Scheme during the year under review.

Pursuant to Regulation 13 of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, ("SEBI SBEB & SE") Bank's Secretarial Auditors, M/s S.A.E. & Associates LLP, Company Secretaries, have certified that the Bank's above mentioned Schemes have been implemented in accordance with the Resolutions passed by Shareholders for 2011 & 2018 Schemes and SEBI SBEB & SE. Disclosures as required under the said regulation are available on Bank's website at https://www. kvb.co.in/investor-corner/other-disclosures/esos-disclosures/

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to Sections 124 and 125 of the Companies Act, 2013 read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (‘IEPF Rules'), the dividends remaining unclaimed for period of 7 years and all shares in respect of which dividend are not claimed for the last 7 consecutive years are liable to be transferred to the Investor Education and Protection Fund (‘IEPF'). The said requirement does not apply to shares in respect of which there is a specific Order of Court, Tribunal or Statutory Authority, restraining transfer of the shares. Further details are provided in the Corporate Governance Report that forms part of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Articles of Association of the Bank drafted in 1916, provided for setting aside of one percent of the annual profits to a "Charity Account", which would be used to support the needy for their health and education requirements. The Bank continues with that tradition even today after 107 years in the modern avatar of Corporate Social Responsibility. A Corporate Social Responsibility (CSR) Committee has been constituted in accordance with the provisions of Section 135 of the Companies Act, 2013, read with the amended Companies (Corporate Social Responsibility Policy) Rules, 2014.

During the year under review, your bank had CSR budget of Rs. 18.09 Crore, against which the Bank spent Rs. 18.39 Crore. Further in line with the CSR policy of the Bank, spends have been spread across the core focus areas viz., health, sanitation, clean drinking water, education, skill development, women empowerment, and environment protection, as defined in Schedule VII of the Companies Act, 2013.

The brief outline of the CSR policy of the Bank, CSR spends and other mandatory disclosures are enclosed to this Report as Annexure - III.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG)

Your Bank is committed to sustainability and responsible banking through comprehensive ESG initiatives. Bank focus on reducing energy consumption with projects like windmill, LED lights and solar grid. Social responsibility efforts include improving gender diversity, supporting semi-urban and rural communities, and prioritizing cyber security and data privacy. Governance is strengthened by a majority of Independent Directors on our Board, aligning our ESG policy with sustainable banking practices and UN SDGs. Bank has integrated ESG considerations into our Credit Policy, established an ESG due diligence framework, and assessed ESG/Climate risk as low. Bank is in pursuit of IGBC certification and CSR initiatives highlight our dedication to environmental sustainability, renewable energy, and community development. Additionally, Bank prioritize employee well-being, ensuring a supportive and healthy work environment.

BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORTING (BRSR)

In terms of Regulation 34(2)(f) of the SEBI LODR read with SEBI circular SEBI/HO/CFD/CFD-SEC-2/P/CIR/2023/122 dated

July 12, 2023, the filing of BRSR shall be mandatory for the top 1000 listed companies (by market capitalisation) from the FY 2023 - 2024. It is to be noted that your Bank has published Business Responsibility and Sustainability Report from the financial year 2021-22 itself on voluntary basis in order to adapt to the regulatory requirements and build transparency among our stakeholders.

The Business Responsibility & Sustainability Reporting (BRSR) of the Bank for the financial year 2023-24 is annexed to this Report as Annexure - IV.

BOARD MEETINGS

The composition of the Board of Directors is in compliance with all the relevant applicable statutory regulations. The Board meets at regular intervals to discuss and decide on Bank's business policy and strategy, apart from other items of business. During the year under review, Twelve Board Meetings were conducted and the relevant periodicity for holding the meetings was complied. The schedule of the meetings of the Board is circulated in advance to the Members of the Board, for their consideration and approval. Details of the composition of Board, Meetings held and attendance of the Directors at such Meetings are provided in the Corporate Governance Report which forms part of Annual Report.

BOARD EVALUATION

Pursuant to Section 134(3) (p) of the Companies Act, 2013, Regulation 17(10) of SEBI LODR and other applicable regulations, Board has carried out annual evaluation of its own performance (Board as a whole), Committees of the Board, Non- Executive Independent Directors including Chairperson and MD & CEO. Further Independent Directors in their Separate Meeting have carried out evaluation of Board as a whole and Non- Executive Non-Independent Directors. The manner of evaluation conducted during the financial year 2023-24 is furnished in the Corporate Governance Report that forms part of this Annual Report.

CHANGES IN BOARD OF DIRECTORS OF THE BANK

Changes in Board of Directors of the Bank during the review period and till the date of this report are presented below;

CA Chinnasamy Ganesan (DIN: 07615862), was co-opted as an Additional Director of the Bank under "Non-Executive Independent Director" category by the Board in its meeting held on April 25, 2023, subject to the approval of the Shareholders of the Bank.

In terms of Regulation 17 (1C) of SEBI LODR, the listed entity shall ensure that approval of shareholders for appointment of a person on the Board of Directors at the next general meeting or within a period of three (3) months from the date of appointment, whichever is earlier.

Accordingly, the appointment of CA Chinnasamy Ganesan as Non- Executive Independent Director of the Bank, for a period of three (3) years with effect from April 25, 2023 to April 24, 2026 not liable to retire by rotation, was placed before the shareholders of the Bank for their approval through Postal Ballot having remote e-voting process and the same was approved by shareholders of the Bank on June 30, 2023.

CA Chinnasamy Ganesan has handled many Indian and Multi National Companies with respect to audits, advisory on international financial reporting, taxation, due diligence and other assurance services. He has more than 25 years of extensive knowledge and experience in carrying out bank audit and in training bank officials in financial reporting. He specialises in Financial Reporting (including Ind AS, IFRS and US GAAP), Company law matters, audit and taxation and was conferred Honorary Doctorate ("honoris causa") in International Financial Reporting Standards for his extensive contribution to Ind AS and IFRS by a renowned foreign university. He is an active resource person for Regional Training Institute of Comptroller and Auditor General of India, Staff training college of Indian Bank, Indian Overseas Bank, Reserve Bank of India and several other banks.

Shri R Vidhya Shankar (DIN: 00002498), was co-opted as an Additional Director of the Bank under "Non-Executive Independent Director" category by the Board in its meeting held on April 22, 2024, subject to the approval of the Shareholders of the Bank.

In terms of Regulation 17 (1C) of SEBI LODR, the listed entity shall ensure that approval of shareholders for appointment of a person on the Board of Directors at the next general meeting or within a period of three (3) months from the date of appointment, whichever is earlier.

Accordingly, the appointment of Shri R Vidhya Shankar as NonExecutive Independent Director of the Bank, for a period of three (3) years with effect from April 22, 2024 to April 21, 2027 not liable to retire by rotation, was placed before the shareholders of the Bank for their approval through Postal Ballot having remote e-voting process and the same was approved by shareholders of the Bank on July 16, 2024.

Shri R Vidhya Shankar is a senior partner of M/s Ramani & Shankar, one of the oldest Law Firms in Western Tamil Nadu and much sought after lawyer in western Tamil Nadu for corporate litigations, transactions and opinions. He specialises in Corporate Law, including in corporate transactions, corporate restructuring, schemes and arrangements, corporate litigations, domestic and international arbitrations, capital market, FEMA compliances, cross-border transactions and general corporate advisory services. He is representing Majority Sectors under the sectoral representation such as Law, Credit Recovery, Co-operation & Rural Economy and MSME on the Board.

Shri J Natarajan (DIN: 02710776)

In the context of growing complexities of the banking sector and to establish an effective senior management complementing Managing Director and CEO's position, Reserve Bank of India vide its circular RBI/2023-24/70 DOR.HGG. GOV. REC.46/29.67.001/2023-24 Appointment of Whole-Time Director(s) dated October 25, 2023, has advised to ensure the presence of at least two Whole Time Directors (WTDs), including the Managing Director and CEO, on the Bank's Boards.

Based on the requirements of RBI circular, Nomination and Remuneration Committee and Board of Directors of the Bank has made the recommendation to the Reserve Bank of India seeking approval for appointment of Shri J Natarajan as Whole Time Director and designated as Executive Director of the Bank.

The Reserve Bank of India vide its letter No. DoR.GOV. No. S1076 /08.41.001 /2024-25 dated May 16, 2024, had accorded its approval for the appointment of Shri J Natarajan (DIN: 02710776) as Whole-time Director (Executive Director) of the Bank, for a period of One (1) year with effect from the date of his taking charge, along with the terms and conditions.

Pursuant to the RBI approval, Shri J Natarajan was co-opted as an Additional Director in the Category of Whole Time Director and designated as Executive Director of the Bank by the Board in its meeting held on May 22, 2024, for a period of one (1) year from the date of taking charge. He has taken charge on May 22, 2024 as Executive Director of the Bank.

In terms of Regulation 17 (1C) of SEBI LODR, the listed entity shall ensure that approval of shareholders for appointment of a person on the Board of Directors at the next general meeting or within a time period of three (3) months from the date of appointment, whichever is earlier.

Accordingly, the appointment of Shri J Natarajan as Whole Time Director designated as Executive Director of the Bank for a period of one (1) year with effect from May 22, 2024, not liable to retire by rotation was placed before the shareholders of the Bank for their approval through Postal Ballot having remote e-voting process and the same was approved by the shareholders of the Bank on July 16, 2024.

Shri J Natarajan joined Karur Vysya Bank as a Trainee in the year 1982 and moved up to different levels including General Manager of the Bank in the year 2010, Chief General Manager of the Bank in the year 2017 and President of the Bank in the year 2019 reporting to MD&CEO of the Bank. He has extensive work experience in Credit, Treasury, Finance, Human resources, Information technology, Merchant Banking etc., He was instrumental in Bank's digital lending journey and various other key initiatives in the Bank.

Shri B Ramesh Babu (DIN: 06900325) was re-appointed as Managing Director & Chief Executive Officer of the Bank for the second term of three years (3) with effect from July 29, 2023, not liable to retire by rotation. The said re-appointment was approved by the shareholders of the Bank vide resolution dated June 30, 2023 through postal ballot on the terms and conditions recommended. Further Reserve Bank of India accorded its approval for the reappointment vide letter dated July 14, 2023.

Dr Harshavardhan R (DIN: 01675460) was re-appointed as Non- Executive Independent director of the Bank for second term of five years (5) effective from July 30, 2023 pursuant to the approval of shareholders through postal ballot having remote e-voting process on June 30, 2023, not liable to retire by rotation.

Opinion of the Board regarding integrity, expertise and experience (including the proficiency) of the Independent Director appointed during the year:

In the opinion of the Board, the Independent Directors appointed during the year possess requisite qualifications, proficiency, expertise, track record, integrity, independence, vast and rich experience in their respective domains. Independent Directors appointed during the year have qualified the online proficiency self-assessment test for Independent Director's Databank/availed exemption, within the timelines prescribed.

Retirement by rotation

Shri R Ramkumar (DIN: 00275622), Non-Executive Non-Independent Director, retires by rotation at the ensuing 105th Annual General Meeting (AGM) and being eligible, offers himself for re-appointment in terms of Section 152 of the Companies Act, 2013. He hails from the promoter's family and was on the Board since June 25, 2018 and would be representing Minority Sector under sectoral representation such as Business Management, Finance, Human Resources. Approval of the shareholders is being requested for reappointment of Shri R Ramkumar as Non-Executive Non-Independent Director of the Bank, liable to retire by rotation.

The brief profile and details in terms of Regulation 36 (3) of SEBI LODR and the Secretarial Standard on General Meetings, in respect of the Director seeking appointment/re-appointment has been annexed to the Notice of the ensuing AGM and in the Corporate Governance Report that forms part of this Annual Report.

Retirement on completion of tenure

Shri M V Srinivasamoorthi (DIN: 00694618), Non-Executive Non Independent Director of the Bank demitted office at the close of office hours on August 26, 2023, consequent to completion of his eight (8) years tenure in terms of Section 10A(2A)(i) of the Banking Regulation Act, 1949.

Dr K S Ravichandran (DIN: 00002713), Non-Executive Independent Director of the Bank demitted office at the close of office hours on May 25, 2024 Consequent to completion of his eight (8) years tenure in terms of Section 10A(2A)(i) of the Banking Regulation Act, 1949.

Board placed on record its sincere appreciation for the valuable services rendered and contribution made by them during their tenure as Directors of the Bank.

Apart from the above, there were no changes in the Board of Directors of the Bank as on the date of this report.

KEY MANAGERIAL PERSONNEL

The changes in Key Managerial Personnel of the Bank during the review period and till the date of this report are briefed below;

Appointment

Shri M S Chandrasekaran was appointed as Chief Operating Officer (COO) of the Bank in Chief General Manager cadre and categorized as Key Managerial Personnel with effect from October 16, 2023.

Shri Dolphy Jose, General Manager and Head of Consumer Banking of the Bank, is elevated to Chief General Manager and Head of Consumer Banking and categorized as Key Managerial Personnel of the Bank on October 16, 2023.

Shri KVSM Sudhakar, General Manager and Chief Compliance Officer, is elevated to Chief General Manager and categorized as Key Managerial Personnel of the Bank and continues as Chief Compliance Officer, with effective from April 01, 2024.

Shri J Natarajan (former President and Key Managerial Personnel of the Bank) was appointed as an Executive Director of the Bank on May 22, 2024 and he continues as Key Managerial Personnel of the Bank.

Re-appointment

Shri B Ramesh Babu was reappointed as MD & CEO of the Bank, who is a Key Managerial Personnel of the Bank, for the second term of three (3) years, with effect from July 29, 2023.

Resignation

Shri Dolphy Jose, Chief General Manager and Head of Consumer Banking (Key Managerial Personnel) of the Bank had tendered his resignation for pursuing other career opportunities and relieved from the Bank on July 01, 2024.

Apart from the above, there were no changes in the Key Managerial Personnels as on the date of this report.

CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES FOR APPOINTMENT/ REAPPOINTMENT OF DIRECTORS

Pursuant to provisions of Section 178(3) of the Companies Act, 2013 and relevant guidelines of RBI, the Nomination and Remuneration Committee (NRC) formulated the criteria for determining qualifications, positive attributes and independence of a Director to adhere the various provisions and guidelines as detailed below:

• ‘Fit and Proper' criteria as per Dr. Ganguly Committee Norms which stipulates age, qualification, experience, track record, integrity, etc., and various circular instructions and guidelines issued by Reserve Bank of India from time to time.

• Norms laid down by the Banking Regulation Act, 1949 as amended from time to time which stipulates substantial interest, sectorial representation as per Section 10A(2) (a), restrictions as per Section 16 and 20 of the Banking Regulation Act, 1949, etc.,

• Disqualification/Conflict of Interest of Directors, and other norms as per the provisions of the Companies Act, 2013 and rules made thereunder from time to time.

• Criteria of Independence of a Director as per the provisions of the Companies Act, 2013 and rules made thereunder and other applicable provisions as amended from time to time.

• Applicable listing regulations as amended from time to time.

• Articles of Association of the Bank.

• Any other factors as the NRC may deem fit and in the best interest of the Bank and its stakeholders.

The terms and conditions of appointment of Independent Director are available on the website of the Bank at https://www.kvb.co.in/ docs/terms-and-conditions-of-appointment-of-independent- directors.pdf. Your Bank's Nomination and Remuneration Committee (NRC) oversees matters of succession planning of its

Directors, Senior Management and also Key Managerial Personnel & the Board of the Bank and ensures that proper plans are put in place for orderly succession of appointment to the Board and to Senior Management of the Bank including KMPs.

Policy on remuneration of directors

The remuneration of Directors is governed by the Compensation Policy of the Bank in terms of RBI circular no. DOR.Appt. BC.No.23/29.67.001/2019-20 dated November 04, 2019, which covers the aspects of remuneration payable to Board of Directors, Whole Time Directors/ Chief Executive Officers/ Material Risk Takers, Key Managerial Personnels, Control Function Staff and all other employees. This Policy is in tune with the guidelines issued by the Reserve Bank of India, provisions of the Companies Act, 2013 and the SEBI LODR amended from time to time. Your Bank has adopted a board approved compensation policy on the basis of the aforesaid regulatory guidelines and the Policy is available on the Bank's website at https://www.kvb.co.in/ docs/investor-compensation-policy.pdf

DECLARATION BY INDEPENDENT DIRECTORS

Pursuant to Section 149(7) read with 149(6) of the Companies Act, 2013 and Regulation 25(8) read with Regulation 16(1)(b) of the SEBI LODR, all the Independent Directors of the Bank has provided the necessary declarations that they meet the criteria of independence laid down thereunder. As required under Schedule IV of the Companies Act, 2013, Board has reviewed the declarations submitted by the Independent Directors and opined that, they fulfil all the conditions specified in the Companies Act, 2013 and SEBI LODR, and are independent of the management.

FAMILIARISATION PROGRAMMES OF INDEPENDENT DIRECTORS

The Independent Directors along with all other Directors are made familiar with their rights, roles and responsibilities in the Bank at the time of appointment and also on a recurrent basis. Details of familiarisation programmes attended by all Directors including Independent Directors are provided at https://www.kvb. co.in/docs/disclosure-on-familiarisation-programmes-for-board- of-directors.pdf, pursuant to regulation 46 of SEBI LODR. Other details on the same are also covered in Corporate Governance Report forming part of Annual Report.

CORPORATE GOVERNANCE

The details on Corporate Governance standards followed by your Bank and the relevant disclosures as stipulated under SEBI LODR and the Companies Act, 2013 and the rules made thereunder are deliberated in Corporate Governance Report that forms part of this Annual Report. A certificate from M/s S.A.E. & Associates LLP, Company Secretaries, confirming compliance to the conditions of Corporate Governance as stipulated under SEBI LODR is annexed to Corporate Governance Report which forms part of this Annual Report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(C) of the Companies Act, 2013 with respect to the Directors' Responsibility Statement, it is hereby confirmed that:

a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) The Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit and loss of the Bank for that period;

c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

d) The Directors had prepared the annual accounts on a going concern basis;

e) The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively; and

f) The Directors had laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively.

AWARDS AND ACCOLADES

Your Bank received the following awards during financial year 2023-24, majority of the same for implementation of innovative technologies:

ACKNOWLEDGEMENTS

The Board of Directors takes this opportunity to convey their gratitude to the Government of India, Reserve Bank of India, Securities Exchange Board of India (SEBI), Ministry of Corporate Affairs (MCA), National Stock Exchange of India Limited, BSE Limited, Rating Agencies, Statutory Auditors, Secretarial Auditors, various State Governments & Union Territories and other regulatory authorities in India, for their valuable guidance and strong support.

The Board expresses its sincere thanks to the Bank's valued shareholders, debenture holders, esteemed customers, all other stakeholders and well-wishers for their continued faith, confidence, and patronage on us and look forward for their continuous support.

Your Board expresses profound gratitude for the support extended by the Auditors, Lawyers, and other financial institutions. The Board also appreciates the entire staff for their sincere and dedicated contributions to the overall performance of the Bank during the year. The Board encourages their ongoing cooperation in achieving the goals of the Bank in the years ahead.