SBFC Finance Ltd

To the Members of SBFC Finance Limited

Your Directors have the pleasure of presenting the Eighteenth Annual Report on the business and operations of your Company together with the Audited Standalone and Consolidated financial statements for the Financial Year (FY) ended March 31, 2025.

Financial Performance

The highlights of the standalone financial results are given below:

(Rs In million)

Your Company's total income increased by 28% from ' 10,198.20 million for the year ended March 31, 2024 to ' 13,061.09 million for the year ended March 31, 2025. The Profit after tax has increased by 46% from ' 2,370.21 million for the year ended March 31, 2024 to ' 3,451.68 million for the year ended March 31, 2025.

Material changes from the end of the financial year till the date of this report

No material changes and commitments have occurred after the closure of the FY 2025 till the date of this Report, which would affect the financial position of your Company.

Transfer to Reserves

The Company transferred an amount of ' 690.34 million to the Reserve Fund under section 45-IC of the RBI Act, 1934.

Pursuant to provisions of Companies Act, 2013 (“the Act”) read with relevant rules thereunder, the Company, being a NBFC, is exempt from creating debenture redemption reserve in respect of privately placed debentures including the requirement to invest up to 15% of the amount of debentures maturing during the next financial year. However, the Company maintains sufficient liquidity buffer to fulfill its obligations arising out of debentures.

Dividend

The Directors do not recommend payment of any dividend on the Equity Shares for the financial year ended March 31, 2025, to conserve capital for future business expansion.

As stipulated in Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”) the Dividend Distribution Policy can be accessed on the Company's website at the web link: https://www.sbfc.com/faq.

Operations

During the financial year, the Company continued to strengthen its presence by expanding to 205 branches across 16 states and 2 union territories in the underserved credit markets of India by focusing on Secured MSME and Gold Loan products, primarily targeting customers in tier II and tier III cities. The Company's approach remained centered on promoting financial inclusion by offering accessible, collateral-backed credit solutions tailored to the needs of micro and small enterprises, as well as individual borrowers seeking short-term liquidity.

Assets Under Management (“AUM”) has grown by 28 % during the year under review from ' 68,219 million as at March 31, 2024 to ' 87,474 million as at March 31, 2025. During the year under review, your Company has disbursed Secured MSME loans of ' 26,707 million against ' 27,933 million during the previous year.

Material Developments

During the year under review, Insurance Regulatory and Development Authority of India has issued a Certificate of Registration dated November 25, 2024 to your Company to act as ‘Corporate Agent (Composite)' under the Insurance Act, 1938. Your Company will provide options to its customers

in the areas of life insurance, health insurance and general insurance under group (Corporate Agent-Composite) in the geographies that the Company operates in.

Change in Nature of Business

There has been no change in the nature of business and operations of the Company during the year under review.

RBI Compliances

The Company continues to comply with the Master Direction

- Reserve Bank of India (Non-Banking Financial Company

- Scale Based Regulation) Directions, 2023 and all the applicable laws, regulations, guidelines, etc. as prescribed by RBI from time to time.

Capital Adequacy

As on March 31, 2025, the Capital to Risk Assets Ratio (“CRAR”) of your Company was 36.10% (Tier I- 36.10%) which is well above the minimum requirement of 15% as prescribed by RBI.

Share Capital

The issued, subscribed and paid-up Equity Share Capital of the Company as on March 31, 2025 stood at ' 10,859,990,880/-. During the Financial Year under review, the paid-up Equity Share Capital of the Company has increased on account of issuance and allotment of 12,244,102 Equity Shares of ' 10/- each pursuant to the exercise of stock options by the eligible employees under Employee Stock Option Schemes of the Company.

No Equity Shares were issued with differential rights as to dividend, voting or otherwise during the year under review. None of the Directors of the Company holds instruments convertible into Equity Shares of the Company.

Equity

Your Company has total equity of ' 31,901.31 million and Goodwill of ' 2,603.92 million as on March 31, 2025. Net of Goodwill, your Company has Tangible Equity of ' 29,297.39 million.

Employee Stock Options

Your Company has in force various Employees Stock Option Schemes viz. SBFC Stock Option Policy I 2018, SBFC Stock Option Policy 2021 -I, SBFC Stock Option Policy 2021 -II, SBFC Stock Option Policy 2021 -III -Special Grant, SBFC Stock Option Policy 2021 -IV, SBFC Stock Option Policy 2021 -V, SBFC Stock Option Policy 2023 -I, SBFC Stock Option Policy 2023 -II, SBFC Stock Option Policy 2023 -III, SBFC Stock Option Policy 2024 -I.

With a view to attract, retain and motivate talent, align employee interests with long-term growth, and foster a sense of ownership to drive a sustained Company success, your Company with the approval of members at Annual General Meeting (“AGM”) held on June 28, 2024, has formulated a SBFC Stock Option Policy 2024 - I, contemplating grant of 5,000,000 equity shares, constituting 0.46% of the paid-up share capital of the Company as on March 31, 2025.

Further, the Nomination and Remuneration Committee at its Meeting held on April 24, 2025 and the Board of Directors at its Meeting held on April 26, 2025 had considered and approved the amendments to SBFC Stock Option Policy I 2018 (‘ESOP 2018-I Policy') and SBFC Stock Option Policy 2021 I (‘ESOP 2021-I Policy'). The special resolution for seeking approval of the members of the Company is set out in the Notice of the ensuing 18th Annual General Meeting. The proposal to amend these policies is with reference to Definition of Eligible Employee, Exercise Period, Relevant Date, SBFC Trust Deed, Vesting Period, Vesting Schedule and Exercise Price details.

The proposed amendments to the ESOP 2018-I Policy and ESOP 2021-I Policy would be applicable to the Employee Stock Options not yet granted and hence any variation in the ESOP 2018-I Policy and ESOP 2021-I Policy will not be considered as prejudicial to the interest of the employees.

In terms of Regulation 14 of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, (SBEB Regulations) the disclosures with respect to the ESOP Schemes have been provided on the website of the Company at https://www.sbfc. com/investors.

The certificate(s) from secretarial auditor M/s Parikh & Associates, Company Secretaries confirming implementation of the ESOP Schemes in accordance with the SBEB Regulations and shareholders resolutions would be made available for inspection of the shareholders at the ensuing Annual General Meeting.

Utilisation of funds raised through Initial Public Offering (IPO)

During FY 2024, your Company made an Initial Public Offer (“IPO” or “Issue”) comprising a fresh issue of 105,301,883 Equity Shares aggregating to ' 6,000 million and an offer for sale of 74,561,402 Equity Shares aggregating to ' 4,250 million and pursuant to the IPO, the shares of the Company were listed on The National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) on August 16, 2023.

Pursuant to the provisions of regulation 32(6) of the SEBI Listing Regulations, the Company has fully utilised the funds raised through IPO for the objects stated in the offer document. The reports from ICRA Limited, monitoring agency appointed for IPO has been filed with the stock exchanges and is also available on the Company's website.

Internal Capital Adequacy Assessment Policy (‘ICAAP')

Pursuant to Master Direction - Reserve Bank of India (NonBanking Financial Company - Scale Based Regulation) Directions, 2023 (SBR), NBFCs are required to have an ICAAP in place. The objective of ICAAP is to ensure availability of adequate capital to support all risks in business and also to encourage NBFCs to develop and use better internal risk management techniques for monitoring and managing their risks. Accordingly, your Company has framed an ICAAP policy. This policy is developed considering the requirements

of the SBR and is based on the Pillar-2 requirements under Basel III Framework developed by the Basel Committee on Banking Supervision (BCBS). The objective of the policy is to provide an ongoing assessment of the Company's entire spectrum of risks and the methodology to assess current and future capital, reckoning other mitigating factors and also to assist and apprise the Board on these aspects and on Company's internal capital adequacy assessment process and Company's approach to capital management.

Information Technology Governance and Cyber Security

In alignmentwith the Reserve Bankof India's Master Direction on Information Technology Governance, Risk, Controls and Assurance Practices, the Company has established a robust IT governance structure. An IT Strategy Committee chaired by an Independent Director and comprising of Independent, Executive and Nominee Directors, the Chief Technology Officer (CTO) and other member of Senior Management provides strategic oversight on technology initiatives and the overall cybersecurity posture. Your Company has implemented a comprehensive suite of IT and security policies, including those for Information Security, Cybersecurity, Business Continuity, IT Outsourcing, Cyber Crisis Management and Incident Response, ensuring a structured and risk-based approach to regulatory compliance and operational resilience.

Cybersecurity remained a key focus area during the year. The Company successfully retained its ISO 27001:2022 certification, reaffirming its commitment to global standards in information security management. Regular Business Continuity and Disaster Recovery (BC/DR) drills were conducted to validate system robustness and response readiness. Advanced threat detection capabilities were enhanced through the deployment of Xtended Detection and Response (XDR) tools, with infrastructure and application logs integrated into a centralized Security Operations Centre (SOC). The SOC operates on a 24x7 basis, enabling realtime threat analysis and risk-based incident response.

To further strengthen the security framework, the Company integrated all endpoints into a unified Active Directory (AD) environment, significantly improving access governance and endpoint control. Key cybersecurity controls including Data Loss Prevention (DLP), email security, and vulnerability management were rigorously assessed, with identified risks promptly mitigated as part of a continuous improvement plan. Periodic Vulnerability Assessment and Penetration Testing (VAPT) exercises were conducted on critical systems and core business applications to ensure ongoing resilience. Furthermore, cybersecurity and privacy awareness across the organization was carried out through structured employee training programs, phishing simulations, and the dissemination of best practice guidelines, reinforcing a culture of cyber vigilance and shared responsibility.

Mobilisation of funds

Your Company has diversified borrowing profile comprising of availing Term loans/Cash Credit facilities from Banks and financial institutions, issue of Non-Convertible Debentures, External Commercial Borrowings through loans. Your Company continues to further expand/diversify its borrowing profile by tapping new lenders.

Mobilisation of funds as on March 31, 2025 are as under:

(RS in million)

As specified in the respective offer documents, the funds raised from issuance of NCDs were utilised for on lending to secured micro, small and medium enterprises and gold loans. Details of the end-use of funds were furnished to the Audit Committee on a quarterly basis. The NCDs are listed on the debt market segment of BSE Limited. During the year, your Company has redeemed NCDs worth ? 930 million.

There has been no default in making payments of principal and interest on all the NCDs issued by the Company on a private placement basis. Further, there was no deviation/ variation in the use of proceeds raised, from the objects stated in the offer document.

Credit Rating

During FY 2025, the credit rating of your Company was upgraded & affirmed by ratings agencies. It reaffirms the high reputation and trust the Company has earned for its sound financial management and its ability to meet all its financial obligations.

The brief details of the ratings received from the credit rating agencies by the Company for its outstanding instruments are given in ‘Annexure -II'.

Management Discussion and Analysis Report

The information on the affairs of the Company is provided in the Management Discussion and Analysis Report in accordance with the SEBI Listing Regulations and Master Direction issued by the Reserve Bank of India. This report is presented as a separate section, forming part of the Annual Report.

Corporate Governance

Your Company is committed to maintaining the highest governance standards and has also implemented several best governance practices. Pursuant to Regulation 34(3) read together with Schedule V of the SEBI Listing Regulations, the Company has prepared Corporate Governance Report which forms part of this Report, marked as ‘Annexure - VI'. As per Para C and E of Schedule V of the SEBI Listing Regulations, the Company has obtained two certificates from M/s Parikh & Associates, Company Secretaries (a) Certificate on Non- Disqualification of Directors; and (b) Certificate on the compliance of the conditions of the Corporate Governance. These certificates forms part of this Report, marked as ‘Annexure - IX' and ‘Annexure - VII' respectively.

The Managing Director and the Chief Financial Officer have given their certificate as required under Regulation 17(8) read with Part B of Schedule II of the SEBI Listing Regulations regarding the Annual Financial Statements of the Company for the year ended on March 31, 2025, which forms part of this Report, marked as ‘Annexure - X'.

Compliance Management

The Company has adopted a compliance management tool viz. Compliance Insights which comprehensively covers all compliances under various regulatory frameworks applicable to the Company and provides system-driven alerts to the respective owners.

Business Responsibility and Sustainability Report

In compliance with Regulation 34(2)(f) of the SEBI Listing Regulations, as applicable, your Company's Business Responsibility and Sustainability Report for the year ended March 31, 2025, forms part of this Annual Report annexed as ‘Annexure - XII'.

Details of subsidiary/ joint ventures/ associate companies

During FY 2025, SBFC Flome Finance Private Limited (‘SBFC Flome Finance'), the Company's wholly-owned subsidiary had made an application to Reserve Bank of India (RBI) for obtaining a Certificate of Registration for operating as a ‘Flousing Finance Company'. RBI had not considered the said application, as SBFC Flome Finance is a subsidiary of a registered NBFC-ICC, leading to layering of NBFCs. Since the intended objective behind the incorporation of SBFC Flome Finance was not achieved, SBFC Flome Finance, decided to pursue the process of Voluntary Liquidation. The shareholders of SBFC Flome Finance at their meeting held on January 27, 2025 had approved the voluntary liquidation process. The liquidator has completed the process of realization of assets and liabilities of SBFC Flome Finance. Consequently, the net proceeds of the realization have been distributed to your Company on March 27, 2025.

The subsidiary had not commenced any business or conducted any operations since the date of its incorporation. Further, SBFC Flome Finance is not a material subsidiary of the Company.

In terms of the provisions of Section 129(3) of the Act, the Consolidated Financial Statements of the Company and its subsidiary, SBFC Flome Finance, are prepared and form part of this Annual Report.

During the FY 2025, there was no other entity which became or ceased to be joint venture or associate of the Company.

A statement containing salient features of the financial statement of subsidiaries or associate companies or joint ventures is provided in Form AOC - 1, which is attached hereto as ‘Annexure - IV'.

Loans and Advances

During the year under review, your Company has not given any loans and advances to its subsidiaries or to firms/ companies in which Directors are interested.

Particulars of Loans, Guarantees or Investments

Your Company, being an NBFC registered with RBI and engaged in the business of giving loans in ordinary course of its business, is exempt from complying with the provisions of Section 186 of the Act with respect to loans.

Pursuant to the provisions of Section 186(4) of the Act, details with regard to the investments made by the Company, as applicable, are given in Notes to the Standalone financial statements, forming part of this Annual Report.

Deposits

Your Company being a non-deposit taking Non-Banking Financial Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Act read with the Companies (Acceptance of Deposit) Rules, 2014 during the financial year under review. Flence, the requirement for furnishing the details relating to deposits covered under Chapter V of the Act or the details of deposits that are not in compliance with Chapter V of the Act is not applicable.

Corporate Social Responsibility (CSR)

The Corporate Social Responsibility (CSR) Committee comprises of three members viz., Ms. Surekha Marandi, Chairperson, Mr. John Mescall and Mr. Ravi Venkatraman, members. The CSR interventions for the year focused on child education and preventive health care. The CSR Policy, approved by the Board, outlines SBFC's commitment to integrate CSR as a core business process for the sustainable development of society.

The CSR Policy has been hosted on the website of the Company at: https://www.sbfc.com/faq.

As per the provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 (“CSR Rules”), the mandatory CSR spend of the Company for FY 2025 was ? 43.78 million, against which

your Company has spent ' 44.91 million during the year. Further, in terms of the CSR Rules, Chief Financial Officer has certified that the funds disbursed have been utilised for the purpose and in the manner approved by the Board for FY 2025.

The Annual Report on the CSR activities undertaken by your Company during the year under review, as prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, is set out in 'Annexure - I' of this Report.

Annual Return

In accordance with the requirements under Section 92(3) and Section 134(3)(a) of the Act and the applicable rules, the annual return in Form No. MGT-7 as on March 31, 2025 is available on the website of the Company www.sbfc.com.

Board & Its Committees

Board

The Company has an optimum combination of executive, non-executive and independent directors, including an independent woman director. As on March 31, 2025, the Board is comprised of a Non-Executive Chairman, 2 (two) Executive Directors, 2 (two) Non-Executive Non-Independent Directors and 5 (five) Independent Directors including 1 (one) Women Director.

Committee(s) of Board

Pursuant to various requirements under the Act and the SEBI Listing Regulations, and the requirements under applicable RBI Regulations, the Board of Directors has constituted/ reconstituted various committees such as Audit Committee, Nomination and Remuneration Committee, Stakeholders' Relationship Committee, Corporate Social Responsibility Committee, Risk Management Committee, IT Strategy Committee. The details of composition, terms of reference, number of meetings held during the year, attendance there at and other details pertaining to these committees are mentioned in the Corporate Governance Report.

All recommendations made by the Audit Committee during the year were approved and accepted by the Board of Directors of the Company.

As on March 31, 2025, the Audit Committee comprised of the 4 (four) Directors, namely, Mr. Ravi Venkatraman (Chairperson), Ms. Surekha Marandi (Independent Director), Mr. Neeraj Swaroop (Independent Director) and Mr. John Mescall (Non-Executive Non-Independent Director).

Meetings and Postal Ballot

The Board of Directors met 5 (five) times during the year under review i.e., on April 27, 2024, July 27, 2024, October 26, 2024, January 25, 2025 and February 28, 2025, as against the statutory requirement of at least four meetings. The requisite quorum was present at all the Board Meetings. The maximum time gap between any two meetings was not more than one hundred and twenty days.

During the year under review, no Extraordinary General Meeting of the Members was held. The Members have passed the following items by way of special resolution through postal ballot:

^ On May 19, 2024 approved the appointment of Mr. Ravi Venkatraman (DIN: 00307328) as an Independent Director of the Company for a term of five consecutive years commencing from February 21, 2024 to February 20, 2029 and Mr. Koni Uttam Nayak (DIN: 02543830) as an Independent Director of the Company for a term of five consecutive years commencing from March 26, 2024 to March 25, 2029 and;

^ On April 7, 2025, approved the appointment of Mr. Mahesh Dayani as a Whole-time director designated as ‘Executive Director' of the Company.

Detailed information on the Meetings of the Board, its Committees, Postal Ballot and the AGM is included in the Report on Corporate Governance, which forms part of this Annual Report.

Meetings of Independent Directors

The Independent Directors met during the year under review, on March 15, 2025. The Meeting was conducted without presence of the Whole-time Director(s), the Non-Executive Non-Independent Directors, Chief Financial Officer or any other Management Personnel to enable the Independent Directors to discuss matters pertaining to, inter-alia, review of performance of Non-Independent Directors and the Board as a whole, review the performance of the Chairman of the Company, assess the quality, quantity and timeliness of flow of information between the Company Management & the Board and its Committees and free flow discussion on any matter that is necessary for the Board to effectively and reasonably perform their duties.

Directors and Key Managerial Personnel

Appointment of Directors

Based on the recommendation of the Nomination and Remuneration Committee and the Board of Directors, the Members of the Company by means of a Special Resolution passed through Postal Ballot on May 19, 2024 approved the appointment of Mr. Ravi Venkatraman (DIN: 00307328) as an Independent Director of the Company for a term of five consecutive years commencing from February 21, 2024 to February 20, 2029 and Mr. Koni Uttam Nayak (DIN: 02543830) as an Independent Director of the Company for a term of five consecutive years commencing from March 26, 2024 to March 25, 2029.

The Board of Directors based on the recommendation of the Nomination and Remuneration Committee and in terms of Section 161 of the Act at its meeting held on February 28, 2025 appointed Mr. Mahesh Dayani (DIN: 06561389) as an Additional and Whole-time Director, designated as ‘Executive Director', for a term of 5 (five) consecutive years commencing from February 28, 2025 to February 27, 2030, subject to approval of Members of the Company. On April 7, 2025, the Members of the Company passed the Special Resolution through Postal Ballot for the appointment of

Mr. Mahesh Dayani as Whole-time Director designated as ‘Executive Director' of the Company.

Based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors at their meeting held on April 26, 2025, appointed Mr. Leroy James Langeveld (DIN: 11068486) as an Additional and Nominee Director (Non- Executive), liable to retire by rotation effective from April 26, 2025. The approval of the members at the ensuing 18th Annual General Meeting will be sought for appointment of Mr. Leroy James Langeveld as Nominee Director of the Company.

Re-appointment of director retiring by rotation

In accordance with the applicable provisions of Section 152 of the Act, Mr. John Mescall (DIN: 08385575), Nominee Director of the Company, retires by rotation at the forthcoming Annual General Meeting (AGM) of the Company. Being eligible, Mr. John Mescall have offered himself for re-appointment as Director. Brief particulars of Mr. John Mescall as required under the Secretarial Standard on General Meetings issued by ICSI have been provided in the notice of the 18th AGM of the Company.

Fit and Proper and Non-Disqualification Declaration by Directors

All the Directors of the Company have confirmed that they satisfy the ‘fit and proper' criteria as prescribed under Master Direction - Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023, and that they are not disqualified from being appointed/re- appointed/continuing as Director in terms of Section 164(1) and (2) of the Act. None of the Directors of the Company are disqualified and/or debarred as per the applicable provisions of the Act and the Securities and Exchange Board of India (SEBI).

Declaration by Independent Directors of the Company

The Company has received declarations under section 149 of the Act and Regulation 16 of the SEBI Listing Regulations from Mr. Neeraj Swaroop, Mr. Ravi Venkatraman, Ms. Surekha Marandi, Mr. Rajesh Mannalal Agrawal and Mr. Koni Uttam Nayak, Independent Directors and a confirmation that there has been no change in the circumstances which may affect their status as Independent Director during the year. Further, the Board after taking these declarations/ disclosures on record and acknowledging the veracity of the same, concluded that the Independent Directors hold highest standards of integrity and possess the relevant proficiency, expertise and experience to qualify and continue as Independent Directors of the Company and are Independent of the Management of the Company.

Key Managerial Personnel

Pursuant to the provisions of Section 203 of the Act read with the rules made there under, Mr. Aseem Dhru, Managing Director & CEO, Mr. Mahesh Dayani, Executive Director, Mr. Narayan Barasia, Chief Financial Officer and Ms. Namrata Sajnani, Company Secretary & Chief Compliance Officer are the whole-time key managerial personnel of the Company as on March 31, 2025.

Changes in Key Managerial Personnel

^ Mr. Jay Mistry, ceased to be the Company Secretary and Chief Compliance Officer of the Company with effect from close of business hours on August 7, 2024. The Board noted the same and placed on record its sincere appreciation for the valuable contribution made by Mr. Jay Mistry during his tenure as the Company Secretary and Chief Compliance Officer of the Company.

^ Based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors of the Company at its Meeting held on July 27, 2024 appointed Ms. Namrata Sajnani as the Company Secretary and Chief Compliance Officer of the Company with effect from August 8, 2024.

^ The Board of Directors of the Company at its Meeting held on February 28, 2025, basis the recommendation of the Nomination and Remuneration Committee appointed Mr. Mahesh Dayani as an Additional and Whole-time Director, designated as ‘Executive Director', subject to approval of Members of the Company. On April 7, 2025, the Members of the Company passed the Special Resolution through Postal Ballot for the appointment of Mr. Mahesh Dayani as Whole-time Director designated as ‘Executive Director' of the Company.

Policies on Directors' Appointment and Remuneration

In accordance with the provisions of Section 134(3)(e) of the Act read with Section 178 of the Act and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”), your Company has adopted a Nomination and Remuneration Policy which, inter-alia, includes the criteria for determining qualifications, positive attributes and independence of Directors, identification of persons who are qualified to become Directors and who may be appointed in the Senior Management team and also adopted Policy on Succession Planning for the Board and Senior Management which inter alia, includes succession planning for Board and Senior Management.

Further, RBI has vide its circular dated April 29, 2022 issued Guidelines on Compensation of Key Managerial Personnel and Senior Management in NBFCs pursuant to RBI Scale Based Regulations. Accordingly, the Company has adopted a Board approved policy exclusively governing compensation payable to Directors, Key Managerial Personnel (KMP) and Senior Management Personnel (SMP).

In view of detailed RBI Guidelines for NBFCs concerning compensation of KMP and SMP, the Company has in place a specific policy to this effect. Accordingly, this remuneration policy has to be read along with the specific policy adopted pursuant to RBI Guidelines as regards compensation of KMP and SMP.

The Nomination and Remuneration Policy and Policy on Succession Planning for the Board and Senior Management is available on the website of the Company and can be accessed at https://www.sbfc.com/faq.

Performance evaluation at Board

The Act and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”) stipulate the evaluation of the performance of the Board, its Committees, Individual Directors and the Chairperson. Your Company has formulated a process for performance evaluation of the Independent Directors, the Board, its Committees and other individual Directors which includes criteria for performance evaluation of the NonExecutive Directors and Executive Directors.

An annual performance evaluation exercise was carried out on the basis of a structured questionnaire on performance criteria. The observations made during the evaluation process were noted and based on the outcome of the evaluation and feedback of the Directors, the Board and the management agreed on various action points to be implemented in subsequent meetings. The evaluation process endorsed cohesiveness amongst directors, the openness of the management in sharing the information with the Board and placing various proposals for the Board's consideration and approval. Overall, the Board expressed its satisfaction on the performance evaluation process as well as performance evaluation of all Directors, Committees and Board as a whole.

Familiarisation Programme for Directors

Your Company has adopted a structured programme for orientation of all Directors including the Independent Directors so as to familiarise them with the Company- its operations, business, industry, environment in which it functions, Indian and global macro-economic front and the regulatory regime applicable to it. The Management updates the Board Members on a continuing basis of any significant changes therein and provides them an insight to their expected roles and responsibilities so as to be in a position to take well- informed and timely decisions and contribute significantly to the Company.

The Independent Directors of your Company are made aware of their roles and responsibilities at the time of their appointment through a formal letter of appointment, which also stipulates various terms and conditions of their engagement. The terms of reference of all the Committees with updations, if any, is shared with all the Board Members on quarterly basis.

Pursuant to the provisions of the Act and Regulation 25(7) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”), your Company has during the year conducted familiarization programmes through briefings at Board/ Committee meetings for all its Directors including Independent Directors. Details of familiarization programmes imparted to the Independent Directors during the financial year under review in accordance with the requirements of the SEBI Listing Regulations are available on the Company's website and can be accessed at the weblink: https://www.sbfc.com/investors and is also provided in the Corporate Governance Report forming part of this Annual Report.

Directors' Responsibility Statement

Pursuant to Section 134 of the Act, the Directors of the Company do hereby confirm that:

a. in the preparation of the annual accounts for financial year ended March 31, 2025, the applicable accounting standards were followed, and that there are no material departures thereof;

b. such accounting policies had been selected and applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2025 and of the profits of the Company for the FY 2025;

c. proper and sufficient care had been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the annual accounts had been prepared on a going concern basis;

e. internal financial controls to be followed by the Company was laid down, and such internal financial controls are adequate and were operating effectively, and

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

Internal Financial Controls

Your Company has in place, adequate and effective internal financial controls with reference to financial statements, commensurate with the size, scale and complexity of its operations.

Internal Audit Framework

The Internal Audit function at SBFC plays a critical role in providing assurance to the Audit Committee, Board of Directors and Senior Management regarding the quality and effectiveness of the Company's internal controls, risk management practices, and governance frameworks. In accordance with the Reserve Bank of India's guidelines on Risk-Based Internal Audit (RBIA), SBFC has adopted and implemented a Risk-Based Internal Audit Policy.

At the start of each financial year, a comprehensive audit plan is developed and approved by the Audit Committee. Internal audit reports, prepared in alignment with this approved plan, are reviewed by the Committee on a quarterly basis. These reports include key audit findings along with recommended corrective and preventive actions. Based on the insights from these audits, the Committee assesses the adequacy and effectiveness of internal control systems.

Additionally, the Audit Committee holds independent discussions with the internal auditor, in the absence of management, to ensure objectivity and transparency in the audit process.

Statutory Auditor's certification on Internal Financial Controls

The Statutory Auditors of your Company viz. M M Nissim & Co. LLP, Chartered Accountants have examined the internal financial controls of the Company and have submitted an unmodified opinion on the adequacy and operating effectiveness of the internal financial controls over financial reporting as at March 31, 2025.

Risk Management

Risk Management forms an integral part of the Company's business. Your Company has a comprehensive Enterprise Risk Management (ERM) framework, which is applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, manage risk within its risk appetite, to provide reasonable assurance regarding the achievement of Company's objectives. The objective of ERM is to lay down the broad principles, guidelines and procedures governing the framework for risk identification, assessment, measurement and reporting process of the business risks. The policy aims to ensure that all material risks can be identified and managed in a timely and structured manner.

In compliance with Scale Based Regulations, the Board of Directors have basis recommendation of Risk Management Committee adopted ICAAP Policy and Framework with the objective of ensuring availability of adequate capital to support all risks in business as also enable effective risk management system in the Company.

The Chief Risk Officer (“CRO”) oversees and strengthens the risk management function of the Company. The CRO apprises the Risk Management Committee and the Board on the risk assessment, process of identifying and evaluating risks, major risks as well as the movement within the risk grades, the root cause of risks and their impact, key risk indicators, risk management measures and the steps being taken to mitigate these risks.

Auditors and Audit Reports

Statutory Auditors and their Reports

The Members of the Company at the 15th Annual General Meeting had approved the appointment of M/s Suresh Surana & Associates LLP, Chartered Accountants, Mumbai (Firm Registration No. 121750W/W- 100010) as the Statutory Auditor of the Company till the 17th Annual General Meeting for a term of 2 consecutive years. Accordingly, their tenure as the Statutory Auditor concluded at the 17th AGM of the Company held on June 28, 2024.

Consequent to the above and in terms of the provisions of Section 139 of the Act and Guidelines for Appointment of Statutory Auditors issued by the Reserve Bank of India and basis the recommendation of the Audit Committee and the Board of Directors of the Company, the Members have at 17th AGM held on June 28, 2024 approved the appointment

of M/s. M M Nissim & Co. LLP, Chartered Accountants, (Firm Registration No. 107122W/W100672), as the Statutory Auditors of the Company from the conclusion of the 17th Annual General Meeting till the conclusion of the 20th Annual General Meeting of the Company to be held in the year 2027.

In compliance with the Reserve Bank of India Guidelines dated April 27, 2021 (“RBI Guidelines”), your Company has in place a Policy for appointment of Statutory Auditors of the Company.

The Statutory Auditors have issued unmodified Audit Reports on the Standalone and Consolidated Financial Statements for the financial year ended March 31, 2025. The Report does not contain any qualification, reservation or adverse remark or disclaimer. The Statutory Auditors have given a confirmation to the effect that they have not been disqualified in any manner from continuing as the Statutory Auditors.

During the year under review, the Statutory Auditors have not reported any instances of fraud committed in the Company by its officers or employees to the Board/Audit Committee under Section 143(12) of the Act.

Secretarial Auditor and Audit Report

Pursuant to the provisions of section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Parikh & Associates, Practicing Company Secretaries to undertake the Secretarial Audit of the Company for FY 2025.

The Company has annexed to this Board's Report as ‘Annexure - VIII', a Secretarial Audit Report for the FY 2025 given by the Secretarial Auditor.

The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Annual Secretarial Compliance Report with additional confirmations on compliances

In compliance with Regulation 24A of SEBI Listing Regulations, your Company has undertaken an audit for FY 2025 for all the applicable compliances as per SEBI Listing Regulations and circulars/guidelines issued thereunder. The Annual Secretarial Compliance Report has been issued by M/s. Parikh & Associates, Practicing Company Secretaries, Secretarial Auditor for FY 2025.

Appointment of Secretarial Auditor of the Company

In compliance with the SEBI Circular No. SEBI/HO/CFD/ CFD-PoD-2/CIR/P/2024/185 dated December 31, 2024 and in accordance with the provisions of Section 204 of the Act read with the Rules framed thereunder and basis the recommendation of Board of Directors, the approval of Members of the Company is sought for appointment of M/s. Parikh & Associates, Practicing Company Secretaries as the Secretarial Auditor of the Company for conducting the Secretarial Audit of the Company for a period of five (5)

consecutive years. The Secretarial Auditor have given a confirmation to the effect that they are eligible to be appointed and not disqualified from continuing as the Secretarial Auditor. Necessary resolution(s) seeking Members approval for appointment of M/s. Parikh & Associates, Practising Company Secretaries as Secretarial Auditor of the Company forms part of the Notice convening the 18th AGM.

Cost Records and Cost Audit

Maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148 of the Act are not applicable in respect of the business activities carried out by your Company and hence such accounts and records were not required to be maintained by the Company.

Particulars of Contracts or Arrangements with Related Parties

All the related party transaction(s) that were entered into during the financial year were on arm's length basis and in ordinary course of business. Pursuant to the provisions of Section 134(3)(h) read with Rule 8(2) of the Companies (Accounts) Rules, 2014, particulars of the contracts or arrangements with related parties referred to in section 188(1) in Form AOC-2 is annexed as ‘Annexure - III'.

In accordance with the applicable provisions of the Master Direction issued by the Reserve Bank of India and the SEBI Listing Regulations, the ‘Policy on Materiality of Related Party Transactions and Dealing with Related Party Transactions', as updated is available on the Company's website: https://www.sbfc.com/faq.

Human Resources Management &

Health, Safety and Environment

At your Company, we prioritise the personal growth and job satisfaction of our employees, recognising them as crucial to our business's success and expansion. We conduct various training and awareness programs to enhance professional skills, keeping our workforce informed about our core values, behaviors and Company policies. Open communication channels, coupled with regular updates across all departments, facilitate the exchange of information and enhance approachability and add to the transparent work culture. We adhere strictly to health, safety, and environmental standards, ensuring a responsible approach to our operations. Through our initiatives, we aim to cultivate fresh talent and nurture a pool of skilled manpower. All employees are well-versed with our Insider Trading Code.

Particulars of Employees and Related Disclosures

Details required under the provisions of section 197(12) of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, containing, among other things, the ratio of remuneration of Director to the median remuneration of employees, the percentage increase in the median remuneration, are annexed to this Report. This disclosure forms part of this Report, and is marked as ‘Annexure - V'.

Details of top ten employees in terms of the remuneration and employees in receipt of remuneration as prescribed under rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as

amended, containing details prescribed under rule 5(3) of the said rules, which form part of the Directors' Report, will be made available to any member on request, as per provisions of section 136(1) of the Act. Any shareholder interested in obtaining such information may write to the Company Secretary at complianceofficer@sbfc.com.

Compliance with the Code of Conduct

All Directors, Key Managerial Personnel and Senior Management of the Company have confirmed compliance with the Code of Conduct applicable to the Directors and employees of the Company. The Managing Director & CEO has given the certificate as required under Regulation 34(3) read with Part D of Schedule V of the SEBI Listing Regulations regarding compliance with the Code of Conduct of the Company for the year ended on March 31, 2025, which forms part of this Report, marked as ‘Annexure - XI'.

The Code of Conduct is available on the Company's website at weblink - https://www.sbfc.com/faq.

Vigil Mechanism

Your Company promotes ethical behaviour in all its business activities and has established a vigil mechanism for its Directors, Employees, and Stakeholders associated with the Company to report their genuine concerns. The Vigil Mechanism as envisaged in the Act and the Rules prescribed thereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is implemented through the Whistle Blower Policy, to provide for adequate safeguards against victimisation of persons who use such mechanism and make provision for direct access to the Chairperson of the Audit Committee.

The Whistle Blower Policy has been widely disseminated within the Company. The Policy is available on the website of the Company at the web link: https://www.sbfc.com/faq.

During the year, the Company received 9 whistle blower complaints. All the cases were investigated and appropriate actions were taken. The Audit Committee is apprised of the vigil mechanism on a periodic basis. During the year, no person was denied access to the Chairperson of the Audit Committee. A quarterly report on the whistle blower complaints is placed before the Audit Committee for its review.

Disclosure Under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“POSH Act”)

Your Company has in place a comprehensive Policy in accordance with the provisions of POSH Act and Rules made thereunder. The Policy has been widely communicated internally and is placed on the Company's intranet portal. The Company ensures that no employee is disadvantaged by way of gender discrimination.

Your Company has complied with the provisions relating to the constitution of the Internal Complaints Committee under the POSH Act to redress complaints received regarding sexual harassment.

No cases were reported during the year under review. 4267 employees have undergone the POSH training in FY 2025.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings & Outgo

The particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134(3)(m) of the Act read with Rule (8)(3) of the Companies (Accounts) Rules, 2014 for FY 2025 are set out hereunder:

a. The Company has no activity involving the Conservation of Energy or Technological or Technology Absorption;

b. The Company's Foreign Exchange Earnings was Nil during the year under review. The Company's Foreign Exchange Outgo was ' 521.18 million pertaining to Interest expense on foreign currency borrowings and '

0.26 million pertaining to software license.

Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company's operations in future

There were no significant and material orders passed by the regulators or courts or tribunals during the year impacting the going concern status of the Company and its future operations.

Compliance with the Provisions of Secretarial Standard - 1 and Secretarial Standard - 2

The Company has devised proper systems to ensure compliance with the provisions of the Secretarial Standards,

i.e., SS-1 and SS-2, relating to ‘Meetings of the Board of Directors' and ‘General Meetings', respectively, issued by The Institute of Company Secretaries of India (“ICSI”) and such systems are adequate and operating effectively.

Disclosure pertaining to Insolvency & Bankruptcy Code

There were neither any applications filed by or against the Company nor any proceedings were pending under the Insolvency and Bankruptcy Code, 2016 during the year under review.

Disclosure on One-Time Settlement

During the year, the Company has not made any one-time settlement for loans taken from the Banks or Financial Institutions and hence the details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof is not applicable.

General Disclosures

The Directors further state that no disclosure or reporting is required in respect of the following items, as there were no transactions/events related to these items during the financial year under review:

^ There was no issue of equity shares with differential rights as to dividend, voting or otherwise;

^ There was no issue of shares (including sweat equity shares) to the employees of the Company under any scheme, save and except Employee Stock Option schemes referred to in this Report;

^ There was no raising of funds/issue of shares through Preferential Allotment, Public Issue, Rights Issue or Qualified Institutional Placement;

^ There was no buy back of the equity shares during the year under review;

^ There were no voting rights which are not directly exercised by the employees in respect of equity shares for the subscription/purchase for which loan was given by the Company (as there is no scheme pursuant to which such persons can beneficially hold shares as envisaged under Section 67(3)(c) of the Act);

^ The Company has completed all corporate actions within the specified time limits. The securities were not suspended from trading during the year due to corporate actions or otherwise;

^ There was no revision made in the Financial Statements or the Board's Report of the Company;

^ Mr. Aseem Dhru, Managing Director & CEO and Mr. Mahesh Dayani, Executive Director did not receive any remuneration/commission from Holding/Subsidiary of the Company during FY 2025.

^ The Company being an NBFC, the provisions relating to Chapter V of the Act, i.e., acceptance of deposit, are not applicable. Disclosures as per NBFC regulations have been made in this Annual Report.

Acknowledgement

Your Directors would like to express their sincere appreciation for the co-operation and assistance received from shareholders, debenture holders, debenture trustee, bankers, financial institutions, regulatory bodies and other business constituents during the financial year under review. Your Directors also wish to place on record their deep sense of appreciation for the commitment displayed by all executives, officers and staff, resulting in the successful performance of the Company during the financial year.

For & on behalf of Board of Directors of SBFC Finance Limited

Neeraj Swaroop Aseem Dhru

Chairperson & Independent Director Managing Director & CEO

DIN: 00061170 DIN: 01761455

Place: Mumbai Date: June 6, 2025

Annexure - I

Annual Report on CSR Activities to be included in Board's Report

1. A brief outline on CSR policy of the Company:

Objective: The main objective of CSR policy is to make CSR a key business process for the sustainable development of society. SBFC will act as a good corporate citizen and aim to supplement the role of the government in enhancing the welfare measures of society. SBFC would be undertaking the CSR activities as listed in Schedule VII and Section 135 of the Companies Act, 2013 and the Rules framed thereunder and as per its CSR policy.

2. The Composition of the CSR Committee:

3. Provide the web-link where the composition of CSR Committee, CSR Policy and CSR Projects approved by the Board are disclosed on the website of the Company:

• Composition of CSR Committee: https://www.sbfc.com/investors

• CSR Policy: https://www.sbfc.com/faq

• CSR Projects: https://www.sbfc.com/faq

4. Provide the details of the Impact assessment of CSR projects carried out in pursuance of sub-rule (3) of rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, if applicable (attach the Report): Not Applicable

5. Details of the amount available for set off in pursuance of sub-rule (3) of rule 7 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 and amount required for set off for the financial year, if any: Not Applicable

6. Average net profit of the Company as per section 135(5): ' 1,996,028,227

7. (a) Two percent of average net profit of the Company as per section 135(5): ' 39,920,565

(b) Surplus arising out of the CSR projects or programmes or activities of the previous financial years: ' 3,852,062

(c) Amount required to be set off for the financial year, if any: NIL

(d) Total CSR obligation for the financial year (7a+7b-7c): ' 43,772,627

8. (a) CSR amount spent or unspent for the financial year:

* The Company received a NAPS subsidy of ' 4,011,026 during FY 2024-25. Of this, ' 1,142,014 was utilized for skill development programs in March 2025, and the remaining amount will be spent in accordance with Section 135 of the Companies Act, 2013.

(b) Details of CSR amount spent against ongoing projects for the financial year: Not Applicable

(c) Details of CSR amount spent against other than ongoing projects for the financial year:

(d) Amount spent in Administrative Overheads: Nil

(e) Amount spent on Impact Assessment, if applicable: Nil

(f) Total amount spent for the Financial Year (8b+8c+8d+8e): ' 44,914,641

(g) Excess amount for set off, if any : Not applicable

9. (a) Details of Unspent CSR amount for the preceding three financial years: Nil

(b) Details of CSR amount spent in the financial year for ongoing projects of the preceding financial year(s): Nil

10. In case of creation or acquisition of a capital asset, furnish the details relating to the asset so created or acquired through CSR spent in the financial year (asset-wise details)

(a) Date of creation or acquisition of the capital asset(s): Not applicable

(b) Amount of CSR spent for creation or acquisition of capital asset: Not applicable

(c) Details of the entity or public authority or beneficiary under whose name such capital asset is registered, their address, etc: Not applicable

(d) Provide details of the capital asset(s) created or acquired (including complete address and location of the capital asset): Not applicable

11. Specify the reason(s) if the Company has failed to spend two per cent of the average net profit as per section 135(5): Not applicable

For & on behalf of Board of Directors of SBFC Finance Limited

Surekha Marandi Aseem Dhru

Chairperson of Committee & Independent Director Managing Director & CEO DIN: 06952573 DIN: 01761455

Place: Mumbai Date: June 6, 2025