PNB Housing Finance Ltd

Your Directors are pleased to present the 36^th Annual Report of PNB Housing Finance Limited together with the Audited Standalone and Consolidated Financial Statements of the Company for the Financial Year ended MarcRs. 31, 2024.

Financial Highlights (Consolidated)

The standalone and the consolidated financial statements for the Financial Year ended MarcRs. 31, 2024, forming part of this annual report, have been prepared in accordance with Ind AS notified under section 133 of the Companies Act, 2013 (‘the Act') and other relevant provisions of the National Housing Bank Act, 1987 as amended from time to time, the Master Directions Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021 dated February 17, 2021 (‘RBI Directions') as amended from time to time and the Master Direction – Reserve Bank of India (Non- Banking Financial Company – Scale Based Regulations) Directions, 2023 dated October 19, 2023 as amended from time to time.

The Net Interest Income for the financial year 2024 stood at I2,516.07 crore as compared to I 2,345.55 crore, registering an increase of 7% year on year. The Pre Provision Operating Profit increased by 4% to I2,125.01 crore from I2,052.19 crore.

The Credit cost including write off for financial year 2024 was I171.11 crore registering a decrease of 75% year on year. The Spread on loans for financial year 2024 stood at 2.34% as compared to 2.81%. Net Interest Margin for financial year 2024 stood at 3.74% as compared to 3.73%. Gross Margin, net of acquisition cost for financial year 2024, was at 4.02% as compared to 4.06%. Return on Asset for financial year 2024 was at 2.20% as compared to 1.61%. Return on Equity for financial year 2024 was at 10.90% as compared to 9.98%. During the year, the Company has transferred a sum of I236.00 crore to Special Reserve and a sum of I 70.00 crore to the Statutory Reserves.

Capital Adequacy Ratio (CRAR)

The Capital Adequacy Ratio (CRAR) as on MarcRs. 31, 2024 was 29.26% (comprising Tier I capital of 27.90% and Tier II capital of 1.36%). The Reserve Bank of India (RBI) has prescribed a minimum CRAR of 15% of total risk weighted assets.

Dividend

In order to preserve capital, your Directors have not recommended any dividend for the year (Previous year Nil). The Company has a Dividend Distribution Policy in place and the same is placed on the website of the Company at https:// www.pnbhousing.com/investors/policies

Rights Issue

The Board of Directors on MarcRs. 9, 2022, had authorized the Company to raise capital by way of Rights Issue up to I2,500 crore. After completion of all the processes, the Board had approved, on March 28, 2023, for issue of 9,06,81,828 fully paid-up Equity Shares for amount aggregating to I 2,493.76 crore. The Board had fixed issue price of I275 per fully paid-up Equity Share (including a premium of I265 per Equity Share) for the said Rights issue.

The Record date for Rights share eligibility was April 5, 2023. The issue opened for subscription on April 13, 2023 and closed for subscription on April 27, 2023. The Board allotted 9,06,81,828 fully paid-up Equity Shares each for an amount aggregating to I 2,493.76 crore. Pursuant to the allotment, the paid-up equity share capital of the Company has increased from RS. 168,86,18,680 comprising of 16,88,61,868 fully paid-up Equity Shares of I 10/- each to I259,54,36,960 comprising of 25,95,43,696 fully paid-up Equity Shares of I10/- each.

The Board has expressed its gratitude to the shareholders for the overwhelming response to the Rights Issue witRs. 1.21 times subscription.

The Company had utilised the proceeds of the Rights Issue during this financial year for the purpose for which it was raised.

Lending Operations

The Company is a Non-Banking Financial Company - Housing Finance Company (NBFC-HFC) and is engaged in financing for purchase and/ or construction of residential houses, loan against property and loan for other related purposes. All other activities revolve around the main business of the Company.

The Company had disbursed loans amounting to I17,583 crore during the year as compared to I 14,965 crore in the previous year (growth of 17.5%).

The Company has accelerated growth during the year with focus on retail loans which contributed 99% of total disbursements. The Company has built a separate affordable loan vertical called ‘Roshni' with dedicated sales, credit, collection, and operations team. The target ticket size of the loan is I15 lakhs. The affordable loan segment presence was expanded to 160 branches/outreaches. This segment will be one of the focus areas going forward together with that of ‘Emerging Market' segment.

Company's digital onboarding platform ACE was enhanced for improving distribution and customer experience. The Company has robust underwriting, monitoring, collection and risk management practices.

Loan Assets

Loan Assets as on MarcRs. 31, 2024, were I65,358 crore as compared to I59,273 crore as on MarcRs. 31, 2023, registering an increase of 10%. With focus on retail segment, during the year, the Company has grown retail loan book by 14% from RS. 55,471 crore to I63,306 crore whereas the corporate loan book has declined by 46% from I3,802 crore to I2,052 crore as per the conscious decision. The retail book constituted around 97% of the Loan Asset as on MarcRs. 31, 2024.

The Assets Under Management (AUM) as on MarcRs. 31, 2024, were I71,243 crore as compared to I66,617 crore as at MarcRs. 31, 2023, resulting in an increase of 7% YoY.

For further details on lending operations please refer the Management Discussion and Analysis Report.

Asset Quality

The overall Gross Non-performing Assets (GNPAs) declined by 233 bps to 1.50% as on MarcRs. 31, 2024 as compared to 3.83% as on MarcRs. 31, 2023. The Retail and Corporate GNPAs declined to 1.45% and 3.31% respectively as on MarcRs. 31, 2024 as compared to 2.57% and 22.25% respectively as on MarcRs. 31, 2023.

The overall Net Non-performing Assets (NNPAs), declined to 0.95% as on MarcRs. 31, 2024 as compared to 2.76% as on MarcRs. 31, 2023. The retail and corporate NNPAs declined to 0.94% and 1.11% respectively as on MarcRs. 31, 2024 as compared to 1.74% and 18.24% respectively as on MarcRs. 31, 2023.

During the year, the Company had auctioned 2,074 properties under the provisions of SARFAESI Act, 2002 and sold 282 properties with loan outstanding amounts aggregating to I178.72 crore and the sale value were aggregating to I120.46 crore. None of the sister concerns of the Company participated in the auction(s). This information is pursuant to Para 37.4.4 of RBI Scale Based Regulations.

The overall ECL provision coverage as on MarcRs. 31, 2024 was 1.91% (retail loans 1.32% and corporate loans 20.27%).

Distribution

During the year, the Company expanded its branch network to 300 branches/outreaches (including 160 affordable loan branches/outreaches) from 189 branches/outreaches (including 82 affordable loan branches/outreaches) as on MarcRs. 31, 2023. Majority of new branches were opened in Tier II and Tier III cities to expand affordable business. The Company has 18 underwriting hubs for credit decision making.

Borrowings

The outstanding borrowings as on MarcRs. 31, 2024, were I55,057 crore as compared to I53,651 crore as on MarcRs. 31, 2023. During the year, the Company has raised fresh resources of I34,547 crore from multiple sources excluding deposits.

Details of market borrowings are provided in the Management Discussion and Analysis Report and notes to accounts.

The Company has complied with the provisions of Chapter XI of RBI Master Directions and SEBI NCS Regulations for issue of Non-Convertible Debentures on private placement basis. The Company has been regular in payment of principal and interest on the Non-Convertible Debentures.

Deposits

The outstanding deposits (including accrued interest) as on MarcRs. 31, 2024 were I 17,802.63 crore (including non-retail deposits of I2081.28 crore) as against I17,247.90 crore (including deposits of I1,722.54 crore) non- retail outstanding as on MarcRs. 31, 2023, registering an increase of 3%. The Company has raised I6,195.53 crore of total (fresh + renewal) deposits during the year.

The Company has accepted public deposits as per RBI Master Directions as amended from time to time (erstwhile National Housing Bank Directions, 2010) and as per the provisions of the Act, to the extent applicable. The Company has paid interest on all the outstanding deposits on due dates as per contract. There was no default on repayment of deposits or payment of interest thereon during the year. The deposits of the Company have been rated AA Positive (Outlook Stable) by CRISIL and CARE AA+ (Outlook Stable) by CARE.

Investment in SLR

The Company has maintained the investments for its Statutory Liquidity Ratio (SLR) as stipulated under RBI Master Directions. The Company had total SLR investments at market value of I2,352.27 crore (Book value of I 2,388.95 crore) as on MarcRs. 31, 2024.

Unclaimed Deposits and NCDs

Out of the deposits, which became due for repayment up to MarcRs. 31, 2024, deposits worth I40.25 crore, including interest accrued and due relating to 518 depositors had not been claimed or renewed by the respective depositors. The Depositors have been intimated regarding the maturity of their deposits with a request to either renew or claim the deposits and subsequent reminders have been sent by SMS, e-mails, etc. Further, in the absence of any specific maturity instruction and where the bank account particulars were correct, the maturity amounts have been remitted to the respective designated bank accounts maintained in the name of the depositor.

Deposits remaining unclaimed for a period of seven years from the date they became due for payment must be transferred to Investor Education and Protection Fund (IEPF) established by the Central Government under section 125 of the Act. During the year, the Company has transferred an amount of I14.13 lakh to IEPF. The concerned depositors can claim the deposit back from the IEPF. The Company has provided the process of claiming refund from IEPF on the website of the Company.

During the year, the Company paid interest amounts from time to time and principal amounts on redemption of NCDs, on the respective due dates. There are no unclaimed/unpaid amounts pertaining to principal or interest in respect of non-convertible debentures issued by the Company. The Company is not required to maintain debenture redemption reserve on privately placed NCDs in terms of MCA Notification dated August 16, 2019.

Credit Rating

During the year, CARE Ratings had initially reaffirmed the AA rating and revised the outlook from ‘Stable' to ‘Positive'. Then the Rating was upgraded to AA+ and outlook was upgraded from ‘Positive' to ‘Stable' for Fixed Deposits, Non-Convertible Debentures and Bank Loans.

ICRA Ratings had initially reaffirmed the AA rating and revised the outlook from ‘Stable' to ‘Positive' for Non-Convertible Debentures. Then the Rating was upgraded to AA+ and outlook was upgraded from ‘Positive' to ‘Stable'. India Ratings had initially reaffirmed the AA rating and revised the outlook from ‘Stable' to ‘Positive' for Non-Convertible Debentures and Bank Loans. Then the Rating was upgraded to AA+ and outlook was upgraded from ‘Positive' to ‘Stable'.

CRISIL Ratings had initially reaffirmed the AA rating and revised the outlook from ‘Stable' to ‘Positive'. Then the Rating was upgraded to AA+ and outlook was upgraded from ‘Positive' to ‘Stable' w.e.f. May 27, 2024 for Fixed Deposits, Non-Convertible Debentures and Bank Loans.

Rating for Commercial Papers was re-affirmed by CRISIL Ratings as A1+ and CARE Ratings as A1+, during the year. The credit rating on deposits, term loans, NCDs and commercial paper and migration during the year is disclosed in the General Information to Shareholders forming part of Director's Report.

Management Discussion and Analysis Report, Report of the Directors on Corporate Governance and Business Responsibility & Sustainability Report

In accordance with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) and the Reserve Bank of India, Master Directions, the Management Discussion and Analysis Report (MD&A) and the Report of Directors on Corporate Governance form part of this report. A certificate on compliance with the conditions of Corporate Governance under the Listing Regulations is placed as Annexure-8, to this Report.

In accordance with the Listing Regulations, the Business Responsibility & Sustainability Report (BRSR) also forms part of Annual report. The BRSR indicates the Company's performance against the principles of the ‘National Guidelines on Responsible Business Conduct' and the BRSR related policies of the Company. This would enable the Members to have an insight into Environmental, Social and Governance initiatives of the Company. The BRSR Report is placed as Annexure-2 , to this Report.

Corporate Social Responsibility (CSR)

The total amount allocated for CSR activities for financial year 2024 was I22.69 crore and the funds were allocated to various projects during the year. Out of this, the amount spent during the year was I 17.80 crore on various CSR activities in lumpsum or tranches based on the progress of the project(s). A sum of I4.89 crore was transferred to Unspent CSR Account to carry out ongoing CSR activities as per schedule within permissible timelines.

Pehel Foundation (wholly owned subsidiary) is the implementation arm of the Company for CSR activities along with other partnering agencies.

During the year, the company focused on Strategic and Flagship Interventions. The flagship interventions were designed for the welfare of the construction workers community and strategic interventions focused upon Healthcare, Environment, Education and Women Empowerment.

Flagship Interventions

The construction worker community has been supported with better living space, scholarship support for students, cataract surgeries, mobile medical units, skill development, education support to children, etc.

Strategic Interventions

Healthcare: Strengthening of Primary Health Centers, Govt. hospital, cataract screening and surgery, support to differently abled like visually impaired, hearing impaired, etc. Support to old age home and senior citizens, transport facility for patients, home away from Home for children suffering from cancer and supported palliative care. Education: Teaching learning material support for Gandhi Balika Vidyalaya (KGBV) and Samarth schools, renovation of school and anganwadis, transport facility for students, established e-learning infrastructure in Govt. schools, Science, technology, engineering, and mathematics (STEM) learning in Govt. schools, supported tribal school with digital learning.

Environment: Projects for water conservation, plastic waste management, solid waste management, tree plantation and awareness generation, Solar electrification in schools, old age homes and villages, etc.

Women Empowerment: Established women owned millet cookies and blended spice production units, skill development of specially abled women, empowered women in villages through facilities of pipeline water at doorstep and community level safe drinking water.

The details are captured in Annexure-1 to Directors' Report on CSR activities.

Human Resource

As on MarcRs. 31, 2024, the Company had 2,003 full time employees on its rolls. There were 10 employees employed throughout the year, who were in receipt of remuneration of I1.02 crore or more per annum or receipt of remuneration of I8.5 lac or more per month. The remuneration comprises salary, allowances, perquisites/ taxable value of perquisites, excluding perquisite value of ESOPs exercised and ex-gratia amount.

In accordance with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and particulars of the top ten employees in terms of remuneration drawn and of the aforesaid employees, are set out in the annex to the Directors' Report. In terms of the provisions of Section 136(1) of the Act read with the applicable rules, the Directors' Report is being sent to all Shareholders of the Company excluding the annexure. Any Shareholder interested in obtaining a copy of the annexure may write to the Company.

Further, disclosures on managerial remuneration are provided in Annexure-3 appended to the Directors' Report. On-boarding of key positions and vacant positions at all levels across locations were made to ensure uninterrupted business operations.

The Learning and Development (L&D) team implemented a learning roadmap for employees on techno-functional and behavioural skills. The L&D team provided physical as well as virtual learning interventions for existing employees and new joinees.

The changes, if any, in the KMPs and/or Senior Management Personnel are covered in detail in the Report of Directors on Corporate Governance.

Prevention, Prohibition and Redressal of Sexual Harassment of Women at the Workplace

The Company has adopted a policy on prevention, prohibition and redressal of sexual harassment at the workplace. Members of the Internal Complaints Committee constituted by the Company are responsible for reporting and conducting inquiries pertaining to such complaints.

The Company on a regular basis sensitises its employees including employees of the subsidiaries on the prevention of sexual harassment at the workplace through workshops, group meetings, online training modules and awareness programmes. Disclosure in relation to Sexual harassment of Women at workplace(Prevention, Prohibition, and Redressal) Act, 2013: a. No. of complaints filed during the year ended MarcRs. 31, 2024: 1 b. No. of complaints disposed off during the year: 1 c. No. of complaints pending at the end of the financial year- Nil (the complaint pending at the end of previous year also stands closed).

Particulars of Loans, Guarantees or Investments

Since the Company is a housing finance company, the disclosures regarding particulars of the loans given, guarantees given and security provided by the Company, if any, is exempt under the provisions of Section 186(11) of the Act. As regards, investments made by the Company, the details of the same are provided in notes to the financial statements of the Company as Note No.7 for the year ended MarcRs. 31, 2024, forming part of this Report.

Particulars of Contracts or Arrangements with Related Parties

In accordance with the provisions of Section 188 of the Act and rules made thereunder, the transactions entered with related parties are in the ordinary course of business and on an arm's length pricing basis, the details of which are included in the notes forming part of the financial statements. The particulars of contracts or arrangements with related parties , including material transactions, as prescribed in Form No. AOC–2 of the Companies (Accounts) Rules, 2014, are annexed to this report as Annexure- 4. Details of related party transactions are given in the Notes to Accounts as Note No.36.10. The Policy on Related Party Transactions is published elsewhere in the Annual Report and is also placed on the Company's website at https://www. pnbhousing.com/investors/policies

Particulars regarding conservation of energy, technology absorption and foreign exchange earnings and outgo

As an institution providing financial services, our operations are not highly energy intensive. However, we have been focusing on sustainability and cultivating climate conscious culture wherein aspects like resource conservation, waste generation, energy efficiency, judicious consumption are given prime importance.

Even as digitization of products and services has been effective in reducing the requirement of paper, it remains a significant resource consumed during the company's normal course of business, and thus rationalizing printing requirements remains a priority within the business. This can eventually enable reduction in energy consumption in our day-to-day operations.

For procurement of equipment required to run our operations, such as computer hardware, air conditioners, energy efficiency standards (viz. 5-star ratings) are duly considered during purchase. Majority of the initiatives such as Sensor based programming of Lift operations, provision for Natural Sunlight for offices through windows, LEDs, energy efficient architecture, Optimized HVAC operation with load balancing etc. are present in select leased offices/ touchpoints and proper care is taken to ensure such initiatives remains a priority while onboarding a new office/ creating customer touchpoint. The typical expenditure around energy expenditure during the year was estimated around I10 Lakh.

There were no foreign exchange earnings, and the Company has incurred foreign exchange expenditure of I263.15 crore during the year primarily on account of interest on borrowings from external sources and other expenses.

Business Continuity

The Company has a Business Continuity Plan (BCP), designed to minimise operational, financial, legal, reputational, and other material consequences arising from a disaster, if any.

The Business Continuity & Disaster Recovery policy at PNB Housing is developed with intent to prevent, contain, and respond to potential disruptions that may impact the continuity of business/support processes performed by PNB Housing, along with ensuring safety of PNB Housing Finance employees.

We have implemented multi-layered controls for identification, prevention, detection, and response to various cyber security threats. We have applied safeguards for protection of customer information. We have framed Information Security Policy, Cyber Security Policy and Cloud Security Policy to Support Information Security Management System and to protect business information at network, endpoint, perimeter, application and human layer.

Maintenance of Cost Records

Being a housing finance company, the Company is not required to maintain cost records as per sub-section (1) of Section 148 of the Act.

Unclaimed Dividend

As on MarcRs. 31, 2024, dividend amounting to I7.03 lakh pertaining to previous years have not been claimed by Shareholders of the Company. The Company has been informing these Shareholders to claim unclaimed dividend, by way of e-mails and letters.

Employees Stock Option Scheme & RSU Scheme

During the year, 21,633 and 1,39,822 Equity Shares of I10 each were allotted on exercise of ESOP options under ESOP Scheme 2016 and 2018, respectively. Further, 34,035 Equity Shares of I10 each were allotted on exercise of RSUs under RSU Scheme 2020.

Grant of fresh ESOPs & RSUs

During the year, the Nomination and Remuneration Committee had granted 3,35,510; 9,73,936 and 3,75,500 ESOPs under ESOP Scheme 2016, 2018 and 2020, respectively.

[30,000 options were granted at I803.40, 41,000 options at I688.15, 18,000 options at RS. 643.40, 2,86,500 options at I483.15 and 60,000 options at I438.85].

During the year, the Nomination and Remuneration Committee has granted 67,500 RSUs under RSU Scheme 2020 at I10 per unit.

Further, pursuant to adjustment on account of Corporate Action of Rights Issue, 3,35,510 ESOPs were issued pursuant to ESOP Scheme 2016; 9,13,936 ESOPs were issued pursuant to ESOP Scheme 2018 and 22,146 RSUs were issued pursuant to RSU Scheme 2020 during the year. There has been no variation in the terms of the options granted under any of these schemes and all the schemes are in compliance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, as amended. The certificate from the Secretarial Auditors confirming that ESOP Schemes have been implemented in accordance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and Shareholder's resolutions has been obtained and will be available for inspection. The Nomination and Remuneration Committee monitors the compliance of these Schemes. The disclosures as required under the regulations have been placed on the website of the Company at https://www.pnbhousing. com/investor-relations/updates-events/.

Regulatory Compliance

Following the amendment in the Finance Act, 2019 and the subsequent notification by the Reserve Bank of India (RBI) in August 2019, Housing Finance Companies (HFCs) are being treated as one of the categories of Non-Banking Financial Companies (NBFCs) for regulatory purposes and accordingly come under RBI's direct oversight. The National

HousingBank (NHB), however, would continue to carry out supervision & refinance facilities for HFCs. In this regard Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021 was notified on February 17, 2021 (updated as on March 21, 2024).

The Company has been following guidelines, circulars and directions issued by the RBI/ NHB, from time to time. The Company has complied with the Master Direction-Non Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021 (updated as on March 21, 2024) and other directions/guidelines prescribed by RBI regarding deposit acceptance, accounting standards, prudential norms for asset classification, income recognition, provisioning, capital adequacy, credit rating, corporate governance, information technology framework, fraud monitoring, concentration of investments, capital market exposure norms, guidelines on maintenance of Liquidity Coverage Ratio (LCR), transfer of loans and know your customer, anti-money laundering, etc.

RBI had issued a circular on "Scale Based Regulation (SBR): A Revised Regulatory Framework for NBFCs" on October 22, 2021 (‘SBR Framework'). As per the framework, based on size, activity, and risk perceived, NBFCs are categorised into four layers, NBFC - Base Layer (NBFC-BL), NBFC - Middle Layer (NBFC-ML), NBFC - Upper Layer (NBFC-UL) and NBFC - Top Layer (NBFC-TL). RBI has categorised PNB Housing Finance Limited as an NBFC - Upper Layer (NBFC-UL) vide its press release dated September 30, 2022 and September 13, 2023. RBI has issued the Master Direction – Reserve Bank of India (Non-Banking Financial Company)-Scale Based Regulation) Directions, 2023 dated October 19, 2023 (updated as on March 21, 2024). The Company has put in place necessary Board approved policies like Internal Capital Adequacy Assessment Policy, Compensation Policy for Key Managerial Personnel and Senior Management, Compliance Policy, Board approved limits for Sensitive Sectors Exposure under the SBR Framework, etc.

During the year, the Company has not made any application, or no proceeding is pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016). The Company has not entered into one-time settlement for any loans availed from the Banks or Financial Institutions.

As per the SEBI Master Circular No. SEBI/HO/DDHS/ PoD1/P/CIR/2023/119 dated July 7, 2023, PNB Housing Finance Limited being Large Corporate (LC) during FY22, FY23 & FY24, was required to borrow at least 25% of its incremental borrowing by way of issuance of debt securities. The company being an HFC raises funds from multiple sources viz., bank borrowings, deposits, National Housing Bank (NHB), External Commercial Borrowings (ECBs), debt markets, etc. In the last few years with rising interest rates, the borrowing from the debt market was costlier than the other long-term sources. Therefore, the Company's actual borrowing through debt securities was lower primarily due to higher cost of borrowing. As per SEBI Circular No.SEBI/HO/DDHS/DDHS-RACPOD1/P/CIR/2023/172 dated October 19, 2023, which is effective from April 1, 2024, the framework for funds raising by issuance of debt securities by Large Corporates has been revised from FY25 onwards. As per the new framework, the requirement of mandatory qualified borrowing by an LC in a FY (not less than 25% of the qualified borrowings) shall be met over a contiguous block of three years i.e., by MarcRs. 31, 2027. For more details, please refer Note No.35 of financial statements.

Policies and Codes

During the year, the Company has revised its policies as required in terms of provisions of the Act, RBI Directions, SEBI Listing Regulations, etc and placed the policies as required under the Regulations on its website at https:// www.pnbhousing.com/investor-relations/corporate-governance/

Directors

As on MarcRs. 31, 2024, the Company has twelve Directors with an optimum combination of Executive and Non- Executive Directors including one woman director. The Board comprises of eleven Non-Executive Directors, out of which six are Independent Directors.

During the financial year, there were no fresh appointment or resignation of Directors. However, Ms. Gita Nayyar whose tenure was about to end on May 28, 2024, was re-appointed as an Independent Director of the Company to hold office for a second term of five consecutive years commencing from May 29, 2024, up to May 28, 2029. She has been re-appointed by the members of the Company on recommendation of the Nomination & Remuneration Committee and the Board through Special Resolution passed by the Postal Ballot on April 26, 2024.

Pursuant to the provisions of Section 149 of the Act, the Independent Directors have submitted declarations that each of them meets the criteria of independence as provided in Section 149(6) and 149 (7) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations. There has been no change in the circumstances affecting their status as independent directors of the Company.

During the year under review, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission and reimbursement of expenses, if any as per the terms of appointment.

Your Board wishes to place on record its sincere appreciation for the contributions made by the directors on the Board and also on various Committees of the Board. In accordance with the provisions of the Act and Articles of Association of the Company, Mr. Kapil Modi and Mr. D K Jain will retire by rotation at the ensuing Annual General Meeting (AGM). They are eligible for re-appointment and your Board has recommended for their re-appointment at the ensuing AGM.

Mr. Neeraj Vyas was initially appointed as an Independent Director on the Board effective from April 15, 2019, for a tenure of five years. He resigned as an Independent Director during April 2020 and was appointed as an Interim Managing Director & CEO of the Company from April 28, 2020, till August 10, 2020. On appointment of a new Managing Director, Mr Vyas was appointed as Non-Executive Director with effect from September 1, 2020, liable to retire by rotation at the Annual General Meeting of the Company. As Mr Neeraj Vyas, who is liable to retire by rotation, has been determined to be a fit and proper candidate by the Nomination & Remuneration Committee (NRC), for appointment as an Independent Director, and on the recommendations of the NRC, the Board has approved and recommended to the members for his appointment as an Independent Director at the ensuing Annual General Meeting (AGM) and a proposal is placed before the members in the Notice of the AGM seeking appointment of Mr Neeraj Vyas as an independent Director of the Company for a tenure of three years. Mr Neeraj Vyas has become eligible to be appointed as an Independent Director after April 1, 2024 (as he was a KMP, he was not eligible to be appointed as an independent director for the immediate succeeding three financial years i.e., upto MarcRs. 31, 2024).

All the directors of the Company have confirmed that they satisfy the fit and proper criteria as prescribed under the applicable regulations and that they are not disqualified from being appointed as directors in terms of Section 164(2) of the Act. The Company has also received a certificate from the Practising Company Secretary confirming that none of the directors have been debarred or disqualified and the same is placed as Annexure- 5, to this Report.

The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience, and expertise. All the Independent Directors of the Company have registered their names with the data bank created for Independent Directors.

The details on the number of Board/ Committee Meetings held are provided in the Corporate Governance Report, which forms part of this report.

The evaluation of Board, its committees and individual Directors was carried out in terms of the provisions of the Act and Listing Regulations. (Refer Corporate Governance Report).

Changes in the Key managerial Personnel

Mr Sanjay Jain (FCS: 2642), Company Secretary and Compliance Officer of the Company was superannuated with effect from the January 31, 2024.

Further, Ms Veena G Kamath (A23788) has been appointed as the Company Secretary and Key Managerial Personnel (KMP) of the Company w.e.f. February 1, 2024.

Statutory Auditors

In terms of the Reserve Bank of India Guidelines dated April 27, 2022, on Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs). The Shareholders at the 33^rd AGM had appointed M/s. T R Chadha & Co, LLP, Chartered Accountants (ICAI Firm Registration No. 006711N/N500028) and M/s. Singhi & Co., Chartered Accountants (ICAI Firm Registration No. 302049E) as the Joint Statutory Auditors of the Company for a period of three years from the conclusion of 33^rd Annual General Meeting till the conclusion of the 36^th AGM of the Company. The term of above Joint Statutory Auditors will come to an end on the conclusion of the ensuing AGM.

The Board of Directors of the Company, on recommendation of the Audit Committee, has considered and recommended to the shareholders for appointment of M/s. CNK & Associates LLP (Firm Registration No.101961 W/W-100036) and M/s M. M. Nissim & Co LLP (Firm Registration No. 107122 W/W-100672) as joint Statutory Auditors of the Company for a period of 3 (three) years from the conclusion of 36^th AGM up to the conclusion of 39^th AGM of the Company. Agenda on the approval of appointment of joint Statutory Auditors of the Company is being placed to the Members in the ensuing AGM.

During the year, the Statutory Auditors were paid a remuneration of I1.08 crore (the Statutory Auditor of the subsidiary companies were paid remuneration of I0.10 crore). The remuneration pertains to fees for audit, internal financial control reporting, limited reviews, tax audits and taxation services, certifications and other matters and reimbursement of expenses.

During the year under review, the Statutory Auditors did not have any matter requiring reporting under Section 143 (12) of the Act. Therefore, there is no reporting disclosure required under Section 134 (3) (ca) of the Act.

The Statutory Auditors have confirmed that they continue to satisfy the eligibility norms and independence criteria as prescribed by RBI guidelines and the Companies Act, 2013.

Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Act, the Board has appointed M/s Vinod Kothari & Company, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the financial year 2023-24.

The Secretarial Audit Report for the financial year ended MarcRs. 31, 2024, as required under Section 204 of the Act and Regulation 24A of the SEBI Listing Regulations, is annexed to this Report as Annexure- 6. Your Company is in compliance with the applicable Secretarial Standards issued by The Institute of Company Secretaries of India and approved by the Central Government under Section 118(10) of the Act for FY 2023-24. The Secretarial Auditor's Report does not contain any qualifications, observations or adverse comments.

In terms of the SEBI Circular dated February 8, 2019 and as per Reg.24A of SEBI LODR Regulations, 2015, your Company has submitted the Annual Secretarial Compliance Report for FY 2023-24 issued by M/s Vinod Kothari & Company, to the Stock Exchanges within the prescribed time and the same is available on website of the Company and Stock Exchanges. The same is placed as Annexure-7, to this Report.

Vigil Mechanism

The Company has a Whistle Blower Policy and has established necessary vigil mechanism for directors and employees in conformation with Section 177(9) of the Act and Regulation 22 of SEBI Listing Regulations, to report concerns about unethical behaviour , if any. This Policy is available on the Company's website at https://www.pnbhousing.com/ investors/policies

Directors' Responsibility Statement

In accordance with the provisions of Section 134(3)(c) of the Act and based on the information provided by the management, your directors state that: a) In the preparation of annual accounts, the applicable accounting standards have been followed; b) Accounting policies selected have been applied consistently. Reasonable and prudent judgements and estimates have been made so as to give a true and fair view of the state of affairs of the Company as on MarcRs. 31, 2024 and of the profit of the Company for the year ended on that date; c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; d) The annual accounts of the Company have been prepared on a going concern basis; e) Internal financial controls have been laid down to be followed by the Company and such internal financial controls are adequate and operating effectively; and f) Systems to ensure compliance with the provisions of all applicable laws are in place and were adequate and operating effectively.

Internal Financial Control

The Company has put in place adequate policies and procedures to ensure that the system of internal financial control commensurate with the size and nature of the Company's business.

These systems provide a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes, safeguarding of assets of the Company, prevention and detection of frauds, accuracy and completeness of accounting records and ensuring compliance with Company's policies.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory and secretarial auditors and external consultants, including the audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by management and the relevant board committees, including the audit committee, the Board is of the opinion that the Company's internal financial controls were adequate and effective during FY 2024.

Internal audit

The Company has an Internal Audit system in place for ensuring that the Company's operations are conducted in a manner that promotes effectiveness, efficiency, and reliable financial reporting while also ensuring compliance with relevant laws, regulations and policies. The Company has appointed an Internal Auditor in terms of the RBI guidelines.

Extracts of Annual Return

The Annual Return in Form MGT-7 , provisional, as on MarcRs. 31, 2024 is available on the website of the Company at https://www.pnbhousing.com/investor-relations/annual-reports/.

Significant and Material Orders Passed by Regulators

During the year, there were no significant or material orders passed by the regulators or courts or tribunals that would impact the going concern status or operations of the Company in the future. The Details on penalties, fines, strictures levied during the last three Financial years are provided in the Corporate Governance Report.

Particulars of contract or arrangements entered Material changes, details of subsidiaries and litigations

There were no material contracts or arrangements and there has been no material change and commitment, affecting the financial position of the Company, which has occurred between the close of the Financial Year ended 2023-24 and the date of this Report.

There has been no change in the nature of business of the Company.

PHFL Home Loans and Services Limited

PHFL is a wholly owned subsidiary and is the distribution arm for PNB Housing, offering doorstep services to the prospective customers. The subsidiary has trained workforce to source business for the loans and deposits offered by PNB Housing.

During the year, the PHFL has sourced loan applications in respect of 74% of total loans disbursed by PNB Housing Finance. The annual accounts of PHFL are enclosed along with the Annual Accounts of PNB Housing.

A report on the performance and financials of PHFL, as per Act and rules made thereunder is provided in Form AOC-1 attached to the Consolidated Financial Statements forming an integral part of the Annual Report.

Pehel Foundation

PEHEL Foundation is a wholly owned non-profit subsidiary Company incorporated under Section 8 of the Act. It is an implementation arm to carry out various CSR activities of PNB Housing Finance and PHFL.

During the year, under review, there was no material change in the nature of the business of the subsidiaries. There are no associates or joint venture companies within the meaning of Section 2(6) of the Companies Act, 2013.

Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the Company's website at https://www.pnbhousing.com/investors/annual-reports.

Other Disclosures

Your Directors hereby clarify that the following disclosures are not applicable, considering that there were no such transactions in the year under review:

1. There has been no issue of Equity Shares with differential rights as to dividend, voting or otherwise.

2. Your Company has not resorted to any buy back of its Equity Shares during the year under review.

3. The Managing Director & CEO of your Company did not receive any remuneration or commission during the year from the subsidiary of the Company.

Acknowledgements

The Directors place on record their gratitude for the support of various regulatory authorities including Reserve Bank of India, National Housing Bank, Securities and Exchange Board of India, Ministry of Housing and Urban Affairs, Ministry of Corporate Affairs, Registrar of Companies, Financial Intelligence Unit (India), Insurance Regulatory and Development Authority of India, the Stock Exchanges and the Depositories.

The Company acknowledges the role of all its key stakeholders- shareholders, borrowers, channel partners, depositors, deposit agents, lenders, auditors, consultants, Registrar & Transfer agents, trustees for their continued support.

The Directors express their appreciation for the dedication and commitment with which the employees of the Company at all levels have worked during the period.