South Indian Bank Ltd

To the Members,

The Board of Directors is pleased to place before you, the 96^th Annual Report on the business and operations of the South Indian Bank Ltd. ("the Bank") along with the audited accounts for the Financial Year (FY) ended March 31, 2024.

The performance highlights of the Bank for the financial year ended March 31, 2024 are as follows:

Rs. in crore

Previous year's figures have been regrouped / reclassified, wherever necessary to conform to current year's classification.

The Bank has achieved a total Business of Rs.1,82,346.52 crore, consisting of Deposits of Rs.1,01,920.26 crore and Gross Advances of Rs.80,426.26 crore as on March 31, 2024.

The total Deposits of the Bank as on March 31, 2024 was Rs.1,01,920.26 crore as against Rs.91,651.35 crore as on March 31, 2023, registering a growth of 11.20%. The break-up of the deposits as on March 31, 2024 is as under:

The Bank during the year has focused on Retail Advances and CASA.

The CASA has grown from Rs.30,227.06 crore as on March 31, 2023 to Rs.32,692.67 crore as on March 31, 2024, with a growth of 8.16%. The Savings Bank Deposits grew by 5.45% on a year on year basis. Current Deposits grew by 21.84% on a year on year basis. While opening new banking relationships, the Bank has accorded priority to meaningful financial inclusion during the period under reporting.

The advance portfolio of the Bank grew by 11.56% on a YoY basis to reach Rs.80,426.26 crore as on March 31, 2024. The focussed strategies implemented by the Bank has facilitated rapid growth in advances.

The Bank has registered a robust recovery and upgradation of NPA during the financial year 2023-24 and GNPA stood at Rs.3,620.34 crore as at March 31, 2024. The Gross NPA of Bank as on March 31, 2024 as a percentage to gross advance is 4.50% and Net NPA stood at 1.46%. Ensuring the Bank's vision on asset quality, the underwriting standards are revisited & reviewed from time to time. The GNPA and Net NPA percentage of new Loan book stood at 0.31% and 0.08% respectively.

During the financial year, the Bank could register growth, with focus on building quality assets across all verticals like corporate, SME, housing loan, auto loan, credit card, personal loan, gold loan etc. The Vehicle Loan ("VL") policy of the Bank was revamped during the year 2023-24, to make the VL products more competitive in the market without compromising credit quality.

The Bank has adopted a forward looking approach and envisaged more co-lending arrangements to enhance priority sector lending. All the priority sector advance targets stands achieved and the Bank was also able to generate additional revenue of Rs.71.80 crore during the year, through sale of Priority Sector Lending Certificates (PSLCs).

Priority sector target & achievement as on March 31, 2024 is as follows:

Break-up of exposure under Priority Sector as on March 31, 2024 is furnished below:

The high quality portfolio growth was channelized by the Relationship Management structure at numerous locations/touch points which helped the Bank in tapping various Retail, SME and cross-selling opportunities. Decentralisation of credit processing centres resulted in speedy disposal of credit facilities.

To achieve the bank's vision of 'profitable credit growth through quality credit, the Bank along with tie up with M/s Nucleus Software Exports Ltd & M/s NewGen Software Technologies Ltd has introduced new advance suite procedures, where the total lifecycle of the loan i.e., from sourcing to collection, including documentation happens through digital mode for both retail and SME lending.

The Net Operating Income (Net Interest Income and Other Income) of the Bank increased by Rs.1,022.86

crore (26.74%) from Rs.3,824.71 crore in FY 2022-23 to Rs.4,847.57 crore in FY 2023-24. The Non-Interest Income increased by Rs.702.89 crore (86.50%) during the year, which was mainly on account of net profit from sale of investments and Income from credit card during the FY 2023-24. The Operating Profit for the year under review was Rs.1,867.67 crore (before taxes and provisions) as against Rs.1,507.33 crore for the financial year 202223. The Net Profit for the year was Rs.1,070.08 crore as compared to a net profit of Rs.775.09 crore during the previous year and the profit available for appropriation are as per details given below:

Rs. in crore

The Board of Directors has recommended a dividend of 30% i.e. Rs.0.30 per Equity share of face value of Rs.1/-

each per share for the financial year ended March 31, 2024 and during the Previous Financial Year, the Bank has paid dividend at the rate of 30% i.e. Rs.0.30 per Equity share of face value of Rs.1/- each per share to the shareholders.

The Bank's issued and paid-up capital stood at Rs.261.59 crore as on March 31, 2024. As per the decision of the Board of Directors in the meeting held on December 27,2023 and the terms of issue approved by the Board of Directors in the meeting held on February 21,2024, our Bank has issued 52,31,85,254 Equity Shares on Rights Basis to the existing shareholders at the rate of Rs.22 per at a ratio of 1:4 to their existing shareholding as on February 27, 2024. Through which the Bank has raised capital through rights issue during the FY 202324 to the tune of Rs.1,151.01 Crore.

The capital plus reserves of the Bank has moved up from Rs.6,674.58 crore, as on March 31, 2023 to Rs.8,823.54 crore as on March 31, 2024, mainly on account of plough back of profits and issue of shares on right basis, during the current financial year.

The Capital to Risk Weighted Assets Ratio (CRAR) of the Bank according to Basel III guidelines is 19.91 as on March 31, 2024 as against the statutory requirement of 11.50 (including Capital Conservation Buffer). Tier I CRAR constitutes 17.65 while Tier II CRAR works out to 2.26. The Bank follows Standardized Approach, Standardized Duration Approach and Basic Indicator Approach for measurement of capital charges in respect of credit risk, market risk and operational risk, respectively.

The Bank's shares continue to be listed on BSE Ltd. and The National Stock Exchange of India Ltd. The Tier I/II Bonds issued by the Bank continue to be listed on BSE Ltd. The Bank confirms that it has paid the listing fees to all the Stock Exchanges for the financial year 2024-25. The securities of the Bank are actively traded on NSE (Shares only) and BSE (Shares and Bonds) and have not been suspended from trading.

The Bank has been successful in widening its network across India with 960 banking outlets (955 Branches, 3 Satellite branches and 2 Ultra small Branches (USB)) and 1,321 ATMs/CRMs as on March 31, 2024. The Bank has opened 15 new outlets and closed 1 USB. The Bank has also opened 45 new ATMs, 11 CRMs across the country during the financial year 2023-24 and closed

23 ATMs and 1 CRM. The branch network now covers 26 States and 4 Union Territories.

Construction of Currency Chest at Kakkanad is under progress and the same is expected to be completed in the FY 2024-25, as per the time-line permitted.

The global economic outlook remained beset by geopolitical tensions, unsettled financial conditions, and stubborn inflation in major economies. However, India has successfully navigated through multiple challenges and emerged as the fastest growing large economy. The inflation in India trended down, both headline and core towards the target of 4% with the Reserve Bank of India projecting the Indian economy to grow by 7% during FY25, making it a fourth successive year of growth at or above 7%.

The Reserve Bank of India kept policy rates unchanged, with repo rate at 6.5% but conducted frequent liquidity operations using the Variable Repo Rate (VRR)/ Variable Reverse Repo Rate (VRRR). Till August 2023, system's liquidity remained at a comfortable surplus of above Rs.1 trillion, but dropped to deficit thereafter in the second half of FY24. The deficit liquidity exerted pressure on India's 10-year bond yields but RBI's nimble liquidity management approach arrested excessive volatility in yields. In FY24 India's 10-year bond yields oscillated in between 6.95-7.40% and the trajectory was defined by factors including the Inflation data, Banking system liquidity, US 10-year yield, FPI debt flows, and international crude oil prices. India's buoyant growth condition coupled with fiscal prudence and effective liquidity management, limit the rise in yields. Going ahead, the favourable growth-inflation dynamics may prompt a rate reduction by RBI, weighing on 10-year bond yield.

The nominal exchange rate of Indian rupee (INR) depreciated to record low of Rs.83.45 relative to the US Dollar (USD) in FY24, depreciating 1.5% compared to a fall of 7.8% in FY23. Throughout the year INR mostly remained range bound due to the combination of robust macro fundamentals, along with comfortable external position and benevolent global backdrop. A lower trade deficit and robust foreign inflows, prospects of a Fed rate cut and lower oil prices supported the INR. Apart from this, RBI's effective intervention in the foreign exchange market also ensured that volatility in the exchange rate remained contained.

The Bank's gross investment portfolio stood at Rs.25,278.63 crore as on March 31, 2024 compared to Rs.26,014.21 crore as on March 31, 2023, down by 2.83%. Investment Deposit ratio moved to 24.80% as on March 31, 2024 from 28.38% as on March 31, 2023. Profit on

sale of investment for FY 2023-24 stood at Rs.256.67 crore. Total interest income from investment for the year was Rs.1,551.61 crore. (Inclusive of dividend income of Rs.1.71 crore and ammortisation cost of Rs.257.37 crore). Yield on investments (profit + interest earned to average investments) during FY 23-24 was 6.64%.

During the year, the fixed income instruments trading desk, the equity trading desk and the forex trading desk in Treasury Department have all managed their portfolios well with data-backed analysis. The SLR trading desk also planned and executed the Bank's participation in Government's Securities Market. The desk has successfully managed the Held-To-Maturity (HTM) book. The equity trading desk took well thought out positions in the secondary market and participated actively in the various primary market offerings too. The forex trading desk has also contributed actively to overall profits by taking gainful trading positions.

The Fund Management and Money Markets Desks at Treasury Department successfully managed the liquidity risk by maintaining appropriate levels of surplus funds. The desk also ensured compliance with the regulatory requirements for Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).

Besides the above, the Forex Merchant Desk in Treasury Department offers to the Bank's customers solutions for foreign exchange risk hedging and remittance-related services. A significant portion of the total Treasury profits for FY 2023-24 came from Forex Merchant activities. Going forward, Treasury Department intends to focus on Forex Merchant business and other similar offerings to customers for diversifying its revenue mix. A new Treasury Management Software was implemented in this Financial Year and has enhanced product portfolio and better productivity to the dealers along with the Back Office.

During the FY 2023-24, as a result of focused and sustained efforts using legal recourse available under the SARFAESI Act, DRTs and Civil Courts, the Bank has been able to improve its overall recovery. The Bank has also relied on expeditious deciding on requests for onetime settlement. The cumulative effect of the sustained action has facilitated the Bank to achieve recovery figure of Rs.1,642.16 crore. The recovery was largely in cash and the Bank has recorded a cash recovery of Rs.1,288.50 crore. During the financial year 2023-24, in order to improve the quality of assets, special thrust was given to selection and underwriting of credit. Further, focus on building efficiency of collection team, resulted in marked improvement in collections and the Bank reaching its lowest ever SMA2 numbers at Rs.566.23 crore (against Rs.711.65 crore in FY 2022-

23). Incremental NPA was also controlled and addition to GNPA was limited at Rs.1,395.48 crore, as against Rs.1,513.22 crore in FY 2022-23. The Gross NPA of the Bank has decreased to 4.50% from 5.14% as on March 31, 2023. The Net NPA has decreased to Rs.1,134.58 crore as on March 31, 2024, from Rs.1,293.61 crore as at March 31, 2023. In terms of percentages, the Net NPA has decreased to 1.46% as on March 31, 2024 from 1.86% as on March 31, 2023. On the recovery front, the Bank has managed to outperform peer group banks and strives to build capability to sustain the momentum and deliver higher numbers during the years to come.

The risk management processes are guided by well- defined policies appropriate for various risk categories, independent risk oversight, and periodic monitoring through the sub-committees of the Board of Directors. The objective of risk management is not to prohibit or prevent risk taking activity, but to ensure that the risks are consciously taken with full knowledge, purpose and clear understanding so that it can be measured and mitigated. The essential functions of risk management are to identify, measure and more importantly monitor the risk profile of the Bank. Managing risk is fundamental to banking and is the key to sustained profitability and stability. Management of risk aims to achieve best trade-off between risk and return and to maximise Risk Adjusted Return on Capital (RAROC). Sound risk management is critical to a Bank's success. Business and revenue growth have therefore to be aligned with Risk appetite in the context of the risks embedded in the Bank's business strategy and balance sheet. Of the various types of risks the Bank is exposed to, the most important are credit risk, market risk and operational risk. The identification, measurement, monitoring and mitigation of risks continue to be key focus areas for the Bank.

The risk management function attempts to anticipate vulnerabilities at the transaction level or at the portfolio level through qualitative and quantitative examinations of the embedded risks. The risk management strategy of the Bank is based on a clear understanding of various risks, disciplined risk assessment, risk measurement procedures and continuous monitoring for mitigation. The policies and procedures established for this purpose are continuously evaluated and benchmarked against the best practices followed in the industry. Through continuous refinement/improvement of the risk measurement/ management systems, including automation of feasible processes, the Bank aims to ensure regulatory compliance as well as better return on and utilisation of capital in line with the business objectives.

Various initiatives such as comprehensive review of Credit Risk Policy and other Risk Management Policies have been initiated along with other process improvements. Liquidity is also actively being managed through the ALCO forum, where the Bank is pursuing actively into increasing the sticky and retail deposits along with operationalizing majority of the wholesale banking financing relationships. As part of the Business Continuity Management, the Bank's Operational Risk team is working in close coordination with various stakeholders to ensure smooth conduct of operations.

The risk management strategy of the Bank is based on a clear understanding of various risks, disciplined risk assessment, risk measurement procedures and continuous monitoring for mitigation. The policies and procedures established for this purpose are continuously evaluated and benchmarked against the best practices followed in the industry. Through continuous refinement/ improvement of the risk measurement/ management systems, including automation of feasible processes, the Bank aims to ensure regulatory compliance as well as better return on and utilization of the capital in line with the business objectives.

The Bank has a comprehensive policy framework which contains separate policies for identification, measurement and management of all material risks including but not limited to credit, market, operational, liquidity and other Pillar-II risks. The Bank has put in place integrated risk management policies which ensures independence of the risk governance structure. The required standard operating procedures also follows the Policies to ensure that all the parameters are well covered while implementing the approved policies. The details of risk management practices are provided in Management Discussion and Analysis Report.

In compliance with regulatory guidelines on Pillar I of Basel III norms, the Bank has computed capital charge for credit risk as per the Standardized Approach, for market risk as per the Standardized Duration Method and for operational risk as per the Basic Indicator Approach. To address Pillar II risk, the Bank has implemented ICAAP (Internal Capital Adequacy Assessment Process), to integrate capital planning with budgetary planning and to capture residual risks which are not addressed in Pillar I, like credit concentration risk, interest rate risk in the banking book, liquidity risk, earnings risk, strategic risk, reputation risk, pension obligation risk etc. The Bank has adopted a common framework for additional disclosures under Pillar III for adhering to the market discipline norms of Basel III guidelines. This requires the Bank to disclose its risk exposures, risk assessment

processes and its capital adequacy to the market in a consistent and comprehensive manner.

The Bank ensures strict compliance with all statutory requirements and voluntarily undertakes several sustainable steps in order to contribute towards a better environment. The Bank has undertaken various initiatives for energy conservation at its premises, to reduce its carbon footprint and improve resource efficiency. It ranging from using better technology to improve energy efficiency, recycling and generating energy from renewable sources. A detailed report on the same is included in the Business Responsibility and Sustainability Report forming part of this annual report. We have engaged with certified agencies to handle disposal of plastic, E-waste, hazardous and other waste, as per our safe and sustainable waste management policy. Furthermore, the Bank ensures to invest in specific technologies to improve the environmental and social impacts of product and processes. Digitization of agreements, paper-less electronic BG issuance, digitization of loan-processing are a few of our various green initiatives that can be quoted. Hence, sustainability is integral to our ethos and we are committed to minimize our environmental footprint and contributing positively to the communities we serve. The Bank, being a banking company and an authorized dealer in Foreign Exchange, has taken all possible steps to enhance export credit. Through its export financing operations, the Bank supports and encourages the country's export efforts.

The Bank has zero tolerance towards any action on the part of any executive/employees which may fall under the ambit of 'Sexual Harassment' at workplace and is fully committed to uphold and maintain the dignity of every women staff working in the Bank. The Bank has complied with provisions relating to the constitution of the Internal Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 [14 of 2013]. The Policy provides for protection against sexual harassment of women at workplace and for prevention and redressal of such complaints. All the employees are covered under this policy.

Number of complaints pending as at the beginning of the financial year - Nil

Number of complaints filed during the financial year - 7

Number of complaints pending as at the end of the financial year - Nil

The Bank had 9,836 employees as on March 31, 2024. The details of the top 10 employees including the employees who were in receipt of aggregate remuneration of more than Rs.1.02 crore per annum (employed throughout the year) or who were in receipt of remuneration of Rs.8.5 lakhs per month (employed for a part of the year) during the FY 2023-24, in terms of remuneration drawn pursuant to provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to this report (Annexure A). The ratio of the remuneration of each director to the median employees' remuneration and other details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to this report (Annexure B).

A brief outline of the Bank's CSR Policy, including overview of projects or programs to be undertaken.

The South Indian Bank is grateful to the society that has supported and encouraged the Bank during its long journey of growth and development. At South Indian Bank, Corporate Social Responsibility (CSR) isn't just a policy: it's ingrained in our ethos. The Bank believes that no organization can make sustainable development without the patronage of the society. We recognize that our success is intertwined with the prosperity of the communities we serve. The Bank is committed to integrate social and environmental concerns in its business operations. The Bank shall continue to have among its objectives, promotion and growth of national economy and shall continue to be mindful of its social and moral responsibilities to the customers, shareholders and the society. The Bank is committed to financing the economic and developmental activities of the nation with concern for human rights and environment. In line with the CSR Policy, and in accordance with Schedule VII, section 135 of the Companies Act, 2013, the Bank has actively engaged in various CSR initiatives aimed at uplifting communities and fostering sustainable development activities during the FY 2023-24, which

had significant impact on the society. From promoting education and healthcare to environmental conservation and community welfare, our endeavours have touched lives across regions we serve.

As we navigate through dynamic economic landscapes, we remain steadfast in our dedication to making positive impact beyond banking services. The CSR initiatives during the FY 2023-24, encapsulate our efforts, underscoring our unwavering commitment to social responsibility and sustainable practices that we embark on together with our stakeholders. The initiatives, inter- alia includes:

• Special thrust on flagship areas like special schools, old age homes and orphanages.

• Specially equipped vehicles for commutation of differently abled children.

• Renovation and maintenance of public parks to offer improved amenities and recreational opportunities to the general public.

• Planting of trees as a part of improving environmental sustainability, maintaining quality of soil, air and water.

• Promoting education, including special education and employment enhancing vocational skills and livelihood enhancement projects.

• Eradicating hunger, poverty and malnutrition, promoting health care including preventive healthcare and sanitation and making available safe drinking water.

• Empowering women, setting up homes and hostels for women and orphans, setting up old age homes, measures for reducing inequalities faced by socially and economically backward groups.

• Rural development activities.

• Training to promote nationally recognized sports.

• Promoting Financial Literacy.

The Bank has always given top priority to fulfilling its obligations under the Corporate Social Responsibility. Diversified Projects in the areas of healthcare, education, sports, sanitation etc. that would benefit the society as a whole are identified and the Bank wholeheartedly supports such initiatives.

The amount spent by the Bank for the FY 2023-24 towards CSR is Rs.10.50 Crores against the CSR obligation of Rs.10.47 Crores (after deducting set off), as per Section 135 of the Companies Act, 2013. The Bank has embarked on some major projects last year in the field

of education, healthcare, environmental sustainability etc. By choosing long term sustainable projects, the Bank has taken an approach which brings steady and long lasting impact on the society. The details of the CSR activities of the FY 2023-24 are mentioned in Annexure 'C' to this report.

Financial inclusion refers to efforts to make financial products and services accessible and affordable to all individuals and businesses, regardless of their personal net-worth or company size. Financial inclusion strives to remove the barriers that exclude people from participating in the financial sector and using these services to improve their lives. Financial inclusion is an effort to make every day financial services available to more of the world's population at a reasonable cost. It aims to ensure that the poor and marginalised make the best use of their money and attain financial education.

With advances in financial technology and digital transactions, more and more start-ups are now making financial inclusion simpler to achieve. It is all about bringing basic banking facilities to the lower income groups at an affordable cost. The Bank has adopted several financial inclusion initiatives, including appointment of Business Correspondents and Financial Literacy Counsellors. For expanding the Financial Inclusion activities, the Bank has 50 Business Correspondents and 22 Financial Literacy Counsellors as on March 31, 2024, in the States of Kerala and Tamil Nadu. Through corporate business correspondents, the Bank has on-boarded 36,423 borrowers with total outstanding of Rs.155.75 crore in the FY 2023-24 in the agriculture lending, hence reaching out to the unserved and underserved strata of the society.

Aadhaar Enabled Payment System (AePS) is a payment service, empowering a bank customer to use Aadhaar as his/her identity to access his/her respective Aadhaar enabled bank account and perform basic banking transactions through a Business Correspondent / POS machine. National Payment Corporation of India (NPCI), an umbrella organisation for all retail payments is controlling AePS operations. AePS offers basic banking services such as Cash Withdrawal, Cash Deposit, Balance Enquiry, Aadhaar to Aadhaar Fund Transfer and Mini Statement. The Bank has also successfully migrated to Aadhaar Enabled Payment System (AePS) for performing transactions through Business Correspondents.

In an era of heightened competition, thin profit margins and cost constraints, establishment of conventional bank branches in all locations cannot be a viable proposition. It is, therefore, imperative to explore the possibilities of other cost effective delivery mechanisms to reach out to remote locations and satisfy the financial needs of clientele at an affordable cost. This has evolved the concept of Business Correspondent (BC) in the banking sector. This is also an efficient and effective tool for implementation of Financial Inclusion programme of Government of India.

Though there are manifold challenges like credit risk, operational risk, legal risk, reputational risk, difficulty in assessing the integrity of the BCs, managing cost on low volume of business, and effective supervision and control of the activities, there exists the potential for employment generation, creativity and productivity in rural hinterlands for bringing about a comprehensive economic development and the resultant benefits to the Bank. Bank's BCs are branded under the name "BANK MITRA".

The wholly outsourced BC model will complement the Bank's strength to increase business volume and improve efficiency of operation. The Bank is ensuring that the Business Correspondent meets the benchmark performance standards at all stages of delivery of services, without diluting Bank's values and principles, control mechanisms, business processes or goodwill and reputation.

Financial Literacy is the ability to understand how money works in our day to day life and how someone manages it, how he/she invests it and how a person offers it to others. More specifically, it refers to the set of skills and knowledge that allows an individual to make informed and effective decisions with their financial resources. As on March 31, 2024 the Bank has engaged 16 FLCs in different Blocks of Kerala to disseminate financial literacy to the people. In addition to this, the Bank has also appointed 6 FLCs in different Districts of Tamil Nadu to emphasize the objectives of Financial Literacy. Bank's FLCs are branded under the name "SIB JYOTHIS". Efforts are being taken to make them more efficient, responsive to the needs of the people. A Board approved policy covering all aspects of Financial Literacy Counsellors has been formulated, giving due consideration to the revised guidelines on FLCs circulated by the RBI.

Pradhan Mantri Jan-Dhan Yojana (PMJDY), is conceived as a national mission on financial inclusion initiated by

the Honourable Prime Minister on August 15, 2014. The scheme envisages universal access to banking facilities, with at least one basic banking account for every household. In line with the directives given by Ministry of Finance and SLBC, PMJDY scheme was implemented in the Bank since 2014. Pradhan Mantri Jan-Dhan Yojana (PMJDY) is National Mission for Financial Inclusion to ensure access to financial services, namely, a basic savings & deposit accounts, remittance, credit, insurance, pension in an affordable manner. Under the scheme, a basic savings bank deposit (BSBD) account can be opened in any bank branch or Business Correspondent (Bank Mitra) outlet, by persons not having any other account.

Atal Pension Yojana (APY), a pension scheme for citizens of India is focused on the unorganized sector workers. Under the APY, guaranteed minimum pension ranging from Rs.1,000/- to Rs.5,000/- per month will be given at the age of 60 years depending on the contributions by the subscribers. Any citizen who is or has been an income tax payer, shall not be eligible to join APY from 01^st October, 2022.

The benefit of minimum pension under Atal Pension Yojana would be guaranteed by the Government in the sense that if the actual realized returns on the pension contributions are less than the assumed returns for minimum guaranteed pension, over the period of contribution, such shortfall shall be funded by the Government. On the other hand, if the actual returns on the pension contributions are higher than the assumed returns for minimum guaranteed pension, over the period of contribution, such excess shall be credited to the subscriber's account, resulting in enhanced scheme benefits to the subscribers.

The Pradhan Mantri Jeevan Jyoti Bima Yojana is available to people in the age group of 18 to 50 years having a Bank account who give their consent to enable autodebit. Aadhar would be the primary KYC for the Bank account. The life cover of Rs.2 lakhs shall be for the one-year period stretching from 1^st June to 31^st May and will be renewable. The PMJJBY offers an annual life coverage of Rs.2 lakhs in case of the demise of the policyholder during the policy term. The policy can be availed at the lowest premium rate of Rs.436 per annum.

Pradhan Mantri Suraksha Bima Yojana (PMSBY) is an accidental insurance scheme that provides one year of accidental death and disability coverage with an annual renewal. With the minimum premium rate of Rs.20/- per annum, this policy is most beneficial to the poor and

low income section of the society. PMSBY covers people aged between 18 years and 70 years with a Bank account for accidental death and full disability benefits of up to Rs.2 Lakh and for partial disability for Rs.1 Lakh.

Dispatch of documents in Electronic Form: As a

responsible corporate citizen, the Bank supports and pursues the 'Green Initiative' of the Ministry of Corporate Affairs ("MCA"). In conformance with such initiatives and in terms of Rule 18 of the Companies (Management and Administration) Rules, 2014, the Bank may give notice through electronic mode including e-mail to those Members who have provided their e-mail address either to their Depository Participants (DPs) or to the Registrar/Company. Pursuant to General circulars dated on September 25, 2023 issued by MCA and SEBI Circulars dated October 06, 2023 on Limited relaxation from compliance with certain provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and dated October 07, 2023 on Relaxation from compliance with certain provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the notice of 96^th Annual General Meeting (to shareholders) and the Annual Report 2023-24 (to Security Holders) will be sent via email to all the shareholders / Bondholders and no physical copies will be sent via post.

Further, in terms of Regulation 36 of the Listing Regulations, the listed entity is required to send soft copies of its Annual Report to all those shareholder(s), who have registered their email address for this purpose. Accordingly, the documents including the notice and explanatory statement of 96^th Annual General Meeting, Annual Report of the Bank for the financial year 202324 including Audited Financial Statements, Directors' Report, Auditors' Report etc., for the year ended March 31, 2024, is sent to the e-mail address registered with their Depository Participant (DP)/Registrar/Company. The e-mail addresses indicated in respective DP accounts which will be periodically downloaded from NSDL/CDSL will be deemed to be their registered e-mail address for serving notices/documents including those covered under Section 136 of the Companies Act, 2013. In case a Member, whose e-mail address has changed, fails to update this new e-mail address, the said documents will be sent to the existing e-mail address and the said documents will be deemed to have been delivered, in compliance with the relevant provisions of the Companies Act, 2013, the relevant Rules made thereunder and the Listing Regulations. Members who have not yet registered their e-mail address are requested to do so, at the earliest. In case of shares held in electronic form and in case of any change in the e-mail address, Members are requested to update the

same with their DP and in case of shares held in Physical form, Members are requested to update the same with the RTA/Company. Security holders may please note that, as allowed by MCA and SEBI circulars, the Bank will not be sending physical copies of AGM Notice to shareholders and Annual Report to the security holders unless the same is specifically requested.

Please note that the said documents will also be uploaded on the Bank's website www.southindianbank. com and copies thereof will be made available for inspection at the Registered Office of the Bank during 10.00 a.m. to 3.00 p.m. on all working days except Saturdays, Sundays, Bank Holidays and Public Holidays up to the date of ensuing AGM. Shareholders have been requested on several occasions to update their e-mail IDs in their folio/ demat A/c to help accelerate the Bank's migration for paperless compliances. The Bank seeks your support for the said green initiatives, as it is designed to protect our fragile environment.

Further, as a part of green initiative by the Bank, all relevant agenda papers pertaining to the Board/ Committee are being circulated in advance to the Board of Directors through electronic mode to facilitate easy access of agenda which would provide sufficient time to the Board for reading and understanding the proposals placed in a meeting.

Transactions processed through the Core Banking Solution are monitored for detecting suspicious transactions, using an AML application to comply with the provisions under Prevention of Money Laundering Act (PMLA). The Bank already has a Centralized Processing Centre (CPC) for customer creation with the objective of full KYC compliance and to use KYC as a fraud prevention tool. The Bank has attached great importance for compliance of KYC/AML/CFT norms by the customers as per the Reserve Bank of India directive.

The Bank has been registered as a reporting entity under FATCA, under GIIN No. IIK7HU.99999.SL.356, to comply with the reporting requirement under the interGovernmental agreement entered between Indian and US Government and the CRS Multilateral Competent Authority Agreement.

The composition of the Board of Directors is governed by the Banking Regulation Act, 1949, the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Code of Conduct on Corporate Governance adopted by the

Bank. The Board comprises of 10 Directors as on the date of this report, with rich experience and specialized knowledge in various areas of relevance to the Bank, including Banking, Accountancy, Risk Management, Treasury, Finance, Business Management, Small scale Industry, Agriculture, Law, Human Resources and Information Technology.

Except 2 Directors, all members of the Board are NonExecutive Directors and 6 Directors out of the total 10 Directors are Independent Directors. Declaration has been obtained from the Independent Directors as required under the RBI Regulations, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Companies Act, 2013. The remuneration and other benefits paid to MD & CEO of the Bank and other Non-Executive and Independent Directors during the financial year 2023-24 are disclosed in Corporate Governance Report. Vide Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019 an online data Bank for the independent directors ("Data Bank") has been rolled out by the Indian Institute of Corporate Affairs, all the Independent Directors of the Bank had registered themselves in the Data Bank in compliance with the same.

During the 95^th Annual General Meeting held on August 24, 2023 as recommended by the Bank the shareholders accorded their approval:

• To appoint a Director in the place of Sri. Benny P Thomas (DIN: 09448424) who retires by rotation under Section 152 of the Companies Act, 2013 and being eligible, offers himself for reappointment.

• To Re-appoint Sri. M George Korah (DIN: 08207827) as Independent Director of the Bank.

• Payment of Compensation by way of Fixed Remuneration to Non- Executive Director/ Independent Directors (other than the NonExecutive Part-time Chairman)

Sri. Murali Ramakrishnan (DIN:01028298) MD & CEO of the Bank, retired from the Board of Directors w.e.f September 30, 2023 (after closure of business hours) on completion of his 3 years term of appointment.

Sri. P R Seshadri (DIN:07820690) has been appointed as the new MD & CEO of the Bank for a period of three years with effect from October 1, 2023 by the Board of Directors at its meeting held on September 29, 2023 and approval for the same were accorded by the members on December 24, 2023 by way of postal ballot.

Sri. Salim Gangadharan, (DIN: 06796232) NonExecutive /Part-time Chairman, retired from the Board of Directors w.e.f November 01, 2023 (after closure of business hours) on completion of his term of

appointment.

Sri. V J Kurian (DIN: 01806859) Non- Executive Independent Director of the Bank, appointed as NonExecutive /Part-time Chairman of the Bank (in addition to being an Independent Director) with effect from November 2, 2023 to March 22, 2026 upon receipt of approval for the same by RBI vide its letter no. DoR.GOV. No.3922/08.51.001/2023-24 dated October 11, 2023 and the same was took on record along with approval of his remuneration by the members on December 24, 2023 by way of postal ballot.

Smt. Lakshmi Ramakrishna Srinivas (DIN: 10365580) was appointed as an additional Independent Director pursuant to Section 161(1) of the Companies Act, 2013 on November 20, 2023. Further she was appointed as an Independent Director of the Bank, for the purpose of Section 149 of the Companies Act, 2013 for a period of three (3) consecutive years with effect from 20^th November, 2023, by the members on December 24,

2023 by way of postal ballot.

Smt. Radha Unni (DIN: 03242769) Non- Executive Independent Director of the Bank, retired from the Board of Directors w.e.f December 03, 2023 on attaining the age of 75 years as per RBI guidelines and in line with her terms of appointment.

As recommended by the Board of Directors, the Reserve Bank of India vide letter number DoR.GOV. No. 1646/08.51.001/2024-25 dated June 14, 2024 has conveyed their approval for the appointment of Sri. Dolphy Jose as Whole-time Director (Executive Director) of the Bank for a period of three years with effect from the date of taking charge. Further to the same, Sri. Dolphy Jose (DIN:10682246) has been appointed as Whole-time Director (Executive Director) of the Bank for a period of three years with effect from July 15, 2024 by the Board of Directors at its meeting held on June 29,

2024 and is subject to the approval of Shareholders at the 96^th Annual General Meeting.

Sri. Jose Joseph Kattoor (DIN: 09213852) was appointed as a Non-Executive Independent Director of the Bank, for a period of three (3) consecutive years with effect from July 18, 2024 by the Board of Directors at its meeting held on July 18, 2024 and is subject to the approval of Shareholders at the 96^th Annual General Meeting.

The Board of Directors has recommended to members:

• To re-appoint Sri. Paul Antony (DIN 02239492) as Non-Executive Director of the Bank, liable to retire by rotation at the 96^th AGM, who retires by rotation under Section 152 of Companies Act, 2013 and being eligible, offers himself for reappointment.

• To appoint Sri. Dolphy Jose (DIN: 10682246) as Whole-time Director (Executive Director) of the Bank for a period of three years with effect from July 15, 2024.

• To appoint Sri. Jose Joseph Kattoor (DIN: 09213852) as Non - Executive Independent Director of the Bank for a period of three years with effect from July 18, 2024.

Necessary information pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, in respect of directors to be appointed, reappointed and change in terms of appointment at the ensuing Annual General Meeting are given in the Annexure to the Notice convening the Annual General Meeting scheduled to be held on August 27, 2024.

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

The major changes in Key Managerial Personnel during the period 01-04-2023 to 31-03-2024 are as follows:

1. Sri. Joby M C, JGM (Head of Internal Audit and Chief of Internal Vigilance) retired on May 31, 2023

2. Sri. Murali Ramakrishnan (DIN:01028298) MD & CEO of the Bank, retired from the Board of Directors w.e.f September 30, 2023 (after closure of business hours) on completion of his term of appointment.

3. Sri. P R Seshadri (DIN:07820690) was appointed as the new MD & CEO for a period of three years with effect from October 1, 2023 by the Board of Directors at its meeting held on September 29, 2023 and approval for the same were accorded by the members on December 24, 2023 by way of postal ballot.

Further during the period between the end of the Financial Year i.e. March 31,2024 and the date of the Directors' Report i.e. July 30, 2024, there was following changes in the Key Managerial Personnel of the Bank

• Sri. Vinod Francis, GM was appointed as Chief Financial Officer (CFO) from April 8, 2024

• Smt. Chithra H, SGM was ceased to be Chief Financial Officer (CFO) of the Bank w.e.f. April 8, 2024.

• Sri. Thomas Joseph K, EVP and Chief Business Officer has completed his contract on May 31, 2024

• Sri. Dolphy Jose (DIN:10682246) was appointed as

Whole-time Director (Executive Director) of the Bank for a period of three years with effect from July 15, 2024 by the Board of Directors at its meeting held on June 29, 2024 and is subject to the approval of Shareholders at the 96^th Annual General Meeting.

The Audit Committee of the Board is chaired by Sri. M George Korah, (Non-Executive Independent Director), who is a Chartered Accountant. The other members of the committee are Sri. Pradeep M Godbole (NonExecutive Independent Director), Sri. R A Sankara Narayanan (Non- Executive Independent Director) and Smt. Lakshmi Ramakrishna Srinivas (NonExecutive Independent Director). The constitution of the Committee is in compliance with the regulatory requirements. The terms of reference of the Audit Committee are in accordance with the SEBI (LODR) Regulations, 2015, Companies Act, 2013 and RBI guidelines.

In terms of the definition of Independence of Director as prescribed under Regulation 16(1) (b) of the SEBI (LODR) Regulations, 2015 and Section 149(6) of Companies Act, 2013 and based on the confirmation/disclosures received from the Directors, the following Directors are Independent Directors of the Bank as on the date of this report.

1. Sri. V J Kurian (DIN: 01806859)

2. Sri. M George Korah (DIN: 08207827)

3. Sri.Pradeep M Godbole (DIN 08259944)

4. Sri. R A Sankara Narayanan (DIN: 05230407)

5. Smt. Lakshmi Ramakrishna Srinivas (DIN:10365580)

6. Sri. Jose J Kattoor (DIN: 09213852)

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

self-assessment test as per Companies (Appointment and Qualification of Directors) Rules, 2014.

The Independent Directors have also confirmed that they are not aware of any circumstance or situation, which exists or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgement and without any external influence. In the opinion of the Board, the Independent Directors possess the requisite expertise and experience and are the persons of high integrity and repute. They fulfil the conditions specified in the Act and the Rules made thereunder and are independent of the Management.

In terms of the provisions of Section 149 of the Companies Act, 2013 and Regulation 17 of the SEBI (LODR) Regulations 2015, the Bank has appointed Smt. Radha Unni (DIN: 03242769) as Woman Director on the Board of the Bank on November 30, 2021. Further, Smt. Lakshmi Ramakrishna Srinivas (DIN:10365580) was appointed as an additional Independent Director by the Board of Directors on November 20, 2023. Subsequently she was appointed as an Independent Director of the Bank, for a period of three (3) consecutive years with effect from November 20, 2023, by the members on December 24, 2023 by way of postal ballot.

Smt. Radha Unni (DIN: 03242769) has retired from the Board of Directors w.e.f December 03, 2023 on attaining the age of 75 years as per RBI guidelines and in line with her terms of appointment.

The nomination policy of the Bank can be accessed at https://www.southindianbank.com/content/nomination- policy-of-the-board/3894

Nomination and Remuneration Committee of the Board shall identify and ascertain the integrity, qualification, expertise and experience of the person who is considered for being appointed/reappointed as Director of the Bank and apply due diligence in compliance with The Banking Regulation Act, 1949, Reserve Bank of India directives on Fit & Proper Criteria, all other applicable provision of the Companies Act, 2013 and Listing Regulations including any amendments from time to time.

The Nomination and Remuneration Committee shall

obtain all applicable declarations & undertaking as provided under Banking Regulation Act, 1949, RBI Guidelines, The Companies Act, 2013, Companies (Appointment and Qualification of Director) Rule, 2014, SEBI Guidelines, Listing Regulations and ensure that the proposed person is not ineligible to be appointed/re-appointed as a Director of the Bank. In case of Independent Directors, the Nomination and Remuneration Committee shall ensure that the Independent Directors meet the criteria of Independence as laid down in the Companies Act, 2013 and the rules made thereunder.

While recommending any potential new Board member(s)/re-appointment of existing member(s) to the Board, the Committee shall consider the following:

a) The professional and personal ethics, integrity and track record;

b) Special knowledge or practical experience in Banking, accountancy, agriculture and rural economy, co-operation, economics, finance, law, small-scale industry, Information Technology, Payment & Settlement Systems, Human Resources, Risk Management, Business Management or any other matter useful to the Banking Company in the opinion of Reserve Bank of India.

c) Ability to provide insights and practical wisdom based on their experience and expertise relevant to the Bank's line of business;

d) Details of his/her association with other Companies/ LLPs/Firms(including NBFC)

e) Details of substantial interest in other Companies/ LLPs/Firms (including NBFC)

f) Details of financial facilities, if any, availed from the Bank.

g) Details of default in the re-payment of loans, availed from the Bank or any other bank, if any.

h) Commitment to enhancing stockholder value;

i) Ability to develop a good working relationship with members of the Board and contribute to the working relationship with senior management of the Bank.

j) Whether he/she suffers from any of the disqualifications envisaged under the provision of Banking Regulation Act, 1949, Companies Act, 2013 and Listing Regulations.

k) Any other factors as the Committee may deem fit and in the best interests of the Bank and its stockholders.

The Criteria of Independence of a Director is determined based on conditions as laid down in the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. The independent director shall at the first meeting of the Board in which he/she participates as a Director and thereafter at the first meeting of the Board in every financial year or whenever there is any change in the circumstances which may affect his/her status as an independent director, give a declaration that he/she meets the criteria of Independence.

The Remuneration Policy for Whole-time Directors, Part-time Chairman, Non-Executive Directors and Employees of the Bank:

The Bank has a Board approved Compensation Policy which deals with the Compensation & Benefits of the Whole-time Directors, Part-time Chairman, NonExecutive Directors and Employees of the Bank.

The objectives of the Compensation Policy of the Bank inter-alia includes, to provide a fair and persistent basis for motivating, inspiring and rewarding the employees appropriately, according to their jobs/role size, performance, accomplishments, contribution, skill, aptitude and competence to implement standards on sound compensation practices and incentives and to provide effective governance of compensation payable to the WTDs/CEO and other staff, alignment of compensation with prudent risk taking and effective supervisory oversight. The disclosure requirement of the remuneration is separately provided in "Disclosure under Basel III norms."

The Board approved Compensation Policy deals with the Compensation & Benefits of the Wholetime Directors/ MD & CEO. The remuneration of the Whole-time Directors/MD & CEO is recommended by the Nomination & Remuneration Committee (NRC) to the Board for approval after considering the factors prescribed under the Compensation Policy. The Compensation Policy factors the guidelines issued by the RBI from time to time.

The Board considers the recommendations of NRC and approves the remuneration, with or without modifications, subject to shareholders' and regulatory approvals. The remuneration payable to Whole-time Directors/MD & CEO is subject to prior approval of the Reserve Bank of India (RBI). Therefore, the remuneration or any revision in remuneration to Whole-time Directors/ MD & CEO is payable only after receipt of the approval from RBI.

The fixed compensation is determined based on the relevant factors such as industry standards, the exposure, skill sets, talent and qualification attained by the official over his/her career span and adherence to statutory requirements. All the fixed items of compensation, including the perquisites, will be treated as part of fixed pay. Perquisites that are reimbursable would also be included in the fixed pay so long as there are monetary ceilings on these reimbursements. Contributions towards superannuation/retirement benefits will also be treated as part of fixed pay.

The variable compensation for Whole Time Directors, Managing Director & Chief Executive Officer and Material Risk Takers is fixed based on organizational performance (both business-unit and firm-wide) and KPAs set for the official. The organization's performance is charted based on Performance Scorecard which takes into account various financial indicators like revenue earned, cost deployed, profit earned, NPA position and other intangible factors like leadership and employee development. The Performance Parameters provides a mix of Financial and Non-Financial, Quantitative and Qualitative Metrics. The variable pay is paid in the form of a mix of cash and sharelinked instruments. While considering/ recommending the variable pay in respect of Managing Director & CEO, MRTs and Whole Time Directors, serious supervisory and regulatory observations (if any) shall be factored.

Members of staff engaged in financial and risk control, including internal audit, are compensated in a manner that is independent of the business areas they oversee and commensurate with their key role in the Bank. The total fixed and variable compensation paid out to the employees in the Risk Control and Compliance Function is decided independent of business parameters.

For the other employees, the Board, based on the recommendation of the NRC may devise appropriate compensation structure. The compensation paid to other employees that include Award Staff, Officers coming under Scale I to IV is fixed based on the periodic industry level settlements with Indian Banks Association. Further the compensation paid to executives coming under Scale V to VII is fixed based on Executive Compensation Package of the Bank, which is finalised after considering various parameters like industry level/peer group status, burden for the Bank and all other relevant factors. The variable compensation paid to employees is based on the Performance Linked

Incentive Scheme, which has been formulated on the basis of performance parameters set in Performance Management System.

As per the compensation policy of the Bank, the compensation structure for the whole-time directors/ Chief Executive Officers / Material Risk Takers (MRTs) of the Bank is divided into Fixed Pay and Perquisites and Variable pay.

Based on the recommendations of the Nomination and Remuneration Committee, and subject to the approval of Reserve Bank of India (for MD & CEO and Executive Directors), Board shall fix the fixed portion of compensation payable which is reasonable, taking into account all relevant factors including adherence to statutory requirements and industry practice.

In order to have a proper balance between the cash and share-linked components in the variable pay, the variable pay is to be structured in the form of share-linked instrument (including Cash-linked Stock Appreciation Rights (CSARs)), or a mix of cash and sharelinked instruments subject to the recommendation of the Nomination and Remuneration Committee of the Board. Only in cases where the compensation by way of share-linked instruments is not permitted by law/ regulations, the entire variable pay can be in cash to be exercised.

The assessment of the variable pay will be based on 'Key Performance Indicators' (KPI) achievement of respective whole-time directors/ Chief Executive Officers / Material Risk Takers (MRTs).

i. In compliance to the RBI Guidelines and other applicable rules and regulations at least 50%, should be variable and paid on the basis of individual, business-unit and firm-wide measures that adequately measure performance. The total variable pay shall be limited to a maximum of 300% of the fixed pay (for the relative performance measurement period).

ii. In case variable pay is up to 200% of the fixed pay, a minimum of 50% of the variable pay; and in case variable pay is above 200%, a minimum of 67% of the variable pay should be via non-cash instruments.

iii. In the event that an executive is barred by statute or regulation from grant of share-linked instruments, his/her variable pay will be capped at 150% of the fixed pay, but shall not be less than 50% of the fixed pay.

iv. The deterioration in the financial performance of the bank should generally lead to a contraction in the total amount of variable compensation, which can even be reduced to zero.

i. In compliance to the RBI Guidelines and other applicable rules & regulations 50% of total pay for all MRTs should be variable pay and paid on the basis of individual, business-unit and firm-wide measures that adequately measure performance.

ii. 50% of the variable pay should be via non-cash instruments.

iii. The deterioration in the financial performance of the Bank should generally lead to a contraction in the total amount of variable compensation, which can even be reduced to zero.

The Board will from time to time specify the Material Risk Takers (MRTs).

a. Deferral of Variable Pay

i. For senior executives, including WTDs, and other employees who are MRTs, a minimum of 60% of the total variable pay must invariably be under deferral arrangements. Further, if cash component is part of variable pay, at least 50% of the cash bonus should also be deferred.

ii. However, in cases where the cash component of variable pay is under Rs.25 Lakh, deferral requirements is not applicable.

b. Period of Deferral Arrangement

The deferral period should be for a period of three years. This would be applicable to both the cash and non-cash components of the variable pay arrangements.

c. Vesting:

Deferred remuneration should be spread out over the course of the deferral period on a pro rata basis as follows:

• not more than 33.33 % of the total deferred variable pay should vest at the end of first year.

• Further, not more than 33.33 % of total

deferred variable pay should vest at the end of second year.

Additionally, vesting should not take place more frequently than on a yearly basis to ensure a proper assessment of risks before the application of ex-post adjustments.

In case of employee's death or permanent disability, whole of the deferred variable pay (Cash component) shall immediately vest on the employee's legal heirs, or the employee, as the case maybe.

Such instruments shall be included as a component of variable pay. Norms for grant of share-linked instruments should be framed by banks in conformity with relevant statutory provisions and should form part of the Bank's compensation policy. The details of share- linked instruments granted should also be disclosed in terms of the disclosure requirements stipulated in these Guidelines. Share-linked instruments should be fair valued on the date of grant by the Bank using Black- Scholes model in compliance with the RBI guidelines.

The Variable pay assessment should be considering the following parameters

• The HR Department in consultation with CFM Department has to recommend that amount of Variable pool of the Bank each year to the Nomination and Remuneration Committee.

• While recommending the variable Pool HR Department should establish the linkage between the variable pool at the Bank level and the performance of the Bank vis-a-vis its financials and risk assumed.

• Further HR Department should also detail the linkage between performance of various units/ functions/ divisions to performance of variable pool.

• There should be a prudent basis for distribution of the overall variable pool between various units/ functions / divisions including various control and assurance functions.

• Performance thresholds as defined and assessed by HR Department to be attained for being eligible for variable compensation.

The same to be included and form part of the Performance Linked Incentive scheme.

The deferred compensation should be subject to malus/ clawback arrangements in the event of subdued or negative financial performance of the Bank and/

or the relevant line of business in any year. The Bank has identified a set of situations which require the invocation of the malus and clawback clauses that may be applicable as detailed below:

i. Applying of Malus / Clawback arrangement on entire variable pay on occurrence of the following Situations:

• Identified fraud / misconduct by the Executive (Whole-Time Directors, Chief Executive Officers / Material Risk Takers (MRTs)) pertaining to the corresponding period for which the clause to be applied.

ii. Applying of Malus / Clawback arrangement on unvested portion of deferred variable pay on occurrence of the following situation:

• Reporting of operating loss or more than 50% fall in operating profit in any year.

iii. Applying of Malus clause on unvested portion of deferred variable pay on occurrence of the following situation:

• Wherever the assessed divergence in Bank's provisioning for Non-Performing Assets (NPAs) or asset classification exceeds the prescribed threshold for public disclosure as detailed below: (As referred in RBI circular No. DBR.BP.BC. No.32/21.04.018/2018-19 dated April 1, 2019, as amended from time to time),

a. the additional provisioning for NPAs assessed by RBI exceeds 10% of the reported profit before provisions and contingencies for the reference period, and

b. the additional Gross NPAs identified by RBI exceed 15% of the published incremental Gross NPAs for the reference period.

Further, in such situations, no proposal for increase in variable pay (for the assessment year) shall be entertained. In case the Bank's post assessment Gross NPAs are less than 2.0%, these restrictions will apply only if criteria for public disclosure are triggered either on account of divergence in provisioning (clause (a)) or both provisioning (clause (a) and asset classification (Clause (b)).

Any other act detrimental to the interest of the Bank including and not restricted to violation of Code of Conduct, violation of Framework for dealing with Conflict of Interest, violation of rules and regulations of the Bank, failure to discharge fiduciary and regulatory duties and in respect of which the Bank would reserve the right to institute appropriate civil, criminal or other proceedings at the risks, costs and consequences of

such individuals.

As part of the criteria for the application of malus and clawback, the following period during which malus and/ or clawback can be applied will be 36 months from application of the clause. Covering at least deferral and retention periods (a period of time after the vesting of instruments which have been awarded as variable pay during which they cannot be sold or accessed)

In case, the MRT(s) resigns, retires or takes early retirements or has been terminated, the above provisions of clawback shall apply subject to due process for recovery of amounts adjudged.

Guaranteed bonus is not consistent with sound risk management or the 'pay for performance' principles and should not be part of the compensation plan. Therefore, guaranteed bonus should only occur in the context of hiring new staff as joining/sign-on bonus and be limited to the first year. Such bonus will neither be considered part of fixed pay nor part of variable pay. Further, banks will not grant severance pay other than accrued benefits (gratuity, pension, etc.) except in cases where it is mandatory under any statute.

The Bank will not provide any facility or funds or permit employees to insure or hedge their compensation structure to offset the risk alignment effects embedded in their compensation arrangement. To enforce the same, the Bank will establish appropriate compliance.

The Nomination and Remuneration Committee after taking into account all relevant factors such as, performance, ability and experience of the individuals recommend to the Board to fix the compensation structure in compliance with the provisions of Companies Act, 2013, Banking Regulation Act, 1949, Listing Regulations and other regulatory guidelines, as amended from time to time.

The remuneration payable to the Chairman is subject to prior approval of the Reserve Bank of India (RBI). Therefore, the remuneration or any revision in remuneration of the Chairman is payable only after receipt of the approval from RBI.

The independence of Bank's non-executive directors is critical for the proper functioning of the Bank's governance framework. By compensating these directors appropriately, Bank can reinforce their

independence from management and other vested interests, allowing them to make decisions that are in the best interest of the Bank and its shareholders.

The Reserve Bank of India has issued guidelines, on the need of banks to attract qualified competent individuals and retain professional expertise in their Boards, keeping in view of individual director's (NEDs) responsibilities, contribution of their time, vide RBI Circular No. DBR.No.BC.97/29.67. 001/2014-15 dated June 1, 2015, on payment of Compensation to NonExecutive Directors (other than the Part-time Chairman) in the form of profit related commission which shall not exceed Rs.10 Lakh per annum for each director subject to the bank making profits. Further as per revised Circular No. RBI/2021-22/24 DOR. GOV. REC.8 /29.67.001 /2021- 22 dated April 26, 2021, RBI has revised the fixed remuneration for a NED, other than the Chair of the board, not exceeding Rs.20 lakh per annum. Further RBI vide circular number RBI/2023-24/121 DoR.HGG.GOV. REC.75/29.67.001/2023-24 dated February 9, 2024 has increased the ceiling of the fixed remuneration for a NED, other than the Chair of the Board, to Rs.30 lakh per annum.

The compensation by way of Fixed Remuneration to all Non-Executive Directors / Independent directors (Other than Non-Executive (Part-time) Chairman), shall not exceed Rs.20,00,000/- (Rupees Twenty Lakhs only) per director per annum, in addition to sitting fees and reimbursement of expenses for attending the meetings of the Board of Directors and/or other meetings, subject to approval of shareholders.

The Bank should obtain shareholder approval to fix maximum Fixed Remuneration limit and also obtain shareholder approval as and when there is a change in maximum Fixed Remuneration limit payable to NonExecutive Directors / Independent Directors of the Bank (other than Part Time Chairman), in line with regulatory guidelines, as amended.

The compensation to be based on profitability at the end of each financial year, as may be approved by the Board of Directors from time to time.

The Board may every year approve the Fixed Remuneration up to Rs.20,00,000/- (Rupees Twenty Lakh Only) per annum per director to each of the NonExecutive Directors / Independent Directors of the Bank (other than Part Time Chairman), for each year effective from financial year 2023-24 on a proportionate basis of his office of directorship in the respective financial year.

The Nomination and Remuneration Committee after taking into account all relevant factors such as ability of Bank and experience of the individuals, recommend to the Board to pay compensation to Non-Executive

Directors / Independent Directors (other than NonExecutive (Part Time) Chairman), in compliance with the provisions of Companies Act, 2013, Banking Regulation Act, 1949, Listing Regulations and other regulatory guidelines, as amended from time to time.

The Non-Executive Directors are also paid sitting fees for attending each meeting of the Board of Directors or any committees of the Board and their expenses for attending such meetings shall be reimbursed in compliance with the provisions of the Companies Act, 2013, Listing Regulations and other regulatory guidelines, as amended from time to time.

The Board while recommending the change in the remuneration or sitting fees will considers various factors like size and complexity of organisation, comparison with the peer Banks and Regulatory guidelines as applicable etc.

Pursuant to SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 to ensure compliance with the applicable provisions, the Bank has devised a policy on Board diversity to ensure adequate diversity in its Board of Directors. The Bank believes that diversity underpins the successful operation of an effective Board and embraces diversity as a means of enhancing the business. With a view to achieve sustainable and balanced development, the Bank sees increasing diversity at the Board level as an essential element in supporting the attainment of its strategic objectives. A diverse Board includes and makes good use of differences in the skills, regional and industry experience, background, race, gender and other qualities of Directors.

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

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

The NRC has the responsibility to lead the process for Board appointments and for identifying and nominating, candidates for appointment to the Board. The benefits of diversity continue to influence succession planning

and continue to be the key criteria for the search and nomination of Directors to the Board.

The Board appointments are based on merit and candidates will be considered against objective criteria, having due regard for the benefits of diversity on the Board, including gender. The policy of Board Diversity is displayed in Bank's website: https://www. southindianbank.com/content/policy-on-board- diversity/783.

The Bank had conducted various sessions during the financial year to familiarize the Independent Directors of the Bank, including various topics on Banking Industry, business model, Corporate Law, Risk management system and Cyber Security. Further, the Directors are encouraged to attend the training programmes being organized by various regulators/ bodies/institutions on above matters. The details of such familiarization programmes are displayed on the website of the Bank. https://www.southindianbank.com/content/directors- training-register/875.

The Companies Act, 2013 and SEBI (LODR) Regulations, 2015 stipulates the performance evaluation of the Directors, MD & CEO, Chairman, Board and its Committees. Considering the said provisions, the Bank has devised the process and the criteria for the performance evaluation which has been recommended by the Nomination & Remuneration committee and approved by the Board. The process for formal annual performance evaluation is as under:

• Committee of Independent Directors at their separate meeting evaluates the performance of Non- Independent Directors, MD & CEO, Chairman of the Bank and the Board as a whole.

• The Board evaluates the performance of the Independent Directors, Non-Executive Directors, Chairman and MD & CEO (excluding the director being evaluated) and submit its report to the Nomination & Remuneration committee.

• The Board and Nomination & Remuneration Committee evaluates the fulfilment of the independence criteria as specified in the regulations and their independence from the management.

• The Board evaluates the performance of Board level committees. ^•

• Nomination & Remuneration Committee evaluates/ reviews the performance of each Director and recommends the appointment/re-appointment/ continuation of Directors to the Board. Based on

the recommendation of Nomination & Remuneration Committee, Board will take appropriate action.

The criteria for performance evaluation, inter-alia, include the following:

Participation at Board/Committee Meetings, Managing Relationship, Knowledge and skill, Personal attributes, Compliance and Corporate Governance; Leadership; Strategy Formulation, Strategy Execution, Financial Planning/ Performance, Relationships with the Board, Human Resource Management and Succession Planning, Personal Qualities; Resources; Conduct of Meetings.

Composition and Diversity; Strategic Foresight, Value Creation, Process and Procedures, Oversight of the Financial Reporting Process and Internal Controls, Oversight of Audit Functions, Corporate Governance, Corporate Culture, monitoring of business activities, Understanding of the business of the Bank and Regulatory environment; Contribution to effective corporate governance and transparency in the Company's Operations; Deliberations/ decisions on the Company's strategies, policies, plans and guidance to the Executive Management.

The performance and effectiveness of the Committee; Frequency and duration; Spread of talent and diversity in the Committee; Understanding of regulatory environment and developments; Interaction with the Board.

An annual performance evaluation of the Board, Committees of the Board and the individual members of the Board was conducted in May, 2023 as per the aforesaid process and the report on the evaluation were presented at the meeting of the NRC and the Board of Directors. The Directors expressed their satisfaction with the evaluation process. The feedback of the Board, post completion of the exercise of performance evaluation of the Board and Committees of the Board were as under:

• The items discussed at the meeting need to be rationalized.

• Fraud controls needs to be strengthened.

• Survey the skill availability and the cost of such skills to contribute effectively.

The SIB ESOS 2008 Employee Stock Option Scheme ('the Scheme') provides for grant of stock options on equity shares of the Bank to employees and Managing Director & CEO and Whole Time Director(s) of the Bank. The Scheme is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021. The Bank followed Black Scholes model for calculating fair value of option to account for its stock based employee compensation plans as per the Guidelines for all the options granted till the accounting period ended March 31, 2024. The fair value thus arrived were being recognised as expense beginning with the accounting period for which approval has been granted as per RBI circular No. RBI/2021- 22/95 DOR.GOV.REC.44/29.67.001/2021-22 dated August 30, 2021. Till March 2024, 5,74,36,203 stock options were vested, out of which 2,89,49,199 stock options were exercised by eligible employees. The money realised due to exercise of the said options was Rs.42,74,54,572.64 and consequently 2,89,49,199 shares of Rs.1/- each have been allotted to the employees/ legal heirs concerned.

A Certificate of the Secretarial Auditors pursuant to Regulation 13 of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 will be placed to the AGM for the scrutiny of Shareholders. The total options granted under thirteen phases of SIB ESOS 2008 works out to 2.67% of the paid-up share capital of the Bank as at March 31, 2024. The scheme has generated the intended motivation amongst the staff. There is no material change in the scheme during the FY 2023-24 and the scheme is in compliance with the applicable regulations. The scheme was last modified at the AGM held on August 18, 2021 in line with the new regulations. Statutory disclosures regarding details of the stock options granted, vested, exercised, forfeited and expired during the year under review is hosted on the website of the Bank and can be viewed at https:// www.southindianbank.com/content/annualreport- financial-year-2022-to-2023/3978

The shareholders at its 93^rd Annual General Meeting held on August 18, 2021, has appointed M/s. CNK & Associates LLP, Chartered Accountants, Mumbai (Firm Registration Number: 101961 W/W-100036) and at its 94^th Annual General Meeting held on July 12, 2022 has appointed M/s. K Venkatachalam Aiyer & Co, Chartered Accountants, Kochi (Firm Registration Number 004610S) as the Joint Central Statutory Auditors of the Bank for a continuous period of 3 years respectively. Accordingly, the appointment of

M/s. CNK & Associates LLP, Chartered Accountants will be until the conclusion of the 96^th Annual General Meeting and appointment of M/s K Venkatachalam Aiyer & Co, Chartered Accountants will be until the conclusion of the 97^th Annual General Meeting of the Bank.

For the year ended March 31, 2024, fees paid/ payable to the Joint Statutory Central Auditors M/s. CNK & Associates LLP Chartered Accountants and M/s K Venkatachalam Aiyer & Co Chartered Accountants are as follows:

There is no qualification or adverse remark in Auditors' Report. There is no incident of fraud requiring reporting by the Auditors under Section 143(12) of the Companies Act, 2013.

The Reserve Bank of India vide. Letter No DOS. CO.RPD. No. S 1035/08.21.005/2024-25 dated May 10, 2024 has approved appointment of M/s. K Venkatachalam Aiyer & Co., Chartered Accountants, (FRN 004610S) and M/s. M P Chitale & Co., Chartered Accountants (FRN : 101851W) as the Joint Statutory Auditors of the Bank for the FY 2024-25 , for their third year and first year respectively. The same is placed for the approval of the Shareholders in the 96^th Annual General Meeting.

Pursuant to Section 204 of the Companies Act, 2013, the Bank had appointed M/s SVJS & Associates, Practicing Company Secretaries, Kochi as its Secretarial Auditors to conduct the secretarial audit of the Bank for the FY 2023-24. The Bank has provided all assistance and facilities to the Secretarial Auditor for conducting their audit. The Report of Secretarial Auditor for the FY 2023-24 is annexed to this report as Annexure D. There are no reservations, adverse remark or disclaimer in the Secretarial Audit Report. No offence of fraud was reported by the Secretarial Auditor of the Bank.

Pursuant to circular no. CIR/CFD/CMD1/27/2019 dated February 08, 2019, issued by SEBI and

Regulation 24A of the SEBI (LODR) Regulations, 2015 the Bank has obtained Secretarial Compliance Report from Practicing Company Secretaries on compliance of all applicable SEBI Regulations and circulars/ guidelines issued thereunder and the copy of the Secretarial Compliance Report was submitted with the Stock Exchanges.

The Bank has put in place extensive internal controls and processes to mitigate operational risks, which includes maker checker authentication of CBS transactions, centralized processing of opening and modifications of CASA accounts and loan accounts, centralized sanctioning of loan facilities etc.

Various Preventive controls viz., Dual custody for cash, gold and other security items, maintenance of daily control registers for security items, finger-scan- authentication for processing of transactions in CBS in addition to login passwords, stringent guidelines on password usage, STP processes between CBS and payment interface systems for transmission of messages etc. are in place.

In addition to that the transactions generated in the CBS is monitored by the Fraud Risk Management (FRM) CBS by the way of alert generated in a near real time basis and the transactions happening through various digital channels are being monitored centrally on a 24x7 basis by Fraud Risk Management (FRM) Cell, for real time detection and prevention of frauds.

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

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

The Bank has an Inspection & Vigilance Department which is responsible for independently evaluating the adequacy and effectiveness of all internal controls, risk management systems, governance systems and processes. The Department is manned by appropriately

qualified personnel to handle the Risk Based Internal Audit, Management Audits, Information Systems Audit and Special audits including Investigations. All the internal audits are conducted based on the RBI direction in relation to conducting risk based internal audit, and concurrent audit of branches and identified critical processes of the branches/ Bank.

Head of Internal Audit & Vigilance is directly reporting to MD & CEO.

Internal inspectors conduct inspection at regular intervals and the inspection reports are placed to Audit Committee at Executive level (Sub Committee of Audit Committee of Executives (SACE)/ Audit Committee of Executives - ACE) for review, which is overseen and controlled by Board Level committee (Audit Committee of Board - ACB).

All the branches are subjected to Risk Based Internal Audit (RBIA). This audit is conducted at periodic intervals based on the risk perception. All the audits are conducted based on predefined check points and all the operational areas are covered under this audit. Credit audit is also conducted as part of Risk Based Internal Audit where aggregate credit exposure of a borrower is Rs.5 crore and above.

In addition to RBIA of branches, the Bank has concurrent audit system, which covers selected Branches, conducted by qualified Chartered Accountants/retired officers. The selection of branches for concurrent audit is done in such a way that it covers branches having substantial advance or deposit, entire specialized Branches such as 'B' Category Branches, Corporate Branches etc., and all poorly rated branches as per the latest rating awarded.

In addition to the concurrent and risk based internal audits, the branches are subjected to Surprise Inspection, Flash Inspection, IS Audit, Revenue Inspection, Self-Audit, Gold Loan Inspection/ Asset Verification and compliance inspection during the financial year.

Separate monitoring team - Inspection Monitoring Group (IMG) closely monitors various inspections/ audits at the Branches. There are four IMGs who are reporting to Head of IMG. These Monitoring groups are assigned the task of ensuring the compliance and closure of the inspection report of the branches. During the course of inspections, serious irregularities if any concerning regulatory guidelines, legal requirements and operational processes are found, these are escalated to the Management for timely action.

All the branch related audit are presently automated

through system where reporting, risk rating, compliance and closure of the reports are done through software application which provides the Bank with an overall control on various audits conducted in the branches. Continuous improvements are made to the application to automate several activities at HO and digitize the records in a single application.

Management Audit of Regional Offices (RO) and Departments are conducted at periodical intervals based on the risk perception.

In addition to the management audit conducted by Inspection Department, all the critical operations such as International Banking Division, Treasury Department, Credit Department and Centralized Processing Centers, etc., are subjected to concurrent audit by independent Chartered Accountant firms. All these reports are reviewed by Sub Committee of Audit Committee of Executives (SACE) and corrective steps are taken to rectify the lapses/ irregularities, if any, pointed out in such inspections.

There is a team available with in Inspection Department exclusively for conducting audit of IT systems and applications. Various IS audits and Vulnerability Assessment & Penetration Testing are conducted in a stipulated frequencies as per approved audit plan. Guidelines from regulators like RBI, Cert-In, NPCI, UIDAI, SEBI, etc. related to IT security are incorporated in the periodic IS audits. Any new software application or modification in the existing application undergoes a thorough audit with respect to IT controls before going live.

New product/process whenever introduced in the Bank is reviewed by Inspection Department and recommendations are made for necessary controls/ improvements for deficiencies / gaps observed in existing internal controls.

Inspection Division also carries out independent evaluation of Bank's internal financial controls in terms of Companies Act, 2013 and also the adequacy of internal financial controls with reference to the Financial Statements.

The Statutory Auditor's Report for the year 2023-24 does not contain any qualification.

In accordance with the provisions of Section 129(3) of the Companies Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014 and other applicable

provisions of the Banking Regulation Act,1949, the Bank has prepared its Consolidated Financial Statement including its wholly owned subsidiary Company M/s. SIB Operations and Services Limited, which is forming part of this Annual report. The financial position and performance of its subsidiary Company is given in Form AOC-1, the statement containing salient features of the financial statements of the subsidiary Company.

In accordance with third proviso to Section 136(1) of the Companies Act, 2013, the Annual Report of the Bank, containing therein its Standalone and the Consolidated Financial Statements has been hosted on its website (www.southindianbank.com). Further, as per fourth proviso to the said Section, the Audited Annual Accounts of the said Subsidiary Company of the Bank, considered as part of the Consolidated Financial Statements have also been hosted on the Bank's website (www.southindianbank.com). The said documents have been hosted on the website of the Subsidiary Company of the Bank also, in compliance with the said Section. The documents/details available on the Bank's website (www.southindianbank.com) will also be available for inspection by any Member at its Registered Office. Further, pursuant to the provisions of Accounting Standard ('AS') 21, Consolidated Financial Statements notified under Section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 issued by the Ministry of Corporate Affairs, the Consolidated Financial Statements of the Bank along with its Subsidiary Company for the year ended March 31, 2024 forms part of the Annual Report.

A separate report detailing Corporate Governance as required under applicable regulations of the SEBI (LODR) Regulations 2015 and a certificate from M/s SVJS & Associates Company Secretaries, Secretarial Auditors of the Bank, are annexed to this Report.

Pursuant to sub-section 3(a) of Section 134 and subsection (3) of Section 92 of the Companies Act, 2013, read with Rule 11 and 12 of the Companies (Management and Administration) Rules, 2014, copy of Annual Return as at March 31, 2024 in Form No. MGT-7 is hosted on the website of the Bank and can be viewed https://www.southindianbank.com/content/annual- report-financial-year-2023-to-2024/4035

Pursuant to Regulation 32 and other relevant provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, read with Master Circular No. SEBI/HO/CFD/PoD2/CIR/P/2023/12 dated July 11, 2023 issued by SEBI, the statement of deviation/

variation in the use of proceeds for the quarter ended on March 31, 2024, of issue of shares on a rights basis at a ratio of 1:4 and issued 52,31,85,254 (Fifty Two Crores Thirty-One Lakhs Eighty five thousand two hundred and fifty-four) shares of face value of Rs.1.00 (Rupee One) each ("Shares") at an issue price of Rs.22 (Rupees Twenty-Two only) aggregating to Rs.1,151.01 Crore (Rupees One thousand One Hundred Fifty One Crore and One Lakh) made by the Bank is Nil. The same has been reviewed by the Audit Committee of the Board and submitted to the Stock Exchanges on May 2, 2024.

Environmental, Social and Governance (ESG) matters have become increasingly relevant for companies across the Globe. Being in financial sector, the Bank has focused on promotion of sustainable and environmentally friendly assets by identifying and recognising ESG risks viz-a-viz opportunities.

As part of developing a sustainable financing policy and for implementing ESG benchmarks in lending and also for addressing issues in Environmental risk management and governance, the Bank has formulated ESMS policy (for governing Lending standards), Green Deposit Policy and Green Financing Framework (to promote investments in green projects and activities that contribute to sustainable development) and ESG Policy (for addressing other ESG issues). The Bank has taken following steps in this regard.

• Corporate Social Responsibility Committee of the Board is made responsible for overseeing the Environmental, Social and Governance (Reporting & review) activities of the Bank under the ESG framework.

• MD & CEO has been authorized as the designated Director for implementing ESG in the Bank for BRSR reporting.

• The Board has constituted an Executive Level Committee for implementing the ESG initiatives of the Bank. Executive Level Committee will be responsible for supervision and implementation of ESG activities in the Bank.

• For effective Reporting of BRSR and to review the ESG practices at the Bank, the Board had also appointed a Professional agency for assisting Business Responsibility and Sustainability Reporting. ^•

• The Human Resources Department have imparted 3 trainings for employees on Human Rights, ESG Investing and Green Finance through Bank's E-learning platform viz., I-learn.

• Environmental and Social Management System (ESMS) Policy reflects Bank's commitment for integrating environmental and social considerations into the business practices and decision-making processes. The Bank employs a robust grading model to assess environmental and social risks, with emphasis on climate risk for high-value credit, in accordance with the thresholds prescribed by ESMS Policy.

• To promote the usage of electrical vehicles by the employees of the Bank, the Bank has initiated steps to install two new DC fast charging station at our New Administrative building at Kakkanad, Kochi. This will encourage employees to use environment friendly electric vehicles and reduce the CO2 emission.

• To optimize AC usage for energy conservation and environmental sustainability, as per Bank's new temperature policy all branches/Departments/ offices including ATMs are instructed to set the temperature of air conditioners at 24 Degree Celsius and further took initiatives to install air conditioning machines with green refrigerant gas for new premises and replacements of existing AC units, wherever feasible. Additionally, all new purchase orders for AC units are mandated exclusively for inverter type machines with 5 star rating, ensuring energy efficiency.

• The Bank have installed 75 KW solar plant at two locations and 150 KW solar plant is ready for commission. Furthermore, plans are underway for additional solar installations.

• As part of Light Change Project, the Facility Management Group has overseen the replacement of old CFL lights with energy-efficient LED lights in all bank-owned premises and administrative buildings, to the extent possible.

• The Bank has taken proactive steps to address water management by installing sewage treatment plants in bank-owned buildings. This includes the commissioning of plants at locations like the Kannur Currency Chest and the Administrative building in Kakkanad. We have commissioned 10 KLD[ kilo liter per Day]sewage treatment plant at Kannur Currency chest in this financial year and we already have 15 KLD plant at Administrative building Kakkanad. Installation of 75 KLD sewage treatment plant was completed as part of new building project and awaiting commissioning.

• The Bank encourages the use of environment- friendly products across all operations. This includes promoting such products for decoration and gifting during events like new branch openings

and campaigns, fostering a culture of sustainability within the organization.

• The Bank has issued circular to all branches/ROs/ Departments to use recycled papers to the extent possible.

• Through its Corporate Social Responsibility (CSR) program, the bank lends financial support for rainwater harvesting, set up and installation of solar panels, and afforestation.

• The Bank has committed to promote sustainable finance and environmental stewardship. One of the ways we demonstrate this commitment is through the green deposit product. Green deposits are a unique financial product that allows customers to align their savings with environmentally responsible initiatives. The objective of the Green Deposit is to promote environmental friendly initiatives by encouraging depositors to invest in green projects and activities that contribute to sustainable development. It aims to mobilize deposits and use the proceeds for funding projects and activities that promote environmental conservation, renewable energy, energy efficiency and other green initiatives.

In line with our commitment to sustainability, the Board

of the Bank has approved the "Green Deposit Policy and Green Financing Framework," which introduces a pioneering financial product known as the "Green Deposit." This product enables depositors to contribute to sustainability objectives by channeling surplus funds into environmentally beneficial projects, following RBI guidelines issued on April 11, 2023.

The funds raised through Green Deposits are dedicated to supporting green financing activities. These activities aim to foster initiatives that have positive environmental impacts, including renewable energy, energy efficiency, sustainable agriculture, and other eco-friendly ventures. As of March 31, 2024, the Green Deposit scheme has successfully raised Rs.56.21 crore, with Rs.51.53 crore allocated to permissible green activities and projects for FY 2023-24. The remaining Rs.4.68 crore is temporarily parked in liquid assets, as stipulated by the financing framework.

The Bank acknowledges its pivotal role in addressing sustainability challenges and is committed to facilitating the transition to a low-carbon economy. Through the provision of a diverse range of sustainable financing products and services to customers, the Bank aims to drive sustainable development and contribute to a greener future.

(Amount in Rs. crore)

As stipulated in Listing Regulations, the Business Responsibility and sustainability Report describing the initiatives taken by the Bank from environmental, social and governance perspective is attached as part of the Directors' Report as Annexure-E.

In accordance with the Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Bank has formulated a Dividend Distribution Policy and the Policy is hosted on the website of the Bank and can be viewed at https://www.southindianbank.com/content/ dividend-distribution-policy/2672

As on March 31, 2024, the Bank has one unlisted wholly owned subsidiary - M/s. SIB Operations and Services Limited, which was incorporated on 28^th May, 2021,

M/s SIB Operations and Services Limited is a wholly owned Non-Financial Subsidiary Company of the South Indian Bank Ltd. The RBI has accorded the final approval on March 25, 2021 for setting up the Subsidiary Company and the Company was incorporated on May 28, 2021 to cater to the operational needs of the South Indian Bank Ltd. Its authorized Capital as on March 31, 2024 is Rs.2 crores and the Issued and Paid up Capital is Rs.50 lakh. The company is providing exclusive services to the Bank in the operational areas of Tele calling, Business Development, Data Entry Operations, I.T. Support and other services permitted by Reserve Bank of India. The Subsidiary Company has reported a profit of Rs.11.11 lakhs as on March 31, 2024.

There are no companies which have ceased to be Bank's

subsidiaries, joint ventures or associate companies during the Financial year 2023-24.

Sri. M George Korah (DIN: 08207827)), Independent Director of the Bank, Sri. P R Seshadri (DIN: 07820690), MD & CEO of the Bank, Sri. Benny P Thomas (DIN: 09448424) Non-Executive Non-Independent Director of the Bank and Sri. Thomas Joseph K (DIN: 09186452), EVP and Chief Business Officer of the Bank were directors of SIB Operations and Services Limited as on March 31, 2024.

Sri. Thomas Joseph K, EVP has completed his contract with the Bank on May 31, 2024 and subsequently resigned from the office of directorship of SIB Operations and Services Limited on the same date.

Further Sri. Anto George T, Chief General Manager - HR & Operations of the Bank has been appointed as Director of the subsidiary on July 11 2024, in the place of Sri. Thomas Joseph K, EVP who has resigned from the subsidiary company on expiry of his contract with the Bank on May 31, 2024.

Except Sri. M George Korah (DIN: 08207827) and Sri. Benny P Thomas (DIN: 09448424), no other directors in the Board of SIB Operations and Services Limited were drawing any remuneration / sitting fee from the subsidiary company. Sri. M George Korah (DIN: 08207827) and Sri. Benny P Thomas (DIN: 09448424), has received Rs.2,40,000/- and Rs.2,00,000/- respectively as sitting fee for attending the Board meeting of the subsidiary company during the financial year 2023-24.

The Board of Directors has formulated a policy for determining 'material' subsidiaries pursuant to the provisions of the Listing Regulations. The same is displayed on the website of the Bank https://www. southindianbank.com/content/policy-for-determining- material-subsidiaries/781

The Board of Directors has formulated a policy or materiality of Related Party Transactions and also or dealing with Related Party Transactions pursuant tc the provisions of the Companies Act, 2013 and SEB (LODR) Regulations, 2015. The same is displayed on the website of the Bank https://www.southindianbank.com, content/policv-on-related-party-transaction/782

Since the related party transactions are in the ordinary course of business and on an arm's length basis and no material, AOC-2 is not applicable.

There are no material changes and commitments affecting the financial position of the Bank which has occurred between the end of the financial year of the Bank i.e. March 31, 2024 and the date of the Directors report i.e. July 30, 2024.

During the year under review, there are no significan and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Bank's operations in future.

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

There is no fraud reported by auditors under sub section (12) of section 143 of the Companies Act, 2013 other than those which are reportable to the Centra Government.

The relevant Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) relatec to the Board Meetings and General Meeting have been complied with by the Bank.

During the last three financial years, there were no penalties or strictures imposed on the Bank by the SEB or any of the stock exchanges and/or any other statutory authorities on matters relating to capital market.

Being a Banking Company, the disclosures required as per Rule 8(5) (v) & (vi) of the Companies (Accounts^ Rules, 2014, read with Section 73 and 74 of the

Companies Act, 2013 are not applicable to the Bank

This has been dealt with in a separate section in the Annual Report.

Pursuant to Section 186 (11) of the Companies Act, 2013, the provisions of section 186 of Companies Act, 2013, except subsection (1), do not apply to a loan made, guarantee given or security provided or investment made by a banking company in the ordinary course of business.

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, with respect to the Director's Responsibility Statement, it is hereby confirmed that:

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

b. the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year 2023-24 and of the profit 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 and other applicable laws for safe guarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

d. the Directors had prepared the annual accounts for the financial year ended on March 31, 2024, on a going concern basis;

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

f. the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

The Board of Directors places on record its gratitude to the Reserve Bank of India, Securities and Exchange Board of India, Government of India, Government of Kerala and all other State Governments where the Bank operates, other Government and Regulatory Authorities, including Stock Exchanges, where the Bank's securities are listed and correspondent Banks for their strong support and guidance, during the year. The Board also places on record its gratitude to

the Bank's security holders and customers for their continued support, patronage and goodwill. The single most important pillar of any Institution is its personnel, more so in the case of a service entity like a Bank, the Board acknowledges this fact and thank all of them for their diligence and loyalty towards the Bank. The Board expresses its sincere appreciation for the dedicated services rendered by officers and employees of the Bank at all levels.