IDFCFIRSTBANK/SD/150/2021-22

August 24, 2021

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The Manager-Listing Department The Manager-Listing Department National Stock Exchange of India Limited BSE Limited Exchange Plaza, Plot No. C - 1, G - Block Phiroze Jeejeebhoy Towers Bandra-Kurla Complex, Bandra (East) Dalal Street, Fort Mumbai 400 051. Mumbai 400 001. Tel No.: 022 – 2659 8237/ 38 Tel No.: 022 – 2272 2039/ 37/ 3121 NSE - Symbol: IDFCFIRSTB BSE - Scrip Code: 539437

Sub.: Annual Report of IDFC FIRST Bank Limited (‘the Bank’) for the financial year ended March 31, 2021, including the Notice of 7[th] Annual General Meeting.

Ref.: Regulation 34(1) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (‘SEBI Listing Regulations’).

Dear Sir/ Madam,

In continuation to our letter dated July 31, 2021 intimating the date of the seventh ( 7[th] ) Annual General Meeting (' AGM ') of the Bank, we hereby submit a copy of the Notice of the AGM of the Bank to be held on Wednesday, September 15, 2021 at 02.00 p.m. IST through Video Conferencing (' VC ') / Other Audio-Visual Means (' OAVM ') along with the Annual Report for the FY 2020-21.

In terms of Regulation 46 of the SEBI Listing Regulations, the Notice of the AGM and Annual Report for FY 2020-21 has also been made available on the website of the Bank at https:// www.idfcfirstbank.com/investors/annual-report. The same is also being sent today through electronic mode to those Members whose email addresses are registered with the Bank / Registrar and Transfer Agent / Depository Participants.

Please take the above on record and acknowledge receipt of the same.

Thanking you, Yours faithfully, For IDFC FIRST Bank Limited SATISH ASHOK Digitally signed by SATISH ASHOK GAIKWAD GAIKWAD Satish Gaikwad Head – Legal & Company Secretary

Encl.: As above

IDFC FIRST Bank Limited

Naman Chambers, C 32, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051. Tel: +91 22 7132 5500 Fax: +91 22 2654 0354 Registered Office: KRM Towers, 7th Floor, No.1, Harrington Road, Chetpet, Chennai - 600 031. Tel: +91 44 4564 4000 Fax: +91 44 4564 4022 CIN: L65110TN2014PLC097792 [email protected] www.idfcfirstbank.com

Notice

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IDFC FIRST Bank Limited

CIN: L65110TN2014PLC097792

Website: www.idfcfrstbank.com; E-mail: [email protected] Registered Office: KRM Tower, 7[th] Floor, No. 1 Harrington Road, Chetpet, Chennai - 600 031, Tamil Nadu, India Tel: + 91 44 4564 4000 Corporate Office: Naman Chambers, C-32, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051, Maharashtra, India Tel: + 91 22 7132 5500

NOTICE is hereby given that the Seventh (7[th] ) Annual General Meeting (‘ AGM ’) of the Members of IDFC FIRST Bank Limited (‘ IDFC FIRST Bank’ or the ‘Bank ’) will be held on Wednesday, September 15, 2021 at 02:00 p.m. Indian Standard Time (‘ IST ’) through Video Conferencing (‘ VC ’)/ Other Audio-Visual Means (‘ OAVM ’), in compliance with the provisions of the Companies Act, 2013 and Rules made thereunder read with General Circular No. 14/2020 dated April 8, 2020, General Circular No. 17/2020 dated April 13, 2020, General Circular No. 20/2020 dated May 5, 2020 and General Circular No. 02/2021 dated January 13, 2021 issued by the Ministry of Corporate Affairs and Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/79 dated May 12, 2020 and Circular No. SEBI/HO/CFD/CMD2/CIR/P/2021/11 dated January 15, 2021 issued by the Securities and Exchange Board of India, to transact the following businesses:

ORDINARY BUSINESS

1. To receive, consider and adopt:

[a] the Audited Standalone Financial Statements of the Bank for the Financial Year ended March 31, 2021, together with the Report of the Board of Directors and the Auditors thereon; and
[b] the Audited Consolidated Financial Statements of the Bank for the Financial Year ended March 31, 2021, together with the Report of the Auditors thereon.

2. To appoint a director in place of Mr. Vishal Mahadevia (DIN: 01035771), who retires by rotation and being eligible, offers himself for re-appointment.

A brief profile of Mr. Vishal Mahadevia along with Directorships and Committee positions held by him in other companies, in terms of Regulation 36 (3) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, and the Secretarial Standard on the General Meetings has been given in the EXHIBIT A to this Notice.

3. To re-appoint and fix remuneration of M/s. B S R & Co. LLP, as one of the Joint Statutory Auditors of the Bank, for a period of one (1) year.

To consider and if thought fit, to pass the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Sections 139, 141, 142 and other applicable provisions, if any, of the Companies Act, 2013 (‘Act’) read with the Companies (Audit and Auditors) Rules, 2014 and other applicable rules, if any, under the Act, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, Section 30 and other applicable provisions, if any, of the Banking Regulation Act, 1949, applicable rules, circulars and guidelines issued by the Reserve Bank of India (‘RBI’), in this regard, from time to time, and any other applicable laws (including any statutory amendment(s), modification(s) or re-enactment(s) thereof, for the time being in force), and in terms of approval of the RBI dated July 8, 2021, M/s. B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/ W-100022), be and is hereby re-appointed as one of the Joint Statutory Auditors of the Bank, for a period of one (1) year, to hold office from the conclusion of seventh (7[th] ) Annual General Meeting (‘AGM’) until the conclusion of the eighth (8[th] ) AGM of the Bank, at an overall audit fees as recommended by the Board of Directors of the Bank (‘Board’) and mentioned in the explanatory statement, for the FY 2021-22, to be allocated between the Joint Statutory Auditors by mutual agreement between the Bank and Joint Statutory Auditors, depending upon their respective scope of work, and additionally out of pocket expenses, outlays and taxes as applicable, with power to the Board, including duly authorised Committee(s) thereof, to alter and vary the terms and conditions of appointment, etc., including by reason of necessity on account of conditions arising out of change/ increase

NOTICE

in scope of work, amendment in Accounting Standards or conditions as may be stipulated by the RBI and/ or any other authority, in such manner and to such extent as may be mutually agreed with the Joint Statutory Auditors.

RESOLVED FURTHER THAT for the purpose of giving effect to the above resolution, the Board (which shall include duly authorised Committee of the Board), be and is hereby authorised on behalf of the Bank to do all such acts, deeds, matters and things as it may, in its absolute discretion, deem necessary or desirable for such purpose and with power on behalf of the Bank to settle all questions, difficulties or doubts that may arise in regard to implementation of the resolution including but not limited to determination of roles and responsibilities/ scope of work of the respective Joint Statutory Auditor(s), negotiating, finalising, amending, signing, delivering, executing, the terms of appointment including any contracts or documents in this regard, without being required to seek any further consent or approval of the Members of the Bank.”

4. To appoint and fix remuneration of M/s. MSKA & Associates, as one of the Joint Statutory Auditors of the Bank, for a period of three (3) years.

To consider and if thought fit, to pass the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Sections 139, 141, 142 and other applicable provisions, if any, of the Companies Act, 2013 (‘Act’), read with the Companies (Audit and Auditors) Rules, 2014 and other applicable rules, if any, under the Act, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, Section 30 and other applicable provisions, if any, of the Banking Regulation Act, 1949, applicable rules, circulars and guidelines issued by the Reserve Bank of India (‘RBI’), in this regard, from time to time, and any other applicable laws (including any statutory amendment(s), modification(s) or re-enactment(s) thereof, for the time being in force), and in terms of approval of the RBI dated July 8, 2021, M/s. MSKA & Associates, Chartered Accountants (Firm Registration No. 105047W), be and is hereby appointed as one of the Joint Statutory Auditors of the Bank, for a period of three (3) years, to hold office from the conclusion of seventh (7[th] ) Annual General Meeting (‘AGM’) until the conclusion of the tenth (10[th] ) AGM of the Bank, subject to them satisfying the eligibility norms and approval of the RBI, each year, at an overall audit fees as recommended by the Board of Directors of the Bank (‘Board’) and mentioned in the explanatory statement, for the FY 2021-22, to be allocated between the Joint Statutory Auditors by mutual agreement between the Bank and Joint Statutory Auditors, depending upon their respective scope of work, and additionally out of pocket expenses, outlays and taxes as applicable, with power to the Board, including duly authorised Committee(s) thereof, to alter and vary the terms and conditions of

appointment, etc., including by reason of necessity on account of conditions arising out of change/ increase in scope of work, amendment in Accounting Standards or conditions as may be stipulated by the RBI and/ or any other authority, in such manner and to such extent as may be mutually agreed with the Joint Statutory Auditors.

SPECIAL BUSINESS

5. To appoint Mr. S. Ganesh Kumar as an Independent Director of the Bank.

To consider, and if thought fit, to pass the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Sections 149, 152, Schedule IV and other applicable provisions, if any, of the Companies Act, 2013 (‘Act’) read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and other applicable rules, if any, under the Act, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘SEBI Listing Regulations’), Section 10A and other applicable provisions, if any, of the Banking Regulation Act, 1949, applicable rules, circulars and guidelines issued by the Reserve Bank of India (‘RBI’) in this regard, from time to time, and any other applicable laws (including any statutory amendment(s), modification(s) or re-enactment(s) thereof, for the time being in force), the provisions of the Articles of Association of the Bank, and based on the recommendations of the Nomination and Remuneration Committee and Board of Directors of the Bank (‘Board’), Mr. S. Ganesh Kumar (DIN: 07635860), who was appointed as an Additional Director of the Bank in the category of Independent Director with effect from April 30, 2021, and who holds office up to the date of this Annual General Meeting, be and is hereby appointed as an Independent Director of the Bank, for a period of five (5) consecutive years, commencing from April 30, 2021 up to April 29, 2026 (both days inclusive).

RESOLVED FURTHER THAT Mr. S. Ganesh Kumar shall not be liable to retire by rotation and be paid such fixed remuneration, sitting fees and reimbursement

IDFC FIRST BANK | NOTICE OF THE 7[TH ] AGM

of expenses for attending the meetings of the Board and Committees thereof, as may be approved by the Board and/ or duly authorised Committee of the Board, within the limits prescribed under the Act, SEBI Listing Regulations, the Banking Regulation Act, 1949 and directions issued by the RBI, in this regard, from time to time.

RESOLVED FURTHER THAT the Board (which shall include duly authorised Committee of the Board) be and is hereby authorised to do all such acts, deeds, matters and things and to execute any agreements, documents, instruments and writings as may be required with power to settle all questions, difficulties or doubts that may arise in regard to the above resolution as it may in its absolute discretion, deem necessary or desirable and to delegate all or any of its powers conferred herein to any director(s) and/ or officer(s) of the Bank to give effect to this resolution.”

6. To appoint Mr. Ajay Sondhi as a Non-Executive NonIndependent Director of the Bank.

To consider, and if thought fit, to pass the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Section 152 and other applicable provisions, if any, of the Companies Act, 2013 (‘Act’) read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and other applicable rules, if any, under the Act, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘SEBI Listing Regulations’), Section 10A and other applicable provisions, if any, of the Banking Regulation Act, 1949, applicable rules, circulars and guidelines issued by the Reserve Bank of India (‘RBI’) in this regard, from time to time, and any other applicable laws (including any statutory amendment(s), modification(s) or re-enactment(s) thereof, for the time being in force), the provisions of the Articles of Association of the Bank, and based on the recommendations of the Nomination and Remuneration Committee and Board of Directors of the Bank (‘Board’), Mr. Ajay Sondhi (DIN: 01657614), who was appointed as an Additional Director of the Bank in the category of Non-Executive Non-Independent Director with effect from July 22, 2021, and who holds office up to the date of this Annual General Meeting, be and is hereby appointed as a Non-Executive NonIndependent Director of the Bank for a period of four (4) consecutive years, commencing from July 22, 2021 up to July 21, 2025 (both days inclusive).

RESOLVED FURTHER THAT Mr. Ajay Sondhi shall be liable to retire by rotation and be paid such fixed remuneration, sitting fees and reimbursement of expenses for attending the meetings of the Board and Committees thereof, as may be approved by the Board and/ or duly authorised Committee of the Board, within the limits prescribed under the Act, SEBI Listing Regulations, the Banking Regulation Act, 1949 and directions issued by the RBI, in this regard, from time to time.

7. To re-appoint Mr. Pravir Vohra as an Independent Director of the Bank.

To consider and if thought fit, to pass the following resolution as a Special Resolution:

“RESOLVED THAT pursuant to the provisions of Sections 149, 152, Schedule IV and other applicable provisions, if any, of the Companies Act, 2013 (‘Act’) read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and other applicable rules, if any, under the Act, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘SEBI Listing Regulations’), Section 10A and other applicable provisions, if any, of the Banking Regulation Act, 1949, applicable rules, circulars and guidelines issued by the Reserve Bank of India (‘RBI’) in this regard, from time to time, and any other applicable laws (including any statutory amendment(s), modification(s) or reenactment(s) thereof, for the time being in force), the provisions of the Articles of Association of the Bank, and based on the recommendations of the Nomination and Remuneration Committee and Board of Directors of the Bank (‘Board’), Mr. Pravir Vohra (DIN: 00082545), be and is hereby re-appointed as an Independent Director of the Bank, to hold office for his second term of five (5) consecutive years, commencing from August 1, 2021 up to July 31, 2026 (both days inclusive).

RESOLVED FURTHER THAT Mr. Pravir Vohra shall not be liable to retire by rotation and be paid such fixed remuneration, sitting fees and reimbursement of expenses for attending the meetings of the Board and Committees thereof, as may be approved by the Board and/ or duly authorised Committee of the Board, within the limits prescribed under the Act, SEBI Listing Regulations, the Banking Regulation Act, 1949 and directions issued by the RBI, in this regard, from time to time.

NOTICE

or desirable and to delegate all or any of its powers conferred herein to any director(s) and/ or officer(s) of the Bank to give effect to this resolution.”

8. To re-appoint Mr. V. Vaidyanathan as Managing Director and Chief Executive Officer of the Bank.

To consider, and if thought fit, to pass the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Sections 196, 197, 203, Schedule V and other applicable provisions, if any, of the Companies Act, 2013 (‘Act’) read with the relevant Rules made thereunder, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, Section 35B and other applicable provisions, if any, of the Banking Regulation Act, 1949, applicable rules, circulars and guidelines issued by the Reserve Bank of India (‘RBI’) in this regard, from time to time, and any other applicable laws (including any statutory amendment(s), modification(s) or reenactment(s) thereof, for the time being in force), the provisions of the Articles of Association of the Bank, and based on the recommendations of the Nomination and Remuneration Committee (‘NRC’) and Board of Directors of the Bank (‘Board’) and subject to the approvals, as may be necessary from the RBI and other concerned authorities or bodies and subject to the conditions as may be prescribed by any of them while granting such approvals, Mr. V. Vaidyanathan (DIN: 00082596) be and is hereby re-appointed as the Managing Director & Chief Executive Officer (‘MD & CEO’) of the Bank, for a period of three (3) consecutive years, commencing from December 19, 2021 up to December 18, 2024 (both days inclusive), upon such terms and conditions including remuneration as set out in the explanatory statement to the resolution as per Item No. 8 of this Notice and which is specifically approved and sanctioned with authority to the Board, which shall include duly authorised Committee of the Board, to alter and vary the terms and conditions of the said appointment and/ or agreement including increments and/ or any other components of the remuneration, as may be necessary from time to time, in view of any approvals and conditions as may be given/ stipulated by the RBI or any other statutory authority, (including authority, from time to time to determine the amount of salary and also the type and amount of perquisites and other benefits payable to Mr. V. Vaidyanathan), in such manner as may be decided by the Board.

RESOLVED FURTHER THAT Mr. V. Vaidyanathan be paid such variable pay including stock options and performance bonus, as approved by the NRC and/ or the Board in accordance with the Remuneration Policy of the Bank and the applicable RBI guidelines, as amended from time to time, subject to seeking necessary regulatory approvals as may be required including that from RBI.

RESOLVED FURTHER THAT in case of absence or inadequacy of net profits in any Financial Year, Mr. V. Vaidyanathan shall be paid such minimum remuneration, as may be determined by the NRC and Board, subject to seeking necessary regulatory approvals as may be required including that from RBI.

RESOLVED FURTHER THAT Mr. V. Vaidyanathan shall not be liable to retire by rotation during his tenure as the MD & CEO of the Bank.

9. To approve payment of Fixed Remuneration to the Non- Executive Directors of the Bank.

To consider and if thought fit, to pass the following resolution as an Ordinary Resolution:

“RESOLVED THAT in supersession to the resolution passed by the Members at the Second (2[nd] ) Annual General Meeting of the Bank held on July 27, 2016 approving payment of Commission to Non-Executive Directors of the Bank and pursuant to the Reserve Bank of India (‘RBI’) circular on Corporate Governance in Banks - Appointment of Directors and Constitution of Committees of the Board dated April 26, 2021, the applicable provisions, if any, of the Banking Regulation Act, 1949, applicable rules, circulars and guidelines issued by the RBI in this regard, from time to time, provisions of Section 197 and other applicable provisions, if any, of the Companies Act, 2013 (‘Act’) read with rules made thereunder, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘SEBI Listing Regulations’), and any other applicable laws (including any statutory amendment(s), modification(s) or re-enactment(s) thereof, for the time being in force), and the provisions of the Articles of Association of the Bank, the consent of the Members be and is hereby accorded for the payment of compensation to each Non-Executive Director of the Bank (except Part Time Non-Executive Chairperson), by way of fixed remuneration up to ` 20,00,000 (Rupees Twenty Lakhs Only) per annum, as may be determined by the Nomination and Remuneration Committee or Board of Directors of the Bank (‘Board’), from time to time, with effect from the Financial Year 2021-22, in addition to payment of sitting fees and reimbursement of out of pocket expenses for attending the meetings of Board and Committees thereof.

IDFC FIRST BANK | NOTICE OF THE 7[TH ] AGM

10. To offer and issue of Debt Securities on Private Placement basis.

To consider and if thought fit, to pass the following resolution as a Special Resolution:

“RESOLVED THAT pursuant to the provisions of Sections 23, 42, 71, 180(1)(c) and other applicable provisions, if any, of the Companies Act, 2013, as amended from time to time (‘Act’) read with Rule 14 and other applicable provisions, if any, of the Companies (Prospectus and Allotment of Securities) Rules, 2014, the Companies (Share Capital and Debentures) Rules, 2014 and other relevant rules under the Act, and read with relevant circulars issued by the Ministry of Corporate Affairs from time to time, Securities and Exchange Board of India (‘SEBI’) (Listing Obligations and Disclosure Requirements) Regulations, 2015, SEBI (Issue and Listing of Debt Securities) Regulations, 2008 and other applicable rules, regulations, guidelines and directions issued by the SEBI, the Banking Regulation Act, 1949, the Reserve Bank of India Act, 1934, Foreign Exchange Management Act, 1999 (including, any statutory amendment(s) or modification(s) or reenactment(s) thereof, for the time being in force), the rules, regulations, circulars, directions and guidelines issued by the Reserve Bank of India (‘RBI’) from time to time and all other relevant provisions of applicable law(s) and pursuant to the Memorandum and Articles of Association of the Bank and subject to receipt of such approval(s), consent(s), permission(s) and sanction(s) as may be necessary from the concerned statutory or regulatory authority(ies), the approval of the Members of the Bank be and is hereby accorded to the Board of Directors of the Bank (hereinafter referred to as ‘the Board’ and which term shall be deemed to include any Committee or any other persons to whom powers are delegated by the Board as permitted under the Companies Act, 2013 or Rules thereunder) for borrowing/ raising funds, from time to time, in Indian rupees/ Foreign currency, by issuing or making offer(s) or invitation(s) to subscribe to Non-Convertible Debentures/ Bonds/ Notes/ other Debt Securities including, but not limited to, Subordinated, Unsecured,

Rated, Listed, Taxable, Redeemable fully paid-up Basel III Compliant Tier-II Bonds/ Non-Convertible Debentures, Medium Term Notes (MTN), Perpetual Debt Instruments (part of Additional Tier I Capital), Tier II Capital Bonds, Long Term Bonds (financing of infrastructure and affordable housing) and such other securities as may be permitted by RBI and under applicable laws from time to time (collectively hereinafter referred to as the ‘debt securities’), on private placement basis, up to an amount not exceeding 5,000 crores (Rupees Five Thousand Crores Only) over and above the outstanding debt securities issued by the Bank, in one or more tranches, series and/or in the form of separately transferable redeemable principal parts (if required), in such classes and with such rights or terms as may be considered necessary, under one or more information memorandum, offering circular, disclosure document, shelf disclosure document and/or under one or more letter of offers as may be issued by the Bank, in domestic and/or overseas market, as per the agreed structure and within the limits permitted by RBI and other regulatory authorities, to the eligible investors, during a period of One (1) year from the conclusion of seventh (7[th] ) Annual General Meeting of the Bank, within the overall borrowing limits of 1,50,000 crores (Rupees One Lakh Fifty Thousand Crores only), as approved by the Members at the first (1[st] ) Annual General Meeting held on September 29, 2015 under Section 180(1)(c) of the Companies Act, 2013 and on such terms and conditions as may be approved by the Board, from time to time.

By order of the Board of Directors of

IDFC FIRST Bank Limited

Date: July 31, 2021 Satish Gaikwad Place: Mumbai Head - Legal & Company Secretary

NOTICE

NOTES:

In view of the prevailing outbreak of COVID-19 Pandemic and the restrictions imposed on gathering of people through social distancing norms, the Ministry of Corporate Affairs vide General Circular No. 14/ 2020 dated April 8, 2020, General Circular No. 17/2020 dated April 13, 2020, General Circular No. 20/2020 dated May 5, 2020 and General Circular No. 02/2021 dated January 13, 2021 (collectively referred as ‘MCA Circulars’) and the Securities and Exchange Board of India vide Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/79 dated May 12, 2020 and SEBI/HO/CFD/CMD2/CIR/P/2021/11 dated January 15, 2021 (collectively referred as ‘SEBI Circulars’) has permitted companies to hold Annual General Meetings (‘AGM’) through Video Conferencing (‘VC’) or Other Audio Visual Means (‘OAVM’), during the calendar year 2021.
In compliance with the provisions of the Companies Act, 2013 (’Act’), SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘SEBI Listing Regulations’), MCA Circulars and SEBI Circulars, the seventh (7[th] ) AGM of the Bank is being held through VC/ OAVM. Hence, the Members can attend and participate in the ensuing AGM through VC/ OAVM only. The proceedings of the AGM will be deemed to be conducted at the Registered Office of the Bank which shall be the deemed Venue of the AGM.
In compliance with the MCA Circulars and SEBI Circulars, the Notice of the seventh (7[th] ) AGM along with the Annual Report for the FY 2020-21 are being sent only through electronic mode to those Members whose e-mail addresses are registered with the Bank/ Registrar and Transfer Agent (RTA) or with the Depository Participant(s).
The Bank has enabled the Members to participate at the seventh (7[th] ) AGM through the VC/ OAVM facility provided by National Securities Depository Limited (‘NSDL’). The instructions for participation by Members are given in the subsequent paragraphs. Participation at the AGM through VC/ OAVM shall be allowed on a first-come-first-served basis.

5. PROXIES:

Pursuant to the provisions of the Act, a Member entitled to attend and vote at the AGM is entitled to appoint a proxy to attend and vote on his/ her behalf and the proxy need not be a Member of the Bank. Since this AGM is being held pursuant to the MCA Circulars and SEBI Circulars through VC/ OAVM, physical attendance of Members has been dispensed with. Accordingly, the facility for appointment of proxies by the Members will not be available for the AGM and hence the Proxy Form and Attendance Slip are not annexed to this Notice.
Institutional/ Corporate Members (i.e. other than individuals/ HUF, NRI, etc.) intending their authorised representatives to attend the AGM through VC/ OAVM on its behalf and to vote through remote e-voting are requested to send scanned certified true copy (PDF/
JPEG Format) of the Board Resolution/ Authority Letter, etc. together with attested specimen signature(s) of the duly authorized representative(s), to the Scrutinizer by e-mail through its registered e-mail address at e-mail id: [email protected] with a copy marked to [email protected].
In case of joint holders, only such joint holder who is higher in the order of names as per the Register of Members of the Bank will be entitled to vote at the AGM.
Members attending the AGM through VC/ OAVM shall be counted for the purpose of reckoning the quorum under Section 103 of the Act.
The relevant statement pursuant to the provisions of Section 102 (1) of the Act as amended, read with the relevant Rules made thereunder, setting out the material facts and reasons, in respect of Item Nos. 3 to 10 of this Notice, is annexed herewith. Members seeking any information with regard to the accounts or any matter to be placed at the AGM, are requested to write to the Bank on or before September 14, 2021 through e-mail on [email protected] mentioning their name, Folio no./ Client ID and DP ID. The same will be replied by the Bank suitably.
All the documents referred to in this Notice and the Explanatory Statement setting out the material facts in respect of Item Nos. 3 to 10 thereof and the Statutory Registers, will be made available for inspection by the Bank on the request of the shareholders.
The relevant details, pursuant to Regulation 36(3) of the SEBI Listing Regulations and Secretarial Standard on General Meetings (SS-2) issued by the Institute of Company Secretaries of India, in respect of appointment or re-appointment and/ or fixation of remuneration of Directors at this AGM is annexed herewith.
The Board of Directors did not recommend any dividend on equity shares for the FY 2020-21 in the absence of distributable profits in terms of the RBI Guidelines.
Members who have either not received or have not encashed their dividend warrant(s), are requested to write to Registrar and Share Transfer Agent of the Bank (‘RTA’) i.e. KFin Technologies Private Limited (‘KFIN’), mentioning the relevant Folio Number(s)/ DP ID and Client ID, for issuance of duplicate/ revalidated dividend warrant(s). Members are requested to note that dividends which are not claimed within seven years from the date of transfer to the Bank’s Unpaid Dividend Account, will, as per the provisions of Section 124 of the Companies Act, 2013 and rules made thereunder, be transferred to the Investor Education and Protection Fund (‘IEPF’). Pursuant to the provisions of Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Bank would upload the details of unpaid and unclaimed amounts lying with the Bank on the Bank’s website www.idfcfrstbank.com, and also on the website of the Ministry of Corporate Affairs, from time to time.

IDFC FIRST BANK | NOTICE OF THE 7[TH ] AGM

Pursuant to the provisions of Section 124(6) of the Companies Act, 2013 read with IEPF (Accounting, Audit, Transfer and Refund) Rules, 2016, the equity shares of the Bank, in respect of which the dividend(s) remained unpaid or unclaimed for a period of seven (7) consecutive years, are liable to be transferred to the IEPF Authority. As per the provisions of IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (as amended), the shareholder may lodge the claim to the IEPF Authority for such dividends and shares by submitting an online application in e-Form IEPF-5 available on the website www.iepf.gov.in in accordance with applicable provisions. In case you have any queries or issues regarding unclaimed dividends or shares, you may please contact KFIN on 1800 309 4001 or send an e-mail on [email protected]. For details, kindly refer Corporate Governance Report forming part of Annual Report.

To prevent fraudulent transactions, Members are advised to exercise due diligence and notify the Bank/ KFIN of any change in address or demise of any Member as soon as possible. Members are also advised to not leave their demat account(s) dormant for long. Periodic statement of holdings should be obtained from the concerned Depository Participant (‘DP’) and holdings should be verified from time to time.

Members are requested to intimate changes, if any, pertaining to their name, postal address, e-mail address, telephone/ mobile numbers, Permanent Account Number (PAN), mandates, nominations, power of attorney, bank details such as, name of the bank and branch details, bank account number, MICR code, IFSC code, etc., to their DPs in case the shares are held by them in electronic form and to KFIN in case the shares are held by them in physical form.
Members can avail the facility of nomination in respect of shares held by them in physical form pursuant to the provisions of Section 72 of the Act. Members desiring to avail this facility may send their nomination in the prescribed Form No. SH-13 duly filled, to the RTA of the Bank i.e. KFIN. Members holding shares in electronic form may contact their respective DP for availing this facility. The Nomination Form SH-13 prescribed by the Government can be obtained from the Bank’s RTA i.e. KFIN or the Secretarial Department of the Bank.
Members holding shares in physical form, in identical order of names, in more than one folio are requested to send to the Bank or KFIN, the details of such folios together with the share certificates for consolidating their holdings in one folio. A consolidated share certificate will be issued to such Members after making requisite changes.
The Securities and Exchange Board of India (‘SEBI’) has mandated the submission of PAN by every participant in securities market. Members holding shares in electronic form are, therefore, requested to submit their PAN details to their DP and Members holding shares in physical form are requested to submit their PAN details to the Bank/ KFIN.
As per Regulation 40 of SEBI Listing Regulations, as amended, securities of listed companies can be transferred only in dematerialized form with effect from, April 01, 2019, except in case of request received for transmission or transposition of securities. In view of this and to eliminate all risks associated with physical shares and for ease of portfolio management, members holding shares in physical form are requested to consider converting their holdings to dematerialized form. Members can contact the Bank’s RTA i.e. KFIN for assistance in this regard.

19. Procedure & Instructions for E-voting and Joining the AGM through VC/ OAVM are as follows:

A. VOTING THROUGH ELECTRONIC MEANS:

[a] In terms of Section 108 and other applicable provisions, if any, of the Act, read with the Companies (Management and Administration) Rules, 2014 and other relevant rules made thereunder, as amended, Regulation 44 of the SEBI Listing Regulations and MCA Circulars read with SEBI Circular, the Bank is providing e-voting facility to its Members holding shares in physical or dematerialised form, as on Wednesday, September 8, 2021, (‘cut-off date’), to exercise their right to vote through electronic means on any or all of the businesses specified in the Notice. The Bank has engaged the services and made necessary arrangements with NSDL for facilitating voting through electronic means, as authorized e-voting agency.
[b] The Remote e-voting commences on Friday, September 10, 2021 at 9:00 a.m. (IST) and ends on Tuesday, September 14, 2021 at 5:00 p.m. (IST). The e-voting module shall be disabled by NSDL for voting thereafter.
[c] A person who is not a Member as on the cut-off date should treat this notice for information purpose only. Those Members, who will be present in the AGM through VC/ OAVM facility and have not cast their vote on the Resolutions through remote e-voting and are otherwise not barred from doing so, shall be eligible to vote through e-voting system during the AGM.
[d] The Members who have cast their vote by remote e-voting prior to the AGM may also attend/ participate in the AGM through VC/ OAVM but shall not be entitled to cast their vote again.
[e] Any person holding shares in physical form and non-individual shareholders, who acquires shares of the Bank and becomes member of the Bank after the notice is sent through e-mail and holding shares as of the cutoff date i.e. September 8, 2021 may obtain the login ID and password by sending a request at [email protected] or Issuer/ RTA. However, if you are already registered with

NOTICE

NSDL for remote e-voting, then you can use your existing user ID and password for casting your vote. If you forgot your password, you can reset your password by using “Forgot User Details/ Password” or “Physical User Reset Password” option available on www.evoting.nsdl.com or call on toll free no. 1800 1020 990 and 1800 22 44 30. In case of Individual Shareholders holding securities in demat mode who acquires shares of the Bank and becomes a Member of the Bank after sending of the Notice and holding shares as of the cut-off date i.e. September 8, 2021 may follow steps mentioned in the Notice of the AGM under “Access to NSDL e-Voting system”.

[f] The voting rights of the Members shall be in proportion to their shares of the paid-up equity share capital of the Bank as on the cut-off date subject to the provisions of the Banking Regulation Act, 1949, as amended from time to time.
[g] A person, whose name is recorded in the Register of Members or in the Register of Beneficial Owners maintained by the RTA of Bank i.e. KFIN as on the cut-off date, only shall be entitled to avail the facility of remote e-voting or casting vote through e-voting system during the meeting.
[h] As the E-voting does not require a person to attend to a meeting physically, the Members are strongly advised to use the E-voting procedure by themselves and not through any other person.
[i] The Board of Directors has appointed Mr. B Narasimhan (Membership No. F1303), Proprietor of BN & Associates, Practicing Company Secretaries, as the Scrutinizer to scrutinize the Remote e-voting process and the e-voting process during the AGM, in a fair and transparent manner. In case of any failure/ inability to scrutinize E-voting by Mr. B Narasimhan, Mr. Venkataraman K (Membership No. A8897), Practicing Company Secretary shall be alternate Scrutinizer to him.

The details of the process and the way to vote electronically on NSDL e-voting system consists of ‘Two Steps’ which are mentioned below:

Step 1: Access to NSDL e-Voting system. A) Login method for e-Voting and joining virtual meeting for Individual shareholders holding securities in demat mode.

In terms of SEBI circular dated December 9, 2020 on e-Voting facility provided by Listed Companies, Individual shareholders holding securities in demat mode are allowed to vote through their demat account maintained with Depositories and Depository Participants. Shareholders are advised to update their mobile number and e-mail Id in their demat accounts in order to access e-Voting facility.

Type of shareholders	Login Method
Individual Shareholders holding securities in demat mode with NSDL 1. 2. 3.	Existing IDeAS user can visit the e-Services website of NSDL Viz. https://eservices.nsdl.comeither on a Personal Computer or on a mobile. On the e-Services home page click on the ‘Benefcial Owner’ icon under ‘Login’ which is available under ‘IDeAS’ section, this will prompt you to enter your existing User ID and Password. After successful authentication, you will be able to see e-Voting services under Value added services. Click on ‘Access to e-Voting’ under e-Voting services and you will be able to see e-Voting page. Click on company name or e-Voting service provider i.e. NSDL and you will be re-directed to e-Voting website of NSDL for casting your vote during the remote e-Voting period or joining virtual meeting & voting during the meeting. If you are not registered for IDeAS e-Services, option to register is available at https://eservices.nsdl.com. Select ‘Register Online for IDeAS Portal’ or click athttps://eservices.nsdl.com/Se- cureWeb/IdeasDirectReg.jsp. Visit the e-Voting website of NSDL. Open web browser by typing the following URL: https://www.evoting.nsdl.com/either on a Personal Computer or on a mobile. Once the home page of e-Voting system is launched, click on the icon ‘Login’ which is available under ‘Shareholder/ Member’ section.

Type of
shareholders

Login Method

Individual
Shareholders
holding
securities in
demat mode
with NSDL
1.
2.
3.

Existing IDeAS user can visit the
e-Services
website
of
NSDL
Viz.
https://eservices.nsdl.comeither on a
Personal Computer or on a mobile. On
the e-Services home page click on the
‘Benefcial Owner’ icon under ‘Login’
which is available under ‘IDeAS’ section,
this will prompt you to enter your existing
User ID and Password.
After successful authentication, you will
be able to see e-Voting services under
Value added services. Click on ‘Access
to e-Voting’ under e-Voting services and
you will be able to see e-Voting page.
Click on company name or e-Voting
service provider i.e. NSDL and you will
be re-directed to e-Voting website of
NSDL for casting your vote during the
remote e-Voting period or joining virtual
meeting & voting during the meeting.
If you are not registered for IDeAS
e-Services, option to register is available
at
https://eservices.nsdl.com.
Select
‘Register Online for IDeAS Portal’ or
click athttps://eservices.nsdl.com/Se-
cureWeb/IdeasDirectReg.jsp.
Visit the e-Voting website of NSDL. Open
web browser by typing the following URL:
https://www.evoting.nsdl.com/either on
a Personal Computer or on a mobile.
Once the home page of e-Voting system
is launched, click on the icon ‘Login’
which is available under ‘Shareholder/
Member’ section.

A new screen will open. You will have to enter your User ID (i.e. your sixteen digit demat account number hold with NSDL), Password/ OTP and a Verification Code as shown on the screen. After successful authentication, you will be redirected to NSDL Depository site wherein you can see e-Voting page. Click on company name or e-Voting service provider i.e. NSDL and you will be redirected to e-Voting website of NSDL for casting your vote during the remote e-Voting period or joining virtual meeting & voting during the meeting.

IDFC FIRST BANK | NOTICE OF THE 7[TH ] AGM

Shareholders/Members can also download NSDL Mobile App ‘NSDL Speede’ facility by scanning the QR code mentioned below for seamless voting experience.

==> picture [173 x 100] intentionally omitted <==

Individual 1. Existing users who have opted for Easi/ Shareholders Easiest, they can login through their user holding id and password. Option will be made securities in available to reach e-Voting page without demat mode any further authentication. The URL for with CDSL users to login to Easi/ Easiest are https:// web.cdslindia.com/myeasi/home/login or www.cdslindia.com and click on New System Myeasi.
After successful login of Easi/Easiest the user will be also able to see the E Voting Menu. The Menu will have links of e-Voting service provider i.e. NSDL. Click on NSDL to cast your vote.
If the user is not registered for Easi/ Easiest, option to register is available at https://web.cdslindia.com/ myeasi/Registration/EasiRegistration.
Alternatively, the user can directly access e-Voting page by providing demat Account Number and PAN No. from a link in www.cdslindia.com home page. The system will authenticate the user by sending OTP on registered Mobile & E-mail as recorded in the demat Account. After successful authentication, user will be provided links for the respective ESP i.e. NSDL where the e-Voting is in progress.

Individual You can also login using the login credentials Shareholders of your demat account through your Depository (holding Participant registered with NSDL/ CDSL for securities in e-Voting facility. upon logging in, you will be demat mode) able to see e-Voting option. Click on e-Voting login through option, you will be redirected to NSDL/CDSL their depository Depository site after successful authentication, participants wherein you can see e-Voting feature. Click on company name or e-Voting service provider i.e. NSDL and you will be redirected to e-Voting website of NSDL for casting your vote during the remote e-Voting period or joining virtual meeting & voting during the meeting.

Important note: Members who are unable to retrieve User ID/ Password are advised to use Forget User ID and Forget Password option available at abovementioned website.

Helpdesk for Individual Shareholders holding securities in demat mode for any technical issues related to login through Depository i.e. NSDL and CDSL.

Login type	Helpdesk details
Individual Shareholders holding securities in demat mode with NSDL	Members facing any technical issue in login can contact NSDL helpdesk by sending a request atevoting@ nsdl.co.inor call at toll free no.: 1800 1020 990 and 1800 22 44 30
Individual Shareholders holding securities in demat mode with CDSL	Members facing any technical issue in login can contact CDSL helpdesk by sending a request at helpdesk [email protected] contact at 022- 23058738 or 022- 23058542-43

B) Login Method for e-Voting and joining virtual meeting for shareholders other than Individual shareholders holding securities in demat mode and shareholders holding securities in physical mode.

How to Log-in to NSDL e-Voting website?

Visit the e-Voting website of NSDL. Open web browser by typing the following URL: https://www.evoting.nsdl.com/ either on a Personal Computer or on a mobile.
Once the home page of e-Voting system is launched, click on the icon ‘Login’ which is available under ‘Shareholder/ Member’ section.
A new screen will open. You will have to enter your User ID, your Password/ OTP and a Verification Code as shown on the screen.
Alternatively, if you are registered for NSDL eservices i.e. IDEAS, you can log-in at https://eservices.nsdl.com/ with your existing IDEAS login. Once you log-in to NSDL eservices after using your log-in credentials, click on e-Voting and you can proceed to Step 2 i.e. Cast your vote electronically.
Your User ID details are given below :

Manner of holding shares Your User ID is: i.e. Demat (NSDL or CDSL) or Physical

a) For Members who hold 8 Character DP ID followed by shares in demat account 8 Digit Client ID For example with NSDL. if your DP ID is IN300 and Client ID is 12 then your user ID is IN30012**.
b) For Members who hold 16 Digit Beneficiary ID For shares in demat account example if your Beneficiary with CDSL. ID is 12** then your user ID is 12**
c) For Members holding EVEN Number followed by shares in Physical Form. Folio Number registered with the Bank. For example if folio number is 001 and EVEN is 101456 then user ID is 101456001

NOTICE

Password details for shareholders other than Individual shareholders are given below:
a) If you are already registered for e-Voting, then you can user your existing password to login and cast your vote.
b) If you are using NSDL e-Voting system for the first time, you will need to retrieve the ‘initial password’ which was communicated to you. Once you retrieve your ‘initial password’, you need to enter the ‘initial password’ and the system will force you to change your password.
c) How to retrieve your ‘initial password’?
- (i) If your e-mail ID is registered in your demat account or with the Bank, your ‘initial password’ is communicated to you on your e-mail ID. Trace the e-mail sent to you from NSDL from your mailbox. Open the e-mail and open the attachment i.e. a .pdf file. Open the .pdf file. The password to open the .pdf file is your 8 digit client ID for NSDL account, last 8 digits of client ID for CDSL account or folio number for shares held in physical form. The .pdf file contains your ‘User ID’ and your ‘initial password’
- (ii) If your e-mail ID is not registered, please follow steps mentioned below in process for those shareholders whose e-mail ids are not registered.
If you are unable to retrieve or have not received the ‘Initial password’ or have forgotten your password:
a) Click on ‘Forgot User Details/ Password?’ (If you are holding shares in your demat account with NSDL or CDSL) option available on www.evoting.nsdl.com.
b) Physical User Reset Password?’ (If you are holding shares in physical mode) option available on www.evoting.nsdl.com.
c) If you are still unable to get the password by aforesaid two options, you can send a request at [email protected] mentioning your demat account number/ folio number, your PAN, your name and your registered address etc.
d) Members can also use the OTP (One Time Password) based login for casting the votes on the e-Voting system of NSDL.
After entering your password, tick on Agree to ‘Terms and Conditions’ by selecting on the check box.

Step 2: Cast your vote electronically and join General Meeting on NSDL e-Voting system.

How to cast your vote electronically and join General Meeting on NSDL e-Voting system?

After successful login at Step 1, you will be able to see all the companies ‘EVEN’ in which you are holding shares and whose voting cycle and General Meeting is in active status.
Select ‘EVEN’ of company for which you wish to cast your vote during the remote e-Voting period and casting your vote during the General Meeting. For joining virtual meeting, you need to click on ‘VC/OAVM’ link placed under ‘Join General Meeting’.
Now you are ready for e-Voting as the Voting page opens.
Cast your vote by selecting appropriate options i.e. assent or dissent, verify/modify the number of shares for which you wish to cast your vote and click on ‘Submit’ and also ‘Confirm’ when prompted.
Upon confirmation, the message ‘Vote cast successfully’ will be displayed.
You can also take the printout of the votes cast by you by clicking on the print option on the confirmation page.
Once you confirm your vote on the resolution, you will not be allowed to modify your vote.

General Guidelines for shareholders

It is strongly recommended not to share your password with any other person and take utmost care to keep your password confidential. Login to the e-voting website will be disabled upon five unsuccessful attempts to key in the correct password. In such an event, you will need to go through the ‘Forgot User Details/Password?’ or ‘Physical User Reset Password?’ option available on https://www.evoting.nsdl.com to reset the password.
In case of any queries, you may refer the Frequently Asked Questions (FAQs) for Shareholders and e-voting user manual for Shareholders available at the download section of https://www.evoting.nsdl.com or call on toll free no.: 1800 1020 990 /1800 224 430 or send a request at [email protected].
In case of any grievances connected with the facility of e-voting, please contact Ms. Pallavi Mhatre, Manager, NSDL, 4[th] Floor, ‘A’ Wing, Trade World, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013.
Now, you will have to click on ‘Login’ button.
After you click on the ‘Login’ button, Home page of e-Voting will open.

IDFC FIRST BANK | NOTICE OF THE 7[TH ] AGM

Process for registration of e-mail id for obtaining Annual Report and user id/password for e-voting and updation of bank account:

Physical Holding Send a request to the RTA of the Bank, KFIN at einward.ris@kfntech. com providing Folio No., Name of shareholder, scanned copy of the share certificate (front and back), PAN (self attested scanned copy of PAN card), AADHAR (self attested scanned copy of Aadhar Card) for registering e-mail address.

Following additional details need to be provided in case of updating Bank Account Details:

  - a. Name and Branch of the Bank in which you wish to receive the dividend,

  - b. the Bank Account type,

  - c. Bank Account Number allotted by their banks after implementation of Core Banking Solutions

  - d. 9 digit MICR Code Number, and

  - e. 11 digit IFSC Code

  - f. a scanned copy of the cancelled cheque bearing the name of the first shareholder.

Demat Holding Please contact your Depository Participant (DP) and register your e-mail address and bank account details in your demat account, as per the process advised by your DP.
B. INSTRUCTIONS FOR MEMBERS FOR ATTENDING THE AGM THROUGH VC/ OAVM ARE AS UNDER:
[a] Member will be provided with a facility to attend the AGM through VC/OAVM through the NSDL e-Voting system. Members may access by following the steps mentioned above for Access to NSDL e-Voting system. After successful login, you can see link of “VC/OAVM link” placed under “Join General meeting” menu against company name. You are requested to click on VC/OAVM link placed under Join General Meeting menu. The link for VC/OAVM will be available in Shareholder/Member login where the EVEN of Company will be displayed. Please note that the members who do not have the User ID and Password for e-Voting or have forgotten the User ID and Password may retrieve the same by following the remote e-Voting instructions mentioned in the notice to avoid last minute rush.
[c] Members are encouraged to join the Meeting through Laptops for better experience. Further Members will be required to allow Camera and use Internet with a good speed to avoid any disturbance during the meeting. Please note that Participants Connecting from Mobile Devices or Tablets or through Laptop connecting via Mobile Hotspot may experience Audio/Video loss due to Fluctuation in their respective network. It is therefore recommended to use Stable Wi-Fi or LAN Connection to mitigate any kind of aforesaid glitches.
[d] Members who need assistance before or during the AGM, can contact NSDL on [email protected]/ 1800 1020 990/ 1800 224 430.
[e] Members who would like to express their views or ask questions during the AGM may register themselves as a speaker by sending request from their registered e-mail ID mentioning their name, DP ID and Client ID/ folio number, PAN, mobile number at [email protected] in advance i.e. at least 7 days prior to date of AGM. Those Shareholders who have registered themselves as a speaker will only be allowed to express their views/ ask questions during the AGM. The Bank reserves the right to restrict the number of questions and number of speakers depending on the availability of time for the AGM.
The Scrutinizer shall, immediately after the conclusion of voting at the AGM, first count the votes cast during the AGM, thereafter unblock the votes cast through remote e-voting and make, not later than 48 hours of conclusion of the AGM, a Scrutinizer’s Report of the total votes cast in favour or against, if any, to the Chairman or a person authorised by him, who shall countersign the same.

The result declared along with the Scrutinizer’s Report will be available on the Bank’s website www. idfcfrstbank.com and on the e-voting service provider’s website i.e. NSDL at https://www.evoting.nsdl.com and communication of the same will be sent to BSE Limited & the National Stock Exchange of India Limited.

In the event that the national lockdown on account of COVID-19 situation is eased off and the Bank’s offices are open for business, the Bank will also display the results of the AGM at its Registered Office and the Corporate Office.

Since the seventh (7[th] ) AGM of the Bank is being held through VC/ OAVM, the Route Map is not annexed to this Notice.
[b] Facility of joining the AGM through VC/ OAVM shall open 30 (thirty) minutes before and after the time scheduled for the AGM by following the procedure mentioned in the Notice.

NOTICE

ANNEXURE TO NOTICE

Statement pursuant to Section 102(1) of the Companies Act, 2013 setting out all material facts:

Item Nos. 3 & 4

To re-appoint and fix remuneration of M/s. B S R & Co. LLP, as one of the Joint Statutory Auditors of the Bank, for a period of one (1) year; and

To appoint and fix remuneration of M/s. MSKA & Associates, as one of the Joint Statutory Auditors of the Bank, for a period of three (3) years.

The Reserve Bank of India (‘RBI’) vide its Circular No. DoS. CO. ARG/ SEC.01/ 08.91.001/ 2021-22 dated April 27, 2021 issued the Guidelines for Appointment of Statutory Central Auditors (SCAs)/ Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) (‘RBI Guidelines’), which supersedes all previous prescribed guidelines in this regard. According to the RBI Guidelines, the Statutory Auditors have to be appointed for a continuous period of three (3) years, subject to the firms satisfying the eligibility norms each year. The said RBI Guidelines are applicable to banks for Financial Year 202122 and onwards in respect of appointment/ re-appointment of Statutory Auditors.

Further, as per the aforesaid RBI Guidelines, considering the asset size of the Bank is more than ` 15,000 crores, the Bank will need to appoint minimum of two Joint Statutory Auditors.

M/s. B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/ W-100022), were previously appointed as the Statutory Auditors of the Bank at the sixth (6[th] ) Annual General Meeting (‘AGM’), held on July 30, 2020, for a period of one (1) year i.e. from the conclusion of sixth (6[th] ) AGM until the conclusion of the seventh (7[th] ) AGM of the Bank.

Considering the aforesaid RBI Guidelines, as M/s. B S R & Co. LLP has been the Statutory Auditor of the Bank since last two (2) Financial Years, they are eligible to be re-appointed as Statutory Auditors of the Bank for the third (3[rd] ) year i.e. for the FY 2021-22.

Further, in view of the requirement to appoint Joint Statutory Auditors in terms of the RBI Guidelines, as aforesaid, the Board of Directors of the Bank (‘Board’) at its meeting held on June 16, 2021, recommended M/s. MSKA & Associates, Chartered Accountants (Firm Registration No. 105047W), being first preferred firm to the RBI to act as a Joint Statutory Auditors of the Bank along with M/s. B S R & Co. LLP. Subsequently, the RBI vide its letter dated July 8, 2021, approved the appointment of M/s. B S R & Co. LLP and M/s. MSKA & Associates as the Joint Statutory Auditors of the Bank for the financial year 2021-22, being their third year and first year respectively.

The brief profiles of M/s. B S R & Co. LLP and M/s. MSKA & Associates (collectively referred as ‘Joint Statutory Auditors’) are given as below.

M/s. B S R & Co. LLP

M/s. B S R & Co. LLP, is a Chartered Accountant Firm, registered with the Institute of Chartered Accountants of India with Firm Registration No. 101248W/W-100022. The

firm has presence in 14 cities in India. The Firm has been closely working with regulatory bodies in various capacities. The Firm has significant experience in auditing financial services clients in India including banks.

M/s. MSKA & Associates

Established in 1978, M/s. MSKA & Associates is an Indian partnership firm, registered with the Institute of Chartered Accountants of India and the PCAOB (US Public Company Accountancy Oversight Board) having offices across key cities in India at Mumbai, Gurugram, Kolkata, Ahmedabad, Pune, Goa, Bangalore, Kochi and Hyderabad.

M/s. MSKA & Associates provides range of services which include Audit & Assurance, Taxation and Accounting Advisory. The Firm’s Audit and Assurance practice has significant experience in auditing financial services clients including large banks.

Based on the aforesaid RBI approval and recommendation of the Audit Committee, the Board at its meeting held on July 31, 2021 had considered and approved the appointment of M/s. B S R & Co. LLP, Chartered Accountants, the current Statutory Auditors, for a period of one (1) year, i.e. from the conclusion of seventh (7[th] ) AGM until the conclusion of the eighth (8[th] ) AGM of the Bank, and M/s. MSKA & Associates, Chartered Accountants, for a period of three (3) years, i.e. from the conclusion of seventh (7[th] ) AGM until the conclusion of the tenth (10[th] ) AGM of the Bank, subject to them satisfying the eligibility norms and approval of the RBI, each year, as the Joint Statutory Auditors of the Bank, at the below remuneration.

[a] Overall remuneration of ` 2.70 crores as the Audit Fees for FY 2021-22 to be allocated between M/s. B S R & Co. LLP and M/s. MSKA & Associates as may be mutually agreed between the Bank and the Joint Statutory Auditors, depending upon their respective scope of work, plus out of pocket expenses, outlays and taxes as applicable; and
[b] Fees for any other assignment not covered in the scope of audit will be extra as per mutually agreed between the Bank and the Joint Statutory Auditors and as may be further approved by the Board from time to time, with power to the Board, including duly authorised Committee(s) thereof, to alter and vary the terms and conditions of appointment, etc., including by reason of necessity on account of conditions arising out of change/ increase in scope of work, amendment in Accounting Standards or conditions as may be stipulated by the RBI and/ or any other authority, in such manner and to such extent as may be mutually agreed with the Joint Statutory Auditors.

As per the requirement of the Companies Act, 2013 (‘Act’), as amended, M/s. B S R & Co. LLP and M/s. MSKA & Associates have confirmed that the appointment, if made, would be within the limits specified under Section 141 of the Act and they are not disqualified to be appointed as Statutory Auditor in terms of the provisions of the Section 139 and Section 141 of the Act read with Companies (Audit and Auditors) Rules, 2014.

IDFC FIRST BANK | NOTICE OF THE 7[TH ] AGM

The Bank has received all the applicable eligibility certificates and consents from M/s. B S R & Co. LLP and M/s. MSKA & Associates for acting as the Statutory Auditors of the Bank.

Therefore, the approval of Members is now sought for appointment of M/s. B S R & Co. LLP, Chartered Accountants, for a period of one (1) year, to hold office from the conclusion of seventh (7[th] ) AGM until the conclusion of the eighth (8[th] ) AGM of the Bank, M/s. MSKA & Associates, Chartered Accountants, for a period of three (3) years, to hold office from the conclusion of seventh (7[th] ) AGM until the conclusion of the tenth (10[th] ) AGM of the Bank, subject to them satisfying the eligibility norms and approval of the RBI, each year, as the Joint Statutory Auditors of the Bank.

Further, in accordance with the requirements of the aforesaid RBI Guidelines, the Bank has framed a Board approved Policy on appointment of Statutory Auditors.

None of the Directors, Key Managerial Personnel of the Bank and/ or their relatives are, in any way, financially or otherwise, concerned or interested, in the passing of these resolutions.

The Board recommends passing of the Ordinary Resolutions as set out in Item Nos. 3 and 4 of this Notice, for approval of the Members.

Item No. 5

To appoint Mr. S. Ganesh Kumar as an Independent Director of the Bank.

The Board of Directors of the Bank (‘Board’), on the recommendation of the Nomination and Remuneration Committee, had approved the appointment of Mr. S. Ganesh Kumar (DIN: 07635860) as an Additional Director, in the category of Independent Director of the Bank, commencing from April 30, 2021, to hold office up to the ensuing Annual General Meeting.

The Bank has received a notice in writing under the provisions of Section 160 of the Companies Act, 2013 (‘Act’) from a Member, proposing the candidature of Mr. S. Ganesh Kumar for appointment as Independent Director of the Bank.

Further, the Bank has also received declaration from Mr. S. Ganesh Kumar that he meets all the criteria of independence pursuant to the provisions of Section 149 of the Act read with rules made thereunder and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘SEBI Listing Regulations’). Mr. S. Ganesh Kumar has given his consent to act as a Director of the Bank and various declarations as required under the Act and other applicable laws.

In the opinion of the Board, Mr. S. Ganesh Kumar is independent of the management of the Bank and fulfils the conditions specified in the Act and the rules made thereunder for appointment as an Independent Director.

Further, Mr. S. Ganesh Kumar is a person of integrity and has requisite experience and expertise as required under Section 10A of the Banking Regulation Act, 1949 and relevant circulars issued by the Reserve Bank of India (‘RBI’) from time to time, for him to be appointed as an Independent Director of the Bank.

Therefore, the approval of the Members is now sought for the appointment of Mr. S. Ganesh Kumar as an Independent Director of the Bank, for a period of five (5) consecutive years commencing from April 30, 2021 up to April 29, 2026 (both days inclusive).

Mr. S. Ganesh Kumar shall be paid such fixed remuneration, sitting fees and reimbursement of expenses for attending the meetings of the Board and Committees thereof, as may be approved by the Board and/ or duly authorised Committee of the Board, within the limits prescribed under the Act, SEBI Listing Regulations, and the Banking Regulation Act, 1949 and directions issued by the RBI, in this regard, from time to time.

Mr. S. Ganesh Kumar shall not be liable to retire by rotation during his tenure as an Independent Director of the Bank.

Mr. S. Ganesh Kumar is not related to any other Director or Key Managerial Personnel (‘KMP’) of the Bank.

Except Mr. S. Ganesh Kumar and his relatives, none of the other Directors, KMP of the Bank and/ or their relatives are, in any way, financially or otherwise, concerned or interested, in the passing of this resolution.

The Board recommends passing of the Ordinary Resolution as set out in Item No. 5 of this Notice, for approval of the Members.

A brief profile of Mr. S. Ganesh Kumar along with Directorships and Committee positions held by him in other companies, in terms of Regulation 36 (3) of SEBI Listing Regulations, and the Secretarial Standard on the General Meetings has been given below.

Name : Mr. S. Ganesh Kumar DIN: 07635860 Age: 61 Years Date of first appointment on the Board: April 30, 2021 Brief Resume, Qualification and Experience:

Mr. S. Ganesh Kumar was the Executive Director of the Reserve Bank of India. While the most recent responsibilities included the entire gamut of Payment and Settlement Systems, creation and development of strategic plans for the Bank and to take care of the external investments and manage the foreign exchange reserves with the central bank, a long period in the Information Technology area has honed skills in this area of specialisation.

Mr. S. Ganesh Kumar is a post graduate in Management having experience in varied fields such as marketing, market research, banking, finance, law, and Information Technology. He was with the Reserve Bank of India for more than three decades. He was also associated with the Institute for Development and Research in Banking Technology - the IT institute for the Banking sector, facilitating in training and new service offerings stemming out of Research activities of the Institute. He was the nominee of the Reserve Bank of India on the Committee for Payment and Settlement Systems in Bank

NOTICE

for International Settlements (BIS), Basel, Switzerland, as also the co-chair of the Financial Innovation Network (FIN) of the Financial Stability Board of the BIS.

Mr. S. Ganesh Kumar was the RBI Nominee Director on the Board of a medium Public Sector Bank and part of few of its Sub Committees for about five years.

He was also associated with the National Cyber Security Council of the Government of India, and in the framing of the Payment and Settlement Systems Act of the country.

Mr. S. Ganesh Kumar had a role to play in ideating, design, development of innovative, technology based retail payment systems for India, including some of the payment systems now being operated by the National Payments Corporation of India (NPCI); in the framework for data related standards, storage and reusability apart from facilitating the setting up of the Reserve Bank Information Technology Limited (ReBIT), a ‘first-of-its-kind’ IT subsidiary for a central bank, for assisting the central bank in cyber security related matters in a focused manner, provide cyber security assistance and advice and assess cyber security of regulated entities both through onsite and offsite means.

Nature of Expertise in specific functional areas:

Mr. S. Ganesh Kumar has special knowledge and practical experience in the matters of Banking, Regulation and Supervision, Accounting, Information Technology, Payment and Settlement Systems, Risk Management, Business Continuity Management, Institution Setting-up as required under Section 10A of the Banking Regulation Act, 1949.

No. of Board Meetings attended during FY21 :

Not Applicable, as he was appointed post completion of Financial Year 2020-21.

Directorships held in other companies (Except Section 8 and Foreign Companies) :

Nil

Memberships/Chairmanships of Committees of other Boards (Only Audit and Stakeholders’ Relationship Committee of Indian Public Limited Companies have been considered):

Nil

Remuneration last drawn :

Not Applicable, as he was appointed post completion of Financial Year 2020-21.

Details of Remuneration sought to be paid :

As provided in resolution set out in Item No. 5 & 9 of this Notice

Shareholding in IDFC FIRST Bank (as on July 31, 2021) : Nil

Relationship with other Directors & Key Managerial Personnel of the Bank: None

Item No. 6

To appoint Mr. Ajay Sondhi as a Non-Executive NonIndependent Director of the Bank.

The Board of Directors of the Bank (‘Board’), on the recommendation of the Nomination and Remuneration Committee, had approved the appointment of Mr. Ajay Sondhi (DIN: 01657614) as an Additional Director, in the category of Non-Executive Non-Independent Director of the Bank, commencing from July 22, 2021, to hold office up to the ensuing Annual General Meeting.

Mr. Ajay Sondhi was an Independent Director of IDFC Bank Limited from July 27, 2015 up to December 18, 2018. Presently, Mr. Ajay Sondhi is an Independent Director of IDFC Limited.

The Bank has received a notice in writing under the provisions of Section 160 of the Companies Act, 2013 (‘Act’) from a Member, proposing the candidature of Mr. Ajay Sondhi for appointment as Non-Executive Non-Independent Director of the Bank.

Further, Mr. Ajay Sondhi has given his consent to act as a Director of the Bank and various other declarations as required under the Act and other applicable laws.

In the opinion of the Board, Mr. Ajay Sondhi is a person of integrity and has requisite experience and expertise as required under Section 10A of the Banking Regulation Act, 1949 and relevant circulars issued by Reserve Bank of India (‘RBI’), from time to time, for him to be appointed as a NonExecutive Non- Independent Director of the Bank.

Therefore, the approval of the Members is now sought for the appointment of Mr. Ajay Sondhi as a Non-Executive NonIndependent Director of the Bank, for a period of four (4) consecutive years commencing from July 22, 2021 up to July 21, 2025 (both days inclusive).

Mr. Ajay Sondhi shall be paid such fixed remuneration, sitting fees and reimbursement of expenses for attending the meetings of the Board and Committees thereof, as may be approved by the Board and/ or duly authorised Committee of the Board, within the limits prescribed under the Act, SEBI Listing Regulations, and the Banking Regulation Act, 1949 and directions issued by the RBI, in this regard, from time to time.

Mr. Ajay Sondhi shall be liable to retire by rotation during his tenure as a Non-Executive Non-Independent Director of the Bank.

Mr. Ajay Sondhi is not related to any other Director or Key Managerial Personnel (‘KMP’) of the Bank.

Except Mr. Ajay Sondhi and his relatives, none of the other Directors, KMP of the Bank and/ or their relatives are, in any way, financially or otherwise, concerned or interested, in the passing of this resolution.

The Board recommends passing of the Ordinary Resolution as set out in Item No. 6 of this Notice, for approval of the Members.

A brief profile of Mr. Ajay Sondhi along with Directorships and Committee positions held by him in other companies, in terms of Regulation 36 (3) of SEBI Listing Regulations, and the Secretarial Standard on the General Meetings has been given below.

Name :

Mr. Ajay Sondhi

DIN:

01657614

Age:

61 Years

Date of first appointment on the Board: July 22, 2021

IDFC FIRST BANK | NOTICE OF THE 7[TH ] AGM

Brief Resume, Qualification and Experience:

Mr. Ajay Sondhi is a seasoned Financial Services and Board professional with extensive Indian and global experience. Mr. Ajay Sondhi was most recently Founder & CEO of Sentinel Advisors Pte Ltd, Singapore, a boutique business and strategy advisory firm. He has had a long career in banking, and has held several senior leadership roles in the industry in India and overseas. He was previously MD and Regional Manager for PWM at Goldman Sachs, Singapore. Mr. Sondhi started his career with Citibank India where he rose to become corporate bank and corporate finance head. He subsequently worked with Salomon Brothers Hong Kong, and then moved back to India as Group CEO for Barclays Bank and BZW. He was subsequently Country Head and CEO India for UBS AG, and then went on to become the Vice Chairman and Managing Director for Kotak Mahindra Capital Company.

In addition to financial services, Mr. Ajay Sondhi also has a strong interest in public health and has a number of engagements in the health sciences area. He recently held an appointment as a Senior Fellow at the Harvard Global Health Institute, Boston. Mr. Sondhi is a Board Director of Maxx Medical Pte. Ltd., Singapore; a Board Director of Noora Health, a California based non-profit active in health education; and an Independent Director on the Board of IDFC Limited. He has previously been an Advisory Board member of Tufts Medical School, Boston, an Independent Director of IDFC Bank, and also of Mahanagar Gas Ltd. Mr. Ajay Sondhi is a 2017 Fellow, Harvard Advanced Leadership Initiative. He is an MBA in Finance from JBIMS, Mumbai University, and a Bachelor of Arts in Economics (Honors) from St. Stephens College, Delhi University.

Nature of Expertise in specific functional areas:

Mr. Ajay Sondhi has special knowledge and practical experience in the matters of Banking, Finance, Business Management, Human Resources, Information Technology and Risk Management as required under Section 10A of the Banking Regulation Act, 1949.

No. of Board Meetings attended during FY21:

Not Applicable, as he was appointed post completion of Financial Year 2020-21.

Directorships held in other companies (Except Section 8 and Foreign Companies): IDFC Limited

Memberships/Chairmanships of Committees of other Boards (Only Audit and Stakeholders’ Relationship Committee of Indian Public Limited Companies have been considered): IDFC Limited – Member of Audit Committee

Remuneration last drawn:

Not Applicable, as he was appointed post completion of Financial Year 2020-21.

Details of Remuneration sought to be paid:

As provided in resolution set out in Item No. 6 & 9 of this Notice

Shareholding in IDFC FIRST Bank (as on July 31, 2021) : Nil

Relationship with other Directors & Key Managerial Personnel of the Bank: None

Item No. 7

To re-appoint Mr. Pravir Vohra as an Independent Director

of the Bank.

The Members of the Bank, at their fifth (5[th] ) Annual General Meeting (‘AGM’) held on July 25, 2019, had approved the appointment of Mr. Pravir Vohra (DIN: 00082545) as an Independent Director of the Bank, for a period of three (3) consecutive years commencing from August 1, 2018 up to July 31, 2021.

The provisions of Section 149(10) of the Companies Act, 2013 (‘Act’) read with rules made thereunder provides that an Independent Director shall hold office for a term of up to five (5) consecutive years on the Board and shall be eligible for re-appointment on passing a special resolution by the company and disclosure of such appointment in its Board’s Report. Also, Section 149(11) provides that an Independent Director may hold office for up to two (2) consecutive terms. However, since the Bank is governed by Banking Regulation Act, 1949, the overall tenure of a Non-Executive Director is restricted for a period of eight (8) consecutive years.

Accordingly, based on the recommendations of the Nomination and Remuneration Committee (‘NRC’), the Board of Directors of the Bank (‘Board’) at the meeting held on May 8, 2021, took note of Mr. Pravir Vohra’s active contribution as a member of the Board and its Committees, providing his independent perspective. Further, the Board considered that his continued association would be beneficial to the Bank, given his background, experience and the contributions made by him during his tenure as an Independent Director, and accordingly the Board approved the re-appointment of Mr. Pravir Vohra for a second term of five (5) consecutive years commencing from August 1, 2021 upto July 31, 2026 (both days inclusive), subject to the approval of the Members of the Bank.

The Bank has received a notice in writing under the provisions of Section 160 of the Act from a Member, proposing the reappointment of Mr. Pravir Vohra as Independent Director of the Bank.

Further, the Bank has also received declaration from Mr. Pravir Vohra that he continues to meet all the criteria of independence pursuant to the provisions of Section 149 of the Act read with rules made thereunder and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘SEBI Listing Regulations’). Mr. Pravir Vohra has given his consent to act as a Director of the Bank and various declarations as required under the Act and other applicable laws.

In the opinion of the Board, Mr. Pravir Vohra is independent of the management of the Bank and continuous to fulfill the conditions specified in the Act and the rules made thereunder for re-appointment as an Independent Director. Further, Mr. Pravir Vohra is a person of integrity and has requisite experience and expertise as required under Section 10A of the Banking Regulation Act, 1949 and relevant circulars issued by the Reserve Bank of India (‘RBI’) from time to time, for him to be re-appointed as an Independent Director of the Bank.

NOTICE

Therefore, the approval of the Members is now sought for reappointment of Mr. Pravir Vohra as an Independent Director of the Bank, for a period of five (5) consecutive years commencing from August 1, 2021 up to July 31, 2026 (both days inclusive).

Mr. Pravir Vohra shall be paid such fixed remuneration, sitting fees and reimbursement of expenses for attending the meetings of the Board and Committees thereof, as may be approved by the Board and/ or duly authorised Committee of the Board, within the limits prescribed under the Act, SEBI Listing Regulations, and the Banking Regulation Act, 1949 and directions issued by the RBI, in this regard, from time to time.

Mr. Pravir Vohra shall not be liable to retire by rotation during his tenure as an Independent Director of the Bank.

Mr. Pravir Vohra is not related to any other Director or Key Managerial Personnel (‘KMP’) of the Bank.

Except Mr. Pravir Vohra and his relatives, none of the other Directors, KMP of the Bank and/ or their relatives are, in any way, financially or otherwise, concerned or interested, in the passing of this resolution.

The Board recommends passing of the Special Resolution as set out in Item No. 7 of this Notice, for approval of the Members.

A brief profile of Mr. Pravir Vohra along with Directorships and Committee positions held by him in other companies, in terms of Regulation 36 (3) of SEBI Listing Regulations, and the Secretarial Standard on the General Meetings has been given below.

Name: Mr. Pravir Vohra DIN: 00082545 Age: 67 Years Date of first appointment on the Board: August 1, 2018 Brief Resume, Qualification and Experience:

In January 2000, he moved to the ICICI Bank group where he headed a number of functions like the Retail Technology Group and Technology Management Group. In these capacities,

he oversaw the deployment of technology across ICICI Bank’s domestic & international operations and was instrumental in creating a future ready, platform independent & scalable infrastructure.

From 2005 till 2012, he was the President and Group CTO at ICICI Bank. His focus was to ensure a meaningful alignment of Technology with overall business goals and obtain the best from people, processes and information within the organization. The objective was to help ICICI Group remain agile, flexible and competitive.

As a Group CTO, he played a key role in shaping the Bank’s technology investments through repositioning strategies across both execution and product innovation. By leveraging both new and existing technologies, he consistently focused on increasing efficiency, reducing costs and supporting competitiveness, as well as creating differentiated products which enabled the enterprise to retain market relevance. Mr. Vohra oversaw IT strategy & innovation, enterprise architecture, process automation, group IT infrastructure and was responsible for leveraging technology synergies across ICICI Bank and its group companies. He also carried additional responsibilities for facilities management infrastructure and administration; in this capacity he oversaw the roll out of new branches, ATMs, two state of the art data centers and a large 4 million square feet office facility at Hyderabad. What is unique is his ability to evaluate technology from a business perspective, leveraging it to reduce costs or generate revenues combined with incredible foresight in an ever changing landscape. With a stint spanning close to four decades. In the industry, Mr. Vohra has immense experience and knowledge in IT architecture, domain expertise in financial products, process re-engineering, IT operations and strategy.

Post his retirement from ICICI Bank in 2012, he mentored startups in the payments space and more recently, completed a 2-year assignment with New Development Bank, Shanghai. He also continues to serve on the Technology Advisory Committees of organizations like the BSE Limited, NCDEX, Indian Clearing Corporation and NPCI etc. He also serves as an Independent Director on the Boards of Thomas Cook (India) Limited, National Commodities Management Services Limited & 3i Infotech Limited.

Mr. Vohra has served on numerous technology & functional committees set up by organizations such as the Central Board of Direct Taxes, the Unique Identification Authority of India (UIDAI) as well as the Reserve Bank of India and the Indian Banks’ Association. He has also served as a nominee director on the boards of Loyalty Solutions & Research Pvt Limited, ICICI Securities Limited, Firstsource Solutions Limited and as an Independent Director on MCX India Limited and Goldman Sachs AMC (India) Limited. Accolades won by Mr. Vohra include The Asian Banker Achievement Award for Technology & Operations in 2006 and the Symantec Asia South Visionary 2008. He was also one of the three CIOs of international banks to have featured on the Information Week’s Global CIO SO List for 2009.

He is passionate about leveraging the power of available and emerging technologies to solve real life business issues, improve operating efficiency, design new products and processes that would touch the lives of the Indian people.

IDFC FIRST BANK | NOTICE OF THE 7[TH ] AGM

Nature of Expertise in specific functional areas:

Mr. Pravir Vohra has special knowledge and practical experience in the matters of Information Technology, Banking, Economics and Payment & Settlement Systems as required under Section 10A of the Banking Regulation Act, 1949.

No. of Board Meetings attended during FY21: 13/13 Directorships held in other companies (Except Section 8 and Foreign Companies): 1. Thomas Cook (India) Limited 2. 3i Infotech Limited 3. National Commodities Management Services Limited 4. Sterling Holiday Resorts Limited Memberships/Chairmanships of Committees of other Boards (Only Audit and Stakeholders’ Relationship Committee of Indian Public Limited Companies have been considered): 1. Thomas Cook (India) Limited – Member of Audit Committee and Chairman of Stakeholders’ Relationship Committee 2. National Commodities Management Services Limited – Chairman of Audit Committee Remuneration last drawn: • Sitting Fees for the year ended March 31, 2021: ` 24,50,000 • Commission for FY 20 (paid in FY 21): Nil Details of Remuneration sought to be paid: As provided in resolution set out in Item No. 7 & 9 of this Notice Shareholding in IDFC FIRST Bank (as on July 31, 2021): 5,10,000 Equity Shares Relationship with other Directors & Key Managerial Personnel of the Bank: None

Item No. 8

To re-appoint Mr. V. Vaidyanathan as Managing Director and Chief Executive Officer of the Bank.

Based on the recommendations of the Board of Directors of the Bank (‘Board’) and approval of the Reserve Bank of India (‘RBI’), vide its letters dated December 14, 2018, January 17, 2019 and January 31, 2019, the Members at the fifth (5[th] ) Annual General Meeting (‘AGM’) held on July 25, 2019, had approved the appointment of Mr. V. Vaidyanathan (DIN:00082596) as the Managing Director and Chief Executive Officer (‘MD & CEO’) of the Bank for a period of three (3) years commencing from December 19, 2018.

As the aforesaid term of Mr. V. Vaidyanathan would conclude on December 18, 2021, the Board, based on the recommendations of the Nomination and Remuneration Committee (‘NRC’), at the meeting held on June 16, 2021 approved the re-appointment of Mr. V. Vaidyanathan as the MD & CEO of the Bank, for a further period of three (3) consecutive years commencing from December 19, 2021, subject to approval of the Members and RBI. Accordingly, the Bank has filed an application with the RBI for reappointment of Mr. V. Vaidyanathan as the MD & CEO of the Bank in terms of Section 35B of the Banking Regulation Act, 1949. The approval of RBI is awaited.

Therefore, the approval of the Members is now sought for

re-appointment of Mr. V. Vaidyanathan as the MD & CEO of the Bank, for a period of three (3) consecutive years commencing from December 19, 2021 up to December 18, 2024 (both days inclusive), subject to approval of the RBI.

While considering the re-appointment of Mr. V. Vaidyanathan, the NRC and the Board considered the following aspects.

Mr. V. Vaidyanathan has successfully merged a Bank (created from an Infrastructure DFI) with an NBFC (Capital First) and has integrated all components including people, technology, systems, business, and control functions such as audit, finance, operations and other functions seamlessly, and has built the leadership teams for the future.
He has provided a clear direction to the merged entity in terms of vision, mission, values and culture.
During the two and a half years since the merger, the Bank has also accounted for a number of legacy loan assets which had gone sour because of the deterioration in India’s infrastructure financing environment, and dealt with the exposure in a leading housing company and a large financial services group that underwent challenges. The Bank also expanded branches, ATMs and other investments for future.
He has successfully maintained the confidence of the markets and the public, and raised two rounds of fresh equity totalling 5,000 crores, and grown retail deposits by 53,494 crores and paid down substantial part of wholesale deposits and Certificate of Deposits.

He has also steered the Bank through the challenging times of being an early stage Bank coupled with the pressures of COVID.

The key achievements achieved by the Bank under his leadership since merger (December 31, 2018) to March 31, 2021 are as follows:

Retail Deposits grew from 10,400 crores to 63,894 crores.
CASA % increased from 8.68% to 51.75%, to reach respectable levels in industry.
CASA grew from 5,274 crores to 45,896 crores.
• Retail as a % of total loan book increased from 35% to 63%.
Infrastructure financing book reduced 52% from 22,710 crores to 10,808 crores.
Number of Bank branches increased from 206 to 596.
Number of ATMs and recyclers increased from 112 to 677.
Net interest Margin increased from 1.84% (premerger, Q2 FY 19) to 4.98% (post-merger, FY 21).

NOTICE

Core Pre provisioning operating profit (excluding the trading gains) increased from 1,429 crores in FY 2018-19 (proforma Capital First + IDFC Bank) to 1,909 crores in FY 2020-21.
The reported Profit After Tax increased from 18 crores in H1-FY19 (pre-merger including proforma Capital First + IDFC Bank), to 452 crores in FY 2020-21.
He has, thus, dealt with the post-merger challenges and has set up the foundation for the future success of the Bank. The Bank look forward to scale up from here with his continued leadership under the following Terms and Conditions:
Tenure: For a period of 3 years commencing from December 19, 2021 up to December 18, 2024 (both days inclusive) as the MD & CEO of the Bank, subject to the approval of the RBI.
Other Terms: Mr. V. Vaidyanathan shall not be liable to retire by rotation during his tenure as MD & CEO of the Bank.
Remuneration: Mr. V. Vaidyanathan shall be entitled for fixed remuneration including reimbursements for FY 2021-22 as described below.

==> picture [242 x 244] intentionally omitted <==

----- Start of picture text -----

Particulars Remuneration for
FY 2021-22
(Amount in ) (A) Salary and Allowances (i) Salary 3,22,00,000 (ii) Leave Fare Concession/ Allowance 2,10,000 (iii) House Rent Allowance 50,40,000 Total Salary & Allowances (A) 3,74,50,000 (B) Retiral Benefits (i) Provident Fund 30,24,000 (ii) Gratuity 12,12,120 Total Retiral Benefits (B) 42,36,120 (C) Reimbursement at actuals (i) Driver(s)’ salary 8,40,000 (ii) Reimbursement of medical expenses 2,10,000 (iii) Furnishing ( 50 lakhs for a block 11,66,667
period of 3 years)
(iv) Fuel and Maintenance 7,80,000
(v) Utility Bills 2,00,000
Total Reimbursements (C) 31,96,667
Total Fixed Remuneration (A+B+C) 4,48,82,787
----- End of picture text -----

Mr. V. Vaidyanathan’s fixed remuneration was reduced to ` 4,48,82,787/- in FY 2020-21 post the voluntarily request to the Board for a 30% pay-cut in the light of the COVID 19. This remuneration has been recommended for continuation into FY 2021-22, subject to RBI approval.

Further, for period beyond FY 2021-22, Mr. Vaidyanathan shall be entitled to receive annual increments if any, to his fixed compensation, and be entitled for Variable Pay as may be determined by the NRC/ Board as per Remuneration Policy of the Bank, subject to approval of RBI.

In case of absence or inadequacy of profit in any financial year, the aforesaid remuneration and perquisites shall be paid to Mr. V. Vaidyanathan as minimum remuneration.

The Bank has received a notice in writing under the provisions of Section 160 of the Act from a Member, proposing the re-appointment of Mr. V. Vaidyanathan as the MD & CEO of the Bank.

Mr. V. Vaidyanathan is not disqualified from being re-appointed as a Director, in terms of Section 164 of the Companies Act, 2013 (‘Act’). Mr. V. Vaidyanathan has given his consent to act as a Director of the Bank and various declarations as required under the Act and the other applicable laws.

Mr. V. Vaidyanathan is not related to any other Director or Key Managerial Personnel (‘KMP’) of the Bank.

Except Mr. V. Vaidyanathan and his relatives, none of the other Directors, KMP of the Bank and/ or their relatives are, in any way, financially or otherwise, concerned or interested, in the passing of this resolution.

The Board recommends passing of the Ordinary Resolution as set out in Item No. 8 of this Notice, for approval of the Members.

A brief profile of Mr. V. Vaidyanathan along with Directorships and Committee positions held by him in other companies, in terms of Regulation 36 (3) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Secretarial Standard on the General Meetings has been given below:

Name: Mr. V. Vaidyanathan DIN: 00082596 Age: 53 Years

Date of first appointment on the Board: December 19, 2018

Brief Resume, Qualification and Experience:

Mr. V. Vaidyanathan took over as the Managing Director and CEO of IDFC FIRST Bank in December 2018 after the merger of Capital First and IDFC Bank. He joined ICICI Group in 2000, built a retail loan book of 1.35 trillion since inception, including mortgages autoloans and other retail products, grew the Bank to 1,411 branches, 4713 ATMs and 28 million customers, built a large CASA and retail deposits franchise of over 1 lakh crores until 2009. He was appointed to the Board of ICICI Bank in 2006, and as the MD and CEO of ICICI Prudential Life Insurance Company in India in 2009.

Between 2010-2012, he acquired equity stakes in a small lossmaking wholesale financing NBFC through leverage, and built a prototype of technology algorithm led retail Financing business of ` 770 crores by 2011. Based on the proof of concept, he secured a PE backing and concluded a Leveraged Buyout of the company, recapitalised it by raising fresh equity, and renamed it Capital First.

Between 2010 to 2018, he grew the loan book of Capital First from 94 crores ($14m) to 29,600 crores ($4.05b),

IDFC FIRST BANK | NOTICE OF THE 7[TH ] AGM

increased retail from 10% to 90% of the book, grew the equity capital from 691 crores ($118m) to 3,993 crores ($600m), reduced Gross NPA from 5.28% to 1.94%, reduced Net NPA from 3.6% to 1%, acquired 7 million customers, got the long- term credit rating upgraded from A+ to AAA, turned the company from losses of 32 crores ($5m) to profit of 328 crores ($50m, 2018), increased ROE from -6% to +15%, and increased the market cap 10 times from 780 crores (US$120 mn) in 2012 to 8,200 crores ($1.2b, 2018). Capital First was growing at a 5-year CAGR of loan growth of 30%, and 55% in PAT between 2013-2018.

Then, in order to secure a banking license, he agreed to merge Capital First with IDFC Bank in December 2018 and took over as the MD and CEO of the merged entity. He is currently pivoting the Bank into technology led retail banking business model. He is working on the new vision of the merged Bank “To build a world-class bank, driven by Customer First values and technology, and be a force for social good”

He earlier worked with Citibank in the consumer banking division. During his career, he and his organization have received a number of domestic and international awards including CNBC Awaaz Entrepreneur of the year 2020, CNBC Asia’s “Innovative Company of the Year at IBLA- 2017, “Most Inspirational Leveraged Management Buyout, India 2018” by CFI Awards, “Entrepreneur of the Year” Award at Asia Pacific Entrepreneurship Awards 2017, “Most Promising Business Leaders of Asia” 2016 by Economic Times. He is an alumnus of Birla Institute of Technology and Harvard Business School, Advanced Management Program.

Nature of Expertise in specific functional areas:

Mr. V. Vaidyanathan has special knowledge and practical experience in the matters of Banking, Business Management and Risk Management as required under Section 10A of the Banking Regulation Act, 1949.

No. of Board Meetings attended during FY21:

13/13

Directorships held in other companies (Except Section 8 and Foreign Companies): None

Memberships/Chairmanships of Committees of other Boards (Only Audit and Stakeholders’ Relationship Committee of Indian Public Limited Companies have been considered):

None

Remuneration last drawn:

As provided in the Corporate Governance report for the FY 2020-21.

Details of Remuneration sought to be paid:

As provided in resolution set out in Item No. 8 of this Notice

Shareholding in IDFC FIRST Bank (as on July 31, 2021):

Mr. V. Vaidyanathan holds 2,44,07,117 Equity Shares. In addition, he holds 58,93,860 shares in Rukmani Social Welfare Trust and holds 11,54,04,748 ESOPs in the Bank. On a fully diluted basis, this amounts to 2.24% of the paid-up equity share capital of the Bank.

Relationship with other Directors & Key Managerial Personnel of the Bank: None

Item No. 9

To approve payment of Fixed Remuneration to the NonExecutive Directors of the Bank.

In accordance with the provisions of Section 197 of the Companies Act, 2013 (‘Act’) and the Reserve Bank of India (‘RBI’) Guidelines dated June 1, 2015, the Members of the Bank at their 2[nd] Annual General Meeting (‘AGM’) held on July 27, 2016, had approved the payment of remuneration by way of commission to the Non-Executive Directors (‘NEDs’) of the Bank (i.e. Directors other than Managing Director and Whole-time Directors), not exceeding in aggregate, 1% of the net profits of the Bank as computed in the manner laid down in Section 198 of the Act or maximum of ` 10,00,000 (Rupees Ten Lakhs only) per annum to each of such Directors, whichever is lower, with effect from Financial Year 2015-16. This was in addition to sitting fees and reimbursement of out of pocket expenses for attending the meetings of Board and Committees thereof.

The RBI vide its circular no. RBI/2021-22/24DOR.GOV. REC.8/29.67.001/2021-22 titled ‘Corporate Governance in Banks - Appointment of Directors and Constitution of Committees of the Board’ dated April 26, 2021 permitted the payment of compensation to NEDs in the form of a fixed remuneration in addition to sitting fees and expenses related to attending meetings of the Board and its committees as per extant statutory norms/ practices. However, such fixed remuneration for an NED, other than the Chair of the Board, shall not exceed ` 20,00,000 (Rupees Twenty Lakhs only) per annum.

The above circular supersedes the earlier RBI Guidelines dated June 1, 2015 which provided for payment of profit related compensation to NEDs (other than Non-Executive (Part-time) Chairman) of Private Sector Banks.

Consequent to and in term of the Revised RBI Circular, the Board of Directors of the Bank (‘Board’), based on the recommendations of the Nomination and Remuneration Committee (‘NRC’) approved the modification to the Remuneration policy of the Bank, so as to incorporate suitable provision in regard to payment of fixed remuneration up to ` 20,00,000 (Rupees Twenty Lakhs only) per annum to each Non-Executive Director of the Bank (except Part Time NonExecutive Chairperson), as may be determined by the Board or NRC, from time to time, in addition to payment of sitting fees and reimbursement of out of pocket expenses for attending the meetings of Board and Committees thereof.

Accordingly, the approval of the Members is now sought for payment of fixed remuneration to each Non-Executive Director of the Bank (except Part Time Non-Executive Chairperson), for an amount up to ` 20,00,000 (Rupees Twenty Lakhs only) per annum, as may be determined by the Board or NRC, from time to time, with effect from the Financial Year 2021-22, in addition to payment of sitting fees and reimbursement of out of pocket expenses for attending the meetings of Board and Committees thereof, in supersession of earlier resolution passed by the Members at 2[nd] Annual General Meeting of the Bank held on July 27, 2016.

NOTICE

It may be noted, that for the current Financial Year 202122, i.e. w.e.f. from April 01, 2021, the Board based on the recommendations of the NRC, has approved a fixed remuneration of ` 16,00,000 (Rupees Sixteen Lakhs only) per annum to each Non-Executive Director of the Bank (except Part Time Non-Executive Chairperson), which may be reviewed by the Board/ or NRC, in terms of the Revised RBI Circular.

Except Non-Executive Directors of the Bank and their relatives, none of the other Directors, Key Managerial Personnel of the Bank and/ or their relatives are, in any way, financially or otherwise, concerned or interested, in the passing of this resolution.

The Board recommends passing of the Ordinary Resolution as set out in Item No. 9 of this Notice, for approval of the Members.

A brief profile of the Non-Executive Directors (other than those whose information forms part of the explanatory statement for their appointment/ re-appointment) eligible for fixed remuneration, in terms of the Secretarial Standard on the General Meetings has been given in the EXHIBIT B to this Notice.

Item No. 10

To offer and issue of Debt Securities on Private Placement

basis.

Section 42 of the Companies Act, 2013 (‘Act’) read with the Companies (Prospectus and Allotment of Securities) Rules, 2014, provides that a company can make private placement of securities subject to the condition that such subscription of securities has been previously approved by the Members of the company, by a special resolution, for each of the offers or invitations/ subscriptions. In case of offer or invitation for subscription of non-convertible debentures (‘NCDs’), it shall be sufficient if the company passes a special resolution only once in a year for all the offers or invitations for subscriptions of such debentures during a period of One (1) year from the date of passing of this Special Resolution.

The Bank had obtained the approval of Members at last AGM held on July 30, 2020 for borrowing/raising funds by issue of debt securities on private placement basis in pursuance of the relevant provisions of the applicable laws and circulars or guidelines issued by Reserve Bank of India (‘RBI’), up to ` 5,000 crores (Rupees Five Thousand Crores Only), in one or more tranches.

In order to facilitate the raising of funds by way of issue of debt securities during a period of one (1) year from the conclusion of 7[th] AGM of the Bank, it would be necessary to have fresh approval of Members in place.

Considering the aforesaid, the Board of Directors of the Bank at its meeting held on July 31, 2021, after assessing its fund requirements, have proposed to obtain the consent of the Members of the Bank for borrowing/ raising funds, from time to time, in Indian rupees/ Foreign currency, by issue of debt securities including but not limited to Subordinated, Unsecured, Rated, Listed, Taxable, Redeemable fully paidup Basel III Compliant Tier-II Bonds/ Non-Convertible Debentures, Medium Term Notes (MTN), Perpetual Debt

Instruments (part of Additional Tier I Capital), Tier II Capital Bonds, Long Term Bonds (financing of infrastructure and affordable housing) and such other securities as may be permitted by RBI and under applicable laws from time to time, on private placement basis, up to an amount not exceeding ` 5,000 crores (Rupees Five Thousand Crores only), over and above the outstanding debt securities issued by the Bank, in one or more tranches, series and/ or in the form of separately transferable redeemable principal parts (if required), in such classes and with such rights or terms as may be considered necessary, under one or more information memorandum, offering circular, disclosure document, shelf disclosure document and/ or under one or more letter of offers as may be issued by the Bank, in domestic and/or overseas market, as per the agreed structure and within the limits permitted by RBI and other regulatory authorities and pursuant to relevant provisions of the applicable circulars, directions or guidelines issued by RBI and such other regulatory authorities.

The Bank had obtained the approval of the Members at the first (1[st] ) Annual General Meeting (‘AGM’) held on September 29, 2015 for borrowing/ raising funds (amongst other borrowing products) by issue of debt securities pursuant to the relevant provisions of the applicable circulars and guidelines issued by the RBI, up to ` 1,50,000 crores (Rupees One Lakh Fifty Thousand Crores only), in one or more tranches.

The said incremental limit of 5,000 crores (Rupees Five Thousand Crores only) is over and above the outstanding debt securities issued by the Bank, which shall be within the overall borrowing limit of 1,50,000 crores (Rupees One Lakh Fifty Thousand Crores only) approved under Section 180(1)(c) of the Act, by the Members at the first (1[st] ) AGM.

The proposed resolution under Section 42 of the Act, shall be valid for a period of one (1) year from the date of passing of this resolution and the offer shall be made to such persons as identified (‘Eligible Investors’) pursuant to Section 42 (2) of the Companies Act, 2013.

The pricing of the debt securities referred above depends on various factors which may include prevailing risk-free rates, competitor rates of similar rating and tenor in the domestic or overseas markets, investor appetite for such instruments and prevailing investor regulations. Further, the debt securities may be issued on such terms and conditions including the price, coupon, par/ premium/ discount, tenor etc., as may be determined by the Board (includes a duly authorized Committee), in the prevailing market conditions as permitted by the relevant applicable regulations.

None of the Directors, Key Managerial Personnel of the Bank and/ or their relatives are, in any way, financially or otherwise, concerned or interested, in the passing of this resolution.

The Board recommends passing of the Special Resolution as set out in Item No. 10 of this Notice, for approval of the Members.

IDFC FIRST BANK | NOTICE OF THE 7[TH ] AGM

EXHIBIT A

Additional Information of Director retiring by rotation at the 7[th] AGM of the Bank, in terms of Regulation 36(3) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Secretarial Standard on General Meetings (SS-2) pertaining to the item No. 2 of the Notice.

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Name Mr. Vishal Mahadevia
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Name	Mr. Vishal Mahadevia

DIN	01035771
Age	48 Years
Date of frst appointment on the Board	December 18, 2018
Brief Resume, Qualifcation and Experience	Mr. Vishal Mahadevia is the Managing Director, Head of India and a member of the Executive Management of Warburg Pincus. Prior to joining Warburg Pincus in 2006, he was a Principal at Greenbriar Equity Group, a fund focused on private equity investments in the Transportation sector. Prior to that, Mr. Vishal Mahadevia worked at Three Cities Research, a New York-based private equity fund and as a consultant with McKinsey & Company. Mr. Mahadevia is also a Director of IDFC FIRST Bank Limited and Apollo Tyres Limited. He received a B.S. in Economics with a concentration in Finance and a B.S. in Electrical Engineeringfrom the Universityof Pennsylvania.
Nature of Expertise in specifc functional areas	Mr. Vishal Mahadevia has special knowledge and practical experience in the matters of Economics and Finance as required under Section 10A of the BankingRegulation Act, 1949.
No. of Board Meetings attended during FY21	13/13
Directorships held in other companies (Except Section 8 and Foreign Companies)	1. Warburg Pincus India Private Limited 2. Apollo Tyres Limited
Memberships/Chairmanships of Committees of other Boards (Only Audit and Stakeholders’ Relationship Committee of Indian Public Limited Companies have been considered)	Nil
Remuneration last drawn	Nil
Details of Remuneration sought to bepaid	Mr. Vishal Mahadevia voluntarily requested the Bank to not to pay any remuneration to him. Accordingly, he will not bepaid anykind of remuneration.
Shareholding in IDFC FIRST Bank(as on July 31, 2021)	Nil
Relationship with other Directors & Key Managerial Personnel of the Bank	None

NOTICE

EXHIBIT B

Additional Information of the Non-Executive Directors (other than those whose information forms part of the explanatory statement for their appointment/ re-appointment), eligible for fixed remuneration in terms of Secretarial Standard on General Meetings (SS-2) pertaining to the item No. 9 of the Notice.

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Name Dr. (Mrs.) Brinda Jagirdar
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Name	Dr.(Mrs.)Brinda Jagirdar

DIN	06979864
Age	68 Years
Date of frst appointment on the Board	December 18, 2018
Brief Resume, Qualifcation and Experience	Dr. (Mrs.) Brinda Jagirdar, is an independent consulting economist with specialization in areas relating to Banking and Economics including Agriculture Economics. She is an Independent Director on corporate boards: IDFC FIRST Bank Limited, Rane Engine Valve Limited, Rane Brake Lining Limited, Multi Commodity Exchange Clearing Corporation Limited, SBI DFHI Limited and Safex Chemicals (India) Limited. She is a member of the Research Advisory Committee of the Indian Institute of Banking and Finance, Mumbai. She is on the Governing Council of Treasury Elite, a knowledge sharing platform for fnance and treasury professionals. She is a member of the Managing Committee of the All India Bank Depositors Association of the Forum of Free Enterprise. She retired as General Manager and Head of Economic Research, State Bank of India, based at its Corporate Offce in Mumbai. As part of the Bank’s Top Management team, Dr. Jagirdar’s work at SBI involved leading the Department of Economic Research to track developments in the Indian and global economy and analyse policy implications for business. She was invitee to the Bank’s Asset Liability Committee and to the Central Management Committee meetings. She conducted research studies on relevant issues including fnancial inclusion, fnancial stability, banking sector reforms. Dr. (Mrs.) Brinda Jagirdar was associated with the Raghuram Rajan Committee on Financial Sector Reforms in India, was a member of the Planning Commission’s Sub Group on Household Sector Savings for the 12thFive Year Plan and member of the Ministry of Finance Group on Deepening India’s Household Financial Savings. She was member of Banking, Finance & Economics Committee of the Bombay Chamber of Commerce, member of the Monetary Policy Group of Indian Banks’ Association and editorial committee member of the journal of the Indian Banks’ Association. In March 2019, Dr. (Mrs.) Brinda Jagirdar was recognised as among India’s Top 100 Women in Finance by the Association of International Wealth Management of India. She has a brilliant academic record, with a Ph.D. in Economics from the Department of Economics, University of Mumbai, M.S. in Economics from the University of California at Davis, USA, M.A. in Economics from Gokhale Institute of Politics and Economics, Pune and B.A. in Economics from Fergusson College, Pune. She has attended an Executive Programme at the Kennedy School of Government, Harvard University, USA and a leadership programme at IIM Lucknow. She has participated and presented papers at several seminars and conferences in India and abroad. She is regularly invited to make presentations and speak on topics relating to the economy and banking at various fora including National Institute of Bank Management, Forum of Free Enterprise, business schools and colleges. She has contributed columns in business newspapers and business journals and is frequently invited to be a panellist on TV business channels.
Nature of Expertise in specifc functional areas	Dr. (Mrs.) Brinda Jagirdar has special knowledge and practical experience in the matters of Banking and Economics including Agriculture Economics as required under Section 10A of the BankingRegulation Act,1949.
No. of Board Meetings attended during FY21	13/13
Directorships held in other companies (Except Section 8 and Foreign Companies)	1. Rane Engine Valve Limited 2. Rane Brake Lining Limited 3. Multi Commodity Exchange Clearing Corporation Limited 4. SBI DFHI Limited 5. Safex Chemicals(India)Limited

IDFC FIRST BANK | NOTICE OF THE 7[TH ] AGM

Memberships/Chairmanships of Committees of other Boards (Only Audit and Stakeholders’ Relationship Committee of Indian Public Limited Companies have been considered)	1. Rane Engine Valve Limited - Member of Audit Committee 2. Rane Brake Lining Limited - Member of Audit Committee 3. Multi Commodity Exchange Clearing Corporation Limited - Member of Audit Committee 4. SBI DFHI Limited - Member of Audit Committee 5. Safex Chemicals(India)Limited - Member of Audit Committee
Remuneration last drawn	• Sitting Fees for the year ended March 31, 2021 :`28,00,000 • Commission for FY 20(paid in FY 21): Nil
Details of Remuneration sought to bepaid	As provided in resolution set out in Item No. 9 of this Notice
Shareholding in IDFC FIRST Bank(as on July 31, 2021)	Nil
Relationship with other Directors & Key Managerial Personnel of the Bank	None

Name	Mr. Aashish Kamat
DIN	06371682
Age	55 Years
Date of frst appointment on the Board	December 18, 2018
Brief Resume, Qualifcation and Experience	Mr. Aashish Kamat has over 32 years of experience in the corporate world, with 24 years being in banking and fnancial services, 6 years in public accounting and 2 years in Private Equity. Until March 31, 2021, Mr. Kamat was the Co-managing partner of GCC Asia Growth Fund. Prior to this, his 24 years in banking have seen him hold various senior and regional roles covering wholesale, investment, private and consumer banking in India and overseas. Mr. Kamat was the Country Head for UBS India, from 2012 until his early retirement in January 2018. Prior to that he was the Regional COO/CFO for Asia Pacifc at JP Morgan based out of Hong Kong. Before moving to Hong Kong, Mr. Kamat was in New York, where he was the Global Controller for the Investment Bank (IB) at JP Morgan in New York; and at Bank of America as the Global CFO for the IB, and, Consumer and Mortgage Products. Mr. Kamat started his career with Coopers & Lybrand, a public accounting frm, in 1988 before he joined JP Morgan in 1994. In these various roles he has been responsible for all aspects of banking including client relationship management and deal origination, strategic and fnancial planning, regulatory management and reporting, all aspects of risk management (market, credit, operational including compliance), Business, product and legal entity controllership, balance sheet, RWA and capital management. His roles at JP Morgan and Bank of America also saw him participate as a member in various global and regional committees for Risk, Finance and Control, and Reputation. Mr. Aashish Kamat holds a BA in Accounting from Franklin & Marshall College, USA and is also a Certifed Public Accountant(CPA).
Nature of Expertise in specifc functional areas	Mr. Aashish Kamat has special knowledge and practical experience in the matters of Accountancy, Auditing, Banking, Finance, Risk Management and Business Management as required under Section 10A of the BankingRegulation Act,1949.
No. of Board Meetings attended during FY21	12/13
Directorships held in other companies (Except Section 8 and Foreign Companies)	Nil
Memberships/Chairmanships of Committees of other Boards (Only Audit and Stakeholders’ Relationship Committee of Indian Public Limited Companies have been considered)	Nil

NOTICE

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Remuneration last drawn • Sitting Fees for the year ended March 31, 2021 : ` 20,00,000
• Commission for FY 20 (paid in FY 21) : Nil
Details of Remuneration As provided in resolution set out in Item No. 9 of this Notice
sought to be paid
Shareholding in IDFC FIRST 26,000 Equity Shares
Bank (as on July 31, 2021)
Relationship with other None
Directors & Key Managerial
Personnel of the Bank
Name Mr. Hemang Raja
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Name	Mr. HemangRaja

DIN	00040769
Age	62 Years
Date of frst appointment on the Board	December 18, 2018
Brief Resume, Qualifcation and Experience	Mr. Hemang Raja, is an MBA from Abilene Christian University, Texas, with a major emphasis on fnance. He has also done an Advanced Management Program (AMP) from Oxford University, UK. He has vast experience of over thirty-seven years in fnancial services industry. His last assignment from the year 2006 was in Private Equity and Fund Management business with Credit Suisse and Asia Growth Capital Advisers in India as MD and Head - India. He has served on the executive committee of the board of the National Stock Exchange of India Limited; also served as a member of the Corporate Governance Committee of the BSE Limited.
Nature of Expertise in specifc functional areas	Mr. Hemang Raja has special knowledge and practical experience in the matters of Finance and Management as required under Section 10A of the BankingRegulation Act,1949.
No. of Board Meetings attended during FY21	13/13
Directorships held in other companies (Except Section 8 and Foreign Companies)	Multi Commodity Exchange of India Limited
Memberships/Chairmanships of Committees of other Boards (Only Audit and Stakeholders’ Relationship Committee of Indian Public Limited Companies have been considered)	Multi Commodity Exchange of India Limited - Member of Stakeholders’ Relationship Committee
Remuneration last drawn	• Sitting Fees for the year ended March 31, 2021 :`27,50,000 • Commission for FY 20(paid in FY 21): Nil
Details of Remuneration sought to bepaid	As provided in resolution set out in Item No. 9 of this Notice
Shareholding in IDFC FIRST Bank(as on July 31, 2021)	Nil
Relationship with other Directors & Key Managerial Personnel of the Bank	None

IDFC FIRST BANK | NOTICE OF THE 7[TH ] AGM

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Name Mr. Sanjeeb Chaudhuri
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Name	Mr. Sanjeeb Chaudhuri

DIN	03594427
Age	68 Years
Date of frst appointment on the Board	May 10, 2019
Brief Resume, Qualifcation, Experience	Mr. Sanjeeb Chaudhuri is an MBA in Marketing and has completed an Advanced Management Program. He has over four decades of senior multinational business experience across global banks and consumer companies. He was listed among the Top 25 Media Visionaries in Asia Pacifc in 2016 and is a featured speaker at premier global marketing and media events in Europe and Asia.

	Mr. Sanjeeb Chaudhuri has deep knowledge of consumer and commercial markets for products and services across major developed and emerging markets of India, rest of Asia, Middle East, Africa and Europe. His operating experience includes driving digital transformation at global banks across Europe, Asia, Middle East and Africa. He has frst-hand experience generating multi-million-dollar effciencies from simplifcation, offshoring and technology-based operating solutions. His portfolio includes Retail, Fin Tech, Internet of Things, Smart Cities and Marketing Tech businesses.

	Mr. Sanjeeb Chaudhuri has been an Independent Director and Audit, Nomination and Remuneration and CSR Committee member at Aditya Birla Group company, ABFRL, the largest fashion retailer in India with thousands of outlets and employees across the country. He has been Director of Citigroup Europe plc, Dublin and been on the Supervisory Board and Audit Committee at Bank Handlowy, the third largest bank in Poland. He was also a Director and Audit Committee Member at Standard Chartered Securities Ltd, India. He is a Board member and Advisor to large commercial and nonproft organisations across Europe, US and Asia.

	Mr. Sanjeeb Chaudhuri is currently a Global Mentor at the Centre for Technology Management at Columbia School of Business, New York, where he advises Chief Technology and Chief Information Offcers at large corporations globally to leverage technology for outstanding business results. He has been on the International Advisory Board of The Open University School of Business and Law, UK, for over a decade. He has been Guest Faculty on Business Strategy, Financial Services and New Age Marketing at Wharton School of Business and Judge Business School,Cambridge.
Nature of Expertise in specifc functional areas:	Mr. Sanjeeb Chaudhuri has special knowledge and practical experience in the matters of Banking, Business Management, Rural Economics, Risk Management, Information Technology and Payment & Settlement Systems as required under BankingRegulation Act,1949.
No. of Board Meetings attended during FY21	13/13
Directorships held in other companies (Except Section 8 and Foreign Companies)	Nil
Memberships/Chairmanships of Committees of other Boards (Only Audit and Stakeholders' Relationship Committee of Indian Public Limited Companies have been considered)	Nil
Remuneration last drawn	• Sitting Fees for the year ended March 31, 2021 :`21,00,000 • Commission for FY 20(paid in FY21): Nil
Details of Remuneration sought to bepaid	As provided in resolution set out in Item No. 9 of this Notice.
Shareholding in IDFC FIRST Bank(as on July 31, 2021)	21,000 Equity Shares
Relationship with other Directors & Key Managerial Personnel of the Bank	None

NOTICE

Green Initiative

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IDFC FIRST Bank Limited

CIN: L65110TN2014PLC097792

GO - GREEN INITIATIVE AND IEPF

Dear Shareholder,

Go Green Initiative - Electronic Mode of service of documents:

The Ministry of Corporate Affairs (‘MCA’) has taken a “Go Green Initiative in the Corporate Governance” by allowing paperless compliances by companies. The applicable provisions of Companies Act, 2013 read with rules made thereunder permits circulation of financial statements, notices etc. to shareholders through electronic mode as per the records of the Company/ Registrar and Share Transfer Agent or as provided by the Depositories.

In this regard, we seek your whole-hearted support for this initiative. We would request you to register your e-mail Id with your Depository Participant, to get Annual Reports and other communications through e-mail instead of paper mode.

In case, you are holding shares of the Bank in physical form, you may kindly provide your e-mail Id to our Registrar and Share Transfer Agent (‘RTA’) i.e. KFin Technologies Private Limited (‘KFIN’), Selenium Tower B, Plot Nos. 31 & 32, Financial District, Gachibowli, Nanakramguda, Serilingampally Mandal, Hyderabad - 500 032, Telangana, India, Tel. No.: +91 40 6716 2222, Toll Free No. 1800 30 94 001 e-mail: einward. [email protected]; Website: www.kfntech.com/ or request by e-mail to KFIN at [email protected], communicating Name, Folio No./ DP ID/ Client ID and e-mail address. In case, you are holding shares of the Bank in demat mode, you are requested to contact your Depository Participant (DP) and register your e-mail address and bank account details in your demat account, as per the process advised by your DP.

Alternatively, the Members can also update their e-mail addresses with Bank by sending an e-mail to [email protected]. The Bank shall appropriately coordinate with the RTA to get the records updated. This will help the Bank for serving documents to you electronically.

You may kindly note that as a member of the Bank, you are entitled to be furnished free of cost, a printed copy of the Annual Report of the Bank, upon receipt of a requisition from you at any time.

However, in view of continuing pandemic situation of COVID-19 and pursuant to the guidelines and notification/ circular issued by the MCA and Securities and Exchange Board of India (‘SEBI’), the Annual Report for FY 2020-21 alongwith seventh (7[th] ) AGM Notice is being sent only through electronic mode.

The Notice and Annual Report of the Bank would also be made available on the Bank’s website www.idfcfrstbank.com and websites of the Stock Exchanges i.e. BSE Limited and National Stock Exchange of India Limited at www. bseindia. com and www.nseindia.com respectively.

Payment of Dividend through electronic mode

As a measure to use electronic method of payment for making cash payments (such as dividends) to the investors, we would request you to do the following:

i. In case of shares held in Demat form, update your Bank account details with your Depository Participant.
ii. In case of shares held in physical form, provide the Bank account details to our RTA, KFIN.

This process also will help you to get all your future dividends immediately on the payment date without any risk of loss of physical warrants in postal transit.

We are sure that as a responsible citizen, you would appreciate the ‘Green Initiative’ taken by MCA and your Bank’s desire to participate in such initiatives and will wholeheartedly support the same.

IDFC FIRST BANK | NOTICE OF THE 7[TH ] AGM

Transfer of Unpaid/ Unclaimed Dividend & Shares Underlying Unclaimed Dividends to the IEPF

We wish to draw your kind attention to the provisions of Section 124 and 125 of the Companies Act, 2013 read with rules made thereunder and the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 as amended, (‘Rules’) and other applicable provisions, pursuant to which the dividend amounts remaining unpaid or unclaimed for a period of seven years will be transferred to the ‘INVESTOR EDUCATION AND PROTECTION FUND’ (IEPF) established by the Central Government. Further, all shares on which dividend has not been paid or claimed for seven consecutive years or more shall also be transferred to the IEPF after complying with the procedure laid down under the ‘IEPF Rules’ and no claim shall lie against the Bank for the amount of dividend(s) and shares so transferred.

However, you can claim from the IEPF Authority, both the unclaimed dividends and the shares transferred to the IEPF by making an online application in Form IEPF-5 and following the procedure as mentioned therein. Further details for claiming the dividend/ shares from the IEPF is available on the website of the IEPF http://www.iepf.gov.in/IEPF/refund. html.

The amount of final dividend declared by erstwhile Capital First Limited at its ninth (9[th] ) Annual General Meeting held for the financial year 2013-14 and the shares corresponding to the unpaid or unclaimed dividends for seven consecutive years or more taking these dividend(s) respectively as the base year are due for transfer to the IEPF. Request you to also refer Corporate Governance Report forming part of Annual Report for details on IEPF.

Transfer of Unpaid/ Unclaimed interest/ principle amount pertaining to matured bonds/ debentures to the IEPF

Further, in accordance with the provisions of the Companies Act, 2013 and IEPF rules, the Bank will also transfer interest/ principle amount of the matured bonds/ debentures which has remained unclaimed/ unpaid for a period of seven years from the date of it became due for payment.

The shareholders are requested to support the Bank in its Green Initiative.

For IDFC FIRST Bank Limited

Satish Gaikwad Head - Legal & Company Secretary

NOTICE

ANNUAL REPORT 2020-21

ALWAYS YOU FIRST

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SET FOR GROWTH

1 CORPORATE OVERVIEW

1 Vision & Mission 2 Key Numbers
3 Our presence
4 MD & CEO’s message
12 COO’s message
14 CFO’s message
16 Investor Corner
24 Building the Brand
28 An ethical way to Growth
32 A helpful Bank during COVID-19 38 Employee Safety & Convenience 40 Ghar Ghar Ration Programme
42 Technology Initiatives
46 You Can initiative 50 Because YOU matter most
54 FIRST IMPACT CSR initiatives 72 Staying connected
76 Awards & Recognition 78 Board of Directors

82 STATUTORY REPORTS

82 Directors’ Report 107 Management Discussion and Analysis 126 Corporate Governance Report

155 FINANCIAL STATEMENTS

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www.idfcfirstbank.com

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COVID-19: Staying resilient. Helping businesses and communities pull through the pandemic

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First Impact: Corporate Social Responsibility 54

Vision

To build a world class bank in India, guided by ethics and customer first values , powered by technology , and be a force for social good

Mission

We want to touch the lives of millions of Indians in a positive way by providing high-quality banking products and services to them, using contemporary technologies

Annual Report 2020-21 1

Key Numbers FY21

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` CRORE 1,17,127 Funded Assets

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67%* Retail Assets as a % of Funded Assets

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` CRORE 45,896 CASA Deposits

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4.98% Net Interest Margin

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1,273 Branches & ATMs

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51.75%[#] CASA Ratio

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13.77% (16.32% including equity raised on April 06, 2021) Capital Adequacy Ratio

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` CRORE 17,808

( ` 20,808 crore including equity raised on April 06, 2021) Networth

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1.86% Net NPA

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153%

Average Liquidity Coverage Ratio for the quarter ended March 31, 2021

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` 452 CRORE

Profit after Tax

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Above are all standalone figures as on/for the year ended March 31, 2021

Excluding the inorganically acquired portfolio, where the underlying assets are retail loans, the Retail contribution to the overall Funded Assets is 63% as of March 31, 2021.
The CASA ratio was 31.87% on March 31, 2020.

2 IDFC FIRST Bank

Growing our Footprint

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596
Jammu
& Kashmir Branches ATMs
Punjab
Chandigarh
Uttarakhand
Haryana
Delhi
Assam
Rajasthan Uttar Pradesh
Meghalaya
Bihar
Jharkhand Tripura
Gujarat Madhya Pradesh West Bengal
Chhattisgarh Odisha
Maharashtra
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596 677 Branches ATMs

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Telangana
Goa
Andhra Pradesh
Karnataka
Puducherry
Tamil Nadu
Kerala
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Annual Report 2020-21

MD & CEO’s message

A World-class Bank in the making

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V Vaidyanathan Managing Director and CEO

We have defined our vision as “To build a world class bank in India, guided by ethics and customer-first values, powered by technology, and be a force for social good.” We find this line highly inspiring..

Dear Shareholders,

It is a great pleasure writing to you once again. It has been two and a half years since the merger and during this period, our Bank has made tremendous progress on laying the foundation for a highly successful and megabank of the future. I would love to explain to you what we are truly building at our Bank. What we are building at the core is a new age digital Bank which is agile and highly scalable. Our pre-provisioning profits (PPOP) are low at this stage because of our DFI background with higher cost of legacy liabilities, coupled with the set-up costs of a new bank, but this is getting fixed at a quick pace because of our strong profitability on an incremental basis.

Chances are, as a shareholder looking at quarterly results, the underlying quality of the bank we are building is not entirely visible at this stage to you. Because the usual conversation from anchors are after any results are “So, what is your exposure to Vodafone Idea? How much more pain is yet to come on infrastructure? What is NPA in retail because of Covid? When do you see the situation normalizing?” If you’re an analyst, chances are that to the above questions you will also add “Your ROE is low.”

I believe they are so focused on the here and now quarter and its comparison with other established banks that the power of incremental profitability is lost in the noise. And the comparison is with banks who have already been there for 20-30 years or with entities that were already profitable when they converted to a bank. What is not visible to many is the foundation that has been laid and how quickly the picture is changing. So much so that when I was pushed hard on some such subject by a journalist, I responded instinctively “You ask Mr Kamath how hard it is to convert a DFI to a commercial bank, to my knowledge he is the only one who has achieved this”. (Refer Financial Express in Press section)

4 IDFC FIRST Bank

Yes, that’s right. Our Bank was created from an infrastructure DFI which had acquired a bank license. An infrastructure DFI, by the nature of its business, usually borrows long term funding from banks/ Bonds at market rates, and usually lends to corporate and institutions. So the margins and profitability are low and individual exposures are large. We are carrying ` 27,936 crore of fixed-rate liabilities at 8.66%, largely legacy, and you can imagine the upsides when these are replaced by low cost deposits.

Thus, to understand the future potential of our Bank, you should understand the true incremental profitability of our Bank. If you want to understand this, please jump straight to Section 4 (Page 9) titled “ The power of incremental profitability. ”

I would now like to explain to you the vision of our Bank.

SECTION 1. VISION OF OUR BANK:

We have defined our vision as “ To build a world class bank in India, guided by ethics and customer-first values, powered by technology, and be a force for social good. ” We find this line highly inspiring and are working towards it day and night. Let me explain what each of these words in our vision statement mean for us.

(a) “To Build”: To create a world class bank is an opportunity few people get in their lifetimes. Our employees could get opportunities to work in “world-class” organisations, but “building” one is something else.
(b) “….a world-class bank”: For a country as large and diverse as India, and a country set to be world’s third largest economy by 2030, there are few “ world-class ” banks in India. And when we say world-class, we mean banks of global scale and profitability, on the cuttingedge of innovation, providing amazing customer service, highest levels of corporate governance, generate high return on equity, and enjoying international respect and admiration. We aspire to be on that list, and are passionate about building such a bank. We have already sown the seeds for such a bank.

For a country as large and diverse as India, and a country set to be world’s third largest economy by 2030, there are few “worldclass” banks in India.

(c) “….with ethics and customer-first values”: We advise our product teams to design products in such a way that it is meant to be sold to our “near and dear” ones. We make products with transparent pricing and fees. Working on the theme of Customer First, we came up with many unique features as follows:

We advise our product teams to design products in such a way that it is meant to be sold to our “near and dear” ones.

Monthly credits: We have started “monthly” credit of interest on savings accounts, against the industry practice of Quarterly credits. So, our customers earn “interest on interest” monthly on their savings accounts. To the best of our knowledge, no large bank with a Universal Bank License has ever done this.
Low, Dynamic APR for revolvers: APR (Annual Percentage Rate) on credit card revolvers has always been about 3.49% per month, that’s about 42% per annum. So if you carry forward any balances or if you miss your payment by mistake, you pay at 42% per annum for that month. And by the way, 40% of card holders do end up paying these rates. Either customers are insensitive to APR or don’t know about it.
We think about this issue differently. We were the first bank to set dynamic and low rates of 0.75% to 2.99% per month, or 9% to 36% per annum, based on several factors including risk rating. Check the APR on the credit card you have in your pocket right now, chances are you are paying more than our highest rates. If you apply, you might get a rate somewhere in between, and chances are that you can benefit right away. And don’t forget our many other such customer friendly features.
Cash withdrawal interest rates: If you withdraw emergency cash from the ATM on your credit card you normally pay 250 as one-time fee PLUS interest rate of 42% p.a. from Day 1 of withdrawal. We felt this was rather high. We charge you 250 and charge no interest till next Payment Due date. Yes, you read this right, no interest till next Payment Due date.

Annual Report 2020-21 5

Customer First: Where there is a misunderstanding, our instruction to the service team is “credit the customer first” and fix the root cause of the issue.
No Fine Print Banking: We don’t follow fine-print banking hoping customer won’t notice certain terms or charges. We don’t appreciate product managers who talk that language when designing products.
We don’t pressurize our employees to “somehow” sell high-margin products to meet fee targets. The list of our “Customer First” features is long.
- So what we are building is a bank that’s clean from within. If you are wondering at this stage, if strong Customer First approach and great returns for Shareholders is an “either-or” trade-off, please jump straight to Section 4 (Page 9) on “ Incremental Profitability ” where we demonstrate the power of our business profitability.
(d) “…and technology” India is building digital highways Aadhaar, a vast mobile network and UPI. We are coupling these with AI ML technologies, data, cloud, API banking and are committed to investing in the latest technologies to continuously stay ahead. We recently unveiled our new mobile and web app which have a large number of unique features like Google like search capabilities, Personal Finance Management, Payto-Contacts, one click FD creation, live mutual fund investing, risk-analyser, and so on.
(e) “….and be a force for social good” To create social good is the purpose of our existence. For example, apart from lending to prime segments such as prime home loans and car loans, we have also developed specialization in financing artisans, large medium and small farmers, kirana shops, restaurants, automobile spare parts, tailoring, carpentry, salons, chemists, two wheelers, consumer durables, JLG in rural areas etc. The purposes of financing include business expansion, cattle purchase, water and sanitation financing and so on.

We have financed over 30 million such loans till date in our combined experience. We have developed unique skills in this area with stable and high asset quality of Gross of ~ 2% and Net NPA of ~ 1% for over ten years. Similarly on the deposits, investments, insurance or wealth management, we can create many solutions for customers across cross section of society, that can create great social good.

To create social good is the purpose of our existence.

Propagating our vision statement: We first came up with the idea of a “seal” to capture our key themes to share with our employees. We then debated hours over multiple sessions about what should be on the seal. After much debate, we settled in on three themes: Ethical Banking, Digital Banking and Social Good . This also goes well with our vision statement.

“Social-Good” is the purpose of our existence. Our business must add to larger social good. We exist to serve society- urban and rural, rich and poor, salaried and self-employed, cities towns and villages, and manufacturing, agriculture or services.

“Ethical” is the means we want to use in dealing with everyone. There is no point becoming highly profitable if not earned the clean way.

And “Digital” is the medium we want to use. The seal looks as follows:

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After much debate, we settled in on three themes: Ethical Banking, Digital Banking and Social Good. This also goes well with our vision statement.

Coding the DNA: By making this seal and sharing with employees, we are attempting to code the DNA of our employees. That’s because we are an early stage bank and the DNA code we build will affect the long term conduct of our employees. This also becomes an internal check and balance among employees for good conduct as expected of them.

6 IDFC FIRST Bank

We are trying to code the DNA of our employees to align with the vision and mission by sharing the seal with them.

SECTION 2. EXPECTATIONS AT MERGER.

As compared to the original estimates at the time of merger, we have outperformed on every front but profitability. On profitability, we would like to share that the issues in infrastructure and certain corporate accounts turned out to be more than expected because of the economic cycle. This resulted in impact on our net-worth by about 2,000 crore. Our Bank had also sold down loans worth 6,448 crore to ARCs prior to the merger, and non-accrual of income from these exposures additionally affected operating profit.

I would like to share that we have substantially overcome the situation because of NIM increasing to 5.5% in Q1 FY22, which has resulted in Core Operating Profit crossing ` 600 crore in Q1 FY22. The core premise of attaching a well performing asset machine with a bank’s liability machine is well intact. We believe the Bank will head towards excellent profitability in upcoming few years and we will cover lost time.

SECTION 3: OVERALL PERFORMANCE OF OUR BANK SINCE MERGER:

1. A strong Deposit Base:

We have always maintained that to have a strong and stable deposit base is the most important foundation for building a great bank for the future. On this count we have achieved the following progress:

a. Strong CASA Ratio: At the time of merger in December 2018, IDFC Bank was a recently formed Bank and thus did not have much CASA, and Capital First was an NBFC with no CASA. On merger we had CASA ratio of 8.68%. At that time every analyst told us that the hardest issue to fix for you will be the liabilities side. We are happy to report that our CASA ratio has crossed 50%. If anything, this describes our capability to raise deposits, a key raw material for growth.
b. Strong granular deposit franchise: During H1 FY21, markets were roiled, exchanges were crashing across the globe, there was crisis at one private sector bank, and it felt the world was falling apart. The general experience in the banking system was that there was a flight of deposits to the top large banks. I am happy to report that precisely during that period of COVID chaos, IDFC FIRST Bank’s granular customer deposits (Balances less than or equal to 5 crore) grew by a whopping 6,315 crore in Q1 FY 21 and by another ` 10,565 crore in Q2 FY21! So the COVID ravaged quarter was our highest ever growth in granular deposits. Such is the confidence our customers bestow on us in a COVID year, and we know it is our job to live up to their trust. We thank them wholeheartedly.

Overall, during FY 20-21, our granular customer deposits (balances less than or equal to 5 crore) grew by a whopping 33,788 crore, or 99% YoY. Today 82% of our customer deposits are granular customer deposits (balances less than or equal to ` 5 crore) as compared to 30% at merger.

As on	Mar 20	Jun 20	Sep 20	Dec 20	Mar 21	YoY Growth
Deposits balance upto`5 cr\|`34,267 cr	`40,582 cr\|`51,147 cr	`60,383 cr\|`68,055 cr	99%

C. New account opening continues to be strong: The deposit inflows were strong, and more than our requirements. So, to optimize the flows, we reduced our savings account interest rates. I am happy to share that our new account opening continues apace. On a related note, reducing our savings account interest rates had another positive side benefit; we can now participate in prime Home loans profitably which has multiplied our market opportunities.

Reducing our savings account interest rates had another positive side benefit; we can now participate in prime Home loans profitably which has multiplied our market opportunities.

Annual Report 2020-21

d. Reducing Concentration risk: Deposits from our Top 20 depositors have reduced from 40.0% of customer deposits at merger to only 7.7% as of March 31, 2021. This is a conscious risk mitigation measure. You can rest assured your Bank’s deposit base is diversified and super safe!

2. Maintaining strong Liquidity:

We always maintain liquidity more than regulatory requirements. We ended Q4 FY 21 with average LCR of 153%, against regulatory LCR requirement of 100%. Again, your Bank will never ever take chances on this count.

3. Maintaining strong Capital:

We have always been and will always keep ourselves capitalized in excess of regulatory requirements at all times. In June 20, even while COVID first wave was raging, we raised 2,000 crore of equity. Again, in April 21, the COVID second wave had just reared its head, we raised 3,000 crore of equity. We enjoy support of long-term investors. Our capital adequacy is strong at 15.56% as of June 30, 2021.

4. Excellent Retail Assets model:

This is the core engine of our Bank and is performing exceedingly well. We feel we will easily surpass the fiveyear guidance of ` 1,00,000 crore given at the time of merger.

5. Asset Quality:

a. Corporate Accounts: We have had a few issues from large corporate accounts, including a housing finance company, a financial conglomerate, a Mumbai based Toll Road company, an Odisha based power account, a telecom account and a few other such accounts because of downturn cycle in infrastructure financing in India and a few financial conglomerates going down. Barring our exposure to the telecom account, we feel most of the issues are behind us.
b. Infrastructure financing is a difficult business because of dependence on regulatory approvals and dependence on ecosystems on which we have limited control. We have brought down the loan outstanding to infrastructure from 22,710 crore at merger to 10,808 crore as of March 31, 2021.
c. On the Corporate Banking side , we have implemented good controls in our Bank and our recent portfolio performance is pristine.

asset list (Accounts that we consider stressed over and above the declared NPA) from 4,138 crore as of March 31, 2019 to 2,264 crore as of March 31, 2021. (further reduced to ` 1,371 crore as of June 30, 2021).

e. Large borrowers’ exposure As a risk mitigation measure, we have reduced exposure on large borrowers. Our top 10 borrowers as a percentage of total exposure has come down from 12.8% as of December 31, 2018 to 5.9% as of March 31, 2021.
f. Retail Assets quality: On the retail side, our asset quality has been pristine at Gross NPA of ~ 2%, Net NPA of ~ 1% for over 10 years, through stress tests of Demonetisation, GST implementation and economic slowdown. During COVID our retail NPA has increased, but we are confident of reverting to our pre-COVID GNPA and Net NPA around end of FY 22, based on the strong pickup in collections post COVID second wave. We should trust our skills, track record, experience and technology, and not doubt ourselves just because of a pandemic that came our way. We learn, adjust, refine, and move on.
g. Expanding customer segments to cover Prime Home Loans: Because we have dropped our interest rates, we can sustainably pursue prime home loans, the safest category of loans. We expect mortgage backed loans to form 40% of our loan book in due course.

We expect mortgage backed loans to form 40% of our loan book in due course.

h. Credit Costs: Our provisions for FY 21-22 is expected to be only 2.5% of the average loan book which is quite reasonable by industry standards, of which a substantial portion has already been taken in Q1 FY22, hence you can expect to see successively reduced provisions in Q2, Q3 and Q4 FY 22. Going forward we expect to keep our provisions at below 2% of the average loan book.
i. 2- 1- 2 Formula: We will be targeting a 2-1-2 formula, i.e. Gross NPA of 2%, Net NPA of 1% and provisions of 2% on funded assets on a steady state basis.
d. Significant reduction in the identified stressed list: We have brought down the Identified stressed

IDFC FIRST Bank

We will be targeting a 2-1-2 formula, i.e. Gross NPA of 2%, Net NPA of 1% and provisions of 2% on funded assets

crore of liabilities at 8.66%. These are largely legacy borrowings of our DFI background, and these are the challenges of converting a DFI into a bank. When our Bank will replace this at say, 5.0%, we would save about ` 1,000 crore per year on an annuity basis compared to today. This is a legacy issue on the liability side and will go away with time.

SECTION 4. INCREMENTAL PROFITABILITY OF OUR BANK:

Please read the following notes on our incremental profitability to understand the profitability of our incremental business.

a. Strong incremental profitability of retail lending business: Our incremental borrowing cost is less than 5% and incremental lending in retail is over 14% at this point of time. So our incremental spreads on retail is over 9%. We have specialization in these segments and our credit costs (provisioning) are expected to be about 2% based on the combination of products we finance. Thus our incremental ROE in the retail lending business is estimated at 18-20%.
b. Strong incremental profitability of Corporate Lending business: Here, the estimated incremental business ROE is 14-15%.
But you are not yet seeing this profitability in our books because of the following two points.
c. Higher cost of **1,000 crore from Legacy Liabilities currently:** As of June 30, 2021, the Bank has 27,936

When our bank will replace this at say, 5.0%, we would save about ` 1,000 crore per year on an annuity basis

d. Set up costs in retail liabilities because of investments as we are a new bank: Since merger to March 31, 2021, we have invested in 390 branches, 565 ATMs, added over 12,000 employees, invested and upgraded our technologies, launched or scaled up many new businesses like credit cards, Wealth Management, Fastag, Gold loans and scaled up many retail lending businesses like prime home loans and digital lending, all these are essential capabilities for building a large bank. These investments are giving us a negative drag today but this will become profitable with scale.
e. Incremental return on capital. Now let me tell you something amazing about our progress. Please study the following table:

	Q3 FY 19 (merger quarter)	Q4 FY 21
Funded Assets	`1,04,660 cr\|`1,17,127 cr	11.9%
Core Income (NII plus Fees)	`1,495 cr\|`2,616 cr	75.0%
Core Operating Profit (NII plus Fees less	`276 cr\|`460 cr	66.9%
Opex excluding trading gains)

Annual Report 2020-21 9

So, when we compare the merger quarter with Q4 21, the funded assets grew only 11.9% in two years, but at the same time, the Core Income grew by 75% and Core PPOP grew by 67%. The comparison with Q1 FY22 was even better. Here the core operating profit was 601 cr which was 118% over the merger quarter, while the book grew only 9% over the merger quarter. This tells you that the incrementally, the operating profit on capital is disproportionately higher as compared to incremental capital consumed. That’s the power of strong increase in Net Interest Margins to 5.5%. Numbers in Q4 FY 21 exclude impact of interest on interest reversal of 55 crore.

Guidance on Profitability:

a. As explained above, our retail lending business is immensely profitable. We expect to grow the retail book by ~25% on a compounded basis for a long period of time. This is already playing out over the last 2 ½ years, as the NIM has already expanded from 1.84% pre-merger to 5.09% in Q4 FY 21 and further to 5.51% in Q1 FY 22. We expect profitability to increase as we expand the loan book.
b. The negative drag because of high cost liabilities will go away as we will repay these liabilities on maturity. The negative drag because of investments will go away with scale. Thus the highly profitable retail and wholesale businesses will shine the results.
c. Basis the above, you can expect to see a significant pickup in NII, ROA and ROE at the Bank from here on as this phenomenon plays out. We feel comfortable guiding for Return on Equity of upwards of 16% as we scale up our business, based on our experience and incremental unit economics.
I believe it is only matter of time, and not a question of whether this will happen.

SECTION 5: OPPORTUNITY FOR SCALE UP.

For our business, the market opportunities are practically unlimited for our lines of businesses. The credit outstanding in the country including banks and NBFCs is about 120 lakh crore, and as per CIBIL TU report, the outstanding for commercial loans > 50 crore is 54 lakh crore (Source: June’ 21 MSME report). Thus the MSME, retail and rural and agriculture markets alone is about 65 lakh crore and growing. India is moving from unorganized to organized,

underserved to served, and technology is supporting this change. We are well positioned to ride the technology wave. We are merely ~` 75,000 crore in this market, which is barely above 1% of this market. For us to grow at 25% is not a big deal. There is no dearth of opportunities in our great country, and we have the necessary capabilities.

SECTION 6. VODAFONE IDEA EXPOSURE:

I would now like to directly address the concerns that some of you would have about our exposure to Vodafone Idea. Let us hope the government supports the industry; out of the total dues of the company about ` 1.5 lakh crore are owed to the government itself and hence they will be keen to solve this issue. In any case, we have a lot of growth capital by our side. We will peruse the matter through law of the land.

With a strong liability base consisting of low-cost CASA of 50%+, we get good margins in our business. We can compound our advances continuously by about 25% for a long time, and we can build this book to any size of our desire in our lifetimes, it could be 2 lakh crore, 5 lakh crore, ` 10 lakh crore or more. We will ride it through without impacting our long-term future and build a great bank from here.

So we will keep our eyes riveted on the longer story. We have experienced such situations earlier and have always learnt that if we have a strong and profitable model and go on for extended periods of time, then a one-off incident does not dent the long-term story.

SECTION 7. DEALING WITH COVID

On dealing with COVID, I would like to say that were overwhelmed with the way our employees stayed motivated throughout the wave one and wave two of COVID. They were volunteering to run their branches and to assist customers. We announced a one-of-a-kind Covid Care scheme for employees by assuring them 4X their CTC, salary credit to nominee for two years, waiver of employee loan, extension of medical insurance for family for 24 months, scholarship up to 10,000 per month for two children until graduation, employment for spouse on merits or skill training allowance of 2 lakh and so on. Our employees appreciated this greatly. We implemented a bank wide cost-rationalization program. We tightened credit criteria and launched new products. We accelerated our efforts for digitising the bank. Our senior management volunteered with salary and bonus cuts to lead austerity by example. I thank them all.

10 IDFC FIRST Bank

SECTION 8. CLOSING NOTE.

I believe we are on to something very special here. We have set up a strong platform. Don’t underestimate the power of the 50% CASA Bank with a powerful and tested lending machine attached to it. We are a mid-size bank today, but I believe we have all the ingredients of becoming a mega bank of the future, with themes of ethics, digital, social-good and customer first. I also believe our best-ever three years are coming up for us.

Don’t underestimate the power of the 50% CASA Bank with a powerful and tested lending machine attached to it.

I express our sincere thanks to our regulator the Reserve Bank of India who have constantly guided us on our approach and supported us throughout. Our Board members are eminent people with rich experience, have great intellect, highest levels of integrity and have constantly guided the Bank with strategic inputs and towards very high standards of corporate governance.

I sincerely thank our customers for banking with us. I also sincerely thank each one of our shareholders for your support and confidence even in trying times. Our employees are exceptional, and I thank them all.

Thank you.

V Vaidyanathan

Managing Director and CEO

Annual Report 2020-21 11

COO’s message Operational Resilience

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Madhivanan Balakrishnan Chief Operating Officer

Responsiveness and Trust in the Bank and its operations were strengthened by establishing a robust delivery model across all areas of operations, technology and customer service in an uninterrupted manner.

Dear Shareholders,

Fiscal 2021 was primarily influenced and shaped by Covid-19 pandemic, resulting in uncertain lockdowns and major disruption of both lives and livelihoods. The impact on economic activity and normal banking operations were immense. The regulatory and policy changes that were put in motion to manage the implications were equally challenging given the speed of response that was needed and had a direct bearing on the day to day operations of the Bank.

At the same time the banking sector also witnessed dramatic changes on the technology front. Forces such as social collaboration, mobility, advanced analytics-based platforms and emergence of cloud as a viable alternative enabled new ways of servicing stakeholders. The emergence of new players in the financial eco system offering niche digital services further accelerated the extreme digitization of financial offerings thereby creating a heightened focus on customer engagement that stretches beyond physical branches, call centers and relationship personnel.

These were also times when the true mettle of an organisation along with its core operating philosophy and principles got tested. All through the year we stayed true to the tenets of transparent and ethical banking, whether it is our ‘Always You First’ approach to customer service or the constant roll out of propositions that are designed to be customer friendly and often an industry first. The focus has always been on offering optimal value in the most seamless way by using digital interfaces.

These challenging times also saw the Bank staying true to its social objectives. The Bank continued to play an active role in helping various sections of both urban and rural society through products and programs that focused on creating livelihoods and relief.

Unlike most other organisations, IDFC FIRST Bank also had to also manage post-merger integrations and work on increasing agility at the same time. A culture of strong customer centricity, an agile operating model, the right technology platforms and quick adoption of new ways of working collaboratively with various teams, helped us keep pace with the fast-changing environment.

12 IDFC FIRST Bank

During this period, IDFC FIRST Bank operated 900+ branches and offices including our contact centres across the country in compliance with government & RBI guidelines allowing essential banking services to be available for its customers. We managed risk by building more than 10000+ remote access capabilities to help staff work from the safe confines of their homes or nearest branches supporting critical business and regulatory activities.

In line with our ‘Always You First’ approach the customer service team launched a unique call back service across multiple languages to manage the increased demand and facilitated quick resolution of issues by working closely with their business and operations colleagues. Dispatch and delivery were severely impacted due to restricted movements during COVID, however, the teams managed uninterrupted services with 97% uptime on ATMs, facilitated moratorium requests, enabled restructuring and refund of ex-gratia amounts and all regular activities such as payment and other processing core to the Bank.

This financial year also saw the Bank starting the process of building a robust technology platform that was reasonably open and secure. Building a modern technology stack that could help the Bank take advantage of evolving digital technologies and be a significant enabler to business was a key priority. This involved working on componentised core banking modules, an API factory, and a comprehensive data platform that can support a wide variety of use cases.

The Bank’s differentiated digital platform is among the most comprehensive and customer friendly platform and will provide us with the right lever to cater to the significant surge in usage of digital services across all segments of customers thereby creating meaningful growth opportunities.

The unique combination of data and digital interfaces have helped various operating teams take real time actionable insights thereby creating differentiated and contextual experiences.

Data sciences through advanced modelling has also enabled us to manage risks, understand propensity and therefore upsell and cross-sell better. The state-of-the-art API / microservices layer along with relevant data insights have also enabled the Bank to build new partnerships and offer innovative propositions with pioneering business models. We also ran programs to streamline services for both customers and employees along with system upgrades and implementation of advanced technology to facilitate scalability and reliability. Continuous enhancement of CRM capabilities and introduction of Robotic Process Automation helped our employees to handle their responsibilities more productively.

The events that continue to unfold are creating a new normal in which change will be the only constant. This has only made our resolve to building an operationally resilient and a responsive organisation stronger.

With best wishes

Madhivanan Balakrishnan

Chief Operating Officer

The development of a new age data lake / mart has resulted in the evolution of a strong data analytics practice that works on driving intelligent customer engagement based on risk and a better understanding of the business. The unique combination of data and digital interfaces have helped various operating teams take real time actionable insights thereby creating differentiated and contextual experiences.

Annual Report 2020-21 13

CFO’s message

Strong Capital and Liquidity Position

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Sudhanshu Jain Chief Financial Officer & Head Corporate Centre

The reduction of savings account interest rates has made the Bank extremely competitive in terms of cost of funds. This has also enabled the bank to access certain additional and new segments of credit markets.

Dear Shareholders,

It is my great pleasure writing to all of you. I had joined the Bank in March 2020, and COVID-19 struck us within 20 days leading to house arrest as severe lockdowns were imposed throughout the country. However, times were such that it was action right from the word “go”. Furthermore, there were concerns which emerged around a large private sector bank. We were very clear that we need to quickly raise capital as an insurance against COVID-19, and also to fund future growth opportunities once things normalise. We conducted investor meetings and quickly mobilised ` 2,000 crore through a preferential allotment.

I’m happy to share that we managed to maintain liquidity level extremely well throughout the year. We continued to get strong customer deposits during the period. In the initial stage, we used the strong retail customer deposit flows to pay off our large bulky Corporate Deposits and Certificate of Deposits. However, when customer inflows continued beyond our needs, we realised that such excess liquidity was a drain on our P&L. Thus, we brought down the interest rates to optimise the level of funds at the Bank. The reduction of savings account interest rates has made the bank extremely competitive in terms of cost of funds, and this has improved our net interest margins and profitability. This has also enabled the Bank to access certain additional and new segments of credit markets focusing on better quality of customers in select segments.

We also undertook focused cost rationalisation efforts as we were aware that our income would come down because of sharp slowdown of economic activity due to the lockdown. We conducted regular drills on cost rationalisation at the bank. We gave cost rationalisation targets to various business verticals and supported their work with direction and supervision from the CFO office to all the business verticals. Some of the

14 IDFC FIRST Bank

measures included slowdown in branch expansion, rental renegotiation, reworking plans for hiring, renegotiating payouts to various vendors and so on. This was a pan-bank exercise with complete support from across the organisation and yielded us excellent results.

We have reported profits for five quarters in a row. Our core pre-provisioning operating profit excluding treasury income has grown healthily and can absorb normalised credit losses as required.

Our core pre-provisioning operating profit excluding treasury income has grown healthily and can absorb normalised credit losses as required

As the CFO, one of the key responsibilities is allocation of capital. We are consciously observing and evaluating the capital consumed by each business and the potential returns from these businesses. I’m happy to share that during the last two years since merger quarter, while our loan book grew by 11.9%, our core income grew by 75%. We could achieve this because we utilise the capital well and increased margins on our business. We lost about ` 2,000 crores of equity capital because of charge offs and provisions on legacy corporate loans during the last two years, but I would like to assure you

We have already raised ` 3,000 crore of fresh equity capital in April 2021 to take our capital adequacy more than 15%.

that on an incremental basis we are very careful and prudent about our approach towards underwriting. We evaluate the risk-reward relationship continuously in order to ensure we take a balanced approach towards growth. We treat capital as a precious commodity and treat it with great respect. We have already raised ` 3,000 crore of fresh equity capital in April 2021 to take our capital adequacy more than 15%. This was the maiden QIP done in the Bank. You will continue to see this approach towards optimal capital utilization from us going forward.

This year as per revised regulations from the regulator, we are required to have a joint statutory auditor. As you know, the appointment of a statutory auditor requires approval of the shareholders. We took some time identifying the second statutory auditor and sought regulatory approval. Hence, the AGM this year is being held later than last year, but we expect to have early AGMs going forward.

I would like the thank all the shareholders once again for their continued support and confidence in us.

Sudhanshu Jain

Chief Financial Officer & Head Corporate Centre

Annual Report 2020-21 15

Investor Corner

Proactive and Transparent Communication

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Saptarshi Bapari Head-Investor Relations

Post the merger, our Bank has made significant progress across all parameters of business.

Our investors have always supported us and appreciated our level of corporate governance and disclosures.

Dear Shareholders,

I would like to start this note with sincere thanks to all the shareholders of the Bank for their continued support, engagement and confidence in us.

Post the merger, our Bank has made significant progress across all parameters of business including growth of deposits, growth of retail loan book, margins and core operating profits.

In the first few quarters after the merger we faced issues regarding certain identified legacy wholesale loans. Our profitability was also affected because we had to stop accruing income on such loans and take incremental provisions on them. I’m happy to share that during this entire period, we have been transparent with the market. Our investor presentation is detailed with our background, trends across various business and financial parameters, and detailed breakup of our assets and liabilities. Apart from disclosing gross and net NPA as is required, we proactively identify and disclose the assets that are not yet NPA but stressed as per management assessment. We even disclose the specific provisions taken against each one of them individually and thus stay very straight and transparent with the street.

Our investors have always supported us and appreciated the level of corporate governance and disclosures in the Bank. On December 17, 2018, a day before the merger between erstwhile IDFC Bank and erstwhile Capital First was consummated, our closing stock price was at 39.35. After the merger, the Bank incurred net losses for five quarters in a row, primarily for the additional provisions needed to be created on certain legacy wholesale assets. Yet our stock price remained stable at around 40-45 throughout this period, which represents the confidence the markets had in the transparency and strength of our business model.

During the initial phase of the COVID-19 pandemic, our stock price came down to around ` 19 but our key business performance indicators continued to improve. Just as the markets kept confidence in us, equally, our customers kept confidence in us even during COVID-19. Our customer deposits continued to grow consistently even throughout the pandemic. During the latter half of the last financial year, there was a strong recovery in the business conditions which helped the Bank to get back to the pre-COVID levels in certain parameters like disbursal run rate and collection

16 IDFC FIRST Bank

efficiency. Along with the deposit growth, the retail loan growth, improvement in Net Interest Margin also drove the Bank to continue on the profitability trajectory even during this challenging time. In fact, our stock price rose beyond ` 60 post the COVID-19 first wave, based on our steady and improved performance and our transparent disclosures.

I am proud to share that despite adverse conditions for over two years, our price to book increased from 0.91x, just before the merger, to a high of 2.00x in February 2021. We thank the shareholders for such confidence in us.

In middle of February 2021, we decided to raise 3,000 crores of equity for growth capital as we could see significant opportunities for growth ahead of us. The Bank convened a special Board Meeting on February 18, 2021 for equity fund raising with a plan to complete the entire process. We carried out all the necessary steps in terms of the regulatory processes, documentation as well as book building initiatives under a tight project plan. With COVID-19 still looming on the horizon with the second wave, it was quite a challenge for the team to carry out the necessary activities with a lot of dependence on the virtual meetings and coordination, across different time zones. In the meantime, the stock price zoomed ahead and touched a closing high of 67.25 in the second week of March 2021 which was higher than the pre-COVID stock price level and as a result, price to book increased to 2.16x.

As we were getting quite close to the issue in the third week of March 2021, the stock price came down with the onset of second wave of the pandemic. Thus, we were in a situation where the market price was lesser than the SEBI mandated price for the equity raise through QIP. Despite the situation, marquee global and domestic investors, participated in our issue and finally we raised 3,000 crore of fresh equity capital through QIP route at 57.30 per share as the process got completed on April 6, 2021. 69% of the issue was subscribed by FIIs. The successful competition of the equity fund raising through QIP in such challenging time while the nation was battling with the COVID-19 second wave, showcases the strength, capabilities and commitment of the management which was appreciated by the investors. I would like to specifically thank all the investors who participated in this round of fund raising. My sincere gratitude goes to our esteemed Members of the Board for their support and guidance. With the additional capital added and calculated on the reported numbers as of March 31, 2021, our revised capital adequacy moved to 16.32%.

We’re happy to share with you that the Bank is doing wonderfully well on all core building blocks. However, after the letter from the Vodafone Idea Chairman addressed to the Government of India came to light in early August 2021, our stock has continuously been under pressure and has come down sharply to early 40s. We do hope and believe that the government will solve the problem to keep this a competitive

telecom market, however irrespective of the outcome, we are already prepared, and the Bank has strong capital buffers to deal with the situation. Our core business model is very strong, our core profitability drivers are performing well and we will continue on our growth journey. We are confident that with strong foundation of a good business model, growth opportunities, strong corporate governance, ethics and transparency, we will continue to do well in the future.

I am proud to share that despite adverse conditions for over two years, our price to book increased from 0.91x, just before the merger, to a high of 2.00x in February 2021. We thank the shareholders for such confidence in us.

As we speak, we are recovering from the second wave of the COVID-19 pandemic in India which had its worst effect on the overall population and in general the economy during AprilMay 2021. Post June-2021, the economy has again revived and the business parameters have been improving gradually. We feel that we will witness a sharp recovery in the country during the second half of the financial year and the Bank is in a very good position to capitalize on that with the capabilities including digital and product innovations, efficient processes, strength of deposit base, high liquidity and strong capital adequacy levels.

We are committed to to creating value for our shareholders and we are confident that in the medium to long run our performance will reflect that and it will be appreciated. We are encouraged with the response of the shareholders for performance over the last 24 months, barring only this issue of exposure to Vodafone Idea which has significantly affected our stock price in recent time. We hope that clarity on this matter emerges soon.

I would like to thank all the shareholders once again for their continued support and confidence in us, even during this challenging time.

Saptarshi Bapari

Head-Investor Relations

Annual Report 2020-21 17

Press clippings In the News

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Financial Express, August 6, 2021

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Annual Report 2020-21 19

Press clippings

Economic Times, May 10, 2021

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Mint, January 19, 2021

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Annual Report 2020-21 21

Press clippings

Economic Times, July 19, 2021

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“While the digital segment has grown multifold, it’s become easier for fraudsters to take advantage of lack of less tech-savvy consumers; for us it’s a fine balance between creating a great user experience versus compliance and authentication.” said Mr. Madhivanan Balakrishnan, COO, IDFC FIRST Bank

The Hill Times, March 13, 2021

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‘Honour FIRST’ is an outcome of our passion to serve the Armed Forces in a very special way by customising banking solutions to the needs of its personnel” said Amit Kumar, Head, Retil Liabilities, IDFC FIRST Bank

22 IDFC FIRST Bank

Echo of India, August 13, 2021

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“This is indeed a proud moment for us. The association couldn’t have come at a better time as the Indian Navy commemorates historic victory in the 1971 war,” said Amit Kumar, Head, Retail Liabilities, IDFC FIRST Bank

Mint, July 19, 2021

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IDFC First Bank had recently launched a monthly interest credit facility on all savings bank accounts (SBAs). From 1 July, interest on SBAs will be credited on a monthly basis.

As per Reserve Bank of India (RBI) regulations, banks credit interest to accounts of depositors every quarter, although they are free to credit it on a monthly basis.

In case of fixed deposits, various frequencies, including monthly, quarterly, annual and cumulative are offered by banks. But for savings accounts, banks have not historically given this flexibility.

Monthly credit of interest helps depositors get access to the interest amount early.

“As IDFC First Bank has always tried to introduce innovative solutions for its customers, this is another such benefit. Crediting interest every month will help savings account holders to earn interest on interest if they continue to keep the interest earned in such accounts. Also, customers can withdraw the interest money if they wish to to meet their expenses, EMIs, etc,” said Amit Kumar, head, retail liabilities, IDFC First Bank.

Annual Report 2020-21 23

Building the Brand A Banking Revolution is on its Way

We set new benchmarks with our branding campaigns in FY21, which clearly showed how we intend to redefine the way India banks.

FY21 continued to be a year of building the foundation of our Bank. A year of non-stop, high octane action.

We continue to strengthen our foundation, built with Trust, Integrity, Transparency, while driving up Innovation and Digital Transformation by several notches.

SELFLESS TREE

In 2020, we launched the Bank’s first brand campaign through a film starring our first brand ambassador, Mr. Amitabh Bachchan – a man of great distinction who truly embodies our principles of trust and integrity. In the film, Mr. Bachchan is seen talking about the life lessons he learnt from his father, who emphasised the importance of a strong foundation. Through the analogy of a ‘Selfless Tree’, that showcases the personality of IDFC FIRST Bank, the film beautifully conveys our endeavour of always putting our customers first.

Our first brand campaign has struck a chord and has etched itself in the minds of customers. Other than making a big television debut, the campaign was screened at partner outlets, bank branches, and social media. It will be one of our most memorable campaigns.

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24 IDFC FIRST Bank

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TREEPUBLIC 2.0

We launched the second edition of our green initiative, which had received overwhelming support last year by encouraging our customers to put ‘Nature first’. On the occasion of the Bank’s second anniversary, we tied up with an NGO and pledged to plant a sapling for every Savings Account opened between December 18, 2020 and January 26, 2021.

Besides planting trees, we also encouraged our staff across our branches in urban and rural India to explore their green thumbs through a contest. Employees had to decorate their branch with all things green. We took to the social media to spread the good word and designed innovative hoardings made with plants to create a buzz. This was backed by a radio campaign and ended with top three displays winning awards. On the occasion, we also ran a special air-index check that let customers know the air quality in their city.

The other green campaign undertaken during the year was the Environment FIRST Heroes, where we celebrated those who put nature first.

In all, we planted over 1 lakh trees during the year. A great way to celebrate, we think.

WEBSITE LAUNCH

The year also saw the launch of our new website with a fresh new look that showcases the benefits of banking with us and our offerings in a clear and succinct manner. We want to make the customer experience simple and easy, and the new website is a big step in that direction.

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Annual Report 2020-21 25

Building the Brand

OUR LATEST AD CAMPAIGN

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IDFC FIRST Bank

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Annual Report 2020-21

Set for Growth

An Ethical Way to Growth

Ethics form the core of our Bank’s culture.

We strive to abide by the highest ethical standards in all our dealings with our customers, communities, employees and stakeholders. This simply means that we are committed to doing what is right for them, even if it were contrary to conventional industry practices. For instance, we make a conscious effort to make every relevant information available to our customers so as to enable them to make informed financial choices. When we fall short of expectations, we acknowledge and correct course. We do not push products or press hidden charges. For us, it means living up to the trust that our customers place in us.

Ethics and transparency anchor every product, service, interaction and decision at the Bank. Here are a few of them:

MONTHLY INTEREST CREDIT:

The Bank offers monthly interest credit on savings account balances as against the industry practice of quarterly interest credit. Interest is credited on the 1[st] of every month. So in the following month, customers earn interest on the interest of the previous month. This enables customers to earn more with the power of compounding every month. In addition to monthly compounding, customers also get higher interest rates on their savings account balances.

FINANCIAL INFORMATION

Highest degree of transparency is maintained in all interactions with customers, investors and stakeholders. Apart from regulatory disclosures reported on NPA, as a part of good governance and transparency, the Bank even provides a list of stressed assets, together with their corresponding outstanding and provision figures, and puts these in public domain through investor presentations every quarter

HUMAN RESOURCES

The Bank has honoured all its commitments made to around 3,500 new hires even at the height of the pandemic. These job offers were rolled out before the pandemic set in and some of the roles were redundant during the pandemic. However, the Bank honoured every single offer made – choosing instead to re-allocate these resources to new roles. Over time as the economy revived, all new hires were given regular positions.

28 IDFC FIRST Bank

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SAVINGS ACCOUNTS

WEALTH MANAGEMENT

Unlimited free ATM Transactions

Our Regular Savings Account with a minimum monthly balance of ` 25,000 comes with unlimited ATM transactions and customers can transact at any ATM country free of cost, as against industry practice of charging beyond 5 transactions.

Digitised and democratised wealth management platform available to all customer segments
Customers can choose to opt for an investment in line with their goals and risk profile without human intervention
Employees are trained not to push products that do not suit customer’s financial needs

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Industry-best Debit card

The Bank offers free debit card and does not charge for replacement when the card is lost. A debit card when replaced is usually charged by industry. For savings accounts with minimum monthly balance of 25,000, the Bank also offers a Personal Accident Insurance cover of 35 lakh and an air accident insurance cover of 1 crore. In the event of loss of card, customers are protected for upto 6 lakh. These features are higher than the industry, and give the highest comfort to our customers. Our debit card also offers one of the highest POS purchase and ATM withdrawal limit.

Fixed Deposits for senior citizens and kids

When our customers, who happen to be senior citizens and kids, close Fixed Deposits ahead of maturity, the Bank does not levy any penalty, as against common practice of penalties on closure of FDs.

No charges on cheque books

The Bank does not charge customers for issuance of cheque books, cancellation or stop payment of cheques. Also, issuance of Demand Drafts, cancellation and revalidation of DDs are not charged as against common practice of charging for these services.

Digital Transactions

All digital services, including electronic funds transfers i.e. NEFT, RTGS, IMPS, issuance of foreign currency draft are also free for our customers. This is common in the industry to charge for digital transactions.

FOREX TRANSACTIONS

Exchange rate is displayed and guaranteed even if transaction is delayed
Forex rate is lower than that in industry

CORPORATE SALARY ACCOUNTS:

Interest is paid on Employee Reimbursement Accounts as against industry practice of treating these as current accounts without interest on balances

POS TRANSACTIONS

Among the highest POS limit in the industry
Charges are mentioned upfront
Uniform and transparent pricing across all cards

Annual Report 2020-21 29

Set for Growth

IDFC FIRST BANK CREDIT CARDS – DIGITAL-FIRST AND SUPER REWARDING

Amidst a pandemic-struck, homebound digital world, we launched IDFC FIRST Bank Credit Cards – a milestone in our retail roadmap.

Simple, straight and transparent, the IDFC FIRST Bank Credit Card is India’s first credit card with dynamic interest rates and several other industry-best privileges. The lifetime-free credit card offers personalised Annual Percentage Rate (APR) in the range of 9-36% and is linked to the cardholder’s credit scores. The APR is among the lowest in the industry, thus benefiting customers with good credit history. The credit card suite also packs in an innovative rewards proposition that resonates with cardholders.

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FIRST Millennia:

Uber cool looks and slick features designed to create a buzz around you

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FIRST Select:

Life’s luxuries with a premium new age credit card

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FIRST Classic:

Exceptional value and classic features

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FIRST Wealth:

Card with all premium features, best for international travellers

Key Differentiators

Credit cards as an industry has been perceived by consumers as one fraught with multiple barriers and legacy systems and processes. We worked on this premise to remove all the friction points and barriers of:

Multiple fees and non-transparent charges
Static and super-high interest rates on revolving credit (usually upwards of 42%)
Complicated reward schemes with a long list of T&Cs, expiry and clunky redemption
Expensive cash advances, attracting interest from Day 1 of withdrawal

We worked towards resolving these friction points and creating an industry-first proposition with best-in-class digital-first customer experience.

IDFC FIRST Bank

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INDUSTRY

IDFC FIRST CREDIT CARDS

BENEFIT FOR CONSUMER

Usually multiple fees (Annual/ Over Limit) and other charges Usually static and high interest rates (36% to 48% APR)

Often difficult redemption processes with defined catalogues and Terms and Conditions on expiry Interest on ATM cash withdrawal from Day 1

Lifetime Free (No Annual Fees ever/ Nil Over Limit Fees up to 10% over limit) Dynamic Interest Rate (9% to 36% APR) Up to 10X reward points. Unlimited earn. No expiry. In-store and online redemption Interest-Free Cash Withdrawal (Up to 48 days – similar to purchases)

Easy on the pocket Affordable Credit Super-Rewarding Emergency Cash

APPROACH TO THE CREDIT CARD BUSINESS

We made a set of strategic choices to execute our vision through a robust operating plan.

Data-based Strategy

Developed in-house predictive online scoring models for qualification and decisioning of credit card applications from new-to-bank as well as existing customers
Created a risk and affluence-based pricing model, which enables tailored offering for every individual cardholder, right from limit assignment to APR

Leveraging Digital

Our mobile-first and fully digital onboarding journey offers instant gratification and usage
Powered by a comprehensive, seamless, WOW experience to our applicants. Rejections, if any, are communicated upfront on application
Leveraged our existing internal channels and customer touch-points to upsell/cross-sell by building seamless, multi-channel customer journeys, both through web and mobile App

Hyper-personalised Customer Experience

Our customer engagement and communication hooks will be hyper-personalised, using AI/ML algorithms drawing from behavioural and real-time data to create highly contextual communication to supply relevant content, product and service information to every user

We are Already Seeing High Acceptability

The Credit Card business was launched in mid-January 2021 for existing customers of the Bank. By March 31, 2021, we had issued close to 1.5 lakh credit cards and the Bank entered the industry’s Top 5 list based on incremental cards issuance.

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150
104
43 57 47 46
Jan-21 Feb-21 Mar-21
New Issuance (‘000) Cards in Force (‘000)
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Annual Report 2020-21 31

COVID-19

A helpful bank during COVID-19

We call ourselves a customer-first bank. COVID-19 was the moment to live up to the statement. In view of the COVID-19 relief policy implemented by the RBI, we facilitated Moratorium 1.0, Moratorium 2.0, Restructuring 1.0, ECLGS, and Ex-gratia Framework seamlessly. Keeping the branches open, reaching out to customers and providing them moratorium was just the start. At every step of the way, we made sure that each process was made extra friendly for customers. We did all it takes to serve our customers with speed and efficiency, to reach out to customers who were in distress and to help others use digital tools and services so that they could bank from the safe confines of home and avoid visiting our outlets. As an essential service, we did our best to reach out to our customers and our employees, and create solutions to ensure ease and support as they transitioned to the new normal.

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IDFC FIRST Bank

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ENSURING CUSTOMER CONVENIENCE

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MORATORIUM FACILITATED DIGITALLY

When COVID struck, the RBI came out with norms for moratorium. Customers were required to apply for one. But we realized that in the context of COVID, customers would find it difficult to access us and go through paper work. So we thought of a novel way of providing moratorium benefit. We created a digital interface for customers to apply for moratorium on our website, provide the reason for it and lo and behold, it was done. This way, we put our customer first philosophy in action in a crisis.

LOAN DISBURSAL DURING THE PANDEMIC

We did not stop our disbursal of loans during the pandemic. We enabled customers to secure loans both digitally and through our doorstep banking services.

VIDEO KYC

Bank implemented Video KYC for convenience of its customers

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DIGITAL LOAN RESTRUCTURING

We did not want customers who were applying for loan restructuring to be burdened with paperwork or go the branch for avail the facility. We gave them an option of coming to the website, giving their loan account number, dragging and dropping information, offering them an easy and intuitive experience and securing loan restructuring in a simple manner. This is how we stayed customer-first.

RURAL CUSTOMERS GIVEN MORATORIUM SUO MOTO

We realized that not all rural customers may be digitally literate or easily apply for moratorium. Some of them may not even be able to access our website. For them, if we had insisted on a written document, most of them would be delinquent with the bureaus. We provided moratorium suo moto to them, making all of them eligible for it.

ATM NETWORK

The Bank added ATMs and kept uptime high

Annual Report 2020-21 33

COVID-19

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Our branches were kept operational to serve the financial needs of our customers

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Our Customer Service Centres were available 24x7 and provided uninterrupted and seamless services through multiple lockdowns. We also launched a new customer service centre at Noida as a disaster recovery site.

34 IDFC FIRST Bank

Customers who were behind schedule for loan repayments, were dealt with sensitivity. People who asked for moratorium were given the benefit as long as they met regulatory norms. A simple moratorium calculator was developed for customers to give them a complete view of the impact of moratorium on their loans and enable them to take informed decisions.

Moratorium portal for Customers to make moratorium applications simpler

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KEY HIGHLIGHTS

The Bank provided easy digital means for customers to avail moratorium

Supports 11 languages with real-time co-browsing support

Self serve and Assisted mode available

Restructuring portal for customer assistance

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KEY HIGHLIGHTS

The Bank provided easy digital means for customers to avail restructuring

Automated decisioning without human interventions

New loan schedule applicable from next due date

Annual Report 2020-21 35

COVID-19

CUSTOMER SUPPORT INITIATIVES DURING THE PANDEMIC

Mobile ATMs were deployed for safe & convenient banking – 1100 + societies served

Health and wellness camps were held for customers at various locations across the country.

10,000+ Business Correspondents provided last mile financial services to customers across 600+ districts in 23 states

Micro ATM led services were offered for senior citizens and customers who were home bound to enable them to transact from the comfort of their homes

36 IDFC FIRST Bank

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Helped customers with santisation services
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We felicitated doctors and COVID warriors to thank them for their service to the country
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Masks and COVID safety kits were distributed to customers who visited branches

Installed automated sanitizers in housing societies within branch catchment

The above pictures represent the Bank’s actual customers and activities

Annual Report 2020-21 37

COVID-19

Employee Safety and Convenience

While ensuring the safety and well-being of our employees, we also ensured that they could work seamlessly from home by implementing technology that could sustain critical business activities from loan disbursals to client consultation. Some of the steps undertaken by us in guaranteeing employee safety:

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The Bank conducted 24 PAN-INDIA DRIVES

to rebuild and grow

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Government guidelines and policies ensured in Bank’s branches with 100% COMPLIANCE

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To ensure safe operations, undertook sanitisation in 900+ OFFICES And Bank branches Facilitated the vaccination of 89% EMPLOYEES within office premises or at hospitals

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For staff to work from the safety of homes, activated NEW REMOTE 10,000+ ACCESS CAPABILITIES

Ensured work-from-home facility for 50% STAFF

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38 IDFC FIRST Bank

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MESSAGE FROM MD & CEO TO EMPLOYEES ON THE BANK’S COVID CARE SCHEME

We hold our employees dear and wish there was no case of COVID death at the bank. But unfortunately the world is having casualties. Hence to assist our employee/ family in the event of any unfortunate death, we are announcing a comprehensive “COVID Assistance, Rehabilitation and Relief scheme” (COVID CARE) as per details later in the note.

This policy will be implemented with retrospective effect for any COVID related death, (i.e. this will cover even cases prior to this communication)

This scheme is applicable to all permanent employees of IDFC FIRST Bank.

These benefits will be applicable for COVID deaths till 31[st] December 2021 or as extended by the bank.

The benefits 1-10 under this scheme will be provided to the dependents of the deceased employee.

Benefit number 11 will be made available to employees in case they themselves are not impacted by COVID but some member in the family is impacted.

As part of the COVID CARE scheme, in addition to any statutory benefits (Employee Deposit Linked Insurance Scheme - EDLI up to INR 7 Lakh, Provident Funds, Gratuity), the Bank will provide additional benefits to the nominee of the deceased employee; with an objective to help the families navigate the difficult times as detailed below:

COVID CARE Relief Programme Details:

Group Term Life of 4X TFP: We provide one of highest insurance coverage in the system, which is 4 times of Total Fixed Pay (TFP) or INR 30 Lakh, whichever is higher, under our Group Term Life plan. This policy is applicable for any normal death situation, and also covers COVID incidents.

Salary credits to nominee for 2 years: We will continue to pay salary (excluding retirals) as ex-gratia to the nominee for full 24 months, after death.

Waiver of Employee Loan: We will waive off all IDFC FIRST Bank employee loans (such as Car Loan, Two-Wheeler loan, Personal Loan, etc.) which are not covered through a personal life insurance of the employee. For an employee Home loan, which happens to be uninsured, we will waive off INR 25 Lakh, and the residual will be recovered through the EMI. In order to make it easy for the employee’s nominee to honour the non-waived component, we will credit the ex-gratia salary for the next two years, and deduct the EMI from the salary credits paid to the nominee as per point 2. This is applicable for death incidents until June 30, 2021. Between now to June 30, 2021, we request you to please ensure your loan amount is insured.

Extension of Mediclaim insurance for the family for 24 months: Currently the employee’s dependents are covered under our group Mediclaim insurance policy. The policy will continue to be effective for 24 months at the same base amount as that applicable to the deceased employee.

Scholarship up to INR 10,000 monthly to 2 children: Post 24 months (i.e. after the ex-gratia monthly salary ceases), the Bank will provide monthly scholarship of INR 10,000/- (INR Ten Thousand Only) for up to 2 children till their graduation.

Employment to Spouse or Skill Training allowance for INR 2 Lakh: The spouse of the deceased employee will be provided an opportunity for a job in the bank on merits. Should they not qualify or not avail of the employment opportunity, the bank will provide one-time skill training for INR 2 Lakh to the spouse for learning new skills/knowledge. This can be availed within next 12 months from the time of the death.

Funeral Expense up to INR 30,000: The Bank will support the family in managing one-time funeral expense of the deceased employee up to INR 30,000. (INR Thirty Thousand only).

Relocation Assistance up to INR 50,000: In case, the surviving family wants to relocate to any other city in India; we will provide relocation support expense up to INR 50,000/- (INR Fifty Thousand only) to employee’s dependent. This can be availed within next 12 months from the time of the death.

Pro-rata Bonus Payout: Normally bonus is payable only for those on the rolls of the Bank as of the date of annual bonus payout. Under the COVID-CARE scheme, the nominee of the employee will receive the prorated annual bonus for the tenure the employee has served the organization in the current performance period, i.e. starting April 1, 2021, based on last year’s performance rating.

Personalized Financial Advisory: To help the family plan their future, on the family’s request, we will provide personalized financial advisory service that helps the family plan their financial future.

Salary Advance up to INR 3 Lakh at 0%: In case employees don’t have COVID themselves, but some member of the employee’s family (as per Mediclaim Beneficiary List) is infected, we understand there may be incidental expenses or expenses of treatment that could end up being more than cover available under Mediclaim. Thus the employee would need additional support to manage the hospitalization expense (in addition to the Mediclaim benefit). For this purpose, we will provide employees up to ` 3 Lakh as salary advance at 0% rate of interest and recover the same in equal installments through monthly salary during the next 24 months.

With warm regards,

V Vaidyanathan Managing Director and CEO

Annual Report 2020-21 39

COVID-19

Employee Funded Customer First Programme

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GHAR GHAR RATION – EMPLOYEE-FUNDED COVID CUSTOMER CARE PROGRAMME

During the first wave, our employees contributed one day’s salary to PM CARES Fund. No sooner had we settled from first wave of COVID-19 and taken a sigh of relief that the second wave hit us and it affected rural markets acutely. Again all the departments joined hands along with our top management to tackle the second wave of COVID-19 and provide relief to rural population who had taken a huge hit.

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Ration distribution at Karnataka by IDFC FIRST Bank Branch staff
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This time around the team brainstormed and came up with a programme to help a large number of poor customers that were directly affected by second wave of COVID-19. We realized that they needed livelihood financing and support as their livelihoods were taken away in a flash. We decided to support our customers directly through the one-day salary contributions given by our employee’s salary. Led by our CEO who contributed one month’s salary to the effort, many employees contributed large discretionary amounts over and above one day’s salary requested by them.

It was very nice of IDFC FIRST Bank to distribute ration kits for people in need during the COVID crisis. Usually other banks even if they make profits they don’t do anything for people in need. I am also very happy that they sourced their ration kits from small kirana owners like me , thereby giving us an opportunity to earn during these difficult times.

After much deliberation, we decided to give our customers a ration box with food staples to help them survive the lockdown for a month.

Mr. Dinesh Gupta,

New Devi stores , Chiklamangalur, Karnataka

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Within just three days, with repeated iterations, we worked out how our 50,000 customers will be reached directly by our employees throughout the value chain. We are proud that even delinquent customers were eligible and availed of this programme in large numbers. Our employees were engaged throughout the value chain, right from sourcing the ration box to delivering it to our rural customers. More than 3500 employees were involved in this process and were extremely thrilled to be serving those in need.

A lot of our customers were affected by COVID and they could not go out and shop due to the lockdown. A lot of them personally came to us , telling us how they were finding it difficult to have a square meal a day . Thus all of us at the bank and branch came up with this idea of personally delivering ration kits to their doorstep. All of them appreciated our efforts and it personally made me feel proud to be working this bank.

In urban locations, in lieu of the ration kit, we will provide the same support, but through a pre-paid SODEXO card worth ` 1800 to the affected customers, with which they can acquire essential supplies.

Ms. Mounica,

GRO, Madhavaram Branch , Chennai , Tamil Nadu , IDFC FIRST Bank

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50,000
Customers are
recipients of
employee-funded
Ghar-Ghar Ration
programme
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Ration distribution at Madhya Pradesh by IDFC FIRST Bank Branch staff
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IDFC FIRST Bank

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MESSAGE FROM MD & CEO TO EMPLOYEES ON GHAR GHAR RATION

Dear Colleagues,

The second wave of COVID has struck havoc in the country. As you know, a large number of our customers belong to a lower income profile and, unfortunately, they have been affected either by loss of jobs, livelihood or even death. We empathize with them in their hour of difficulty. While we cannot solve all their problems, we want to make an effort to support them to the extent we can.

In this spirit, we have come up with a unique Employee led Customer FIRST COVID Care Program called “Ghar Ghar Ration” . As you know we are a Customer First Bank, and this is the moment to stand up and support our affected customers in our personal capacities.

All of you have been highly generous in contributing one day’s salary, with which we have created the above program.

Under the “Ghar Ghar Ration” Employee led Customer FIRST COVID Care Program , we will supply 50,000 customers with a ration kit containing essentials including 10 kg rice/ atta, 2 kg dal, 1 kg sugar and salt, 1 kg cooking oil, 5 packets of assorted spices, tea and biscuits - which should hopefully support a small family for a period of one month.

In rural locations, our local staff will nominate affected customers, procure the ration kit described above from the local market, and directly deliver to the affected customers in person at their homes. This will support the local rural economies and also support our customers in the process. In urban locations, in lieu of the ration kit, we will provide the same support, but through a pre-paid SODEXO card worth ` 1800 to the affected customers, with which they can acquire essential supplies.

Even delinquent customers of our Bank are eligible.

The program will be completed before 30[th] June 2021.

Please fill out this nomination form here and help us identify customers in dire need. The deadline for nomination submission is 12 June 2021 .

Each of you can be proud that this is a unique program where our employees have pitched in to support our customers in need with your personal resources. It also symbolizes that we revere our customers and this is our moment to express it. We are proud all of you who participated in this program.

With warm regards,

V Vaidyanathan Managing Director and CEO

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Annual Report 2020-21 41

Digital FIRST

Innovation and Technology for an Aspiring India

Technology is changing banking at its roots. The mobile is now the go-to mode for contactless and instant banking. At IDFC FIRST Bank, we are deploying sophisticated technologies that enable us to be flexible and highly responsive to changing customer preferences.

We are using predictive and data-driven technologies such as cloud, Artificial Intelligence (AI) and Machine Learning (ML) to deepen our insight into customer needs and automate decision making. For our customers, this has resulted in improved user interface and experience.

42 IDFC FIRST Bank

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Transactions made easy: With options available for autoselection of payment models (like RTGS, IMPS, NEFT or UPI).

Here are some of the key digital initiatives that have benefited our customers.

IDFC FIRST APP AND NETBANKING – A REVOLUTION IN DIGITAL BANKING

Payments: Adding payees is super-simplified with fewer clicks

Our Bank developed a new advanced app for our customers. Personalised, intuitive and futuristic, the mobile App is built to deliver a superior user experience.

Loans: Easy application process, instant approvals, access to details and documents
Fixed Deposits: Three-click deposit booking

The App uses data-driven and predictive technologies, resulting in customised views, convenience and an extraordinary user interface. Here are some of the features that make it first-of-its kind:

Digital chequebook management: With option to set digital instructions to stop payment of cheques and view returns for cheque payments
Video and Chat services: Available to some segments of customers
Log in: Seamless and secure
Global search option: With the App’s search option for functionalities, transactions and beneficiaries, say goodbye to menus and dashboards
Auto-linking of all accounts to UPI handle: Easy to set-up and track all your balances from the app
Investing: Recommended investment schemes and options as per customer’s risk profile and simple view investment summary
Analytics: All transactions are smartly auto-categorised into income and expenses, with an option to edit the categories such as shopping, home expenses, lifestyle etc.
Features for MSME customers: Overdraft against FDs, seamless adding of maker/viewers, management of daily limits, multiple payments in one go, managing of daily limits, flexibility to review, approve and reject transactions
Single-view of all cash flows: With interactive graphs to show daily trends in spends
Insights: On upcoming expenses and incomes

All of this – in an environment of enhanced security.

Fund transfers are now more convenient: With autodetection of IFSC codes

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Annual Report 2020-21 43

Digital FIRST

SAFEPAY – WAVE, PAY & GO: CONTACTLESS CARD PAYMENTS ON PHONE

In a wireless world, the way people want to pay is changing. IDFC FIRST Bank’s SafePay is a digital facility that allows contactless debit card payments by simply waving one’s smartphone against a Near Field Communication (NFC)enabled POS terminal.

Our Bank was the first to have this facility embedded in the mobile App to enable secure payments using a debit card issued by the Bank. A social distancing-friendly way to pay, it completely does away with the need to hand over the card to a merchant or even carry it in the wallet. Users can simply wave, pay and go, making the payment process not only touch-free, but also faster, simpler and safer.

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PAYMENTS

Pay to Contacts – Simpler and Faster Digital Payments

Our Bank launched ‘Pay to Contacts’ feature in its mobile banking App, enabling users to make payment by selecting a beneficiary from the user’s phonebook or by entering the beneficiary’s mobile number. This feature rides on the UPI payments stack. The process of payment is seamless and can be completed with a few clicks and in seconds. It completely does away with the need to enter the recipient’s bank details, card number or the UPI ID. Pay to Contacts enables customers to transact in a frictionless and secure environment. It is the simplest and fastest way to pay.

RBI Regulatory Sandbox

The Bank was the first to participate in the Reserve Bank of India’s regulatory sandbox for enabling UPI for feature phones/offline payments. The Bank partnered with UltraCash to support offline through IVR and with eRoute to support UPI payments on feature phones using SIM overlay.

Prepaid Cards

VIDEO KYC – PUTTING CUSTOMERS’ SAFETY FIRST

As a bank on the forefront of digital experiences, our Bank was among the first few in the industry to launch video KYC for its online savings accounts opening journey. The start-to-finish digital journey makes savings account opening a delight, as it enables customers to complete the paperless KYC process in a few minutes. The digital facility offers customers a branchlike experience at home, making it possible to meet bankers virtually, at a time convenient to the customer. The zero contact method completely does away with paper work or biometric verification, thereby removing physical interaction between the Bank and the customer for the KYC process.

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The Bank offered seamless digital solutions for managing rewards, gifting and employee benefits. The Bank partnered Sodexo to launch Flexi Benefit co-branded prepaid card.

To promote financial wellness among teenagers using prepaid cards, the Bank partnered FamPay and created a co-branded prepaid card targeting teenagers.

Bill Payment

We simplified bill payments and autopay services to retail and corporate customers.

Payments on mobile App

The Bank is among the few in the country that fetches names for third party funds transfer, default creation of UPI id for all customers, and auto-links the savings account to default created UPI ID/VPA.
The app also auto selects the payments rail – IMPS/NEFT/ RTGS - depending on the amount and the time of funds transfer initiated by the user on IDFC FIRST Mobile app.

IDFC FIRST Bank

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LOAN ACCOUNT SERVICING – DIGITALLY DRIVEN

We redesigned our online payment journey to enable frictionless transactions:

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KEY HIGHLIGHTS

Frictionless 1 click payments

Support for vernacular languages available & to be implemented

Integration with core systems to provide real time payment recepits

We used WhatsApp channel to assist customers

IDFC FIRST Bank Debt Support- WhatsApp Channel

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KEY HIGHLIGHTS

2.5L

accounts reached in 3 months

Track all details for your loan on WhatsApp

Seamless one click payment enabled by UPI integrations

Annual Report 2020-21 45

Committed to making Customer Experience better Creating Exceptional Experiences

During FY21, our Bank took a large number of initiatives and sharply upgraded our customer service levels.

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LETTER TO EMPLOYEES ON ‘YOU CAN’ INITIATIVES

At IDFC FIRST Bank, we have set a new benchmark of customer-centricity with every story under the Heroes@FIRST initiative. More importantly, these stories have proven that giving our customers memorable experiences is not only the responsibility of one department but also the duty of our entire organisation.

Our focus therefore is clear:

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Simplify
Enrich Automate
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It is not merely a function, but a culture. I commend the demonstration of exemplary customer experience shown by every team member of our organisation by going beyond their call of duty to serve our customers and I greatly appreciate and thank our CX team for bringing the most inspiring stories under the spotlight.

While this is only the first edition of the coffee table book, I assure you many more heroic tales are in the making at this very moment. Because, as customercentricity evolves, so does our employees’ spirit to serve.

Mr. Madhivanan Balakrishnan COO, IDFC FIRST Bank Ltd

46 IDFC FIRST Bank

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Simplified to serve better

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Automated for remote and speedy connect

In FY21, we had

5 million+

digital interactions to assist customers via phone, email and video conferencing

6.5 Lakh

WhatsApp banking users with 70% growth in usage over three quarters

2.7 million

Requests served on WhatsApp

50+ services

redefined and automated to serve our customers digitally

20+ STP

for enhanced customer convenience

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Enriched experiences

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Our in-house customer experience teams were available all through the lockdowns and the pandemic to respond, assist and resolve issues for customers

>90%

loan centre service levels

1,600+

frontline employees upskilled and trained

~6,000

Video KYCs done every month

Annual Report 2020-21 47

Committed to making Customer Experience better

In order to improve customer experience, we initiated a bank-wide campaign called You[X] (You raised to the power of x). Under this programme, employees of the Bank were trained to create superior customer experiences. We also published a coffee table book with stories of our employees who went out of their way to serve customers. Enclosed are a few stories from the book.

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More than a banker

Jerry Pinto, Branch Manager, Sangli, proved that we care for our customers – beyond just providing service!

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Excerpts from the Coffee Table Book after the You[x] Customer Experience campaign

48 IDFC FIRST Bank

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Thinking on their feet

Naga Sai Swamy Pilla, Fexi-Banker, and Raviteja Namudur, Deputy Branch Manager, Gayatrinagar, Vijawada Branch, were vigilant and prevented the customer from giving in to a fraudulent transaction.

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Excerpts from the Coffee Table Book after the You[x] Customer Experience campaign

Annual Report 2020-21 49

Being there for our customers

Because YOU matter the most

We are passionate about serving our customers. Our wide range of products are customised to their needs. When we support a small business we support a dream. Our digital processes and technologies are aimed at creating customer delight. Following are statements from a few of our customers on their association with us and the impact on their everyday lives.

DIGITAL BANKING FOR A TECH-SAVVY TEAM

“We started our banking relationship with IDFC FIRST Bank for salary accounts three years ago. It’s been a wonderful experience using the Bank’s digital services, especially during the pandemic. We have employees across the country and all their accounts were opened digitally in just 10 minutes. Their newly launched app and netbanking is quite distinctive and extremely user friendly. Given its customer focus, we hope the Bank continues to keep their high standards of service in the future.” Ravindranath Rao, Finance Controller, Trigent Software, Bengaluru

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A bit about Trigent Software: Trigent is an early pioneer of offshore software development business and IT outsourcing having its operations in the United States and India. It offers end-to-end consulting services, design, development and managed services across Infrastructure, Cloud, Mobility, BI, Analytics, Product Engineering, QA & Testing, IoT, Big Data, and Artificial Intelligence.

50 IDFC FIRST Bank

BIG BUSINESS STARTS SMALL

“I started my business with an investment of ` 1 lakh. With time, I wanted to expand the business, but funds were short. I approached several banks but obtaining funds during a lockdown was challenging. Then I approached IDFC FIRST Bank for a Personal Loan. The process from application to disbursal was fast. With the funds, I renovated and expanded my shop so that the shelves can hold more. My income per month is now more than the loan I had secured.”

STITCHING SUCCESS

“I started my small business with one embroidery machine. There was a growing demand for embroidered fabrics but my expansion plans were constrained due to lack of funds. A Business Loan from IDFC FIRST Bank helped buy more machines and cater to new clients. Soon my business turnover doubled to ` 50 lakh. I am delighted that today I am regarded as a successful entrepreneur in my locality.”

Nasiruddin Sardar, Proprietor, Embroidery Factory, Howrah

Mihirkumar Patel, M/s Sahjanand Chill Point, Anand, Gujarat

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CATCHING AN OPPORTUNITY

“In the business of finishing boats, the more the number of boats, more is the opportunity to earn. I availed of a Micro Enterprise Loan of ` 1 lakh from IDFC FIRST Bank and expanded the number fishing boats I operated at Velankanni. Not only did this increase my family income and helped buy essential items of my home, but it also enabled me to give employment to 10 labourers who work with me. I wanted to expand my business of manufacturing fishing boats.”

Jayakumar, Velankanni, Tamil Nadu

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The above pictures represent the Bank’s actual customers

Annual Report 2020-21 51

Being there for our customers

MULTIPLYING OPPORTUNITY

“Besides agricultural land, I also owned 8 buffaloes and supplied about 25-30 liters of milk to people in Hanagal. But I wanted to expand to meet higher demand from my customers. A loan from IDFC FIRST Bank helped me increase the daily production of milk to 45-50 litres per day. My business has now expanded and is profitable.”

Nagaraj Gaouli, Hanagal, Hubli

PLAYING IT BIG IN THE SPORTSWEAR MARKET

“Demand for sportswear has been steadily increasingly over the years. I expanded from wholesale to retail sportswear and set up a manufacturing unit for stitching these garments. I could achieve this with funding from IDFC FIRST Bank. Today, I am able to procure raw materials from different locations and increase margins. My turnover is now higher with an integrated wholesale and retail business.”

K Shivakumar, Proprietor, Bindass Sportswear, Mysore

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TURNING YARN INTO MONEY

“As the lockdown lifted in August 2020, business activity was back to normal and we witnessed increased demand for knitted products. I required funds to meet my working capital needs. I obtained a loan from IDFC FIRST Bank. With five circular knitting machines and seven workers, I have been able to enhance capacity utilisation of my installed machines and cater to new clients and untapped markets.”

Parminder Singh, M/s Padda Industries, Ludhiana

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52 IDFC FIRST Bank

A LINE OF CREDIT THAT CHANGED LIFE

“I needed funds for working capital and expansion of our garments business. However, due to the lengthy procedures of banks I failed to get a loan. My shop was too small and both banks and finance companies were unwilling to give us a loan. When I approached IDFC FIRST Bank for a business loan, they processed my documents in two working days and the funds were credited into my account. The helped improve my cash flows and enabled me to expand my shop. Soon footfalls increased and I had to even install a CCTV for surveillance during rush hours. I am now planning to start another outlet. We’ve come a long way from a struggling business to a successful one.”

Sayara Bano and son Firoz Ansari, M/s Fashion Flora, Jhangirpuri, New Delhi

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FUELLING GROWTH OF WHOLESALE PHARMA BUSINESS

“Demand for pharmaceuticals has shot up in the past year. I wanted to expand my wholesale pharmaceutical business and stock more products to be able to meet increasing demand from retailers. The loan provided by IDFC FIRST Bank helped scale up supplies significantly and increase turnover from ` 1 crore to 1.75 crore annually. Now, I am an entrepreneur with an established presence in my catchment area.”

Raju Kumar Agarwal, Proprietor, M/s Shiv Pharma, Ranchi

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ALWAYS A GOOD TIME TO INVEST MORE

“As agriculturists, our income is not the same every year. So I decided to invest in milch animals. I availed of a Micro Enterprise Loan from IDFC FIRST Bank and bought 3 milch animals. I started supplying milk in my native village Kumarakudi in Sembanarkoil. This turned out to be a successful business so I took another loan from IDFC FIRST and now I own 7 milch animals. My family income has increased and this additional cash flow has given us the much needed financial stability.”

Subhashini, Tanjavur, Tamil Nadu

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The above pictures represent the Bank’s actual customers

Annual Report 2020-21 53

FIRST IMPACT: Corporate Social Responsibility Being There for the Community

FY21 brought with it unprecedented challenges as a result of the pandemic. We responded by deepening our engagement with the beneficiaries of our social programmes through the use of digital. We also launched ‘First Impact’, our CSR brand purpose to give a clear focus and definitive identity to the CSR function.

As a value-driven organisation, we recognise our role in creating a positive impact in people’s lives and the communities we operate in. FY21 was a challenging year on account of the pandemic, given the lockdowns and health concerns. We ensured our continued support to our beneficiaries even through these extraordinary times. And we did what we had to do – from training our partners and their field staff to driving digital adoption in remotest locations. This helped sustain the pace of implementation of our social responsibility programmes. We also created cross collaboration between our partners, which helped scale interventions to new geographies.

Gram Sakhi Smt. Geeta Patel of village Paraswada, District Hoshangabad, Madhya Pradesh has a small cattle farm of 5 milch animals at her home. She increased the production of milk by 2.5 liter per day by using good practices of dairy, feed, fodder and shed management after she was trained under the Shwetdhara programme.

54 IDFC FIRST Bank

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Our
Focus
IMPACT SINCE INCEPTION
24+
Programmes supported
erment L
E
w i
d
v
h
u
o e
t
l
l c
p i
a a
m h
e t
o
i
E
H
o
o
n
n
d
e
m
o
W
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41 LAKH+ Lives impacted till date

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10+
Locations
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Annual Report 2020-21 55

FIRST IMPACT: Corporate Social Responsibility

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During FY 2020-21, our CSR brand identity and theme-line was redefined and launched.

We believe in creating opportunities beyond creating capabilities. In empowerment beyond charity. In equality beyond reducing inequality. In long-term impact beyond short-term alleviation. In flow of wealth beyond accumulation of wealth. In inspiration beyond instruction.

We believe in being the prime-mover in a chain reaction of good.

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12 35 48 No. of programmes No. of trainings taken No. of NGO Staff by IDFC FIRST Bank trained by IDFC FIRST CSR Team Bank CSR team 17 36 218 No. of NGO Staff's No. of NGO staff No. of field workers Capacity Built as part of supported by CSR supported by our CSR the program programs programs 22600 46312 156 No. of beneficiaries No. of hours of No. of hours of capacity reached training provided for building sessions held beneficiaries for NGO staff

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BENEFICIARY BIFURCATION
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94 13 6759 219 No. Youth with No. of Entrepreneurs No. of Youth No. of women disabilities supported Supported beneficiaries supported 227 322 14966 No. of adults with No. of scholars No. of households disability supported supported supported

56 IDFC FIRST Bank

1. EDUCATION

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IDFC FIRST Bank programmes support young adults from economically weaker sections across India and provide them with equal opportunity to succeed in life. This includes providing financial assistance in the form of scholarships to meritorious and deserving candidates, supporting special education of young adults with intellectual disabilities and other underserved programmes around mental health.

1.A. FLAGSHIP MBA SCHOLARSHIP PROGRAMME

Beneficiaries: Students enrolled in B-schools with family income less than ` 6 lakh p.a.

Programme Overview:

The programme provides scholarships of ` 1 lakh p.a. for two years to full time MBA students who secure admission in B-schools on their own merit.

Under this programme, scholarships have been awarded to 677 students until March 31, 2021. The 2020-21 batch of scholars were felicitated at the IDFC FIRST Bank MBA Scholarship Digital Conclave in February 2021.

The Bank hired four scholars of the previous year’s batch as management trainees this year.

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677 MBA SCHOLARS

hailing from diverse family backgrounds such as children of retired government employees, autorickshaw drivers, farmers, single parent etc. from low income families have received the scholarship till date.

“I stay with my mother who is the sole earning member of the family. There were a lot of ups and down in my family due to which our financial condition wasn’t very good. My goal is to become financially independent and having an MBA degree is the stepping stone to achieve my goals and it wouldn’t have been possible to achieve it all without the support of IDFC FIRST Bank’s MBA Scholarship.”

Aishwarya Lakhmani, IDFC FIRST Bank Scholar

Annual Report 2020-21 57

FIRST IMPACT: Corporate Social Responsibility

SCHOLARSHIPS SUPPORTING SPECIAL EDUCATION

1.B. Kamyaab Scholarship

Beneficiaries: Young adults with autism

Programme Overview:

The Bank in partnership with Bubbles Centre for Autism is supporting special education for children with disabilities from both urban and rural communities in Karnataka. Under this partnership we run a scholarship programme, life-skills programme and a rural capacity building programme.

The programme has supported special education for 153 young adults with autism till date. These students hail from economically disadvantaged families and cannot afford the cost of intervention. Their parents are tea stall owners or auto rickshaw drivers and earn an annual income of ` 1-2 lakh. Since the onset of the pandemic, the programme is being conducted virtually to provide end-to-end support to 20 young adults. The classes also include sessions on speech therapy, occupational therapy and physiotherapy. We have distributed tablets and gadgets to nine of these students to help them access good quality intervention at affordable rates during the lockdown.

Our Life Skills Programme imparts training to 10 young adults with autism and includes digital training on farming and gardening. Activities such as composting, manuring, seed ball and coco planter making are taught. The aim of this programme is to strengthen social and life skills of youth with autism, which are often inaccessible and too costly for the families.

The above two programmes cater to students from urban areas in Bengaluru.

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Kuhu, our Kamyaab scholar during an online session with her mother
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Chandana, student from Sankalpa, Davangere (Outreach partner under Aadhar
programme), Karnataka with her mother. She is 9 years old and with Bubble’s
intervention on motor activities for the first time she has started walking with support.
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Our Aadhar Programme is a rural outreach and capacity building programme which provides early intervention for 20 children with autism in Hospet, Karnataka.

The Bank increased its outreach through five more partners across India to build capacities of 15 trainers, who would, in turn, train 70 more children. These NGOs namely, Transcendent Knowledge Society in Kolkata, BD Tatti in Laxmeswar, Sankalpa in Davangere, and Ashadeep in Ilekal, Karnataka are small NGOs that were severely impacted during the pandemic and had little or no support
The Bank provided 86 hours of teachers’ training in domains of development, pre-academic skills, sensory integration etc.
Laptops were donated to these NGOs to enable them to carry out interventions.

58 IDFC FIRST Bank

1.C. Young India Fellowship Programme

Beneficiaries: Students pursuing their degree in Liberal Arts from Ashoka University

Programme Overview: IDFC FIRST Bank, in partnership with Ashoka University, is supporting need-based scholarships for 4 undergraduate and postgraduate students at Ashoka University this year.

We have supported 28 scholars of the Young India Fellowship Programme till date. Access to high quality liberal arts studies, especially in a renowned institute such as Ashoka, is made possible with our scholarships. Many of these students make careers in the development sector and solve social challenges in India. Our scholars belong to families of diverse backgrounds such as small business owners, farmers, single parents, social workers etc.

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Journalist Ravish Kumar holding a baithak with Ashoka students. The University hosts
several formal and informal sessions for students to interact with notable people from
across professions.
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NALAM worker at her residence in Thiruoporur block, Chengalpet district, Tamil Nadu
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1.D. BALM Fellowship Programme

Beneficiaries: Students from economically weaker sections pursuing mental health studies at BALM

Programme Overview: The Bank, in partnership with Banyan Academy for Leadership in Mental Health (BALM), supports capacity-building of human resources in the field of mental health services. We have supported 193 students till date.

The mental health crisis in India has seen a spike during the COVID-19 pandemic. We recognise that there is a significant need to provide access to quality mental health education to those who cannot afford it. With this in mind, we provide stipends to students from low-income groups pursuing their masters and diploma programme at BALM. Most of our students, post their graduation, go on to provide mental health services in rural communities and work with the vulnerable sections of society.

About 18 students who attended the IDFC FIRST Bank Diploma programme in community mental health this year are currently employed as NALAM workers and have been working in the field, helping others in marginalised communities.

Recognising the negative effects of the COVID-19 pandemic on mental health, the Bank provided disability allowance and social entitlements to 668 service users from low-income families.

Annual Report 2020-21 59

FIRST IMPACT: Corporate Social Responsibility

2. LIVELIHOODS

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Our programmes aim to provide livelihood intervention and skill development to youth and women from low-income communities across India, thereby making them employable and entrepreneurial.

Demand for labour and skills vary across geographies and depend on infrastructure and local industries. We enable access to training courses which empower women and youth to choose a livelihood skill such as electrical, welding, beauty care, and dairy farming.

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Haqdarshak camp organized by Etasha Society in Mangolpuri community, Delhi
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“I went through a difficult time after my husband was diagnosed with brain haemorrhage. Since then, I have been taking care of my family and all household expenses, including my husband’s medical expenses. I wasn’t expecting much from this year but my handmade soaps did very well during Diwali and Christmas season. I am glad that I am a part of the Women Entrepreneurship Programme. Thank you IDFC FIRST Bank for supporting me and other women like me.”

Ms. Suman,

Noor Mahila Udyog, Handmade soap enterprise

2.A. Women Entrepreneurship Programme

Beneficiaries: Underprivileged women from slum areas of Delhi

Programme overview: In partnership with ETASHA Society, the Bank supports entrepreneurship development among women from low-income communities of Delhi, providing them the necessary skills to run and manage successful enterprises. All our current 18 women beneficiaries are firsttime entrepreneurs and are supported until they become quality- oriented, profitable and self-sustaining businesses owners. Beyond financial gains, the women engaged in this programme experience higher levels of self-esteem, respect within the community and an improved sense of fulfilment.

We have supported eight women-led micro enterprises and nine individual entrepreneurs till date and trained more than 360+ women since the inception of this programme. These entrepreneurs are involved in manufacturing LED bulbs, soaps, hand wash, shampoos, candles etc. From organising cross collaborative digital literacy sessions to enabling access to social entitlements, this year we decided to go beyond just providing financial support and take advantage of the rapid digital adoption following the pandemic. As part of this, we connected 288 community members with eligible

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Awareness camp organized by Haqdarshak on government loan and pensions
schemes at Mangolpuri-CDC-3
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welfare schemes. ETASHA Society is also a part of our Karma First Donation Programme. Currently 11 women in Delhi are part of the Women Entrepreneurship Programme in partnership with ETASHA Society .

360+

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Women trained in various skills since inception of Women

60 IDFC FIRST Bank

2.B. Social Action for Manpower Creation (SAMPARC)

Beneficiaries: Rural youth of Maval, Haveli and Mulshi Taluka of District Pune

Programme Overview: The Bank has been supporting the SAMPARC Industrial Training and Vocational Training Centre in training rural school dropouts and youth to enable them to find employment. We have supported 1,907 students till date across four vocational training courses – electrician, fitter, welder and wireman courses. These courses also impart computer literacy and English language skills. It has resulted in 100% placement records. During the lockdown, all the 128 students of the 2020 batch migrated to virtual learning and focused on theoretical subjects. Practical classes have resumed with precautionary and safety measures in place.

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Om Creations beneficiaries at the fund raising drive ‘The Hope Drive’

The Bank’s CSR team also conducted capacity building workshops for the staff of Om Creations Trust on topics such as Log Framework Analysis and developing Theory of Change.

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ITI Electrician Students receiving Practical Training
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2.C. Om Creations Trust

Beneficiaries: Women with Down Syndrome

Programme Overview: In partnership with Om Creations Trust, the Bank provides stipends to women with multiple intellectual disabilities to honour their commitment towards making quality art and food products that are sold by the Trust. The proceeds of the sale are used for providing intervention to these women. We have supported 187 women till date.

With the COVID-19 lockdown setting in, the current batch of 41 women migrated to online classes. Their teachers delivered skilling kits at their doorstep and the women were trained with the help of their guardians. The students received an average stipend of ` 5,000 a month for the stitching, art and craft and designing work they did from their homes.

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Om Creations Beneficiaries working from the Centre post lockdown

Annual Report 2020-21 61

FIRST IMPACT: Corporate Social Responsibility

2.D. Lighthouse Programme

Beneficiaries: Underprivileged youth from slum areas of Aundh, Pune

Programme Overview: In partnership with Pune City Connect, the Bank is implementing the ‘Sustainable Livelihood Programme’, which is run through physical centres called ‘Lighthouses’. The real estate and capital expenditure for these Lighthouses is provided by Pune Municipal Corporation and the Bank contributes for the operational expenses to run the Lighthouse. This programme involves skilling underprivileged youth from the slum community at Aundh in vocational

courses of their choice and providing placement support. Pune City Connect works very closely with youth from urban slums, non-slum and gaothan settlements. IDFC FIRST Bank has supported 1,800 youth as part of this programme till date.

This year we reached 413 youth in spite of the challenges posed by the COVID-19 lockdown. Our students quickly adapted to the new digital learning set-up and post-completion of the course, were placed across e-commerce companies as delivery agents. This year, we were able to secure placements for 50% of the batch.

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Youth and women working on an assignment during foundation course at Aundh Lighthouse, Pune
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The Lighthouse programme is significantly different from other skilling programmes in India because of its emphasis on mapping passion versus skills and working closely with the family eco-system to support them in making well-informed decisions.

IDFC FIRST Bank

2.E. Digital Empowerment Programme

Beneficiaries: Adults between the age of 18-60

Programme Overview: Together with Pune City Connect, the Bank provides digital literacy training for youth and adults from low-income communities of Pune city. This course imparts digital skills required for day-to-day activities such as accessing net banking, applying for jobs, transacting online, exchanging mails, using apps etc. This programme is especially important to bridge the digital divide and to enable people to use their digital skills to advance their income and access entitlements from the government. Youth and women who have been through this programme have expressed an increase in self-confidence and employability skills post-their certification.

The Bank has supported 11,000+ learners till date across five centres in Pune. This year, the Bank was able to train 2,000+ learners out of which 77% learners were female candidates.

The Bank is also encouraging beneficiaries of our other programmes to learn digital literacy skills from mentors of this programme to benefit a wider audience which earlier could not be reached due to geographical limitations.

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Technology Mela organized for youth of Digital Empowerment Centre at Aundh, Pune

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11,000+

Learners across Pune availed the Digital empowerment training till date.77% of them were female

2.F. SHWETDHARA PROGRAMME

Beneficiaries: Small and marginal farmers

Programme Overview:

In partnership with Vrutti and End Poverty, the Bank has designed and implemented a unique cattle care programme in rural Madhya Pradesh and Rajasthan to improve the productivity of milch animals and increase the income of small and marginal dairy farmers. This programme also aims to ensure dairy farmers are equipped with best practices and have better understanding about the right practices. The programme has reached 30,000+ beneficiaries through services like artificial insemination, cattle treatment, feed and fodder services and medicine supply for the cattle.

Aligned with the Bank’s catchment areas, this programme is run at the grassroots level by a cadre of women leaders in the community called ‘Gram Sakhis’, who enable last mile service delivery. We have set up six Pashu Vikas Kendras in the branch catchment areas, catering to 6,000 rural households. This programme has been designed to become self-sustaining in five years from commencement with each Pashu Vikas Kendra.

The Bank has trained 192 Gram Sakhis who cover 192 villages across two states, conducting 378 community trainings and 4,286 cattle treatments.

Baseline assessment for the programme was carried out in December 2018 and a midline assessment in December 2020. A total of 171 households participated

Gram Sakhi Smt. Geeta Patel of village Paraswada, District Hoshangabad, Madhya Pradesh providing animal husbandry training to Shwetdhara group members of her village. Every month, she received training under the programme on various animal husbandry topics and she also delivers training to other women of her village.

in the midline assessment. Based on findings of the midline study, it can be said that Shwetdhara is an essential component in the communities we serve. The programme received considerable response from the community in the midline study.

The programme has resulted in a considerable shift in attitude, upkeep of cattle, and use of artificial insemination, which increased by 40% with 25,000 artificial inseminations performed till date. This has resulted in a reduction in input cost by ` 40-70 per household per day and a consequent increase in net income of households.

Apart from the improvement in income and the upkeep of cattle, the most significant impact of the Shwetdhara programme is the identification of Gram Sakhis as professionals, increase in income from dairy, and training of each Gram Sakhi and community members.

Annual Report 2020-21 63

FIRST IMPACT: Corporate Social Responsibility

3. WOMEN EMPOWERMENT

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Our programmes under the theme of ‘Women Empowerment’ have a special focus on economic and social empowerment of women from low-income groups in rural and urban areas. These include women-focused livelihood interventions and skill development to bring about a social transformation starting with one woman at a time. As a result, the wide-ranging effects of these programmes are not limited to financial benefits alone, they extend to changing deep-rooted social attitudes towards women.

“I enrolled myself for the Saksham programme as I was eager to learn a new skill that could help me become financially independent. My financial situation was not good and I used to borrow money to pay for my children’s education and sometimes also for my daily expenses. There was no scope for savings as a major part of my husband’s income used to go towards paying the house rent. After completion of my tailoring course, I started earning ` 5,000 per month. I also bought a sewing machine for myself on revolving credit under the Saksham programme supported by IDFC FIRST Bank, as going to the centre for stitching every time was not feasible and I was getting a lot of orders.”

Pragati Rajesh Patel,

Trainee of Saksham Programme, Jogeshwari West Centre

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Women beneficiaries of the Vashi centre during the graduation ceremony
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3.A. Saksham

Beneficiaries: Women living in slum areas of Mumbai

Programme Overview: In partnership with Animedh Charitable Trust, the Bank supported a three-month tailoring programme called ‘Saksham’ for women from low-income communities in Mumbai. This programme gives women the freedom to work from home or in a garment factory and earn a living for themselves and their families. With the Bank’s intervention, the women were able to earn up to ` 5,000 a month and also take care of their families. We are supporting three tailoring centres across Mumbai and have trained 1,000+ women till date. During lockdown, 100 women were being trained online. Post lockdown, the batch size was reduced to half to maintain social distancing at the centre.

Artisan beneficiaries during the advanced tailoring and garment construction training

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1,000+

Women trained in tailoring through Saksham programme till date

IDFC FIRST Bank

4. HEALTH

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Our programme under the theme ‘Health’ aims to create awareness regarding community-driven solid waste management processes and segregation at source within the Worli Koliwada community of Mumbai through a participatory process.

“As part of the Swachh Worli Koliwada project, Stree Mukti Sanghatana advocates capacity-building of citizens residing in Koliwada and giving hands-on training to segregate waste at source in three ways to make the project self-reliant and to adhere to the principles of decentralised waste management. With strategic guidance and financial support from IDFC FIRST Bank, along with active participation of MCGM, we are confident that Worli Koliwada can become a zero-waste community.”

Jyoti Mhapsekar, Founder, Stree Mukti Sanghatana

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CSR Team with the staff of Stree Mukti Sanghatana during field visit at Worli
Koliwada, Mumbai
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4.A. Swachh Worli Koliwada

Beneficiaries: Worli Koliwada community

Programme Overview: In partnership with Stree Mukti Sanghatana and the Municipal Corporation of Greater Mumbai (MCGM), the Bank is working on project Swachh Worli Koliwada with the aim to clean Worli Koliwada, create awareness and bring about behaviour change around solid waste management practices and segregation at-source through a participatory process. The programme intends to build a zero-waste neighbourhood that is equipped to manage solid waste through community participation, which makes the programme sustainable in the long run. This programme is expected to touch the lives of 9,452 household residents spread across 65 acres of Worli Koliwada. Under the programme, 64,872 kgs of wet waste was collected and 63,810 kgs was processed into compost. The Bank has funded the setting up of infrastructure for dry waste segregation with the installation of a machine that has a capacity of creating 1,000 kgs compost per day. Total dry waste collected and sent for recycling to the MCGM is 18,111 kgs.

Extensive awareness activities continue with 50 awareness sessions, which saw the participation of students and 550 community members. An innovative approach, which gamifies behaviour change, is being adopted. The programme has a partnership with IIT Bombay to build a

field level data collection tool which will show real time data on a website. Koliwada being primarily a fishing community, local businesses have been engaged with to use fish waste to create high quality compost. Efforts are being made to build sustainability into the programme by creating sources of revenue through compost generated.

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64,872 kgs Of wet waste collected and processed into compost

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18,111 kgs Of dry waste collected and sent to Munipal Corporation of Greater Mumbai for recycling

Annual Report 2020-21 65

OTHER SOCIAL IMPACT INITIATIVES

Karma First Donation Programme

FY21 saw the launch of our unique Karma First programme, which makes contributions to social initiatives easier than ever. The programme, hosted on the Bank’s website, enables our customers to contribute seamlessly to social causes of their choice.

This new feature has a simple user interface.

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Log into their net banking account
Choose the cause one wishes to support
Enter the amount to be donated
Click to proceed
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“We are grateful to the customers of IDFC FIRST Bank for supporting us in enhancing our learning models and continuing our intervention with individuals with autism and ID (intellectual disabilities). The Karma First Donation Programme helped us raise support for our beneficiaries. Using these funds, we provided support to single mother of one of our students from a low-income group, helping her with her rations and daily necessities.”

Mrs. Sarbani Mallick,

Founder and Managing Trustee, Biswa Gouri Charitable Trust

Customers can select from a variety of social causes and payment schedules such as recurring donations or a onetime donation. They can also choose to donate a part of their interest earnings if they wish to. The Bank bears all the administrative costs of this programme and 100% of the funds go directly to the cause chosen by the contributor.

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66 IDFC FIRST Bank

First Impact: Corporate Social Responsibility

Lend-A-Shoulder Programme

Our employee volunteering programme offers our colleagues an opportunity to make a difference by espousing social causes that are important to them. An employee can explore ways to do social good either directly or alongside our NGO partners based on their specific skills, areas of interest and availability. They can volunteer to spend time supporting children with special needs and providing academic support to youth, or participate in financial literacy programmes and even give art and dance lessons to individuals with intellectual disabilities.

We have two programmes under Lend-A-Shoulder programme, namely Employee Volunteering Programme for all employees across organisation and Employee Donation programme for employees across Mumbai, Maharashtra.

These prorgammes enable our employees to harness their interests, professional skills, invest time towards social good with the mission to strengthen their local communities, especially those who are most vulnerable.

Our Impact

We have received more than 80+ nominations for volunteering from our employees and despite COVID-19 restrictions, we have had 15 of our employees lend their time, energy and skills towards joining our social impact mission since the launch of this programme.

These employees spent more than 80 hours of collective volunteering to train more than 100+ beneficiaries and helped 4+ NGOs across Delhi, Bengaluru and Mumbai in digitally training their members and beneficiaries.

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100+ 80+ 15+ Beneficiaries Employees Completed reached Nominated Volunteering

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Lend-A-Shoulder is a great programme where we can connect to the NGOs based our interest and skillsets and are able to help them where they need the most. It enables people like us to reach to correct place where we can be of some help. It needs to be endorsed more. I believe more awareness should be created among employees at the bank so that we can contribute more hours collectively.

Nihar Ranjan Sahoo,

Technology Delivery Manager-Projects, Information Technology, IDFC FIRST Bank

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“The Lend-A-Shoulder program is the best opportunity and platform for us to give back to our society. Whilst volunteering, I realised that the women were very talented but lacked new-age know-how. By imparting my knowledge in marketing and business-related strategy, I provided them with tools that were most relevant to their trade and dayto-day lives.”

Nasarinbanu Kittur,

Senior Customer Service Executive, Customer Experience, IDFC FIRST Bank

Annual Report 2020-21 67

Responding to the Second Wave of COVID-19

The second wave of COVID-19 has disrupted lives and resulted in loss of jobs and livelihoods for many. At IDFC FIRST Bank, we always put our customers first and are conscious of the situation they are going through. We carried out a set of targeted interventions to address the concerns of our customers and alleviate the situation for them.

Distribution of masks to JLG group community women by IDFC FIRST Bank Branch Team at Madhya Pradesh

68 IDFC FIRST Bank

We at CSR division are passionate about what we do and are involved directly in all the programmes that we manage. We get the necessary resources, time and attention of peers and seniors who along with us are thrilled for the opportunity to serve the people around us.

We get support from the highest level in the Bank and all our departments get together and join hands in serving communities affected by both waves of COVID-19. After weeks of brainstorming we conceptualised the following 7 programmes to tackle the first wave of COVID-19

PM Cares Contribution – We donated ` 5 Crores to PM CARES Fund
Ask For Mask Programme- We supported 250 women who stitched masks. We procured /manufactured and distributed 1.5 Lakh masks in total to frontline workers
Shramik Sahayata Programme – We supported direct cash transfer and linkage to various government schemes for 625 labourers who had lost their livelihoods
Share-a-Meal Programme - Distributed 1 Lakh meals to migrant laborers and slum dwellers
Gaon Gaon Mask Programme – 150 women stitched 2 lakh masks that were distributed in rural locations

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Oxygen concentrator handed over to Life Care Hospital, Kopargaon, Maharashtra
by IDFC FIRST Bank Branch staff, Maharashtra
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IMPACT STORIES

Jankari mein Samajhdari Programme – COVID-19 awareness film disseminated to 3 mn customers
COVID Warriors on Wheels Programme - Provided free transport facility for staff of two leading hospitals in Mumbai during the lockdown

DURING THE SECOND WAVE, WE ROLLED OUT THE FOLLOWING PROGRAMMES –

1. JANKARI-MEIN-SAMAJDHARI PROGRAMME

In order to emphasise on the urgency of the COVID-19 vaccination, and to clear misconceptions relating to it, the Bank reached out to over 5 million of its customers in semi-urban and rural locations digitally. Animated films and infographics were circulated through SMS links in nine different languages across Kerala, Karnataka, Tamil Nadu, Andhra Pradesh, Maharashtra, Gujarat, Madhya Pradesh, Chhattisgarh, Odisha, Haryana and Rajasthan.

“There were a lot of rumors around the coronavirus vaccine and we were very disturbed by these rumors that were going around. We were afraid that the vaccine would be harmful for us but after we saw the ‘Jankari Mein Samajhdari’ video in the Shwetdhara Gram Sakhi WhatsApp group, we realised that it’s completely safe to get vaccinated. We are now looking forward to getting vaccinated.”

Rama Bai,

Shwetdhara Member, Madhya Pradesh

Annual Report 2020-21 69

2. AAS BHI, SAAS BHI – OXYGEN CONCENTRATOR DONATION PROGRAM

IDFC FIRST Bank, in partnership with Give India, procured 63 oxygen concentrators to be distributed across hospitals in and around our 42 rural branches to meet the shortage of oxygen concentrators in rural India. Employees of our rural branches personally visited the hospitals to hand over the oxygen concentrators.

In partnership with Give India, procured 63 OXYGEN CONCENTRATORS

to be distributed across hospitals in and around our 42 rural branches

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3. GAON-GAON MASK PROGRAM

Owing to the traumatic impact of the second wave of COVID-19 on the livelihoods of rural communities, the Bank enabled 64 Gram Sakhis, our village-level dairy entrepreneurs in rural Madhya Pradesh, to lead the stitching of 1 lakh masks. This created livelihood for women entrepreneurs in the villages and kept their families engaged. The masks stitched by them were distributed among vulnerable rural communities in order to limit the spread of the virus. Masks were also distributed among the personnel of Government hospitals, dispensaries, police, sanitation workers, PRIs, Shwetdhara Group members, farmers and Anganwadi workers.

Ms. Madhubala, programme coordinator of Shwetdhara programme providing masks stitching training to Gram Sakhis at Rani Pipariya village of Hoshangabad District Madhya Pradesh

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70 IDFC FIRST Bank

4. MASK DISTRIBUTION PROGRAMME

Along with the Gaon-Gaon Mask programme, the Bank distributed over 4.25 lakh masks in rural and urban areas across 18 states to curb the spread of the COVID-19 virus. Masks were distributed among frontline workers, police, sanitation workers, hospitals, farmers and community members from 500+ IDFC FIRST Bank branch catchment areas. All the employees of our 500+ branches participated in this activity.

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Manjunatha GS, ABM handing over masks to Asst PI, Hiriyur, Karnataka

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Mask Distribution Activity at vaccination center, Pathalgaon Chattisgarh
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5. CASH RELIEF SUPPORT

The Bank supported vulnerable families, who had lost an earning member of their family to COVID-19, with cash relief support of 10,000 in partnership with Give India. As part of this programme, we reached out to our existing NGO partners and rural bank branches to identify community members who needed our support and who fit the eligibility criteria. Families with income less than 3 lakh per annum were identified and supported with cash relief; 250 such families across 20+ rural and urban locations in India benefited from this programme.

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5 MILLION+

Customers in semi-urban and rural India reached through SMS in 9 languages to promote vaccination

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OSD – Urban Development & Housing Minister MP
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IMPACT STORIES

“During COVID-19, I lost my husband who was the sole bread earner of our family. IDFC FIRST Bank helped us with cash relief ` 10,000, which helped us immensely. My daughter can now continue her education and will not have to quit school. Thanks to IDFC FIRST Bank for helping us during a time of need.”

Mrs. Reshma Pramod Kamble. wife of the deceased, Pune City Connect

Annual Report 2020-21 71

People

Staying connected while Working From Home

Through the year, our Bank organised multiple sessions to drive engagement among employees in an effort to upgrade their knowledge and skills, and to keep the business momentum going.

BHARAT KI SHAAN

Rewards & Recognition programme in which state teams across the country come together on a digital platform on the same day to appreciate and recognize Top Performers in the business.

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The Arête New Joiner Kit was introduced to welcome the newly joined and inducted members of the ‘New Age’ teams (Technology, Data & Analytics, Digital Platforms, Digital Solutions)

72 IDFC FIRST Bank

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Rahul Chari (Guest Speaker) pictured with Surajit Deb (HeadTechnology Management Group and Chief Enterprise Architect) addressing employees during ‘ Tech Hour ’ – the Bank’s monthly learning and knowledge sharing session for our new age banking teams.

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Shikha Hora, Business Head – Consumer Lending (highlighted above) chaired a Samvaad session – a Leadership Connect Programme which provides a platform for frontend employees to interact directly with leadership

Annual Report 2020-21 73

People

A social media message to our MD & CEO Mr. V Vaidyanathan triggered the thought of launching the Bank’s 500th branch at Dimapur, Nagaland.

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It all started with a comment by a resident of Nagaland to IDFC FIRST Bank. The resident invited the Bank to open a branch in Nagaland. The comment was picked up the social media team and the message was promptly conveyed to the business teams.

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The invitation of the Nagaland resident was considered in the business plan and branch was opened in Dimapur, Nagaland.

The customer Nyemkha T Konyak (highlighted) was invited to the branch launch in a digital conference during the inaugural ceremony and he conveyed happiness that he was taken so seriously.

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74 IDFC FIRST Bank

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COVID-19 Vaccination Drives conducted across locations for our employees and their families

Annual Report 2020-21 75

Awards and Recognition

During the year under review, our Bank was recognized in various ways and the significant awards were presented to our Bank.

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76 IDFC FIRST Bank

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Best Private Bank – Digital Innovation & Services 2019 by Asian Private Banker – Awards for Distinction;

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Won three awards in ‘Asset Triple A Awards 2020’ for Treasury, Trade, SSC and Risk;

‘Most Transformed Bank in India 2020’ by Capital Finance International (CFI)

Economic Times ‘Best BFSI Award’ in Private Bank Category

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Annual Report 2020-21 77

Board of Directors

Providing Prudent Guidance

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MR. SANJEEB CHAUDHURI

Independent Director

Mr. Sanjeeb Chaudhuri is a Board member and Advisor to large commercial and nonprofit organisations across Europe, US and Asia, having over four decades of senior multinational business experience across global banks and consumer companies. He was listed among the Top 25 Media Visionaries in Asia Pacific in 2016 and is a featured speaker at premier global marketing and media events in Europe and Asia. Mr. Chaudhuri has most recently been Regional Business Head for India and South Asia for Retail, Commercial and Private Banking and also Global Head of Brand and Chief Marketing Officer at Standard Chartered Bank. Prior to this, he was CEO for Retail and Commercial Banking for Citigroup, Europe, Middle East and Africa. Mr. Chaudhuri has an MBA in Marketing and has completed an Advanced Management Programme. He is also a Global Mentor at the Columbia Business School Center for Technology Management.

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MR. AASHISH KAMAT Independent Director

Mr. Aashish Kamat has over 32 years of experience in the corporate world, with 24 years in banking and financial services, 6 years in public accounting and 2 years in Private Equity. Until March 31, 2021, Mr. Kamat was the Co-managing partner for the GCC Asia Growth Fund. He was the Country Head for UBS India from 2012 until his early retirement in January 2018. Prior to that, he was the Regional COO/CFO for Asia Pacific at JP Morgan based out of Hong Kong. Before moving to Hong Kong, Mr. Kamat was in New York, where he was the Global Controller for the Investment Bank (IB) at JP Morgan and at Bank of America as the Global CFO for the IB and Consumer & Mortgage Products. He started his career in 1988 with Coopers & Lybrand, a public accounting firm, before he joined JP Morgan in 1994. Mr. Kamat holds a BA in Accounting from Franklin & Marshall College, USA and is also a Certified Public Accountant (CPA).

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DR. (MRS.) BRINDA JAGIRDAR Independent Director

Dr. (Mrs.) Brinda Jagirdar is an independent consulting economist with specialization in areas relating to banking and economics, including Agriculture Economics. She is a member of the Research Advisory Committee of the Indian Institute of Banking and Finance, Mumbai. She is on the Governing Council of Treasury Elite, a knowledge sharing platform for finance and treasury professionals. She retired as General Manager and Chief Economist, State Bank of India, based at its corporate office in Mumbai. In March 2019, Dr. (Mrs.) Brinda Jagirdar was recognised as among India’s Top 100 Women in Finance by the Association of International Wealth Management of India. She has a brilliant academic record, with a Ph.D. in Economics from the Department of Economics, University of Mumbai, M.S. in Economics from the University of California at Davis, USA, M.A. in Economics from Gokhale Institute of Politics and Economics, Pune and B.A. in Economics from Fergusson College, Pune. She has attended an executive programme at the Kennedy School of Government, Harvard University, USA and a leadership programme at IIM Lucknow.

78 IDFC FIRST Bank

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MR. PRAVIR VOHRA

Independent Director

Mr. Pravir Vohra is a postgraduate in Economics from St. Stephen’s College, University of Delhi and a Certified Associate of the Indian Institute of Bankers. He began his career in banking with State Bank of India, where he worked for over 23 years. He held various senior level positions in business as well as technology within the Bank, both in India and abroad. The late 1990s saw Mr. Vohra as Vice President in charge of the Corporate Services Group at Times Bank Ltd. In January 2000, he moved to the ICICI Bank Group, where he headed a number of functions like the Retail Technology Group and Technology Management Group. From 2005 till 2012, he was the President and Group CTO at ICICI Bank. Post his retirement from ICICI Bank in 2012, he mentored start-ups in the payments space and, more recently, completed a 2-year assignment with New Development Bank, Shanghai. In the industry, Mr. Vohra has immense experience and knowledge in IT architecture, domain expertise in financial products, process re-engineering, IT operations and strategy and continues to serve on the Technology Advisory Committees of organizations like the BSE Limited, NCDEX, Indian Clearing Corporation and NPCI etc.

MR. HEMANG RAJA Independent Director

Mr. Hemang Raja is an MBA from Abilene Christian University, Texas, with a major in finance. He has also completed an Advanced Management Programme (AMP) from Oxford University, UK. He has vast experience of over 37 years in the financial services industry. His last assignment from the year 2006 onwards was in Private Equity and Fund Management with Credit Suisse and Asia Growth Capital Advisers in India as MD and Head-India. He has served on the Executive Committee of the Board of the National Stock Exchange of India Limited and has also served as a member of the Corporate Governance Committee of BSE Limited.

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Annual Report 2020-21 79

Board of Directors

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MR. S GANESH KUMAR

Independent Director

Mr. S Ganesh Kumar was the Executive Director of the Reserve Bank of India. He was with the Reserve Bank of India for more than three decades. His most recent responsibilities included the entire gamut of Payment and Settlement Systems, creation and development of strategic plans for the Bank and to take care of the external investments and manage the foreign exchange reserves with the central bank. Mr. Kumar is a post graduate in Management having experience in varied fields such as marketing, market research, banking, finance, law, and Information Technology.

MR. VISHAL MAHADEVIA

Non-Executive Non-Independent Director

Mr. Vishal Mahadevia is the Managing Director, Head of India and a member of the Executive Management of Warburg Pincus. Prior to joining Warburg Pincus in 2006, he was a Principal at Greenbriar Equity Group, a fund focussed on Private Equity investments in the transportation sector. Prior to that, Mr. Mahadevia worked at Three Cities Research, a New York-based Private Equity Fund and as a Consultant with McKinsey & Company. He received a B.S. in Economics with a concentration in Finance & B.S. in Electrical Engineering from the University of Pennsylvania.

80 IDFC FIRST Bank

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MR. AJAY SONDHI

Non-Executive Non-Independent Director

Mr. Ajay Sondhi, is a 2017 Fellow, Harvard Advanced Leadership Initiative, MBA - Finance from JBIMS, Mumbai University, and B.A. in Economics (Honors) from St. Stephens College, Delhi University. He is a seasoned Financial Services and Board professional with extensive Indian and global experience. Most recently he was Founder & CEO of Sentinel Advisors Pte Ltd, Singapore, a boutique business and strategy advisory firm. He was previously MD and Regional Manager for PWM at Goldman Sachs, Singapore. He has had a long career in banking, and has held several senior leadership roles in the industry in India and overseas.

MR. V VAIDYANATHAN

Managing Director and CEO

Mr. V Vaidyanathan worked with Citibank and ICICI Group. He then acquired a stake in an existing listed small wholesale NBFC, concluded a Leveraged Management Buyout of the company, recapitalised the company by raising fresh equity, and founded Capital First (2012) as a new entity and brand. He then turned around the company and took it to significant scale and profitability and multiplied the market cap manifold. He later agreed to merge Capital First with IDFC Bank and became the MD & CEO of the merged entity renamed as IDFC FIRST Bank. He is currently working on the vision of the bank “To build a world class bank in India, guided by ethics and customer-first values, powered by technology, and be a force for social good.”

Annual Report 2020-21 81

Directors’ Report

Dear Shareholders,

Your Board of Directors are pleased to present the Seventh Annual Report of IDFC FIRST Bank Limited ( ‘IDFC FIRST Bank’ or the ‘Bank’ ) together with the Audited Financial Statements for the financial year ended March 31, 2021.

FINANCIAL HIGHLIGHTS

FINANCIAL HIGHLIGHTS
Particulars	(`in crore) FY 2021 FY 2020
Deposits	88,688 65,108
Borrowings	45,786 57,397
Investments	45,412 45,405
Advances	100,550 85,595
Total Assets/Liabilities	163,144 149,200
Total Income	18,222 18,030
Proft before Depreciation and Tax	805 (2,073)
Net Proft	452 (2,864)
Appropriations
Transfer to StatutoryReserve	114 -
Transfer to Capital Reserve	149 166
Transfer to Special Reserve	24 -
Transfer from Investment Reserve	335 -
Dividendpaid(includes tax on dividend)	- -
Balance inproft and loss account carried forward	(3,729) (3,560)

Capital adequacyratio(Basel III)	13.77% 13.38%
Gross NPA %	4.15% 2.60%
Net NPA %	1.86% 0.94%
Return on Assets	0.28% (1.79%)

STATE OF AFFAIRS OF THE BANK

The Bank has successfully diversified its business mix and added new revenue streams after the Merger. Now it has expanded its reach to serve new customer segments both on the retail as well as wholesale side of the business. The achievements during the FY 2020-21 are mentioned below –

1. Strong Growth in Retail Assets:

Retail Book increased 29% Y-o-Y to 73,673 crore as on March 31, 2021 from 57,310 crore as on March 31, 2020.
Retail Book constitutes 63% of Funded Loan Assets as on March 31, 2021 compared to 54% as on March 31, 2020. Including the Priority Sector Lending (‘PSL’) buyout portfolio, where the underlying assets are retail loans, the retail assets contribution to overall funded assets stood at 67% as of March 31, 2021.
Wholesale Book decreased by 14% to 33,920 crore as on March 31, 2021 from 39,388 crore as on March 31, 2020.
Within Wholesale Book, the Infrastructure loans

decreased by 27% to 10,808 crore as on March 31, 2021 from 14,840 crore as on March 31, 2020.

2. Strong Growth in Retail Liabilities:

The Total CASA Deposits increased to 45,896 crore as on March 31, 2021 from 20,661 crore as on March 31, 2020, Y-o-Y increase of 122%.
CASA Ratio improved to 51.75% as on March 31, 2021 from 31.87% as on March 31, 2020.
Strong CASA growth of 25,235 crore during FY21 and 5,333 crore during Q4 FY21.
Retail Deposits (Retail CASA and Retail Term Deposits) increased to 63,894 crore as on March 31, 2021 from 33,924 crore as on March 31, 2020, Y-o-Y increase of 88%.
IDFC FIRST Bank Fixed Deposit program was assigned highest safety rating of ‘FAAA’ by CRISIL.
Bank consciously reduced Certificate of Deposits (‘CD’) to 5,964 crore as on March 31, 2021 from 7,111 crore as on March 31, 2020, a Y-o-Y reduction of 16%, as CD are short term institutional borrowing in nature, and replaced them with Retail

IDFC FIRST Bank

FD and CASA money, thus strengthening and diversifying the liabilities significantly.

3. Strong growth in Core Earnings:

Strong NII Growth: For the full year, total Net Interest Income (‘NII’) increased by 21% to 7,380 crore in FY21 from 6,076 crore in FY20.
Strong NIM improvement: The Net Interest Margin (‘NIM’) for the full year FY21 was at 4.98% as compared to 3.91% in FY20.
Strong growth in Total Income (NII + Fees and Other Income + Trading Gain): The total income for the full year increased by 24% to 10,207 crore in FY21 from 8,237 crore in FY20.
Core Pre-provision Operating Profit (PPOP Net of treasury income and impact of interest on interest reversal): For the full year, the Core PPOP grew by 11% to 1,964 crore in FY21 from 1,764 crore in FY20.
Provision: For the full year, Total Provisions stood at 2,638 crore in FY21 as compared to 4,754 crore in FY20.
Profit After Tax: The Net Profit for the full year FY21 was 452 crore as compared to Net Loss of 2,864 crore in FY20.

4. Asset Quality of the Bank:

Bank’s Gross NPA ratio as of March 31, 2021 stood at 4.15% as compared to 2.60% as of March 31, 2020.
Bank’s Net NPA ratio as of March 31, 2021 stood at 1.86% as compared to 0.94% as of March 31, 2020.
Provision Coverage Ratio (PCR) was 56.23% as of March 31, 2021 as compared to 64.53% as of March 31, 2020.

5. Asset Quality on Retail Loan Book:

Retail Asset Gross NPA ratio stood at 4.01% as of March 31, 2021 as compared to 1.77% as of March 31, 2020.
Retail Asset Net NPA ratio stood at 1.90% as of March 31, 2021 as compared to 0.67% as of March 31, 2020.

6. Capital Adequacy:

With Preferential Issue of ` 2,000 crore (approx.) during June 2020, our Bank availed an insurance for an emerging COVID-19 situation, that positioned itself for strong growth going forward.
Capital Adequacy Ratio stood at 13.77% with CET1 Ratio at 13.27% as of March 31, 2021.
The Bank has raised equity capital of ` 3,000 crore (approx.) through Qualified Institutions Placement (‘QIP’) on April 06, 2021, including this, the Capital Adequacy Ratio stands at 16.32% with CET-1 ratio at 15.62%, as on March 31, 2021.

7. Franchisee:

As on March 31, 2021, the Bank has built a national footprint through the operation of 596 branches (out of which 371 are Urban Branches and 225 are Rural Branches) across many cities in India, 655 Corporate Business Correspondent ( ‘BC’ ) branches, 592 ATMs, 85 Recyclers, 3 Central Processing Centers and 1 Clearing Hub.

Points of Presence comparison chart:

Particulars	FY 2020-21 FY 2019-20
Urban Bank Branches	371 295
Rural Bank Branches	225 169
ATMs*	592 356
Recyclers	85 -
Asset Service Branches	151 128
Rural BC Branches (IDFC FIRST Bharat Limited)	384 380
Other BC Branches	271 272

*Excluding white label ATMs

The Bank offers a wide gamut of products to cater to the needs of customers from all segments which can be viewed on our website: www.idfcfrstbank.com.

UPDATE ON IMPACT OF COVID-19

Towards the end of 2020 and early 2021, India saw considerable decrease in new COVID-19 cases. But major Pandemics have multiple waves of infection and being aware of the same, the Business Continuity Management (‘BCM’) team continued to monitor and create awareness among staff and management on the related threat to the Bank’s services and its customers. In the later weeks of February 2021, India saw the 2[nd] wave of the COVID-19 Pandemic hit the country.

The continued and proactive review by the BCM team on the evolving nature of the pandemic helped the Bank take timely actions and minimize the impact of the 2[nd] wave.

Initiative undertaken to combat 2[nd] wave of COVID-19 Pandemic –

Proactive & Inclusive Communication: The Bank continues its communication with its staff on the Pandemic, creating awareness on the threat, precautions to take, the Bank’s Pandemic Assistance Program, government guidelines/restrictions and the Bank’s strategy to address the ongoing situation. For this multiple modes of communications are employed - electronic (SMS, E-mail, Screensavers) and physical (Standees/posters etc.) to reach the staff. Further, managers are encouraged to have frequent sessions with staff to understand and address any issues considering that the staff has been working remotely for most parts of the Pandemic.
COVID-19 Policies & Assistance Programs: The Bank last year implemented various policies targeted towards employee health & safety like the Work from

Annual Report 2020-21 83

Home Policy & Quarantine Policy. Both these policies were activated & implemented before the lockdown in India, thus ensuring Bank was well prepared to address the effects of the Pandemic and the Lockdowns. The 21 days paid Quarantine Leaves ensured infected employee recovers well and do not infect other staff or customers.

Further, as Pandemic started having impact on our staff, the Bank came out with a “COVID-19 Assistance Program” to help its staff and their families. The program addressed multiple issues affecting staff – Reimbursement of the cost of testing & vaccination, a 24x7 Doctor Helpline to allay their doubts/concerns, discounted Pricing for Home Isolation Packages and hospitalization assistance for employees and their family on best effort basis. The Bank also launched countrywide vaccination drive for its staff and their dependents thus ensuring staff and families are safe.

Safe & Secure Operating Environment: The government came out with specific guidelines on keeping bank premises safe and secure last year. The Bank implemented these guidelines and ensured that our premises are sanitized and deep cleaned frequently so that they are safe and secure both for our staff and our customers. Specialized in-house and external partners are involved in ensuring the same daily. Further, branches are closed for pre-defined periods whenever there is a positive COVID-19 case in the branch and fully sanitized. Our Bank is fully compliant to government laid down guidelines on use of mask, social distancing and relevant controls across our offices/branches in the country.
Business Continuity & Course Correction: The Business Continuity Program stood up well against the Pandemic last year. The Pandemic plan has been further enhanced with the learnings e.g. like the Bank’s continuity strategy has embraced the remote working and split site operations as a primary strategy, Bank’s branches & team operate per changing nature of the operating environments and government directives seamlessly with staff on rotation. The same continues now as we see the impact of the 2[nd] wave of COVID-19 Pandemic.
Sprucing Up Technology Infrastructure: Our technology infrastructure has been the backbone of the Bank’s fight against the Pandemic. It provided the remote access platform that helped critical teams to perform business activities from the secure confines of their homes and ensure continuity of critical business functions. The remote access technology supporting the Bank has been further enhanced over the course of the last year to ensure the Bank can support more staff in the remote operating model.
Reporting: The overall progress of the Pandemic continues to be reported periodically to the management, the Board and their advice is taken from time to time. As required, the management assesses,

guides and provides resources to help address the challenges of the Pandemic, keeping in front the customer viz. CUSTOMER FIRST!

CSR Initiatives: We have undertaken 5 key initiatives in response to the severe second wave of COVID-19 that has impacted the marginalized across urban and rural India. In order to emphasise urgency for COVID-19 vaccination, and to clear misconceptions relating to it, the bank reached out to over five million of its customers in semi-urban and rural locations digitally using animated films. In our other programs, we provided Oxygen Concentrators to rural hospitals, Cash Relief support to those who lost their bread-winner to the deadly disease, mask distribution and also initiated a livelihood program to help families earn a living despite lockdown restrictions by means of mask-making.

The Bank continues to monitor the evolving environment of the Pandemic (potential 3[rd] wave) with the help of its BCM team and will take necessary steps and do course correction as required in the interests of its customers and its staff!

DIVIDEND

The Board of Directors did not recommend any dividend on equity shares for the FY 2020-21, in absence of distributable profits, in terms of the RBI Guidelines.

In accordance with Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended ( ‘SEBI Listing Regulations’ ), our Bank has formulated a Dividend Distribution Policy, which ensures a fair balance between rewarding its Shareholders and retaining enough capital for the Bank’s future growth.

This Policy is available on the Bank’s website at www.idfcfrstbank.com under the ‘Investors’ section.

PREPAREDNESS ON IMPLEMENTATION OF INDIAN

ACCOUNTING STANDARDS (‘IND-AS’)

The Reserve Bank of India (‘RBI’) vide Circular RBI/20182019/146 DBR. BP.BC.No.29/21.07.001/2018-19 dated March 22, 2019 has decided to defer the implementation of IND-AS for banks till further notice.

The Bank has made considerable progress on IND-AS implementation and in fact, since the Bank is an associate company of IDFC Limited (holding company of IDFC Financial Holding Company Limited, Promoter) which is a Non-Banking Finance Company (‘NBFC’) that falls under the ‘IND-AS Road map’ mandatorily applicable from April 01, 2018. Accordingly, the Bank has been preparing and submitting special purpose ‘Fit for Consolidation’ consolidated financials under IND-AS to IDFC Limited with the transition date as April 01, 2017. Under the RBI guidelines, banks are not allowed to early adopt IND-AS and should be guided by the RBI guidelines. Accordingly, the general purpose financial statements of the Bank presented in the Annual Report are not under IND-AS.

Further, the Bank also submits quarterly Standalone

84 IDFC FIRST Bank

Proforma financials in the format as prescribed by the RBI. These submissions are reviewed by the management and the Audit Committee of the Bank before submission to the RBI. The working group of the Bank prepares quarterly proforma IND-AS financials as required by the RBI.

The implementation of IND-AS is expected to result in significant changes to the way the Bank prepares and presents its financial statements. The areas that are expected to have significant accounting impact on the application of IND-AS are summarized below:

Financial assets (which include advances and investments) shall be classified under amortized cost, fair value through other comprehensive income (a component of Reserves and Surplus) or fair value through profit/ loss categories on the basis of the nature of the cash flows and the intention of holding the financial assets.
Interest will be recognized in the income statement using the effective interest method, whereby the coupon, fees net of transaction costs and all other premiums or discounts will be amortized over the life of the financial instrument.
The impairment requirements of IND-AS 109, Financial Instruments, are based on an Expected Credit Loss (ECL) model that replaces the incurred loss model under the extant framework. The Bank will be generally required to recognize either a 12-Month or Lifetime ECL, depending on whether there has been a significant increase in credit risk since initial recognition. IND-AS 109 will change the Bank’s current methodology for calculating the provision for standard assets and nonperforming assets (NPAs). The Bank will be required to apply a three-stage approach to measure ECL on financial instruments accounted for at amortized cost or fair value through other comprehensive income. Financial assets will migrate through the following three stages based on the changes in credit quality since initial recognition:
Stage 1: 12 Months ECL - For exposures which have not been assessed as credit-impaired or where there has not been a significant increase in credit risk since initial recognition, the portion of the ECL associated with the probability of default events occurring within the next twelve months will need to be recognized.
Stage 2: Lifetime ECL - For credit exposures where there has been a significant increase in credit risk since initial recognition but are not credit-impaired, a lifetime ECL will need to be recognized.
Stage 3: Lifetime ECL - Credit Impaired Financial assets will be assessed as credit impaired when one or more events having a detrimental impact on the estimated future cash flows of that asset have occurred. For financial assets that have become credit impaired, a lifetime ECL will need to be recognized.
Accounting impact on the application of IND-AS at the transition date shall be recognized in Equity (Reserves and Surplus) as and when it becomes statutorily applicable to the Bank.

SHARE CAPITAL

Authorised Share Capital

In order to meet Bank’s growth objectives, business expansion plans and to further strengthen its financial position, the Bank felt the need to have adequate Authorised Capital in order to infuse additional funds in the form of further capitalization and to generate long term resources by issuing securities.

Pursuant to approval of the Board of Directors of the Bank at their meeting held on May 01, 2020, and in accordance with the consent of the shareholders and other requisite approvals, the Authorised Share Capital of the Bank was increased to 75,38,00,00,000 (Rupees Seven Thousand Five Hundred Thirty Eight Crore only) divided into 7,50,00,00,000 (Seven Hundred Fifty Crore) equity shares of 10 each and 38,00,000 (Thirty Eight Lakh) preference shares of 100 (Rupees One Hundred only) each, by creation of additional 2,17,50,00,000 (Two Hundred Seventeen and Fifty Lakh) equity shares of 10 each and the consequent alteration of its Memorandum of Association. Further, Reserve Bank of India had vide its letter dated May 10, 2020, acknowledged the proposed increase in Authorised Share Capital and consequent amendment to be carried out in the Memorandum of Association of the Bank, subject to compliance with relevant statutes and circulars/ instructions/ guidelines issued by RBI from time to time.

As on March 31, 2021, the Authorised Share Capital of the Bank was 75,38,00,00,000 comprising of 7,50,00,00,000 equity shares of 10 each and 38,00,000 preference shares of ` 100 each.

Paid-up Equity Share Capital

Issue of Equity Shares on Preferential basis (‘Preferential Issue’)

Our Bank has grown steadily on its business and financial parameters during the recent years. Our Bank is one of India’s fastest growing private sector banks with an expanding presence across the country.

Basis the approval of the Board of Directors of the Bank at their meeting held on May 01, 2020 and by virtue of special resolution passed by the shareholders of the Bank through postal ballot on June 03, 2020, the Allotment, Transfer and Routine Matters Committee had at its meeting held on June 12, 2020, approved the issue and allotment of 86,24,40,704 (Eighty-Six Crore Twenty-Four Lakh Forty Thousand Seven Hundred and Four) equity shares of face value of 10 each fully paid-up, at a price of 23.19 per Equity Share (including premium of 13.19 per share), aggregating to ~ 2,000 crore on a preferential basis, the offer/issue price being determined in accordance with the applicable provisions of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended ( ‘SEBI ICDR Regulations’ ).

Annual Report 2020-21 85

Qualified Institutions Placement (‘QIP’)

Basis approval of the Board of Directors of the Bank at their meeting held on February 18, 2021 and by virtue of special resolution passed by the shareholders of the Bank through postal ballot on March 21, 2021, the Capital Raising Committee of the Board (the ‘Capital Raising Committee’ ) had at its meeting held on April 06, 2021 approved the issue and allotment of 52,31,03,660 (Fifty-Two Crore Thirty-One Lakh Three Thousand Six Hundred Sixty) equity shares of face value of 10 each to Qualified Institutional Buyers ( **‘QIBs’** ) at an issue price of 57.35 per Equity Share (including a premium of 47.35 per share) aggregating to ~ 3,000 crore. Further, the list of allottees who had been allotted more than five percent

(5%) of the equity shares in the QIP Issue were as below:

Name of the Investors/ Allottees	No. of Equity Shares allotted	% of total Equity Shares offered in
		the QIP Issue
Bajaj Allianz Life Insurance Company Ltd. Baillie Gifford Emerging Markets Equities Fund	6,26,85,260 5,95,74,979	11.98 11.39
Baillie Gifford Pacifc Fund	46,792,068	8.95
a Sub Fund of Baillie Gifford
Overseas Growth Funds
BNP Paribas Arbitrage - ODI	45,074,080	8.62
City of New York Group	44,606,692	8.53
Trust Baillie Gifford Emerging Markets Growth Fund a Sub	35,524,397	6.79
Fund of Baillie Gifford Overs
HDFC Life Insurance	34,873,580	6.67
Company Limited
TATA AIA Life Insurance	30,514,380	5.83
CO LTD-Whole Life MID
Cap Equity Fund-ULIF 009 04/01/07

Both, the Preferential Issue and the QIP was made pursuant to applicable provisions of the Companies Act, 2013, read with relevant rules made thereunder, in accordance with the guidelines, rules and regulations of the Securities and Exchange Board of India ( ‘SEBI’ ), including SEBI ICDR Regulations, SEBI Listing Regulations, the relevant provisions of the Banking Regulation Act, 1949, the rules, circulars, directions and guidelines issued by the RBI, and subject to the MCA Circulars issued in December 2020. The Bank has ensured to comply with all legal and statutory formalities.

Post the above QIP Issue, the issued, subscribed and paidup equity share capital of our Bank as on April 06, 2021 was 61,98,95,35,150 consisting of 6,19,89,53,515 equity shares of 10 each.

Allotment of Equity Shares pursuant to exercise of Stock

Options

During FY 2020-21, 35,06,135 equity shares of ` 10 each were issued and allotted to the eligible employees of the Bank on exercise of Options granted under IDFC FIRST Bank Limited Employee Stock Option Scheme 2015 ( ‘IDFC FIRST Bank ESOS-2015’ ).

up equity share capital of our Bank was 56,75,84,98,550 comprising 5,67,58,49,855 equity shares of 10 each.

Subsequent to the year under review and as on date of this report, the Bank has allotted 29,13,740 equity shares of 10 each to the allottees upon exercise of stock options pursuant to IDFC FIRST Bank ESOS-2015. Post the said allotment, the paid-up Equity Share Capital of the Bank stands at 620,18,67,255 equity shares of 10 each, aggregating to ` 6201,86,72,550.

Our Bank has not issued any equity shares with differential voting rights.

CAPITAL ADEQUACY

Currently, the Bank is required to maintain a minimum total Capital Adequacy Ratio of 10.875%, of which minimum Tier 1 is 8.875% including Capital conservation buffer.

Our Bank is well capitalised and has a Capital Adequacy Ratio under Basel III as at March 31, 2021 of 13.77% (as against the RBI minimum requirement of 10.88%) & with Tier-I Capital Adequacy Ratio being 13.27%.

Capital Adequacy Ratio of the Bank, including additional equity capital of ` 3,000 crore raised through QIP on April 6, 2021 and calculated on figures as on March 31, 2021, was strong at 16.32% with CET-1 Ratio at 15.62%.

At such Capital Adequacy, our Bank shall be one of the highest CET-1 capitalized banks in the country, which is far higher than the regulatory requirements.

At high levels of Capital Adequacy, our Bank will continue to enjoy the highest levels of confidence from the Indian financial ecosystem including capital market participants, depositors and our customers.

With the strong opportunities in India (India is an emerging economy and an underserved and under-penetrated market), the strong asset track record (combined with Capital First and IDFC Bank) combined with robust liability franchise, our Bank is well placed to grow its business in the future. Also, the capital raise does give the buffer on account of unforeseen circumstances on account of COVID-19.

As a Bank, it is our endeavor to be strong custodians of public depositors/ shareholders and to further strengthen the balance sheet immensely.

RATINGS

Credit rating details for 80CCF Long Term Infrastructure Bonds, Private Placement Bonds and other instruments of IDFC FIRST Bank is available on the Bank’s website at www.idfcfrstbank.com under the ‘Investors’ section.

Our Bank is rated ‘FAAA’ by CRISIL for ` 50,000 crore Fixed Deposit Program, which is the highest level of safety rating by CRISIL.

During the FY 2020-21, our Bank has not issued any Senior Unsecured Redeemable Long-Term Bonds in the nature of Non-Convertible Debentures and/ or non-equity regulatory capital instrument.

As on March 31, 2021, the issued, subscribed and paid-

IDFC FIRST Bank

DEPOSITS

Being a Banking Company, the disclosures required as per Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, 2014, read with Sections 73 and 74 of the Companies Act, 2013 are not applicable to our Bank.

As per the applicable provisions of the Banking Regulation Act, 1949, details of the Bank’s deposits have been included under Schedule 3 - Deposits, in the preparation and presentation of the financial statements of the Bank.

LOANS, GUARANTEES OR ACQUISITION OF

SECURITIES

In addition thereto, the Annual Report of IDFC FIRST Bharat containing therein its audited financial statements has also been hosted on the Bank’s website at www.idfcfrstbank.com under the ‘Investors’ section.

IDFC FIRST Bank has only one Associate Company as on March 31, 2021, viz Millennium City Expressways Private Limited, in which it holds 29.98% equity stake.

The highlights on performance of the Subsidiary and Associate Company and their contribution to the overall performance of the Bank can be referred to in Form AOC-1, appended as ANNEXURE 1 .

PROMOTER

Pursuant to Section 186 (11) of the Companies Act, 2013, the provisions of Section 186 of the Companies Act, 2013, except sub-section (1), do not apply to a loan made, guarantee given or security provided or any investment made by a banking company in the ordinary course of business. The particulars of investments made by the Bank are disclosed in Schedule 8 of the Financial Statements as per the applicable provisions of the Banking Regulation Act, 1949.

PERFORMANCE AND CONTRIBUTION OF SUBSIDIARY AND ASSOCIATE COMPANIES

IDFC FIRST Bank has one wholly owned Subsidiary Company, namely IDFC FIRST Bharat Limited (‘IDFC FIRST Bharat‘).

IDFC FIRST Bharat is acting as a Business Correspondent (‘BC’) for distribution of the products of IDFC FIRST Bank and has given an added momentum to the financial inclusion plan of the Bank.

During FY 2020-21, IDFC FIRST Bharat has sourced loans worth 6,220 crore, of which 4,162 crore is in Joint Liability Group Loans (‘JLG’), 555 crore is in Micro Enterprises Loans (‘MEL’), 1,110 crore is in Micro Housing Loan (‘MHL’), 206 crore is in Two Wheeler Loans, 17 crore is in Housing Loan and 95 crore is in Loan Against Property products as a BC to IDFC FIRST Bank. During the year consumer durable and personal loan products, were launched and 71 crore and 4 crore respectively were disbursed. The year-end Assets Under Management (‘AUM’) of IDFC FIRST Bharat as of March 31, 2021 has increased to 7,811 crore from ` 5,908 crore as on March 31, 2020.

IDFC FIRST Bank’s policy for determining material subsidiaries is available on the Bank’s website at www.idfcfrstbank.com under the ‘Investors’ section.

In accordance with the provisions of Section 129(3) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, the Bank has prepared its consolidated financial statements, which forms part of this Annual Report.

Further, pursuant to Section 136(1) of the Companies Act, 2013, the Annual Report of the Bank, containing therein its standalone and consolidated financial statements has been hosted on the Bank’s website at www.idfcfrstbank.com under the ‘Investors’ section.

Pursuant to the RBI Guidelines for ‘Licensing of New Banks in the Private Sector’ dated February 22, 2013, the Promoter - IDFC Financial Holding Company Limited ( ‘IDFC FHCL’ ) is required to hold a minimum of 40% of the total paid-up voting equity capital of the Bank which shall be locked in for a period of five years from the date of commencement of business of the Bank i.e. from October 01, 2015. Further, the shareholding by IDFC FHCL in the Bank in excess of 40% of the total paid-up voting equity capital was required to be brought down to 40% within three years from the date of commencement of business of the Bank. Also, in the event of the Bank raising further voting equity capital during the first five years from the date of commencement of business, IDFC FHCL should continue to hold 40% of the enhanced total voting equity capital of the Bank for a period of five years from the date of commencement of business of the Bank. Accordingly, as and when equity shares were allotted by IDFC FIRST Bank pursuant to the ESOP Scheme or by way of any other allotment, IDFC FHCL used to purchase new shares for maintaining 40% shareholding in the Bank.

The lock-in restrictions on IDFC FHCL for holding minimum 40% of the total paid-up voting equity capital of the Bank ceased to be applicable with effect from October 01, 2020. However, pursuant to applicable provisions of law, 34,49,76,282 equity shares of the Bank allotted to IDFC FHCL during their subscription of preferential issue is locked-in for 3 years i.e. with effect from June 26, 2020 upto June 25, 2023.

As on March 31, 2021, IDFC FHCL held 2,26,89,37,489 equity shares in Bank constituting 39.98% of the total paidup voting equity capital of the Bank. As on April 06, 2021 (post QIP), the shareholding of IDFC FHCL was 36.60% of the total paid-up voting equity capital of the Bank. As on date of this report, the equity shareholding of IDFC FHCL remains same.

EMPLOYEES

The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 may be obtained by the shareholders by writing to the Head - Legal and Company Secretary of our Bank.

Annual Report 2020-21 87

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is appended as ANNEXURE 2 .

EMPLOYEE STOCK OPTION SCHEME

The Employee Stock Option Scheme ( ‘IDFC FIRST Bank ESOS - 2015’/ ‘ESOS’ ) was framed with an object of encouraging higher participation on the part of employees in the Bank’s financial growth and success. An effective stock option scheme enables retention of talent and aligning employee interest to that of the Shareholders.

There were 23,41,93,359 stock options outstanding at the beginning of FY 2020-21. During FY 2020-21, 4,21,32,000 stock options were granted to the eligible employees under IDFC FIRST Bank ESOS-2015.

Further, 1,30,19,110 stock options had lapsed/ forfeited, and 35,06,135 stock options were exercised during the year ended March 31, 2021. Accordingly, 25,98,00,114 stock options remained outstanding as on March 31, 2021. All stock options vests in a graded manner and are required to be exercised within a specific period in accordance with IDFC FIRST Bank ESOS-2015 and Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, as amended ( ‘SEBI SBEB Regulations’ ).

The Bank has used the intrinsic value method to account for the compensation cost of Stock Options to employees of the Bank. Intrinsic value is the amount by which the quoted market price of the underlying share on the date, prior to the date of the grant, exceeds the exercise price on the Option. IDFC FIRST Bank ESOS - 2015 is administered by the Nomination and Remuneration Committee ( ‘NRC’ ) of the Board of the Bank.

There has been no material change in IDFC FIRST Bank ESOS - 2015 during FY 2020-21 and the said IDFC FIRST Bank ESOS - 2015 is in compliance with the SEBI SBEB Regulations.

The details and disclosures with respect to ESOS as required under SEBI SBEB Regulations and circulars issued thereunder, have been uploaded on the Bank’s website at www.idfcfrstbank.com under the ‘Investors’ section.

Further, disclosure as per the ‘Guidance Note on Accounting for Employee Share-based Payments’ issued by the Institute of Chartered Accountants of India, are appearing in the Notes to the Standalone Financial Statements of IDFC FIRST Bank, forming part of this Annual Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Appointment & Cessation

All appointments of Directors are made in accordance with the relevant provisions of the Companies Act, 2013 and the Rules framed thereunder, the SEBI Listing Regulations, the Banking Regulation Act, 1949 and the rules, guidelines and circulars issued by the RBI from time to time.

The NRC conducts due diligence before appointment of Directors and ensures adherence to ‘Fit and Proper’ criteria, as prescribed by RBI.

The Bank received instructions from Department of Financial Services, Ministry of Finance, Government of India nominating Dr. Sanjay Kumar (DIN 08764419) as a Government Nominee Director on the Board of the Bank in place of Ms. Anindita Sinharay (DIN 07724555). Based on the recommendation of the NRC, the Board of Directors of the Bank had appointed Dr. Sanjay Kumar as a Government Nominee Director (Additional Director) of the Bank with effect from June 22, 2020 and accordingly Ms. Anindita Sinharay ceased to be a Government Nominee Director with effect from June 22, 2020.

The shareholders at 6[th] AGM of the Bank held on July 30, 2020 approved the appointment of Dr. Sanjay Kumar as a Government Nominee Director (Non-Executive NonIndependent Director), with effect from June 22, 2020.

During the year under review, Dr. Rajiv Lall (DIN 00131782) tendered his resignation as Part-Time Non-Executive Chairman from the Board of IDFC FIRST Bank effective from September 04, 2020 citing his prolonged personal health issues.

Pursuant to Reserve Bank of India Circular Ref:DBOD. No.BC.24/08.139.001/2002-03 dated September 9, 2002 on ‘Implementation of Recommendations of the Consultative Group of Directors of Banks/ Financial Institutions’ (‘RBI Circular’), and in view of attaining an age of 70 years, Mr. Anand Sinha (DIN 00682433) ceased to be an Independent Director of the Bank with effect from February 02, 2021.

The Bank had received a communication dated March 25, 2021 from Department of Financial Services, Ministry of Finance of Government of India ( ‘GoI’ ), mentioning that GoI holds one (1) seat on the Board of the Bank and since, the GoI has been minority shareholder in Bank and is not involved in day to day operation of the Bank, it has been decided to withdraw its Board representation from the Board of the Bank. Accordingly, the Board vide circular resolution dated March 25, 2021 noted and approved the cessation of Dr. Sanjay Kumar as a Government Nominee Director on the Board of the Bank with effect from March 25, 2021.

Subsequent to the year under review, based on the recommendation of the NRC, the Board at its meeting held on April 30, 2021, approved the appointment of Mr. S. Ganesh Kumar (DIN 07635860) as an Additional Director in the category of Independent Director of the Bank for a period of five (5) consecutive years, effective from April 30, 2021 to hold office up to April 29, 2026 (both days inclusive), subject to approval of the shareholders of the Bank and other applicable statutory/ regulatory approvals. Further, on May 08, 2021, the Board of Directors on the recommendation of the NRC, approved the re-appointment of Mr. Pravir Vohra (DIN 00082545) as an Independent Director of the Bank for a second term of five (5) consecutive years, commencing from August 01, 2021 up to July 31, 2026 (both days inclusive), subject to approval of the shareholders of the Bank and other applicable statutory/ regulatory approvals.

IDFC FIRST Bank

Further, the Board of Directors of the Bank at its meeting held on June 16, 2021, based on the recommendation of the NRC and performance evaluation, as applicable, have approved the re-appointment of Mr. V. Vaidyanathan (DIN 00082596) as the Managing Director & Chief Executive Officer (‘MD & CEO’) for a period of three years with effect from December 19, 2021, subject to the approval of the shareholders and the Reserve Bank of India. The approval of the shareholders in this regard is being sought at the ensuing AGM of the Bank.

The details of the Director being re-appointed is set out in

the Notice of the ensuing AGM of the Bank.

Brief profiles of all the Directors of the Bank are available on the Bank’s website at www.idfcfrstbank.com under the ‘Board of Directors’ section.

None of the Directors of the Bank are disqualified in

accordance with Section 164 of the Companies Act, 2013.

Further, the Bank had received declaration from all the Independent Directors ( ‘IDs’ ), at the time of appointment and also at the first meeting of the Board of Directors held in FY 2020-21, that they meet the criteria of independence specified under sub-section (6) of Section 149 of the Companies Act, 2013, read with Rule 5 of the Companies (Appointment and Qualification of Directors) Rules, 2014 and Regulation 16(1) (b) of the SEBI Listing Regulations, for holding the position of ID and that they shall abide by the ‘Code for Independent Directors’ as per Schedule IV of the Companies Act, 2013. In the opinion of the Board, the IDs possess the requisite integrity, experience, expertise and proficiency required under all applicable laws and the policies of the Bank.

Further, all the IDs of the Bank have complied and affirmed to abide by Rule 6 (Creation and Maintenance of Databank of Persons Offering to become Independent Directors) of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended, and have also declared their enrollment in the databank of Independent Directors maintained by Indian Institute of Corporate Affairs (‘IICA’).

Further, it is reported by M/s. Makarand M. Joshi & Co., Practicing Company Secretaries, Bank’s Secretarial Auditor that during the financial year under review, the Board of Directors of the Bank is duly constituted with proper balance of Executive Director, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Companies Act, 2013, and other applicable RBI Regulations laws.

Further, as per the SEBI Listing Regulations, the Bank has received Certificate from M/s. Bhandari & Associates, Practicing Company Secretaries that none of the Directors on the Board of the Bank have been debarred or disqualified from being appointed or continuing as directors of Companies by the Securities and Exchange Board of India/ Ministry of Corporate Affairs or any such other statutory authority.

FRAMEWORK FOR APPOINTMENT OF DIRECTORS

The Bank has in place a framework for Board Diversity, Fit & Proper Criteria and Succession Planning for appointment of Directors on the Board of the Bank.

FAMILIARISATION PROGRAMMES FOR BOARD

MEMBERS

At the time of appointment, all Directors of our Bank are familiarized with their roles, responsibilities, rights and duties along with a brief overview of our Bank’s operations in a nutshell.

The Board members are further provided with necessary documents, reports and internal policies to enable them to familiarize with the Bank’s procedures and practices.

Periodic presentations are made at the Board and Committee meetings on business and performance of the Bank, global business environment, business strategy and associated risks, responsibilities of the Directors etc.

Detailed presentations on the Bank’s business and updates thereon were made at the meetings of the Board and Committees held during the year.

The details of the said programmes are available on the Bank’s website at www.idfcfrstbank.com under the ‘Investors’ section.

BOARD EVALUATION

The Board of Directors (‘ Board ’) has carried out an annual evaluation of the Board, Board Committees, and Individual Directors pursuant to the provisions of the Companies Act, 2013 and the SEBI Listing Regulations for the financial year 2020-21.

The detailed process indicating the manner in which the annual evaluation has been carried out pursuant to the SEBI Listing Regulations and Companies Act, 2013 is provided in the Corporate Governance Report, which forms part of this Annual Report.

NUMBER OF MEETINGS OF THE BOARD

The Board met thirteen (13) times during FY 2020-21 viz., May 01, 2020, May 22, 2020, July 24, 2020, July 28, 2020, August 28, 2020, September 11, 2020, October 08, 2020, October 31, 2020, January 09, 2021, January 30, 2021, February 18, 2021, March 22, 2021 and March 31, 2021; details of which are given in the Corporate Governance Report, which forms part of this Annual Report. The maximum interval between any two consecutive meetings did not exceeded 120 days.

BOARD COMMITTEES

In compliance with various regulatory requirements, several Board-level Committees have been constituted to delegate matters that require greater and more focused attention.

Details on the constitution, brief terms of reference, meetings held and attendance of all the Board-level Committees are given in the Corporate Governance Report which forms part of this Annual Report.

Annual Report 2020-21 89

A brief overview of some of the Board-level Committees is furnished below:

Audit Committee

The Audit Committee met six (6) times during FY 2020-21 i.e. on May 21, 2020, May 29, 2020, July 28, 2020, September 11, 2020, October 30, 2020, and January 30, 2021.

All recommendations made by the Audit Committee during the year were accepted by the Board.

Further, the Audit Committee comprises of the following members as on the date of this report:

|Mr. Aashish Kamat|- Chairman | Independent Director|
|---|---|
|Mr. Pravir Vohra|- Member | Independent Director|
|Mr. Sanjeeb Chaudhuri|- Member | Independent Director|
|Mr. Sunil Kakar|- Member | Non-Executive
Non-Independent Director|

Nomination and Remuneration Committee (NRC)

The NRC is constituted in compliance with the RBI Guidelines, Section 178 of the Companies Act, 2013 and the SEBI Listing Regulations.

The NRC met five (5) times during FY 2020-21 on May 21, 2020, July 27, 2020, August 28, 2020, October 31, 2020 and January 28, 2021.

Further, the NRC comprised of the following members as on the date of this report:

the	date of this report:
Mr.	HemangRaja	- Chairman
Mr. Dr. Mr.	Aashish Kamat (Mrs.)Brinda Jagirdar Vishal Mahadevia	- Member

Remuneration Policy

The Bank has formulated and adopted the Remuneration Policies for the (i) Non-Executive Part-time Chairman and Non-Executive Directors; (ii) Whole-time / Executive Directors, Material Risk Takers, Key Managerial Personnel, Senior Management Personnel & Control Function Staff; and (iii) employees of the Bank (‘the Policies’), in terms of the relevant provisions of Section 178 of the Companies Act, 2013, the relevant Rules made thereunder, the SEBI Listing Regulations relating to Corporate Governance and the Guidelines issued by the RBI, in this regard.

During the year, the said Policies were reviewed and approved by the NRC and the Board.

Our Bank also has a process in place for identification of independence, qualifications and positive attributes of its Directors. The NRC ensures a transparent nomination process to the Board of Directors with diversity of gender, thought experience, knowledge and perspective in the Board.

The said Policies have been hosted on the website of the Bank at www.idfcfrstbank.com, under the ‘Investors’ section in terms of the SEBI Listing Regulations.

Stakeholders’ Relationship and Customer Service Committee (SRCSC)

The SRCSC met four (4) times during FY 2020-21 i.e. on May 07, 2020, July 24, 2020, October 30, 2020, and January 28, 2021.

Further, the SRCSC comprised of the following members as on the date of this report:

||Dr. (Mrs.) Brinda Jagirdar
Mr. Sanjeeb Chaudhuri|- Chairperson | Independent
Director
- Member|Independent Director|
|---|---|---|
||Mr. Pravir Vohra|- Member|Independent Director|
||Mr. S. Ganesh Kumar|- Member|Independent Director|
||Mr. Sunil Kakar|- Member | Non-Executive
Non-Independent Director|
||Mr. V. Vaidyanathan|- Member|MD & CEO|

Corporate Social Responsibility (CSR) Committee

The CSR Committee met three (3) times during FY 2020-21 on May 07, 2020, October 30, 2020 and January 28, 2021.

Further, the CSR Committee comprises of the following members as on the date of this report:

||Mr. V. Vaidyanathan|- Chairman | MD & CEO|
|---|---|---|
||Dr.(Mrs.)Brinda Jagirdar|- Member | Independent Director|
||Mr. HemangRaja|- Member | Independent Director|

The CSR Policy of the Bank is available on the Bank’s website at www.idfcfrstbank.com under the ‘Investors’ section.

The CSR initiatives of the Bank in FY 2020-21 were implemented through various implementation agencies/ partners. In order to achieve impact and scale, the CSR activities undertaken during the year mainly focused on areas: [a] Livelihoods, [b] Health and Sanitation, [c] Education, [d] Women Empowerment, and [e] Others (COVID-19 Relief).

The amount spent for CSR contribution by the Bank for FY 2020-21 was ` 19.62 crore.

Annual Report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended from time to time, has been appended as ANNEXURE 3 and forms part of this Report.

KEY MANAGERIAL PERSONNEL

As on the date of this report, the following officials of the Bank are the ‘Key Managerial Personnel’ pursuant to the provisions of Section 203 of the Companies Act, 2013:

Mr. V. Vaidyanathan

Managing Director & Chief Executive Officer

Mr. Sudhanshu Jain

Chief Financial Officer & Head - Corporate Centre

Mr. Satish Gaikwad

Head – Legal & Company Secretary

IDFC FIRST Bank

INTERNAL FINANCIAL CONTROLS

The Bank has adequate internal controls and processes in place with respect to its financial statements that provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements. These controls and processes are driven through various policies, procedures and certifications which also ensure the orderly and efficient conduct of the Bank’s business, including adherence to Bank’s policies, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. The controls and processes are being reviewed periodically. The Bank has a mechanism of testing the controls and processes at regular intervals for their design and operating effectiveness to ascertain the reliability and authenticity of financial information.

INFORMATION / CYBER SECURITY FRAMEWORK

IDFC FIRST Bank since its inception has put in place a robust Information/ Cyber Security Framework. Our Bank being a green field setup, has Information Security woven into our banking platform and seamlessly merges both culturally and technologically. A dedicated team of security professionals are part of the Information Security Group (‘ISG’) who govern the Information Security practices in the Bank. Our Bank has put in place state of the art security technologies including several industries ‘firsts’ technology solutions and adopted ‘defense in depth’ approach & industry best practices as part of our security framework and architecture.

This year Bank onboarded several new core cyber defense technologies to improve upon our defense and response capabilities in line with our overall Cyber Defense Strategy. While such technologies are in various stages of maturity, the use of Artificial Intelligence (‘AI’) / Machine Learning (‘ML’) is at its core to identify early signs of exploits and automated response and remediation will ensure identified issues are addressed promptly.

Overall banking industry including our bank experienced challenges associated with the pandemic conditions and work from home strategy. At our bank, secure practices were deployed very quickly with almost real time transition of teams to work from home, without any significant downtime or security lapses. Bank continued to maintain and upkeep its compliance posture to standards such as ISO 27001 ISMS (Information Security Management System), PCI DSS and regulatory requirements. Given the changing threat landscape and the continuation of the pandemic conditions, the attempt is to progressively move towards maturity of proactive and adaptive platforms for automated detection, response and recovery.

INTERNAL OMBUDSMAN

In compliance with regulatory guidelines, the Bank has appointed Mr. Dayanand P. Kasabe, a senior retired Central Banker as Internal Ombudsman for a period of 3 years with effect from December 03, 2018, as per the Internal

Ombudsman Scheme, 2018 to enhance our Bank’s customer grievance redressal mechanism and to improve service delivery.

STATUTORY AUDITORS

In terms of the ‘Guidelines for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs)’ dated April 27, 2021 ( ‘RBI Guidelines’ ) issued by RBI, banks shall appoint the Statutory Auditors for a continuous period of three (3) years, subject to the firms satisfying the eligibility norms each year and the approval of RBI on an annual basis.

B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022) have been the Statutory Auditors of the Bank for two (2) years i.e. FY 2019-20 and FY 2020-21. Hence, they may continue as Statutory Auditors for one (1) more year i.e. from the conclusion of the 7[th] Annual General Meeting ( ‘AGM’ ) till the conclusion of the 8[th] AGM to be held in 2022, subject to the approval of RBI. Accordingly, on the basis of the recommendation of the Audit Committee of the Board ( ‘ACB’ ), the Board of Directors (‘the Board ’) has recommended the re-appointment of B S R & Co. LLP as one of the Joint Statutory Auditors for a period of one (1) more year to the RBI for approval.

Further, in terms of the RBI Guidelines and the Bank’s Policy for Appointment of Statutory Auditors, our Bank is required to appoint two (2) Statutory Auditors. Accordingly, the Board, on the recommendation of the ACB, has recommended to the RBI for approval, the name of MSKA & Associates, Chartered Accountants (Firm Registration No. 105047W) as the first preferred firm, to act as the Joint Statutory Auditors of the Bank, for a period of one (1) year. The Board has also recommended the appointment of MSKA & Associates, Chartered Accountants as Joint Statutory Auditors of the Bank for a period of three (3) years to hold office from the conclusion of the 7[th] AGM until the conclusion of the 10[th] AGM of the Bank, for the approval of the shareholders at the ensuing AGM, subject to the approval of RBI on an annual basis. MSKA & Associates shall act as the Joint Statutory Auditors of the Bank along with B S R & Co. LLP till the conclusion of the 8th AGM and thereafter act as Joint Statutory Auditors of the Bank with such other new joint Statutory Auditor(s) who will be appointed by the Bank subject to prior approval from RBI and approval of the shareholders of the Bank.

AUDITORS’ REPORT

There were no qualifications, reservations, adverse remarks or disclaimers made by the Statutory Auditors in their report for the financial year ended March 31, 2021.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Bank had appointed M/s. Makarand M. Joshi & Co., Practicing Company Secretaries to undertake the Secretarial Audit of the Bank for the financial year ended March 31, 2021.

Annual Report 2020-21 91

The Bank provided all assistance and facilities to the Secretarial Auditors for conducting their audit.

The Secretarial Audit Report is appended as ANNEXURE 4 to this report.

There were no qualifications, reservations, adverse remarks or disclaimers made by the Secretarial Auditors in their report for the financial year ended March 31, 2021.

CONCURRENT AUDIT

Our Bank has a regular and well-defined process of concurrent audits for important functions such as treasury, trade finance operations, retail operations, wholesale operations, information technology, data center, etc. in line with the extant regulatory guidelines. Reputed Chartered Accountant / CERT-IN certified firms carry out these Concurrent Audits. Key findings of these audits are placed before the Audit Committee of the Board on a quarterly basis.

REQUIREMENT FOR MAINTENANCE OF COST

RECORDS

The Bank is not required to maintain cost records as specified by the Central Government under Section 148(1) of the Companies Act, 2013.

AWARDS AND RECOGNITIONS

Best Private Bank – Digital Innovation & Services 2019 by Asian Private Banker

This award recognised our Bank as one which has embraced the digital wave, its impact on the wealth management business, and the opportunities afforded by emergent technologies. This win also recognised our digital capabilities and convenience our technology brought to banking.

Three Asset Triple A Awards 2020 for Treasury, Trade,

INSTANCES OF FRAUD, IF ANY, REPORTED BY THE AUDITORS OR THE MANAGEMENT

No offence of fraud was reported by the Auditors of the Bank under Section 143(12) of the Companies Act, 2013. The details of provisioning pertaining to Fraud Accounts during the year under review are provided in Note No. 18.16 to the Standalone Financial Statements as at March 31, 2021.

RISK MANAGEMENT FRAMEWORK

Our Bank promotes a strong risk culture throughout the organization. A strong risk culture is designed to help reinforce the Bank’s resilience by encouraging a holistic approach to management of risk & return and an effective management of risk, capital and reputational profile.

Consequent to the amalgamation of erstwhile Capital First Group with IDFC Bank, effective December 18, 2018, Bank has re-aligned its key policies and Risk Framework forming an overall Risk Framework of the merged entity. Our Bank operates within an effective Risk Management Framework to actively manage all the material risks faced by the Bank, in a manner consistent with the Bank’s risk appetite. Our Bank aims to establish itself as an industry leader in the management of risks and strive to reach the efficient frontier of risk and return for the Bank and its shareholders. The Board has ultimate responsibility for the Bank’s Risk Management Framework. It is responsible for approving the Bank’s risk appetite, risk tolerance and related strategies and policies. The Board is assisted by Risk Management Committee of the Board ( ‘RMC’ ) and is supported by various management committees as part of the Risk Governance framework to ensure that Bank has sound system of risk management and internal controls. The RMC assists the Board in relation to the oversight and review of the Bank’s risk management principles and policies, strategies, appetite, processes and controls.

SSC and Risk

Our Bank secured 2 awards in Payments and Collection solutions category for India and 1 award for Treasury and Working Capital Domain in the NBFC segment. These awards corroborate with our ideology of client focus, cocreating innovative and client centric solutions.

‘Most Transformed New Bank in India 2020’ by Capital Finance International (CFI)

With an uptick during the “COVID-19 Quarter” (Q4-2020) coupled with strong corporate governance policies aligned with international best practices, and focus on transparent client engagement, IDFC FIRST Bank won the Most Transformed New Bank (India) in 2020 at the CFI Awards. The CFI.co judging panel bestowed this honour on IDFC FIRST Bank on recognizing its high-growth performance and prospects.

ET Best BFSI Brand in Private Banking Category

At the 4[th] edition of ET Best BFSI Brands, IDFC FIRST Bank was chosen as one of the Best BFSI Brands of 2021 in the Private Bank Category. The award was based on the parameters of innovation, trust, legacy, customer centricity and performance – all key tenets of the Bank’s core values and philosophy.

The RMC of the Board reviews risk management policies of the Bank pertaining to credit, market, liquidity and operational risks. The Committee also reviews the Risk Appetite & Enterprise Risk Management framework, Internal Capital Adequacy Assessment Process (‘ICAAP’) and Stress Testing. ICAAP & Stress Testing requires the Bank to undertake rigorous, forward-looking assessment of risks by identifying severe events or changes in market conditions which could adversely impact the Bank.

Our Bank has in place a Board approved Risk Management Policy. The Policy aims at establishing a risk culture and governance framework to enable identification, measurement, mitigation and reporting of risks within the Bank in line with the Bank’s risk appetite, risk - return tradeoff and the escalation & accountability framework.

Our Bank manages its capital position to maintain strong capital ratios well in excess of regulatory and Board approved minimum capital adequacy at all times. The strong Tier I capital position of the Bank is a source of competitive advantage and provides assurance to regulators, credit rating agencies, depositors and shareholders. Capital management practices are designed to maintain a risk

IDFC FIRST Bank

reward balance, while ensuring that businesses are adequately capitalized to absorb the impact of stress events including pandemic risks.

Our Bank has rigorously adhered to the RBI mandated prudential norms on provisioning including on the basis of evaluation of impact arising out of the fallout of COVID-19 on the underlying portfolio, which is aimed at preserving and protecting shareholders value. Our Bank continued to proactively work on the resolution of the stressed asset portfolio and has further reduced the position. Our Bank has also de-risked the portfolio by diversifying the credit portfolio across non-infrastructure sectors and focused on increasing shorter-tenure and granular exposures. With these measures, we have sought to reduce the concentration risk in the portfolio.

RELATED PARTY TRANSACTIONS

All the related party transactions that were entered into during the financial year were on arm’s length basis and in the ordinary course of business of the Bank. IDFC FIRST Bank have always been committed to good corporate governance practices, including matters relating to related party transactions.

All the related party transactions are placed before the Audit Committee for approval. Prior omnibus approval is obtained from the Audit Committee for foreseen related party transactions. Prior omnibus approval is also obtained for unforeseen related party transactions subject to their value not exceeding ` 1 crore per transaction. The required disclosures are made to the Audit Committee on a quarterly basis for all the related party transactions.

Further, in terms of Regulation 23(9) of the SEBI Listing Regulations, the Bank submits the disclosure of Related Party Transactions, on consolidated basis, in a prescribed format, as specified under relevant Accounting Standards, on half yearly basis to the Stock Exchanges and update its website accordingly.

Pursuant to the provisions of Companies Act, 2013 and the Rules made thereunder, SEBI Listing Regulations and in the back-drop of the Bank’s philosophy on such matters, the Bank has in place a Board approved policy on related party transactions. The said policy is also uploaded on the Bank’s website at www.idfcfrstbank.com under the ‘Investors’ section. Since all related party transactions entered into by the Bank were in the ordinary course of business and on arm’s length basis, Form AOC-2 as prescribed under Section 134(3)(h) of the Companies Act, 2013 is not applicable to the Bank.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report for the year under review, as required by Regulation 34(2)(e) of the SEBI Listing Regulations, forms part of this Annual Report.

CORPORATE GOVERNANCE

directing its affairs, whilst meeting the appropriate interests of its Shareholders and other Stakeholders.

Our Bank is committed to achieve the highest standards of Corporate Governance. A separate section on Corporate Governance standards followed by our Bank and the relevant disclosures, as stipulated under the SEBI Listing Regulations, Companies Act, 2013 and Rules made thereunder forms part of this Annual Report.

A Certificate from the Secretarial Auditors of the Bank, M/s. Makarand M. Joshi & Company, Practicing Company Secretaries, confirming compliance to the conditions of Corporate Governance as stipulated under the SEBI Listing Regulations is enclosed at the beginning of the Corporate Governance Report and forms part of this Annual Report.

CEO & CFO CERTIFICATION

Certificate issued by Mr. V. Vaidyanathan, Managing Director & CEO and Mr. Sudhanshu Jain, Chief Financial Officer & Head - Corporate Centre of the Bank, in terms of Regulation 17(8) of the SEBI Listing Regulations, for the year under review was placed before the Board of Directors and forms part of this Annual Report.

BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report, in terms of Regulation 34(2)(f) of the SEBI Listing Regulations, describing the initiatives taken by IDFC FIRST Bank from an environmental, social and governance perspective is hosted on the Bank’s website at www.idfcfrstbank.com under the ‘Investors’ section and constitutes a part of this Annual Report.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY

The Bank has implemented a Whistle Blower Policy in compliance with the provisions of the SEBI Listing Regulations, Companies Act, 2013 and RBI notification on Introduction of ‘Protected Disclosures Scheme for Private Sector and Foreign Banks’. Pursuant to this policy, the Whistle Blowers can raise concerns relating to reportable matters (as defined in the policy) such as breach of IDFC FIRST Bank’s Code of Conduct, employee misconduct, fraud, illegal unethical imprudent behavior, leakage of Unpublished Price Sensitive Information, corruption, safety and misappropriation or misuse of Bank funds/ assets etc.

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

The Audit Committee reviews the functioning of the Vigil Mechanism from time to time. None of the Whistle Blowers has been denied access to the Audit Committee of the Board. The Whistle Blower Policy is available on the Bank’s website at www.idfcfrstbank.com under ‘Investors’ section. The Whistle Blower Policy is communicated to the employees and is also posted on the Bank’s intranet.

Your Directors ensure the Bank’s prosperity by collectively

Annual Report 2020-21 93

In addition to the above, the Bank has formulated a Vigilance Policy for effectively managing the risks faced by the Bank on account of corruption, malpractices and frauds.

PREVENTION OF SEXUAL HARASSMENT OF

WOMEN AT THE WORKPLACE

Our Bank has an Internal Committee to investigate and inquire into sexual harassment complaints in line with The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013.

Our Bank has in place a policy on Anti-Sexual Harassment, which reflects the Bank’s zero-tolerance towards any form of prejudice, gender bias and sexual harassment at the workplace. Our Bank has set up an Internal Committee ( ‘IC’ ) to receive and redress complaints of sexual harassment. Our Bank undertakes ongoing trainings to create awareness on this policy.

During the year under review i.e. FY 2020-21, four (4) sexual harassment complaints were filed, out of which three (3) complaints were closed during the year. One (1) complaint was received in the month of February 2021 and was subsequently resolved within the timelines.

During FY 2020-21, employees were given online training in order to understand the Policy on Prevention of Sexual Harassment and framework for reporting and resolving instances of sexual harassment, details of which have been mentioned in the Business Responsibility Report, which is hosted on the Bank’s website at www.idfcfrstbank.com under ‘Investors’ section.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/ COURTS/ TRIBUNALS

There were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status or the operations of the Bank.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE BANK

There are no material changes and commitments, affecting the financial position of the Bank between the end of the financial year of the Bank i.e. March 31, 2021 and the date of the Board Meeting in which the Directors’ Report was approved i.e. June 16, 2021.

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

The provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 relating to conservation of energy and technology absorption are given as under:

Detailed initiatives taken for conservation of energy has been mentioned in the Business Responsibility Report, which is hosted on the Bank’s website at www.idfcfrstbank.com under the ‘Investors’ section.

Also, our Bank has been increasingly using information technology in its operations, for more details, please refer Management Discussion and Analysis Report, which forms part of this Annual Report.

Further, Foreign Exchange earnings and outgo are part of the normal banking business of the Bank.

ANNUAL RETURN

Pursuant to Section 92(3) read with Section 134(3)(a) of the Companies Act, 2013, the Annual Return as on March 31, 2021 is available on the Bank’s website on https://www.idfcfrstbank.com/investors/annual-report.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, it is hereby confirmed that:

a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b. the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as on March 31, 2021 and of the profit of the Bank for that period;
c. the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;
d. the Directors had prepared the annual accounts on a going concern basis;
e. the Directors had laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and
f. the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

GREEN INITIATIVE

To support the ‘Green Initiative’, shareholders who have not updated their e-mail addresses are requested to update the same with their respective Depository Participants (DPs), in case shares held are in electronic form or communicate their e-mail address to the Registrar and Share Transfer Agent i.e. KFin Technologies Private Limited or to the Bank, in case shares are held in physical form, so that future communications can be sent to shareholders in electronic mode. Note on Green Initiative forms part of the 7[th] AGM Notice.

IDFC FIRST Bank

ACKNOWLEDGMENT

Your Directors take this opportunity to express their deep and sincere gratitude to our Customers, Business Partners, Business Correspondents and Vendors for the trust and confidence reposed by them in the Bank. We would like to thank our Shareholders, Bondholders, Investors and Financial Institutions for their co-operation and assistance during the year under review.

Your Directors would like to place on record their appreciation for the support received from IDFC Group, Government of India, State Governments, various Ministries, Reserve Bank of India (‘RBI’), Securities and Exchange Board of India (‘SEBI’), Insurance Regulatory and Development Authority of India (‘IRDA’), Financial Intelligence Unit-India (FIU-IND),

Stock Exchanges (‘National Stock Exchange of India Limited’ & ‘BSE Limited’), Depositories, Rating Agencies, Unique Identification Authority of India (‘UIDAI’), National Payments Corporation of India (‘NPCI’), The Clearing Corporation of India Limited (‘CCIL’), Indian Banks’ Association (‘IBA’), Fixed Income Money Market and Derivatives Association of India (‘FIMMDA’) and all other regulatory agencies and associations with which the Bank interacts.

Your Directors sincerely acknowledge the commitment and hard work put in by all employees of the Bank through its transformational journey. Their valuable contribution has enabled the Bank to make significant progress towards achieving its objective of becoming a diversified universal Bank, with a focus on retail banking.

For and on behalf of the Board of Directors of IDFC FIRST Bank Limited

Date: June 16, 2021 Place: Mumbai

Hemang Raja V. Vaidyanathan Director Managing Director & CEO DIN: 00040769 DIN: 00082596

Annual Report 2020-21 95

ANNEXURE 1

Form No. AOC -1

Statement containing Salient Features of the Financial Statements of Subsidiaries / Associate Companies / Joint Ventures as on the Financial Year ended on March 31, 2021

[Pursuant to first proviso to Section 129(3) of the Companies Act, 2013, read with Rule 5 of the Companies (Accounts) Rules, 2014]

A. SUBSIDIARIES

												(`	in crore)
	Name of	Date since	Share	Reserves	Total	Total	Investments Turnover		Proft	Provision	Proft	Proposed	% of
Sr. No.	Subsidiary Company	when subsidiary	Capital	and Surplus	Assets	Liabilities (Note 3)			Before Tax	For Tax	After Tax	Dividend (%)	Share- holding
		was
		acquired
1	IDFC FIRST Bharat Limited	October 13, 2016	5.58	177.31	303.62	120.73	-	463.70	40.34	11.64	28.70	-	100%
Notes:
1	Names of Subsidiaries which		are yet to	commence	operations: Not Applicable
2	Names of Subsidiaries which		have been liquidated		or sold	during the	year: Not Applicable
3	Total Liabilities is excluding Share Capital and Reserves &					Surplus
4	Numbers are as per IND-AS fnancial statements.

B. ASSOCIATES AND JOINT VENTURES

B.	ASSOCIATES AND JOINT VENTURES
Sr.	Name of Associate Company	Millennium City Expressways Private Limited (Note 3)
No.
1	Date on which the Associate or Joint Venture was associated or acquired	October 21, 2014
2	Latest audited Balance Sheet Date	March 31, 2021
3	Shares of Associate held by the Bank on the year end
	Number of Equity Shares	22,63,83,431
	Amount of Investment in Associate Company (`in crore)	226.38
	Extent of Holding (%)	29.98%
4	Description of how there is signifcant infuence	Extent of equity holding in the associate company
		exceeds 20%
5	Reason why the Associate is not consolidated	Not Applicable (refer Note 4)
6	Networth attributable to Bank’s Shareholding as per latest	Nil
	audited BalanceSheet(`in crore)
7	Proft / (Loss) for the year ended March 31, 2021 (`in crore)
	I. Considered in Consolidation	-
	II. Not considered in Consolidation	(125.38)

Notes:

1 Names of Associates or Joint Ventures which are yet to commence operations: Not Applicable
2 Names of Associates or Joint Ventures which have been liquidated or sold during the year: Not Applicable
3 The financials of Millennium City Expressways Private Limited for the year ended March 31, 2021 are unaudited.
Investment in Millennium City Expressways Private Limited is fully provided.

For and on behalf of the Board of Directors of IDFC FIRST Bank Limited

V. Vaidyanathan

Managing Director & CEO DIN: 00082596

Aashish Kamat Director DIN: 06371682

Date: June 16, 2021 Place: Mumbai

Sudhanshu Jain Satish Gaikwad Chief Financial Officer and Head - Legal and Company Secretary Head-Corporate Centre

96 IDFC FIRST Bank

ANNEXURE 2

Details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

I. Ratio of Remuneration of each director to the median employees’ remuneration for the FY 2020-21 and Percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer and Company Secretary in the FY 2020-21

	in the FY 2020-21
Sr.	Name of the Director/KMP	Designation	Ratio	Percentage Increase
No.
1.	Mr. V. Vaidyanathan	ManagingDirector & CEO	104 : 1	-30%
2.	Mr. Aashish Kamat	Independent Director	4.8 : 1	-
3.	Dr.(Mrs.)Brinda Jagirdar	Independent Director	6.7 : 1	-
4.	Mr. HemangRaja	Independent Director	6.5 : 1	-
5.	Mr. Pravir Vohra	Independent Director	5.8 : 1	-
6.	Mr. Sanjeeb Chaudhuri	Independent Director	5.0 : 1	-
7.	Mr. Sunil Kakar	Non-Executive Non-Independent Director	-	-
8.	Mr. Vishal Mahadevia	Non-Executive Non-Independent Director	-	-
9.	Mr. Sudhanshu Jain	KMP – CFO & Head-Corporate Centre	-	Nil
10.	Mr. Satish Gaikwad	KMP – Head-Legal & CompanySecretary	-	Nil
11.	Dr. Rajiv B. Lall	Part-Time Non-Executive Chairman	5.6 : 1	Nil
12.	Mr. Anand Sinha	Independent Director	3.9 : 1	-
13.	Ms. Anindita Sinharay	Non-Executive Non-Independent Director	-	-
14.	Dr. SanjayKumar	Non-Executive Non-Independent Director	-	-

Note:

Executive Director:

In case of Managing Director & CEO, we have considered Total Fixed Pay, as approved by the RBI, for the computation of ratios. Total Fixed Pay includes Fixed Salary, allowances and employee contribution to Provident fund. Further, there has been a reduction in the remuneration of Managing Director & CEO in the FY 2020-21. In view of the distress caused by COVID-19 pandemic which had impacted the overall economy, and as part of the Bank’s austerity measures which start at the top, the Mr. V. Vaidyanathan, Managing Director & CEO had voluntarily offered to take a pay cut of 30% in his compensation including Fixed compensation as well as all allowances for FY 2020-21.

Independent / Non-Executive Directors:

In case of Part-Time Non-Executive Chairman, we have considered the Salary, as approved by RBI and sitting fees for attending Board meetings during FY 2020-21. Further, there has been no increase in the remuneration of Part-Time Non-Executive Chairman in the FY 2020-21. Dr. Rajiv Lall ceased to be a Parttime Non-Executive Chairman of the Bank with effect from September 04, 2020 pursuant to tendering his resignation due to prolonged personal health issues.

In case of Independent Directors, sitting fees paid for attending Board and Committee meetings during FY 2020-21 has been considered. Further, the amount of sitting fees paid per Board and Committee meeting remains unchanged from previous FY 2019-20.

Pursuant to Reserve Bank of India Circular Ref:DBOD.No.BC.24/08.139.001/2002-03 dated September 9, 2002 on ‘Implementation of Recommendations of the Consultative Group of Directors of Banks/ Financial Institutions’ (‘RBI Circular’), in view of attaining an age of 70 years, Mr. Anand Sinha (DIN: 00682433) ceased to be an Independent Director of the Bank with effect from February 02, 2021.

In case of Non-Executive Non-Independent Directors, they have not been paid any remuneration (i.e. sitting fees for attending Board and Committee meetings) during FY 2020-21.

Ms. Anindita Sinharay ceased to be Government Nominee Director, with effect from June 22, 2020, pursuant to communication received from Ministry of Finance, Government of India.

Dr. Sanjay Kumar was appointed as Government Nominee Director of the Bank, with effect from June 22, 2020 and he ceased to be Government Nominee Director with effect from March 25, 2021, pursuant to receipt of communication dated March 25, 2021 from Department of Financial Services, Ministry of Finance of Government of India (GoI) mentioning that since GoI holds one (1) Board seat and is minority shareholder in Bank, not involved in day to day operations of the Bank, it was decided to withdraw its Board representation from the Board of the Bank.

Key Managerial Personnel, other than MD & CEO:

Mr. Sudhanshu Jain, Chief Financial Officer & Head-Corporate Centre, the percentage increase in remuneration during the FY 2020-21 is 0%.

Mr. Satish Gaikwad, Head-Legal & Company Secretary, the percentage increase in remuneration during the FY 2020-21 is 0%.

Annual Report 2020-21 97

II. The percentage increase in the median remuneration of Employees in the financial year

The median remuneration of the employees of IDFC FIRST Bank Limited increased by 13% in the financial year.

III. The number of permanent Employees on the rolls of the Bank

There were 24,169 permanent employees on the rolls of the Bank as on March 31, 2021.
IV. Average percentile increase already made in the salaries of Employees other than the Managerial Personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration

Average percentile increase for Managerial Personnel for the financial year is 13%.

Average percentile increase for employees other than the Managerial Personnel for the financial year is 16%.

The average increase in the remuneration of employees compared to the increase in remuneration of Managerial Personnel is in line with the market bench mark study.

There is no exceptional increase in the Managerial Remuneration.

V. Affirmation that the remuneration is as per the remuneration policy of the Bank

The Bank affirms that the remuneration is as per the remuneration policy of the Bank, as applicable.

For and on behalf of the Board of Directors of IDFC FIRST Bank Limited

Hemang Raja Date: June 16, 2021 Director Place: Mumbai DIN: 00040769

V. Vaidyanathan Managing Director & CEO DIN: 00082596

98 IDFC FIRST Bank

ANNEXURE 3

Annual Report on CSR Activities

[Pursuant to Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended]

1. Brief outline on CSR policy of the Bank.

The Corporate Social Responsibility (‘CSR’) policy is to ensure that CSR activities are not performed in silos and that it be skillfully and inextricably woven into the fabric of the Bank’s business strategy for overall value creation for all stakeholders. As a conscientious corporate citizen, IDFC FIRST Bank believes in a sense of responsibility towards all stakeholders with a view to make a material, visible and lasting difference to the lives of disadvantaged sections of the people, preferably in the immediate vicinity in which the Bank operates and at the same time ensure widespread spatial distribution of its CSR activities Pan-India.

Section 135 of Companies Act, 2013 (‘the Act’) read with Companies (Corporate Social Responsibility Policy) Rules 2014 requires IDFC FIRST Bank Limited to mandatorily spend on CSR.

During the year, IDFC FIRST Bank Limited carried out CSR activities through various not-for-profit implementing partners / agencies.

IDFC FIRST Bank undertook the following CSR activities which fall within the ambit of the activities listed in Schedule VII of the Act for promoting the development of –

(a) Livelihoods
(b) Health and sanitation
(c) Education
(d) Women empowerment
(e) Others (COVID-19 Relief)

2. Composition of the CSR Committee:

Sl.	Name of Director	Designation	Number of	Number of
No.		/ Nature of	meetings	meetings
		Directorship	of CSR	of CSR
			Committee	Committee
			held during the	attended during the
			year	year
1	Mr. V. Vaidyanathan	Chairman / MD & CEO	3	3
		Member /
2	Mr. Hemang Raja	Independent	3	3
3	Dr. (Mrs.) Brinda Jagirdar	Director Member / Independent Director	3	3

3. Web-link where Composition of CSR committee, CSR Policy and CSR projects approved by the board are disclosed on the website of the Bank:

Composition of the CSR Committee shared above and is available on the Bank’s website at https:// www.idfcfrstbank.com/content/dam/idfcfrstbank/ pdf/corporate - governance/IDFC - FIRST- Bank-Composition-of-Board-level-Committees.pdf

CSR policy - https://www.idfcfrstbank.com/content/ dam/idfcf rstbank/pdf/corporate - governance/ Corporate-Social--Responsibility-Policy.pdf

CSR projects - https://www.idfcfrstbank.com/csr-activities

4. 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:

The Bank takes cognizance of sub-rule (3) of rule 8 of the Companies CSR Policy Rules 2014. There are no projects undertaken or completed after January 22, 2021, for which the impact assessment report is applicable in FY 2020-21.

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:

Sl.	Financial Year	Amount available	Amount required
No.		for set-off from	to be set-off for the
		preceding fnancial	fnancial year, if any
		years(in`)\|(in`)
1.	FY 2019-20	7.24 crore	-
2.	FY 2020-21	19.62 crore	-
	Total	26.86 crore	-

6. Average net profit of the Bank as per section 135(5): ` - 1,230.17 crore

7. (a) Two percent of average net profit of the Bank as per section 135(5): NIL

(b) Surplus arising out of the CSR projects or programmes or activities of the previous financial years: NIL
(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): NIL

Annual Report 2020-21

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

|Total Amount Spent
for the Financial
Year. (in**)**| **Amount Unspent(in**)|
|---|---|
||Total Amount transferred to Unspent
CSR Account asper section 135(6)
Amount transferred to any fund specifed under Schedule VII
asper secondproviso to section 135(5)|
||Amount
Date of transfer
Name of the Fund
Amount
Date of transfer|
|19.62 crore|NIL
Not Applicable
Not Applicable
NIL
Not Applicable|

(b) Details of CSR amount spent against ongoing projects for the financial year: None

(1) (2) (3) (4)	(5) (6) (7) (8) (9) (10)	(11)
Sl. No. Name of the Project Item from the list of activities in Schedule VII to the Act Local area (Yes/ No)	Location of the project Project duration Amount allocated for the project (in`)<br>Amount<br>spent<br>in the<br>current<br>fnancial<br>Year<br>(in`) Amount transferred to Unspent CSR Account for the project as per Section 135(6) (in`) Mode of Implementation - Direct (Yes/No) State. District.	Mode of Implementation - Through Implementing Agency
		Name CSR Registration number
1. - - -	- - - - - - -	- -

(c) Details of CSR amount spent against other than ongoing projects for the financial year: ` 19,43,88,599.75 (Refer EXHIBIT-A )
(d) Amount spent in Administrative Overheads: ` 17,86,166.65
(e) Amount spent on Impact Assessment, if applicable: Not Applicable
(f) Total amount spent for the Financial Year (8b+8c+8d+8e): ` 19,61,74,766.40
(g) Excess amount for set off, if any

Sl.	Particular	Amount (in`)
No.
(i)	Twopercent of average netproft of the companyasper section 135(5)	NIL
(ii)	Total amount spent for the Financial Year	19.62 crore
(iii)	Excess amount spent for the fnancialyear[(ii)-(i)]	19.62 crore
(iv)	Surplus arising out of the CSR projects or programmes or activities of the previous fnancial years, if any	NIL
(v)	Amount available for set off in succeedingfnancialyears[(iii)-(iv)]	19.62 crore

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

9. (a) Details of Unspent CSR amount for the	preceding three fnancial years:
Sl. No. Preceding Financial Year Amount transferred to Unspent CSR Account under section 135 (6) (in`)<br>Amount spent<br>in the reporting<br>Financial Year<br>(in`)	Amount transferred to any fund specifed under Schedule VII as per section 135(6), if any. Amount remaining to be spent in succeeding fnancial years. (in`)<br>Name of the Fund<br>Amount (in`) Date of transfer
1. - NIL -	- NIL - -

(b) Details of CSR amount spent in the financial year for ongoing projects of the preceding financial year(s): None

	year(s):N	one
(1)	(2)	(3)	(4)	(6)	(7)	(8)	(9)
Sl. No	Project ID	Name of the	Financial Year	Project	Total amount	Amount spent	Cumulative	Status of
		Project	in which the	duration	allocated for	on the project	amount spent	the project -
			project was		the project	in the reporting	at the end	Completed /
			commenced		(in`)	Financial Year	of reporting	Ongoing
						(in`)	Financial Year
							(in`)
1.	-	-	-	-	-	-	-

100

IDFC FIRST Bank

10. In case of creation or acquisition of 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): None
(b) Amount of CSR spent for creation or acquisition of capital asset: NIL
(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 and on behalf of the Board of Directors of IDFC FIRST Bank Limited

Hemang Raja V. Vaidyanathan Member - CSR Committee Chairman - CSR Committee Date: June 16, 2021 Director Managing Director & CEO Place: Mumbai DIN: 00040769 DIN: 00082596

Annual Report 2020-21 101

EXHIBIT - A

(1)	(2)	(3)	(4)
Sl.	Name of the Project	Item from the list of activities in Schedule VII to the Act	Local area (Yes/No)
No.
1	Psychosocial Disability Support	Cl.(ii) promoting education.	Yes
2	Scholarship Program	Cl.(ii) promoting education.	Yes
3	Women Entrepreneurship Program	Cl.(ii) promoting employment, enhancing vocation skills	Yes
		among women, livelihood enhancement projects.
4	Saksham	Cl.(iii) Empowering women	Yes
5	Kamyaab Program	Cl.(ii) promoting education, including special education.	Yes
6	Vocation Training Program	Cl.(ii) promoting employment, enhancing vocation skills,	Yes
		livelihood enhancement projects.
7	Lighthouse Program	Cl.(ii) promoting employment, enhancing vocation skills,	Yes
		livelihood enhancement projects.
8	Digital Empowerment Program	Cl.(ii) promoting education and employment, enhancing	Yes
		vocation skills.
9	Rehabilitation Program	Cl.(ii) promoting employment, enhancing vocation skills	Yes
		among differently abled.
10	Om Abode	Cl.(ii) promoting employment, enhancing vocation skills	Yes
		among differently abled.
11	MBA Scholarship Program	Cl.(ii) promoting education
12	Swachh Worli Koliwada	CI (i) Promoting sanitation	Yes
13	Shwetdhara	Cl.(ii) livelihood enhancement projects.	Yes
14	iSpirt Foundation	Cl.(ii) promoting education	Yes
15	Research Grant	Cl.(ii) promoting education.	Yes
16	Ask For Mask	CI (xii) disaster management, including relief, rehabilitation	Yes
		and reconstruction activities
17	Gaon Gaon Mask	CI (xii) disaster management, including relief, rehabilitation	Yes
		and reconstruction activities
18	Shramik Sahayata	CI (xii) disaster management, including relief, rehabilitation	Yes
		and reconstruction activities
19	Share a meal	CI. (i) Eradicating hunger, poverty and malnutrition	Yes
20	Jankari Mein Samajhdari	CI (xii) disaster management, including relief, rehabilitation	Yes
		and reconstruction activities
21	Warrior On Wheels	CI (xii) disaster management, including relief, rehabilitation	Yes
		and reconstruction activities
22	Covid Relief Response	CI. (i) Eradicating hunger, poverty and malnutrition	Yes
23	PM CARES fund	(viii) contribution to Prime Minister’s Citizen Assistance and	Yes
		Relief in Emergency Situations Fund (PM CARES Fund)]
TOTAL

102 IDFC FIRST Bank

	(5) (6) (7)	(8)
	Location of theproject. Amount spent for the project (excluding administrative overhead expenses) (in`) Mode of Implementation - Direct (Yes/No) State District	Mode of Implementation - Through Implementing Agency
		Name CSR Registration number.
	Tamil Nadu Chennai 22,36,500.00 No	Banyan Academy of Leadership in Mental Health CSR00001557
	Delhi Delhi 1,09,66,500.00 No	Ashoka University CSR00000712
	Delhi Delhi 29,41,820.00 No	ETASHA Society CSR00002969
	Maharashtra Mumbai 25,76,465.00 No	Animedh Charitable Trust CSR00003224
	Karnataka Bangalore 52,02,073.50 No	Biswa Gouri Charitable Trust CSR00001082
	Maharashtra Lonavala 16,67,501.07 No	Social Action for Manpower Creation(SAMPARC) CSR00003752
	Maharashtra Pune 96,13,538.00 No	Pune City Connect CSR00001116
	Maharashtra Pune 34,31,750.00 No	Pune City Connect CSR00001116
	Maharashtra Mumbai 36,58,544.50 No	Om Creations Trust CSR00002773
	Maharashtra Karjat 10,25,000.00 No	Om Creations Trust CSR00002773
	PAN India 29969000.17 Yes	IDFC FIRST Bank -
	Maharashtra Mumbai 11538441.51 No	Stree Mukti Sanghatana , G5A Foundation for Contemporary culture CSR00001126
	Madhya Pradesh and Rajasthan Hoshangabad, Indore Dewas, Jaipur 22049825 No	End Poverty , CARD , Vrutti CSR00000314, CSR00000538
	PAN India 1,25,00,000.00 No	iSpirt Foundation CSR00001434
	Delhi Delhi 1,00,000.00 No	Pahle India Foundation CSR00005791
	Maharashtra and Delhi Mumbai, Delhi 57,89,401.00 No	ETASHA Society , Om Creations Trust , IDFC FIRST Bank CSR00002773, CSR00002969
	Rajasthan and Madhya Pradesh Hoshangabad, Indore Dewas, Jaipur 29,35,450.00 No	End Poverty, Vrutti CSR00000314, CSR00000538
	PAN India 27,00,000.00 No	Collective Good Foundation CSR00001648
	Delhi, Haryana Gurgaon , Delhi 24,81,875.00 No	Akshay Patra , Zomato Feeding India , others CSR00000286
	PAN India 3,19,000.00 No	Swadhaar Fin access -
	Maharashtra Mumbai 5,40,640.00 Yes	IDFC FIRST Bank -
	PAN India 1,00,00,000.00 No	Give India CSR00000389
	PAN India 5,01,45,275.00 No	PM CARES Fund -
	19,43,88,599.75

Annual Report 2020-21 103

ANNEXURE 4

FORM NO. MR-3 SECRETARIAL AUDIT REPORT

For The Financial Year Ended March 31, 2021

[Pursuant to section 204(1) of the Companies Act, 2013 and rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]

To

The members, IDFC FIRST Bank Limited

We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by IDFC FIRST Bank Limited (hereinafter called the ‘Bank’). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/ statutory compliances and expressing our opinion thereon.

Based on our verification of the Bank’s books, papers, minute books, forms and returns filed and other records maintained by the Bank and also the information provided by the Bank, its officers, agents and authorized representatives during the conduct of secretarial audit, we hereby report that in our opinion, the Bank has, during the audit period covering the financial year ended on March 31, 2021 (hereinafter called the ‘Audit Period’) complied with the statutory provisions listed hereunder and also that the Bank has proper Boardprocesses and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:

We have examined the books, papers, minute books, forms and returns filed and other records maintained by the Bank for the financial year ended on March 31, 2021 according to the provisions of:

(i) The Companies Act, 2013 (the ‘Act’) and the rules made thereunder;
(ii) The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder;
(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;
(iv) Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment and External Commercial Borrowings. The Bank did not have any Overseas Direct Investment during the Audit Period;
(v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’):-
(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
(b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;
(c) The Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018;
(d) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018;
(e) The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014;
(f) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;
(g) The Securities and Exchange Board of India (Issue and Listing of Non-Convertible and Redeemable Preference Shares) Regulations, 2013; (Not Applicable to the Bank during the Audit Period)
(h) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client;
(i) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 (Not applicable to the Bank during the Audit Period) and
(j) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 2018; (Not Applicable to the Bank during the Audit Period) .

We have also examined compliance with the applicable clauses of the following:

(i) Secretarial Standards issued by The Institute of Company Secretaries of India;
(ii) The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

We further report that, having regard to the compliance systems prevailing in the Bank and on the examination of the relevant documents and records in pursuance thereof on test- check basis, the Bank has complied with the following laws to the extent applicable:

The Banking Regulation Act, 1949 read with applicable circulars/ notifications/ guidelines, etc. issued by RBI from time to time.

104

IDFC FIRST Bank

The Securities and Exchange Board of India (Bankers to an Issue) Regulations, 1994;
The Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations, 1992;
The Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992.

During the Audit Period, the Bank has complied with the provisions of the Act, Rules, Regulations, Guidelines and Standards made thereunder for all the above laws to the extent possible.

We further report that The Board of Directors of the Bank is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.

Adequate notice was given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

All decisions at Board Meetings and Committee Meetings are carried out unanimously as recorded in the minutes of the meetings of the Board of Directors and Committee of the Board, as the case may be and no dissenting views were observed, while reviewing the minutes.

We further report that there are adequate systems and processes in the Bank to commensurate with the size and operations of the Bank to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

We further report that during the audit period, the Bank has

undertaken following events/ actions:

(i) The Bank has increased its Authorized Share Capital to 75,38,00,00,000 comprising 7,50,00,00,000 equity shares of10 each and 38,00,000 preference shares of `100 each.
(ii) The Bank has issued 86,24,40,704 equity shares on Preferential Basis, amounting to ` 2,000 Crores. The Shareholders of the Bank have approved both the aforesaid proposals through Postal Ballot with requisite majority on June 03, 2020.
(iii) The Bank has approved borrowing/raising of funds, from time to time, in Indian currency/ Foreign currency, by issue of debt securities including but not limited to Non-Convertible Debentures and Bonds on private placement basis upto an amount not exceeding 5,000 Crores, outstanding at any point of time, within the overall borrowing limits of 1,50,000 Crores; via members approval obtained at the 6th Annual General Meeting held on July 30, 2020.
(iv) The shareholders of the Bank approved raising of Capital through issuance of Equity Shares and/or other Equity-linked Securities up to ` 3,000 Crores, through Postal Ballot with requisite majority on March 21, 2021.
(v) The Bank has bought back various series of Private Placement Bonds aggregating to 18,33,60,00,000/through buy back/call/put option and redeemed Retail Bonds and Private Placement Bonds aggregating to 8,34,84,00,000/- & ` 42,75,10,00,000/- respectively.

For Makarand M. Joshi & Co. Practicing Company Secretaries

Kumudini Bhalerao

Partner

FCS No. 6667 CP No. 6690 UDIN: F006667C000341276 Peer Review No : P2009MH007000

Place: Mumbai Date: May 18, 2021

This report is to be read with our letter of even date which is annexed as Annexure A* and forms an integral part of this report.

Annual Report 2020-21 105

Annexure A

To

The members, IDFC FIRST Bank Limited

Our Secretarial Audit Report for the financial year ended March 31, 2021 of even date is to be read along with this letter.

Maintenance of secretarial record is the responsibility of the management of the Bank. Our responsibility is to express an opinion on these secretarial records based on our audit.
We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the Secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. We believe that the processes and practices, we followed provide a reasonable basis for our opinion.
We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Bank.
Wherever required, we have obtained the Management representation about the compliance of laws, rules and regulations and happening of events, etc.
The compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of management. Our examination was limited to the verification of procedures on test basis.
The Secretarial Audit report is neither an assurance as to the future viability of the Bank nor of the efficacy or effectiveness with which the management has conducted the affairs of the Bank.

For Makarand M. Joshi & Co. Practicing Company Secretaries

Kumudini Bhalerao

Partner

FCS No. 6667 CP No. 6690 UDIN: F006667C000341276 Peer Review No : P2009MH007000

Place: Mumbai Date: May 18, 2021

106 IDFC FIRST Bank

Management Discussion and Analysis

MACRO-ECONOMIC ENVIRONMENT

The financial year 2020-21 brought overwhelming headwinds because of COVID-19, resulting in lockdowns implemented as a first line of defence. India’s lockdown was one of the most stringent last year impacting nearly 50% of the economy in the Q1 of FY21. GDP growth contracted sharply, down by 24% Y-o-Y in Q1 FY21, spanning both industry and services. Subsequently as COVID-19 cases declined, restrictions were eased, resulting in GDP moving into positive growth territory in the third (0.54%) and fourth quarter (1.6%) of the year. For the full financial year, India’s GDP contracted by 7.3% 2020-21 as per the Ministry of Statistics and Programme Implementation, Government of India.

The start of FY22 has been even more challenging with a surge in COVID-19 cases. The second wave has been much steeper and spread across majority states. Test positivity

rates have exceeded the peak of last year, indicating the virulence of the second wave. In response the state governments increased restrictions and announced/ local lockdowns to curtail the spread of the virus and reduce the burden on the healthcare infrastructure.

The lockdowns and restrictions were able to contain the spread of infection with Covid-19 cases peaking in May 2021. Subsequently, restrictions are being eased in a calibrated manner resulting in improvement in activity indicators with rise in individual and freight movement and industrial activity. The recovery from the second wave has been much faster with activity levels recovering in three months compared to 10 months during the first wave last year. The faster recovery is because lockdowns have been nimbler, with industries remaining functional to varying degrees. Moreover, the duration of the lockdowns has been shorter.

COVID-19 Business continuity index

==> picture [348 x 175] intentionally omitted <==

Source: CEIC, IDFC FIRST Bank Economics Research

Looking ahead, we expect the recovery to be supported by increasing pace of vaccinations, strong export growth and capital expenditure by the government. Rising pace of vaccinations will support consumer sentiment and reduce the risks to the recovery from potential rise in Covid-19 cases. The unprecedented levels of stimulus in developed countries is expected to support strong global growth recovery which augurs well for India’s exports. The FY22 Union Budget prioritized capital expenditure which tends to have stronger growth multipliers and will provide much needed support to the capex cycle. We estimate FY22 GDP growth at 10.0%, with growth improving in H2FY22.

Inflation Spiked on Supply-side Disruptions

At the height of the lockdown last year, CPI inflation had touched 7.6% in October 2020 as supply-side disruption had driven food and beverages inflation to 10.1%. Subsequently as lockdown restrictions were eased and food supplies improved supported by bumper harvests, headline inflation moderated to 5.6% in H2FY21 from 6.7% in H1FY21.

The moderation in headline inflation masks the fact that core inflation remains upward sticky, rising to 5.5% in H2FY21 from 5.1% in H1FY21. Part of the reason behind the upward rise in core inflation is higher global crude oil prices as economic activity recovered gradually the world over. Moreover, the

Annual Report 2020-21 107

Government of India maintained its excise duty hikes on petrol and diesel undertaken in H1FY21 to shore up its revenues. However, a few state governments reduced their VAT on fuel to provide some relief to retail consumers.

To get a better sense of core dynamics, we removed the impact of commodities from core inflation, better known as core core inflation. Here too, a pick-up is seen with core core inflation rising to 4.4% in H2FY21 from 4.1% in H1FY21, driven by higher service inflation. The disruptive impact of COVID-19 persists on services with elevated healthcare costs. Moreover, service providers need to comply with COVID-19 norms, which adds to their costs, resulting in services inflation remaining upward sticky.

In FY22, we expect the CPI inflation to average at 5.7%, which is premised on our expectation of normal monsoon and crude oil prices (Brent) averaging at US US$70 per barrel. The second Covid-19 wave resulted in recurrence of supplyside disruptions resulting in Headline CPI inflation averaging at 5.6% in Q1FY22 from 4.9% in Q4FY21, reflecting higher services inflation. Looking ahead, core inflation is expected to remain upward sticky with supply-side disruption and elevated fuel prices, keeping it firm in H1FY22. In H2FY22, we expect the output gap to narrow as domestic demand conditions improve.

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----- Start of picture text -----

CPI inflation Core inflation Food inflation
14 YoY%
12
10
8
6
4
2
0
Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22
----- End of picture text -----

Source: CEIC, IDFC FIRST Bank Economics Research

Fiscal Policy and Monetary Policy to Remain Accommodative

Monetary policy was the first line of defence in FY21, with sharp reduction in repo rate by 115 bps and ensuring liquidity to the affected sectors via Targeted Long-term Repo Operations (TLTRO), whereby the funds would be earmarked for investments in corporate bonds, commercial papers and non-convertible debentures, the rates of which had risen due to the Covid-19 shock. The RBI also cut CRR by 100 bps to 3% in March 2020 to infuse liquidy which was subsequently normalized back to 4%in two phases by May 2021. Further, in light of the COVID-19 related disruptions, the RBI announced moratorium of payments of instalments on term loans and deferment of interest payments on working capital loans.

Importantly, the RBI emphasised that these regulatory forbearances will not qualify as a default, effectively ringfencing asset quality of banks, preventing any adverse swing in the NPA cycle during a phase when the lockdown is likely to lead to large cashflow mismatches for all economic agents.

There was also a sharp rise in inter-bank liquidity due to RBI’s dollar purchase to limit appreciation pressure on the Indian Rupees (‘INR’). RBI also purchased Government Securities (G-Secs)to keep yields contained, despite a sharp rise in government borrowing programme. The RBI conducted net Open Market Operations (OMO) purchases of INR 3.1 trillion in FY21. This includes INR 300 billion of OMO purchases of State Development Loans (SDLs) undertaken by the RBI for the first time ever, to keep SDL yields contained.

108 IDFC FIRST Bank

RBI net OMO puchase / sale (INR bn)

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----- Start of picture text -----

3,500
3,133
2.992
3,000
2,500
2,000
1,500 1,149
1,105
881
1,000
500
0
-500
-1,000 -888
-1,500
FY16 FY17 FY18 FY19 FY20 FY21
----- End of picture text -----

Source: CEIC, IDFC FIRST Bank Economics Research

As a consequence of RBI’s foreign exchange (FX) purchases and G-Sec purchases, substantial interbank liquidity conditions persist, resulting in call rates falling below the reverse repo rate. Monetary transmission also improved with weight average lending rates lower by 71 bps on outstanding loans and 63 bps lower on fresh loans in FY21.

Looking ahead we expect the RBI to keep monetary policy accommodative given the uncertainty created by the second COVID-19 wave. The regulator has clearly indicated that supporting growth on a durable basis remains a priority, while ensuring CPI inflation remains within the 4%±2% target range. We expect our repo rate to remain unchanged this year and ample liquidity conditions to be maintained.

On the yields front, liquidity management focus is on flattening the yield curve. The upfront commitment to purchase G-secs by the RBI under G-SAP is expected to keep long-end yields contained. At the same time, the announcement of longer tenor of variable rate reverse repo auctions is aimed at lifting overnight rates back above reverse repo.

Fiscal policy in FY21 has played a supportive role with total fiscal stimulus estimated at 8.4% of GDP, which includes demand augmenting measures (higher expenditure and tax cuts) of 3.3% of GDP. The first two packages announced by the government focused more on supply-side measures ensuring credit flow to the affected sectors (credit guarantees

for MSMEs and NBFCs) and protecting the vulnerable section of society. Policy focus gradually shifted to supporting demand with third bailout package focusing on boosting consumption and investment.

The FY22 Union Budget focus is on providing a boost to investments with a 26.2% YoY increase in capital expenditure in FY22 and mobilisation of funds for infrastructure projects by setting up DFI and creation of a National Monetisation pipeline to fund the creation of new assets. The expenditure mix is expected to improve substantially in FY22 with capital expenditure accounting for 16% of total government expenditure, compared to the usual ratio of 12% to 13%. This bodes well for growth as capital expenditure has a higher fiscal multiplier than revenue expenditure.

The Government of India has allocated INR 350 billion on vaccination cost.

Additional fiscal response from the Government of India due to the second COVID-19 wave has been focused on providing relief to at-risk segment of the population. It has announced additional free food grains for the next two months, which will have fiscal cost of INR 260 billion. State governments which have announced lockdowns have announced income support for construction workers and migrant workers.

External Sector

The sharp decline in growth last year resulted in a rise in current account surplus to 3.0% of GDP in H1FY21, as imports had contracted and fall in crude oil prices. In H2FY21, current account was back in the deficit zone as imports revived and rise in crude oil prices. The revival in imports was due to easing of lockdown restrictions and improvement in domestic demand conditions. For the full year FY21 current account surplus was 0.9% of GDP. In FY22, we expect a moderate current account deficit of 1.6% of GDP, led by rise in imports and higher crude oil prices.

On the flows front there was a surge in capital flows in FY21, due to ultra-accommodative global monetary policy, resulting in large foreign investment inflows to the emerging markets (EMs). India also witnessed rise in foreign investment inflows - net FPI inflows rose to US $30.3 billion in FY21 and net FDI inflows rose to US $44 billion. The current account surplus and capital inflows resulted in net BoP surplus rising to US $87 billion.

To limit, appreciation pressure on the INR, RBI intervened in both spot and forwards market to absorb dollar inflows. RBI’s net dollar purchases (spot plus forward market) is estimated at US $146 billion in FY21.

Annual Report 2020-21 109

RBI FX intervention (USDbn)

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Source: CEIC, IDFC FIRST Bank Economics Research

In FY22, we estimate BoP surplus to reduce to US $22.8 billion, based on our expectation of current account deficit and slowdown in FPI inflows. In H1 FY22 we saw a measure of INR volatility as restrictions rise in various states, negatively impacting growth momentum. H1FY22, USD-INR trading range is expected between INR 73.50 and INR 76.50. In H2FY22, we expect depreciation pressures on INR to reduce with expected reduction in COVID-19 cases and progress on the vaccination front. Overall, more than adequate FX reserves and moderate current account deficit in FY22, will keep depreciation pressures contained.

prepare and provide for credit defaults and losses arising from this unprecedented situation in their balance sheets. At its early stages of transformation and growth, IDFC FIRST Bank also encountered such a situation, which impacted its financial performance of FY21.

Net Profit ( ` crores)

FINANCIAL SUMMARY

FY21 has been a challenging yet a transformational year for IDFC FIRST Bank.

As the pandemic hit India in the early part of 2020, the Banking and Financial Services (BFSI) sector in our country encountered the impact from March 2020 onwards. Financial year 2020-21 (FY21) has been an extremely challenging year for the entire BFSI sector, which witnessed multiple interventions from the Government of India and the RBI. This includes an array of fiscal and monetary stimulus measures (moratorium, extension of moratorium and restructuring plans) to support the vulnerable sections of the population. Mobility of the population was also restricted by imposing nation-wide lockdown.

The slowdown in the economy with contraction in GDP compelled the incumbents in the BFSI sector in India to

The Bank posted a profit of ` 452 crore for the last financial year, FY21, despite challenges in the Indian banking sector as the COVID-19 pandemic outbreak triggered nationwide lockdowns. This impacted businesses, operations and collections of the Bank and the Bank took additional provisions to accommodate such impacts, following the prescribed guidelines by the RBI. We are proud to share that during the year our customer deposits consistently grew every quarter and our transparent communications helped to increase our customers’ confidence.

110 IDFC FIRST Bank

The Bank steadily diversified its funded assets by increasing the Retail Loan Assets.
The Bank made significant progress in retailising its deposit base in favour of the retail deposits including
Retail CASA and Retail Term Deposits as they are much stickier, granular and sustainable in nature.

Such transformation of both loan assets and deposits are evident through the performance of the Bank post merger.

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----- Start of picture text -----

Core Deposits (Retail CASA + Retail TD) Other Deposits Total Customer Deposits (Excl. CD)
38,455 Cr40,504 Cr 57,719 Cr82,725 Cr
18,831 Cr 10,400 Cr 23%
41%
33%
27%
59% 77%
73% 67%
28,055 Cr63,894 Cr
Dec-18 Mar-19 Mar-20 Mar-21
----- End of picture text -----

==> picture [418 x 175] intentionally omitted <==

----- Start of picture text -----

Retail Funded Assets Wholesale Funded Assets (incl Inorganic Portfolio) Total Funded Assets
1,04,660 Cr1,10,400 Cr 1,07,004 Cr1,17,127 Cr
43,453 Cr 36,236 Cr
37% 37%
46%
35%
54% 63%
65% 63%
68,424 Cr73,673 Cr
Dec-18 Mar-19 Mar-20 Mar-21
----- End of picture text -----

Annual Report 2020-21 111

Liabilities – Transformation Driven by the Strong Retail Deposits Growth

CASA Deposits

The CASA Deposits of the Bank has grown strongly. The CASA deposits of the Bank has grown by 122% from 20,661 crore as on March 31, 2020 to 45,896 crore as on March 31, 2021.

CASA Deposits ( ` crores)

March 31, 2021 from 27.72% as of March 31, 2020. The Bank now is well positioned with its large peers in terms of CASA ratio.

Funded Assets

Total Funded Loan Assets, including advance, credit investments and PSL buyouts (as per internal classification) gross of Inter-Bank Participation Certificates (IBPC), stood at 1,17,127 crore as on March 31, 2021, compared to 1,07,004 crore for as on March 31, 2020. Of the total book, the Retail Loan Book increased by 29% to 73,673 crore as on March 31, 2021, compared to 57,310 crore as on March 31, 2020. The Retail Loan Book as March 31, 2021 includes the outstanding book disbursed under ECLGS scheme of ` 1,687 crores. Excluding this, the Retail Loan Book grew by 26% YOY in FY21.

Retail Funded Assets ( ` crores)

Core Deposits

The Bank’s Core Deposits (Retail CASA and Retail Term Deposits) of the Bank increased by 88% from 33,924 crore as on March 31, 2020 to 63,894 crore as on March 31, 2021.

Core Deposits ( ` crores)

In line with the stated strategy to reduce the concentrated exposure, the Bank reduced its Wholesale Funded Assets by 14% from 39,388 crore as on March 31, 2020, to 33,920 crore as on March 31, 2021. This is also in accordance with the guidance given at the time of merger.

Wholesale Funded Assets (in ` crore)

Total Customer Deposits

Total Customer Deposits (CASA, Retail Term Deposits and Wholesale Term Deposits) have increased by 43% from 57,719 crore as on March 31, 2020 to 82,725 crore as on March 31, 2021. The Bank is primarily focused on growing the Retail CASA and Retail Term Deposits, in order to reduce the dependence on Wholesale Term Deposits.

Gradual Improvement in the CASA ratio

During FY21, the Bank’s CASA ratio has consistently improved every quarter and within a year it has grown from 31.87% as on March 31, 2020 to 51.75% as on March 31, 2021. The daily average CASA Ratio of the Bank improved to 50.23% as of

Reduced Exposure to the Infrastructure Segment

Again, as per the stated strategy, within the Wholesale Funded Assets, the Infrastructure Financing portfolio decreased by 27% from 14,840 crore as on March 31, 2020 to 10,808 crore as on March 31, 2021.

112 IDFC FIRST Bank

Infrastructure Finance Portfolio ( ` crores)

Asset Quality

The Bank’s Gross NPA% reduced by 3 bps sequentially to 4.15% as on March 31, 2021, compared to the proforma GNPA% of 4.18% as on December 31, 2020. The Net NPA% reduced by 18 bps sequentially to 1.86% as on March 31, 2021, compared to the proforma Net NPA% of 2.04% as on December 31, 2020. Provision Coverage Ratio (PCR) stood at 56.23% as on March 31, 2021. The Gross NPA% and Net NPA% for the Bank as of March 31, 2020 was 2.60% and 0.94% respectively. The NPA% figures as of March 31, 2021 includes the percolated effect of moratorium and standstill due to COVID-19 situation and hence not comparable with the NPA% figures of March 31, 2020.

Particulars	December 2019 (pre COVID)	March 2020 (Moratorium implemented during thequarter)	Proforma December 2020 (post COVID)	March 2021 (post COVID)
Gross NPA	2.83%	2.60%	4.18%	4.15%
Net NPA	1.23%	0.94%	2.04%	1.86%
PCR(%)	57.34%	64.53%	52.35%	56.23%

As on March 31, 2021, the Gross NPA percentage of the Retail Loan Book was at 4.01% (compared to Proforma Retail GNPA of 3.88% as on December 31, 2020) and Net NPA

percentage of the Retail Loan Book of the Bank was at 1.90% (as compared to Proforma Retail NNPA of 2.35% as on December 31, 2020).

Particulars	December 2019 (pre COVID)	March 2020 (Moratorium implemented during thequarter)	Proforma December 2020 (post COVID)	March 2021 (post COVID)
Retail - Gross NPA	2.26%	1.77%	3.88%	4.01%
Retail - Net NPA	1.06%	0.67%	2.35%	1.90%
PCR(%)	53.67%	62.44%	40.52%	53.68%

Net Worth (Share Capital and Reserves & Surplus) & Capital Adequacy

The Bank’s net worth stood at 17,808 crore as on March 31, 2021 compared to 15,343 crore as on March 31, 2020. The book value per share stood at 31.37 as of March 31, 2021. The Bank raised 3,000 crores of fresh equity capital from marquee FIIs and DIIs through qualified institutional placement on April 6, 2021. Including the same on the net worth figure as of March 31, 2021, the revised net worth would have been 20,808 crore and the revised book value per share would have been 33.56.

The Bank reported Capital Adequacy of 13.77% with CET1 ratio of 13.27% as of March 31, 2021. Calculated on the revised net worth after including the fresh equity raised of ` 3,000 crores on the reported net worth as of March 31, 2021 as mentioned above, the revised Capital Adequacy Ratio, would have been 16.32% with CET-1 Ratio at 15.62%.

Profit and Loss Statement

Net Interest Income

The Bank reported 21% growth in Net Interest Income (interest earned less interest expended) to ` 7,380 crore for

FY21 from 6,076 crore in FY20. The Total Operating Income (Net Interest Income plus other revenues) of the Bank grew by 24% YOY to 10,207 crore in FY21 from 8,237 crore in FY20. The growth in the Total Operating Income included the 97% growth in the trading gains. Excluding the same, the core operating income of the Bank increased by 18% to 9,002 crore in FY21 from ` 7,625 crore in FY20.

Interest income from the loans originated through business correspondents (BCs), were earlier being booked net of the origination and servicing expense incurred by BCs. Effective from Q4 FY21, such income is now booked on a gross basis, and the origination and servicing expenses pertaining to this book is included in the operating expense line of the Bank. For fair comparison purposes, the previous period interest income, operating expenditure (opex) figures, and the resulting NIM% have been recomputed and presented.

The Net Interest Margin (NIM = Net Interest Income as % of Interest Earning Assets) for the year was 4.98% excluding the one-time non-recurring income amount of ` 53 crore in FY21. The NIM% in FY21 improved by 107 basis point from 3.91% in FY20. The NIM% of the Bank has been increasing steadily over the quarters since the merger in December 2018, as the

Annual Report 2020-21 113

both the assets and liabilities of the Bank are undergoing the transformation in favour of the retail businesses resulting in the improvement of overall yields and cost of funds respectively.

Net Interest Margin (%)

trading gains) for the bank was 78.79% in FY21 as compared to 76.86% in FY20.

Pre-Provision Operating Profit

The Pre-Provision Operating Profit of the Bank increased by 31% YOY, to 3,113 crore in FY21 from 2,376 crore in FY20. Excluding the Trading Gain, the Core Pre-Provision Operating Profit grew by 11% YOY, to 1,964 crore in FY21 from 1,764 crore in FY20.

Provisions

The incremental provisions including provisions for NPAs, other stressed assets, standard assets as well as write-offs for the year ended March 31, 2021 was at ` 2,638 crore. The total provisions as % of the average total assets of the Bank was 1.68% for FY21.

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----- Start of picture text -----

(Pre-Merger)
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Non-Interest Income

The year FY21 experience a tepid YOY growth of 5% in fee & other income, from 1,550 crore in FY20 to 1,662 crore in FY21, due to lower disbursals and business activities impacted by the lockdowns and weak economic condition due to COVID-19 pandemic, especially in the first half of the financial year FY21 as it was down by 35%. In the second half of FY21, the business activities revived with disbursal volumes and climbing to pre-COVID19 monthly run-rate by March 2021, the fee income grew by 36% YOY in H2-FY21.

The fee & other income also included the fees obtained from the non-funded assets of our Bank, which decreased by 8% from 25,450 crore as on March 31, 2020 to 23,530 crore as on March 31, 2021.

Operating Expenses

The operating expenses for the year ended March 31, 2021, were 7,093 crore, an increase of 21% on YOY basis from 5,861 crore in FY20. Post the merger, with the new strategic plan and transformation journey to become a large retail banking player in India, the Bank is making investments for building the foundation blocks which will yield results going forward. During the year FY21, the Bank invested significantly in the digital capabilities as the COVID-19 situation hit the economy, enforcing the necessities for touch free and remote business processes and operations. With the requisite digital innovations and capabilities being built, the Bank has prepared itself on course to be future ready for the digital wave in Indian Banking and Financial Services system, with a strong focus on customer experiences. Along the way, the Bank also increased its footprints across India by opening 132 new Bank branches and 236 new ATMs and 85 new Recyclers. The Bank also invested in building the new products like credit card & gold loans and expanded the manpower to scale up the new businesses further. As a result, the cost to income ratio (on core income excluding the

The erstwhile Capital First had portfolios like loan against shares with ticket sizes above 20 lakh and loans with annual interest payments, which were allowed for NBFCs but are not allowed for a Bank. On merger with the Bank, dispensation was provided by the RBI for the said portfolio and such dispensation stood discontinued during the year. Due to this, the Bank had to make 100% provision on these loans amounting to 89 crore in Q4-FY21.

Net profit (Loss)

For FY21, the Bank posted a net profit of 452 crore, compared to net loss of 2,864 crore for FY20, despite the COVID-19 impact on its businesses, operations and collections. This affected the total income of the Bank and also resulted in the need for the additional provisioning.

RETAIL LIABILITIES: BUILDING A STRONG

FRANCHISE

FY21 was a year of transformation for the Bank’s Liabilities and wealth management business. Our Liabilities proposition achieved significant breadth and scale which enabled the Bank to have a competitive advantage and deliver superior customer experience.

The Bank’s franchise strength is evident from the growth in its Liabilities franchise. The Bank recorded a 31% growth in the number of retail liabilities accounts opened over that opened in FY 19-20. The retail deposits including Retail CASA and Retail Term Deposits grew over 88% YOY to ` 63,894 crore in FY21, despite the COVID-19 impact. A total of 132 branches, 236 ATMs and 85 new Recyclers were added during the year, taking the Bank’s footprint to 596 branches. Despite challenging circumstances in FY21, our branches remained open throughout the lockdown in FY21, helping customers by providing in-person support and assistance.

In FY21, the Bank overcame the challenging business conditions and offered customers convenient ways to transact, access their savings and current accounts, fixed deposits, make digital payments and grow their wealth.

114 IDFC FIRST Bank

The Bank revised its interest rates on Savings Accounts from 7% to 6% in FY21. These rates have now been further reduced to 4% below 1 lakh, 4.5% from Rs 1 lakh- 10 lakh and 5% from Rs 10 lakh-` 2 cr. The Bank is aware that the CASA ratio may come down as a result of this reduction and savings account balances may shift to term deposits which may impact our CASA ratio, but the Bank is comfortable with CASA ratio in the range of 40-50% at the reduced savings account interest rate as it reduces the Bank’s cost of funds and enables the Bank to become more competitive for the products in the asset side.

Digital Capabilities as Business Drivers

While the Bank continued to invest across channels, including physical branches, a significant underlying business driver was its enhanced digital capabilities. A rapid scale up of our digital platforms complemented our branch presence and strengthened our business model.

The Bank has built the necessary digital capabilities with customer friendly features and continues to develop on these capabilities. In the new financial year, this will provide us meaningful opportunities for growth.

Customer experience is at the centre of all our strategies. In line with this business philosophy, the Bank launched a world-class digital platform for mobile and netbanking that provided customers a whole new way of banking. The platform, called IDFC FIRST App. is available on browser and mobile app, and comes with an easy-to-navigate user interface with a faster and safer login process. Once logged in, the dashboard offers all relevant information, upfront. It is intuitive, personalised, and enables all service requests with ‘one click’, including single-click fixed deposit opening. It is designed and built to provide a convenient and engaging customer experience.

The Bank also launched a digitised processes for Corporate Salary account opening. Earlier in the year, the Bank introduced Video KYC for digital account opening, thereby providing an integrated and seamless experience to customers from account opening to KYC completion.

The Bank also launched SafePay, contactless debit card payments on phone, a digital facility that allows customers to make payments by simply waving one’s smartphone against a Near Field Communication (NFC)-enabled POS terminal. SafePay embeds Near Field Communication (NFC) technology in the IDFC FIRST Mobile App to enable secure payments using a debit card issued by the Bank.

NRI banking

The Bank’s NRI business grew significantly during the year as the Bank added a dedicated NRI Relationship Management team to cater to the specialised needs of NRI clients. NRIs have reposed faith in the Bank, evidenced from a significant growth in both balances and addition of new customers. The Bank also offered NRI customers an opportunity to hedge their Foreign Currency deposits as INR with enhanced yields.

The Bank started offering NRI Portfolio Investment Scheme accounts that enabled NRI investors to invest in listed companies in India through stock exchanges. As an industryfirst, the account can be opened digitally through netbanking in a few simple steps, along with instant issuance of the Portfolio Investment Scheme permission letter.

Expanding the product suite

The Bank continues to expand capital market offering for its customers with the launch of the Application Supported by Blocked Amount (ASBA). This allows customers to apply for IPOs digitally via netbanking as well as through ASBAdesignated branches. The features of this offering include simplification of the application process and assistance during the user’s online journeys.

Yet another segment where the Bank expanded convenience was forex for retail customers. It offered services of global fund transfer in 13 currencies to resident as well as nonresident customers at competitive exchange rates. Our customers can now also send money abroad digitally via netbanking 24/7 at guaranteed exchange rates for a wide variety of purposes.

Business Banking

The Bank undertook a number of initiatives to offer best-inclass products and digital platforms to small businesses. With this objective, the Freedom Current Account & World Business Account were launched. These variants provide competitive transaction charges across all domestic and international trade transactions. This provided customers the ability to access their account anytime and from anywhere without charges. The Bank supplemented this with its bestin-class business account management app and digital trade platform. The digital platform provides end-to-end support from transaction initiation to regulatory closure with integrated forex rate booking – all on a single platform.

As part of customer offerings in this space, the Bank curated ‘Beyond Banking offers’ by partnering with various fin-techs in the space of ERP solutions, HRMS payroll, legal, taxation advisory, school management, society management, etc. Our Beyond Banking product suite now has over 50 offers and is growing at a healthy pace with an overwhelming market response.

In support of India’s start-up story, the Bank supports customers in their early stages of business with preferential pricing and Beyond Banking offers. The merchant acquiring solution was also launched by the Bank along with a simplified the UPI-QR solution to strengthen the proposition for retail customers. These solutions have found healthy adoption and acceptability by customers.

The Bank’s Business Banking vertical supports Micro, Small and Medium Enterprises (MSMEs) by meeting their working capital requirements through a diverse offerings for both funded and non-funded lending. The Bank developed capabilities for the relationship manager to onboard

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customers digitally in a hassle-free manner. The Kisan credit card continues to offer a secured working capital facility for customers/ farmers involved in agricultural activities based on credit assessments related to cropping pattern, credit bureau and reference checks as well as legal and technical valuation of the security.

Corporate Salary business

The Bank’s Corporate Salary accounts grew 38% year-on-year and salary credits increased 41% year-on-year, despite corporates job and pay cuts across industries. Retail CASA in the portfolio also saw stellar growth.

To enhance digital experience in this segment, the Bank launched the start-to-finish instant digital corporate salary account. Backed by Video KYC, the zero-contact processes does away with paper, biometric verification or physical interaction between the Bank and customer.

During the year, the Bank introduced a customised offering for the Armed Forces with the launch of Honour FIRST salary account for Assam Rifles. The Bank also introduced Women’s Savings Account named FIRST Power and FD Life Secure – a bundled offering of Fixed Deposit with a complimentary life insurance cover. For graduate and post graduate students, the Bank launched Future FIRST account and for corporates in the rural space, the Bank introduced Vishesh Salary account.

We continue to make strong advances in salary accounts as our salary accounts products are preferred by corporates because of attractive interest rates, wide range of services, no hidden fees, digital enhancements and experiences.

Wealth Management

The Bank made significant progress in growing its Wealth Management business. The Bank’s wealth management AUM recorded 2x growth during the year to ` 3,100 crore. It adopted the multi-partner open architecture insurance distribution model in FY21, adding two new life insurance partners – ICICI Prudential Life and Bajaj Allianz Life. The year also saw the launch of the Bank’s digital wealth management solutions through the new mobile app and netbanking platforms.

The new wealth management platform now offers unique features such as ‘Consolidated Investment Dashboard’ where the customer can access all investments such as Mutual Funds, Fixed Deposits, Gold Bonds, PMS among other investment on a single dashboard. The Bank received two awards during the year – ‘The Digital Banker’ awards for Best Wealth Management Digital Experience and Excellent User experience for Netbanking.

For its Private Banking clients, the Bank added niche solutions such as Offshore Investment Products and Immigration-based investment products to its product suite.

Government Banking

The Government Banking division continues to maintain and further deepen strategic partnerships with Central and various State Governments, Public Sector Undertakings and other government entities through new banking solutions, backed by technological capabilities and agile services.

Proactive participation in the e-Governance initiatives of the government through customised solutions to meet their requirements and ease of transacting for the citizens has been the division’s focus area. The Bank provides multiple product suites to government clients including Account Management Services, Corporate Salary Solutions, Transaction Banking, e-Auction and other digital solutions, benefiting the citizens for example Contribution to PM CARES, Collections under Municipal, Housing and Education segment, and many others.

The Government Banking division continues to engage in discussions with the key stakeholders to understand the requirements and opportunities to add value in the Government eco-system. The Group works closely with the branch banking teams to fulfil their banking needs at all levels viz. State, Districts, Blocks, Panchayats and Villages on the PFMS platform. This synergy has resulted in the Bank being empanelled by various state governments for providing banking services.

Despite the pandemic, the Bank’s effort to deliver banking services and seamless transaction execution facility digitally have made the Bank a preferred one in this segment.

RETAIL ASSETS: RESETTING FOR GROWTH

The Bank expanded its range and reach of retail loans in FY 21 to enable customers, largely individuals and small businesses to avail financial services in the most hassle-free and convenient manner.

The Bank’s Retail Assets grew to 73,673 crore on March 31, 2021, from 57,310 crore as on March 31, 2020, registering 29% growth. The retail loan book as on March 31, 2021 includes the ECLGS portfolio of ` 1,687 crore. Excluding this, the retail loan book growth YOY in FY21 was 26%. Including inorganically acquired portfolio where underlying assets are retail loans; the Bank’s retail loans as a proportion of total funded assets were at 67% as on March 31, 2021.

Through FY21, the Bank continued to sustain the momentum garnered in FY20 with a significant focus on expanding the product offering in line with market demand and digitisation to improve customer experience.

The Bank’s Home Loans portfolio was backed by a strong, segmented approach, focus on portfolio quality and enhancements in digital customer journeys. This helped the business post sustained growth after the lockdown and clock higher disbursement figures. During the year, the Bank launched digital customer on-boarding experiences.

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During the year, the Bank started providing holistic banking solutions through its liability branches by serving the needs of both asset and liability customers. The Bank’s Personal Loan business expanded its presence to 103 locations with a good growth in the overall book in FY21. The Bank’s consumer durable business witnessed a sharp pick-up in demand post lockdown. The Bank used advanced machine learning techniques and adopted unique process flows to improve its origination processes The Bank successfully leveraged new business models such as self-fulfilment journeys for customer on-boarding by dealers and collaborated with partners to expand its retail distribution.

New product variants such as personal line of credit, travel line of credit, merchant loans, and Buy Now Pay Later loans in partnership with major e-commerce and financial services entities across India were launched during the year. The Bank has been able to achieve 3X increase in month-on-month disbursals and 6X jump in assets under management in this product segment in FY21.

In the last financial year FY21, the Bank launched its credit card product with multiple variants targeted for different customer segment. The product was introduced with many unique and differentiated features like dynamic interest rate (APR), lifetime free, interest free cash withdrawals (up to next billing cycle date or 48 days, whichever is earlier) etc. Since launch in January 2021, the Bank has already issued more than 300,000 credit cards till June 2021.

The Bank witnessed a 27% growth in Two-wheeler loans and 12% in Used Car loan book in FY21. The Commercial Vehicle loan book also grew by 21%, supported by increased focus on the retail and small commercial vehicles segment. The Bank announced additional tie-ups with preferred financers for all three segments, resulting in an expansion of its customer base.

During the year, the Bank leveraged technology and analytics to expand its cross-sell business and enhance its offerings to SME and liability customers. as a result, many of the Bank’s existing customers could avail the benefit of pre-approved loans in select product segments. This gave them access to emergency funds with a superior experience.

The Bank continued to offer Micro Business Loans to micro entrepreneurs across 133 locations across the country. The Bank’s specialised lending approach to these customers based on their credit personas has helped understand customer needs better with effective risk profiling.

In the SME retail business, the Bank sustained the momentum gained in the earlier year. It proactively reached out to eligible customers under the Government’s Emergency Credit Line Guarantee Scheme. By March 2021, the Bank’s business reached an all-time high, surpassing pre-COVID levels.

The Rural Banking division of IDFC FIRST Bank remained unwavering in its mission of transforming lives across rural India. This year, the unit stayed on its course of providing banking services to several villages and towns across India.

The team focused its efforts on building digital literacy, inculcating mobile and online banking habits, and offering convenience and speed of world class banking within the deepest pockets of India.

FY21 saw Rural Banking expand its presence across 9 states and 225 branches across the country, almost a third of the total branches. This growth came with an increase in employee base, an expanded product suite across assets and liabilities, and improved digital offerings for customers.

Our Rural product offering now includes JLG loan and a wide range of loans including Gold loans and Home loans. On the Liabilities side, the Bank’s has continued its focus on Savings which contributed to building the habit of thrift in rural households, and channelising savings into the formal banking channel. The Bank’s product proposition remains committed to serving the last mile customer and ensures that it plays its part in the financial inclusion of the nation.

Despite the headwinds faced due to the pandemic, the ethos of strong customer relationship ensured that the team remained committed to supporting the wellbeing of customers (with initiatives such as Gaon Gaon Mask – through this initiative, we provided the materials for our customers to stitch 2 lakh masks which were then distributed across hospital staff, police personnel, sanitation workers, community members across the rural areas).

In this COVID impacted year, our Rural Banking division engaged with customers about their well-being, educated them about moratorium and its impact on their loans, taught them contact-less ways of Banking along with making them finance available when they needed it most. We continued to work with customers encouraging them to borrow and repay digitally, do their financial transactions on the Mobile, offering them convenience and speed of world class banking, out of their mobile phones.

WHOLESALE BANKING

The current financial year was one of the most challenging ones for the Indian Corporate sector due to the pandemic. During the year, your Bank has worked along various RBI regulatory packages and continued its effort to maintain the portfolio performance. Your Bank continued on the strategy of transitioning its exposure from infrastructure lending and large-ticket lending to a more diversified and mid-sized lending. Even so, your Bank continues to have a full-service suite of Corporate Banking with coverage across Large Corporates, Emerging Large Corporates, NBFCs and Financial Institutions. We offer all products encompassing Lending, Transaction Banking, Financial Markets and Liabilities. Further, the Bank continues to focus on improving profitability through improving its lending yields and improving product penetration across its clients.

Corporate Coverage

The Bank’s Corporate Coverage Group continued its efforts to reduce the Bank’s balance sheet risk profile from long-term

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and big-ticket infrastructure legacy assets to predominantly loans to operating mid-sized and more granular corporate banking assets.

During the year under review, the Bank’s Corporate Coverage Group successfully reduced its Infrastructure Legacy Assets exposure by 4,032 crore over that of the previous year. Similarly, certain large-ticket exposures to corporate entities were also reduced. Infrastructure loans decreased by 27% to 10,808 crore as on March 31 2021 from 14,840 crore as on March 31, 2020. Infrastructure loans accounted for 9.23% of total funded assets as on March 31, 2021 as compared to 13.87% as on March 31, 2020.

The Bank also opted for a cautious approach on its exposure to the NBFC and FIG sector. The outstanding to this sector reduced from 12,645 crore on March 31, 2020 to 10,960 crore in March 31, 2021.

The combination of these have led to the overall Wholesale Bank book reduce by ` 5,468 crore in its size over this year. Going forward, the Bank will continue to work on the similar strategy and will continue to focus on asset quality.

The Bank’s credit rating threshold for initiating a relationship continues to be in a healthy zone with most of the business being initiated with the better performing investment grade corporates.

At the beginning of the financial year FY 20-21, RBI had issued the guidelines on the COVID regulatory package basis which our Wholesale Banking business had offered moratorium to its customers as per their requests. The moratorium was extended to 272 customers. The repayment schedule of these customers were revised in line with the moratorium extended. Further, basis the customer request, for 14 customers the accrued interest for CC /OD/WCDL facilities (for the deferment period up to August 31, 2020) was converted into a funded interest term loan (FITL) which was repayable not later than March 31, 2021.

As part of the Emergency Credit Line Guarantee Scheme (ECLGS) announced by the Finance Ministry to aid the Micro, Small, Medium Enterprises (MSME) sectors in view of the economic distress caused by the COVID-19 pandemic, the wholesale banking segment extended credit to 7 MSME customers under the ECLGS 1.0 scheme. Further under the ECLGS 2.0 scheme, the wholesale banking segment extended credit facility to 20 borrowers in the sectors identified by the Kamath Committee on Resolution Framework and the Healthcare sector. 100% Guarantee coverage on the amount for the credit facility under the ECLGS scheme has been provided by the NCGTC to the Bank.

Further in August 2020, RBI announced a one-time special window for lenders in order to restructure the current loans, which will further allow them to change repayment terms for their borrowers who have been hit by the COVID-19 lockdown. Under this scheme as on March 31, 2021, your bank has granted restructuring to 13 clients.

Key focus areas for the Corporate Coverage Group will continue to be:

To obtain corporate salary account mandates and increase core CASA liabilities
ELC segment asset growth
Earning higher fee from transaction banking, non-fund based commissions, FX and Debt Capital Markets business
Drive higher utilization of our world-class cash management services platform

Financial Institutional Coverage

The Bank’s Financial Institutions Group addresses the finance and banking needs of Domestic as well as International Financial Institutions.

The Domestic Financial Institutions Group (DFIG) team engages with the domestic commercial banks, small finance banks (SFBs), Insurance Companies, Financial Institutions and Capital Market participants such as Exchanges, Mutual Funds, FPIs and AIFs. The Bank is focused to on-board large liability-strong Institutions by offering superior transaction banking services through innovative products and assuring client-centricity for product delivery. The Bank has been able to create traction with large Institutions, thereby improving its footprint substantially.

The Bank actively engages with Institutions like SIDBI, NABARAD, NHB and Exim Bank to avail refinance and with overseas branches of domestic banks to avail foreign currency borrowings. Leveraging on its strong relationships with banks, the Bank also acquired Priority Sector Assets to meet its regulatory requirements, through investment in IBPC issued by these banks and purchased PSLCs from them.

The Bank’s International Financial Institutions Group (IFIG) team is responsible for relationship management with International Banks, Multilateral Agencies and offshore Financial Institutions.

The Bank continues to strengthen its network of international banks and FIs to deliver efficient treasury and trade finance solutions to the Bank’s local customers, who have banking requirements offshore. The Bank also offers complete suite of products encompassing Financial Markets, trade finance and financial advisory to the offshore banks and FIs, thereby enabling them to provide seamless India linked service to their clientele. Through strong relationship management and distinctive service, the Bank has built up strong network in prominent India linked trade corridors. As of March 2021, the Bank has been able to develop strong correspondent banking network of over 250 global entities, spread across 56 countries.

Financial Markets Group

The Bank’s Financial Markets Group consists of Treasury, Foreign Exchange/Interest Rate sales and Domestic Capital

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Market business. Treasury manages Investments and funding from money markets for the Bank. This function ensures that the Bank meets its regulatory requirements of maintaining CRR, SLR and LCR. This is achieved through a well-defined and monitored asset liability management process carried out under the guidance of the Asset-liability committee (ALCO) of the Bank. It also manages the sensitivity to interest rate movements for the Bank by utilising various market investments, money markets and permitted derivative products.

The treasury sales team helps clients manage risk of exposure to currency and rates fluctuation through a diverse suit of risk management products (FX Forwards / Time option FX Forwards, FX Options and variants, Currency Swaps, Risk Transformation products). The team also provides expertise and online end to end solutions to handle remittances for both retail and corporate clients. The Domestic Capital Markets team provides debt financing solutions delivered through bonds, structured products and loans to raise funds for capital expenditure, working capital, refinancing and other corporate requirements. Technology driven fully automated forex outward remittance solution for retail customers. Ease of FX booking is of key focus to deliver superior customer experience.

Since its start, the bank has successfully grown its business with clients by offering and transacting in the full suite of product solutions. Dealing rooms are set up across six centres to cater to client requirements in the best possible way. In house research is also disseminated to keep clients abreast of market developments. Significant effort has been made to build robust online solutions for clients to further increase efficiency and service quality across products.

TRANSACTION BANKING

The Bank’s Transaction Banking solutions are designed keeping in mind customers’ interest and convenience.

The Transaction Banking vertical offers a unique state-ofthe-art digital platform which offers a unified interface for accessing products and services.

During the year, the Bank offered digital solutions within Cash Management on the payments as well as the collections side. The Bank continues to enhance its next-generation corporate banking portal the Business Experience Platform (BXP), which unifies cash management, trade services, corporate linked finance, and treasury services for a seamless banking experience.

The Transaction Banking team works closely with technology partners, industry leaders and service providers to develop various customised solutions to cater to the business requirements of various customer segments. The Bank’s initiatives were well received and led to transitioning ~33 per cent of transactions to the digital mode. During the year, a focused approach was made for specific segment-

based channel usage such as API Banking and Host-to-Host connectivity apart from the existing online platform i.e, BXP.

Backed by technology, various solutions in the bill payments and collection space were customised to client requirements. An emphasis on enablers such as e-NACH, API-based frameworks, BBPS, etc., ensured healthy business growth and helped in self-sustaining current account balances for the Bank. In addition to corporates, the Transaction Banking vertical engages with various other segments such as MFIs, NBFCs, MFs, Insurance companies, and Government Banking clients to design innovative offerings.

The Bank consistently focused on the digital agenda for Trade flows, providing smooth and faster turnaround time for clients for transaction processing. A comprehensive, inward remittance module on trade platform has been successfully developed which takes care of various aspects of settling inward remittances like, export, non-export with FX rate booking functionalities. The division implemented form rationalization which has resulted in reduced discrepancies while processing clients trade transaction and operational excellence. These solutions are offered to all clients including MSME and corporates. The Bank also introduced new features and functionalities for the Supply Chain space, aimed at achieving granular and sustainable business.

Toll and Transit

The Bank continued to be one of the leading players in the toll and transit space with the acquisition of over 200 toll plazas and issue of over 15,00,000 tags during the year. The Bank services fleet owners, automobile dealers and tech service providers in the automobile and mobility world to provide digital solutions which are simple and secure to use.

The Bank’s FASTag is the only one that can be used for toll, fuel and payments at parking lots. The Bank’s tie-up with HPCL enables customers to pay for fuel at an HPCL outlet using the IDFC FIRST FASTag. The Bank has also tied up with four major shopping malls to enable customers to pay for parking with IDFC FIRST FASTag.

OPERATIONS

The Operations function at the Bank has been designed to deliver a superior and differentiated customer experience. The Bank works alongside business and technology in an agile manner to deliver technology-enabled processes that minimise paperwork and ensure seamless processing with minimal manual intervention.

The Retail Operations Function of the Bank is committed to deliver a superior experience for business growth and collection strategies. With our primary focus on customer experience, we successfully introduced Credit Card Operations with strong process orientation, controls and technology implementation. In view of the Covid-19 Relief policy implemented by RBI, we have facilitated Moratorium 1.0, Moratorium 2.0, Restructuring 1.0, ECGLS, and ex-gratia Framework seamlessly. Our Operations team

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has adopted “Innovative Operating Model” theme which primarily focused on encouraging Innovation by lateral outof-box thinking based around preemptive actions with use of technology, cutting cost and control the disintegrated value chain. We adopted an imaginative approach to support our front-line teams in an agile manner and stay connected to offer differentiated solutions to fulfill rapidly changing customer needs.

Throughout the year, the Operations team has delivered faster Time to Process against higher volumes across all products through technology enabled delivery model and unified workflows. Major breakthroughs in technologies adopted such as Robotics Process Automation (RPA Bots), OCR and SAS reporting were major drivers of uninterrupted services during lockdown and facilitated higher scale of operations. We have been successful in implementing “Digilocker – A Digital India Initiative” solution as prescribed by Ministry of Electronics and Information Technology (MeiTY), Government of India (GOI) in one our automation initiatives, becoming rare in the industry to adopt.

Adopting variablisation strategies to shift from conventional operations model to a managed service model is getting implemented, which is bringing benefits of cost optimisation and consolidation of services.

Our customer-facing deliveries and collaboration with business through technology solutions along with strong WFH strategy ensured uninterrupted services during lockdown. We are also strengthening our core capabilities to empower our frontend teams with rightsizing and data analytics During these lockdown waves, with adoption of balanced scheduling of work from home and work from office, we were able to maintain our agreed turnaround time levels and accuracy expectations. This ensured seamless operations of our core deliveries of onboarding, servicing, reconciliation, dispute settlement and repayments across all products and portfolios of the Bank.

Wholesale Banking Operations provides transaction and accounting execution for all corporate banking products and key enterprise functions such as Clearing and Cash. It also has a demonstrated client orientation through the client servicing team which provides targeted service to clients through experienced client focused bankers having expertise across a range of products. Part of the account opening and servicing process is digital and requires minimal manual intervention.

Through the year, the Operations team has delivered against higher volumes across products by leveraging technology-enabled systems, workflows and STP, wherever possible. This has enabled us to deliver faster turnaround times, across identified key products.

The pandemic has accelerated focus on technology and digital channels which has ensured that the Bank can consistently deliver high levels of service in a cost-effective manner, and at scale. The Operations team supported both

our clients and front facing business teams by adopting a split team approach seamlessly, combining work from home and work from office to deliver uninterrupted services through these testing times.

TECHNOLOGY

The Bank has further continued to build on its technology platforms by expanding its coverage of digital state of the art experiences across a wider variety of the banks products and services. New product launches and the roll out of enhanced services especially in the areas of data management and microservices have widened the portfolio of offerings and the capabilities to respond faster to the ever changing market dynamics. As a by-product of the restrictions caused by the pandemic, there has been a significant change in customer behaviour with a huge surge in usage of digital services across all segments of customers with an expectation of end to end services being delivered digitally. The bank is pivoting towards next generation platforms that are cloud native, open & extensible and flexible to meet the expectations of both customers and employees alike. The need for an hybrid work environment with all the attendant security needs was also met in an efficient manner. Further, the bank has also created capabilities that helps the business operations leverage the power of data & insights in a secure and transparent model to offer new products & services in a seamless manner. The Bank continues to build a differentiated technology team with a unique set of capabilities, defined new ways of working and a harmonised partner ecosystem to build and sustain its edge in the market.

RISK

The Bank promotes a strong risk culture throughout the organization. This is designed to help reinforce the Bank’s resilience by encouraging a holistic approach to management of risk and return, and an effective management of risk, capital and reputational profile.

Consequent to the merger of erstwhile IDFC Bank Limited and erstwhile Capital First Limited effective December 2018, Bank has re-aligned its key policies and Risk Framework forming an overall Risk framework of the merged entity.

The Bank operates within an effective risk management framework to actively manage all the material risks faced, in a manner consistent with the Bank’s risk appetite, making the Bank resilient to shocks in a rapidly changing environment. The Bank aims to establish itself as an industry leader in the management of risks, and strive to reach the efficient frontier of risk and return for the Bank and its shareholders, consistent with its risk appetite.

The Bank has a robust risk governance framework. The Board is principally responsible for approving the Bank’s risk appetite, risk tolerance and related strategies and policies. To ensure that the Bank has a sound system of risk management and internal controls in place, the Board has established Risk Management Committee of the Board (RMC). The RMC

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assists the Board in relation to the oversight and review of the Bank’s risk management principles and policies, strategies, appetite, processes and controls.

Risk Appetite

The risk appetite is an expression of the amount and type of risks that the Bank is able and is willing to take in pursuit of its business objectives. The Risk Appetite Statement provides strategic guidance around various parameters. The Risk Appetite Framework is approved by the Board and put up for review/ revision to the Risk Management Committee of the Board, at least on an annual basis, keeping in the view the changing business environment and the Bank’s business strategy and competencies.

Credit Risk

Bank’s credit risk is controlled and governed by the Board approved Credit Risk Management Policy. The Credit Risk group has been established to independently evaluate all proposals to estimate the various risks as well as their mitigation. The Bank has rigorously adhered to the RBI mandated prudential norms on provisioning of stressed assets and has adopted a stringent approach in taking aggressive provisioning, which is aimed at preserving and protecting shareholder value. During the year, Our Bank has proactively worked on the resolution of the stressed asset portfolio and has significantly reduced the stressed assets outstanding. Bank has also de-risked the portfolio by diversifying the credit portfolio across non-infrastructure sectors and focused on increasing shorter-tenure and nonfunded exposures. With these measures, we have sought to reduce the concentration risk in the portfolio.

Market Risk

The Bank’s trading positions in debt, foreign exchange, derivatives, and equity are subject to Market Risk. Market Risk Group is responsible for identifying, measuring and monitoring such risks. Our Bank has put in robust policy frameworks such as Market Risk Policy, Funds and Investment Policy, Forex and Derivatives Policy to ensure positions, which are subject to market risk are maintained within the approved risk appetite of the Bank. Several models and tools such as MTM, PV01, VaR, Stress testing, Capital Charge assessment and extensive limit management framework etc., are used to measure and continuously monitor such risks.

The tools, models and underlying risk factors are reviewed periodically to enhance their effectiveness. The group also supports the Asset-Liability Management (ALM) function. The purpose of the Asset Liability Management Committee (ALCO) is to act as a decision-making unit responsible for integrated balance sheet risk-management from risk-return perspective including strategic management of interest rate and liquidity risks. ALM function also supports measurement and monitoring of Liquidity Gaps, resilience to liquidity stress using tools like LCR and Interest Rate Risk in Banking Book by assessing impact on NII and Market Value of Equity due to changes in underlying interest rates.

Operational Risk

Deregulation and globalisation of financial services, together with growing sophistication of financial technology and increasing complexity and volume of financial transactions, are making the risk profiles of Banks more complex. A growing number of operational losses and risk events, recent regulations, industry trends and new types of threats and exposures have highlighted the importance of Operational Risk management. Operational Risk touches every part of the organisation from products, people, processes and technology and hence it is important to identify and manage proactively. The Bank has put in place Board approved governance and organisational structure to manage Operational Risks. A committee comprising senior management personnel namely ‘Operational Risk and InfoSec Risk Management Committee ’ is responsible for overseeing implementation of Board approved Operational Risk Management policy and framework. Operational Risk Management Department engages with the First Line of Defence (Business and Operating Units) on a continuous basis to identify and mitigate operational risks to minimise the Risk and its impact.

Compliance Risk

Compliance Risk is defined as the risk of legal or regulatory sanctions, material financial loss, or loss to reputation the Bank may suffer as a result of its failure to comply with applicable laws, regulations, rules, standards, and codes of conduct. The management of compliance risk is an integral component of the governance framework at the Bank along with other internal control and risk management frameworks.

The Bank has a Compliance Policy, duly approved by the Board of Directors for effectively managing the compliance risk faced by the Bank. The Compliance function of the Bank is an independent unit with adequate staff managing various compliance activities of the Bank. The Compliance function performs the following principal activities:

(i) advisory services to businesses on regulatory matters
(ii) dissemination and implementation of regulatory guidelines/ directions
(iii) regulatory engagement
(iv) managing AML/ KYC/ CFT
(v) identifying, assessing, monitoring and reporting on compliance risk The Compliance department assists the businesses and other functions for the management of compliance risks (to mitigate and prevent breaches of laws and regulations) in accordance with the compliance risk framework of the Bank. The Compliance department provides compliance assurance to the Management and Board through the Compliance Self-Certification System and Compliance Testing Framework. The status updates of compliance risk are regularly reported to the Management and Board.

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Information Technology and Information Security Risk

Given that the Bank’s expansion strategy is more and more digital, cyber and Information Security risk is an important area of focus of the Bank. The Information Security Group (ISG) is responsible for this function and works continually towards adoption of newer and better security practices. ISG works as an independent group within Risk function and operates under the Information Security Management System framework (ISMS), which is aligned to ISO 27001 and RBI Cyber Security Framework and other guidance’s issued from time to time. The Bank is an ISO 27001: 2013 and PCI DSS certified organisation. ISG follows systematic approach through people, process and technological security controls to prevent, detect, respond and recover from cyber-attacks and manage sensitive company information so that it remains secure by design and practice.

BitSight an independent cyber readiness rating company offers the most widely adopted Security Ratings solution. BitSight Security Ratings range from 250 to 900 and indicate s company’s relative security effectiveness. Each organisation can receive one of the three following ratings:

Basic (upto 640)
Intermediate (below 740)
Advanced (740 and Above)

The Security Rating for IDFC FIRST Bank has moved from 600 (Basic) to 790 (Advanced) over the past 12 months clearly validating our commitment to move towards Secured Digital Bank as a continuous endeavour.

Capital Adequacy

The Bank manages its capital position to maintain strong capital ratios well in excess of regulatory and Board approved minimum capital adequacy at all times. The strong Tier-I capital position of the Bank is a source of competitive advantage and provides assurance to regulators, creditrating agencies, depositors and shareholders. In accordance with the RBI guidelines on Basel III, the Bank adopts the standardised approach for credit risk, basic indicator approach for operational risk and standardised duration approach for market risk.

Capital management practices are designed to maintain a risk- reward balance, while ensuring that businesses are adequately capitalised to absorb the impact of stress events including pandemic risks. The Internal Capital Adequacy Assessment Process (ICAAP) forms an integral part of the Supervisory Review Process (SRP) under Pillar 2 of the Basel III Framework. SRP under the Basel III Framework (Pillar 2) envisages the establishment of appropriate risk and capital management processes in banks and their review by the supervisory authority. ICAAP is a structured approach to assess the risk profile of the Bank and determine the level of capital commensurate with the scale and complexity of operations. As part of the Basel III implementation, Bank has

developed a comprehensive ICAAP policy and document, in line with regulations prescribed by the RBI.

The document aims to assess the risk profile of the Bank and whether the capital maintained is commensurate with the scale and complexity of operations. The document also contains projections of financials for the Bank, and its capital adequacy projections for next three years under normal and stress conditions. It also contains relevant details of plans and strategies for meeting capital requirements. Stress testing forms an essential part of ICAAP. It requires the Bank to undertake rigorous, forward-looking assessment of risks by identifying severe events or changes in market conditions which could adversely impact the Bank.

The ICAAP ensures that stress-testing reports provide senior management with a thorough understanding of the material risks to which the Bank is exposed. Stress-testing complements other approaches in the assessment of risk. It is the primary indicator of the Bank’s ability to withstand tail events and maintain sufficient levels of capital. It is used to evaluate the financial position of the Bank under various plausible scenarios (base, medium and severe) to assist in decision-making. It also assists the Bank in improving its risk monitoring processes.

Environment and Social Policy (E&S) and Appraisal Process

The Bank has a comprehensive environment and social policy and a robust environment and social risk management framework for its lending businesses. The Environmental Risk Group (ERG) of IDFC FIRST Bank works proactively with clients/ internal teams to identify, mitigate and manage E&S risks associated with projects/ transactions. The Bank obtains environment-related regulatory compliance information so as to ensure that the projects/ transactions it finances are in compliance with the applicable national environmental legislations. IDFC FIRST Bank has developed and adopted an exclusion list comprising sectors in which it will not engage in any financing activity. The Bank continues to hold the distinction of being India’s first financial institution to sign up for the Equator Principles (EP) – a credit risk management framework for determining, assessing and managing environmental and social risk in Project Finance transactions. For the purpose of financing activities, IDFC FIRST Bank has also identified sensitive sectors which have potentially high impact on the environment and communities, and where the Bank may have to deal with critical E&S issues.

INTERNAL CONTROLS

IDFC FIRST Bank’s internal controls systems are based on a framework of organizational policies, technology systems, processes, and risk management practices. These controls identify and mitigate various risks by ensuring effectiveness and efficiency of operations, adequacy and reliability of financial controls, monitoring and reporting systems and compliance with applicable laws and regulations.

122 IDFC FIRST Bank

The internal controls systems are aimed at ensuring adequate authorisation, accurate recording and reporting of all transactions in the Banks books of account, and safeguarding the Banks assets. The Bank uses an array of technology systems and processes for its operations including loan origination system, core banking system, treasury system, customer relationship management system, general ledger system and other technologies, which operate under a robust control framework.

The Bank has an independent Internal Audit Function, headed by the Chief Internal Auditor who reports to the MD & CEO of the Bank and the Audit Committee of the Board, in compliance with extant regulatory guidelines. The Internal Audit Function of the Bank constitutes the third line of defence of the Bank and adopts a risk-based approach to provide independent, objective assurance on the effectiveness of internal controls, risk management and information security systems, compliance with regulatory requirements and corporate governance to the Board, Management and other stakeholders.

The Internal Audit Department is appropriately staffed with qualified and competent personnel to perform their duties as outlined in the Internal Audit Charter which is approved by the Board of Directors. Internal Audit reports all significant observations and their follow-up actions to the Audit Committee of the Board. Further, the Audit Committee reviews adequacy and effectiveness of the Bank’s internal control environment and also monitors the implementation of audit recommendations. The Audit Committee also reviews and evaluates the functioning of the Bank’s Internal Audit Department through independent meetings, reviews and formal annual evaluations.

HUMAN RESOURCES: BUILDING EMPLOYEE RESILIENCE

The Bank responded very well to the first phase of the COVID-19 crisis in FY21. In compliance with government guidelines related to the pandemic, the Bank transitioned overnight to provide a Work From Home (WFH) environment for a section of its workforce, automated processes and significantly scaled up digital initiatives for employees.

Simultaneously, safety measures were enhanced for employees on the field, at branches and customer service centres, to enable uninterrupted service to our customers during the lockdown.

A new way of working

Our employees at branches and offices responded well to workplace challenges. Employees who worked remotely also successfully navigated the unprecedented levels of disruption created by the pandemic and stayed on-course to deliver desired business results.

Sustaining the link to a common purpose

The Bank continued to drive operational excellence in every aspect of its business. To do so, it was important to link our employees working remotely across different geographies back to the organization’s common purpose – that of serving our customers.

Towards this, the Bank stepped up Learning & Development in digital formats and invested in upskilling and re-skilling of employees to prepare them for a dynamic business environment.

Providing employees with flexible learning opportunities made available digitally via mobile app was key to promoting a culture of learning. Towards this, the Bank launched the mobile app called iLearn (Learning Management System) and through it, imparted training in technology, leadership and soft skills. Other initiatives included AI-based assessment, virtual board games for managers to help upskill, reskill and train, and self-learning platforms. This resulted in a sharp increase in learning among employees with 322,605 learning hours clocked in FY21.

Engaging employees in continual two-way dialogue

The Bank continued to provide a transparent working environment where employees would feel empowered to speak up and trigger a change in the interest of our customers and organization ethics.

A series of engagement initiatives during the year helped align employees to the organization’s mission, and encouraged them to seek help when required.

The engagement took the form of townhalls, rewards and recognition events and digital interactions with senior management. This allowed informal and organic conversations to emerge and an open two-way dialogue on business trends, customer expectations and new initiatives by the Bank. Such sessions enabled employees to stay connected and also earn camaraderie in an ongoing crisis.

Each engagement initiative was curated to address specific employee groups. The bank implemented avenues fordirectly connecting the key senior leadership team with frontline staff and management trainees. The Bank implemented initiatives for catering to the needs of the technology teams, recognising star performers in rural banking and for other retail banking teams. ‘Your Voice’ enabled the HR team to reach out to specific employee groups to understand employee pulse and plan necessary interventions . The MD & CEO of the Bank and other key senior management of the Bank routinely addressed senior employees through Microsoft Teams and provided necessary leadership on matters related to culture, transformation, moratorium, growth, controls and all such leading matters. They also wrote and spoke to employees during townhalls on time to time as required.

A blend of remote-working and on-site service to customers led to vastly different working models and cross-functional collaborations. This helped meet the organization’s most pressing needs and worked well for customers and business.

Annual Report 2020-21 123

Focus on employee effectiveness and well-being

The Bank continued to invest in the well-being of its teams. The Human Resources team was empathetic and engaging so as to support employees in meaningful ways.

Numerous initiatives including free 24*7 online consultations with doctors, a medical room facility in our larger offices, a free COVID-19 Assistance Program for employees and their family members, were launched. In addition, monthly workshops and webinars on wellness were also conducted.

Our Group insurance policies offering medical, accident and life covers continued to be a critical support for employees during these challenging times. The Bank also offered attractive top-up options for increased medical insurance coverage and enhancement in the cover for women employees. A Wellness Week was held in December 2020 with online mental & physical wellness sessions.

Talent continued to be key to our transformation into a stronger Bank

The Bank succeeded in hiring high quality talent to ensure seamless business continuity. The team digitised the entire hiring process, thus providing applicants and managers a unified candidate application and screening process. The Bank witnessed an uptick in hiring around mid-September and ended the financial year on a high note, resulting in successful expansion into new geographies. Onboarding and induction of new recruits was made completely paperless and digitised. The Bank launched its new career website and Employer Value Proposition, which resulted in significant enhancement of its brand as a preferred company to work with.

Continuing to meet the safety needs

As the second wave of the COVID-19 crisis sweeps the country, we continue to foster a culture of collaboration and a strong focus on the safety of our employees.

OPPORTUNITIES & OUTLOOK

FY2021 has been an exception year for the entire world and specifically with Indian Banking & Financial Services sector as the world struggled with the impact of COVID-19 pandemic which brought in extended national lockdown for the entire country, stalling the economic progress across industries. The country experienced a gradual shift towards “new normal” which resulted in a spurt in demand for essential consumptions, personal mobility, digital products, focus on health-oriented practices and a need for larger comfortable space for living.

During this time, IDFC FIRST Bank, as a new age Bank with focus on digital innovations and interventions, has been in the cross-road of the pandemic and the new opportunities emerging from the situation. As a strategic choice, post the merger in December 2018, the Bank has drifted away from the wholesale financing and infrastructure financing to focus on retail banking. Such a strategy will help the Bank cater better to Indian consumers and SMEs in the urban and rural

India with the help of IT interventions and analytics, resulting in efficient digital customer journeys.

The Bank has put in place robust systems and processes to accomplish high growth in its retail deposit base, even during the pandemic. It also showed the confidence to reduce peak interest rates offered for savings account by 200 bps. The retail deposits including retail CASA is a big opportunity for the Bank going forward as it gears itself with its new Banking App and website to provide seamless experience to depositors. Interestingly, they can use the same app as a one-stop solution for usual banking, transactions, payments, investments, expense management, and so on.

Although some of the consumption segments such as travel, entertainment, restaurants and others were impacted comparatively higher by the COVID-19 pandemic during the first half of FY21, the overall consumption trajectory was positive during the second half of FY21. This indicates a sharp recovery and growth opportunity going forward, especially in the digital transactions, e-commerce, consumer durables, car and two wheeler sales and the high demand for the mortgage products.

The interventions and new schemes from the Government of India also helped the SME segments cope with the tough economic scenario and SMEs have subsequently shown strong resilience and recovery for growth. These segments have been key for the Bank’s business growth going forward. Recently, the Bank also announced offering home loans for the select customer segment at a very competitive (6.90% annually) interest rate. This indicates the Bank’s assessment of the growth opportunity of this segment and its confidence on its capabilities to capture such opportunity, apart from continuing with the existing product offering to the chosen customer segments including the rural customers.

The Bank has also launched credit card as a product with differentiated features like dynamic pricing which would help the Bank to participate in the opportunity in this segment resulting in higher banking transaction activities and fee income growth.

The country has also experienced the impact of the second wave of COVID-19 pandemic starting in late March 2021 which turned out to be more fatal as compared to the first wave. However, the rapid vaccination program as well as localised restrictions initiated by the Government of India and the respective State Governments have helped the entire country to move through the peak infection scenarios and situations improved gradually as we see right now. The economic activities are gradually coming back on track and expected to soon reach the March-2021 level, as it was before the COVID-19 second wave. Although the first two quarters of the current financial year may turn out to be tepid in terms of business growth, the entire country is now better prepared for faster recovery in the second half of the current financial year. The Bank has utilised this time to strengthen its processes and product offering to come out with excellent digital solutions and is poised for the growth opportunity ahead.

124 IDFC FIRST Bank

“CAUTIONARY STATEMENT

Statements made in this Management Discussion and Analysis Report may contain certain forward-looking statements based on various assumptions on the Bank’s present and future business strategies and the environment in which it operates. Actual results may differ substantially or materially from those expressed or implied due to risk and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India and abroad, volatility in interest rates and in the securities market,

new regulations and Government policies that may impact the Bank’s businesses as well as the ability to implement its strategies. The information contained herein is as of the date referenced and the Bank does not undertake any obligation to update these statements. The Bank has obtained all market data and other information from sources believed to be reliable or its internal estimates, although its accuracy or completeness cannot be guaranteed.”

Annual Report 2020-21 125

Corporate Governance Report

IDFC FIRST BANK’S PHILOSOPHY ON CORPORATE GOVERNANCE

IDFC FIRST Bank Limited (‘IDFC FIRST Bank’ or the ‘Bank’), since its inception is committed to adopting the highest standards of Corporate Governance through its commitment to values and ethical business conduct. The Bank strongly believes that sound Corporate Governance is an essential ingredient for corporate success and sustainable economic growth. The Bank, through its stringent adherence to compliances, aims to enhance and retain investor trust and social acceptability.

The Bank endeavors to conduct its operations with transparency and honesty towards all its stakeholders including customers, shareholders, regulators, employees and the general public at large. The Bank’s business focuses on maximizing return on assets while managing inherent risks, thus ensuring that the Bank’s performance goals are met with integrity. The Bank’s systems, policies and frameworks are regularly upgraded to meet the challenges of rapid growth in a dynamic external business environment. Governance practices not only deal with the growing size of business, but also deal with the increase in complexities of the organisational structure that supports such growth.

In India, Corporate Governance standards for listed companies are regulated by the Securities and Exchange Board of India (‘SEBI’) through SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations’). As a Bank, which believes in implementing Corporate Governance practices that go beyond just meeting the letter of law, IDFC FIRST Bank not only complies with the requirements of Companies Act, 2013, Banking Regulation Act, 1949 and mandated elements of Listing Regulations, but also incorporates most of the nonmandatory recommendations.

This Chapter, read with the chapters on Management Discussion & Analysis, and Directors’ Report confirms IDFC FIRST Bank’s compliance with the Listing Regulations.

BOARD OF DIRECTORS

The Board of Directors (the ‘Board’) of the Bank brings with them, a wide range of significant professional expertise, skills and rich experience across a wide spectrum of functional areas such as Management, Administration, Economics, Banking, Finance, Accounting, Auditing, Information Technology, Business Management, Risk Management, Agricultural Economics, etc.

The Bank encourages Board diversity and balance of skills at the same time, to ensure effective decision making.

The Board has been constituted in compliance with the Banking Regulation Act, 1949, the Companies Act, 2013,

Listing Regulations and in accordance with the best practices in Corporate Governance across the Industry.

Changes in the Board

During the year under review, the Board of the Bank had an optimum combination of Executive and Non-Executive Directors with excellent knowledge and experience in various fields relating to the business activities of the Bank.

During the year under review, pursuant to the instructions received from Department of Financial Services, Ministry of Finance, Government of India (‘Ministry of Finance, GoI’) for change in Nominee Director, the Board through its Circular Resolution dated June 22, 2020 approved the appointment of Dr. Sanjay Kumar (DIN 08764419) as Additional Director in the category of Nominee Director representing Ministry of Finance, GoI with effect from close of business hours of June 22, 2020, subject to the approval of the shareholders of the Bank and other applicable statutory/ regulatory approvals and noted the consequent stepping-down of Nominee Director, Ms. Anindita Sinharay (DIN 07724555) representing Ministry of Finance, GoI, with effect from close of business hours of June 22, 2020.

The aforesaid appointment of Dr. Sanjay Kumar was approved by the shareholders of the Bank at its 6[th] Annual General Meeting held on July 30, 2020.

During the year under review, Dr. Rajiv B. Lall (DIN 00131782) tendered his resignation as Part-Time Non-Executive Chairman of the Bank citing reason that he has been dealing with prolonged personal health issues. The Board noted his resignation with effect from September 04, 2020, vide its Circular Resolution dated September 04, 2020.

Pursuant to Reserve Bank of India (‘RBI’) Circular Ref:DBOD. No.BC.24/08.139.001/2002-03, dated September 09, 2002, on ‘Implementation of Recommendations of the Consultative Group of Directors of Banks/ Financial Institutions’, in view of attaining an age of 70 years, Mr. Anand Sinha (DIN 00682433) ceased to be an Independent Director of the Bank with effect from the close of business hours of February 02, 2021. The Board noted the same at its meeting held on January 30, 2021.

The Ministry of Finance, GoI vide its communication dated March 25, 2021 had mentioned that the Government of India has been minority shareholder in Bank and is not involved in day to day operation of the Bank, and accordingly it was decided to withdraw its nominee representation from the Board of the Bank. Pursuant to aforesaid communication, the Board of the Bank vide its Circular Resolution dated March 25, 2021, noted the cessation of directorship held by Dr. Sanjay Kumar as Non-Executive Non-Independent Director (Nominee Director representing Ministry of Finance, GoI) of

126

IDFC FIRST Bank

the Bank with effect from close of business hours of March 25, 2021.

Accordingly, as on March 31, 2021, the Board of the Bank consisted below eight (8) Directors, out of which five (5) were Independent Directors (the ‘IDs’), two (2) Non-Executive Non-Independent Directors and one (1) Executive Director:

Name of the Director (DIN)	Position on the Board
Mr. Aashish Kamat	: Independent Director
(DIN 06371682)
Dr. (Mrs.) Brinda Jagirdar	: Independent Director
(DIN 06979864)
Mr. Hemang Raja	: Independent Director
(DIN 00040769) Mr. Pravir Vohra (DIN 00082545) Mr. Sanjeeb Chaudhuri (DIN 03594427) Mr. Sunil Kakar (DIN 03055561) Mr. Vishal Mahadevia (DIN 01035771) Mr. V. Vaidyanathan (DIN 00082596)	: Independent Director : Independent Director : Non-Executive Non-Independent Director : Non-Executive Non-Independent Director : Managing Director & Chief Executive Offcer (the‘MD & CEO’)

Mr. Sunil Kakar is representing IDFC Limited. As on March 31, 2021, IDFC Financial Holding Company Limited held 39.98% equity shares in the Bank.

Subsequent to the year under review, based on the recommendation of the Nomination and Remuneration Committee (‘NRC’), the Board at its meeting held on April 30, 2021, approved the appointment of Mr. S. Ganesh Kumar (DIN 07635860) as an Additional Director in the category of Independent Director of the Bank for a period of five (5) consecutive years, effective from April 30, 2021 to hold office up to April 29, 2026 (both days inclusive). Further, on May 08, 2021, the Board of Directors on the recommendation of the NRC, approved the re-appointment of Mr. Pravir Vohra (DIN 00082545) as an Independent Director of the Bank for a second term of five (5) consecutive years, commencing from August 01, 2021 up to July 31, 2026 (both days inclusive).

The aforesaid appointment of Mr. S. Ganesh Kumar and reappointment of Mr. Pravir Vohra is subject to approval of the shareholders of the Bank at ensuing Annual General Meeting and other applicable statutory/ regulatory approvals, as required.

Further, the Board of Directors of the Bank at its meeting held on June 16, 2021, based on the recommendation of the NRC and performance evaluation, as applicable, have approved the re-appointment of Mr. V. Vaidyanathan (DIN 00082596) as the MD & CEO for a period of three (3) years with effect from December 19, 2021, subject to the approval of the shareholders and the Reserve Bank of India.

Brief profiles of all the Directors of the Bank are available on the Bank’s website at www.idfcfrstbank.com under the ‘Board of Directors’ section.

The Board has complete access to all the information about the Bank. The Board is frequently provided with necessary documents, reports and internal policies to enable them to get familiarised with the Bank’s procedures and practices. The details of familiarisation programmes imparted to Directors are disclosed on the Bank’s website: www.idfcfrstbank.com under ‘Investors’ section.

Skills/ Expertise/ Competence of Board of Bank

The Bank recognizes and embraces the importance of a diverse Board and is endowed with appropriate balance of skills, experience and diversity of perspectives thereby ensuring effective Board governance. The Board has reviewed and adopted the Policy on Board Diversity, which sets out its approach to ensure Board diversity, so as to enhance its effectiveness while discharging its fiduciary obligations towards the stakeholders of the Bank. The Bank considers diversity in skills, regional and industry experience, expertise and educational background whilst determining the composition of its Board. The Bank also considers the principles relating to fit and proper norms as prescribed by the RBI and confirms that each Director is also in compliance with the norms as prescribed by the Ministry of Corporate Affairs (‘MCA’) and SEBI under applicable laws, whilst determining the composition of its Board.

Our Bank, being a Banking Company, is regulated by the provisions of Banking Regulation Act, 1949, Listing Regulations and the Companies Act, 2013. In terms of Section 10A(2)(a) of the Banking Regulation Act, 1949 read with RBI notification no. DBR. Appt. BC. No.38/29.39.001/2016-17 dated November 24, 2016, requires that not less than 51% of the total number of members of the Board of Directors of a Banking Company shall consist of persons, who shall have special knowledge or practical experience in respect of one or more of the following matters, namely;

(i) accountancy
(ii) agriculture and rural economy
(iii) banking
(iv) co-operation
(v) economics
(vi) finance
(vii) law

(viii) small-scale industry

(ix) Information Technology
(x) Payment & Settlement Systems
(xi) Human Resources
(xii) Risk Management
(xiii) Business Management
(xiv) any other matter the special knowledge of, and practical experience in, which would, in the opinion of the RBI, be useful to the Banking Company.

Annual Report 2020-21 127

Further, not less than two Directors shall be persons having special knowledge or practical experience in respect of agriculture and rural economy, co-operation or small-scale industry.

The Bank has identified above skills/ expertise/ competencies as required to be possessed by the Board of our Bank, to function effectively in the context of businesses and the sectors in which Bank deals.

Based on the confirmation and declaration taken from the Directors of the Bank, the Board of Directors at its meeting held on May 08, 2021 noted the following skill set, special knowledge or practical experience of the Directors:

Name of the Director	Position on the Board	Skill set, special knowledge or practical experience
Mr. Aashish Kamat	Independent Director	Accountancy, Auditing, Banking, Finance, Risk
		Management and Business Management
Dr. (Mrs.) Brinda Jagirdar	Independent Director	Bankingand Economics includingAgriculture Economics
Mr. HemangRaja	Independent Director	Finance and Management
Mr. Pravir Vohra	Independent Director	Information Technology, Banking, Economics and
		Payment & Settlement Systems
Mr. Sanjeeb Chaudhuri	Independent Director	Banking, Business Management, Rural Economics, Risk
		Management, Information Technology and Payment &
		Settlement Systems
Mr. S. Ganesh Kumar*	Additional - Independent Director	Banking, Regulation and Supervision, Accounting,
		Information Technology, Payment and Settlement Systems,
		Risk Management, Business Continuity Management,
		Institution Setting-up
Mr. Sunil Kakar	Non-Executive Non-Independent Director	Finance
Mr. Vishal Mahadevia	Non-Executive Non-Independent Director	Economics and Finance
Mr. V. Vaidyanathan	MD & CEO	Banking, Business Management and Risk Management

Mr. S. Ganesh Kumar has been appointed as Independent Director of the Bank, with effect from April 30, 2021.

The Board of the Bank is guided by the above provisions and the business requirements during appointment of any new Director on the Board.

As on date of this Report, the Board of our Bank is formed in compliance with the requirements of all applicable laws.

CODE OF CONDUCT

The Bank has in place a Code of Conduct (‘Code’) for Board of Directors and designated Senior Management Personnel (‘SMP’) of the Bank. The Code is available on the Bank’s website: www.idfcfrstbank.com under ‘Investors’ section.

All Directors and designated SMP have affirmed their compliance with the Code. A declaration to this effect duly signed by the MD & CEO is enclosed at the end of this Report.

Further, all the IDs have confirmed that they meet the criteria mentioned under Regulation 16(1)(b) of the Listing Regulations read with Section 149(6) of the Companies Act, 2013. Also, they have given a declaration of independence pursuant to Section 149(7) of the Companies Act, 2013, read with Rule 5 of Companies (Appointment and Qualification of Directors) Rules, 2014 along with their affirmance to the Code for Independent Directors as prescribed under Schedule IV of the Companies Act, 2013. The Board confirms that in the opinion of the Board, the Independent Directors fulfill the conditions specified in the Listing Regulations and are independent of the Management.

Further, the Bank has received a certificate from M/s. Bhandari & Associates, Company Secretaries that none of the Directors on the Board of the Bank have been debarred or disqualified from being appointed or continuing as Directors of Companies by the Securities and Exchange Board of India/ Ministry of Corporate Affairs or any such statutory authority (Certificate annexed to this Report as ANNEXURE A) .

The terms and conditions of appointment of IDs are also disclosed on the Bank’s website: www.idfcfrstbank.com under ‘Investors’ section.

BOARD MEETINGS

The Board meets at least once a quarter to review the quarterly results along with other agenda items and additional meetings are conducted from time to time to consider significant matters, whenever required. The dates of Board meetings for the next financial year (‘FY’) are decided well in advance and are informed to the Directors so as to enable them to manage their schedule effectively and prepare for the meetings well in advance.

128 IDFC FIRST Bank

Also, the Bank makes available video conferencing facility or other audio-visual means, to enable larger participation of Directors in the meetings, whenever required. During the year all the meetings of the Board and its Committees were held through video conference due to COVID-19 pandemic restrictions across country.

In consultation with the MD & CEO and the Management team, the Company Secretary prepares the agenda along with the detailed notes thereon. Directors and invitees are free to recommend inclusion of any matter in the agenda for discussion.

SMP are also invited to attend the Board meetings, make presentations and provide additional inputs to the agenda items under discussion, whenever required.

on the following dates:

May 01, 2020
May 22, 2020
July 24, 2020
July 28, 2020
August 28, 2020
September 11, 2020
October 08, 2020
October 31, 2020
January 09, 2021
January 30, 2021

The responsibilities of the Board inter-alia include formulating and monitoring plans, business strategies, budgets, information security methods, reviewing financial results, appointment/ cessation and remuneration of SMP and Key Managerial Personnel (‘KMP’), perusing of policies and procedures, etc. The Board reviews on a quarterly basis the compliance reports of all laws applicable to the Bank, including the Corporate Governance reports submitted to the Stock Exchanges.

The RBI prescribes seven comprehensive critical themes in Board deliberation, to be placed before the Board of Directors, vide its circular on ‘Calendar of Reviews’. These themes include Business Strategy, Risk, Financial Reports and their integrity, Compliance, Customer Protection, Financial Inclusion and Human Resources. Agenda items within the scope of these themes are primarily presented to the relevant Committees of the Board, report of which is then placed at the Board meetings.

During FY 2020-21, thirteen (13) Board meetings were held

February 18, 2021
March 22, 2021
March 31, 2021

The maximum gap between any two consecutive meetings was less than 120 days. The necessary quorum was present for all the meetings.

Periodic presentations are made at the Board/ Committee meetings on business strategy, performance updates, financial statements etc. Minimum Information to be placed before the Board of Directors as mentioned in Schedule II Part A of the Listing Regulations is placed before the Board for its consideration, as and when applicable.

Details of Directors of the Board, along with their attendance at the Board meetings and Annual General Meeting (‘AGM’) held during FY 2020-21, other directorships, memberships/ chairmanships in Committees, etc. as on March 31, 2021 are given in Table No. 1 .

Annual Report 2020-21 129

Table No. 1: Composition of Board of Directors for FY 2020-21 and other details as on March 31, 2021

Name of the Director DIN Completed Age Position on the Board	Board Meetings attended in FY 2020- 21
Mr. Aashish Kamat 06371682 55 Independent Director	12/13
Dr. (Mrs.) Brinda Jagirdar 06979864 68 Independent Director	13/13
Mr. Hemang Raja 00040769 62 Independent Director	13/13
Mr. Pravir Vohra 00082545 66 Independent Director	13/13
Mr. Sanjeeb Chaudhuri 03594427 68 Independent Director	13/13
Mr. Sunil Kakar 03055561 63 Non-Executive Non-Independent Director *(representing IDFC Limited – Equity* *Investor)*	13/13
Mr. Vishal Mahadevia 01035771 48 Non-Executive Non-Independent Director	13/13
Mr. V. Vaidyanathan 00082596 53 Managing Director & Chief Executive Offcer	13/13
Dr. Rajiv B. Lall 00131782 63 Part-Time Non-Executive Chairman	2/5
Mr. Anand Sinha 00682433 70 Independent Director	10/10
Dr. Sanjay Kumar 08764419 44 Non-Executive Non-Independent Director *(was representing Ministry of Finance, GoI* *– Equity Investor)* Ms. Anindita Sinharay 07724555 45	0/10
	0/2

Notes:

1 Ms. Anindita Sinharay ceased to be Government Nominee Director, with effect from close of business hours of June 22, 2020, pursuant to communication received from Ministry of Finance, Government of India.
2 Dr. Sanjay Kumar was appointed as Government Nominee Director of the Bank, with effect from close of business hours of June 22, 2020 and later on, he ceased to be Government Nominee Director with effect from close of business hours of March 25, 2021, pursuant to communications received from Ministry of Finance, Government of India.
3 Dr. Rajiv B. Lall has resigned as Part-Time Non-Executive Chairman of the Bank with effect from September 04, 2020.
4 Mr. Anand Sinha ceased to be Independent Director of the Bank with effect from close of business hours of February 02, 2021, in view of him attaining an age of 70 years.
5 Subsequent to FY 2020-21, Mr. S. Ganesh Kumar has been appointed as Independent Director of the Bank with effect from April 30, 2021.
6 None of the Directors of the Bank were Member of more than 10 committees or acted as Chairperson of more than 5 committees across all Public Limited Companies in which they were Directors in terms of Regulation 26 of the Listing Regulations.
7 None of the Directors held directorship in more than 10 Public Limited Companies.

130 IDFC FIRST Bank

Whether attended Sixth AGM held on July 30, 2020*	Number of Directorships Directorship in other Listed Company excluding IDFC FIRST Bank (Category of Directorship) No. of Committee Membership (Chairmanship) of Companies (including IDFC FIRST Bank)# of Indian Public Limited Companies (including IDFC FIRST Bank) of other Companies^
Yes	1 1 None 1(1)
Yes	6 0 Rane Engine Valve Limited (Independent Director) Rane Brake Lining Limited(Independent Director) 5 (0)
Yes	2 0 Multi Commodity Exchange of India Limited (Non-Executive – Non Independent Director) [Shareholder Nominee Director] 1 (0)
Yes	4 0 Thomas Cook (India) Limited (Independent Director) 3i Infotech Limited (Non-Independent Director) 5 (2)
Yes	1 0 None 2(1)
Yes	6 3 IDFC Limited (Executive Director, Managing Director & CEO) 2 (0)
No	3 1 Apollo Tyres Limited (Non-Executive – Non Independent Director) 1 (0)
Yes	1 0 None 1 (0)
No	Not Applicable, as ceased to be Director of the Bank as on March 31, 2021
Yes
Yes
Not Applicable

8 None of the Directors were related to each other.
9 None of the Directors of the Bank served as Director or Independent Director in more than 7 listed companies.
10 Mr. V. Vaidyanathan, MD & CEO, was not on Board of any other company.
Chairpersons of the Audit Committee, the Nomination and Remuneration Committee, and the Stakeholders’ Relationship and Customer Service Committee were present at the 6[th] AGM held on July 30, 2020. Dr. Rajiv B. Lall and Mr. Vishal Mahadevia could not attend the 6[th] AGM due to their personal commitments/ exigencies.
^ Excludes directorship held in Foreign Companies but includes Private Limited Companies and Section 8 Companies in India.
Includes memberships of Audit Committee and Stakeholders’ Relationship Committee of all Indian Public Limited Companies including IDFC FIRST Bank Limited; figures in brackets indicate number of Committee Chairmanships as per Regulation 26 of the Listing Regulations. Section 8 Companies have been excluded for the purpose of Committee Memberships/ Chairmanships.

Annual Report 2020-21 131

BOARD COMMITTEES

The Board has constituted various Board-level Committees to delegate particular matters that require greater and more focused attention. These Committees take informed decisions in the best interest of the Bank. Also, these Committees monitor the activities falling within their terms of reference and recommend their views to the Board.

Pursuant to appointment of Mr. S. Ganesh Kumar as Independent Director and in terms of RBI Circular No. RBI/2021-22/24DOR.GOV.REC.8/29.67.001/2021-22 dated April 26, 2021 on ‘Corporate Governance in Banks - Appointment of Directors and Constitution of Committees of the Board’, the Board Committees were reconstituted alongwith necessary quorum requirements.

As on March 31, 2021, the Bank had following Board-level Committees, which have been constituted in accordance with the applicable provisions of law, wherever applicable:

Audit Committee
Risk Management Committee
Nomination and Remuneration Committee
Credit Committee
Information Technology Strategy Committee
Fraud Monitoring Committee
Stakeholders’ Relationship & Customer Service Committee
Corporate Social Responsibility Committee
Allotment, Transfer and Routine Matters Committee
Wilful Defaulter or Non-Cooperative Borrower Review Committee

Majority of the members of most of the Board – level Committees are IDs and most of these Committees are chaired by IDs.

Mr. Satish Gaikwad, Head – Legal & Company Secretary acts as the Secretary for all the Board – level Committees and ensures adherence to all laws and regulations for conducting Committee meetings.

Also, the Bank has put in place, a Management Committee framework to ensure that various submissions to the Board and its Committees are first reviewed, approved and recommended by the Management Committees. This enhances governance and helps to strengthen the compliances within the Bank.

As on March 31, 2021, the Bank had the following Management Committees:

Credit and Market Risk Committee
Operational and Information Security Risk Committee
Asset Liability Management Committee
Product Approval Committee
Customer Service Committee
Investment Committee
Premises Committee
Information Technology Steering Committee
Data and Cyber Security Committee
Internal Audit and Controls Committee
Executive Committee
Human Resources Committee

Details on composition of the Board-level Committees, brief terms of reference and number of meetings held during FY 2020-21, are given hereinafter:

1. Audit Committee

As on March 31, 2021, the Audit Committee comprised four (4) members, three (3) of whom were IDs and one (1) NonExecutive Non-Independent Director viz. Mr. Aashish Kamat – Chairperson, Mr. Pravir Vohra, Mr. Sanjeeb Chaudhuri and Mr. Sunil Kakar.

Also, the Chief Financial Officer, Statutory Auditors and the Internal Auditors are invitees to the meetings of the Audit Committee.

All members of the Audit Committee are financially literate and have accounting and related financial management expertise.

The Committee met six (6) times during FY 2020-21, on May 21, 2020, May 29, 2020, July 28, 2020, September 11, 2020, October 30, 2020 and January 30, 2021. The meeting held on May 21, 2020 was adjourned to May 22, 2020 and the meeting held on October 30, 2020 was adjourned to October 31, 2020, for discussion of few agenda items. The time gap between two consecutive meetings was less than 120 days. All the meetings were held during the year with requisite quorum.

The composition, names of members and chairperson, and their attendance at the Audit Committee meetings held during FY 2020-21 are given in Table No. 2 .

Table No. 2 : Attendance Details of Audit Committee Meetings held during FY 2020-21

Name of the Member	Position on the Board	Status	No. of Meetings
			attended in
			FY 2020-21
Mr. Aashish Kamat	Independent Director	Chairperson	6/6
Mr. Pravir Vohra	Independent Director	Member	6/6
Mr. Sanjeeb Chaudhuri	Independent Director	Member	6/6
Mr. Sunil Kakar	Non-Executive Non-Independent Director	Member	6/6

132 IDFC FIRST Bank

The Terms of Reference of the Audit Committee of the Board inter-alia includes the following:

Oversight of the Bank’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.
Reviewing with management quarterly results, quarterly/ annual financial statements and auditor’s report before submission to the Board with special emphasis on accounting policies and practices, compliance with accounting standards, disclosure of related party transactions and other legal requirements relating to financial statements.
Approval for Related party transactions including omnibus approval.
Review of Intra Group Transactions & Exposures, Corporate Governance norms, accounting policies/ systems, etc.
Recommending to the Board, the appointment, reappointment, remuneration, terms of appointment and, if required, the replacement or removal of the statutory auditor and fixation of audit fees.
Evaluation of internal financial controls and risk management systems.
Review compliance report on directives issued by ACB/ Board/ RBI.
Review the functioning of the Whistle Blower/ Vigil Mechanism.
Reviewing the adequacy of the Audit and Compliance functions, including their policies, procedures, techniques and other regulatory requirements.
Any other terms of reference as may be included from time to time in the Companies Act, 2013, Listing Regulations, and/ or applicable RBI Guidelines/ Regulations, or any re-enactment, amendment or modification thereto from time to time.

2. Risk Management Committee

IDFC FIRST Bank has in place a robust mechanism to inform the Board about its risk assessment and minimisation procedures with periodic reviews to ensure that the Management controls risk through a Board-approved welldefined framework. The Board is responsible for framing, implementing and monitoring the Risk Management Plan for the Bank. This is done through its Board-level Risk Management Committee (‘RMC’) and it monitors and reviews risks of the Bank on a regular basis. The RMC reviews and monitors mainly four types of risks across the organisation viz. credit risk, market risk, liquidity risk and operational risk. This is done under the overall framework of the Enterprise Risk Management System.

As on March 31, 2021, the RMC comprised five (5) members, four (4) of whom were IDs and one (1) Executive Director viz. Mr. Sanjeeb Chaudhuri – Chairperson, Dr. (Mrs.) Brinda Jagirdar, Mr. Hemang Raja, Mr. Pravir Vohra and Mr. V. Vaidyanathan.

The Committee met four (4) times during FY 2020-21, on May 13, 2020, July 27, 2020, October 29, 2020, and January 29, 2021. All the meetings were held during the year with requisite quorum.

The composition, names of members and chairperson and their attendance at the RMC meetings held during FY 202021 are given in Table No. 3 .

Table No. 3 : Attendance Details of the Risk Management Committee Meetings held during FY 2020-21

Name of the Member	Position on the Board	Status	No. of Meetings
			attended in FY
			2020-21
Mr. Sanjeeb Chaudhuri1	Independent Director	Chairperson	-
Dr.(Mrs.)Brinda Jagirdar2	Independent Director	Member	4/4
Mr. HemangRaja	Independent Director	Member	4/4
Mr. Pravir Vohra	Independent Director	Member	4/4
Mr. V. Vaidyanathan	MD & CEO	Member	4/4
Mr. Anand Sinha1	Independent Director	Chairperson	4/4

Notes:

Pursuant to cessation of Mr. Anand Sinha from the Board with effect from February 02, 2021, he ceased to be Chairperson of the RMC. Mr. Sanjeeb Chaudhuri has been appointed as Chairperson of the RMC with effect from February 02, 2021.
Dr. (Mrs.) Brinda Jagirdar ceased to be member of the RMC with effect from May 08, 2021 and in her place Mr. S. Ganesh Kumar has been appointed as member of the RMC with effect from May 08, 2021.

The Terms of Reference of the Risk Management Committee inter-alia includes the following:

To identify, monitor and measure the risk profile of the Bank (including market risk, liquidity risk, operational risk, reputational risk, fraud management and credit risk).
To monitor and review the cyber security processes of the Bank.
To oversee the risk management policy and approve annual Risk Appetite Framework for the Bank.
To review the activities of certain Management Committees and to monitor compliance of various risk parameters by operating departments.
To monitor and review the risk management plan of the Bank.

Annual Report 2020-21 133

To oversee the Bank’s integrated risk measurement system.
To review and evaluate the overall risk faced by the Bank including market risk and liquidity risk.
To review management’s formulation of procedures, action plans and strategies to mitigate risks on short term as well as long term basis.
To review and recommend to the Board, the Bank’s ICAAP proposal.
Design stress scenarios to measure the impact of unusual market conditions and monitor variance between actual volatility of portfolio value and that predicted by risk measures.
To ensure that the Bank’s credit exposure to any one group or industry does not exceed the internally set limits and that the risk is prudently diversified.
To oversee promotion of awareness of a risk-based culture and achieving a balance between risk minimization and reward for risks accepted.
Advance Approaches) preparedness and Reserve Bank of India Application
To carry out any other function as referred by the Board from time to time or enforced by any statutory authority, as may be applicable.

3. Nomination and Remuneration Committee

As on March 31, 2021, the Nomination and Remuneration Committee (‘NRC’) comprised four (4) members, three (3) of whom were IDs and one (1) Non-Executive Non-Independent Director viz. Mr. Hemang Raja – Chairperson, Mr. Aashish Kamat, Dr. (Mrs.) Brinda Jagirdar and Mr. Vishal Mahadevia.

The Committee met five (5) times during FY 2020-21, on May 21, 2020, July 27, 2020, August 28, 2020, October 31, 2020 and January 28, 2021. The meeting held on January 28, 2021 was adjourned to January 29, 2021 for discussion of few agenda item. All the meetings were held during the year with requisite quorum.

The composition, names of members and chairperson, and their attendance at the NRC meetings held during FY 202021 are given in Table No. 4 .

To oversee the Bank’s Basel (Standardized and

Table No. 4 : Attendance Details of Nomination and Remuneration Committee	Table No. 4 : Attendance Details of Nomination and Remuneration Committee	Meetings held during FY 2020-21	Meetings held during FY 2020-21
Name of the Member	Position on the Board	Status	No. of Meetings
			attended in FY
			2020-21
Mr. HemangRaja	Independent Director	Chairperson	5/5
Mr. Aashish Kamat	Independent Director	Member	5/5
Dr.(Mrs.)Brinda Jagirdar	Independent Director	Member	5/5
Mr. Vishal Mahadevia	Non-Executive Non-Independent Director	Member	4/5

The Terms of Reference of the Nomination and Remuneration Committee of the Board inter-alia includes the following:

Formulation of the criteria for determining qualifications, positive attributes and independence of a Director and recommend to the Board of Directors a policy relating to the remuneration of the Directors, key managerial personnel and other employees.
Devising a policy on diversity of Board of Directors.
Identifying persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down, and recommend to the Board of Directors their appointment and removal and shall specify the manner for effective evaluation of performance of Board, its committees and individual directors to be carried out either by the Board, by the Nomination and Remuneration Committee or by an independent external agency and review its implementation and compliance.
Determine the Bank’s policy on specific remuneration packages for Whole-time Directors/ Executive Directors including pension rights and any compensation payment.
The Committee shall plan for CEO/ Senior Management succession including plans for interim succession in the event of an unexpected occurrence and submit a

report to the Board to nominate potential successors to CEO/ Senior Management personnel.

Oversee the Director’s succession planning process for ensuring the right mix of Directors on the Board.
Approve and monitor grant of employee stock options as a part of compensation of Whole-time Directors, Senior Management Personnel, Key Managerial Personnel and other employees.
Provide a framework for the remuneration of all employees (including risk-takers).
Recommend to the Board, all remuneration, in whatever form, payable to senior management.
To provide guidance and help shape management’s efforts in embedding ethical practices in the organization.
To co-ordinate and oversee the annual self-review of the performance of the Board, its Committees and of the Individual Directors.
Abide by any other requirement in accordance with the applicable provisions of the Listing Regulations, Companies Act, 2013 and/ or applicable RBI Guidelines/ Regulations, or any re-enactment, amendment or modification thereto from time to time.

134 IDFC FIRST Bank

Performance Evaluation

The Companies Act, 2013 and Listing Regulations contain broad provisions on Board evaluation i.e. evaluation of the performance of (a) Board as a Whole, (b) Individual Directors (including Independent Directors and Chairperson) and (c) Various Committees of the Board.

SEBI vide its circular no. SEBI/HO/CFD/CMD/ CIR/P/2017/004 dated January 05, 2017 issued a guidance note on Board evaluation in order to guide listed entities by elaborating various aspects of board evaluation that may help them to improve the evaluation process, derive the best possible benefit and achieve the objective of the entire process.

For FY 2019-20

Three (3) questionnaires for the above categories were circulated to all the Directors of the Bank for Evaluation Process of FY 2019-20.

Evaluation process for “Board as a Whole”, “Committee(s) of the Board” and “Individual Directors (including Independent Directors and Chairperson of the Board)” was carried out.

Questionnaire for evaluation of Chairperson of the Board was sent to all the Directors of the Bank (except the Chairperson himself) and the results thereon were sent directly to Mr. Hemang Raja, Chairperson of the NRC. Further, Questionnaire for evaluation of other individual Directors (i.e. excluding the Chairperson of the Board) was sent to all the Directors and the results thereon were sent directly to Dr. Rajiv B. Lall, former Chairperson of the Board.

Mr. Hemang Raja and Dr. Rajiv B. Lall informed Mr. Satish Gaikwad, Head – Legal & Company Secretary, that the performance evaluation results for evaluation of “Individual Directors (including Independent Directors and Chairperson)” were communicated to each individual Director and accordingly, the entire evaluation process for FY 2019-20 have been completed satisfactorily.

For FY 2020-21

Evaluation Process for the FY 2020-21 was carried out in a similar manner, where-in three (3) questionnaires for the above categories were circulated to all the Directors of the Bank for evaluation.

Evaluation process for “Board as a Whole”, “Committee(s) of the Board” and “Individual Directors (including Independent Directors and Chairperson of the Board)” was carried out.

Questionnaire for performance evaluation of Chairperson of the Board Meetings, was sent to all the Directors of the Bank (except Chairperson of Board Meeting). Further, Questionnaire for evaluation of other individual Directors (i.e. excluding the Chairperson of the Board Meeting) was sent to all the Directors. The performance evaluation process for FY 2020-21 has been completed and the outcome of same will be placed before the Independent Director meeting and meeting of NRC and Board.

Remuneration of Directors

Pursuant to the requirement of Companies Act, 2013 read with Rules and provision of Listing Regulations as amended from time to time, the Board of Directors on the recommendation of Nomination and Remuneration Committee have adopted the following remuneration policies:

(i) Remuneration Policy (For the Non-Executive/ Independent Directors)
(ii) Remuneration Policy (For the Whole Time/ Executive Directors, Material Risk Takers, Key Managerial Personnel, Senior Management Personnel and Control Function)
(iii) Remuneration Policy for Employees (Except for the Whole Time/ Executive Directors, Non-Executive/ Independent Directors, Key Managerial Personnel, Senior Management Personnel, Control Function & Material Risk Taker)

These policies are in line with the provisions of the Banking Regulation Act, 1949 and RBI guidelines issued in this regard, from time to time.

The aforesaid policies are available on the Bank’s website at www.idfcfrstbank.com under ‘Investors’ section.

The NRC in accordance with the Remuneration Policy, recommends remuneration of the Directors, Senior Management Personnel and Key Managerial Personnel to the Board for its approval.

IDFC FIRST Bank pays remuneration to the Executive Directors by way of salary, allowance, perquisites including retirement benefits (fixed component), stock options and a variable component based on the recommendation of the NRC and approvals of the RBI, Board of Directors and Shareholders of the Bank.

The IDs are paid by way of commission/ remuneration and sitting fees. Based on the recommendation of the NRC, the Board approved sitting fees to be paid to Non-Executive Directors (‘NEDs’) at 1,00,000 per Board meeting and 50,000 per Committee meeting.

Further, the shareholders at their meeting held on July 27, 2016 approved payment of remuneration by way of commission to the NEDs of the Bank (i.e. Directors other than Managing Director and Whole-time Directors), not exceeding in aggregate, 1% of the net profits of the Bank as computed in the manner laid down in Section 198 of the Companies Act, 2013 or maximum of ` 10 Lakh per annum to each of such Directors as per RBI guidelines, whichever is lower.

Our Bank did not pay any commission to its NEDs for the FY 2020-21.

Pursuant to RBI Circular No. RBI/2021-22/24 DOR. GOV.REC.8/29.67.001/2021-22 dated April 26, 2021 on ‘Corporate Governance in Banks - Appointment of Directors and Constitution of Committees of the Board’, basis the recommendation of the Nomination and Remuneration

Annual Report 2020-21 135

Committee, the Board of Directors of the Bank has approved a fixed remuneration of ` 16 Lakh per annum to NEDs (except Chairperson of the Board) for FY 2021-22. The said remuneration within the overall limit, shall be subject to the approval of the shareholders at its 7[th] AGM.

The criteria for making payments to NEDs has been disseminated on the Bank’s website: www.idfcfrstbank.com under ‘Investors’ section.

During FY 2020-21, the Bank had not granted any stock options to NEDs of the Bank. The Bank did not advance loans to any of its Directors during FY 2020-21, except credit card issued to Directors in normal course of business. The Executive Director(s) are not entitled to severance fee and the notice period shall be subject to compliance with the provisions of Banking Regulation Act, 1949, Banks’ policy and other regulations, as applicable. None of the employees of the Bank are related to any of the Directors. There is no inter-se relationship between the members of the Board. None of the Directors of the Bank are related to each other.

Except below, none of the NEDs held any shares or convertible instruments of IDFC FIRST Bank as on March 31, 2021:

	Name of the Director	No. of equity shares held
	Mr. Aashish Kamat Mr. Pravir Vohra Mr. Sanjeeb Chaudhuri	26,000 5,10,000 21,000
	Mr. Sunil Kakar	20,000

There were no pecuniary relationships or transactions of NEDs vis-à-vis the Bank which has potential conflict with the interests of the Bank at large.

The remuneration paid to the Directors is well within the limits prescribed under the Banking Regulation Act, 1949 and is in line with the guidelines issued by RBI, from time to time.

Details of remuneration paid to the Directors during FY 202021 are given in Table No. 5 .

Table No. 5 : Details of the Remuneration paid to the Directors

				(in`)
Name of the Director	Stock Options granted	Sitting Fees	Remuneration	Performance Bonus/
	during the year (No.)			Commission for FY
				2019-20 (Paid during FY
				2020-21)
Mr. V. Vaidyanathan	50,00,0001	-	4,76,72,7952	1,40,92,4003
Mr. Aashish Kamat	-	20,00,000	-
Dr.(Mrs.)Brinda Jagirdar	-	28,00,000	-	-
Mr. HemangRaja	-	27,50,000	-	-
Mr. Pravir Vohra	-	24,50,000	-	-
Mr. Sanjeeb Chaudhuri	-	21,00,000	-	-
Mr. Sunil Kakar	-	-	-	-
Mr. Vishal Mahadevia	-	-	-	-
Dr. Rajiv B. Lall4	-	2,00,000	21,41,6675	-
Ms. Anindita Sinharay6	-	-	-	-
Dr. SanjayKumar7	-	-	-	-
Mr. Anand Sinha8	-	16,50,000	-	-

Notes:

1 During FY 2020-21, based on the recommendation of Nomination and Remuneration Committee, the Board of Directors of the Bank at its meeting held on May 22, 2020 had approved grant of 50,00,000 stock options to Mr. V. Vaidyanathan, MD & CEO under ‘IDFC FIRST Bank – Employees Stock Option Scheme 2015’. In terms of Section 35B of the Banking Regulation Act, 1949, the said grant was duly approved by the RBI vide its letter dated January 22, 2021. Further during the FY 2020-21, in terms of Section 35B of the Banking Regulation Act, 1949, the 30,00,000 stock options granted to Mr. V. Vaidyanathan, MD & CEO in October 2019, was duly approved by the RBI vide its e-mail dated April 13, 2020.
2 In view of the distress caused by COVID-19 pandemic which had impacted the overall economy, in order to demonstrate responsible leadership and to set the tone at the top for the Bank’s austerity measures, the MD & CEO had voluntarily offered to take a pay cut of 30% for his compensation of FY 2020-21, including all Fixed compensation as well as all allowances.
3 During FY 2020-21, an amount of ` 1,40,92,400 was paid to Mr. V. Vaidyanathan towards Performance Bonus for FY 2019-20 and the same was duly approved by the RBI vide its letter dated January 22, 2021.
4 Dr. Rajiv B. Lall has resigned as Part-Time Non-Executive Chairman of the Bank with effect from September 04, 2020.
5 A fixed remuneration of 15,00,000 per annum to Dr. Rajiv B. Lall for rendering service as Part-Time Non-Executive Chairman of the Bank was approved by RBI vide its letter dated December 21, 2018. Accordingly, during FY 2020-21, remuneration of 15,00,000 for FY 2019-20 and ` 6,41,667 for FY 2020-21 (upto September 04, 2020) was paid to Dr. Rajiv B. Lall as Part-Time Non-Executive Chairman of the Bank.
6 Ms. Anindita Sinharay ceased to be Government Nominee Director, with effect from close of business hours of June 22, 2020, pursuant to communication received from Ministry of Finance, Government of India.

136 IDFC FIRST Bank

7 Dr. Sanjay Kumar was appointed as Government Nominee Director of the Bank, with effect from close of business hours of June 22, 2020 and later on, he ceased to be Government Nominee Director with effect from close of business hours of March 25, 2021, pursuant to communications received from Ministry of Finance, Government of India.
8 Mr. Anand Sinha ceased to be Independent Director of the Bank with effect from close of business hours of February 02, 2021, in view of him attaining an age of 70 years.
9 Subsequent to FY 2020-21, Mr. S. Ganesh Kumar has been appointed as Independent Director of the Bank with effect from April 30, 2021.

4. Credit Committee

As on March 31, 2021, the Credit Committee comprised four (4) members, two (2) of whom were IDs, one (1) NonExecutive Non-Independent Director and one (1) Executive Director viz. Mr. Hemang Raja – Chairperson, Dr. (Mrs.) Brinda Jagirdar, Mr. Vishal Mahadevia and Mr. V. Vaidyanathan.

The Committee met thirteen (13) times during FY 2020-21, on April 29, 2020, May 29, 2020, June 30, 2020, July 31, 2020,

August 31, 2020, October 12, 2020, November 11, 2020, December 16, 2020, January 15, 2021, January 28, 2021, February 18, 2021, March 12, 2021 and March 26, 2021. All the meetings were held during the year with requisite quorum.

The composition, names of members and chairperson, and their attendance at the Credit Committee meetings held during FY 2020-21 are given in Table No. 6 .

Table No. 6 : Attendance Details of the Credit Committee Meetings held during FY 2020-21

Name of the Member	Position on the Board	Status	No. of Meetings
			attended in FY
			2020-21
Mr. HemangRaja	Independent Director	Chairperson	13/13
Dr.(Mrs.)Brinda Jagirdar	Independent Director	Member	13/13
Mr. Vishal Mahadevia	Non-Executive Non-Independent Director	Member	13/13
Mr. V. Vaidyanathan	MD & CEO	Member	13/13

The Terms of Reference of the Credit Committee inter-alia includes the following:

To formulate clear policies on standards for presentation of credit proposals, financial covenants, rating standards and benchmarks, delegation of credit approving powers, prudential limits on large credit exposures, asset concentrations, standards for loan collateral, portfolio management, loan review mechanism, risk concentrations, risk monitoring and evaluation, pricing of loans, provisioning, norms for write-off and compromise/ settlement proposals, recovery procedures, sale of NPAs, regulatory/ legal compliance, etc.
To approve credit exposures which are beyond the powers delegated to executives of the Bank as per the Delegation of Authority.

mechanism and portfolio management.

5. Information Technology (IT) Strategy Committee

As on March 31, 2021, the IT Strategy Committee comprised three (3) members, two (2) of whom were IDs and one (1) Executive Director viz. Mr. Pravir Vohra – Chairperson, Mr. Sanjeeb Chaudhuri and Mr. V. Vaidyanathan.

The Committee met four (4) times during FY 2020-21, on May 13, 2020, July 27, 2020, October 29, 2020 and January 29, 2021. All the meetings were held during the year with requisite quorum.

The composition, names of members and chairperson, and their attendance at the IT Strategy Committee meetings held during FY 2020-21 are given in Table No. 7 .

To control the risk through effective loan review

Table No. 7 : Attendance Details of the IT Strategy Committee Meetings held during FY 2020-21

Name of the Member	Position on the Board	Status	No. of Meetings
			attended in FY
			2020-21
Mr. Pravir Vohra	Independent Director	Chairperson	4/4
Mr. Sanjeeb Chaudhuri	Independent Director	Member	4/4
Mr. V. Vaidyanathan	MD & CEO	Member	4/4
Mr. Anand Sinha1	Independent Director	Member	4/4

Notes:

1 Pursuant to cessation of Mr. Anand Sinha from the Board with effect from February 02, 2021, he ceased to be member of the IT Strategy Committee.

2 Mr. S. Ganesh Kumar has been appointed as member of the IT Strategy Committee with effect from May 08, 2021.

The Terms of Reference of the IT Strategy Committee inter-alia includes the following:

ensuring that the management has put an effective strategic planning process in place.

Approving IT strategy and policy documents and

Annual Report 2020-21 137

Ascertaining that management has implemented processes and practices that ensure that the IT delivers value to the business.
Ensuring IT investments represent a balance of risks and benefits and that budgets are acceptable.
Monitoring the method that management uses to determine the IT resources needed to achieve strategic goals and provide high-level direction for sourcing and use of IT resources.
Ensuring proper balance of IT investments for sustaining Bank’s growth and becoming aware about exposure towards IT risks and controls.
Such other roles and functions as may be prescribed by Reserve Bank of India or as may be delegated by the Board of Directors from time to time.

6. Fraud Monitoring Committee

As on March 31, 2021, the Fraud Monitoring Committee comprised five (5) members, three (3) of whom were IDs, one (1) Non-Executive Non-Independent Director and one (1) Executive Director viz. Mr. Sanjeeb Chaudhuri – Chairperson, Mr. Aashish Kamat, Mr. Pravir Vohra, Mr. Sunil Kakar and Mr. V. Vaidyanathan.

The Committee met four (4) times during FY 2020-21, on May 07, 2020, July 24, 2020, October 29, 2020 and January 29, 2021. All the meetings were held during the year with requisite quorum.

The composition, names of members and chairperson, and their attendance at the Fraud Monitoring Committee meetings held during FY 2020-21 are given in Table No. 8 .

Table No. 8 : Attendance Details of the Fraud Monitoring Committee Meetings held during FY 2020-21

Name of the Member	Position on the Board	Status	No. of Meetings
			attended in FY
			2020-21
Mr. Sanjeeb Chaudhuri2	Independent Director	Chairperson	-
Mr. Aashish Kamat	Independent Director	Member	4/4
Mr. Pravir Vohra	Independent Director	Member	4/4
Mr. Sunil Kakar	Non-Executive Non-Independent Director	Member	3/4
Mr. V. Vaidyanathan	MD & CEO	Member	4/4
Mr. Anand Sinha1	Independent Director	Chairperson	4/4

Notes:

1 Pursuant to cessation of Mr. Anand Sinha from the Board with effect from February 02, 2021, he ceased to be Chairperson of the Fraud Monitoring Committee.
2 Mr. Sanjeeb Chaudhuri was appointed as Chairperson of Fraud Monitoring Committee with effect from February 02, 2021. He ceased to be Chairperson of the Fraud Monitoring Committee with effect from May 08, 2021, however continued as member of the Fraud Monitoring Committee.
3 Mr. S. Ganesh Kumar has been appointed as Chairperson of the Fraud Monitoring Committee with effect from May 08, 2021.

The Terms of Reference of the Fraud Monitoring Committee inter-alia include the following:

The major function of the Fraud Monitoring Committee would be to monitor and review of all the frauds of ` 10 million and above so as to:

Identify the systemic lacunae, if any, that facilitated perpetration of the fraud, and put in place measures to plug the same;
Identify the reasons for delay in detection, if any, reporting to top management of the bank and RBI;
Monitor progress of CBI / Police Investigation, and recovery position;
Ensure that staff accountability is examined at all levels in all the cases of frauds and staff side action, if required, is completed quickly without loss of time;
Review the efficacy of the remedial action taken to prevent recurrence of frauds, such as strengthening of

internal controls;

Put in place other measures as may be considered relevant to strengthen preventive measures against frauds;
To initiate process of fixing staff accountability for cases involving very senior executive of the Bank;
To monitor and review the progress of the mitigating steps taken by the Bank in case of electronic frauds and efficacy of the same in containing fraud numbers and values; and
To review a report providing inter-alia , a synopsis of the remedial action taken together with their current status of the Red Flagged Accounts.

7. Stakeholders’ Relationship and Customer Service Committee

As on March 31, 2021, the Stakeholders’ Relationship and Customer Service (‘SRCS’) Committee comprised five

138 IDFC FIRST Bank

(5) members, three (3) of whom were IDs, one (1) NonExecutive Non-Independent Director and one (1) Executive Director viz. Mr. Sanjeeb Chaudhuri – Chairperson, Dr. (Mrs.) Brinda Jagirdar, Mr. Pravir Vohra, Mr. Sunil Kakar and Mr. V. Vaidyanathan.

Mr. Satish Gaikwad, Head – Legal and Company Secretary is the designated person responsible for handling Investor/ Shareholder Grievances and is the Compliance Officer of the Bank under Listing Regulations. He is also the Nodal Officer of the Bank for handling Investor Grievances with respect to Investor Education and Protection Fund (‘IEPF’).

The Bank receives investor complaints through various sources such as from Stock Exchanges, SEBI Complaints Redress System (SCORES), Registrar of Companies, through the Bank’s Registrar and Transfer Agents, directly from investors’ correspondence and from the investors personal visits to the Bank. The Bank has a dedicated team of professionals to respond to queries and grievances

received from the investors, customers, shareholders and bond holders. The Board of Directors and the SRCS Committee are on a quarterly basis updated on the resolution and redressal of the complaints. The Committee looks into various aspects of interests of the Bank’s Shareholders and Debenture holders.

The Bank has designated e-mail id [email protected] for equity investors and [email protected] for bond holders for reporting complaints/ grievances. The said e-mail id are also displayed on the website of the Bank.

The Committee met four (4) times during FY 2020-21, on May 07, 2020, July 24, 2020, October 30, 2020 and January 28, 2021. All the meetings were held during the year with requisite quorum.

The composition, names of members and chairperson, and their attendance at the SRCS Committee meetings held during FY 2020-21 are given in Table No. 9 .

Table No. 9 : Attendance Details of Stakeholders’ Relationship and Customer Service Committee Meetings held during FY 2020-21

during FY 2020-21
Name of the Member	Position on the Board	Status	No. of Meetings
			attended in FY
			2020-21
Mr. Sanjeeb Chaudhuri1	Independent Director	Chairperson	4/4
Dr.(Mrs.)Brinda Jagirdar2	Independent Director	Member	4/4
Mr. Pravir Vohra	Independent Director	Member	4/4
Mr. Sunil Kakar	Non-Executive Non-Independent Director	Member	3/4
Mr. V. Vaidyanathan	MD & CEO	Member	4/4

Notes:

1 Mr. Sanjeeb Chaudhuri ceased to be Chairperson of the SRCS Committee with effect from May 08, 2021, however continued as member of the SRCS Committee.

2 Dr. (Mrs.) Brinda Jagirdar, who was member of the SRCS Committee, has been appointed as Chairperson of SRCS Committee with effect from May 08, 2021.

3 Mr. S. Ganesh Kumar has been appointed as member of the SRCS Committee with effect from May 08, 2021.

Details of Complaints received and attended by the Bank during FY 2020-21 for Equity Shares and Infrastructure Bonds issued under Section 80CCF of Income Tax Act, 1961 are given in Table No. 10A.

Table No. 10A : Nature of Complaints received and attended during FY 2020-21

Particulars	Complaints pending	Complaints received	Complaints redressed	Complaints pending
	as on April 01, 2020	during the year	during the year	as on March 31, 2021
EquityShares	0	8	8	0
Infrastructure Bonds	3	6831	6155	679*

the pending complaints have been resolved subsequent to the year under review within the prescribed timelines.

During FY 2020-21, no Complaints were received in respect of the bonds/ Non-Convertible Debentures issued by the Bank on private placement basis.

During FY 2020-21, total 21,015 complaints were received from the customers of the Bank. As on March 31, 2021, 98.4% of the cases were resolved and 1.6% of the cases were pending.

Annual Report 2020-21 139

Awards passed by the Banking Ombudsman in FY 2020-21 is given in Table No. 10B

Table No. 10B : Awards passed by the Banking Ombudsman

Number of unimplemented awards	Number of awards passed by the	Number of awards implemented Number of unimplemented awards	Number of awards implemented Number of unimplemented awards
at the beginning of the year	Banking Ombudsman during the	during	the year at the end of the year
	year
0	1		1 0
The Terms of Reference of the	Stakeholders’ Relationship	•	To review the level of customer service in the Bank
and Customer Service Committee of the Board inter-alia			including customer complaints and the nature of their
includes the following:			resolution.
For Security and Other Stakeholders

To ensure customers are treated fairly all the times and complaints raised by them is dealt with courtesy and in time.
To consider and resolve the grievances of security holders of the Bank including complaints related to transfer/ transmission of shares, non-receipt of balance sheet, non-receipt of annual report, non-receipt of declared dividend, issue of new/ duplicate certificates, general meetings etc.
To examine any other issues having a bearing on the quality of customer service rendered.
• To formulate comprehensive deposit policy incorporating the issues arising out of the demise of a depositor for operation of his account, the product approval process, the annual survey of depositor satisfaction and the triennial audit of such services.
Propose to the Board of Directors, the appointment/ reappointment of the Registrar and Share Transfer Agent, including the terms and conditions, remuneration, service Charge/ fees.
Review of adherence to the service standards adopted by the listed entity in respect of various services being rendered by the Registrar and Share Transfer Agent.
To monitor implementation of awards under the Banking Ombudsman Scheme.
To ensure implementation of directives received from RBI with respect to rendering services to customers of the Bank.
Review the existing “Stakeholder Redressal System” and suggest measures for improvement.
Take measures to enhance operational transparency to Stakeholders and suggest measures for improvement in Stakeholder relations.
Any other requirement in accordance with the applicable provisions of RBI Guidelines.

8. Corporate Social Responsibility Committee

Develop mechanism to provide access to Stakeholders to relevant, sufficient and reliable information on a timely and regular basis to enable them to participate in Corporate Governance process.

As on March 31, 2021, the CSR Committee comprised three (3) members, one (1) of whom was Executive Director and two (2) were IDs. viz. Mr. V. Vaidyanathan – Chairperson, Dr. (Mrs.) Brinda Jagirdar and Mr. Hemang Raja. The Committee met three (3) time during FY 2020-21, on May 07, 2020, October 30, 2020 and January 28, 2021. All the meetings were held during the year with requisite quorum.

Any other requirement in accordance with the applicable provisions of the Companies Act, Listing Regulations and RBI Guidelines.

For Customers:

The composition, names of members and chairperson, and their attendance at the CSR Committee meetings held during FY 2020-21 are given in Table No. 11 .

To oversee the functioning of the Bank’s internal committee set-up for customer service.

Table No. 11 : Attendance Details of the Corporate Social Responsibility Committee Meetings held	Table No. 11 : Attendance Details of the Corporate Social Responsibility Committee Meetings held	Table No. 11 : Attendance Details of the Corporate Social Responsibility Committee Meetings held	during FY 2020-21
Name of the Member	Position on the Board	Status	No. of Meetings
			attended in FY
			2020-21
Mr. V. Vaidyanathan	MD & CEO	Chairperson	3/3
Dr.(Mrs.)Brinda Jagirdar	Independent Director	Member	3/3
Mr. HemangRaja	Independent Director	Member	3/3

Details of CSR initiatives undertaken by IDFC FIRST Bank can be referred in the Directors’ Report, which forms part of this Annual Report.

The Board approved CSR Policy is placed on the Bank’s website: www.idfcfrstbank.com under ‘Investors’ section

The Terms of Reference of the Corporate Social Responsibility Committee inter-alia includes the following:

Formulate and recommend to the Board, a CSR Policy

which shall indicate the activities to be undertaken by the Bank as specified in Schedule VII of the Companies Act, 2013 and applicable rules as amended from time to time.

Recommend the amount of expenditure to be incurred on the activities referred to in Point above.

Monitor the CSR Policy of the Bank from time to time.

Review and monitor the CSR activities of the Bank

140

IDFC FIRST Bank

on behalf of the Board to ensure that the Bank is in compliance with appropriate laws and legislations.

Formulate a transparent monitoring mechanism for implementation of CSR Projects or programs or activities undertaken by the Bank.
Regularly report to the Board on the CSR initiatives and status and also provide reasons to the Board if the amount earmarked for CSR initiatives has not been spent and action steps for the same.
Review management’s position on key stakeholder expectations involving CSR and provide perspectives for Board’s consideration.
Review on a continuous basis the Bank’s communication strategies relating to CSR.
Review the Bank’s annual CSR report prior to its issuance.
Review and assess the remit and reports of any audit process to gain assurance over the CSR activities.
Review management-identified opportunities to optimize the use of technology for the use of CSR activities.

9. Allotment, Transfer and Routine Matters Committee

As on March 31, 2021, the Allotment, Transfer and Routine Matters Committee comprised six (6) members, three (3) of whom were Directors consisting of one (1) Executive Director, one (1) ID and one (1) Non-Executive NonIndependent Director viz. Mr. V. Vaidyanathan – Chairperson, Mr. Sanjeeb Chaudhuri and Mr. Sunil Kakar, and three (3) were employees of the Bank consisting of Chief Financial Officer & Head – Corporate Centre, Chief Human Resources Officer and Head - Information Security Governance.

The Committee met one (1) time during FY 2020-21, on June 12, 2020. The meeting was held during the year with requisite quorum.

The composition, names of members and chairperson, and their attendance at the Allotment, Transfer and Routine Matters (ATRM) Committee meeting held during FY 2020-21 are given in Table No. 12 .

Table No. 12 : Attendance Details of the Allotment, Transfer and Routine Matters Committee Meeting held during FY 2020-21

FY 2020-21
Name of the Member	Position on the Board	Status	No. of Meetings
			attended in FY
			2020-21
Mr. V. Vaidyanathan	MD & CEO	Chairperson	1/1
Mr. Sanjeeb Chaudhuri	Independent Director	Member	1/1
Mr. Sunil Kakar	Independent Director	Member	1/1

Notes:

1 Chief Financial Officer & Head – Corporate Centre, Chief Human Resources Officer and Head – Information Security Governance were present at the ATRM Committee meeting held on June 12, 2020.
2 Head - Information Security Governance ceased to be member of the ATRM Committee with effect from May 08, 2021.

The Terms of Reference of the Allotment, Transfer and Routine Matters Committee inter-alia includes the following:

To address, approve and monitor all matters related with the allotment, transfer, transmission, transposition, name deletion, consolidation, rematerialization, dematerialization and splitting of share and debenture certificates of the Bank.
To open, operate and close different types of bank accounts/ Demat accounts of the Bank as may be necessary, from time to time and update the operating instructions of existing bank accounts of the Bank.
To apply for memberships to various exchanges, central counterparties and other quasi regulatory bodies.
To grant authorization for labour and HR operations matter including signing of leave and license agreement(s).
To appoint/ empanel such intermediaries and consultants or service providers, as may be required from time to time.
To open/ operate/ close dividend account/ G Sec account.
To give authority for signing documents for treasury transactions.
To do such other things as may be delegated by the Board/ any other Committee of the Bank.

10. Wilful Defaulter or Non-Cooperative Borrower

Review Committee

As on March 31, 2021, the Wilful Defaulter or Non-Cooperative Borrower Review (‘WDNCBR’) Committee comprised three (3) members, one (1) of whom was Executive Director and two (2) were IDs viz. Mr. V. Vaidyanathan – Chairperson, Mr. Aashish Kamat and Dr. (Mrs.) Brinda Jagirdar.

During the year, pursuant to cessation of Mr. Anand Sinha from the Board with effect from February 02, 2021, he ceased to be member of the WDNCBR Committee and in his place Dr. (Mrs.) Brinda Jagirdar has been appointed as member of WDNCBR Committee with effect from February 02, 2021. Mr. S. Ganesh Kumar has been appointed as member of the WDNCBR Committee with effect from May 08, 2021.

Annual Report 2020-21 141

No meeting of WDNCBR Committee has been held during FY 2020-21.

The Terms of Reference of the Wilful Defaulter or NonCooperative Borrower Review Committee inter-alia include the following:

To review the order passed by the Identification Committee which concludes that an event of wilful default or non-cooperation has occurred and issues a Show Cause Notice to the concerned borrower (and the promoter / whole time director) and calls for their submissions and after considering their submissions, issues an order, recording the fact of wilful default or non-cooperation and the reasons for the same.
To review as on half yearly basis the status of non– cooperative borrowers for deciding whether their names can be declassified as evidenced by its return to credit discipline and cooperative dealings.
To review the status of and matters relating to NonCooperative Borrowers or Wilful Defaulters.
Any other requirement in accordance with the applicable provisions of RBI Guidelines.
Any other matters which the Committee may deem fit in this connection and as may be required by any regulatory authority, from time to time.

The Composition of all the Board-level Committees is available on the Bank’s website: www.idfcfrstbank.com under ‘Investors’ section.

MEETING OF INDEPENDENT DIRECTORS

As per Schedule IV of the Companies Act, 2013 and the rules made thereunder, the IDs of a Company shall hold at least one (1) meeting in a financial year, without the attendance of Non-Independent Directors and members of the Management. This meeting is expected to review the performance of Non-Independent Directors and the Board as a whole; review the performance of the Chairperson of the Board, taking into account the views of executive directors and non-executive directors; and assess the quality, quantity and timeliness of the flow of information between the Management and the Board that is necessary for the Board to effectively and reasonably perform their duties. Accordingly, a separate meeting of IDs of the Bank was held on May 21, 2020 without the presence of MD & CEO, NonIndependent Directors and SMP. The meeting was attended by all the six (6) IDs.

RELATED PARTY TRANSACTIONS

During FY 2020-21, all transactions entered into with related parties as defined under the Companies Act, 2013 and the Listing Regulations, were in the ordinary course of business and on arm’s length basis and did not attract the provisions of Section 188 of the Companies Act, 2013. The Bank has not entered into any materially significant transactions with the related parties including Promoters, Directors, Key Managerial Personnel, Subsidiaries or Relatives of the Directors, which could lead to a potential conflict with

the interest between the Bank and these parties. Suitable disclosures as required by the Accounting Standards (AS18) have been made in the notes to the Financial Statements. The details of the transactions with related parties are placed before the Audit Committee, from time to time. The Board has approved a policy for related party transactions in compliance with the provisions of the Companies Act, 2013 and the Listing Regulations which is available on the Bank’s website: www.idfcfrstbank.com under ‘Investors’ section.

MD & CEO AND CFO CERTIFICATION

In compliance with Regulation 17 of the Listing Regulations, the MD & CEO and Chief Financial Officer certification on the financial statements and internal controls relating to financial reporting for FY 2020-21 is enclosed at the end of this Report.

POLICY FOR DETERMINING ‘MATERIAL’ SUBSIDIARIES

In accordance with the provisions of Listing Regulations, every listed entity shall formulate a policy for determining its ‘material’ subsidiaries. IDFC FIRST Bank has one subsidiary company viz. IDFC FIRST Bharat Limited (formerly known as IDFC Bharat Limited) and it does not fall under the definition of material subsidiary as per Regulation 16(1) (c) of the Listing Regulations. The policy for determining ‘material’ subsidiaries is available on the Bank’s website: www.idfcfrstbank.com under ‘Investor Relations’ section.

CODE OF CONDUCT FOR PROHIBITION OF

INSIDER TRADING

The Bank has adopted a Code of Conduct for Prohibition of Insider Trading (the ’PIT Code’) in accordance with the requirements of the SEBI (Prohibition of Insider Trading) Regulations, 2015 (‘SEBI Insider Trading Regulations’) as amended from time to time, with a view to regulate trading in securities by the Board of Directors and Employees of IDFC FIRST Bank, their immediate relatives and other insiders as defined in the Code. When the trading window is open, ‘Designated Persons’ as defined in the Code are required to obtain pre-clearance from the Compliance Officer before trading (buy/ sell) in securities of IDFC FIRST Bank. Also, during the period of closure of the trading window, no Employee/ Designated Person is permitted to trade with or without pre-clearance in securities of restricted companies as informed by the Secretarial Department, from time to time. Timely disclosures are made to the Stock Exchanges by the Bank where transactions over any calendar quarter, whether in one transaction or a series of transaction aggregates to a traded value (buy/ sell) in excess of ` 10 lakh.

No Employee/ Designated Person is permitted to communicate, provide, or allow access to any Unpublished Price Sensitive Information relating to IDFC FIRST Bank, its securities or any other company (listed or proposed to be listed), to any person except where such communication is in furtherance of legitimate purpose, performance of duties or discharge of legal obligations.

The Bank periodically monitors and facilitates compliance

142 IDFC FIRST Bank

with the SEBI Insider Trading Regulations, 2015, as amended from time to time, and report the status to Audit Committee on a periodic basis.

During FY 2020-21, the identified Designated Persons (‘DPs’) of the Bank were given online training in order to understand the Bank’s PIT Code as well as framework of the SEBI Insider Trading Regulations, as amended. Further, efforts were made to create awareness and sensitize the employees (including DPs) of the Bank about important topics & aspects of the PIT Code and SEBI Insider Trading Regulations through periodic e-mailers.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY

The Bank has implemented a Whistle Blower Policy in compliance with the provisions of the Listing Regulations, Companies Act, 2013 and RBI notification on Introduction of ‘Protected Disclosures Scheme for Private Sector and Foreign Banks’. Pursuant to this policy, the Whistle Blowers can raise concerns relating to reportable matters (as defined in the policy) such as breach of IDFC FIRST Bank’s Code of Conduct, employee misconduct, fraud, illegal unethical imprudent behavior, leakage of UPSI, corruption, safety and misappropriation or misuse of Bank funds/ assets etc.

Further, the mechanism adopted by the Bank encourages the Whistle Blower to report genuine concerns or grievances and provides for adequate safeguards against victimization

of Whistle Blower to those who avail such mechanism and also provides for direct access to the Chairman of the Audit Committee, in exceptional cases.

The Audit Committee reviews the functioning of the Vigil Mechanism from time to time. None of the Whistle Blowers has been denied access to the Audit Committee of the Board. The Whistle Blower Policy is available on the Bank’s website at: www.idfcfrstbank.com under ‘Investors’ section. The Whistle Blower Policy is communicated to the employees and is also posted on the Bank’s intranet.

In addition to the above, the Bank has formulated a Vigilance Policy for effectively managing the risks faced by the Bank on account of corruption, malpractices and frauds.

Mr. Avinash Saraiya is the Chief Vigilance Officer of the Bank.

PENALTIES AND STRICTURES - CAPITAL MARKET

During the last three years, there were no instances of noncompliance by the Bank or any penalties and/ or strictures imposed on the Bank by the RBI or stock exchange(s) or SEBI or any other statutory authority, on any matter relating to capital markets.

ANNUAL GENERAL MEETINGS

Details of the Annual General Meetings held in the last three (3) financial years have been given in Table No. 13 .

Table No. 13 : Annual General Meetings held in last three years

Financial Year	Location of the Meeting	Day, Date & Time	Special Resolutions passed with requisite majority	Special Resolutions passed with requisite majority
*FY	Through Video Conference:	Thursday, July	1.	Offer and Issue of Debt Securities on Private Placement
2019-20	KRM Towers, 7th Floor, No.1,	30, 2020 at		basis
6thAGM	Harrington Road, Chetpet,	11:00 a.m.
	Chennai – 600 031,
	Tamil Nadu, India
FY	The Music Academy,	Thursday, July	1.	Re-appointment of Mr. Anand Sinha as an Independent
2018-19	T.T.K Auditorium (Main Hall),	25, 2019 at		Director of the Bank.
5thAGM	Near Acropolis Building, New No. 168 (Old No. 306), T.T.K. Road, Royapettah, Chennai - 600 014, Tamil Nadu, India	11:00 a.m.	2. 3.	Increase in ESOP pool from 6% to 8% of the issued and paid up capital of the Bank, from time to time and modifcation of exercise period and consequent modifcation to “IDFC FIRST Bank ESOS – 2015. Modifcation of IDFC FIRST Bank ESOS – 2015 and
				grant of Options to Eligible Employee of the Subsidiary
				Company(ies) of the Bank under the Scheme
			4.	Offer and Issue of Debt Securities on Private Placement
				basis.
FY	Sir Mutha Venkatasubba Rao	Tuesday, July 31,	1.	Offer and Issue of Debt Securities on Private Placement
2017-18	Concert Hall (Inside Lady Andal	2018 at 10:30		basis
4thAGM	School Premises), Shenstone Park, # 13/1 Harrington Road,	a.m.	2.	Re-appointment of Mr. Abhijit Sen as an Independent Director of the Bank
	Chetpet, Chennai – 600 031, Tamil Nadu, India		3.	Re-appointment of Ms. Veena Mankar as an Independent Director of the Bank
			4.	Re-appointment of Mr. Ajay Sondhi as an Independent
				Director of the Bank
			5.	Re-appointment of Mr. Rajan Anandan as an Independent
				Director of the Bank
			6.	Alteration of Articles of Association

The 6[th] AGM was held through Video Conferencing on account of outbreak of COVID-19 pandemic. The AGM was conducted in accordance with relevant circulars issued by MCA and SEBI.

Annual Report 2020-21 143

POSTAL BALLOT

Procedure for Postal Ballot

In view of the pandemic situation of COVID-19 and pursuant to the guidelines and notification issued by the Ministry of Home Affairs, Government of India and in light of circulars issued by the Ministry of Corporate Affairs, Government of India (the ‘MCA’) vide its General Circular No.14/2020 dated April 08, 2020, General Circular No.17/2020 dated April 13, 2020 General Circular No. 22/2020 dated June 15, 2020, General Circular No. 33/2020 dated September 28, 2020 and General Circular No. 39/2020 dated December 31, 2020 (the ‘MCA Circulars’) and pursuant to Section 110 of the Companies Act, 2013 (the ‘Act’) and the Rules made thereunder, the Bank proposed to pass the necessary resolutions as per the said guidelines, circulars and provisions of the Act as mentioned in Postal Ballot Notice. In terms of said Section of the Act and the Rules, a company may, and in case of resolutions relating to such business as the Central Government may, by notification, declare to be conducted only by Postal Ballot, shall, get any resolution (other than Ordinary Business and any Business in respect of which Directors or Auditors have right to be heard at any meeting) passed by means of Postal Ballot, instead of transacting the business in general meeting of the Company.

Accordingly, the Postal Ballot procedure for Postal Ballot

Notice dated May 01, 2020 and February 18, 2021 has been carried out as per the above provisions and therefore, the hard copy of Postal Ballot Notice was not sent to the shareholders for aforesaid Postal Ballot and shareholders were required to communicate their assent or dissent through the E-Voting system only.

Apart from above, the Postal Ballot, if any, post closure of COVID-19 pandemic situation, would be carried out as per the provisions of Sections 108 and 110 and other applicable provisions of the Companies Act, 2013 read with the rules framed thereunder.

Postal Ballot during FY 2020-21

In view of the pandemic situation of COVID-19, approval of shareholders of the Bank was sought only by way of remote electronic voting for the following matters through Postal Ballot activity conducted twice during the FY 202021, in accordance with the provisions of Sections 108 and 110 and other applicable provisions of the Companies Act, 2013 alongwith with the guidelines, notification issued by the Ministry of Home Affairs, Government of India and in light of circulars issued by the MCA and SEBI.

Details of Postal Ballot activity undertaken during FY 202021 are given in Table No. 14A and 14B .

Table No. 14A : Postal Ballot dated May 01, 2020

SN Resolution	Votes in favour of the resolution Votes against the resolution
	No. of votes % to total votes No. of votes % to total votes
1. Ordinary Resolution:To increase the authorized share capital of the Bank and consequent alteration of the Memorandum of Association of the Bank.	2,82,39,20,747 99.9635 10,29,932 0.0365
2. Special Resolution:To issue, offer and allot equity shares on preferential basis.	2,82,34,53,922 99.9475 14,83,265 0.0525

Date of Results: Wednesday, June 03, 2020

Scrutinizer: Mr. B Narasimhan (Membership No. F1303) of M/s. BN & Associates, Practicing Company Secretaries, was the Scrutinizer for carrying out the aforesaid Postal Ballot process in a fair and transparent manner.

Table No. 14B : Postal Ballot dated February 18, 2021

Table No. 14B : Postal Ballot dated February 18, 2021
SN Resolution	Votes in favour of the resolution Votes against the resolution
	No. of votes % to total votes No. of votes % to total votes
1. Special Resolution:To approve raising of capital through issuance of equity shares and/or other equity linked securities.	3,45,51,34,831 99.9544 15,77,981 0.0456

Date of Results: Sunday, March 21, 2021

Scrutinizer: Ms. Manisha Maheshwari (Membership No. A30224) of M/s. Bhandari & Associates, Practicing Company Secretaries, was the Scrutinizer for carrying out the aforesaid Postal Ballot process in a fair and transparent manner.

The result of the aforesaid Postal Ballot is posted on the Bank’s website www.idfcfrstbank.com and was also communicated to the Stock Exchanges where the Bank shares are listed.

Apart from above, resolution(s), if any, to be passed through Postal Ballot during the FY 2021-22 will be taken up as and when necessary.

MEANS OF COMMUNICATION

As per Regulation 46 of Listing Regulations, IDFC FIRST Bank maintains a website viz. www.idfcfrstbank.com containing information about the Bank, such as details of its business, financial results, shareholding pattern, compliance with the corporate governance requirements and contact details of the designated officials who are responsible for assisting and handling investor grievances.

144 IDFC FIRST Bank

The Bank also displays all official press releases and presentations to institutional investors or analysts made by the Bank.

This information is regularly updated on the Bank’s website

www.idfcfrstbank.com.

The National Stock Exchange of India Limited (‘NSE’) and BSE Limited (‘BSE’) have their respective electronic platforms namely NSE Electronic Application Processing System (‘NEAPS’) and BSE Listing Centre Online Portal for submission of various filings by listed companies. IDFC FIRST Bank ensures that the requisite compliances are filed through these platforms on time.

The financial and other information filed by the Bank from time to time is also available on the website of the Stock Exchanges i.e. NSE and BSE.

The quarterly, half-yearly and annual results of IDFC FIRST Bank’s performance and other news articles are normally published in leading newspapers in India which include the Hindu Business Line, Financial Express and Makkal Kural (in Chennai) and are also displayed on the Bank’s website: www.idfcfrstbank.com under ‘Investors’ section.

COMPLIANCE WITH MANDATORY AND NONMANDATORY REQUIREMENTS

IDFC FIRST Bank has duly complied with all the mandatory Corporate Governance requirements as given under Regulations 17 to 27 and clauses (b) to (i) of Regulation 46(2) of the Listing Regulations, to the extent applicable.

The Bank has also adopted and complied with the nonmandatory requirements as follows:

Separate Posts of Chairperson and CEO

The Bank has complied with the requirement of having separate persons to the post of Chairperson and MD & CEO. During the FY 2020-21, Dr. Rajiv B. Lall resigned from the post of Part-Time Non-Executive Chairman of the Bank with effect from September 04, 2020 as he has been dealing with prolonged personal health issues. The Bank has proposed the candidate(s) for the position of Part-Time Non-Executive Chairperson of the Bank and the approval of RBI is awaited. The office of Non-Executive Chairman of the Bank is maintained by the Bank at its expenses and all the expenses incurred in performance of his duties are reimbursed by the Bank.

Mr. V. Vaidyanathan is the MD & CEO of the Bank.

Audit Qualification

For the year under review, there were no audit qualifications with respect to Bank’s financial statements. IDFC FIRST Bank strives to adopt the best practices to ensure a regime of financial statements with unmodified audit opinion.

Reporting of Internal Auditor

The Internal Auditor of the Bank reports to the MD & CEO of the Bank and the Audit Committee of the Board, in compliance with extant regulatory guidelines.

Shareholder Rights

Quarterly, half-yearly and annual financial results along with

Investor Presentations thereon are uploaded on the Bank’s website: www.idfcfrstbank.com

SECRETARIAL AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCE

As required under Schedule V of Listing Regulations, the Secretarial Auditors’ Certificate on Corporate Governance is provided at the end of this Report.

GENERAL SHAREHOLDER INFORMATION

7[th] Annual General Meeting:

DAY and DATE: Wednesday, September 15, 2021

TIME: 02:00 p.m. (IST)

VENUE: In view of the ongoing COVID-19 pandemic scenario in the country, the Bank is conducting meeting through Video Conferencing (“VC”) / Other Audio Visual Means (“OAVM”) pursuant to the circular issued by MCA and SEBI. For details please refer to the Notice of this AGM.

As required under Regulation 36(3) of the Listing Regulations and Secretarial Standard 2, particulars of Director seeking appointment at this AGM is given in the Annexure to the Notice of this AGM.

Financial Calendar

Financial year: The financial year of the Bank is from April 01 to March 31 of the following year.

For the year ended March 31, 2021, results were announced on:

July 28, 2020 for first quarter
October 31, 2020 for second quarter and half year
January 30, 2021 for third quarter and nine months
May 08, 2021 for fourth quarter and full year

For the year ending March 31, 2022, results will be announced latest by:

Second week of August 2021 for first quarter
Second week of November 2021 for second quarter and half year
Second week of February 2022 for third quarter and nine months
Last week of May 2022 for fourth quarter and full year

Dividend Payment Date

The Board of Directors did not recommend any dividend on equity shares for the FY 2020-21 in the absence of distributable profits in terms of the RBI Guidelines.

Dividend Distribution Policy

In accordance with Regulation 43A of the SEBI Listing Regulations as amended from time to time, our Bank has formulated a Dividend Distribution Policy, which ensures a fair balance between rewarding its Shareholders and retaining enough capital for the Bank’s future growth.

The Dividend Distribution Policy is available on the Bank’s website at www.idfcfrstbank.com under ‘Investors’ section.

Annual Report 2020-21 145

STOCK EXCHANGES WHERE SECURITIES OF IDFC FIRST BANK ARE LISTED

Equity Shares

The equity shares of IDFC FIRST Bank are listed on BSE and NSE.

BSE Limited

Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001

National Stock Exchange of India Limited

Exchange Plaza, C/ 1, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051.

The Stock Exchange Codes and ISIN for equity shares of the Bank are as follows:

BSE: 539437

NSE: IDFCFIRSTB ISIN: INE092T01019

The annual listing fees for equity shares for FY 2021-22 has been paid.

Bonds & Debentures

80CCF Infrastructure Bonds

Pursuant to the Demerger Scheme, the Financial Undertaking of IDFC Limited was transferred to IDFC FIRST Bank with effect from October 01, 2015 (Effective Date of Demerger Scheme). Accordingly, Infrastructure Bonds issued by IDFC Limited under Section 80CCF of the Income Tax Act, 1961 and the Bonds issued by IDFC Limited on private placement basis were transferred to IDFC FIRST Bank on October 01, 2015.

A. Upcoming Redemptions of IDFC Infrastructure Bonds - Tranche 1, 2 and 3 of FY 2011-12:

The 80CCF Infrastructure Bonds of IDFC FIRST Bank are listed and traded on NSE and BSE. The trading details for the 80CCF Infrastructure Bonds alongwith redemption dates are mentioned in Table No. 15A .

Table No. 15A : Details of 80CCF Infrastructure Bonds

Table No. 15A : Details of 80CCF Infrastructure Bonds
SN Folio Code Tranche Series ISIN	BSE NSE Maturity Date Scrip code Scrip ID Symbol Series
1 IDD Tranche 1/ FY12 Series 1 - Annual INE092T08CK9	961719 IDFCFBLD1I IDFCFIRSTB N9 December 30, 2021
2 IDD Tranche 1/ FY12 Series 2 - Cumulative INE092T08CL7	961720 IDFCFBLD1J IDFCFIRSTB NA December 30, 2021
3 IDE Tranche 2/ FY12 Series 1 - Annual INE092T08CM5	961735 87IDFCBFBL IDFCFIRSTB NB March 21, 2022
4 IDE Tranche 2/ FY12 Series 2 - Cumulative INE092T08CN3	961736 870IDFCFBL IDFCFIRSTB NC March 21, 2022
5 IDF Tranche 3/ FY12 Series 1 - Annual INE092T08CO1	961745 843IDFCFBLL IDFCFIRSTB ND March 31, 2022
6 IDF Tranche 3/ FY12 Series 2 - Cumulative INE092T08CP8	961746 843IDFCFBL IDFCFIRSTB NE March 31, 2022

In order to facilitate smooth and immediate payment of maturity proceeds of upcoming Bond redemption, we urge our Bondholders to visit https://www.idfcfrstbank.com/investors/ifb-infra-bonds-equity-shares and update Bank account, Address and other details, as required.

B. Update on IDFC Infrastructure Bonds - Tranche 1, 2 and 3 of FY 2010-11, redeemed during the FY 2020-21:

During the FY 2020-21, the Bank has redeemed the following Bonds pertaining to Tranche 1, 2 and 3 of FY 2010-11 as mentioned in Table No. 15B .

Table No. 15B : Details of 80CCF Infrastructure Bonds redeemed during FY 2020-21

SN Folio Code Tranche Series ISIN	BSE NSE Maturity Date Scrip code Scrip ID Symbol Series
1 IDA Tranche 1/ FY11 Series 1 - Annual INE092T08CC6	961694 IDFCFBLD1A IDFCFIRSTB N1 November 12, 2020
2 IDA Tranche 1/ FY11 Series 2 - Cumulative INE092T08CD4	961695 IDFCFBLD1B IDFCFIRSTB N2 November 12, 2020
3 IDA Tranche 1/ FY11 Series 3 - Annual INE092T08CE2	961696 IDFCFBLD1C IDFCFIRSTB N3 November 12, 2020
4 IDA Tranche 1/ FY11 Series 4 - Cumulative INE092T08CF9	961697 IDFCFBLD1D IDFCFIRSTB N4 November 12, 2020
5 IDB Tranche 2/ FY11 Series 1 - Annual INE092T08CG7	961699 IDFCFBLD1E IDFCFIRSTB N5 February 21, 2021

146

IDFC FIRST Bank

SN Folio Code Tranche Series ISIN	BSE NSE Maturity Date Scrip code Scrip ID Symbol Series
6 IDB Tranche 2/ FY11 Series 2 - Cumulative INE092T08CH5	961700 IDFCFBLD1F IDFCFIRSTB N6 February 21, 2021
7 IDC Tranche 3/ FY11 Series 1 - Annual INE092T08CI3	961709 IDFCFBLD1G IDFCFIRSTB N7 March 30, 2021
8 IDC Tranche 3/ FY11 Series 2 - Cumulative INE092T08CJ1	961710 IDFCFBLD1H IDFCFIRSTB N8 March 30, 2021

All the aforesaid Bond Tranches were redeemed on maturity dates, as mentioned above. Maturity intimations were made to Bondholders well in advance, by way of sending emails/ physical letter, including necessary intimations to Stock exchanges about the record/ maturity dates.

The Bank also proactively undertook series of initiatives including newspaper advertisements, sending emails and SMS, to encourage the Bondholders to update their Bank Account/ Address and other details in order to ensure seamless redemption of maturity proceeds.

Additionally, with the objective of easing the process of claiming maturity proceeds, an URL link - https://ris.kfntech. com/clientservices/bonds/bankmandate/bankmandate.aspx was also activated and has been live for bondholder to update bank account, address and other details.

For any further information, you are requested to visit Bond Section on our website www.idfcfrstbank.com.

Pursuant to the provisions of Section 125 of the Companies Act, 2013, read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, any matured debentures and interest accrued

which remains unclaimed/ unpaid for a period of seven years from the date it became due for payment is required to be transferred to the IEPF established by the Central Government. After such transfer, no claim shall lie against the Bank. However, the Bondholders can claim the unpaid amount from the IEPF Authority.

For any query related to Bond redemption/ interest payment kindly contact our Registrar and Transfer Agent, KFin Technologies Private Limited on Toll Free No.: 1800 309 4001 or send an E-mail at [email protected]. You may also reach us on Toll Free No.: 1800 266 0404 or send an E-mail at [email protected].

Private Placement Bonds

Private Placement bonds of IDFC FIRST Bank are listed and traded on NSE and BSE, wherever applicable, as per their respective Information Memorandum/ Term Sheets. The trading details for Private Placement bonds can be obtained by sending an e-mail at [email protected]

The annual listing fees for FY 2021-22 for both the aforesaid bonds have been paid.

MARKET PRICE DATA

Table No. 16 gives the monthly high and low quotation of IDFC FIRST Bank’s equity shares traded on BSE Limited (‘BSE’) and the National Stock Exchange of India Limited (‘NSE’) during FY 2020-21.

Table No. 16 : Monthly High & Low Prices of IDFC FIRST Bank’s Equity Shares during FY 2020-21 along with Traded Volumes

Volumes
Month	BSE NSE
	High (in`)<br>Low (in`) Volume High (in`)<br>Low (in`) Volume
April 2020	26.90 19.50 2,25,09,829 26.90 19.50 52,80,14,104
May2020	22.85 18.50 3,26,50,927 23.25 18.45 77,02,80,360
June 2020	29.25 22.45 9,99,54,565 29.25 22.40 1,36,42,79,287
July2020	29.75 24.10 5,40,19,462 29.20 24.10 89,38,52,554
August 2020	34.50 26.00 6,19,80,969 34.50 26.00 1,01,17,02,892
September 2020	32.75 26.85 6,71,14,861 32.75 26.85 87,04,42,894
October 2020	32.30 29.80 3,44,30,384 32.25 29.75 55,28,30,104
November 2020	37.75 29.90 4,70,97,678 38.50 29.90 71,33,86,893
December 2020	39.00 32.85 4,71,26,233 39.05 32.90 58,55,93,457
January2021	52.45 36.90 10,18,37,813 52.45 36.85 1,28,83,23,462
February2021	65.85 43.80 8,64,25,501 66.80 43.75 1,38,78,40,786
March 2021	69.30 55.35 6,57,92,720 69.30 55.30 87,38,37,857

Annual Report 2020-21 147

Performance of the Equity Shares of the Bank relative to indices of BSE (S&P BSE Private Bank) and NSE (Bank Nifty) respectively is given below:

==> picture [496 x 268] intentionally omitted <==

----- Start of picture text -----

100.00%
31 Dec 2018: 31 Mar 2020:
80.00% S&P BSE Private Bank: +4.39% S&P BSE Private Bank: -28.51%
Bank Nifty: +3.81% Bank Nifty: -26.83%
IDFCFB: +19.09% IDFCFB: -42.03%
60.00%
40.00%
20.00%
0.00%
-20.00%
31 Mar 2019: 31 Mar 2021:
S&P BSE Private Bank: +18.37% S&P BSE Private Bank: +27.39%
-40.00% Bank Nifty: +16.30% Bank Nifty: +27.29%
IDFCFB: +52.47% IDFCFB: +53.02%
-60.00%
Bank Nifty IDFC FIRST Bank S&P BSE Private Bank
----- End of picture text -----

UNCLAIMED SHARES LYING IN THE ESCROW ACCOUNT

Pursuant to SEBI’s Circular No. CIR/ CFD/ DIL/ 10/ 2010 dated December 16, 2010, IDFC Limited had credited the unclaimed shares lying in the Escrow Account, allotted in the Initial Public Offer of the company during July – August 2005, into a Demat Suspense Account opened specifically for this purpose. Pursuant to the Demerger Scheme, the shareholders of IDFC Limited as on the record date i.e. October 05, 2015 were allotted one equity share of IDFC FIRST Bank for every one equity share held by them in IDFC Limited. Therefore, 100 Shareholders who were holders of 28,453 shares lying in the Demat Suspense Account of IDFC Limited were eligible and allotted equity shares of IDFC FIRST Bank.

As on April 01, 2020, the Demat Suspense Account of IDFC FIRST Bank held 28,253 equity shares of 10 each belonging to 99 shareholders. During FY 2020-21, no shareholder had approached the Registrar and Share Transfer Agent for transfer of shares from the Demat Suspense Account. As on March 31, 2021, the Demat Suspense Account of IDFC FIRST Bank held 28,253 equity shares of 10 each belonging to 99 shareholders.

The voting rights on the shares outstanding shall remain frozen till the rightful owner claims their shares. The details of the Shareholders whose equity shares are lying in the Demat Suspense Account are available on the Bank’s website: www.idfcfrstbank.com under ‘Investors’ section.

UNCLAIMED/ UNPAID DIVIDEND AND SHARES

Pursuant to the provisions of Sections 124 and 125 of the Companies Act, 2013, read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (‘IEPF Rules’), any dividend/ refund which remains unclaimed/ unpaid for a period of seven years from the date of transfer to the unpaid dividend/ refund account is required to be transferred to the IEPF established by the Central Government. After such a transfer, no claim shall lie against the Bank. However, the investor can claim the unpaid dividend from the IEPF Authority.

As on March 31, 2021, the amounts lying in the unclaimed/ unpaid dividend account with respect to the final dividend that were declared by the Bank and erstwhile Capital First Limited and last tentative date for claiming dividend before they become due to be credited to the IEPF are mentioned in Table No. 17 :

Table No. 17: Tentative Date of Transfer of Unclaimed/ Unpaid Dividend to IEPF

|SN|Financial Year|IDFC FIRST Bank (**)**|**erstwhile Capital First Limited (**)|Last Tentative Date for claiming|
|---|---|---|---|---|
|||||Dividend|
|1.|2013-14|NA|3,62,358.00|July14,2021| |2.|2014-15|NA|4,34,564.00|August 15,2022|
|3.|2015-16|10,58,605.00|4,31,465.20|August 22,2023|

148

IDFC FIRST Bank

|SN|Financial Year|IDFC FIRST Bank (**)**|**erstwhile Capital First Limited (**)|Last Tentative Date for claiming|
|---|---|---|---|---|
|||||Dividend|
|4.|2016-17|34,74,459.75|5,22,449.80|August 23,2024|
|5.|2017-18|42,68,433.00|6,29,235.60|August 26,2025|
|6.|2018-19|No Dividend Declared|||
|7.|2019-20|No Dividend Declared|||

During FY 2021-22, the Bank would be transferring unclaimed Dividend amount declared for the FY 2013-14 by erstwhile Capital First Limited (‘eCFL’). The Bank has sent an intimation letter dated April 05, 2021 to shareholders in respect of the shares on which dividend declared by eCFL for FY 2013-14, had remained unpaid or unclaimed for seven consecutive years or more, requesting them to claim such dividend latest by July 14, 2021, so as to avoid the corresponding shares being transferred to the IEPF authority. Simultaneously, an advertisement to this effect was published in leading English and vernacular newspapers.

Shareholders who either have not received or have not encashed their dividend warrant(s) as specified above, are requested to write to KFin Technologies Private Limited [earlier Karvy Fintech Private Limited] (‘KFIN’), mentioning the relevant Folio number(s)/ DP ID and Client ID, for issuance of duplicate/ revalidated dividend warrant(s).

All shares in respect of which dividend has not been claimed or paid for a period of seven consecutive years or more from

the date they became due for payment are required to be transferred to the demat account of IEPF in the manner prescribed under the IEPF Authority (Accounting, Audit, Transfer and Refund) Amendment Rules, 2017 as may be amended from time to time. Upon transfer of such shares, all benefits (e.g. bonus, spilt etc.), if any, accruing on such shares shall also be credited to the IEPF Demat Account and the voting rights on such shares shall remain frozen till the rightful owner claims the shares.

In this connection, during FY 2020-21, IDFC FIRST Bank had sent intimation letters to shareholders in respect of the shares on which dividend declared by erstwhile Capital First Limited for FY 2012-13, had remained unpaid or unclaimed for seven consecutive years or more, requesting them to claim such dividend so as to avoid the corresponding shares being transferred to the IEPF authority. Simultaneously, an advertisement to this effect was published in leading English and vernacular newspapers.

During FY 2020-21 IDFC FIRST Bank had transferred to the IEPF, the following unclaimed Dividends which were declared by erstwhile Capital First Limited for FY 2012-13 and shares:

erstwhile Capital First Limited for FY 2012-13 and shares:
Particulars	Amount of	No. of shares
	Dividend(`)
Unclaimed Dividend for the FY 2012-13 and Shares on which Dividend had remained unpaid	`3,66,029	2,443
or unclaimed for seven consecutive years or more, transferred during FY 2020-21 to IEPF

The dividend amount and shares transferred to the IEPF can be claimed by the concerned shareholders from the IEPF Authority after complying with the procedure prescribed under the IEPF Rules. The details of the unclaimed dividends are also available on the Bank’s website at www. idfcfrstbank.com under ‘Investors’ section and the said details have also been uploaded on the website of the IEPF Authority and the same can be accessed through www. iepf.gov.in.

As on March 31, 2021, 4,74,501 equity shares are lying with IEPF.

Share Transfer System

IDFC FIRST Bank has appointed KFIN as its Registrar and Share Transfer Agent. All share transfers and related operations are conducted by KFIN, which is registered with SEBI as a Category I Registrar.

In terms of Regulation 40(1) of SEBI Listing Regulations, as amended from time to time, securities can be transferred only in dematerialized form with effect from April 01, 2019, except in case of request received for transmission or transposition of securities. Further, SEBI has fixed March 31, 2021 as the cut-off date for re-lodgement of transfer deeds and the shares that are re-lodged for transfer shall be issued only in demat mode. Members holding shares in physical form are requested to consider converting their

holdings to dematerialized form. Transfers of equity shares in electronic form are processed through the depositories with no involvement of the Bank. The Allotment, Transfer and Routine Matters Committee are authorized by the Board to approve matters related to transfer/ transmission, remat/ demat of shares, issue of duplicate shares, etc.

IDFC FIRST Bank has a Stakeholders’ Relationship and Customer Service Committee for redressing complaints and queries raised by Shareholders, Investors and Customers, from time to time.

IDFC FIRST Bank’s shares are compulsorily traded in dematerialised mode. A half-yearly certificate of compliance with the share transfer formalities as required under Regulation 40(9) of the Listing Regulations is obtained from the Practising Company Secretary and a copy of the certificate is filed with the Stock Exchanges.

As required by SEBI, Reconciliation of Share Capital Audit is conducted by a Practising Company Secretary on a quarterly basis, for the purpose, inter-alia , of reconciliation of the total admitted equity share capital with the depositories and in the physical form with the total issued/ paid-up equity capital of the Bank.

Certificates issued in this regard are filed with BSE and NSE on a quarterly basis.

Annual Report 2020-21 149

Distribution of Shareholding

The distribution of the shareholding of IDFC FIRST Bank’s equity shares by size and by ownership as on March 31, 2021 are given in Table No. 18 and Table No. 19 respectively. Top ten equity shareholders of IDFC FIRST Bank as on March 31, 2021 are given in Table No. 20.

Table No. 18 : Distribution of Shareholding as on March 31, 2021 (Total) (By Size)

SN	Category (Shares)	No. of Holders	% To Holders	No. of Equity Shares	% To Equity
1.	1 - 5,000	11,49,734	97.16	48,92,30,835	8.62
2.	5,001 - 10,000	17,683	1.49	13,00,14,703	2.29
3.	10,001 - 20,000	8,647	0.73	12,27,96,990	2.16
4.	20,001 - 30,000	2,813	0.24	6,96,51,654	1.23
5.	30,001 - 40,000	1,237	0.10	4,34,72,625	0.77
6.	40,001 - 50,000	780	0.07	3,59,50,603	0.63
7.	50,001 - 100,000	1,354	0.11	9,62,46,299	1.70
8.	100,001 and above	1,114	0.09	4,68,84,86,146	82.60
TOTAL		11,83,362	100.00	5,67,58,49,855	100.00
Table	No. 19 : Distribution of Shareholding as on March 31, 2021 (Total) (By Ownership)
SN	Description		No. of Holders	No. of Equity Shares	% To Equity
1.	Promoters Bodies Corporate		1	2,26,89,37,489	39.98
2.	Foreign Portfolio - Corp		158	67,41,84,070	11.88
3.	Foreign Corporate Bodies		1	47,17,33,265	8.31
4.	Foreign Nationals		14	47,312	ß
5.	Qualifed Institutional Buyer		10	44,55,06,136	7.85
6.	Mutual Funds		13	16,24,07,577	2.86
7.	ClearingMembers		329	3,26,31,771	0.57
8.	Insurance Companies		5	2,80,64,270	0.49
9.	Indian Financial Institutions		1	100	ß
10.	Alternative Investment Fund		1	19,000	ß
11.	Bodies Corporates		2,861	5,65,46,718	1.00
12.	Banks		9	13,80,240	0.02
13.	NBFC		13	19,61,503	0.03
14.	President of India		1	26,14,00,000	4.61
15.	Investor Education and Protection	Fund	1	4,74,501	0.01
16.	Resident Individuals		11,47,093	1,14,97,05,649	20.26
17.	Non-Resident Indians		8,029	6,05,67,459	1.07
18.	Non-Resident Indian Non Repatriable		4,380	2,17,04,233	0.38
19.	HUF		20,406	3,81,66,442	0.67
20.	Trusts		36	4,12,120	0.01
TOTAL			11,83,362	5,67,58,49,855	100.00

ß denotes negligible value

Table No. 20 : Top Ten Equity Shareholders as on March 31, 2021 (Client Id based)

SN	Name	No. of Equity Shares	% To Equity
1.	IDFC Financial HoldingCompanyLimited	2,26,89,37,489	39.98
2.	Cloverdell Investment Ltd	47,17,33,265	8.31
3.	President of India	26,14,00,000	4.61
4.	ICICI Prudential Life Insurance CompanyLimited	25,87,32,212	4.56
5.	ODYSSEY 44 A S	22,85,89,390	4.03
6.	BajajAllianz Life Insurance CompanyLtd.	9,19,45,461	1.62
7.	Dayside Investment Ltd	9,17,75,672	1.62
8.	HDFC Life Insurance CompanyLimited	7,80,44,407	1.38
9.	Aditya Birla Sun Life Trustee Private Limited A/C Aditya Birla Sun Life Tax Relief 96	6,42,40,516	1.13
10.	Vanguard Emerging Markets Stock Index Fund, a series of Vanguard International	3,86,33,746	0.68
	EquityIndex Funds

Dematerialisation of Shares and Liquidity

The Bank’s shares are compulsorily traded in dematerialised form on NSE and BSE and are available for trading on both the depositories in India i.e. NSDL and CDSL. As on March 31, 2021, over 99.99% equity shares of IDFC FIRST Bank were held

150

IDFC FIRST Bank

in dematerialised form. Details on the same are given in Table No. 21.

Table No. 21 : Statement of Dematerialisation of Shares as on March 31, 2021

Category	No. of Equity Shares	% To Equity
NSDL	5,16,40,37,698	90.98
CDSL	51,16,99,237	9.02
Physical	1,12,920	ß
TOTAL	5,67,58,49,855	100.00

ß denotes negligible value

Credit Ratings and Change/ Revisions in Credit Ratings:

As on the date of this report, the credit ratings assigned by the rating agencies are as below:

Domestic Rating	Long Term Outlook Tier 2 Bonds NCDs Infrastructure Bonds Fixed Deposits Bank Loan1	Short-term Month of Press Release Certifcates of Deposits
CRISIL	CRISIL AA - - FAAA - Stable	CRISIL A1+ Apr-21
ICRA	- ICRA AA ICRA AA - - Stable	ICRA A1+ June-20
India Ratings	IND AA+ IND AA+ IND AA+ - - Negative	- Aug-20
CARE	- CARE AA - - CARE AA Stable	- Oct-20
Brickworks	- BWR AA+ - - - Stable	- May-21

Notes:

1 The Instruments have been transferred from Capital First Limited (CFL) and Capital First Home Finance Limited (CFHFL) to IDFC FIRST Bank Limited as per the Scheme of Amalgamation between CFL, CFHFL and Capital First Securities Limited with IDFC FIRST Bank.

During the FY 2020-21 following revisions in credit rating took placed:

CRISIL: Long term rating of CRISIL FAAA (Stable) was assigned to IDFC FIRST Bank’s Fixed Deposit Program (April 2020)

ICRA: Short Term rating of IDFC FIRST Bank’s Commercial Papers was withdrawn considering NIL Outstanding (May 2020)

CARE: Long term ratings of IDFC FIRST Bank’s NCD and bank loans were revised to CARE AA (Stable) from CARE AA+ (Negative) and Short Term rating of IDFC FIRST Bank’s Commercial Papers was withdrawn considering NIL outstanding (October 2020)

During the FY 2021-22 following revisions in credit rating took place:

Brickwork: Long term ratings of IDFC FIRST Bank’s bank loans was withdrawn considering NIL outstanding (May 2021)

Details of utilization of funds raised through preferential allotment or qualified institutions placement:

During the FY 2020-21, the Bank has raised funds through Preferential Allotment on June 12, 2020. Further subsequent to the year under review, the Bank has raised funds through Qualified Institutional Placement.

The Bank has utilized the funds raised through Preferential Allotment made by the Bank during FY 2020-21 for the purposes which was stipulated in the Placement Document. Further, the funds raised through Qualified Institutions Placement subsequent to the year under review has also been utilized for the purposes which was stipulated in the Placement Document.

Recommendations of Committees of the Board

There were no instances during the FY 2020-21, wherein the Board had not accepted recommendations made by any Committee of the Board.

Total fees for Statutory Auditors of the Bank

During FY 2020-21: a] M/s. B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W- 100022) were paid/ provided 2.70 crore as Audit Fees and 2.68 crore as fees for Certifications, and rendering other Non-Audit services (includes fees related to QIP) to the Bank and b] ` 0.11 crore was paid/ provided to one of the firms of B S R & Affiliates, a network registered with the Institute of Chartered Accountants of India, of which the Statutory Auditors are a member entity.

The above fees excludes applicable Taxes and Out of Pocket expenses.

Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

Our Bank has an Internal Committee (‘IC’) to investigate and inquire into sexual harassment complaints in line with The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013.

Our Bank has in place a policy on Anti-Sexual Harassment, which reflects the Bank’s zero-tolerance towards any form of prejudice, gender bias and sexual harassment at the workplace. Our Bank has set up an IC to receive and redress complaints of sexual harassment. Our Bank undertakes ongoing trainings to create awareness on this policy.

Annual Report 2020-21 151

During FY 2020-21, employees were given online training in order to understand the Policy on Prevention of Sexual Harassment and framework for reporting and resolving instances of sexual harassment.

Outstanding GDRs/ ADRs/ Warrants or any Convertible Instruments, Conversion Date and likely impact on Equity

The Bank does not have any Outstanding GDRs/ ADRs/ Warrants or any other convertible instruments as on date.

Commodity Price Risk or Foreign Exchange Risk and Commodity Hedging Activities

The Bank has a Board approved Market Risk Management Policy, Limit Management Framework and Foreign Exchange and Derivatives Policy which defines the risk control framework for undertaking foreign exchange transactions and for managing the risks associated with it. The Board of the Bank has defined Net Overnight Open Position (‘NOOP’) Limit, Stop Loss Limit, Value at Risk (‘VaR’) limit to control the Foreign exchange risk within the approved framework. The Bank uses derivatives including FORWARDS and SWAPS for hedging its currency risk in its balance sheet and offers these products to customers and proprietary trading in due compliance with overall risk limits, control framework and applicable regulatory guidelines. Bank does not offer commodity hedging products.

The management of these products is governed by the policies mentioned above. The Bank did not exceed any of the Board approved risk limits during the period under review.

Plant Location

As the Bank is engaged in the business of banking / financial services, the Bank does not have any plant location.

INVESTOR CORRESPONDENCE MAY BE ADDRESSED TO:

Mr. Satish Gaikwad

Head – Legal & Company Secretary

Corporate Office Address

IDFC FIRST Bank Limited

Naman Chambers, C-32, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051, Maharashtra, India. Tel: +91 22 7132 5500

Registered Office Address

IDFC FIRST Bank Limited

KRM Tower, 7th Floor, No. 1 Harrington Road, Chetpet, Chennai - 600 031, Tamil Nadu, India. Tel: +91 44 4564 4000 Toll Free No.: 1800 266 0404 E-mail: [email protected] Website: www.idfcfrstbank.com

For Bond Related Query you can contact:

RTA Toll Free No.: 1800 309 4001 E-mail: [email protected] Bank Toll Free No.: 1800 266 0404 E-mail: [email protected]

Details of the Registrar and Share Transfer Agent For Equity Shares and 80CCF Long Term Infrastructure Bonds

KFin Technologies Private Limited

(Unit: IDFC FIRST Bank Limited)

Selenium Tower B, Plot 31 & 32, Gachibowli, Financial District, Nanakramguda, Serilingampally, Hyderabad - 500 032, Telangana, India.

Tel: +91 40 6716 2222/ 7961 1000 Toll Free: 1800 309 4001 E-mail: [email protected] Website: www.kfntech.com

For Certificate of Deposits, Bonds and Debentures issued on Private Placement basis

NSDL Database Management Limited

4th Floor, Trade World, A Wing, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai - 400 013, Maharashtra, India Tel: +91 22 4914 2700 E-mail: [email protected] Website: www.ndml.in

Details of the Debenture Trustee

IDBI Trusteeship Services Limited

Asian Building, Ground Floor, 17, R. Kamani Marg, Ballard Estate, Mumbai - 400 001, Maharashtra, India. Tel: +91 22 4080 7000 E-mail : [email protected] Website: www.idbitrustee.com

Catalyst Trusteeship Limited

GDA House, Plot No. 85, Bhusari Colony (Right), Paud Road, Pune – 411 038, Maharashtra, India. Tel. No.: +91 20 2528 0081 E-mail: [email protected] Website: www.catalysttrustee.com

For and on behalf of the Board of Directors of IDFC FIRST Bank Limited

Date: June 16, 2021 Place: Mumbai

Hemang Raja Director DIN: 00040769

V. Vaidyanathan Managing Director & CEO DIN: 00082596

152 IDFC FIRST Bank

Corporate Governance Compliance Certificate

To The Members, IDFC FIRST Bank Limited

We have examined the compliance of conditions of Corporate Governance by IDFC FIRST Bank Limited (“the Bank”) for the year ended on March 31, 2021, as stipulated in Regulations 17 to 27 and clauses (b) to (i) of sub-regulation (2) of Regulation 46 and Para C, D and E of Schedule V of The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 [”Listing Regulations”].

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Bank for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Bank.

In our opinion and to the best of our information and according to the explanations given to us, and representations made by the management, we certify that the Bank, to the extent applicable, has complied with the conditions of Corporate

Governance as stipulated in Regulations 17 to 27, clauses (b) to (i) of sub-regulation (2) of Regulation 46 and Para C, D and E of Schedule V of the Listing Regulations.

We further state that such compliance is neither an assurance as to the future viability of the Bank nor of the efficiency or effectiveness with which the management has conducted the affairs of the Bank.

For Makarand M. Joshi & Co. Practicing Company Secretaries

Kumudini Bhalerao

Partner FCS No. 6667 CP No. 6690 Peer Review No : P2009MH007000 UDIN: F006667C000341397

Place: Mumbai Date: May 18, 2021

Annual Report 2020-21 153

ANNEXURE A

Certificate of Non-Disqualification of Directors

Pursuant to Regulation 34(3) and Schedule V Para C clause (10)(i) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

To, The Member of IDFC FIRST BANK LIMITED KRM Tower, 7th Floor, No. 1 Harrington Road, Chetpet, Chennai - 600031

We have examined the relevant registers, records, forms, returns and disclosures received from the Directors of IDFC FIRST Bank Limited, having CIN: L65110TN2014PLC097792 and having registered office at KRM Tower, 7th Floor, No. 1 Harrington Road, Chetpet, Chennai - 600031 (hereinafter referred to as ‘the Bank’), produced before us by the Bank for the purpose of issuing this Certificate, in accordance with Regulation 34(3) read with Schedule V Para-C sub clause 10(i) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In our opinion and to the best of our information and according to the verifications (including Directors Identification Number (DIN) status at the portal www.mca.gov.in) as considered necessary and explanations furnished to us by the Bank and its officers, we hereby certify that none of the Directors on the Board of the Bank as stated below for the financial year ended on March 31, 2021 have been debarred or disqualified from being appointed or continuing as Directors of Companies by the Securities and Exchange Board of India, Ministry of Corporate Affairs, or any such other Statutory Authority.

Sr.	Name of Director	DIN	Date of appointment
No.
1.	Mr. Aashish Kamat	06371682	December 18,2018
2.	Dr.(Mrs.)Brinda Jagirdar	06979864	December 18,2018
3.	Mr. HemangRaja	00040769	December 18,2018
4.	Mr. Pravir Kumar Vohra	00082545	August 01,2018
5.	Mr. Sanjeeb Chaudhuri	03594427	May10,2019
6.	Mr. Sunil Kakar	03055561	July16,2017
7.	Mr. Vishal Mahadevia	01035771	December 18, 2018
8.	Mr. Vaidyanathan Vembu	00082596	December 19, 2018

Ensuring the eligibility for the appointment / continuity of every Director on the Board is the responsibility of the management of the Bank. Our responsibility is to express an opinion based on our verification. This certificate is neither an assurance as to the future viability of the Bank nor of the efficiency or effectiveness with which the management has conducted the affairs of the Bank.

For Bhandari & Associates

Company Secretaries

S. N. Bhandari

Partner FCS No: 761; C P No. : 366 Mumbai | June 11, 2021 ICSI UDIN: F000761C000447451

154 IDFC FIRST Bank

CEO & CFO Certificate

We, V. Vaidyanathan, Managing Director & Chief Executive Officer and Sudhanshu Jain, Chief Financial Officer & Head - Corporate Centre of IDFC FIRST Bank Limited (‘the Bank’) hereby certify to the Board that:

[a] We have reviewed financial statements and the cash flow statement for the year ended March 31, 2021 and that to the best of our knowledge and belief:
(i) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;
(ii) these statements together present a true and fair view of the Bank’s affairs and are in compliance with existing accounting standards, applicable laws and regulations.
[b] There are, to the best of our knowledge and belief, no transactions entered into by the Bank during the year which are fraudulent, illegal or violative of the Bank’s Code of Conduct.
[c] We accept responsibility for establishing and maintaining internal controls for financial reporting and we have evaluated the effectiveness of internal control systems of the Bank pertaining to financial reporting. We have disclosed to the Auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which we are aware and the steps we have taken or propose to take to rectify these deficiencies.
[d] We have indicated to the Auditors and the Audit Committee:
(ii) significant changes in accounting policies during the year and the same have been disclosed in the notes to the financial statements; and
(iii) instances of significant fraud of which we have become aware and the involvement therein, if any, of the management or an employee having a significant role in the listed entity’s internal control system over financial reporting.
[e] We affirm that no personnel has been denied access to the Audit Committee of the Bank (in respect of matters involving alleged misconduct, if any).
[f] We further declare that all Board members and Senior Management Personnel have affirmed compliance with the ‘Code of Conduct for Board of Directors & Senior Management Personnel’.

For IDFC FIRST Bank Limited

V. Vaidyanathan Sudhanshu Jain Managing Director & Chief Financial Officer & Chief Executive Officer Head - Corporate Centre DIN: 00082596

Date: June 16, 2021 Place: Mumbai

(i) significant changes in internal control over financial reporting during the year;

Annual Report 2020-21 155

Independent Auditor’s Report

To the Members of IDFC FIRST Bank Limited

Report on the audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of IDFC FIRST Bank Limited (the ‘Bank’), which comprise the standalone balance sheet as at 31 March 2021, the standalone profit and loss account, the standalone cash flow statement for the year then ended, and notes to the standalone financial statements, including a summary of the significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 2013 (the ‘Act’) in the manner so required for banking companies and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Bank as at 31 March 2021, and its profit, and its cash flows for the year ended on that date.

Basis of opinion

We conducted our audit in accordance with the Standards on Auditing (‘SAs’) specified under Section 143 (10) of the Act. Our responsibilities under those SAs are further described in the Auditor’s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Bank in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained, is sufficient and appropriate to provide a basis for our opinion on the standalone financial statements.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

156 IDFC FIRST Bank

Key audit matter

How the matter was addressed in our audit

Provisions on advances

P/L Charge (Including provision on Non Performing Advances (NPA), Identified Standard Advances, restructured advances, COVID provisions and Write-off) : Rs. 3,888 crore for year ended 31 March 2021

Provision on Advances (Including provision on Non Performing Advances, Identified Standard Advances and Restructured Advances) : Rs. 3,173 crore as at 31 March 2021

Refer to the accounting policies in “Note 17.02 to the Standalone Financial Statements: Significant Accounting Policies – Advances”, “Schedule 9 to the Standalone Financial Statements: Advances”, “Note 18.12(d) to the Standalone Financial Statements: COVID-19 Regulatory Package - Asset Classification and Provisioning” and “Note 18.29 to the Standalone Financial Statements: Provisions and Contingencies”

Subjective estimate

Our key audit procedures included: Design / controls

Provisions in respect of non-performing and restructured advances are made based on management’s assessment of the degree of impairment of the advances subject to the minimum provisioning levels prescribed under the Prudential Norms on Income Recognition, Asset Classification & Provisioning, prescribed by the RBI from time to time. The provision on non-performing assets (NPAs) are also based on the valuation of the security available. In case of restructured accounts, provision is made in accordance with the RBI guidelines.

Assessing the design, implementation and operating effectiveness of key internal financial controls over monitoring of watch list loans, including monitoring process of overdue loans (and those which became overdue subsequent to the reporting date), measurement of provision, identification of NPA accounts, assessing the reliability of management information, which included overdue reports. Also, assessing how management has evaluated the impact of stress in the overall economic environment arising from COVID-19 in its NPA assessment.

We identified provision on non-performing advances as a key audit matter because of-

Understanding management’s approach, interpretation, systems and controls implemented in relation to NPA computation.

1) the management judgement involved in determining the - provision;
2) any regulator mandated provision that may be needed for the portfolio of loans;

For corporate loans, testing controls over the monitoring of the credit watch list, credit file review processes, approval of external collateral valuation vendors and review controls over the approval of significant individual impairments.

3) the dependency on the valuation of the security available on NPAs; and
4) because of its significance to the financial results of the Bank.

Evaluating the design, implementation and operating effectiveness of key internal controls over the valuation of the securities for the NPAs and watch list cases.

Testing of review controls over measurement of provisions and disclosures in financial statements.

Involving information system specialist to gain comfort over data integrity and calculations, including system reconciliations.

Testing key controls operating over the information technology in relation to NPA systems, including system access and system change management, program development and computer operations.
Testing Bank’s controls relating to implementing and actioning any RBI mandated specific provision requirement.

Annual Report 2020-21 157

Key audit matter

Further, we have identified the impact of, and uncertainty related to the COVID-19 pandemic as a key event and consideration for recognition and measurement of NPAs on account of greater levels of management judgement and therefore increased levels of audit focus in the Bank’s estimation of provision for NPAs.

Management has assessed the impact of COVID-19 on the loan portfolio in evaluating the need for recording additional provisions on loans at 31 March 2021.

How the matter was addressed in our audit

Substantive tests

Test of details over of calculation of NPA provisions, including provisions on restructured loans, as at the year-end for assessing the completeness, accuracy and relevance of data and to ensure that the same is in compliance with the Prudential Norms on Income Recognition, Asset Classification & Provisioning, Bank’s policy and the Resolution Framework for COVID-19 related stress announced by the RBI.
Select a sample of corporate loans to test potential cases of loans repaid and disbursed to the same customer during the period and fresh disbursement(s) to stressed customers.
Testing a sample (based on quantitative and qualitative thresholds) of large sized corporate clients where impairment indicators had been identified by management. Obtaining management’s assessment of the recoverability of these exposures (including individual provisions calculations) and challenging whether individual impairment provisions, or lack of, were appropriate.

This included the following procedures:

evaluating the statement of accounts, approval process, committee meeting minutes, credit review of customers, review of SMA reports and other related documents to assess recoverability and the classification of the facility; and
assessing external collateral valuer’s work and the results and comparing external valuations to values used in management’s assessment.
For a selection of corporate loans not identified as displaying indicators of impairment by management, independently challenging their assessment by reviewing the historical performance of the customer and formed our own view whether any impairment indicators were present.
- Evaluating management’s rationale for making additional provision on account of COVID-19 and testing the computation.
- Assessing the factual accuracy and appropriateness of the financial statements disclosures made by the Bank in context of impact of COVID-19 and restructured loans.

158 IDFC FIRST Bank

Key audit matter

How the matter was addressed in our audit

Assessment of the realizability of deferred tax assets
Deferred tax asset(net): Rs. 1,999 crore as at 31 March 2021
Refer to the accounting policies in “Note 17.08 to the Standalone Financial Statements: Signifcant Accounting Policies –
Income Tax” and “Note 18.28 to the Standalone Financial Statements: Deferred Tax”

Signifcant estimate and judgement involved
Recognition of deferred tax assets require a determination of
future taxable income based on the Bank’s expectations. The
assessment of realizability of deferred tax assets is based
on a virtual or reasonable certainty test, depending on the
composition of the deferred tax assets.
Given the Bank’s recent fnancial performance and
uncertainty in business growth on account of COVID-19, we
identifed recognition of deferred tax assets as a key audit
matter because of the signifcant management judgement
and assumptions involved in estimating the future taxable
income based on the income forecasts approved by the
Bank’s Board of Directors.

Our key audit procedures included:
• Assessing the design, implementation and operating
effectiveness of management’s key internal fnancial
controls over the recognition of deferred tax assets.
• Obtained details of different components of deferred tax
assets and details of estimates of taxable incomes for
future periods as approved by the Board of Directors.
• Obtained confrmation where the future forecasts were
approved in the meetings of the Board of Directors.
• Evaluating management assessment relating to the
amendment in Income Tax Act and its consequential
impact on items that qualify for recognition of deferred
tax assets.
• Evaluating management assessment for estimating
availability of future taxable profts for determination of
recognition of deferred tax assets.
• Evaluated management’s considerations involved in
forecasting future taxable profts due to the uncertainty
on account of COVID-19.
• Assessed the period over which the deferred tax assets
would be recovered against future taxable income.
• Evaluated the Bank’s actual performance vis-à-vis the
budgets for the current and past years and discussed
with management their basis and assumptions in respect
of evidence to support that there will be suffcient taxable
income to absorb the deferred tax asset.
• Performed
sensitivity
analysis
over
the
Bank’s
expectations of the future taxable income.

Annual Report 2020-21 159

Key audit matter

How the matter was addressed in our audit

Valuation of Investments

Net Value of Investments: Rs. 45,412 crore as at 31 March 2021

Provision on depreciation on investments (including the amount related to standard identified investments) : Rs. (820) crore for year ended 31 March 2021

Refer to the accounting policies in “Note 17.01 to the Standalone Financial Statements: Significant Accounting PoliciesInvestments Classification”, “Schedule 8 to the Standalone Financial Statements: Investments” and “Schedule 18.29 to the Standalone Financial Statements: Provision and Contingencies”

Subjective estimates and judgment involved Investments

Our key audit procedures included: Test of design / controls

Investments are classified into ‘Held for Trading’ (‘HFT’), ‘Available for Sale’ (‘AFS’) and ‘Held to Maturity’ (‘HTM’) categories at the time of purchase. Investments, which the Bank intends to hold till maturity are classified as HTM investments.

Assessed the design, implementation and operating effectiveness of management’s key internal financial controls over specific provisions on certain investments.

Evaluated controls relating to creation and reversal of provisions

Investments classified as HTM are carried at amortised cost. Where, in the opinion of management, a diminution other than temporary, in the value of investments has taken place, appropriate provisions are required to be made.

Substantive tests

For a selection of investments, we re-performed the valuation computation. For cases where no directly observable inputs were used, we examined and reperformed the calculation basis the cashflows by using a discounted cashflow method to compare the results with that of the Bank’s which was computed in accordance with the relevant RBI guidelines.

Investments classified as AFS and HFT are marked- tomarket on a periodic basis as per the relevant RBI guidelines.

We identified valuation of investments as a key audit matter because of the:

     - We verified the management assessment of specific provisions against certain investments and evaluated the appropriateness of the provisions made and rationale put forward by the Bank for reversal of such specific provision.

  -

management judgement and external data involved in-
determining the value of certain investments like security receipts, venture capital units, pass through certificates and unquoted equity securities,
Assessed whether the financial statement disclosures appropriately reflect the Bank’s exposure to investments with reference to the requirements of the prevailing RBI guidelines.
creation and reversal of specific provisions on certain - identified investments; and
the overall significance of investments to the financial statements of the Bank.

We verified that the specific provision are netted off from the carrying value of such investments in line with the accounting policy of the Bank.

160 IDFC FIRST Bank

Key audit matter

How the matter was addressed in our audit

Information technology
Information Technology (IT) systems and controls
The Bank’s key fnancial accounting and reporting processes
are highly dependent on information systems including
automated controls in systems, such that there exists a risk
that gaps in the IT control environment could result in the
fnancial accounting and reporting records being misstated.
Amongst its multiple IT systems, we scoped in systems that
are key for the overall fnancial reporting.
The Bank has also undertaken few data migration projects
post the merger in the last fnancial year.
Further, the prevailing COVID-19 situation has caused the
required IT applications to be made accessible on a remote
basis.
We have identifed ‘IT systems and controls’ as a key audit
matter because of the high level of automation, signifcant
number of systems being used by management and the
complexity of the IT architecture.

Our key IT audit procedures included:
-
We focused on user access management, change
management, segregation of duties, system interface
controls, system application controls and Information
Produced by entity (IPE) controls over key fnancial
accounting and reporting systems.
-
We tested a sample of key controls for data migration
operating over the information technology in relation to
fnancial accounting and reporting systems, including
analysis of strategy documents, review of data mapping
sheets and reconciliation confrmations from operations
team, user acceptance test (UAT) sign offs, incidents
monitoring and approvals for pre and post migration.
-
We tested the design and operating effectiveness of key
controls over user access management which include
new user creation and granting access rights, removal of
user rights, user access review and preventive controls
designed to enforce segregation of duties.
-
For a selected group of key controls over fnancial
and reporting systems, we independently performed
procedures to determine that these controls remained
unchanged during the year or were changed following
the standard change management process.
-
Other areas that were assessed included password
policies, security confgurations, controls over changes
to applications and databases and controls to ensure
that developers and production support did not have
access to change applications, the operating system or
databases in the production environment.
-
Performed inquiry for data security controls in the context
of a large population of staff working from remote location
at theyear end.

Information Other than the Standalone Financial Statements and Auditors’ Report Thereon

The Bank’s management and Board of Directors are responsible for the other information. The other information comprises the information included in the Bank’s Annual report, but does not include the standalone financial statements and our auditor’s report thereon. The Bank’s Annual report is expected to be made available to us after the date of this auditor’s report.

Our opinion on the standalone financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

When we read the Bank’s Annual Report, if we conclude that there is a material misstatement therein, we are required to

communicate the matter to those charged with governance.

Management’s and Board of Director’s Responsibility for the Standalone Financial Statements

The Bank’s management and Board of Directors are responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the state of affairs, profit and cash flows of the Bank in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, provisions of Section 29 of the Banking Regulation Act, 1949 and the circulars and guidelines issued by Reserve Bank of India (‘RBI’) from time to time. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding of the assets of the Bank and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness

Annual Report 2020-21 161

of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, the Management and Board of Directors are responsible for assessing the Bank’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Management and Board of Directors either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Bank’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Standalone

Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3) (i) of the Act, we are also responsible for expressing our opinion on whether the bank has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.
evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures in the standalone financial statements made by the Management and Board of Directors.
conclude on the appropriateness of the Management and Board of Directors use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause a Bank to cease to continue as a going concern.
evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

The standalone balance sheet and the standalone profit and loss account have been drawn up in accordance with the provisions of Section 29 of the Banking Regulation Act, 1949 and Section 133 of the Act.

A. As required by sub-section (3) of Section 30 of the Banking Regulation Act, 1949, we report that:
(a) we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purpose of our audit and have found them to be satisfactory;
(b) read with the matter discussed in Note 18.01 of standalone financial statements, transactions of the Bank, which have come to our notice, have been within the powers of the Bank; and
(c) since the key operations of the Bank are automated with the key applications integrated to the core banking systems, the audit is carried out centrally as all the necessary records and data required

162 IDFC FIRST Bank

for the purposes of our audit are available therein. However, during the course of our audit we have visited 27 branches.

B. Further, as required by Section 143(3) of the Act, we report that:
(a) we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
(b) in our opinion, proper books of account as required by law have been kept by the Bank so far as it appears from our examination of those books;
(c) the standalone balance sheet, the standalone profit and loss account, and the standalone cash flow statement dealt with by this Report are in agreement with the books of account;
(d) in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, to the extent they are not inconsistent with the accounting policies prescribed by RBI;
(e) on the basis of the written representations received from the directors as on 31 March 2021 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2021 from being appointed as a director in terms of Section 164 (2) of the Act; and
(f) with respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Bank and the operating effectiveness of such controls, refer to our separate Report in ‘Annexure A’.
C. With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

litigations as at 31 March 2021 on its financial position in its standalone financial statements - Refer Schedule 12 and Note 18.58 to the standalone financial statements;

ii. the Bank has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Schedule 12 and Note 18.58 to the standalone financial statements;
iii. there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Bank; and
iv. The disclosures required on holdings as well as dealing in Specified bank notes during the period from 8 November 2016 to 30 December 2016 as envisaged in notification G.S.R. 308(E) dated 30 March 2017 issued by the Ministry of Corporate Affairs is not applicable to the Bank.
D. With respect to the other matters to be included in the Auditors’ Report in accordance with the requirements of Section 197(16) of the Act, as amended:

In our opinion and to the best of our information and according to the explanations given to us, being a banking company, Section 35B (2A) of the Banking Regulation Act, 1949 regarding managerial remuneration applies to the Bank and Section 197 (16) of the Act is not applicable.

For B S R & Co. LLP Chartered Accountants ICAI Firm Registration No: 101248W/W-100022

Manoj Kumar Vijai

Partner Membership No:046882 UDIN: 21046882AAAAAG4376

Place: Mumbai Date: 8 May 2021

i. the Bank has disclosed the impact of pending

Annual Report 2020-21 163

Annexure A to the Independent Auditor’s Report of even date on the standalone financial statements of IDFC FIRST Bank Limited for the period ended 31 March 2021

Report on the internal financial controls with reference to the aforesaid standalone financial statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013

(Referred to in paragraph (B (f)) under ‘Report on other legal and regulatory requirements’ section of our report of even date)

Opinion

We have audited the internal financial controls with reference to standalone financial statements of IDFC FIRST Bank Limited (the ‘Bank’) as of 31 March 2021 in conjunction with our audit of the standalone financial statements of the Bank for the year ended on that date.

In our opinion, the Bank has, in all material respects, adequate internal financial controls with reference to standalone financial statements and such internal financial controls were operating effectively as at 31 March 2021, based on the internal financial controls with reference to standalone financial statements criteria established by the Bank considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (the ‘Guidance Note’).

Management’s responsibility for internal financial

controls

The Bank’s management and the Board of Directors are responsible for establishing and maintaining internal financial controls based on the internal financial controls with reference to standalone financial statements criteria established by the Bank considering the essential components of internal control stated in the Guidance Note. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Bank’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013 (the ‘Act’).

Auditor’s responsibility

Our responsibility is to express an opinion on the Bank’s internal financial controls with reference to standalone financial statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing prescribed under section 143 (10) of the Act, to the extent applicable to an audit of internal financial controls with reference to standalone financial statements. Those Standards and the Guidance Note require that we comply with ethical requirements and plan

and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to standalone financial statements were established and maintained and whether such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls with reference to standalone financial statements and their operating effectiveness. Our audit of internal financial controls with reference to standalone financial statements included obtaining an understanding of such internal financial controls, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Bank’s internal financial controls with reference to standalone financial statements.

Meaning of internal financial controls over financial

reporting

A bank’s internal financial controls with reference to standalone financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the standalone financial statements for external purposes in accordance with generally accepted accounting principles. A bank’s internal financial controls with reference to standalone financial statements include those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the bank; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of standalone financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the bank are being made only in accordance with authorizations of management and directors of the bank; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the bank’s assets that could have a material effect on the standalone financial statements.

164 IDFC FIRST Bank

Inherent limitations of internal financial controls with reference to standalone financial statements

Because of the inherent limitations of internal financial controls with reference to standalone financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls with reference to standalone financial statements to future periods are subject to the risk that the internal financial controls with reference to standalone financial statements may become inadequate because of changes in conditions, or that the degree of

compliance with the policies or procedures may deteriorate.

For B S R & Co. LLP Chartered Accountants ICAI Firm Registration No: 101248W/W-100022

Manoj Kumar Vijai Partner Membership No:046882 UDIN: 21046882AAAAAG4376

Place: Mumbai Date: 8 May 2021

Annual Report 2020-21 165

Balance Sheet

as at March 31, 2021

Particulars Schedule No.	(`in Thousands) As at March 31, 2021 As at March 31, 2020
Capital and Liabilities
Capital 1	56,758,499 48,099,030
Employees' stock options outstanding 1a	974 -
Reserves and surplus 2	121,319,463 105,326,974
Deposits 3	886,884,214 651,079,712
Borrowings 4	457,860,854 573,971,855
Other liabilities andprovisions 5	108,614,824 113,526,415
TOTAL	1,631,438,828 1,492,003,986

Assets
Cash and balances with Reserve Bank of India 6	47,459,280 33,799,209
Balances with banks and moneyat call and short notice 7	10,819,273 8,108,642
Investments 8	454,117,427 454,045,798
Advances 9	1,005,501,259 855,953,595
Fixed assets 10	12,664,230 10,377,265
Other assets 11	100,877,359 129,719,477
TOTAL	1,631,438,828 1,492,003,986

Contingent liabilities 12	2,124,743,417 2,806,760,832
Bills for collection	12,853,780 9,149,534
Signifcant accounting policies and notes to accounts 17 & 18

The schedules and the accompanying notes to accounts referred to above form an integral part of the standalone Balance Sheet.

As per our report of even date.

The balance sheet has been prepared in conformity with form ‘B’ of the Third Schedule to the Banking Regulation Act, 1949

For B S R & Co. LLP

For and on behalf of the Board of Directors of IDFC FIRST Bank Limited

Chartered Accountants (Firm Registration No: 101248W/W-100022)

Manoj Kumar Vijai Aashish Kamat Partner Director (Membership No. 046882) DIN: 06371682

V. Vaidyanathan Managing Director & Chief Executive Officer DIN: 00082596

Date : May 8, 2021 Place : Mumbai

Satish Gaikwad Head - Legal & Company Secretary

Sudhanshu Jain Chief Financial Officer & Head Corporate Centre

166 IDFC FIRST Bank

Profit & Loss Account

for the year ended March 31, 2021

Schedule No.	(`in Thousands) Year Ended March 31, 2021 Year Ended March 31, 2020
I Income
Interest earned 13	159,678,595 163,075,645
Other income 14	22,536,990 17,221,577
TOTAL	182,215,585 180,297,222
II Expenditure
Interest expended 15	85,875,968 102,319,989
Operatingexpenses 16	70,932,833 58,609,874
Provisions and contingencies 18.29	20,883,981 48,009,463
TOTAL	177,692,782 208,939,326
III Net Proft / (Loss) for the year (I-II)	4,522,803 (28,642,104)
Balance in proft and loss account brought forward from previous year	(35,602,576) (5,300,472)
IV Amount Available for Appropriation	(31,079,773) (33,942,576)
V Appropriations :
Transfer to statutoryreserve 18.31	1,135,000 -
Transfer to investment reserve 18.31	3,350,000 -
Transfer to capital reserve 18.31	1,485,000 1,660,000
Transfer to special reserve 18.31	240,000 -
Transfer to investment fuctuation reserve 18.31	- -
Dividendpaid(includes tax on dividend) 18.53	- -
Balance inproft and loss account carried forward	(37,289,773) (35,602,576)
TOTAL	(31,079,773) (33,942,576)
VI Earnings Per Share 18.47
(Face value`10per share)
Basic(`)	0.82 (5.98)
Diluted(`)	0.81 (5.91)
Signifcant accounting policies and notes to accounts 17 & 18

The schedules and the accompanying notes to accounts referred to above form an integral part of the Profit and Loss Account. As per our report of even date.

For B S R & Co. LLP

For and on behalf of the Board of Directors of IDFC FIRST Bank Limited

Chartered Accountants (Firm Registration No: 101248W/W-100022)

Manoj Kumar Vijai Partner (Membership No. 046882)

Aashish Kamat Director DIN: 06371682

V. Vaidyanathan

Managing Director & Chief Executive Officer DIN: 00082596

Date : May 8, 2021 Place : Mumbai

Satish Gaikwad Head - Legal & Company Secretary

Sudhanshu Jain Chief Financial Officer & Head Corporate Centre

Annual Report 2020-21 167

Cash Flow Statement

for the year ended March 31, 2021

Schedule No.	(`in Thousands) Year Ended March 31, 2021 Year Ended March 31, 2020
A Cash fow from operating activities
Proft/ (Loss) after tax	4,522,803 (28,642,104)
Add: Provision for tax	235,040 4,856,929
Netproft/ (loss) before taxes	4,757,843 (23,785,175)
Adjustments for :
Depreciation on fxed assets 16(V)	3,293,752 3,054,447
Amortization of deferred employee compensation 16(I)	974 -
Amortisation ofpremium on held to maturityinvestments	1,061,129 1,286,952
Provision/ (Write back)on depreciation in value of investments 18.29	(8,203,859) 10,514,904
Provision towards nonperformingadvances 18.29	9,450,777 4,415,807
Provision for restructured assets 18.29	993,198 205,915
Provision/ (Write back)on identifed standard assets 18.29	811,004 (410,618)
Provision/ (Write back)for standard assets 18.29	958,147 3,309,472
Bad-debts includingtechnical/ prudential write off 18.29	23,870,190 13,864,356
Loss/ (Proft)on sale of fxed assets(net) 14(IV)	(156,565) 1,731
Otherprovisions and contingencies 18.29	(7,230,416) 11,252,696
Adjustments for :
(Increase) / decrease in investments (excluding held to maturity investment and investment in subsidiary)	29,909,122 152,616,283
Increase in advances	(183,578,718) (11,006,196)
Increase/ (Decrease)in deposits	235,804,502 (53,710,374)
(Increase) /Decrease in other assets	30,459,300 (25,639,600)
Increase/ (Decrease)in other liabilities andprovisions	(6,937,590) 24,584,931
Direct taxes(paid) /refund(net)	5,351,934 (1,287,424)
Net cash fowgenerated from operating activities(A)	140,614,724 109,268,106
B Cash fow from investing activities
Purchase of fxed assets	(5,774,002) (4,005,264)
Proceeds from sale of fxed assets	349,850 73,872
Increase in held to maturityinvestments	(22,838,021) (33,710,082)
Net cash fow used in investing activities(B)	(28,262,173) (37,641,474)

168 IDFC FIRST Bank

Cash Flow Statement

for the year ended March 31, 2021

C	Cash fow from fnancing activities
	Decrease in borrowings	(116,111,001) (125,862,047)
	Proceeds from issue of share capital	20,129,152 475,496
	Net cash fow used in fnancing activities(C)	(95,981,849) (125,386,551)
	Net increase/ (decrease)in cash and cash equivalents(A+B+C)	16,370,702 (53,759,919)
	Cash and cash equivalents at the beginningof theyear	41,907,851 95,667,770
	Cash and cash equivalents at the end of theyear	58,278,553 41,907,851
	Represented by:
	Cash and Balances with Reserve Bank of India	6 47,459,280 33,799,209
	Balances with Banks and Moneyat Call and Short Notice	7 10,819,273 8,108,642
	Cash and cash equivalents at the end of theyear	58,278,553 41,907,851

As per our report of even date.

For B S R & Co. LLP

For and on behalf of the Board of Directors of IDFC FIRST Bank Limited

Chartered Accountants (Firm Registration No: 101248W/W-100022)

Manoj Kumar Vijai Aashish Kamat Partner Director (Membership No. 046882) DIN: 06371682

V. Vaidyanathan

Managing Director & Chief Executive Officer DIN: 00082596

Date : May 8, 2021 Place : Mumbai

Satish Gaikwad Head - Legal & Company Secretary

Sudhanshu Jain

Chief Financial Officer & Head Corporate Centre

Annual Report 2020-21 169

Schedules

forming part of the balance sheet as at March 31, 2021

Schedule 1 - Capital

	(`in Thousands) As at March 31, 2021 As at March 31, 2020
Authorised capital
7,500,000,000(Previous Year - 5,325,000,000)equityshares of`10 each	75,000,000 53,250,000
3,800,000(Previous Year - 3,800,000)Preference shares of`100 each	380,000 380,000
Equity Share Capital^
Issued, subscribed andpaid-up capital
5,675,849,855(Previous Year - 4,809,903,016)equityshares of`10 each,fully paid up	56,758,499 48,099,030
TOTAL	56,758,499 48,099,030

^ Includes 3,506,135 equity shares (Previous Year 28,226,604 equity shares) allotted pursuant to the exercise of options under the Employee Stock Option Scheme.

Also includes additional capital raised by Bank aggregating to 2,000 crore (rounded off) on a preferential basis through issuance of 862,440,704 equity shares, fully paid-up, at the price of 23.19/- per equity share (including premium).

Schedule 1a - Employees’ Stock Options Outstanding

Schedule 1a - Employees’ Stock Options Outstanding
Employees’ stock option outstanding	974 -
TOTAL	974 -

Schedule 2 - Reserves and Surplus

	(`in Thousands) As at March 31, 2021 As at March 31, 2020
I Statutory reserves
Openingbalance	8,197,951 8,197,951
Additions duringtheyear(refer note 18.31)	1,135,000 -
Deduction duringtheyear	- -
Closingbalance	9,332,951 8,197,951
II Capital reserves
Openingbalance	4,575,100 2,915,100
Additions duringtheyear(refer note 18.31)	1,485,000 1,660,000
Deduction duringtheyear	- -
Closingbalance	6,060,100 4,575,100
III Share premium
Openingbalance	118,142,291 117,949,061
Additions duringtheyear	11,469,684 193,230
Deduction duringtheyear	- -
Closingbalance	129,611,975 118,142,291
IV General reserve
Openingbalance	6,882,161 6,882,161
Additions duringtheyear(refer note 18.31)	- -
Deduction duringtheyear	- -
Closingbalance	6,882,161 6,882,161
V Amalgamation Reserve	(2,317,951) (2,317,951)
VI Special reserve
Openingbalance	5,450,000 5,450,000
Additions duringtheyear(refer note 18.31)	240,000 -
Deduction duringtheyear	- -
Closingbalance	5,690,000 5,450,000

170 IDFC FIRST Bank

Schedules

forming part of the balance sheet as at March 31, 2021

	(`in Thousands) As at March 31, 2021 As at March 31, 2020
VII Investment Fluctuation Reserve
Openingbalance	- -
Additions duringtheyear(refer note 18.31)	- -
Deduction duringtheyear	- -
Closingbalance	- -
VIII Investment Reserve Account (IRA)
Openingbalance	- -
Additions duringtheyear	3,350,000 -
Deduction duringtheyear(refer note 18.31)	- -
Closingbalance	3,350,000 -
IX Balance in Proft and Loss Account	(37,289,773) (35,602,576)
TOTAL(I+II+III+IV+V+VI+VII+VIII+IX)	121,319,463 105,326,974

Schedule 3 - Deposits

	(`in Thousands) As at March 31, 2021 As at March 31, 2020
A I Demand deposits
(i)From banks	3,343,654 1,599,190
(ii)From others	50,812,542 40,868,300
II Savings bank deposits	404,805,164 166,929,213
III Term deposits
(i)From banks	24,490,499 19,604,899
(ii)From others	403,432,355 422,078,110
TOTAL(I+II+III)	886,884,214 651,079,712
B I Deposits of branches in India	886,884,214 651,079,712
II Deposits of branches outside India	- -
TOTAL	886,884,214 651,079,712

Schedule 4 - Borrowings

	(`in Thousands) As at March 31, 2021 As at March 31, 2020
I Borrowings in India
(i)Reserve Bank of India	- -
(ii)Other banks ^	17,746,794 40,924,349
(iii)Other institutions and agencies$	411,357,414 486,367,444
II Borrowings outside India	28,756,646 46,680,062
TOTAL(I + II)	457,860,854 573,971,855
Secured borrowings included in I and II above *	50,824,682 70,855,239

^ Borrowings from banks include long term infrastructure bonds of 281.50 crore (Previous Year 281.50 crore).

$ Borrowings from other institutions and agencies include long term infrastructure bonds of 9,226.80 crore (Previous Year 10,152.50 crore) and Bonds under section 80CCF of the Income tax Act, 1961 of 855.08 crore (Previous Year 1,689.92 crore).

Secured borrowings includes borrowings under Collateralised Borrowing and Lending Obligation / Triparty Repo (TREPS), market repurchase transactions with banks & financial institutions, transactions under Liquidity Adjustment Facility and Marginal Standing Facility secured against Government Securities.

Annual Report 2020-21 171

Schedules

forming part of the balance sheet as at March 31, 2021

Schedule 5 - Other Liabilities and Provisions

Schedule 5 - Other Liabilities and Provisions
	(`in Thousands) As at March 31, 2021 As at March 31, 2020
I Billspayable	9,155,950 3,831,576
II Inter-offce adjustments(net)	- -
III Interest accrued	25,269,754 34,887,705
IV Contingentprovision against standard assets(refer note 18.19)	9,594,974 7,542,712
V Others(including provisions)	64,594,146 67,264,422
TOTAL(I + II + III + IV + V)	108,614,824 113,526,415

Schedule 6 - Cash and Balances with Reserve Bank of India

	(`in Thousands) As at March 31, 2021 As at March 31, 2020
I Cash in hand(includingforeign currencynotes)	5,776,109 5,033,988
II Balances with Reserve Bank of India:
(i)In current accounts	41,683,171 28,765,221
(ii)In other accounts	- -
TOTAL(I + II)	47,459,280 33,799,209

Schedule 7 - Balances with Banks and Money at call and short notice

	(`in Thousands) As at March 31, 2021 As at March 31, 2020
I In India
(i) Balance with banks
(a)In current accounts	2,631,342 1,805,098
(b)In other deposit accounts	- -
(ii) Moneyat call and short notice
(a)With banks	4,470,000 5,250,000
(b)With other institutions	958,978 -
TOTAL	8,060,320 7,055,098

II Outside India
(i)In current accounts	398,324 189,669
(ii)In other deposit accounts	- -
(iii)Moneyat call and short notice	2,360,629 863,875
TOTAL	2,758,953 1,053,544
GRAND TOTAL(I+II)	10,819,273 8,108,642

172 IDFC FIRST Bank

Schedules

forming part of the balance sheet as at March 31, 2021

Schedule 8 - Investments (Net of Provisions)

Schedule 8 - Investments (Net of Provisions)
	(`in Thousands) As at March 31, 2021 As at March 31, 2020
I Investments in India in:
(i) Government securities	354,464,011 330,138,163
(ii) Other approved securities	- -
(iii)Shares#	4,615,388 3,827,243
(iv)Debentures and bonds	40,919,490 50,797,993
(v)Subsidiaries and/orjoint ventures	2,324,021 2,324,021
(vi)Others(venture capital funds,securityreceipts,PTCs etc.)	51,791,257 66,955,118
Total Investments in India	454,114,167 454,042,538

II Investments Outside India in:
(i) Government securities(includinglocal authorities)	- -
(ii) Subsidiaries and/orjoint ventures abroad	- -
(iii)Others(EquityShares)	3,260 3,260
Total Investments outside India	3,260 3,260
GRAND TOTAL(I+II)	454,117,427 454,045,798

Includes investments in associates

Schedule 9 - Advances (net of provisions)

Schedule 9 - Advances (net of provisions)
	(`in Thousands) As at March 31, 2021 As at March 31, 2020
A (i) Billspurchased and discounted	17,346,701 15,650,404
(ii) Cash credits,overdrafts and loans repayable on demand	65,618,583 55,798,000
(iii) Term loans#	922,535,975 784,505,191
TOTAL	1,005,501,259 855,953,595

B (i) Secured bytangible assets *	568,100,921 516,370,564
(ii)Covered bybank/ governmentguarantees$	18,917,010 9,846,717
(iii)Unsecured	418,483,328 329,736,314
TOTAL	1,005,501,259 855,953,595

C I Advances in India
(i) Prioritysector	272,239,206 199,738,539
(ii) Public sector	3,600,000 8,600,000
(iii) Banks	2,907,752 3,138,122
(iv) Others	726,754,301 644,476,934
TOTAL	1,005,501,259 855,953,595

C II Advances Outside India
(i) Due from banks	- -
(ii) Due from others :
(a)Billspurchased and discounted	- -
(b)Syndicated loans	- -
(c)Others	- -
TOTAL	- -
GRAND TOTAL(C I+C II)	1,005,501,259 855,953,595

The above advances are net of provisions of 3,173.12 crore (Previous Year 2,153.36 crore).

Net of borrowings under Inter Bank Participation Certificate (IBPC) Nil for current year (previous year ` 3,484.12 crores)

Includes advances against book debts

$ Includes advances against LCs issued by banks

Annual Report 2020-21 173

Schedules

forming part of the balance sheet as at March 31, 2021

Schedule 10 - Fixed Assets

Schedule 10 - Fixed Assets
	(`in Thousands) As at March 31, 2021 As at March 31, 2020
I Premises (Including Land)
Gross block
At cost at the beginningof theyear	2,963,562 2,963,562
Additions duringtheyear	- -
Deductions duringtheyear	(128,015) -
TOTAL	2,835,547 2,963,562

Depreciation
As at the beginningof theyear	588,914 536,833
Charge for theyear	51,422 52,081
Deductions duringtheyear	(36,148) -
Depreciation to date	604,188 588,914
Net block ofpremises	2,231,359 2,374,648

II Other fxed assets (including furniture and fxtures) (refer note 18.51)
Gross block
At cost at the beginningof theyear	42,489,173 39,178,700
Additions duringtheyear	5,774,002 3,610,730
Deductions duringtheyear	(290,849) (300,257)
TOTAL	47,972,326 42,489,173

Depreciation
As at the beginningof theyear	35,217,220 32,439,508
Charge for theyear	3,242,329 3,002,366
Deductions duringtheyear	(267,387) (224,654)
Depreciation to date	38,192,162 35,217,220
Net block of other fxed assets(including furniture and fxtures)	9,780,164 7,271,953

III CAPITAL WORK-IN-PROGRESS (including capital advances)	652,707 730,664
GRAND TOTAL(I+II+III)	12,664,230 10,377,265

174 IDFC FIRST Bank

Schedules

forming part of the balance sheet as at March 31, 2021

Schedule 11 - Other Assets

Schedule 11 - Other Assets
	(`in Thousands) As at March 31, 2021 As at March 31, 2020
I Inter-offce adjustments(net)	- -
II Interest accrued	16,751,212 16,593,655
III Taxpaid in advance/tax deducted at source(net ofprovisions)	5,148,607 10,522,581
IV Stationeryand stamps	176 97
V Non bankingassets acquired in satisfaction of claims	- -
VI Others *	78,977,364 102,603,144
TOTAL( I + II + III + IV + V + VI)	100,877,359 129,719,477

Includes RIDF Deposit of 2,515.53 crore (Previous Year 2,736.59 crore), Deferred Tax Asset (net) of 1,999.45 crore (Previous Year 2,020.75 crore) and share issue expenses of ` 41.18 crore which shall be adjusted against securities premium to the extent permissible under Companies Act, 2013 on the date of completion of Qualified Institutional Placement i.e. April 6, 2021.

Schedule 12 - Contingent Liabilities

Schedule 12 - Contingent Liabilities
	(`in Thousands) As at March 31, 2021 As at March 31, 2020
I Claims against the bank not acknowledged as debts	684,615 640,506
II Liabilityforpartly paid investments	255,816 143,993
III Liabilityon account of outstandingforward exchange and derivative contracts :
(a)Forward Contracts	686,623,792 732,933,712
(b) Interest rate swaps, currency swaps, forward rate agreement and interest rate futures	1,175,398,844 1,740,855,788
(c)Foreign currencyoptions	19,700,180 75,460,600
Total(a+b+c)	1,881,722,816 2,549,250,100
IV Guaranteesgiven on behalf of constituents
In India	151,181,907 165,222,583
Outside India	- -
V Acceptances,endorsements and other obligations	84,122,392 89,279,212
VI Other items for which the bank is contingentlyliable	6,775,871 2,224,438
GRAND TOTAL(I+II+III+IV+V+VI)	2,124,743,417 2,806,760,832

Annual Report 2020-21 175

Schedules

forming part of profit and loss account for the year ended March 31, 2021

Schedule 13 - Interest Earned

Schedule 13 - Interest Earned
	(`in Thousands) Year Ended March 31, 2021 Year Ended March 31, 2020
I Interest/discount on advances/bills	126,329,781 120,747,996
II Income on investments	30,392,107 39,172,849
III Interest on balances with Reserve Bank of India and other inter-bank funds	1,121,667 805,243
IV Others *	1,835,040 2,349,557
TOTAL	159,678,595 163,075,645

Includes interest on income tax refunds amounting to 32.99 crore (Previous Year 42.89 crore).

Schedule 14 - Other Income

	(`in Thousands) Year Ended March 31, 2021 Year Ended March 31, 2020
I Commission,exchange and brokerage	14,995,606 14,201,187
II Proft/ (loss)on sale of investments(net)	5,969,578 3,904,461
III Proft/ (loss)on revaluation of investments(net)	- -
IV Proft/ (loss)on sale of land,buildings and other assets(net)	156,565 (1,731)
V Proft/ (loss)on exchange/derivative transactions(net)	1,360,828 (1,106,447)
VI Income earned by way of dividends etc. from subsidiaries / companies and / or joint venture abroad / in India	- -
VII Miscellaneous Income	54,413 224,107
TOTAL	22,536,990 17,221,577

Schedule 15 - Interest Expended

Schedule 15 - Interest Expended
	(`in Thousands) Year Ended March 31, 2021 Year Ended March 31, 2020
I Interest on deposits	47,350,847 47,117,972
II Interest on borrowings from Reserve Bank of India/inter-bank borrowings	11,133,766 15,925,879
III Others	27,391,355 39,276,138
TOTAL	85,875,968 102,319,989

Schedule 16 - Operating Expenses

	(`in Thousands) Year Ended March 31, 2021 Year Ended March 31, 2020
I Payments to andprovisions for employees	19,769,758 15,275,824
II Rent,taxes and lighting	3,237,254 2,785,191
III Printingand stationery	461,345 582,771
IV Advertisement andpublicity	822,099 1,391,236
V Depreciation on bank'sproperty	3,293,752 3,054,447
VI Directors' fees,allowance and expenses	19,806 17,197
VII Auditors' fees and expenses	40,352 35,680
VIII Law charges	377,550 73,853
IX Postage,telegrams,telephones etc.	799,850 846,885
X Repairs and maintenance	1,109,496 1,800,849
XI Insurance	902,986 536,293
XII Other expenditure	40,098,585 32,209,648
TOTAL	70,932,833 58,609,874

176 IDFC FIRST Bank

Schedules

forming part of the Financial Statements as at and for the year ended March 31, 2021

17 Significant accounting policies forming part of the financial statements for the year ended March 31, 2021

A Background

IDFC FIRST Bank Limited (Formerly ‘IDFC Bank Limited’) (“the Bank”) was incorporated on October 21, 2014 as a Company under the Companies Act, 2013. Further, the Bank commenced its banking operations on October 1, 2015 after receiving universal banking license from the Reserve Bank of India (‘the RBI’) on July 23, 2015. The Bank has 598 branches and 156 Banking Outlets in India. The Bank’s shares are listed on National Stock Exchange of India Limited and BSE Limited.

B Basis of preparation

The financial statements have been prepared based on historical cost convention and accrual basis of accounting, unless otherwise stated and are in accordance with the requirements prescribed under Section 29 and third schedule of the Banking Regulation Act, 1949 and in conformity with Generally Accepted Accounting Principles in India to comply with the statutory requirements prescribed under the circulars and guidelines issued by the RBI from time to time and the Accounting Standards notified under section 133 of the Companies Act, 2013 read together with Companies (Accounts) Rules, 2014 and the Companies (Accounting Standards) Amendment Rules, 2016 to the extent applicable and practices generally prevalent in the banking industry in India.

C Use of estimates

The preparation of financial statements in conformity with the Generally Accepted Accounting Principles requires the Management to make estimates and assumptions that affects the reported amount of assets and liabilities, revenues and expenses and disclosure of contingent liabilities at the date of the financial statements. The management believes that the estimates used in preparation of financial statements are prudent and reasonable. Actual results could differ from these estimates. Any revision to the accounting estimates is recognised prospectively in the current and future periods.

D Significant accounting policies :

17.01 Investments

Classification :

In accordance with the RBI Guidelines on investment classification and valuation; Investments are classified into following categories:

Held for Trading (‘HFT’),
Available for Sale (‘AFS’) and
Held to Maturity (‘HTM’).

Transfer of securities between categories of investments is accounted as per the RBI guidelines. However, for disclosure in the Balance Sheet, investments in India are classified under six categories - Government Securities, Other approved securities, Shares, Debentures and Bonds, Investment in Subsidiaries / Joint Ventures and Others.

Basis of classification and accounting :

Investments that are held principally for resale within 90 days from the date of purchase are classified under HFT category. Further, as per the RBI guidelines, HFT securities, which remain unsold for a period of 90 days are reclassified to AFS category. Investments which the Bank intends to hold till maturity are classified as HTM securities. Investments which are not classified in either of the above categories are classified under AFS category. Investments in the equity of subsidiaries / joint ventures are categorised as HTM in accordance with the RBI guidelines. Purchase and sale transactions in securities are recorded under settlement date of accounting, except in the case of equity shares where trade date accounting is followed.

Cost of acquisition :

Costs such as brokerage and commission pertaining to investments paid at the time of acquisition are charged to the Profit and Loss Account.
Cost of investments is computed based on First in First out Method for all categories of Investments including Short sales.
Broken period interest (the amount of interest from the previous interest payment date till the date of purchase / sale of instrument) on debt instrument is treated as a revenue item.

Valuation :

Investments classified under HTM category are carried at their acquisition cost and not marked to market. Any premium on acquisition is amortised over the remaining maturity period of the security on a straight line method basis, while discount is not accreted. Such amortisation of premium is adjusted against interest income under the head “Income from investments” as per the RBI guidelines. Any diminution, other than temporary, in the value of investments in HTM Category is provided.

Investments classified under AFS and HFT categories are marked to market as per the extant RBI guidelines. Traded investments are valued based on the trades / quotes on the recognised stock exchanges, or prices/ yields declared by Primary Dealers Association of India (‘PDAI’) jointly with Fixed Income Money Market and Derivatives Association (‘FIMMDA’) / Financial Benchmark India Pvt. Ltd. (‘FBIL’), periodically.

Annual Report 2020-21 177

Schedules

forming part of the Financial Statements as at and for the year ended March 31, 2021

The market value of unquoted government securities which qualify for determining the Statutory Liquidity Ratio (‘SLR’) included in the AFS and HFT categories is computed as per the prices published by FIMMDA / FBIL.
Special bonds such as oil bonds, DISCOM bonds, fertilizer bonds etc. that do not qualify for SLR are valued using the prices published by FIMMDA/ FBIL by applying the appropriate mark up above the corresponding yield on GOI securities.
The valuation of other unquoted fixed income securities (viz. State Government securities, Other approved securities, Bonds and Debentures) and preference shares, wherever linked to the YTM rates, is done with a mark-up (reflecting associated credit and liquidity risk) over the YTM rates for government securities published by FIMMDA / FBIL. For Tax-free bonds, the valuation is done after grossing up the coupon in line with FIMMDA/ FBIL guidelines.
Unquoted equity shares are valued at the breakup value, if the latest balance sheet is available or at ` 1 as per the RBI guidelines.
Units of mutual funds are valued at the latest repurchase price / net asset value (‘NAV’) declared by the mutual fund.
Treasury Bills, Commercial Papers and Certificate of Deposits being discounted instruments, are valued at carrying cost. Accretion of discount on discounted Money Market Securities is computed on straight line method and for long term discounted securities, constant YTM method is used.
Security receipts (SR) are valued as per NAV as provided by the Reconstruction Company (‘RC’) / Securitization Company (SC).
Units of Venture Capital Funds (‘VCF’) and Alternate Investment Fund (‘AIF’) held under AFS category are marked to market based on the NAV provided by VCF/AIF based on the latest audited financial statements. In case the audited financials are not available for a period beyond 18 months, the investments are valued at ` 1 per VCF/AIF. Investments in units of VCFs is classified under HTM for an initial period of three years and valued at cost during this period, in accordance with the RBI guidelines.
Priority Sector pass through certificates (‘PTCs’) are valued at book value as per FIMMDA guidelines.

Investments in subsidiaries are categorised as HTM and assessed for impairment to determine permanent diminution, if any, in accordance with the RBI guidelines. Dividend received from pre-acquisition profits is reduced from cost of investments as per AS - 13 - Accounting for Investments.

Securities are valued script wise and depreciation / appreciation is aggregated for each category. Net depreciation, if any, compared to the acquisition cost, in any of the categories, is charged to the Profit and Loss Account. The net appreciation in each category, if any, is not recognised except to the extent of depreciation already provided. Net depreciation required to be provided for in any one classification is not reduced on account of net appreciation in any other classification. The valuation of investments includes securities under repo transactions.

Non-performing investments (‘NPI’) are identified and depreciation / provision is made thereon based on the RBI guidelines. The depreciation / provision against NPI is not set off against the appreciation in respect of other performing securities. Interest on non-performing investments is recognised on cash basis.

As a prudent risk measure, specific provision against identified investments are made based on management’s assessment of impairment based on qualitative factors, subject to minimum provision determined under FIMMDA/FBIL valuation guidelines. These provisions are netted off from carrying value of such investments. Further, interest on such identified investments is recongnised on cash basis.

Bonds and debentures are classified as other receivables under other assets on maturity date and disclosed under Schedule - 11

Investment Fluctuation Reserve (‘IFR’) :

The RBI has advised banks to create an Investment Fluctuation Reserve (‘IFR’) with effect from FY 2018-19. Accordingly, an amount not less than the lower of net profit on sale of investments during the year or net profit for the year less mandatory appropriations shall be transferred to the IFR, until the amount of IFR is at least 2 percent of the HFT and AFS portfolio, on a continuing basis. Where feasible, this should be achieved within a period of 3 years.

Further, the Bank may, at its discretion, draw down the balance available in IFR in excess of 2 percent of its HFT and AFS portfolio, for credit to the balance of profit/ loss as disclosed in the profit and loss account at the end of any accounting year. In the event the balance in the IFR is less than 2 percent of the HFT and AFS investment portfolio, a draw down is permitted subject to the following conditions:

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forming part of the Financial Statements as at and for the year ended March 31, 2021

(a) The drawn down amount is used only for meeting the minimum Common Equity Tier 1/Tier 1 capital requirements by way of appropriation to free reserves or reducing the balance of loss and
(b) The amount drawn down is not more than the extent the MTM provisions made during the aforesaid year exceed the net profit on sale of investments during that year.

IFR is eligible for inclusion in Tier 2 capital.

Short sales :

The Bank undertakes short sale transactions in Central Government dated securities in accordance with the RBI guidelines and these are shown under Schedule 8 - Investments. The short position is marked to market along with other securities in that category and loss, if any, is charged to the Profit and Loss Account while gain, if any, is ignored. Profit / loss on settlement of the short position are recognised in the Profit and Loss Account.

Repo and Reverse Repo Transaction :

In accordance with the RBI guidelines, Repo and Reverse Repo transactions in government securities and corporate debt securities, including transactions conducted under Liquidity Adjustment Facility (‘LAF’) and Marginal Standby Facility (‘MSF’) with RBI are reflected as borrowing and lending transactions respectively. Borrowing cost on repo transactions is accounted as interest expense and revenue on reverse repo transactions are accounted as interest income.

17.02 Advances

In accordance with the RBI guidelines, advances are classified as performing and non-performing. NonPerforming advances (‘NPA’) are further classified as Sub-Standard, Doubtful and Loss Assets in accordance with the RBI guidelines on Income Recognition and Asset Classification (‘IRAC’). In addition, based on extant environment or specific information on risk of possible slippages or current pattern of servicing, the Bank makes provision on specific advances which are classified as standard advances as these are not non-performing advances (‘identified advances’). Advances are stated net of provisions against NPA, specific provisions against identified advances, provisions for non-performing funded interest term loan and provisions in lieu of diminution in the fair value of restructured asset.

The Bank may transfer advances through inter-bank participation with and without risk. In accordance with the RBI guidelines, in the case of participation with risk, the aggregate amount of the participation issued by the Bank is reduced from advances and where the Bank is participating, the aggregate amount of the

participation is classified under advances. In the case of participation without risk, the aggregate amount of participation issued by the Bank is classified under borrowings and where the Bank is participating, the aggregate amount of participation is shown as due from banks under advances.

The Bank makes general provisions on all standard advances and restructured advances based on the rates under each category of advance as prescribed by the RBI. In addition, the Bank makes provisions for standard assets in telecom sector (as defined by RBI) and other stressed sectors, at rates higher than the regulatory minimum, based on evaluation of risk and stress as per the Board approved policy. The provision on standard advances is not reckoned for arriving at net NPAs. The provision against standard advances (other than provision against identified advances) is shown separately as “Contingent Provisions against Standard Assets” under “Schedule 5 - Other Liabilities”.

In case of corporate loans, specific loan loss provisions in respect of identified advances and non-performing advances are made based on the management’s assessment of the degree of impairment, subject to the minimum provisioning level prescribed by the RBI. The Bank can provide additional specific provision on standard advances at higher than prescribed rates as a prudent risk measure. These provisions are reviewed and reassessed at least once in a year. Provision on / write off of homogeneous retail loans and advances, subject to minimum provisioning requirement of the RBI, is assessed on the basis of ageing of loans as prescribed in the Board approved policy of the Bank. Provision due to diminution in the fair value of restructured / rescheduled loans and advances is made in accordance with the applicable the RBI guidelines.

The RBI issued guidelines on enhancing credit supply for Large Borrowers through Market Mechanism dated August 25, 2016 which are applicable to exposure on all single counterparties of the Bank. The bank’s incremental exposures from FY 2018-19 onwards to the specified borrowers exceeding the Net Permitted Lending Limits (‘NPLL’) will attract prudential measures. Incremental Exposure of the Banking System to a specified borrower beyond NPLL shall be deemed to carry higher risk which shall be recognized by way of additional standard asset provisioning and higher risk weights.

In accordance with the RBI guidelines relating Large Exposures Framework – Increase in Exposure to a Group of Connected Counterparties dated May 23, 2020, banks exposure to a group of connected counterparties has been increased from 25% to 30% of the eligible capital base with a view to facilitate greater

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forming part of the Financial Statements as at and for the year ended March 31, 2021

flow of resources to corporates under COVID-19 pandemic till Jun 30, 2021.

In the event of substantial erosion in value of loan and remote possibility of collection, non performing loans with adequate provisions are evaluated for technical / prudential write off based on Bank’s policy and the RBI guidelines. Such write off does not have an impact on the Bank’s legal claim against the borrower. The Bank may also write off non performing loans on one time settlement (‘OTS’) with the borrower or otherwise. Amounts recovered from borrowers against debts written off is recognised in the Profit and Loss Account under “Provisions and contingencies”.

Further, the RBI has issued guidelines on “Prudential Framework for Resolution of Stressed Assets dated June 07, 2019” with a view to providing a framework for early recognition, reporting and time bound resolution of stressed assets. The Bank has put in place Boardapproved policy for resolution of distressed borrowers with an objective to initiate the process of resolution even before a default and prior to the initiation of proceedings under the IBC.

The Bank is required to make an additional provisioning for the delayed implementation of Resolution Plan (RP) as under:

(a) Additional provision of 20% of total outstandings if RP is implemented beyond 180 days from the end of the review period
(b) Additional provision of 35% of total outstandings if RP is implemented beyond 360 days from the end of the review period

The additional provisions shall be made over and above the higher of the following, subject to the total provisions held being capped at 100% of total outstanding:

(a) The provisions already held; or,
(b) The provisions required to be made as per IRAC norms

In accordance with the RBI guidelines relating to COVID-19 Regulatory Package dated April 17, 2020 and May 23 , 2020, it has been decided that in respect of accounts which were within the Review Period as on March 1, 2020, the period from March 1, 2020 to August 31, 2020 shall be excluded from the calculation of the 30-day timeline for the Review Period. In respect of all such accounts, the residual Review Period shall resume from September 1, 2020, upon expiry of which the lenders shall have the usual 180 days for resolution.

In respect of accounts where the Review Period was over, but the 180-day resolution period had not expired

as on March 1, 2020, the Bank may at its discretion extend such timeline for resolution by 180 days from the date on which the 180-day period was originally set to expire, on case by case basis.

COVID-19 – Regulatory Package

In accordance with the RBI guidelines on ‘COVID-19 Regulatory Package’ of March 27, 2020, April 17, 2020 and May 23, 2020, the Bank granted moratorium on repayment of instalments and / or interest, as applicable, due between March 1, 2020 and August 31, 2020 to all eligible borrowers. For all eligible accounts, where the moratorium is granted, the asset classification shall remain stand still during the moratorium period (i.e. the number of days past-due shall exclude the moratorium period for the purposes of asset classification under the Income Recognition, Asset Classification and Provisioning norms).

The Bank made general provision in terms of the RBI circular dated April 17, 2020. These provisions are adjusted against the actual provisioning requirements for slippages from the accounts reckoned for such provisions. The residual provisions at the end of the financial year are written back or adjusted against the provisions required for all other accounts.”

In accordance with Resolution Framework for COVID-19 announced by the RBI on August 6, 2020, the Bank has implemented a one-time restructuring for certain eligible borrowers and such borrowers are classified as Standard Restructured in accordance with this framework. On successful implementation of resolution plan under this framework, the Bank is required to maintain provisions which should be higher of 10% of the restructured debt or provisions required under IRAC norms before the implementation of the Resolution Plan.

Unhedged Foreign Currency Exposure

Provision for Unhedged Foreign Currency Exposure of borrowers is made as per the RBI guidelines and disclosed under Contingent Provision against Standard Assets. In addition to the provisions required to be held according to the asset classification status, provisions are held for individual country exposure (other than for home country as per the RBI guidelines). The countries are categorised into seven risk categories as mentioned in the ECGC guidelines namely insignificant, low, moderate, high, very high, restricted and off-credit and provision is made on exposures exceeding 180 days on a graded scale ranging from 0.25% to 100%. For exposures with contractual maturity of less than 180 days, 25% of the normal provision requirement is held. If the funded exposure (net) of the Bank in respect of each country does not exceed 1% of the total assets, no provision is maintained on such country exposure.

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forming part of the Financial Statements as at and for the year ended March 31, 2021

17.03 Revenue recognition

Interest income :

Interest Income is recognised on accrual basis in the Profit and Loss Account, except in the case of NonPerforming Assets (‘NPAs’) and identified advances, where it is recognised upon realisation. The unrealised interest, fees and charges booked in respect of NPAs and identified advances and any other facility given to the same borrower is reversed to the Profit and Loss and subsequent interest income is accounted into interest suspense.

In accordance with the instructions in the RBI Circular on Refund / adjustment of ‘interest on interest’ dated April 07, 2021, the Bank shall refund / adjust ‘interest on interest’ to all borrowers including those who had availed of working capital facilities during the moratorium period, irrespective of whether moratorium had been fully or partially availed, or not availed. As required by the RBI notification, the methodology for calculation of such interest on interest has recently been circulated by the Indian Banks’ Association. The Bank is in process of implementing this circular. As at March 31, 2021, the Bank has created a liability towards estimated interest relief and reduced the same from the interest income.

The unrealized interest represented by Funded Interest Term Loan (‘FITL’) is reversed in Profit & Loss Account with the corresponding credit in Sundry Liabilities Account- Interest Capitalization account. Interest income is booked in Profit & Loss account upon realization, by debiting the sundry liabilities account.

Subvention income on loans is recognised as income over the tenor of the loan agreements. The unamortized balance is disclosed as part of other liabilities. On foreclosure, balance unamortised subvention income is recognised in the Profit and Loss Account. Income on retained interest in the assigned asset, if any, is accounted on accrual basis except in case of NPAs wherein interest income is recognised on receipt basis as per RBI guidelines.

Interest Income on coupon bearing securities is recognised over the tenure of the instrument on a straight line method and on non-coupon bearing securities over the tenure on yield basis. Any premium on acquisition of securities held under HTM category is amortised over the remaining maturity period of the security on a straight line method basis.

Dividend on equity shares, preference shares and on mutual fund units is recognised as income when the right to receive the dividend is established.

Fees and charges :

Loan originating fees, when it becomes due, is recognised upfront as income. Arrangership / syndication fee is accounted on completion of the agreed service and when right to receive is established. Fee and commission income is recognised as income when due and reasonable right of recovery is established and can be reliably measured.

Commission received on guarantees and letter of credit issued is recognised on straight line basis over the period of the contract or the period for which commission is received.

Fee on rescheduling of outstanding debt is recognised on accrual basis over the period of time covered by the rescheduled extension period.

Underwriting commission earned to the extent not reduced from the cost of the securities is recognised as fees on closure of issue.

All other fees and charges is recognised as and when they become due and revenue can be reliably measured and reasonable right of recovery is established.

Investments :

Profit / loss on sale of investments under the HTM, AFS and HFT categories are recognised in the Profit and Loss Account. The profit from sale of investment under HTM category, is appropriated from Profit and Loss Account to “Capital Reserve” (net of applicable taxes and transfer to Statutory Reserve) in accordance with the RBI guidelines.

Exchange gain or loss arising on account of revaluation of monetary assets and liabilities is recognised in the Profit and Loss Account as per the revaluation rates published by Foreign Exchange Dealers’ Association of India (‘FEDAI’).

Other operating income : Securitisation transactions :

Net income arising on account of sale of standard asset, being the difference between the sale consideration and book value, is amortised over the life of the securities issued by the Special Purpose Vehicle (SPV). Any loss arising on account of sale is recognised in the Profit and Loss Account in the year in which the sale occurs.

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forming part of the Financial Statements as at and for the year ended March 31, 2021

SRs by SC / RC, the sale will be recognised at lower of redemption value of SRs and net book value of financial asset sold. On realisation, the proceeds are reduced against the carrying value of SRs and surplus, if any, is recognised in the Profit and Loss Account.

With effect from April 1, 2018 investments in SRs by more than 10 percent of the SRs backed by the assets sold and issued under the scheme of securitization, provisioning requirement on SRs will be higher of provisioning rate required in terms of net asset value declared by the SCs/RCs or provisioning rate as applicable to the underlying loans, assuming that the loans notionally continued in the books.

Direct Assignments :

Profit / premium arising on account of sale of standard asset, being the difference between the sale consideration and book value, is amortised over the residual life of the loan. Any loss arising on account of sale is recognised in the Profit and Loss Account in the year in which the sale occurs. In case of gain on sale of non-performing assets, the excess provision shall not be reversed but will be utilised to meet the shortfall / loss on account of sale of other non-performing financial assets and shortfall if any is charged to the Profit and Loss Account.

17.04 Priority Sector Lending Certificates (‘PSLCs’)

The bank may enter into transactions for the purchase or sale of Priority Sector Lending Certificates (‘PSLCs’). In case of a purchase transaction the bank buys the fulfilment of priority sector obligation and in case of a sale transaction, the bank sells the fulfilment of priority sector obligation through the RBI trading platform without any transfer of underlying risk or loan assets. Fees paid for purchase of the PSLCs is recorded as ‘Other Expenditure’ and fees received for the sale of PSLCs is recorded as ‘Miscellaneous Income’ in Profit and Loss Account. These are amortised on straight-line basis over the tenor of the certificate.

17.05 Transactions involving foreign exchange

Foreign currency income and expenditure items of domestic operations are translated at the exchange rates prevailing on the date of the transaction. Monetary foreign currency assets and liabilities of domestic and integral foreign operations are translated at closing exchange rates notified by FEDAI relevant to the balance sheet date. The resulting gain or loss on revaluation are included in the Profit and Loss Account in accordance with the RBI / FEDAI guidelines. All outstanding forward exchange contracts are revalued based on the exchange rates notified by FEDAI for specified maturities and at interpolated rates for contracts of interim maturities. The forward exchange contracts of longer maturities where exchange rates are not notified

by FEDAI are revalued at the forward exchange rates implied by the swap curves in respective currencies. The resultant gains or losses are recognized in the Profit and Loss Account.

Contingent liabilities on account of forward exchange and derivative contracts, guarantees, acceptances, endorsements and other obligations denominated in foreign currencies are disclosed at closing rates of exchange notified by FEDAI.

17.06 Accounting for derivative transactions

Derivative transactions comprises of forward contracts, futures, swaps and options. The Bank undertakes derivative transactions for trading and hedging on-balance sheet assets and liabilities. All trading transactions are marked to market and resultant gain or loss is recognized in the Profit and Loss Account.

For hedge transactions, the Bank identifies the hedged item (asset or liability) and assesses the effectiveness at inception as well as at each reporting date. Funding swaps are accounted in accordance with FEDAI guidelines. The Hedge swaps and funding swaps are accounted on accrual basis except the swap designated with an asset or liability that is carried at lower of cost or market value in the financial statements. In such cases swaps are marked to market with the resulting gain or loss recorded as an adjustment to the market value of designated asset or liability. Any resultant profit or loss on termination of hedge swaps is amortized over the life of the swap or underlying liability whichever is shorter. Upon ineffectiveness of hedge on re-assessment or termination of underlying, the Bank designates the derivative as trade.

Premium / discount on currency swaps undertaken to hedge foreign currency assets and liabilities and funding swaps is recognized as interest income / expense on accrual basis and is amortized on a prorata basis over the underlying swap period.

Premium in option transaction is recognized as income / expense on expiry or early termination of the transaction. Mark to market gain / loss (adjusted for premium received / paid on options contracts) is recorded as other income. The amounts received / paid on cancellation of option contracts are recognized as realized gain / loss on options. Pursuant to the RBI guidelines, any receivables under derivative contracts which remain overdue for more than 90 days and markto-market gains on all derivative contracts with the same counter-parties are reversed in Profit and Loss Account.

Currency futures contracts are marked-to-market using daily settlement price on a trading day, which is the closing price of the respective futures contracts on that

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forming part of the Financial Statements as at and for the year ended March 31, 2021

day. All open positions are marked to market based on the settlement price and the resultant marked to market profit/loss settled with the exchange. Charges receivable / payable on cancellation / termination of foreign exchange forward contracts is recognized as income / expense on the date of cancellation / termination under ‘Other Income’.

Valuation of Exchange Traded Currency Options (‘ETCO’) is carried out on the basis of the daily settlement price of each individual option provided by the exchange and valuation of Interest Rate Futures (‘IRF’) is carried out on the basis of the daily settlement price of each contract provided by the exchange.

As per the RBI guidelines on ‘Prudential Norms for Off Balance Sheet Exposures of Banks’ a general provision is made on the current gross MTM gain of the contract for all outstanding interest rate and foreign exchange derivative transactions. For provisioning purpose, the exposure for all the counterparties except CSA / Qualified Central Counter Party (‘QCCP’) are calculated at deal level, i.e. Gross Positive MTM after netting of margin to the extent of Positive MTM. The exposure reckoned for standard provisioning on CSA / QCCP is calculated at counterparty level i.e. Net Positive MTM adjusted for margin, if any.

The RBI has released amendments to prudential guidelines on bilateral netting of Qualified Financial Contracts (QFC) on March 30, 2021 permitting taking benefit of netting agreement in computation of exposure with immediate effect. The Bank shall work towards implementation of the revised guidelines.

17.07 Fixed assets and depreciation

Fixed assets are carried at cost of acquisition less accumulated depreciation and impairment, if any. Cost includes freight, duties, taxes and incidental expenses related to the acquisition and installation of the asset.

The management believes that the useful life of assets assessed by the Bank, pursuant to the Companies Act, 2013, taking into account changes in environment, changes in technology, the utility and efficacy of the asset in use, fairly reflects its estimate of useful lives of the fixed assets.

Capital work-in-progress includes cost of fixed assets that are not ready for their intended use and also include advances paid to acquire fixed assets.

Depreciation is charged over the estimated useful life of a fixed asset on a straight-line basis. The rates of depreciation for fixed assets, which are not lower than the rates prescribed in Part C of Schedule II of the Companies Act, 2013, are given below :

	Asset Building– RCC Frame Building– Other than RCC Frame Computers – Desktops, Laptops, End User Devices Computers – Server & Network	Estimated Useful Life 60 Years 30 Years 3 Years 6 Years
	Vehicles	4 Years
	Furniture	10 Years
	Offce Equipment Leasehold Improvements	5 Years Over the extended period of lease
	Others (including software and	5 years
	system development)

Fixed assets individually costing less than ` 5,000 are fully depreciated in the year of installation.

17.08 Income tax

Income tax expense is the aggregate amount of current tax and deferred tax charge. The current tax expense and deferred tax expense is determined in accordance with the provisions of the Income Tax Act, 1961 and as per Accounting Standard 22 - Accounting for Taxes on Income respectively.

Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted at the Balance Sheet date.

Current tax assets and liabilities and deferred tax assets and liabilities are off-set when they relate to income taxes levied by the same taxation authority, when the Bank has a legal right to off-set and when the Bank intends to settle on a net basis.

Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future. In case of history of tax losses, deferred tax assets on unabsorbed depreciation or carried forward loss under taxation laws are recognized only if there is virtual certainty of realization of such assets. Deferred tax assets are reviewed at each balance sheet date and appropriately adjusted to reflect the amount that is reasonably / virtually certain to be realized. The impact of changes in the deferred tax assets / liabilities is recognised in the Profit and Loss Account.

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forming part of the Financial Statements as at and for the year ended March 31, 2021

17.09 Employees’ stock option scheme

The Bank has formulated Employees’ Stock Option Scheme - IDFC FIRST Bank Limited ESOS -2015 (‘the Scheme’) in accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The scheme provides for the grant of options to acquire equity shares of the Bank to its employees. The options granted to employees vest in a graded manner and these may be exercised by the employees within a specified period.

The Bank follows the intrinsic value method to account for its stock-based employee compensation plans. Compensation cost is measured by the excess, if any, of the market price of the underlying stock over the grant price as determined under the option plan. Compensation cost, if any is amortized over the vesting period on a straight line method. In case the vested stock options expire unexercised, the balance in stock options outstanding is transferred to the general reserve. In case the unvested stock options get lapsed / cancelled, the balance in stock option outstanding account is transferred to the Profit and Loss Account.

17.10 Employee benefits

Defined contribution plan :

The contribution to provident fund, superannuation fund and pension fund are considered as defined plans and are charged to the Profit and Loss Account as they fall due, based on the amount of contribution required to be made and when services are rendered.

Defined benefit plan :

The net present value of obligations towards gratuity to employees is actuarially determined as at the Balance Sheet based on the projected unit credit method. Actuarial gains and losses are recognised in the Profit and Loss Account for the year.

Compensated absences :

Any unavailed privilege leave to the extent encashable is paid to the employees and charged to the Profit and Loss Account for the year based on estimates of availment / encashment of leaves.

17.11 Provisions, contingent liabilities and contingent assets

A provision is recognised when the Bank has a present obligation as a result of past event where it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

Provisions for onerous contracts are recognised when

the expected benefits to be derived by the Bank from a contract are lower than the unavoidable costs of meeting the future obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Bank recognises any impairment loss on the assets associated with that contract.

A disclosure of contingent liability is made when there is :

a possible obligation arising from a past event, the existence of which will be confirmed by occurrence or non-occurrence of one or more uncertain future events not within the control of the Bank; or
a present obligation arising from a past event which is not recognised as it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.

When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Contingent assets are not recognised in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognised in the period in which the change occurs.

17.12 Earnings per share

The Bank reports basic and diluted earnings per share in accordance with AS-20, Earnings per Share, as notified under Section 133 of the Companies Act, 2013 read together with paragraph 7 of the Companies (Accounts) Rules, 2014 and the Companies (Accounting Standards) Amendment Rules, 2016. Basic earnings per share are computed by dividing the net profit after tax by the weighted average number of equity shares outstanding for the year.

Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue equity shares were exercised or converted during the year. Diluted earnings per equity share is computed by dividing net profit after tax attributable to equity shareholders by the weighted average number of equity shares and weighted average number of dilutive potential equity shares outstanding during the year, except where the results are anti-dilutive.

17.13 Leases

Leases where the lessor effectively retains substantially

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forming part of the Financial Statements as at and for the year ended March 31, 2021

all the risks and benefits of ownership over the lease term are classified as operating lease. Amount due under the operating leases, including cost escalation, are charged on a straight line method over the lease term in the Profit and Loss account. Initial direct cost incurred specifically for operating leases are recognised as expense in the Profit and Loss Account in the year in which they are incurred.

17.14 Reward Points

The Bank may grant reward points in respect of certain debit / credit cards. Presently, the Bank is offering reward points only on credit cards. The Bank makes provisions for reward points in credit cards basis outstanding redemption points after considering the conversion ratio.

17.15 Securities issue expenses

Securities issue expenses are adjusted from Securities Premium Account in terms of Section 52 of the Companies Act, 2013.

17.16 Segment reporting

As per the RBI guidelines, business segments are divided under a) Treasury b) Corporate and wholesale banking c) Retail Banking and d) Other Banking Business. Business segments have been identified and reported considering the target customer segment, the nature of products, internal business reporting system, transfer pricing policy approved by Asset Liability Committee (ALCO), the guidelines prescribed by the RBI.

17.17 Impairment of assets

at by discounting the future cash flows to their present value, based on an appropriate discounting factor. If at the Balance Sheet date, there is an indication that previously recognised impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount, subject to a maximum of the depreciable historical cost and reversal of such impairment loss is recognised in the Profit and Loss Account, except in case of revalued assets.

17.18 Fraud Provisioning

As per the RBI guidelines, in case of frauds due to the Bank or for which the Bank is liable, provision needs to be immediately recognised in Profit and Loss Account. However, the banks have an option to make provisions over a period, not exceeding four quarters, commencing from the quarter in which the fraud has been detected.

17.19 Cash and cash equivalents

Cash and cash equivalents include cash in hand, balances with the RBI, balances with other banks and money at call and short notice.

17.20 Corporate social responsibility

Spends towards corporate social responsibility, in accordance with Companies Act, 2013, are recognised in the Profit and Loss Account.

17.21 Accounting for Dividend

As per AS-4 ‘Contingencies and Events occurring after the Balance sheet date’ as notified by the Ministry of Corporate Affairs through amendments to Companies (Accounting Standards) Amendment Rules, 2016, dated 30 March, 2016, the Bank does not account for proposed dividend (including tax) as a liability through appropriation from the profit and loss account. The same is recognised in the year of actual payout post approval of shareholders. However, the Bank reckons proposed dividend in determining capital funds in computing the capital adequacy ratio.

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forming part of the Financial Statements as at and for the year ended March 31, 2021

18 Notes forming part of the Financial Statements as at and for the year ended March 31, 2021

Amounts in notes forming part of the financial statements for the year ended March 31, 2021 are denominated in ` crore to conform with the extant RBI guidelines.

18.01

IDFC FIRST Bank Limited (Formerly ‘IDFC Bank Limited’) (“the Bank”) was incorporated on October 21, 2014 as a Company under the Companies Act, 2013. Further, the Bank commenced its banking operations on October 1, 2015 after receiving universal banking license from the Reserve Bank of India (‘the RBI’) on July 23, 2015.

The Bank had sought for renewal of dispensation from

the RBI, which was valid till December 31, 2019, to grandfather certain loan accounts which were given by the erstwhile Capital First Limited as a Non Banking Financial Company (NBFC). In this regard, the RBI vide letter dated March 4, 2021, having not acceded to the dispensation, had advised the Bank to hold 100% provisions in respect of non-compliant non-performing loans. Further, for other non-compliant standard loans with insignificant outstanding balance, the Bank is required to assign additional risk weight of 25% and make such loan accounts compliant with the extant regulatory instructions by June 30, 2021. The Bank has made additional provision of ` 89.34 crore for the year ended March 31, 2021 for such non-compliant nonperforming loans and assigned additional risk weight of 25% on other non-compliant standard loans.

18.02 Capital adequacy

The capital adequacy ratio of the Bank, calculated as per the RBI guidelines (under Basel III) is set out below :

Particulars	(`in crore) March 31, 2021 March 31, 2020
Tier I capital	16,974.38 14,690.12
of which common equitytier I capital	16,974.38 14,690.12
Tier II capital	647.15 89.93
Total capital	17,621.53 14,780.05
Total Risk Weighted Assets	127,943.29 110,481.46
Common equityTier I capital ratio(%)	13.27% 13.30%
Tier I capital ratio(%)	13.27% 13.30%
Tier II capital ratio(%)	0.50% 0.08%
Total capital ratio(CRAR) (%)	13.77% 13.38%
Percentage of the shareholdingof the Government of India	4.61% 5.43%
Amount of equitycapital raised*	2,000.00 -
Amount of additional Tier I capital raised; of which
Perpetual non cumulativepreference shares	- -
Perpetual debt instruments	- -
Amount of Tier II capital raised; of which
Debt capital instrument	- -
Preference share capital instruments	- -

The Bank raised additional capital aggregating to 2,000 crore (rounded off) on a preferential basis through issuance of 862,440,704 equity shares, fully paid-up, at the price of 23.19/- per equity share (including premium).

The Capital Raising Committee of the Board of Directors of the Bank at its meeting held on April 6, 2021, approved the issue and allotment of 523,103,660 equity shares of face value of 10 each to qualified institutional buyers at an issue price of 57.35 per equity share (including a premium of 47.35 per equity share), aggregating to 3,000 crore (rounded off), pursuant to the Issue.

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forming part of the Financial Statements as at and for the year ended March 31, 2021

18.03 Business ratios / information

18.03 Business ratios / information
Particulars	(`in crore) March 31, 2021 March 31, 2020
Interest income as apercentage to workingfunds$	9.79% 9.56%
Non-interest income as apercentage to workingfunds$	1.38% 1.01%
Operating proft as apercentage to workingfunds$ &	1.56% 1.14%
Return on assets@	0.28% (1.79%)
Businessper employee# ^ (`in crore)	7.68 9.59
Net Proft/(loss) per employee^ (`in crore)	0.02 (0.18)

$ Working funds represents average of total assets as reported to Reserve Bank of India in Form X under Section 27 of the Banking Regulation Act, 1949, during the 12 months of the financial year.

@ Return on assets is based on the simple average of opening and closing total assets excluding accumulated losses if any.

Business is the total of average net advances and average deposits (net of inter-bank deposits). The average advances and the average deposits represents the simple average of the opening and closing figures.

^ Productivity ratios are based on monthly average of employee numbers, which excludes contract staff, intern etc.

& Operating profit is profit before provisions and contingencies.

18.04 Investments

I Value of investments :

18.04 Investments I Value of investments :
Particulars	(`in crore) March 31, 2021 March 31, 2020
i. Gross value of investments
a. In India	47,454.41 48,267.63
b. Outside India	0.33 0.33
ii Provisions for depreciation
a. In India	(2,042.99) (2,863.38)
b. Outside India	- -
iii Net value of investments
a. In India	45,411.42 45,404.25
b. Outside India	0.33 0.33

II Movement of provisions held towards depreciation on investments (including provision towards non-performing investments classified under schedule-8 and specific provision against identified investments)

Particulars	(`in crore) March 31, 2021 March 31, 2020
Openingbalance	2,863.38 1,811.89
Add: Provisions made duringtheyear	318.27 2,314.39
Less: Write-back ofprovisions duringtheyear	(1,138.66) (1,262.90)
Closingbalance	2,042.99 2,863.38

Annual Report 2020-21 187

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

18.05 Repo transactions

Following are the details of securities sold and purchased under repo / reverse repo transactions (in face value terms) respectively including transactions under Liquidity Adjustment Facility (LAF) and Marginal Standing Facility (MSF) done during the years ended March 31, 2021 and March 31, 2020 :

Year ended March 31, 2021

					(`in crore)
Particulars		Minimum outstanding during theyear	Maximum outstanding during theyear	Daily Average outstanding during theyear	Outstanding as on March 31, 2021
Securities	sold under repo
i	Government securities	184.20	7,671.51	1,939.54	309.70
ii	Corporate debt securities	-	-	-	-
Securities	purchased under reverse repo
i	Government securities	145.00	11,403.68	3,787.20	510.12
ii	Corporate debt securities	-	-	-	-

Year ended March 31, 2020

					(`in crore)
Particulars		Minimum outstanding during theyear	Maximum outstanding during theyear	Daily Average outstanding during theyear	Outstanding as on March 31, 2020
Securities	sold under repo
i	Government securities	229.50	9,516.81	4,594.23	229.50
ii	Corporate debt securities	-	-	-	-
Securities	purchased under reverse repo
i	Government securities	95.00	7,802.79	1,550.65	470.52
ii	Corporate debt securities	-	-	-	-

18.06 Non-SLR investment portfolio

i Issuer composition of non SLR investments as at March 31, 2021 * :

						(`in crore)
No	Issuer	Total Amount	Extent of private placement	Extent of "below investment grade" securities	Extent of "unrated" securities^	Extent of "unlisted" securities
(1)	(2)	(3)	(4)	(5)	(6)	(7)
i	Public sector undertakings	ß	-	-	-	ß
ii	Financial institutions	1,043.16	848.18	-	-	87.22
iii	Banks	1,102.25	1,002.25	-	-	-
iv	Private corporates	3,997.90	3,997.90	2,225.00	-	1,380.59
v	Subsidiaries/ joint ventures	232.40	232.40	-	-	232.40
vi	Others	5,589.49	5,589.49	141.59	-	5,589.49
vii	Provision held towards depreciation	(1,999.86)	-	-	-	-
	Total	9,965.34	11,670.22	2,366.59	-	7,289.71

Amounts reported under columns (4), (5), (6) and (7) above are not mutually exclusive.

excludes investment in excess SLR government securities of ` 5,904.67 crore .
^ Excludes investments in equity shares, units of equity oriented mutual funds / venture capital funds and Security Receipts

188 IDFC FIRST Bank

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

Issuer composition of non SLR investments as at March 31, 2020[$] :

						(`in crore)
No	Issuer	Total Amount	Extent of private placement	Extent of "below investment grade" securities	Extent of "unrated" securities^	Extent of "unlisted" securities
(1)	(2)	(3)	(4)	(5)	(6)	(7)
i	Public sector undertakings	142.74	0.88	-	-	ß
ii	Financial institutions	3,036.17	2,074.81	295.96	-	92.22
iii	Banks	756.61	756.61	-	-	27.36
iv	Private corporates	3,969.63	3,969.63	2,100.00	-	1,235.72
v	Subsidiaries/ joint ventures	232.40	232.40	-	-	232.40
vi	Others	7,116.59	7,116.59	-	-	7,116.59
vii	Provision held towards depreciation	(2,863.38)
	Total	12,390.76	14,150.92	2,395.96	-	8,704.29

Amounts reported under columns (4), (5), (6) and (7) above are not mutually exclusive.

$ excludes investment in excess SLR government securities of ` 7,188.62 crore .

^ Excludes investments in equity shares, units of equity oriented mutual funds / venture capital funds and Security Receipts

ii Non performing Non-SLR investments :

ii Non performing Non-SLR investments :
Particulars	(`in crore) March 31, 2021 March 31, 2020
(a) Openingbalance of NonperformingNon-SLR investments	1,646.14 1,290.34
Additions duringtheyear	213.36 407.33
Reductions duringtheyear	(379.55) (51.53)
Closing balance of Nonperforming Non-SLR investments	1,479.95 1,646.14
(b) OpeningProvision on NonperformingNon-SLR investments	1,523.02 1,290.34
Additions duringtheyear	180.06 285.41
Reductions duringtheyear	(338.48) (52.73)
Closing Provision on Nonperforming Non-SLR investments	1,364.59 1,523.02
(c) Opening balance of Non performing Non-SLR investments (Under‘Schedule 11-Other Assets’)	451.73 -
Additions duringtheyear	215.00 451.73
Reductions duringtheyear	(451.73) -
Closing balance of Non performing Non-SLR investments (Under 'Schedule 11- Other Assets')	215.00 451.73
(d) Opening provision on Non performing Non-SLR investments (Under‘Schedule 11-Other Assets’)	338.80 -
Additions duringtheyear	215.00 338.80
Reductions duringtheyear	(338.80) -
Closing provision on Non performing Non-SLR investments (Under 'Schedule 11- Other Assets')	215.00 338.80

18.07

During the years ended March 31, 2021 and March 31, 2020, the value of sales / transfers of securities to / from HTM category (excluding one-time transfer of securities permitted to be undertaken by banks at the beginning of the accounting year and with approval of the Board of Directors and sales to the RBI under open market operation auctions and redemptions in units of Venture Capital Funds as these are not initiated by the Bank) did not exceed 5% of the book value of investments held in HTM category at the beginning of the year.

Annual Report 2020-21 189

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

Particulars	(`in crore) March 31, 2021 March 31, 2020
Market value of investments held in HTM category	N.A. N.A.
Excess of book value over market value for whichprovision is not made	N.A. N.A.
18.08 Forward rate agreement (FRA) / interest rate swap (IRS) Particulars	(`in crore) March 31, 2021 March 31, 2020
i The notionalprincipal of swapagreements	109,697.01 165,940.28
ii Losses which would be incurred if counterparties failed to fulfl their obligations under the agreements	867.48 1,693.46
iii Collateral required bythe bank upon enteringinto swaps	- -
iv Concentration of credit risk arisingfrom the swaps *	53.82% 53.95%
v The fair value of the swapbook(Net MTM)	(72.00) (246.83)

Concentration of credit risk basis CEM arising from swaps with Banks & Financial Institutions as at March 31, 2021 & March 31, 2020

The nature and terms of the IRS as on March 31, 2021 are set out below :

					(`in crore)
Nature	No. of deals		Notional principal	Benchmark	Terms
Trading		792	46,304.68	INROIS	PayFixed/Receive Floating
Trading		474	20,800.83	INROIS	PayFloating/Receive Fixed
Trading		107	13,494.53	USD LIBOR	PayFixed/Receive Floating
Trading		66	13,121.89	USD LIBOR	PayFloating/Receive Fixed
Trading		10	6,899.48	USD LIBOR	PayFloating/Receive Floating
Trading		1	30.01	EURIBOR	PayFixed/Receive Floating
Trading		1	30.01	EURIBOR	PayFloating/Receive Fixed
Trading		54	4,405.00	INRMIFOR	PayFixed/Receive Floating
Trading		93	4,062.25	INRMIFOR	PayFloating/Receive Fixed
Banking		1	548.33	USD LIBOR	PayFixed/Receive Floating
Total		1,599	109,697.01

The nature and terms of the IRS as on March 31, 2020 are set out below :

(` in crore)

				(`in crore)
Nature	No. of deals	Notional principal	Benchmark	Terms
Trading	1,186	51,024.75	INROIS	PayFixed/Receive Floating
Trading	1,047	64,833.34	INROIS	PayFloating/Receive Fixed
Trading	121	17,950.45	USD LIBOR	PayFixed/Receive Floating
Trading	88	24,052.58	USD LIBOR	PayFloating/Receive Fixed
Trading	1	43.45	EURIBOR	PayFixed/Receive Floating
Trading	1	43.45	EURIBOR	PayFloating/Receive Fixed
Trading	82	3,687.25	INRMIFOR	PayFloating/Receive Fixed
Trading	53	4,305.00	INRMIFOR	PayFixed/Receive Floating
Total	2,579	165,940.28

190 IDFC FIRST Bank

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

18.09 Exchange traded interest rate derivatives

18.09 Exchange traded interest rate derivatives
Particulars	(`in crore) March 31, 2021 March 31, 2020
i Notional principal amount of exchange traded interest rate derivatives under- taken during the year	- 10.38
7.26% GOI 2029	- 10.38
ii Notional principal amount of exchange traded interest rate derivatives outstanding.	- -
iii Notional principal amount of exchange traded interest rate derivatives outstanding and not“highly effective”	- -
iv Mark-to-market value of exchange traded interest rate derivatives outstand- ing and not“highly effective”	- -

18.10 Disclosures on risk exposure in derivatives

Qualitative disclosures :

a. Structure and organisation for management of risk in derivatives trading, the scope and nature of risk measurement, risk reporting and risk monitoring systems, policies for hedging and / or mitigating risk and strategies and processes for monitoring the continuing effectiveness of hedges / mitigants :
i The Bank undertakes transactions in FX and derivatives for the purpose of hedging the Balance Sheet, support customer FX and Derivatives hedging / business requirements and takes proprietary positions. Bank deals in various kinds of products viz. FX spot and forwards, INR and CCY Swaps and Foreign currency options. The Bank undertakes trading positions FX Spot, Forward, Swaps and Futures. The Bank does not run Option book as of now. All the Option products are offered to the clients on a back to back basis.
ii Treasury Sales Desk is a customer centric desk that caters to customers’ requirements in FX and Derivatives products subject to regulatory and internal requirements. Product offering to the clients is based on Suitability and Appropriateness policy of the Bank as well as by the extant RBI guidelines. The policy ensures that the product being offered by the Bank are in sync with the nature of the underlying risk sought to be hedged giving due regard to the risk appetite of the customer and understanding of the risk by the customer. Market Risk exposures of clients arising out of FX and Derivative transactions are monitored by the Bank on a daily basis through current exposure method. Exposures are independently monitored and reported.
iii The Bank recognises all derivative contracts (other than those designated as hedges) at fair value. The mark to market movement on the positions is monitored on a daily basis. Changes in the fair value of derivatives other than those designated as hedges are recognised in the Profit and Loss Account. Hedge transactions are accounted for on an accrual basis. Hedging transactions are undertaken by the Bank to protect the variability in the fair value or the cash flow of the underlying Balance Sheet item.
iv All the derivative transactions are governed by the FX & Derivative policy, Market Risk Management policy and Limit Management Framework of the Bank. Limit Management Framework details various types of market risk limits which are monitored on a daily basis and breaches, if any, are reported promptly. Risk assessment of the portfolio is undertaken periodically and presented to the Market Risk Committee / Asset Liability Committee. These limits are set up taking into account market volatility, risk appetite, business strategy and management experience. The Bank has a clear functional segregation of Treasury operations between Front Office, Market Risk and Back Office.
b. Accounting policy for recording hedge and non-hedge transactions; recognition of income, premiums and discounts; valuation of outstanding contracts; provisioning, collateral and credit risk mitigation :
For hedge transactions, the Bank identifies the hedged item (asset or liability) and assesses the effectiveness at inception as well as at each reporting date. Funding swaps are accounted in accordance with FEDAI guidelines.

Interest rate swaps are booked with the objective of managing the interest rate risk on liabilities. Interest rate swaps in the nature of hedge are recorded on accrual basis and these transactions are not marked-to-market. Any resultant profit or loss on termination of the hedge swaps is amortised over the life of the swap or underlying liability, whichever is shorter.

Currency interest rate swaps in the nature of hedge, booked with the objective of managing the currency and interest rate risk on foreign currency liabilities are recorded on accrual basis and these transactions are not

Annual Report 2020-21 191

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

marked-to-market. Any resultant profit or loss on termination of hedge swaps is amortised over the life of swap or underlying liability, whichever is shorter. The foreign currency balances on account of principal of currency interest rate swaps outstanding as at the balance sheet date are revalued using the closing rate.

Quantitative disclosure on risk exposure in derivatives :

Quantitative disclosure on risk exposure in derivatives :
Sr. No. Particulars	(`in crore) March 31, 2021
	Currency Derivatives Interest rate derivatives
1 Derivatives(notionalprincipal amount)
a. For hedging	10,216.08 548.33
b. For trading	68,259.19 109,148.68
2 Marked to marketpositions
a. Asset(+)	777.08 867.48
b. Liability (-)	(861.96) (939.47)
3 Credit exposure	3,115.21 1,811.88
4 Likelyimpact of onepercentage change in interest rate(100*PV01)^
a. On hedgingderivatives	0.94 1.40
b. On tradingderivatives	13.41 76.91
5 Maximum and minimum of 100*PV01 observed during year^
a. On hedging
- minimum	0.86 -
- maximum	1.29 4.19
b. On trading
- minimum	11.34 74.63
- maximum	18.27 186.64
^ Excludes instruments such as FX forwards, FX Swaps etc. Sr. No. Particulars	(`in crore) March 31, 2020
	Currency Derivatives Interest rate derivatives
1 Derivatives(notionalprincipal amount)
a. For hedging	7,473.04 945.81
b. For trading	81,511.69 164,994.47
2 Marked to marketpositions
a. Asset(+)	2,062.25 1,693.46
b. Liability (-)	(1,527.12) (1,940.30)
3 Credit exposure	5,033.12 3,100.08
4 Likelyimpact of onepercentage change in interest rate(100*PV01)^
a. On hedgingderivatives	1.11 0.01
b. On tradingderivatives	14.12 95.07
5 Maximum and minimum of 100*PV01 observed during year^
a. On hedging
- minimum	0.36 -
- maximum	1.27 6.66
b. On trading
- minimum	9.58 95.07
- maximum	14.12 240.48

^ Excludes instruments such as FX forwards, FX Swaps etc.

i The notional principal amount of derivatives reflect the volume of transactions outstanding as at the balance sheet date and do not represent the amounts at risk.

192

IDFC FIRST Bank

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

ii The Bank has computed maximum and minimum of PV01 for the year based on monthly averages.
iii In respect of derivative contracts, the Bank evaluates the credit exposure arising therefrom. Credit exposure has been computed using the Current Exposure Method (CEM) which is the sum of :
a. the current replacement cost (marked-to-market value including accrued interest) of the contract or zero whichever is higher; and
b. the Potential Future Exposure (PFE) is a product of the notional principal amount of the contract and credit conversion factors derived basis the type / residual maturity of the contract, in line with the extant RBI guidelines

The RBI had released amendments to prudential guidelines on Bilateral Netting of Qualified Financial Contracts on March 30, 2021. The Bank shall work towards implementation of the same. However, it may be noted that the credit exposure (CEM) is currently reckoned basis the earlier methodology defined under Basel III Capital Regulations, which are more conservative for exposure measurement.

18.11 Credit Default Swaps

The Bank has not undertaken any transactions in Credit Default Swaps (CDS) during the year ended March 31, 2021 and March 31, 2020. Further, there are no outstanding CDS as on March 31, 2021 and March 31, 2020.

18.12 Asset quality

18.12 Asset quality
a Particulars	(`in crore) March 31, 2021 March 31, 2020
i Net NPAs to Net Advances(%)	1.86% 0.94%
ii Provision Coverage Ratio(In terms of extant RBIguidelines)	63.57% 66.40%
iii Movement ofgross NPAs :
a. Openingbalance	2,279.56 2,136.04
b. Additions duringtheyear	5,626.76 2,693.50
c. Reductions duringtheyear :
- Upgradation	(345.80) (663.19)
- Recoveries(excludingrecoveries made from upgraded accounts)	(585.54) (376.56)
- Write offs includingtechnical/ prudential write-offs	(2,671.97) (1,510.23)
d. Closingbalance	4,303.01 2,279.56
iv Movement of net NPAs :
a. Openingbalance	808.57 1,106.63
b. Additions duringtheyear	2,074.28 695.47
c. Reductions duringtheyear :	(999.57) (993.53)
d. Closingbalance	1,883.28 808.57
v Movement of provisions for NPAs (excluding provisions on standard assets) :
a. Openingbalance	1,470.99 1,029.41
b. Additions duringtheyear
Additions	3,552.47 1,998.03
Transfer on downgrade of identifed advances	- -
c. Reductions duringtheyear :
Write-offs includingtechnical/ prudential write-offs	(2,246.95) (1,225.49)
Write-back on recovery /upgradation	(356.78) (330.96)
d. Closingbalance	2,419.73 1,470.99

Annual Report 2020-21 193

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

b Divergence in Asset Classification and Provisioning for NPAs :

In terms of the RBI circular no. DBR.BP.BC.No.32/21.04.018/2018-19 dated 1 April, 2019, banks are required to disclose the divergences in asset classification and provisioning consequent to RBI’s annual supervisory process in their notes to accounts to the financial statements, wherever either or both of the following conditions are satisfied: (a) the additional provisioning for NPAs assessed by RBI exceeds 10 per cent of the reported profit before provisions and contingencies for the reference period and (b) the additional Gross NPAs identified by RBI exceed 15 per cent of the published incremental Gross NPAs for the reference period.

Based on the above, no disclosure on divergence in asset classification and provisioning for NPAs is required with respect to RBI’s annual supervisory process for the year ended 31 March, 2020.

c Implementation of Resolution Plans (RPs):

					(`in crore)
Cases eligible for RPs during FY21*		RPs successfully implemented during FY21*		RPs under implementation during FY21*
No.of cases	Balance Outstanding$	No.of cases#	Balance Outstanding	No.of cases	Balance Outstanding
3	585.13	2	585.13	-	-

Aggregate Exposure of the Borrower to Lenders above ` 1,500 crore
$ Balance outstanding does not include 1 case written off during the year

No.of cases include 1 case where RP was implemented and there is no balance outstanding as at March 31, 2021.

Note - As per the approved policy of the Bank, in addition to the above, RP is at various stages of implementation for 5 counterparties with aggregate outstanding of ` 382.10 Crores as on March 31, 2021.

d COVID-19 Regulatory Package - Asset Classification and Provisioning:

With reference to the RBI circular RBI/2019-20/220 DOR.No.BP.BC.63/21.04.048/2020-21 dated April 17, 2020, Banks are advised to disclose as under.

(` in crore)

				(`in crore)
Respective amounts in
SMA/overdue categories, where the moratorium / deferment was extended, in terms of Para 2 and 3	Respective amount where asset classifcation benefts is extended.	Provisions made in terms of Para 5 of the circular	Provisions adjusted against slippages in terms of Para 6 of the circular	Residual provisions as at March 31, 2021 in terms of Para 6 of the circular.
of the circular
2,917.40	1,248.66	287.78	(287.78)	-

The impact of COVID-19, including changes in customer behaviour and pandemic fears, as well as restrictions on business and individual activities, has led to significant volatility in global and Indian financial markets and a significant decrease in global and local economic activity, which may persist even after the restrictions related to the COVID-19 outbreak are being lifted. While the easing of restrictions has driven a revival in economic activity across sectors, the continued slowdown has impacted lending business, fee income generation from sale of third party products, collection efficiency etc. Further, there may be a rise in the number of customer defaults and consequently an increase in provisions. The extent to which the COVID-19 pandemic, including the current “second wave” will continue to impact the Bank’s operations and asset quality will depend on future developments, which are highly uncertain. The current second wave COVID-19 pandemic where the number of cases have increased significantly in India, has resulted into re-imposition of localised / regional lock down measures in various parts of the country. The Bank’s capital and liquidity position is strong and would continue to be the focus area for the Bank during this period.

In accordance with the RBI guidelines on ‘COVID-19 Regulatory Package’ of March 27, 2020, April 17, 2020 and May 23, 2020, the Bank granted moratorium on repayment of instalments and/or interest, as applicable, due between March 1, 2020 and August 31, 2020 to all eligible borrowers. For all eligible accounts, where the moratorium was granted, the asset classification was under standstill during the moratorium period (i.e. the number of days pastdue shall exclude the moratorium period for the purposes of asset classification under the Income Recognition, Asset Classification and Provisioning norms).

194 IDFC FIRST Bank

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

During the year ended March 31, 2021, the Bank has made additional COVID-19 related provision (net) amounting to ` 375.00 crores.

e Resolution Framework for COVID-19-related Stress

Details of resolution plan implemented under the Resolution Framework for Covid-19 related stress as per RBI circular dated August 6, 2020 during the year ended March 31, 2021:

					(`in crore)
Type of Borrower	Number of accounts where resolution plan has been implemented under this window (A)	Exposure to accounts mentioned at (A) before implementation of the plan (B)*	Of (B), aggregate amount of debt that was converted into other securities (C)	Additional funding sanctioned, if any, including between invocation of the plan and implementation(D)	Increase in provisions on account of the implementation of the resolution (E)**
Personal Loans	81,007	961.48	-	-	96.15
Corporate Loans	1	100.00	-	-	- ***
Of which,MSMEs	-	-	-	-	-
Others	45	4.74	-	-	0.47
Total	81,053	1,066.22	-	-	96.62

Refers to Outstanding balances of the restructured advances upon implementation of the resolution plan.

** Refers to provisions created on account of implmentation of the resolution plan.

*** The Bank is required to maintain higher of the provisions held as per the extant IRAC norms immediately before implementation, or 10 percent of the total debt, accordingly the Bank holds Provisions amounting to ` 25.00 crore

f Micro, Small and Medium Enterprises (MSME) sector – Restructuring of Advances

With reference to the RBI circular RBI/2020-21/17 DOR.No.BP.BC/4/21.04.048/2020-21 dated August 6, 2020, Banks are advised to disclose MSME accounts restructured as under:

Amount ( ` in crore) 533 318.89

No. of accounts restructured

Annual Report 2020-21 195

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

Total	Total	9	834.05	30.02	86.90	81,586	1,309.23	-	198.16	-	-	-	-	(7.95)	(0.60)	24.69	(1)	(399.96)	-	(20.04)	-	-	-	-	(1)	(4.67)	-	(4.67)	81,593	1,730.70	29.42	285.04
	Loss	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-					-	-	-	-	-	-	-	-	-	-	-	-
	Doubtful	2	32.17	-	11.55	22	0.16	-	0.17	-	-	-	-	(1.31)	-	24.23					1	49.70	-	7.50	(1)	(4.67)	-	(4.67)	24	76.04	-	38.77
	Sub- standard	1	49.70	-	7.50	-	-	-	-	-	-	-	-	(1.04)	(0.60)	0.05					22,956	278.67	30.02	90.04	-	-	-	-	22,957	327.33	29.42	97.59
	Standard	6	752.17	30.02	67.85	81,564	1,309.08	-	197.99	-	-	-	-	(5.59)	-	0.41	(1)	(399.96)	-	(20.04)	(22,957)	(328.37)	(30.02)	(97.54)	-	-	-	-	58,612	1,327.33	-	148.67
Others	Total	9	834.05	30.02	86.90	81,586	1,309.23	-	198.16	-	-	-	-	(7.95)	(0.60)	24.69	(1)	(399.96)	-	(20.04)	-	-	-	-	(1)	(4.67)	-	(4.67)	81,593	1,730.70	29.42	285.04
	Loss	-	-	-	-		-	-		-	-	-	-	-	-	-					-	-	-	-	-	-	-	-	-	-	-	-
	Doubtful	2	32.17	-	11.55	22	0.16	-	0.17	-	-	-	-	(1.31)	-	24.23					1	49.70	-	7.50	(1)	(4.67)	-	(4.67)	24	76.04	-	38.77
	Sub- standard	1	49.70	-	7.50	-	-	-	-	-	-	-	-	(1.04)	(0.60)	0.05					22,956	278.67	30.02	90.04	-	-	-	-	22,957	327.33	29.42	97.59
	Standard	6	752.17	30.02	67.85	81,564	1,309.08	-	197.99	-	-	-	-	(5.59)	-	0.41	(1)	(399.96)	-	(20.04)	(22,957)	(328.37)	(30.02)	(97.54)	-	-	-	-	58,612	1,327.33	-	148.67
Under SME Debt Restructuring Mechanism	Total	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
	Loss	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-					-	-	-	-	-	-	-	-	-	-	-	-
	Doubtful	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-					-	-	-	-	-	-	-	-	-	-	-	-
	Sub- standard	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-					-	-	-	-	-	-	-	-	-	-	-	-
	Standard	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-		-	-	-	-	-	-	-	-	-	-	-	-	-
Under CDR Mechanism	Total	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-		-	-	-	-	-	-	-	-	-	-	-	-	-
	Loss	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-					-	-	-	-	-	-	-	-	-	-	-	-
	Doubtful	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-					-	-	-	-	-	-	-	-	-	-	-	-
	Sub- standard	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-					-	-	-	-	-	-	-	-	-	-	-	-
	Standard	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-		-	-	-	-	-	-	-	-	-	-	-	-	-
Type of Restructuring	Asset Classifcation	No. of borrowers	Amount outstanding (restructured facility)	Amount outstanding (other facility)	Provision there on	No. of borrowers	Amount outstanding (restructured facility)	Amount outstanding (other facility)	Provision there on	No. of borrowers	Amount outstanding (restructured facility)	Amount outstanding (other facility)	Provision there on	Amount outstanding (restructured facility)	Amount outstanding (other facility)	Provision there on	No. of borrowers	Amount outstanding (restructured facility)	Amount outstanding (other facility)	Provision there on	No. of borrowers	Amount outstanding (restructured facility)	Amount outstanding (other facility)	Provision there on	No. of borrowers	Amount outstanding (restructured facility)	Amount outstanding (other facility)	Provision there on	No. of borrowers	Amount outstanding (restructured facility)	Amount outstanding (other facility)	Provision there on
		Restructured accounts as on April 1, 2020 (opening fgures)				Fresh restructuring during the year				Upgradations to restructured standard category during the year				Increase / (decrease) in borrower level outstanding of existing restructured cases during the year ended March 31, 2021			Restructured standard advances which cease to attract higher provisioning and / or additional risk weight at the end of the year and hence need not be shown as restructured standard advances at the beginning of the next year				Downgradations of restructured accounts during the year				Write-offs / recoveries of restructured accounts during the year				Restructured Accounts as on March 31, 2021 (closing fgures)
Sr. No.		1				2				3				4			5				6				7				8

196 IDFC FIRST Bank

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

Total	Total	7	782.41	32.68	157.01	2	54.87	-	12.37	-	-	-	(82.86)	(3.23)	(2.66)	0.37	-	-	-	-	-	-	-	-	-	-	-	-	9	834.05	30.02	86.90
	Loss	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-					-	-	-	-	-	-	-	-	-	-	-	-
	Doubtful	1	401.53	-	102.89	1	4.87	-	4.87	(1)	(401.53)	-	(102.89)	(0.20)	-	2.55					1.00	27.50	-	4.13	-	-	-	-	2	32.17	-	11.55
	Sub- standard	1	27.50	-	4.13	1	50.00	-	7.50	-	-	-	-	(0.30)	-	-					(1.00)	(27.50)	-	(4.13)	-	-	-	-	1	49.70	-	7.50
	Standard	5	353.38	32.68	49.99	-	-	-	-	1	401.53	-	20.04	(2.74)	(2.66)	(2.18)	-	-	-	-	-	-	-	-	-	-	-	-	6	752.17	30.02	67.85
Others	Total	7	782.41	32.68	157.01	2	54.87	-	12.37	-	-	-	(82.86)	(3.23)	(2.66)	0.37	-	-	-	-	-	-	-	-	-	-	-	-	9	834.05	30.02	86.90
	Loss	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-					-	-	-	-	-	-	-	-	-	-	-	-
	Doubtful	1	401.53	-	102.89	1	4.87	-	4.87	(1)	(401.53)	-	(102.89)	(0.20)	-	2.55					1.00	27.50	-	4.13	-	-	-	-	2	32.17	-	11.55
	Sub- standard	1	27.50	-	4.13	1	50.00	-	7.50	-	-	-	-	(0.30)	-	-					(1.00)	(27.50)	-	(4.13)	-	-	-	-	1	49.70	-	7.50
	Standard	5	353.38	32.68	49.99	-	-	-	-	1	401.53	-	20.04	(2.74)	(2.66)	(2.18)	-	-	-	-	-	-	-	-	-	-	-	-	6	752.17	30.02	67.85
Under SME Debt Restructuring Mechanism	Total	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
	Loss	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-					-	-	-	-	-	-	-	-	-	-	-	-
	Doubtful	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-					-	-	-	-	-	-	-	-	-	-	-	-
	Sub- standard	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-					-	-	-	-	-	-	-	-	-	-	-	-
	Standard	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-		-	-	-	-	-	-	-	-	-	-	-	-	-
Under CDR Mechanism	Total	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
	Loss	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-					-	-	-	-	-	-	-	-	-	-	-	-
	Doubtful	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-					-	-	-	-	-	-	-	-	-	-	-	-
	Sub- standard	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-					-	-	-	-	-	-	-	-	-	-	-	-
	Standard	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Type of Restructuring	Asset Classifcation	No. of borrowers	Amount outstanding (restructured facility)	Amount outstanding (other facility)	Provision there on	No. of borrowers	Amount outstanding (restructured facility)	Amount outstanding (other facility)	Provision there on	No. of borrowers	Amount outstanding (restructured facility)	Amount outstanding (other facility)	Provision there on	Amount outstanding (restructured facility)	Amount outstanding (other facility)	Provision there on	No. of borrowers	Amount outstanding (restructured facility)	Amount outstanding (other facility)	Provision there on	No. of borrowers	Amount outstanding (restructured facility)	Amount outstanding (other facility)	Provision there on	No. of borrowers	Amount outstanding (restructured facility)	Amount outstanding (other facility)	Provision there on	No. of borrowers	Amount outstanding (restructured facility)	Amount outstanding (other facility)	Provision there on
		Restructured accounts as on April 1, 2019 (opening fgures)				Fresh restructuring during the year				Upgradations to restructured standard category during the year				Increase / (decrease) in borrower level outstanding of existing restructured cases during the year ended March 31, 2020			Restructured standard advances which cease to attract higher provisioning and / or additional risk weight at the end of the year and hence need not be shown as restructured standard advances at the beginning of the next year				Downgradations of restructured accounts during the year				Write-offs / recoveries of restructured accounts during the year				Restructured Accounts as on March 31, 2020 (closing fgures)
Sr. No.		1				2				3				4			5				6				7				8

Annual Report 2020-21 197

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

18.14 Specific Provision against identified advances

18.14 Specifc Provision against identifed advances
Particulars	(`in crore) March 31, 2021 March 31, 2020
Openingbalance	654.09 695.15
Addition duringtheyear	324.14 136.33
Reduction duringtheyear	(73.47) (149.78)
Transfer toprovisions on NPA	(169.57) (27.61)
Closing balance	735.19 654.09

18.15 Movement in technical / prudential written-off accounts :

Technical or prudential write-offs refers to the amount of non-performing advances which are outstanding in the books of the branches, but have been written-off (fully or partially) at the head office level. Movement in the stock of technically or prudentially written-off accounts are given below :

Particulars	(`in crore) March 31, 2021 March 31, 2020
Openingbalance of technical/ prudential written- off accounts	126.93 20.35
Add : Technical/ prudential write-offs duringtheyear	759.30 111.62
Less : Recoveries made from previously technical / prudential written-off accounts during the year (19.49) (5.05)
Less : Sacrifce made from previously technical/prudential written-off accounts	- -
Closing balance of technical/ prudential write off	866.74 126.93
18.16 Provisioning pertaining to Fraud Accounts Particulars	(`in crore) March 31, 2021 March 31, 2020
Number of frauds reported	370 321
Amounts involved*@	106.23 30.56
Provisions held at the beginningof theyear	3.10 0.60
Provisions made duringtheyear	7.28 3.55
Release inprovision	(5.81) (1.05)
Provisions held at the end of theyear	4.57 3.10
Unamortisedprovision debited from ‘other reserves’ as at the end of theyear	- -

Includes fraudulent accounts which are NPAs and provision of 25.04 crore (Previous year 14.12 crore) has been made as part of NPA provisions.

@ Includes written off fraudulent accounts of 102.42 crore (Previous year 11.44 crore).

18.17 Securitisation and Direct Assignment

a Details of Financial Assets sold to Securitisation / Reconstruction Company for Asset Reconstruction

Particulars	(`in crore) March 31, 2021 March 31, 2020
No. of accounts	- -
Aggregate value(net ofprovisions)of accounts sold to SC/RC	- -
Aggregate consideration	- -
Additional consideration realized in respect of accounts transferred in earlier years	- -
Aggregategain/ (loss)over net book value	- -

198 IDFC FIRST Bank

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

Details of book value of investments in security receipts Year ended March 31, 2021

Year ended March 31, 2021	Year ended March 31, 2021
(`in crore) Particulars SRs issued within past 5 years SRs issued more than 5 years ago but within past 8 years SRs issued more than 8 years ago
i Backed byNPAs sold bythe bank as underlying 102.48 141.82 -
Provision held against(i) 102.48 141.82 -
ii Backed by NPAs sold by other banks / fnancial institutions / non banking fnancial companies as underlying - - 14.19
Provision held against(ii) - - 14.19
Total book value of investments in security receipts( i+ii) 102.48 141.82 14.19
Year ended March 31, 2020 (`in crore) Particulars SRs issued within past 5 years SRs issued more than 5 years ago but within past 8 years SRs issued more than 8 years ago
i Backed byNPAs sold bythe bank as underlying 258.68 154.85 -
Provision held against(i) 102.48 154.85 -
ii Backed by NPAs sold by other banks / fnancial institutions / non banking fnancial companies as underlying - - 14.19
Provision held against(ii) - - 14.19
Total book value of investments in security receipts( i+ii) 258.68 154.85 14.19
b Disclosures relating to Securitisation Particulars	(`in crore) March 31, 2021 March 31, 2020
1 No. of SPVs sponsored bythe bank for securitisation transactions	- -
2 Total amount of securitised assets as per books of the SPVs sponsored by the bank	- -
3 Total amount of exposures retained by the bank to comply with MRR as on the date of balance sheet
a Off-balance sheet exposures
First loss	- -
Others	- -
b On-balance sheet exposures
First loss	- -
Others	- -
4 Amount of exposures to securitisation transactions other than MRR
a Off-balance sheet exposures
i. Exposure to own securitizations
First loss	- -
Others	- -
ii. Exposure to thirdpartysecuritisations
First loss	- -
Others	165.85 256.71
b On-balance sheet exposures
i. Exposure to own securitizations
First loss	- -
Others	- -
ii. Exposure to thirdpartysecuritisations
First loss	- -
Others	- -

199

Annual Report 2020-21

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

c Disclosures relating to loans sold through direct assignment

c Disclosures relating to loans sold through direct assignment
Particulars	(`in crore) March 31, 2021 March 31, 2020
1 No.ofSPVs sponsored bythe bank forsecuritisation transactions	- -
2 Totalamountofassets soldthroughdirectassignmentduringthe year	- -
3 Total amount of exposures retained by the bank to comply with MRR as on the date of balance sheet
a Off-balance sheetexposures
First loss	9.00 9.00
Others	12.07 10.58
b On-balance sheetexposures
First loss	- -
Others*	255.31 334.06
4 Amountofexposuresto securitisation transactions other than MRR
a Off-balance sheetexposures
i. Exposureto ownsecuritizations
First loss	- -
Others	- -
ii. Exposuretothird party securitisations
First loss	- -
Others	- -
b On-balance sheetexposures
i. Exposureto ownsecuritizations
First loss	- -
Others	- -
ii. Exposuretothird party securitisations
First loss	- -
Others	- -

Represents MRR portion for direct assignment transactions done by the Merging entities before the appointed date of the merger.

18.18 Details of non-performing financial assets purchased / sold (excluding securitisation / reconstruction companies)

A Details of non performing financial assets purchased:

companies) A Details of non performing fnancial assets purchased:
Particulars	(`in crore) March 31, 2021 March 31, 2020
1 a. No. of accountspurchased duringtheyear	- -
b. Aggregate outstanding	- -
2 a. Of these,number of accounts restructured duringtheyear	- -
b. Aggregate outstanding	- -

B Details of non performing financial assets sold:

B Details of non performing fnancial assets sold:
Particulars	(`in crore) March 31, 2021 March 31, 2020
1 No. of accounts sold	969 920
2 Aggregate outstanding	4.45 3.77
3 Aggregate consideration received	4.45 3.77

Note: This includes sale of written off accounts.

18.19 Provisions on standard assets (including unhedged foreign currency exposure)

(` in crore)

	(`in crore)
Particulars	March 31, 2021 March 31, 2020
Provisions towards standard assets*	959.50 754.27

Including Covid-19 provision & provision on standard restructured assets. (refer note 18.12 - d, e & f)

200 IDFC FIRST Bank

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

18.20 Exposure to real estate sector

Category	(`in crore) March 31, 2021 March 31, 2020
1 Direct exposure
i Residential mortgages	9,492.17 6,621.28
of which housingloans eligible for inclusion inprioritysector advances	1,674.28 1,586.45
ii Commercial real estate	1,426.52 1,680.27
iii Investments in Mortgage Backed Securities (MBS) and other securitised exposures
a. Residential	1,204.89 1,506.53
b. Commercial real estate	- -
2 Indirect exposure
Fund based and non-fund based exposures on National Housing Bank (NHB) and Housing Finance Companies (HFCs)	1,787.53 3,276.46
Others	100.00 50.00
Total Exposure to Real Estate Sector	14,011.11 13,134.54
18.21 Exposure to capital market Particulars	(`in crore) March 31, 2021 March 31, 2020
1 Direct investment in equity shares, convertible bonds, convertible debentures and units of equity oriented mutual funds the corpus of which is not exclusively invested in corporate debt* 1,351.95 1,260.82
2 Advances against shares / bonds / debentures or other securities or on clean basis to individuals for investment in shares (including IPOs / ESOPs), convertible bonds, convertible debentures, and units of equity-oriented mutual funds - 13.07
3 Advances for any other purposes where shares or convertible bonds or convertible debentures or units of equity oriented mutual funds are taken as primary security - 19.40
4 Advances for any other purposes to the extent secured by the collateral security of shares or convertible bonds or convertible debentures or units of equity oriented mutual funds i.e. where the primary security other than shares / convertible bonds / convertible debentures / units of equity oriented mutual funds does not fully cover the advances - -
5 Secured and unsecured advances to stock brokers and guarantees issued on behalf of stockbrokers and market makers 216.90 168.38
6 Loans sanctioned to corporates against the security of shares / bonds / debentures or other securities or on clean basis for meeting promoter’s contribution to the equity of new companies in anticipation of raising resources 19.15 121.10
7 Bridge loans to companies against expected equityfows/issues - -
8 Underwriting commitments taken up by the banks in respect of primary issue of shares or convertible bonds or convertible debentures or units of equity oriented mutual funds - -
9 Financingto stockbrokers for margin trading - -
10 All exposures to Venture Capital Funds(both registered and unregistered) 614.53 615.57
Total exposure to capital market 2,202.54 2,198.34

Excludes investment in equity shares on account of conversion of debt into equity as part of Strategic Debt Restructuring amounting to 274.02 crore (Previous Year 274.02 crore) which are exempted from exposure to Capital Market.

Annual Report 2020-21 201

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

18.22 Risk category wise country exposure

(` in crore)

	(`in crore)
Risk Category	March 31, 2021 March 31, 2020
	Exposure (net) Provision held Exposure (net) Provision held
Insignifcant	5,489.67 - 6,511.95 -
Low	1,063.07 - 1,182.57 -
Moderate	134.00 - 140.00 -
High	- - - -
VeryHigh	- - - -
Restricted	- - - -
Off-credit	- - - -
Total	6,686.74 - 7,834.52 -

18.23 Maturity pattern of certain items of assets and liabilities

A maturity pattern of certain items of assets and liabilities as at March 31, 2021 :

(` in crore)

										(`in crore)
Particulars	Day 1 2 days to 7 days	8 days to 14 days	15 days to 30 days	31 days to 2 months	Over 2 months to 3 months	Over 3 months and up to 6 months	Over 6 Months and up to 1year	Over 1 year & up to 3 years	Over 3 years & up to 5 years	Over 5 years Total
Deposits	692.64 2,690.26	3,143.51	2,319.65	8,665.71	6,628.74	7,887.45	8,246.62	45,902.71	1,555.83	955.30 88,688.42
Advances	314.30 2,060.47	902.89	1,868.89	4,023.46	4,248.42	9,643.70	13,028.80	30,445.33	11,703.37	22,310.50 100,550.13
Investments	13,555.74 6,052.31	584.89	568.41	1,296.67	1,947.27	2,243.80	4,019.92	8,673.77	2,167.84	4,301.12 45,411.74
Borrowings	- 5,329.67	70.12	729.00	2,170.69	1,114.73	1,000.81	2,385.87	13,028.61	19,596.79	359.80 45,786.09
Foreign Currency	276.41 0.19	23.22	178.38	433.30	132.67	834.11	39.46	269.68	136.79	81.51 2,405.72
assets*
Foreign Currency	2.21 6.47	6.26	60.12	1,311.78	607.51	803.68	314.60	550.87	805.98	- 4,469.48
liabilities *

*The net FX risk is dynamically hedged by the Balance Sheet Management Group of the Bank.

A maturity pattern of certain items of assets and liabilities as at March 31, 2020^ :

(` in crore)

Particulars	Day 1	2 days to 7 days	8 days to 14 days	15 days to 30 days	31 days to 2 months	Over 2 months to 3 months	Over 3 months and up to 6 months	Over 6 Months and up to 1year	Over 1 year & up to 3 years	Over 3 years & up to 5 years	Over 5 years	Total
Deposits	249.68	1,933.90	2,692.18	888.65	8,627.24	6,336.34	7,178.08	7,887.99	26,981.23	1,675.65	657.03	65,107.97
Advances	207.03	1,854.13	1,044.79	130.52	3,375.47	1,411.33	7,528.69	11,174.83	27,502.39	23,278.62	8,087.56	85,595.36
Investments	9,806.89	8,509.51	611.95	696.42	978.40	2,701.69	2,187.46	2,581.25	9,903.19	1,591.39	5,836.43	45,404.58
Borrowings	-	7,427.71	230.12	1,561.20	2,921.83	4,610.16	2,752.05	4,830.46	12,330.42	14,974.70	5,758.54	57,397.19
Foreign Currency	106.65	0.06	73.45	29.27	214.96	226.85	174.22	51.26	114.47	98.42	110.16	1,199.77
assets*
Foreign Currency	0.71	4.29	7.38	7.83	1,951.59	2,631.92	1,017.62	1,382.82	587.80	348.01	0.00	7,939.97
liabilities *

The net FX risk is dynamically hedged by the Balance Sheet Management Group of the Bank.
^ The estimates and assumptions used by the Bank for classification of assets and liabilities under the different maturity buckets are based on the returns submitted to RBI for the relevant periods. In accordance with the regulatory package announced by the Reserve Bank of India on March 27, 2020, the Bank has extended the option of payment moratorium for all dues falling due between March 1, 2020 and May 31, 2020 to its eligible borrowers. As the moratorium has been given effect in April 2020, inflows from advances are based on the original cash flows prevailing at March 31, 2021 along with the effect of applicable behavioral studies.

Classification of assets and liabilities under the different maturity buckets is based on the same estimates and assumptions as used by the Bank for compiling the return submitted to the RBI, which has been relied upon by the auditors. Maturity profile of foreign currency assets and liabilities is excluding off balance sheet items.

202 IDFC FIRST Bank

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

18.24 Unsecured advances

During the year ended March 31, 2021, there are unsecured advances of 655.23 crore (Previous Year 811.38 crore) for which intangible securities such as charge over the rights, licenses, authority etc. has been taken as collateral by the Bank and the estimated value of the intangible collaterals was 1,844.78 crore (Previous Year 2,154.12 crore).

18.25 Disclosure of penalties imposed by RBI

During the year ended March 31, 2021, no penalty was imposed by the RBI. During the previous year, RBI imposed a penalty of ` 10,000 on the Bank with respect to certain deficiencies observed on note /coin exchange and clean note policy during the incognito visit to the branch.

18.26 Employee benefits

i The Bank has charged the following amounts in the Profit and Loss Account towards contribution to defined contribution plans which are included under schedule 16 (I) :

contribution plans which are included under schedule 16 (I) :
Particulars	(`in crore) March 31, 2021 March 31, 2020
Provident fund	67.78 53.89
Superannuation fund	- -
Pension fund	2.77 2.79

ii Gratuity

The following tables summarise the components of net benefit expenses recognised in the Profit and Loss Account and funded status and amounts recognised in the balance sheet for the gratuity benefit plan :

Profit and Loss Account

Net employee benefit expenses (recognised in payments to and provisions for employees) :

Particulars	(`in crore) March 31, 2021 March 31, 2020
Current service cost	14.64 13.48
Interest on defned beneft obligation	4.06 4.87
Expected return onplan assets	(3.06) (3.92)
Net actuarial losses/ (gains)recognised in theyear	(7.98) (4.83)
Past service cost	0.20 0.20
Losses/ (gains)on Acquisition/Divestiture	- -
Total included in “employee beneft expense”[schedule 16(I)]	7.86 9.79
Actual return onplan assets	5.44 3.58

Balance Sheet

Details of provision for gratuity :

Particulars	(`in crore) March 31, 2021 March 31, 2020
Fair value ofplan assets	45.16 44.32
Present value of funded obligations	(62.91) (54.41)
Unrecognised Past Service Cost	0.20 0.39
Net Liability Included under Schedule 5 - Other Liabilities	(17.55) (9.69)

Annual Report 2020-21 203

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

Changes in the present value of the defined benefit obligation are as follows :

Particulars	(`in crore) March 31, 2021 March 31, 2020
Openingdefned beneft obligation	54.41 53.13
Current service cost	14.64 13.48
Interest cost	4.06 4.87
Actuarial losses/ (gains)	(5.60) (5.18)
Past service cost	- -
Liabilities assumed on acquisition/ (settled on divestiture)	- -
Beneftspaid	(4.60) (11.89)
Closing defned beneft obligation	62.91 54.41
Changes in the fair value of plan assets are as follows : Particulars	(`in crore) March 31, 2021 March 31, 2020
Openingfair value ofplan assets	44.32 52.64
Expected return onplan assets	3.06 3.92
Actuarialgains/ (losses)	2.38 (0.35)
Contributions byemployer	- -
Assets acquired on acquisition/ (distributed on divestiture)	- -
Beneftspaid	(4.60) (11.89)
Closing fair value ofplan assets	45.16 44.32
Expected Employers Contribution Next Year	6.00 6.00

Experience adjustments

Experience adjustments
Particulars	(`in crore) March 31, 2021 March 31, 2020 March 31, 2019 March 31, 2018 March 31, 2017
Defned beneft obligations	62.91 54.41 53.13 36.90 36.13
Plan assets	45.16 44.32 52.64 37.19 36.44
Surplus/ (defcit)	(17.74) (10.08) (0.49) 0.29 0.31
Experience adjustments on plan liabilities	(3.76) (6.33) (1.57) (1.59) 2.02
Experience adjustments on plan assets	2.38 (0.35) (0.20) (0.20) 1.12

Major categories of plan assets (managed by Insurers) as a percentage of fair value of total plan assets :

Particulars	March 31, 2021 March 31, 2020
Government securities	44.24% 32.70%
Bonds,debentures and other fxed income instruments	38.06% 50.56%
Deposits and moneymarket instruments	5.99% 4.97%
Equityshares	11.71% 11.77%
Principal actuarial assumptions at the balance sheet date: Particulars	March 31, 2021 March 31, 2020
Discount rate(p.a.)	5.30% 6.20%
Expected rate of return onplan assets(p.a.)	7.00% 7.00%
Salaryescalation rate(p.a.)	8.00% 8.00%

204 IDFC FIRST Bank

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

18.27 Segment reporting

Business Segments :

The Business of the bank is divided into four segments : Treasury, Corporate / Wholesale Banking, Retail Banking Business and Other Banking Business. These segments have been identified and reported taking into account, the target customer segment, the nature of products, internal business reporting system, transfer pricing policy approved by Asset Liability Committee (ALCO), the guidelines prescribed by the Reserve Bank of India (‘the RBI’), which has been relied upon by the auditors.

Segment	Principal activities
	The treasury segment primarily consists of Bank’s investment portfolio, money market borrowing
	and lending, investment operations and entire foreign exchange and derivative portfolio of the
Treasury	Bank. Revenue of treasury segment consist of interest income on investment portfolio, inter segment revenue, gains or losses from trading operations, trades and capital market deals. The principal
	expenses consists of interest expenses from external sources & on funds borrowed from inter
	segments, premises expenses, personnel cost, direct and allocated overheads.
	The wholesale banking segment provides loans, non-fund facilities and transaction services to
	corporate relationship not included under Retail Banking, and syndication. Revenues of the
Corporate / Wholesale Banking	wholesale banking segment consists of interest earned on loans to customers, inter segment revenue, interest / fees earned on transaction services, earnings from trade services, fees on client FX & derivative and other non-fund facilities. The principal expenses of the segment consists of
	interest expense on funds borrowed from internal segments, premises expenses, personnel costs,
	other direct overheads and allocated expenses of delivery channels, and support groups.
	Retail Banking constitutes lending to individuals / business banking customers through the branch
	network and other delivery channels subject to the orientation, nature of product, granularity of
	the exposure and the quantum thereof. Revenues of the retail banking segment are derived from
Retail Banking	interest earned on retail loans, inter segment revenue and fees from services rendered, fees on client FX & derivative. Expenses of this segment primarily comprise interest expense on deposits &
	funds borrowed from inter segments, commission paid to retail assets sales agents, infrastructure
	and premises expenses for operating the branch network and other delivery channels, personnel
	costs, other direct overheads and allocated and support groups.
Other BankingBusiness	This segment includes revenue from distribution of thirdparty products.
	All items which are reckoned at an enterprise level are classifed under this segment. This includes
	assets and liabilities which are not directly attributable to any segment. Revenue & expense of this
Unallocated	segment includes income & expenditure which are not directly attributable to any of the above segments. Revenue includes interest on income tax refund and expense of this segment mainly
	includes employee cost, establishment & technology expense which is not directly attributable to
	any segment.

Segmental reporting for the year ended March 31, 2021 are set out below :

(` in crore)

Particulars	Treasury	Corporate/ Wholesale Banking	Retail Banking	Other Banking Business	Unallocated	Total
Revenue(i)	10,773.55	6,118.04	15,010.76	152.67	50.61	32,105.63
Less : inter segment revenue(ii)						(13,884.07)
Total Revenue(i-ii)						18,221.56
Segment Results before tax	2,594.94	698.50	(2,594.71)	(17.24)	(205.70)	475.78
Less: Provision for tax						(23.50)
Net Proft						452.28
Total Segment assets	56,420.62	29,167.89	74,459.95	41.61	3,053.81	163,143.88
Total Segment liabilities	40,843.93	35,895.26	67,466.52	27.97	1,102.31	145,335.99
Net assets	15576.69	(6727.37)	6993.43	13.64	1951.50	17807.89
Capital expenditure for theyear	22.10	6.28	523.53	23.23	2.26	577.40
Depreciation on fxed assets for	47.06	4.46	273.50	2.24	2.12	329.38
the year

Annual Report 2020-21 205

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

Segmental reporting for the year ended March 31, 2020 are set out below :

						(`in crore)
Particulars	Treasury	Corporate/ Wholesale Banking	Retail Banking	Other Banking Business	Unallocated	Total
Revenue (i)	12,866.02	8,028.33	11,777.72	158.53	43.49	32,874.09
Less: intersegment revenue (ii)						(14,844.37)
Total Revenue(i-ii)						18,029.72
Segment Results beforetax	(1,241.68)	(25.61)	(917.33)	(6.29)	(187.61)	(2,378.52)
Less: Provision for tax						(485.69)
Net Proft						(2,864.21)
TotalSegmentassets	57,727.54	30,660.45	57,334.26	76.37	3,401.78	149,200.40
TotalSegment liabilities	58,294.59	39,072.68	36,236.42	70.57	183.54	133,857.80
Net assets	(567.04)	(8,412.23)	21,097.84	5.80	3,218.24	15,342.60
Capitalexpenditurefor the year	3.71	29.79	322.88	0.12	4.57	361.07
Depreciation on fxed assets for	9.23	34.42	255.81	0.09	5.89	305.44
the year

Geographic segments

The business of the Bank is concentrated in India. Accordingly, geographical segment results have not been reported.

18.28 Deferred tax

The major components of deferred tax assets and deferred tax liabilities arising out of timing differences are as under :

Particulars	(`in crore) March 31, 2021 March 31, 2020
Deferred tax assets on:
- Provisionsfor loan losses	1,008.01 708.12
- Provision fordiminution in value of investments	521.91 489.97
-Othercontingencies	557.50 461.31
- Depreciationon fxed assets (Includingintangible assets)	- 436.38
Total(A)	2,087.42 2,095.78
Deferred tax liabilities on:
- Depreciationon fxed assets (Includingintangible assets)	7.01 -
-Others (Special Reserve undersection 36(1)(viii) of IncomeTax Act,1961)	80.96 75.03
Total(B)	87.97 75.03
Net Deferred tax asset(A-B)	1,999.45 2,020.75

The Finance Act, 2021 has provided that goodwill of a business or profession will not be considered as a depreciable asset and no depreciation on goodwill would be allowed effective April 1, 2020. The Bank had claimed depreciation on goodwill while computing provision for tax that arose pursuant to the merger with Erstwhile Capital First Limited and its subsidiaries in FY2018, and a deferred tax asset had been recognised on carrying value of such goodwill as per Income Tax Act. Pursuant to the change in law, the Bank has now written off the deferred tax asset of ` 338.00 crores on depreciation on goodwill in excess of the depreciation claimed in its returns of income filed till FY 2020 by debiting the profit and loss account. Further, as at March 31, 2021, the Bank has reassessed the continuing recognition of deferred tax assets by assessing availability of sufficient future taxable profits, based on financial projections which have been approved by the Board of Directors, to absorb the carrying amount of deferred tax asset.

18.29 Provisions and contingencies

‘Provisions and contingencies’ shown under the head expenditure in Profit and Loss Account comprise of :

Particulars	(`in crore) March 31, 2021 March 31, 2020
Provision made towards income taxes	23.50 485.69
Provisions for depreciation on investment*	(820.39) 1,051.49
Provision/ (Write back)towards non-performingadvances	945.08 441.58

206 IDFC FIRST Bank

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

Particulars	(`in crore) March 31, 2021 March 31, 2020
Provision/ (Write back)for restructured assets	99.32 20.59
Provision/ (Write back)on identifed standard assets	81.10 (41.06)
Provision against Standard Asset	95.81 330.95
Bad-debts written off/technical write off ^	2,387.02 1,386.44
Provision and other contingencies	(723.04) 1,125.27
Total	2088.40 4,800.95

^ Net of bad-debt recoveries from borrowers on written off accounts of 420.10 crore (Previous Year 229.58 crore)
During the year ended March 31, 2020, the Bank recognized a large telecom exposure of 3,243.77 crore ( 2,000.00 crore funded, 1,243.77 crore non funded) as stressed and created provisions of 1,622.00 crore, (50%) on the total of funded and non-funded exposure, of which the Bank has written back provision amounting to ` 1,135.40 crore during the year ended March 31, 2021.
During the year ended March 31, 2021, the Bank has sold bonds of a Non Banking Finance company and large housing finance company resulting into realised loss of 573.48 crore accounted in “Other Income” and corresponding existing provision release of 572.92 crore accounted in “Provisions (other than tax) and Contingencies”. During the year ended March 31, 2020, the Bank sold bonds of Financial Services Company resulting into realised loss of 381.98 crore accounted in “Other Income” and corresponding existing provision release of 374.63 crore accounted in “Provisions (other than tax) and Contingencies”

18.30 Floating provisions

Particulars	(`in crore) March 31, 2021 March 31, 2020
a OpeningBalance	- -
b Provisions made duringtheyear	- -
c Amount of draw down made duringtheyear	- -
d ClosingBalance	- -

18.31 Draw down from reserves

The Bank has not undertaken any draw down from reserves during the year ended March 31, 2021 and March 31, 2020.

Appropriation to Reserves

i Statutory Reserve

As mandated by the Banking Regulation Act, 1949, all banking companies incorporated in India shall create a reserve fund, out of the balance of profit of each year as disclosed in the profit and loss account and before any dividend is declared and transfer a sum equivalent to not less than twenty five per cent of such profit. During the year, the Bank has transferred an amount of ` 113.50 crore (Previous year Nil) to Statutory Reserve Account.

ii Investment Reserve Account (IRA)

As per RBI guidelines, if provisions created on account of depreciation in the ‘AFS’ or ‘HFT’ categories are found to be in excess of the required amount in any year, the excess shall be credited to the Profit and Loss Account and an equivalent amount (net of taxes, if any and net of transfer to Statutory Reserves as applicable to such excess provision) shall be appropriated to Investment Reserve Account. Further, the Bank may draw down from the IRA to the extent of provision made during the year towards depreciation in investment in AFS and HFT categories (net of taxes, if any, and net of transfer to Statutory Reserves as applicable to such excess provision). During the year, the Bank has transferred an amount of ` 335.00 crore (Previous year Nil) to Investment Reserve Account.

iii Investment Fluctuation Reserve (IFR)

The RBI vide circular DBR.No.BP.BC.102/21.04.048/2017-18 dated April 2, 2018 advised banks to create an Investment Fluctuation Reserve (IFR) with effect from FY 2018-19. Accordingly, an amount not less than the lower of net profit on sale of investments during the year or net profit for the year less mandatory appropriations shall be transferred to the IFR, until the amount of IFR is at least 2 percent of the HFT and AFS portfolio, on a continuing basis. Where feasible, this should be achieved within a period of 3 years. During the year, the Bank has transferred Nil (Previous year Nil) to Investment Fluctuation Reserve.

iv Capital Reserve

Annual Report 2020-21 207

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

recognised in the Profit and Loss Account. Accordingly, the Bank has appropriated 148.50 crore (Previous Year 166.00 crore) to capital reserve.

v Special Reserve

As per the provisions under Section 36(1)(viii) of Income Tax Act, 1961, specified entities like banks are allowed deduction in respect of any special reserve created and maintained, i.e. an amount not exceeding twenty per cent of the profits derived from eligible business computed under the head “Profits and gains of business or profession” is carried to such reserve account. This would be applicable till the aggregate of the amounts carried to such reserve account from time to time exceeds twice the amount of the paid up share capital and general reserves of the entity. During the year, the Bank has transferred an amount of ` 24.00 crore (Previous Year Nil) to Special Reserve.

vi General Reserve

During the year ended March 31, 2021 and March 31, 2020, no amount was transferred to the general reserve.

18.32 Disclosure of complaints

A Complaints by Customers / Stakeholders / Bondholders

i (a) Disclosure of customer complaints relating to Bank’s customers on Bank’s ATMs

(b) (c) (d)	Particulars	March 31, 2021 March 31, 2020
	a No. of complaintspendingat the beginningof theyear	- -
	b No. of complaints received duringtheyear	9 -
	c No. of complaints redressed duringtheyear	9 -
	d No. of complaintspendingat the end of theyear	- -
	Disclosure of customer complaints relating to Bank’s customers on other bank’s ATMs Particulars March 31, 2021 March 31, 2020
	a No. of complaintspendingat the beginningof theyear	- -
	b No. of complaints received duringtheyear	8,013 2,473
	c No. of complaints redressed duringtheyear	8,010 2,473
	d No. of complaintspendingat the end of theyear	3 -
	Disclosure of customer complaints other than ATM transaction complaints Particulars March 31, 2021 March 31, 2020
	a No. of complaintspendingat the beginningof theyear	540 131
	b No. of complaints received duringtheyear	12,993 5,123
	c No. of complaints redressed duringtheyear	13,209 4,714
	d No. of complaintspendingat the end of theyear	324 540
	Summary information on complaints received by the bank from customers and from the OBOs Complaints received by the bank from its customers March 31, 2021 March 31, 2020
	a No. of complaintspendingat the beginningof theyear	540 131
	b No. of complaints received duringtheyear	21,015 7,596
	c No. of complaints redressed duringtheyear	21,228 7,187
	-Of which,number Of complaints rejected bythe bank	397 -
	d. No. of complaintspendingat the end of theyear	327 540
	Maintainable complaints received by the bank from OBOs
	e. Number of maintainable complaints received by the Bank from OBOs	3,394 1,572
	f. Of 'e',number of complaints resolved in favour of the Bank byBOs	3,189 1,500
	g. Of 'e', number of complaints resolved through conciliation/media- tion/advisories issued by BOs	204 72
	h. "Of 'e', number of complaints resolved after passing of Awards by BOs against the bank"	1 -
	i. Number of Awards unimplemented within the stipulated time (oth- er than those appealed)	- -

208

IDFC FIRST Bank

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

Top five grounds of complaints received by the bank from customers March 31, 2021

March 31, 2021
			% increase/
Grounds of complaints, (i.e. complaints relating to)	Number of complaints pending at the beginning of the year	Number of complaints received during the year	decrease in the number of complaints received over the previous	Number of complaints pending at the end of the year	Of 5, number of complaints pending beyond 30 days
			year
1	2	3	4	5	6
ATM/Debit Cards	3	8,270	224%	5	-
Loans and advances	330	5,903	149%	168	1
RecoveryAgents/Direct Sales Agents	64	4,726	320%	87	2
Charges Related	21	657	208%	24	-
Internet/Mobile/Electronic Banking	31	328	-15%	8	1
Others	91	1,131	20%	35	3
Total	540	21,015	177%	327	7

March 31, 2020

Grounds of complaints, (i.e. complaints relating to) Number of complaints pending at the beginning of the year Number of complaints received during the year % increase/ decrease in the number of complaints received over the previous year Number of complaints pending at the end of the year Of 5, number of complaints pending beyond 30 days	Grounds of complaints, (i.e. complaints relating to) Number of complaints pending at the beginning of the year Number of complaints received during the year % increase/ decrease in the number of complaints received over the previous year Number of complaints pending at the end of the year Of 5, number of complaints pending beyond 30 days
1 2 3	4 5 6
ATM/Debit Cards 1 2,555	585% 3 3
Loans and advances 67 2,375	130% 330 52
RecoveryAgents/Direct Sales Agents 37 1,125	37% 64 36
Charges Related 6 385	686% 31 3
Internet/Mobile/Electronic Banking 5 213	26% 21 2
Others 15 943	37% 91 27
Total 131 7,596	143% 540 123
Investors complaints : Particulars	March 31, 2021 March 31, 2020
a No. of complaintspendingat the beginningof theyear	- 9
b No. of complaints received duringtheyear *	8 538
c No. of complaints redressed duringtheyear	8 547
d No. of complaintspendingat the end of theyear	- -

ii Investors complaints :

The aforesaid decrease in reporting is on account of requisite guidelines issued to Registrar and Transfer Agent (RTA) for appropriate segregation amongst queries and complaints.

iii Retail bondholder’s complaints :

Particulars	March 31, 2021 March 31, 2020
a No. of complaintspendingat the beginningof theyear	3 -
b No. of complaints received duringtheyear	6,831 5,726
c No. of complaints redressed duringtheyear	6,155 5,723
d No. of complaintspendingat the end of theyear	679 3

18.33 Disclosure of letters of comfort (LoCs) issued by banks

The Bank has not issued any Letter of Comfort to its subsidiary / group companies during the years ended March 31, 2021 and March 31, 2020.

Annual Report 2020-21 209

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

18.34 Bancassurance business

The details of fees / brokerage earned in respect of insurance broking, agency and bancassurance business undertaken by the Bank are as under:

the Bank are as under:	the Bank are as under:
Nature of Income		(`in crore) March 31, 2021 March 31, 2020
1 For sellinglife insurancepolicies		33.42 25.31
2 For sellingnon-life insurancepolicies		19.14 16.81
3 For sellingmutual fundproducts		5.86 3.72
4 Others		7.68 4.94
Total		66.10 50.78
18.35 Concentration of deposits, advances, exposures and NPAs i Concentration of deposits Particulars Total Deposits of twentylargest depositors Percentage of deposits of twenty largest depositors to total deposits of the bank ii Concentration of advances Particulars Total advances to twentylargest borrowers# Percentage of advances to twenty largest borrowers to total advances of the bank # Advances represent credit exposure (fund based). Particulars Total advances to twentylargest borrowers * Percentage of advances to twenty largest borrowers to total advances of the bank		(`in crore) March 31, 2021 March 31, 2020
	Total Deposits of twentylargest depositors	8,843.08 14,799.75
	Percentage of deposits of twenty largest depositors to total deposits of the bank	9.97% 22.73%
	Concentration of advances Particulars	(`in crore) March 31, 2021 March 31, 2020
	Total advances to twentylargest borrowers#	8,376.99 9,228.09
	Percentage of advances to twenty largest borrowers to total advances of the bank	8.08% 10.52%
	# Advances represent credit exposure (fund based). Particulars	(`in crore) March 31, 2021 March 31, 2020
	Total advances to twentylargest borrowers *	14,532.10 16,628.05
	Percentage of advances to twenty largest borrowers to total advances of the bank	11.08% 13.88%

Advances represent credit exposure (funded and non-funded) including derivative exposure computed as per current exposure method in accordance with RBI guidelines.

iii Concentration of exposures[$]

Particulars	(`in crore) March 31, 2021 March 31, 2020
Total exposure to twentylargest borrowers/customers	21,039.37 21,898.06
Percentage of exposures to twenty largest borrowers / customers to total exposure of the bank on borrowers / customers	12.44% 13.49%

$ Exposure includes credit exposure (funded and non-funded), derivative exposure and investment exposure (including underwriting and similar commitments) in accordance with RBI guidelines.

iv Concentration of NPAs

Particulars	(`in crore) March 31, 2021 March 31, 2020
Total exposure to topfour NPA accounts	948.10 873.33

18.36 Details of single borrower limit (SGL) / group borrower limit (GBL) exceeded by the bank

During the years ended March 31, 2021 and March 31, 2020, the Bank’s credit exposure to single borrower and group borrowers was within the prudential exposure limits prescribed by the RBI.

210

IDFC FIRST Bank

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

During the year ended March 31, 2021, the Bank complied with the RBI guidelines on Large Exposure framework on Individual borrower and Group borrower limit. As per the exposure limits permitted under extant RBI guidelines, the Bank with the approval of the Board of Directors can enhance exposure to single borrower and borrower group by a further 5% of capital funds.

18.37 Intra-group exposures

Intra-group exposures in accordance with RBI guidelines are as follows :

Particulars	(`in crore) March 31, 2021 March 31, 2020
i Total amount of intra-groupexposures	800.18 809.78
ii Total amount of top-20 intra-groupexposures	800.18 809.78
iii Percentage of intra-group exposures to total exposure of the bank on bor- rowers / customers	0.47% 0.50%
iv Details of breach of limits on intra-group exposures and regulatory action thereon, if any	- -

18.38 Unhedged Foreign Currency Exposure (UFCE)

The Bank’s Credit Policy lays down that the Bank will evaluate risks arising out of unhedged foreign currency exposures of the borrowers and will also monitor the same. Both at the time of initial approval as well as subsequent reviews, the assessment of credit risk arising out of foreign currency exposure of the borrowers include details of imports, exports, repayments of foreign currency borrowings, as well as hedges done by the borrowers or naturally enjoyed by them visa-vis their intrinsic financial strength, history of hedging and losses arising out of foreign currency volatility. The details of unhedged foreign currency exposure of customers are monitored periodically. The Bank also maintains additional provision and capital, in line with RBI guidelines.

During the year ended March 31, 2021, incremental capital held towards borrowers having unhedged foreign currency exposures is 119.69 crore (Previous Year43.37 crore) and provision held towards UFCE is 54.50 crore (Previous Year41.81 crore).

18.39 Sector-wise advances

(` in crore)

Sector	March 31, 2021
	Outstanding total advances Gross NPAs % of Gross NPAs to total advances in that sector
A Priority Sector
i Agriculture and allied activities	10,457.64 140.87 1.35%
ii Advances to industries sector eligible as priority sector lending	2,510.56 64.51 2.57%
iii Services	11,100.26 398.27 3.59%
iv Personal loans,of which : *	3,551.46 96.28 2.71%
Housing	3,028.64 93.50 3.09%
Subtotal(A)	27,619.92 699.93 2.53%
B Non Priority Sector
i Agriculture and allied activities	211.02 - -
ii Industry,of which *	18,974.88 675.95 3.56%
Infrastructure- Energy	2,947.09 91.19 3.09%
Infrastructure- Transport	4,848.42 358.53 7.39%
iii Services	11,628.81 638.21 5.49%
iv Personal loans,of which : *	45,288.61 2,288.92 5.05%
Housing	7,155.51 184.89 2.58%
Vehicle Loans	9,774.25 609.69 6.24%
Subtotal(B)	76,103.32 3,603.08 4.73%
Total(A)+(B)	103,723.24 4,303.01 4.15%

Sub-sectors have been disclosed where advances exceed 10% of total advances in that sector at reporting date.

Annual Report 2020-21 211

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

Sector	(`in crore) March 31, 2020
	Outstanding total advances Gross NPAs % of Gross NPAs to total advances in that sector
A Priority Sector
i Agriculture and allied activities	6,544.54 12.05 0.18%
ii Advances to industries sector eligible as priority sector lending	2,783.59 90.97 3.27%
iii Services	8,178.65 159.29 1.95%
iv Personal loans,of which : *	2,630.06 47.67 1.81%
Housing	2,271.51 47.47 2.09%
Subtotal(A)	20,136.84 309.98 1.54%
B Non Priority Sector
i Agriculture and allied activities	275.41 - -
ii Industry,of which *	21,316.98 729.56 3.42%
Infrastructure- Energy	4,463.60 94.55 2.12%
Infrastructure- Transport	5,751.90 498.27 8.66%
Infrastructure- Communication	- - -
iii Services	11,551.46 557.52 4.83%
iv Personal loans,of which : *	34,468.03 682.50 1.98%
Housing	4,343.30 50.35 1.16%
Vehicle Loans	8,048.99 209.53 2.60%
Subtotal(B)	67,611.88 1,969.58 2.91%
Total(A)+(B)	87,748.70 2,279.56 2.60%

Sub-sectors have been disclosed where advances exceed 10% of total advances in that sector at reporting date.

18.40 Amount of Priority Sector Lending Certificates (PSLCs) purchased / sold by the Bank Category wise PSLCs purchased :

Category wise PSLCs purchased :
Particulars	(`in crore) March 31, 2021 March 31, 2020
PSLC - Agriculture	4,458.00 450.00
PSLC - Small/Marginal Farmers	10,176.00 7,004.00
PSLC - Micro Enterprises	- -
PSLC - General	1,000.00 -
	15,634.00 7,454.00
Category wise PSLCs sold : Particulars	(`in crore) March 31, 2021 March 31, 2020
PSLC - Agriculture	- 1,000.00
PSLC - Small/Marginal Farmers	- -
PSLC - Micro Enterprises	75.00 2,700.00
PSLC - General	- 550.00
	75.00 4,250.00
18.41 Overseas assets, NPAs and revenue Particulars	(`in crore) March 31, 2021 March 31, 2020
Total assets	- -
Total NPAs	- -
Total revenue	- -

Note: The Bank does not have any overseas operations as on March 31, 2021 and March 31, 2020.

212 IDFC FIRST Bank

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

18.42 Off-balance sheet SPVs sponsored (which are required to be consolidated as per accounting norms)

Off-balance sheet SPVs sponsored as on March 31, 2021 and March 31, 2020

Name of the SPV sponsored	March 31, 2021 March 31, 2020
	Domestic Overseas Domestic Overseas
	Nil Nil Nil Nil

18.43 Disclosures on Remuneration

Qualitative disclosures

a Information relating to the composition and mandate of the Remuneration Committee :
The Board nomination and remuneration committee comprised of the following members :

Mr. Hemang Raja	Chairman
Mr. Aashish Kamat	Member
Dr. (Mrs.) Brinda Jagirdar	Member
Mr. Vishal Mahadevia	Member

The functions of the Committee inter-alia include the following :

i Evaluate performance of the Whole Time Directors (WTDs) (including the Managing Director & CEO) against predetermined parameters
ii Make recommendations on remuneration (including performance bonus and perquisites) of Whole Time Directors
iii Approve policy and quantum of variable pay, bonus, stock options and increments for the employees of the Bank
iv Frame guidelines for the Employees Stock Option Scheme (ESOS) and recommend grants of the Bank’s stock options to Whole Time Directors of the Bank
v Review and recommend to the Board the payment of profit related commission to the Non-Executive Directors of the Bank within the overall limits as may be approved by the shareholders of the Bank, in terms of the Companies Act, 2013 and RBI Guidelines.

b Information relating to the design and structure of remuneration processes and the key features and objectives of remuneration policy :

The principles for Remuneration Policy at the Bank have been formulated with the approval of the Nomination and Remuneration Committee (‘NRC’). They are guided by the organization’s philosophy for enabling employee performance to achieve the organization’s short term and long term objectives, balanced with prudent risk taking and are in compliance with the RBI’s Guidelines on Compensation of Whole Time Directors / Chief Executive Officers / Risk takers and Control function staff, etc. dated January 13, 2012.

The principles are as follows:

To ensure that the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate talent.
To ensure that the remuneration is balanced between fixed pay, variable pay and ESOPs, with adequate focus on prudent risk taking and the short-term as well as the long-term objectives of the Bank and its shareholders.
To ensure a clear relationship between remuneration and performance with adequate focus on achievement of performance objectives incorporating elements of risk, compliance and service measures.
To respect employee needs basis relevant market anchors and to compensate adequately for the contribution towards the Bank’s growth.
To ensure that the cost/income ratio of the Bank supports the remuneration package consistent with maintenance of sound capital adequacy ratio.

Annual Report 2020-21 213

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

c Description of the ways in which current and future risks are taken into account in the remuneration process including the nature and type of the key measures used to take account of these risks :
The Board approves the risk framework for the Bank. Business activities of the Bank are undertaken within this framework to achieve the financial plan. The risk framework includes the Bank’s risk appetite, limits framework and policies and procedures governing various types of risk. The performance evaluation framework of Whole Time Directors, equivalent positions and senior management personnel in material risk taker roles, incorporates these risk and control aspects as detailed by the Board. These factors include (but are not limited to) elements such as consistency in asset quality, rating slippage of existing loans, RORWA, operational risk parameters and quality of systems. The performance management framework of the Bank will evolve over time and get more sophisticated and mature. As regards linkage to remuneration, the compensation for Whole Time Director’s, etc. is paid in fixed pay, performance linked variable pay and stock options which is approved by the NRC.
d Description of the ways in which the bank seeks to link performance during a performance measurement period with levels of remuneration :
Performance and its linkage to levels of remuneration will be guided by the objectives / principles as spelt out in Item b above. Annual Remuneration package comprises of a combination of fixed salary, cash bonus and ESOPs, in a mix that ensures appropriate alignment with RBI guidelines, long term value creation and stability of the Bank. Further, total pay levels will be referenced against 66th percentile of Indian private sector banks.
e Bank’s policy on deferral and vesting of variable remuneration and a discussion of the bank’s policy and criteria for adjusting deferred remuneration before vesting and after vesting :
As outlined in Item (d) above, deferral structures have been incorporated and published to the staff. For senior levels and material risk taker roles, remuneration package represents a mix of fixed pay, cash bonus and ESOP with deferred vesting schedule. Further, the deferred / unvested portions will be subject to “malus” provision in conformity with RBI guidelines.
f Description of the different forms of variable remuneration (i.e. cash, shares, ESOPs and other forms) that the bank utilizes and the rationale for using these different forms :
The bank has the following forms of variable remuneration
Annual Cash Bonus - This is part of the annual performance and compensation review cycle and is basis the performance rating of the individual employee.
Sales Incentive Plan - employees in sales, customer relationship / service, collections & operations are covered under Incentive Plan. The coverage and payout plan is defined on the basis of business plans and budgets, it is designed keeping in mind, requisite emphasis on risk and control parameters.
Promotional activities which may result in rewards on achieving threshold targets. This may be in cash or kind and is subject to perquisite tax as applicable.
The ESOP scheme has been designed with a view to ensure an appropriate risk balanced remuneration architecture.

Quantitative disclosures

The quantitative disclosures cover the Bank’s Whole Time Directors.

Particulars	March 31, 2021 March 31, 2020
a i Number of meetings held by the Remuneration Committee during the fnancial year	5 6
ii Remunerationpaid to its members(sittingfees) (`in crore)	0.75 0.85
b Number of employees having received a variable remuneration award during the fnancial year 1 1
c Number and total amount of sign-on awards made duringthe fnancialyear - -
d Details ofguaranteed bonus,if any, paid asjoining /sign-on bonus - -
e Details of severancepay,in addition to accrued benefts,if any - -
f Total amount of outstanding deferred remuneration, split into cash, shares and share-linked instruments and other forms (`in crore). NIL NIL
g Total amount of deferred remunerationpaid out in the fnancialyear NIL 0.13

214 IDFC FIRST Bank

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

Particulars	March 31, 2021 March 31, 2020
h Breakdown of amount of remuneration awards for the fnancial year to show fxed and variable, deferred and non-deferred	Fixed -`4.77 cr<br>Variable -`1.41 cr Deferred - Nil Number of stock option granted during the fnancial year-80,00,000* Fixed -`6.42 cr<br>Variable -`2.30 cr Deferred - Nil Number of stock option granted during the fnancial year-Nil
i Total amount of outstanding deferred remuneration and retained remunera- tion exposed to ex-post explicit and/or implicit adjustments	NIL NIL
j Total amount of reductions during the fnancial year due to ex-post explicit adjustments	NA NA
k Total amount of reductions during the fnancial year due to ex-post implicit adjustments	NA NA

During FY 2020-21, the Board of Directors of the Bank, based on the recommendation of Nomination and Remuneration Committee, at its meeting held on May 21, 2020 had approved grant of 50,00,000 stock options to Mr. V. Vaidyanathan, MD & CEO under ‘IDFC FIRST Bank – Employees Stock Option Scheme 2015’. In terms of Section 35B of the Banking Regulation Act, 1949, the said grant was duly approved by the Reserve Bank of India vide its letter dated January 22, 2021.

During FY 2019-20, the Board of Directors of the Bank, based on the recommendation of Nomination and Remuneration Committee, at its meeting held on October 24, 2019 had approved grant of 30,00,000 stock options to Mr. V. Vaidyanathan, MD & CEO under ‘IDFC FIRST Bank – Employees Stock Option Scheme 2015’. In terms of Section 35B of the Banking Regulation Act, 1949, the said grant was duly approved by the Reserve Bank of India vide its email dated April 13, 2020. The aforesaid grant has been accounted for in the FY 2020-21, in terms of the relevant applicable accounting norms.

18.44 Transfers to depositor education and awareness fund (DEAF)

Particulars	(`in crore) March 31, 2021 March 31, 2020
Openingbalance of amounts transferred to DEAF	- -
Add : Amounts transferred duringtheyear	- -
Less : Amounts reimbursed towards claims	- -
Closingbalance of amounts transferred to DEAF	- -

18.45 Liquidity Coverage Ratio

Qualitative disclosure

Liquidity risk management of the Bank is undertaken by the Balance Sheet Management Group (BSMG) under the central oversight of the Asset Liability Management Committee (ALCO) in accordance with the Board approved policies and ALCO approved funding plans. The Bank has adopted the Basel III framework on liquidity standards as prescribed by RBI for reporting of the Liquidity Coverage Ratio (LCR). The mandated regulatory threshold as per the transition plan is embedded into the Limit Management Framework of the Bank with appropriate cushion to ensure maintenance of adequate liquidity buffers. Risk department computes the LCR and reports the same to the Asset Liability Management Committee (ALCO), Risk Management Committee of the Board and Board for oversight and periodical review. The Bank has been submitting LCR reports to RBI from January 2016.

As a strategy, the Bank is highly invested into GOI Bonds and corporate bonds which has resulted in a high level of HQLA. The Bank follows the criteria laid down by the RBI for month-end calculation of High Quality Liquid Assets (HQLA), gross outflows and inflows within the next 30 day period. HQLA predominantly comprises Government securities in excess of minimum SLR requirement viz. Treasury Bills, Central and State Government securities and corporate bonds in form of CP, CD and Bonds rated AA- and above with mandated haircuts applied thereto.

Bank is funded through long term bonds , term deposits, CASA, refinance and foreign currency borrowings. All significant outflows and inflows determined in accordance with RBI guidelines are included in the prescribed LCR computation.

The Risk department measures and monitors the liquidity profile of the Bank with reference to the Board approved limits on a static as well as on a dynamic basis by using the gap analysis technique supplemented by monitoring of key liquidity ratios and periodical liquidity stress testing. The Bank assesses the impact on short term liquidity gaps dynamically under various scenarios covering business projections under normal as well as varying market conditions. Periodical reports are placed before the Bank’s ALCO for perusal and review.

Annual Report 2020-21 215

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

Quantitative disclosure

Particulars	(`in crore) Quarter ended Quarter ended Quarter ended Quarter ended
	March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020
	Total Unweighted Value (average) Total Weighted Value (average) Total Unweighted Value (average) Total Weighted Value (average) Total Unweighted Value (average) Total Weighted Value (average) Total Unweighted Value (average) Total Weighted Value (average)
High quality liquid assets
1 Total high quality liquid assets (HQLA)	30,131.93 28,740.03 27,701.22 28,905.62
Cash outfows
2 Retail deposits and deposits from small business customers, of which :	51,991.63 4,905.83 44,074.84 4,127.95 36,199.22 3,356.83 29,085.02 2,686.22
i Stable deposits	5,866.58 293.33 5,590.61 279.53 5,261.74 263.09 4,445.73 222.29
ii Less stable deposits	46,125.04 4,612.50 38,484.22 3,848.42 30,937.48 3,093.75 24,639.29 2,463.93
3 Unsecured wholesale funding, of which :	26,313.42 17,647.43 26,365.04 17,861.13 27,235.49 18,500.94 29,202.67 20,183.25
i Operational deposits (all counterparties)	- - - - - - - -
ii Non-operational deposits (all counterparties)	14,443.31 5,777.32 14,173.18 5,669.27 14,557.60 5,823.04 15,032.37 6,012.95
iii Unsecured debt	11,870.11 11,870.11 12,191.86 12,191.86 12,677.90 12,677.90 14,170.30 14,170.30
4 Secured wholesale funding	- - - -
5 Additional requirements, of which :	29,827.66 24,042.59 20,299.27 15,246.58 18,774.53 15,881.68 23,067.40 20,331.29
i Outfows related to derivative exposures and other collateral requirements	23,565.86 23,565.86 14,816.27 14,816.27 15,636.83 15,636.83 20,091.01 20,091.01
ii Outfows related to loss of funding on debt products	- - - - - - - -
iii Credit and liquidity facilities	6,261.80 476.73 5,483.00 430.31 3,137.71 244.85 2,976.39 240.28
6 Other contractual funding obligations	1,937.35 1,937.35 1,679.37 1,679.37 1,318.50 1,318.50 1,219.64 1,219.64
7 Other contingent funding obligations	35,505.04 1,304.08 28,846.91 994.46 26,019.04 844.47 34,367.35 1,238.16
8 Total cash outfows	49,837.28 39,909.49 39,902.42 45,658.56
Cash infows
9 Secured lending (e.g.reverse repos)	3,836.23 - 4,422.28 - 3,172.79 - 5,508.52 -
10 Infows from fully performing exposures	7,676.97 6,465.70 4,055.90 3,137.97 4,675.13 3,870.78 3,336.89 2,672.59
11 Other cash infows*	24,205.82 23,721.83 15,535.43 15,016.35 16,637.29 15,993.47 20,928.85 20,360.07
12 Total Cash Infows	35,719.02 30,187.53 24,013.61 18,154.32 24,485.21 19,864.25 29,774.26 23,032.66

216 IDFC FIRST Bank

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

Particulars	(`in crore) Quarter ended Quarter ended Quarter ended Quarter ended
	March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020
	Total Unweighted Value (average) Total Weighted Value (average) Total Unweighted Value (average) Total Weighted Value (average) Total Unweighted Value (average) Total Weighted Value (average) Total Unweighted Value (average) Total Weighted Value (average)

	Total Adjusted Value Total Adjusted Value Total Adjusted Value Total Adjusted Value
TOTAL HQLA	30,131.93 28,740.03 27,701.22 28,905.62
Total Net Cash Outfows	19,649.77 21,755.17 20,038.17 22,625.90
Liquidity coverage ratio (%)	153.34% 132.11% 138.24% 127.75%

The average weighted and unweighted amounts are calculated taking daily averages.

“Other Cash inflows” include inflows related to derivative exposure. The corresponding outflows related to derivative exposures are shown separately under “5.i. Outflows related to derivative exposures and other collateral requirements”

Particulars	(`in crore) Quarter ended Quarter ended Quarter ended Quarter ended
	March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019
	Total Unweighted Value (average) Total Weighted Value (average) Total Unweighted Value (average) Total Weighted Value (average) Total Unweighted Value (average) Total Weighted Value (average) Total Unweighted Value (average) Total Weighted Value (average)
High quality liquid assets
1 Total high quality liquid assets (HQLA)	23,828.61 22,516.71 24,187.84 23,515.25
Cash outfows
2 Retail deposits and deposits from small business customers, of which :	25,916.02 2,443.60 21,521.42 2,096.52 15,685.90 1,522.75 11,431.23 1,104.87
i Stable deposits	2,960.09 148.00 1,112.38 55.62 916.77 45.84 764.99 38.25
ii Less stable deposits	22,955.93 2,295.59 20,409.04 2,040.90 14,769.12 1,476.91 10,666.24 1,066.62
3 Unsecured wholesale funding, of which :	29,870.92 20,106.92 27,197.35 18,075.06 29,248.26 20,017.68 30,514.41 21,992.41
i Operational deposits (all counterparties)	- - - - - - - -
ii Non-operational deposits (all counterparties)	16,273.33 6,509.33 15,203.82 6,081.53 15,384.30 6,153.72 14,203.33 5,681.33
iii Unsecured debt	13,597.59 13,597.59 11,993.54 11,993.54 13,863.96 13,863.96 16,311.08 16,311.08
4 Secured wholesale funding	- - - -
5 Additional requirements, of which :	25,163.48 21,225.79 20,650.68 16,484.14 22,977.41 21,409.44 24,207.09 23,248.51
i Outfows related to derivative exposures and other collateral requirements	20,899.83 20,899.83 16,147.37 16,147.37 21,235.41 21,235.41 23,174.60 23,174.60
ii Outfows related to loss of funding on debt products	- - - - - - - -

Annual Report 2020-21 217

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

Particulars	(`in crore) Quarter ended Quarter ended Quarter ended Quarter ended
	March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019
	Total Unweighted Value (average) Total Weighted Value (average) Total Unweighted Value (average) Total Weighted Value (average) Total Unweighted Value (average) Total Weighted Value (average) Total Unweighted Value (average) Total Weighted Value (average)
iii Credit and liquidity facilities	4,263.65 325.96 4,503.31 336.76 1,742.00 174.02 1,032.49 73.91
6 Other contractual funding obligations	1,469.03 1,469.03 906.15 906.15 803.79 803.79 925.82 925.82
7 Other contingent funding obligations	36,626.67 1,316.55 38,687.54 1,408.73 40,351.87 1,487.12 40,666.97 1,489.11
8 Total cash outfows	46,561.90 38,970.61 45,240.78 48,760.72
Cash infows
9 Secured lending (e.g.reverse repos)	3,173.08 - 737.06 1,503.72 - 697.30 -
10 Infows from fully performing exposures	5,687.30 3,928.42 5,483.10 3,637.97 6,578.68 4,548.10 7,635.06 5,455.73
11 Other cash infows*	21,723.63 21,171.85 16,938.63 16,400.54 21,899.02 21,408.30 23,961.18 23,456.58
12 Total Cash Infows	30,584.00 25,100.27 23,158.80 20,038.51 29,981.41 25,956.40 32,293.55 28,912.31

	Total Total Total	Total
	Adjusted Adjusted Adjusted	Adjusted
	Value Value Value	Value
TOTAL HQLA	23,828.61 22,516.71 24,187.84	23,515.25
Total Net Cash Outfows	21,461.62 18,932.10 19,284.38	19,848.41
Liquidity coverage ratio	111.03% 118.93% 125.43%	118.47%
(%)

The average weighted and unweighted amounts are calculated taking daily averages.

“Other Cash inflows” include inflows related to derivative exposure. The corresponding outflows related to derivative exposures are shown separately under “5.i. Outflows related to derivative exposures and other collateral requirements”

In accordance with the regulatory package announced by the Reserve Bank of India on March 27, 2020, the Bank has extended the option of payment moratorium for all dues falling due between March 1, 2020 and May 31, 2020 to its eligible borrowers. As the moratorium has been given effect in April 2020, inflows from advances are based on the original cash flows prevailing at March 31, 2021 along with the effect of applicable behavioral studies.

Note : Classification of inflows and outflows for determining the run off factors is based on the same estimates and assumptions as used by the Bank for compiling the return submitted to the RBI, which has been relied upon by the auditors.

18.46 Related party disclosure :

As per AS-18, Related Party Disclosure, the Bank’s related parties are disclosed below :

a Entities having Significant Influence
IDFC Limited
IDFC Financial Holding Company Limited
b Subsidiary
IDFC FIRST Bharat Limited
c Associates
Millennium City Expressways Private Limited
d Key Management Personnel
Mr. V. Vaidyanathan

218 IDFC FIRST Bank

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

e Relatives of key management personnel:

Mrs. Jeyashree Vaidyanathan, Mr. Krishnamurthy Vembu, Mr. Pranav Vaidyanathan, Mr. Amartya Vaidyanathan, Ms. Anusha Vaidyanathan, Group Captain V. Satyamurthy, Mr. Maj V Krishnamurthy, Ms. Savitri Krishnamoorthy

In accordance with paragraph 5 and 6 of AS - 18, the Bank has not disclosed certain transactions with relatives of key management personnel as they are in the nature of banker-customer relationship.

The significant transactions between the Bank and related parties for year ended March 31, 2021 are given below. A specific related party transaction is disclosed as a significant related party transaction wherever it exceeds 10% of all related party transactions in that category:

Interest Expense :
IDFC Financial Holding Company Limited 7.61 crore (Previous year 3.99 crore); IDFC FIRST Bharat Limited 2.47 crore (Previous year 3.97 crore)
Interest income earned :
Millennium City Expressways Private Limited 8.93 crore (Previous year 0.11 crore)
Managerial Remuneration :
Mr. V. Vaidyanathan 6.18 crore (Previous year 8.72 crore)
Receiving of services
IDFC FIRST Bharat Limited 464.35 crore (Previous year 372.62 crore)
Rendering of services
Millennium City Expressways Private Limited 0.10 crore (Previous year 0.10 crore); IDFC FIRST Bharat Limited ` 0.01 crore (Previous year Nil)
Sale of fixed assets
IDFC Limited ` 0.09 crore (Previous year Nil)

The details of the transactions of the Bank with its related party during the year ended March 31, 2021 are given below:

(` in crore)

	(`in crore)
Particulars	Related Party
	Entities having Signifcant Infuence Subsidiary Associates Key Management Personnel
Interest expense	7.62 2.47 - 0.12
Interest income earned	- - 8.93 -
Managerial Remuneration**^	- - - 6.18
Receivingof services	0.35 * 464.35 - -
Renderingof services	- 0.01 0.10 ß
Sale of fxed assets	0.09 - - -

Reimbursement of chairman office expenses done by the Bank to IDFC Limited for Dr. Rajiv Lall during the tenure of chairmanship till September 4, 2020.
** Refer Note 18.43 - Quantitative Disclosure
^ During FY 2020-21, the Board of Directors of the Bank, based on the recommendation of Nomination and Remuneration Committee, at its meeting held on May 21, 2020 had approved grant of 50,00,000 stock options to Mr. V. Vaidyanathan, MD & CEO under ‘IDFC FIRST Bank – Employees Stock Option Scheme 2015’. In terms of Section 35B of the Banking Regulation Act, 1949, the said grant was duly approved by the Reserve Bank of India vide its letter dated January 22, 2021.

Annual Report 2020-21 219

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

The balances payable to / receivable from the related parties of the Bank as on March 31, 2021 are given below:

(` in crore)

	(`in crore)
Particulars	Related Party
	Entities having Signifcant Infuence Subsidiary Associates Key Management Personnel
Deposits with the Bank	7.73 152.18 - 0.93
Interest Accrued on Deposit	- 0.25 - ß
Loans & advances including credit card balances	- - 341.40 ß
Investment of the Bank	- 232.40 226.38 -
Investment of relatedpartyin the Bank$	- - - -
Other receivables#	- 76.56 - -
Other Payable	- 48.24 - -

Other receivable includes cash with business correspondents.
$ As at March 31, 2021, IDFC Financial Holding Company Limited holds 2,268,937,489 and KMP holds 24,857,117 equity shares in the Bank.

The maximum balances payable to/receivable from the related parties of the Bank during the year ended March 31, 2021 are given below:

(` in crore)

Particulars	Related Party
	Entities having Signifcant Infuence Subsidiary Associates Key Management Personnel
Deposits with the Bank	875.08 201.95 - 6.54
Loans & advances including credit card balances	- - 351.00 ß
Investment of the Bank	- 232.40 226.38 -
Other receivables#	- 76.56 - -
Otherpayables	- 85.10 - -

Other receivable includes cash with business correspondents.

The details of the transactions of the Bank with its related party during the year ended March 31, 2020 are given below:

(` in crore)

	(`in crore)
Particulars	Related Party
	Entities having Signifcant Infuence Subsidiary Associates Key Management Personnel
Interest expense	4.01 3.97 - 0.07
Interest income earned	- - 0.11 -
Purchase of investments	51.61 - - -
Managerial Remuneration**	- - - 8.72
Receivingof services	- 372.62 - -
Renderingof services	0.27 - 0.10 -

** Refer Note 18.43 - Quantitative Disclosure

220 IDFC FIRST Bank

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

The balances payable to / receivable from the related parties of the Bank as on March 31, 2020 are given below:

Particulars	(`in crore) Related Party
	Entities having Signifcant Infuence Subsidiary Associates Key Management Personnel
Deposits with the Bank	609.43 29.03 - 6.58
Interest Accrued on Deposit	0.54 0.17 - -
Advances	- - 351.00 -
Investment of the Bank	- 232.40 226.38 -
Investment of relatedpartyin the Bank$	- - - -
Other receivables#	- 32.30 - -
Other Payable	- 97.89 - -

Other receivable includes cash with business correspondents.
$ As at March 31, 2020, IDFC Financial Holding Company Limited holds 1,923,961,207 and KMP holds 25,081,117 equity shares in the Bank.

The maximum balances payable to/receivable from the related parties of the Bank during the year ended March 31, 2020 are given below:

Particulars	(`in crore) Related Party
	Entities having Signifcant Infuence Subsidiary Associates Key Management Personnel
Deposits with the Bank	614.44 210.33 - 10.03
Advances	- - 351.00 -
Investment of the Bank	- 232.40 226.38 -
Other receivables#	- 74.26 - -
Otherpayables	- 97.89 - -

Other receivable includes cash with business correspondents.

18.47 Earnings per share (‘EPS’)

Basic and diluted earnings per equity share are computed in accordance with AS 20 - Earnings per share. Basic earnings per equity share is computed by dividing net profit after tax attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted earnings per equity share is computed by dividing net profit after tax attributable to equity shareholders by the weighted average number of equity shares and weighted average number of dilutive potential equity shares outstanding during the year, except where the results are anti-dilutive. Dilution of equity is on account of stock options granted to employees by the Bank.

Particulars	March 31, 2021 March 31, 2020
Basic
Weighted average number of equityshares outstanding (in crore)	550.26 478.64
Net Proft/ (Loss)after Tax( `in crore)	452.28 (2,864.21)
Basic earningsper share( ` )	0.82 (5.98)
Diluted
Weighted average number of equityshares outstanding (in crore)	557.58 484.88
Net Proft/ (Loss)after Tax( `in crore)	452.28 (2,864.21)
Diluted earningsper share( ` )	0.81 (5.91)
Nominal value of shares( ` )	10.00 10.00

18.48 Movement in stock options granted is as under:

Employee Stock Option Scheme (ESOS) of IDFC FIRST Bank Limited viz. IDFC FIRST Bank ESOS-2015 was framed with an object of encouraging higher participation on the part of employees in the Bank’s financial growth and success. An effective stock option scheme enables retention of talent and aligning employee interest to that of the Shareholders.

Annual Report 2020-21 221

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

The Shareholders of the Bank at its Extra-Ordinary General Meeting held on December 09, 2014 had approved IDFC FIRST Bank ESOS – 2015. The IDFC FIRST Bank ESOS – 2015 was further amended and was approved by the shareholders at its the 1st Annual General Meeting (AGM) held on September 29, 2015, at the 2nd AGM held on July 27, 2016 and at 5th AGM held on July 25, 2019.

IDFC FIRST Bank ESOS-2015 is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, as amended from time to time. IDFC FIRST Bank ESOS-2015 is administered by the Nomination and Remuneration Committee (‘NRC’) of the Bank. As per IDFC FIRST Bank ESOS-2015, the Bank is authorized to issue Employee Stock Options to Eligible Employees as defined under the IDFC FIRST Bank ESOS-2015.

All Options vests in a graded manner and are required to be exercised within a specific period. The Bank has used the intrinsic value method to account for the compensation cost of stock options to employees of the Bank. Intrinsic value is the amount by which the quoted market price of the underlying share on the date, prior to the date of the grant, exceeds the exercise price on the Option. Accounting for the stock options has been in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, to the extent applicable.

During the year ended March 31, 2021, there has been no material change in IDFC FIRST Bank ESOS-2015.

Stock option activity under the Scheme for the year ended 31 March, 2021 is set out below:

				Weighted
Particulars	Options outstanding	Range of exercise prices (`)\|Weighted average<br>exercise price (`)	average remaining contractuallife
				(Years)
Outstandingat the beginningof theyear	234,193,359	11.20 - 79.85	37.32	3.68
Granted duringtheyear	42,132,000	19.25 - 47.80	21.79	5.45
Re-Instated druingtheyear	-	-	-	-
Forfeited duringtheyear	(12,302,110)	19.25 - 74.20	42.16	-
Expired duringtheyear	(717,000)	44.60 - 53.26	50.73	-
Exercised duringtheyear	(3,506,135)	11.20 - 58.75	36.84	-
Outstanding at the end of theyear	259,800,114	11.20 - 79.85	34.54	3.09
Exercisable at the end of theyear	160,584,324	11.20 - 79.85	33.43	2.31

The weighted average share price in respect of options exercised during the year was ` 56.63

Stock option activity under the Scheme for the year ended 31 March, 2020 is set out below:

				Weighted
Particulars	Options outstanding	Range of exercise prices (`)\|Weighted average<br>exercise price (`)	average remaining contractuallife
				(Years)
Outstandingat the beginningof theyear	256,256,305	11.20 - 79.85	36.28	4.23
Granted duringtheyear	41,026,000	21.75 - 54.65	38.77	5.45
Re-Instated druingtheyear	83,400	33.24 - 51.06	45.12	2.81
Forfeited duringtheyear	(28,861,525)	12.53 - 78.55	47.70	-
Expired duringtheyear	(6,084,217)	12.53 - 59.43	49.00	-
Exercised duringtheyear	(28,226,604)	11.20 - 47.00	16.85	-
Outstanding at the end of theyear	234,193,359	11.20 - 79.85	37.32	3.68
Exercisable at the end of theyear	152,281,819	11.20 - 79.85	33.06	3.22

The weighted average share price in respect of options exercised during the year was ` 39.14

Fair Value Methodology

On applying the fair value based method in Guidance Note on ‘Accounting for Employee Share-based Payments’ the impact on reported net profit and EPS would be as follows:

222 IDFC FIRST Bank

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

Particulars	March 31, 2021 March 31, 2020
Net Proft/ (Loss) (as reported) ( `in crores)	452.28 (2,864.21)
Add: Stock based employee compensation expense under intrinsic value method included in net Proft / (Loss)	0.10 -
Less: Stock based employee compensation expense determined under fair value based method (proforma) (`in crores)	40.06 26.98
Net Proft/ (Loss) (Proforma) ( `in crores)	412.32 (2,891.19)
Earnings per share: Basic(in` )
As reported	0.82 (5.98)
Proforma	0.75 (6.04)
Earnings per share: Diluted(in` )
As reported	0.81 (5.91)
Proforma	0.74 (5.96)

The fair value of the options is estimated on the date of the grant using the Black-Scholes options pricing model, with the following assumptions:

with the following assumptions:
Particulars	March 31, 2021 March 31, 2020
Dividendyield	3.35% 0.07%
Expected life	4.50years 4.51years
Risk free interest rate	5.43% 6.14%
Volatility	40.35% 35.37%

18.49 Unclaimed Shares

Details of unclaimed shares as of March 31, 2021 and March 31, 2020 are as follows :

Particulars	March 31, 2021 March 31, 2020
Aggregate number of shareholders at the beginningof theyear	99 99
Total outstanding shares in Unclaimed Suspense Account at the beginning of the year	28,253 28,253
Number of shareholders who approached to issuer for transfer of shares from Unclaimed Suspense Account during the year	- -
Number of shareholders to whom shares were transferred from Unclaimed Sus- pense Account during the year	- -
Aggregate number of shareholders at the end of theyear	99 99
Total outstandingshares in Unclaimed Suspense Account at the end of theyear	28,253 28,253

18.50 Leases

In accordance with Accounting Standard 19 on ‘Leases’ as notified under the Accounting Standards specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, the following disclosures in respect of operating leases are made:

(This comprise of office premises / branches / ATMs taken on lease.)

(This comprise of offce premises / branches / ATMs taken on lease.)
Particulars	(`in crore) March 31, 2021 March 31, 2020
Future lease rentalspayable as at the end of theyear :
Not later than oneyear	247.79 214.35
Later than oneyear and not later than fveyears	724.92 589.76
Later than fveyears	252.82 210.70
Total of minimum lease payments recognised in the Proft and Loss Account for the year	289.73 238.12
Total of future minimum sub-lease payments expected to be received under non-cancellable subleases	- -
Sub-leasepayments recognised in the Proft and Loss Account for theyear	- -

Annual Report 2020-21 223

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

The Bank has not sub-leased any of its properties taken on lease. There are no provisions relating to contingent rent. The terms of renewal / purchase options and escalation clauses are those normally prevalent in similar agreements. There are generally no undue restrictions or onerous clauses in the agreements.

18.51 Other Fixed Assets

The movement in fixed assets capitalised as application software is given below :

Particulars	(`in crore) March 31, 2021 March 31, 2020
	Software Other Intangibles Software Other Intangibles**
Cost
At the beginningof theyear	783.07 2,599.35 648.44 2,599.35
Additions duringtheyear	294.99 - 134.63 -
Deductions duringtheyear	- - - -
Total(i)	1,078.06 2,599.35 783.07 2,599.35
Depreciation
Accumulated depreciation at the beginning of the year	510.37 2,599.35 346.96 2,599.35
Depreciation charge for theyear	158.21 - 163.41 -
Deductions duringtheyear	- - - -
Total(ii)	668.58 2,599.35 510.37 2,599.35
Net Value(i-ii)	409.48 - 272.70 -

Other intangibles includes Goodwill & Brand acquired and arising on amalgamation

18.52 Corporate Social Responsibility (CSR)

i Amount required to be spent by the Bank on CSR during the year is Nil (Previous Year Nil).
ii Amount spent towards CSR during the year and recognised as expense in the statement of profit and loss on CSR related activities is 19.62 crores (Previous Year 7.24 crores), which comprise of following -

Year ended March 31, 2021

ear ended March 31, 2021
			(`in crore)
Nature of activities	In cash	Yet to be paid in cash(i.e.provision)	Total
Construction/acquisition of anyasset	-	-	-
Onpurpose other than above	19.46	0.16	19.62
Year ended March 31, 2020
			(`in crore)
Nature of activities	In cash	Yet to be paid in cash(i.e.provision)	Total
Construction/acquisition of anyasset	-	-	-
Onpurpose other than above	7.24	-	7.24

18.53 Proposed dividend

The Bank did not declare any dividend for the financial year ended March 31, 2021 and March 31, 2020.

18.54 Small and Micro Industries

Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from October 2, 2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises. During the year ended March 31, 2021 23.91 crores (Previous Year Nil) worth bills were paid with delays to micro and small enterprises and 1.86 crores worth bills remained unpaid as at March 31, 2021. There have been no demand of interest on these payments.

18.55 Disclosure on Factoring

224 IDFC FIRST Bank

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

As per the RBI circular Ref No. DBR.No.FSD.BC.32/24.01.007/2015-16 dated July 30, 2015, banks are required to disclose factoring exposures. Receivables acquired under factoring are treated as part of loans and advances and reported under the head ‘Bills Purchased and Discounted’ in Schedule 9 of the Balance Sheet. The Bank has factoring exposure of 875.05 crore (Previous Year 876.14 crore) and outstanding of 607.13 crore (Previous Year 573.87 crore) as on March 31, 2021.

18.56 Investor Education and Protection Fund

There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Bank.

18.57 The Bank pays loan servicing fees to business correspondents for services rendered towards sourcing and servicing of loans and other related activities. These were hitherto netted off from “Interest/discount on advances/bills” in the profit and loss account. During the year ended March 31, 2021, the Bank has changed this presentation and accordingly reclassified them as part of “Operating Expenses” with the corresponding change in the previous year. Basis this change, all relevant disclosures have been regrouped / reclassified wherever applicable.

	(`in crore)
	Year ended
	31.03.2020
Interest/discount on advances/bills - As reported	11,634.54
Interest/discount on advances/bills - Asper reclassifcation	12,074.80
OperatingExpenses - As reported	5,420.73
OperatingExpenses Asper reclassifcation	5,860.99

18.58 In accordance with the instructions in the aforesaid circular dated April 07, 2021, the Bank shall refund / adjust ‘interest on interest’ to all borrowers including those who had availed of working capital facilities during the moratorium period, irrespective of whether moratorium had been fully or partially availed, or not availed. As required by the RBI notification, the methodology for calculation of such interest on interest has recently been circulated by the Indian Banks’ Association. The Bank is in process of implementing this circular. As at March 31, 2021, the Bank has created a liability towards estimated interest relief of ` 55.00 crore and reduced the same from the interest income.

18.59 Description of contingent liabilities

i Claims against the Bank not acknowledged as debts
The Bank is a party to taxation matters which are in dispute and are under appeal. The demands have been partly paid / adjusted and will be received as refund if the matters are decided in favour of the Bank. The Bank is a party to various legal proceedings in the normal course of business. The Bank does not expect the outcome of these proceedings to have a material adverse effect on the Bank’s financial conditions, results of operations or cash flows.

ii Liability for partly paid investments

This represents amounts remaining unpaid towards liability for partly paid investments. These payment obligations of the Bank do not have any profit / loss impact.
iii Liability on account of forward exchange and derivative contracts
The Bank enters into foreign exchange contracts, currency options, forward rate agreements, currency swaps and interest rate swaps with inter-bank participants on its own account and for customers. Forward exchange contracts are commitments to buy or sell foreign currency at a future date at the contracted rate. Currency swaps are commitments to exchange cash flows by way of interest / principal in one currency against another, based on predetermined rates. Interest rate swaps are commitments to exchange fixed and floating interest rate cash flows. Interest rate futures are standardised, exchange-traded contracts that represent a pledge to undertake a certain interest rate transaction at a specified price, on a specified future date. Forward rate agreements are agreements to pay or receive a certain sum based on a differential interest rate on a notional amount for an agreed period. A foreign currency option is an agreement between two parties in which one grants to the other the right to buy or sell a specified amount of currency at a specific price within a specified time period or at a specified future time. An exchange traded currency option contract is a standardised foreign exchange derivative contract, which gives the owner the right, but not the obligation, to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date on the date of expiry. Currency Futures contract is a standardised, exchange-traded contract, to buy or sell a certain underlying currency at a certain date in the future, at a specified

Annual Report 2020-21 225

Notes

forming part of the Financial Statements as at and for the year ended March 31, 2021

price.

With respect to transactions entered by customers, the Bank generally takes off-setting positions in the inter-bank markets which results into higher numbers of outstanding contracts. The same also leads to representation of large gross notional principal of the portfolio, while the actual credit /market risk is much smaller.

Further, the notional amount of the financial instruments do not represent the current fair value or future cash flows and hence do not indicate Banks’ exposure to credit or price risk. The derivative instrument becomes an asset / liability basis change in underlying market rates compared to contracted rates.

iv Guarantees given on behalf of constituents
As a part of its banking activities, the Bank issues guarantees on behalf of its customers to enhance their credit standing. Guarantees represent irrevocable assurances that the Bank will make payments in the event of the customer failing to fulfill its financial or performance obligations.
v Acceptances, endorsements and other obligations
These includes documentary credit issued by the Bank on behalf of its customers and bills drawn by the Bank’s customers that are accepted or endorsed by the Bank.

vi Other items

Other items represent estimated amount of contracts remaining to be executed on capital account. This also includes the amount of investments bought and remaining to be settled on the date of financial statements.

18.61 Comparative figures

Figures for the previous year have been regrouped and reclassified wherever necessary to conform to the current year’s presentation.

18.62 The figures of ` 50,000 or less have been denoted by ß .

For B S R & Co. LLP Chartered Accountants (Firm Registration No: 101248W/W-100022)

For and on behalf of the Board of Directors of IDFC FIRST Bank Limited

Manoj Kumar Vijai Partner (Membership No. 046882)

Aashish Kamat Director DIN: 06371682

V. Vaidyanathan Managing Director & Chief Executive Officer DIN: 00082596

Date : May 8, 2021 Place : Mumbai

Satish Gaikwad Head - Legal & Company Secretary

Sudhanshu Jain Chief Financial Officer & Head Corporate Centre

226 IDFC FIRST Bank

Independent Auditor’s Report

To the Members of IDFC FIRST Bank Limited

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of IDFC FIRST Bank Limited (hereinafter referred to as the ‘Bank’ or ‘Holding Company’) and its subsidiary (the Bank/ Holding Company and its subsidiary together referred to as the ‘Group’) and its associate, which comprise the consolidated balance sheet as at 31 March 2021, the consolidated profit and loss account and the consolidated cash flows statement for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as the ‘consolidated financial statements’).

In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of report of another auditor on separate financial statements of a subsidiary and management accounts of an associate, the aforesaid Consolidated Financial Statements give the information required by the Companies Act, 2013 (“Act”) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the consolidated state of affairs of the Group and its associate as at 31 March 2021, of its consolidated profit and consolidated cash flows for the year ended on that date.

Basis of opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those SAs are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the Consolidated Financial Statements in terms of the Code of Ethics issued by Institute of Chartered Accounts of India and the relevant provisions of the Act, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence obtained by us along with the consideration of audit reports of the other auditors referred to in sub paragraph (a) of the “Other Matters” paragraph below, is sufficient and appropriate to provide a basis for our opinion on the consolidated financial statements.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Annual Report 2020-21 227

Key audit matter

How the matter was addressed in our audit

Provisions on advances

P/L Charge (including provision on Non Performing Advances (NPA), Identified Standard Advances, restructured advances, COVID provisions and Write-off) : Rs. 3,888 crore for year ended 31 March 2021

Provision on Advances (Including provision on Non Performing Advances (NPA), Identified Standard Advances and Restructured Advances) : Rs. 3,173 crore as at 31 March 2021

Refer to the accounting policies in “Note 17.02 to the Consolidated Financial Statements: Significant Accounting Policies – Advances”, “Schedule 9 to the Consolidated Financial Statements: Advances”, “Note 18.05 to the Consolidated Financial Statements: Provisions and Contingencies” and “Note 18.21 to the Consolidated Financial Statements: COVID-19 Regulatory Package - Asset Classification and Provisioning.”

Subjective estimate

Our key audit procedures included: Design / controls

Assessing the design, implementation and operating effectiveness of key internal financial controls over monitoring of watch list loans, including monitoring process of overdue loans (and those which became overdue subsequent to the reporting date), measurement of provision, identification of NPA accounts, assessing the reliability of management information, which included overdue reports. Also, assessing how management has evaluated the impact of stress in the overall economic environment arising from COVID-19 in its NPA assessment.

We identified provision on non-performing advances as a key audit matter because of-

Understanding management’s approach, interpretation, systems and controls implemented in relation to NPA computation.

1) the management judgement involved in determining the - provision;
2) any regulator mandated provision that may be needed for the portfolio of loans;

3) the dependency on the valuation of the security available on NPAs; and
4) because of its significance to the financial results of the Bank.

Evaluating the design, implementation and operating effectiveness of key internal controls over the valuation of the securities for the NPAs and watch list cases.

Testing of review controls over measurement of provisions and disclosures in financial statements.

Involving information system specialist to gain comfort over data integrity and calculations, including system reconciliations.

Testing key controls operating over the information technology in relation to NPA systems, including system access and system change management, program development and computer operations.

Testing Bank’s controls relating to implementing and actioning any RBI mandated specific provision requirement.

228 IDFC FIRST Bank

Key audit matter

Management has assessed the impact of COVID-19 on the loan portfolio in evaluating the need for recording additional provisions on loans at 31 March 2021.

How the matter was addressed in our audit

Substantive tests

Test of details over of calculation of NPA provisions, including provisions on restructured loans, as at the year-end for assessing the completeness, accuracy and relevance of data and to ensure that the same is in compliance with the Prudential Norms on Income Recognition, Asset Classification & Provisioning and the Resolution Framework for Covid-19 related stress announced by the RBI .
Select a sample of corporate loans to test potential cases of loans repaid and disbursed to the same customer during the period and fresh disbursement(s) to stressed customers.
Testing a sample (based on quantitative and qualitative thresholds) of large sized corporate clients where impairment indicators had been identified by management. Obtaining management’s assessment of the recoverability of these exposures (including individual provisions calculations) and challenging whether individual impairment provisions, or lack of, were appropriate.

This included the following procedures:

evaluating the statement of accounts, approval process, committee meeting minutes, credit review of customers, review of SMA reports and other related documents to assess recoverability and the classification of the facility; and
assessing external collateral valuer’s work and the results and comparing external valuations to values used in management’s assessment.
For a selection of corporate loans not identified as displaying indicators of impairment by management, independently challenging their assessment by reviewing the historical performance of the customer and formed our own view whether any impairment indicators were present.
Evaluating management’s rationale for making additional provision on account of COVID-19 and testing the computation.
Assessing the factual accuracy and appropriateness of the financial statements disclosures made by the Bank in context of impact of COVID-19 and restructured loans.

Annual Report 2020-21 229

Key audit matter

How the matter was addressed in our audit

Assessment of the realizability of deferred tax assets
Deferred tax asset(net): Rs. 2,002 crore as at 31 March 2021
Refer to the accounting policies in “Note 17.08 to the Consolidated Financial Statements: Signifcant Accounting Policies –
Income Tax” and “Note 18.04 to the Consolidated Financial Statements: Deferred Tax”

230 IDFC FIRST Bank

Key audit matter

How the matter was addressed in our audit

Valuation of Investments

Net Value of Investments: Rs. 45,182 crore as at 31 March 2021

Provision on depreciation on investments (including the amount related to standard identified investments) : Rs. (820) crore for year ended 31 March 2021

Refer to the accounting policies in “Note 17.01 to the Consolidated Financial Statements: Significant Accounting PoliciesInvestments Classification”, “Schedule 8 to the Consolidated Financial Statements: Investments” and “Schedule 18.05 to the Consolidated Financial Statements: Provision and Contingencies”

Subjective estimates and judgment involved Investments

Our key audit procedures included:

Test of design / controls

Assessed the design, implementation and operating effectiveness of management’s key internal financial controls over specific provisions on certain investments.

Evaluated controls relating to creation and reversal of provisions

Substantive tests

For a selection of investments, we re-performed the valuation computation. For cases where no directly observable inputs were used, we examined and reperformed the calculation basis the cashflows by using a discounted cashflow method to compare the results with that of the Bank’s which was computed in accordance with the relevant RBI guidelines.

Investments classified as AFS and HFT are marked- tomarket on a periodic basis as per the relevant RBI guidelines.

We identified valuation of investments as a key audit matter because of the:

  - We verified the management assessment of specific provisions against certain investments and evaluated the appropriateness of the provisions made and rationale put forward by the Bank for reversal of such specific provision.

management judgement and external data involved in:
determining the value of certain investments like security receipts, venture capital units, pass through certificates and unquoted equity securities;

Assessed whether the financial statement disclosures appropriately reflect the Bank’s exposure to investments with reference to the requirements of the prevailing RBI guidelines.

creation and reversal of specific provisions on certain - identified investments; and
the overall significance of investments to the financial statements of the Bank.
We verified that the specific provision are netted off from the carrying value of such investments in line with the accounting policy of the Bank.

Annual Report 2020-21 231

Key audit matter Information technology

How the matter was addressed in our audit

Our key IT audit procedures included:

Information Technology (IT) systems and controls

We focused on user access management, change management, segregation of duties, system interface controls, system application controls and Information Produced by entity (IPE) controls over key financial accounting and reporting systems.

The Bank’s key financial accounting and reporting processes are highly dependent on information systems including automated controls in systems, such that there exists a risk that gaps in the IT control environment could result in the financial accounting and reporting records being misstated. Amongst its multiple IT systems, we scoped in systems that - are key for the overall financial reporting.

We tested a sample of key controls for data migration operating over the information technology in relation to financial accounting and reporting systems, including analysis of strategy documents, review of data mapping sheets and reconciliation confirmations from operations team, user acceptance test (UAT) sign offs, incidents monitoring and approvals for pre and post migration.

The Bank has also undertaken few data migration projects post the merger in the last financial year.

Further, the prevailing COVID-19 situation has caused the required IT applications to be made accessible on a remote basis.

We tested the design and operating effectiveness of key controls over user access management which include new user creation and granting access rights, removal of user rights, user access review and preventive controls designed to enforce segregation of duties.

We have identified ‘IT systems and controls’ as a key audit matter because of the high level of automation, significant number of systems being used by management and the complexity of the IT architecture.

For a selected group of key controls over financial and reporting systems, we independently performed procedures to determine that these controls remained unchanged during the year or were changed following the standard change management process.

Other areas that were assessed included password policies, security configurations, controls over changes to applications and databases and controls to ensure that developers and production support did not have access to change applications, the operating system or databases in the production environment.

Performed inquiry for data security controls in the context of a large population of staff working from remote location at the year end.

Information Other than the Consolidated Financial Statements and Auditors’ Report Thereon”

Management’s and Board of Directors’ Responsibilities for the Consolidated Financial Statements

The Bank’s management and Board of Directors are responsible for the other information. The other information comprises the information included in the Bank’s Annual Report, but does not include the consolidated financial statements and our auditors’ report thereon. The Bank’s Annual report is expected to be made available to us after the date of this auditor’s report.

The Bank’s management and Board of Directors are responsible for the preparation and presentation of these consolidated financial statements in term of the requirements of the Act that give a true and fair view of the consolidated state of affairs, the consolidated profit and the consolidated cash flows of the Group including its associate in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act and the circulars, and guidelines issued by Reserve Bank of India (‘RBI’) from time to time.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

The respective Management and Board of Directors of the companies included in the Group and of its associate are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of each Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

When we read the Bank’s Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

232 IDFC FIRST Bank

effectively for ensuring accuracy and completeness of the accounting records, relevant to the preparation and presentation of the consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated financial statements by the Management and Directors of the Bank, as aforesaid.

In preparing the consolidated financial statements, the respective Management and Board of Directors of the companies included in the Group and of its associate are responsible for assessing the ability of each Company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the respective management and Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The respective Board of Directors of the companies included in the Group and of its associate are responsible for overseeing the financial reporting process of each Company.

Auditor’s responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the Consolidated Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3) (i) of the Act, we are also responsible for expressing our opinion on the internal financial controls with reference to consolidated financial statements and the operating effectiveness of such controls based on our audit.
evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management and Board of Directors.
conclude on the appropriateness of Management and Board of Directors use of the going concern basis of accounting in preparing consolidated financial statements and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the appropriateness of this assumption. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and its associate to cease to continue as a going concern.
evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group and its associate to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit of the financial statements of such entities included in the consolidated financial statements of which we are the independent auditors. For the other entities included in the consolidated financial statements, which have been audited by another auditors, such other auditor remains responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion. Our responsibilities in this regard are further described in sub- paragraph (a) of the section titled ‘Other Matters’ in this audit report.

We believe that the audit evidence obtained by us along with the consideration of audit report of the other auditor referred to in sub-paragraph (a) of the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the Consolidated Financial Statements.

We communicate with those charged with governance of the Holding Company in the Consolidated Financial Statements of which we are the independent auditors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may

Annual Report 2020-21 233

reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matters

(a) We did not audit the financial statements of 1 subsidiary whose financial statements reflect total assets of Rs. 299 crore as at 31 March 2021, total revenues of Rs. 464 crore and net cash flows amounting to Rs. 111 crore for the year ended on that date, as considered in the consolidated financial statements. These financial statements have been audited by other auditors whose reports have been furnished to us by the Management and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of the subsidiary and associate, and our report in terms of sub-section (3) of Section 143 of the Act, in so far as it relates to the aforesaid subsidiary is based solely on the audit report of the other auditor.
(b) The consolidated financial statements also include the Group’s share of net loss of Rs. NIL for the year ended 31 March 2021, as considered in the consolidated financial statements, in respect of 1 associate, whose financial statements have not been audited by us or by other auditors. These unaudited financial statements have been furnished to us by the Management and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of this associate and our report in terms of sub-sections (3) of Section 143 of the Act in so far as it relates to the aforesaid associate, is based solely on such unaudited financial statements. In our opinion and according to the information and explanations given to us by the Management, these financial statements are not material to the Group.

Our opinion on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors and the financial statements certified by the Management.

Report on Other Legal and Regulatory Requirements

A. As required by Section 143(3) of the Act, based on our audit and on the consideration of report of the other auditors on separate financial statements and the other financial information of such subsidiary as were audited by other auditors and management accounts of the

associate, as noted in the ‘Other Matters’ paragraph, we report, to the extent applicable, that:

a) we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements;
b) in our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books and the reports of the other auditors;
c) the consolidated balance sheet, the consolidated profit and loss account, and the consolidated cash flow statement dealt with by this Report are in agreement with the relevant books of account maintained for the purpose of preparation of the consolidated financial statements;
d) in our opinion, the aforesaid consolidated financial statements comply with the Accounting Standards specified under Section 133 of the Act to the extent they are not inconsistent with the accounting policies prescribed by RBI;
e) on the basis of the written representations received from the directors of the Bank as on 31 March 2021 taken on record by the Board of Directors of the Bank and the reports of the statutory auditor of its subsidiary company, none of the directors of the Group companies is disqualified as on 31 March 2021 from being appointed as a director in terms of Section 164(2) of the Act; and
f) with respect to the adequacy of the internal financial controls with reference to financial statements of the Bank and its subsidiary company and the operating effectiveness of such controls, refer to our separate Report in “Annexure A”;
B. With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditor’s) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us and based on the consideration of the report of the other auditors on separate financial statements of the subsidiary and management accounts for the associate as noted in the ‘Other Matters’ paragraph:
i. The consolidated financial statements disclose the impact of pending litigations as at 31 March 2021 on the consolidated financial position of the Group. Refer Schedule 12 and Note 18.18 to the consolidated financial statements.
ii. Provision has been made in the consolidated financial statements, as required under the applicable law or accounting standards, for material foreseeable losses, on long-term contracts including derivative contracts. Refer

234

IDFC FIRST Bank

Schedule 12 and Note 18.18 to the consolidated financial statements in respect of such items as it relates to the Group.

iii. There has been no delay in transferring amounts to the Investor Education and Protection Fund by the Bank or its subsidiary company during the year ended 31 March 2021.
iv. The disclosures regarding holdings as well as dealings in specified bank notes during the period from 8 November 2016 to 30 December 2016 have not been made in the consolidated financial statements since they do not pertain to the financial year ended.
C. With respect to the other matters to be included in the Auditor’s Report in accordance with the requirements of section 197(16) of the Act, as amended:

of the Act is not applicable and based on the reports of the statutory auditor of such subsidiary company which were not audited by us, the remuneration paid during the current year by the subsidiary company to its directors is in accordance with the provisions of Section 197 of the Act. The remuneration paid to any director by the subsidiary company is not in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) which are required to be commented upon by us.

For B S R & Co. LLP Chartered Accountants ICAI Firm Registration No: 101248W/W-100022

Manoj Kumar Vijai Partner Membership No:046882 UDIN: 21046882AAAAAI6941

Place: Mumbai Date: 8 May 2021

Annual Report 2020-21 235

Annexure A to the Independent Auditor’s Report on the consolidated financial statements of IDFC FIRST Bank Limited for the period ended 31 March 2021

Report on the internal financial controls with reference to the aforesaid consolidated financial statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013

(Referred to in paragraph (A (f)) under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)

Opinion

In conjunction with our audit of the consolidated financial statements of IDFC FIRST Bank Limited as of and for the year ended 31 March 2021, we have audited the internal financial controls with reference to consolidated financial statements of IDFC FIRST Bank Limited (hereinafter referred to as “the Holding Company”), as of that date.

In our opinion, the Holding Company and its subsidiary company, have, in all material respects, adequate internal financial controls with reference to consolidated financial statements and such internal financial controls were operating effectively as at 31 March 2021, based on the internal financial controls with reference to consolidated financial statements criteria established by such companies considering the essential components of such internal controls stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (the “Guidance Note”).

Management’s responsibility for internal financial

controls

The respective Company’s management and the Board of Directors are responsible for establishing and maintaining internal financial controls with reference to consolidated financial statements based on the criteria established by the respective company considering the essential components of internal control stated in the Guidance Note. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the respective company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013 (hereinafter referred to as “the Act”).

Auditors’ responsibility

Our responsibility is to express an opinion on the internal financial controls with reference to consolidated financial statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to consolidated financial statements. Those Standards and the Guidance Note require that we comply

with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to consolidated financial statements were established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls with reference to consolidated financial statements and their operating effectiveness. Our audit of internal financial controls with reference to consolidated financial statements included obtaining an understanding of internal financial controls with reference to consolidated financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of the internal controls based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors of the relevant subsidiary company in terms of their reports referred to in the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls with reference to consolidated financial statements.

Meaning of internal financial controls with reference to

consolidated financial statements

A company’s internal financial controls with reference to consolidated financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial controls with reference to consolidated financial statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely

236 IDFC FIRST Bank

detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent limitations of internal financial controls with reference to consolidated financial statements

Because of the inherent limitations of internal financial controls with reference to consolidated financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls with reference to consolidated financial statements to future periods are subject to the risk that the internal financial controls with reference to consolidated financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Other matters

Our aforesaid report under Section 143 (3) (i) of the Act on the adequacy and operating effectiveness of the internal financial controls with respect to consolidated financial statements insofar as it relates to a subsidiary which is a company incorporated in India, is based on the corresponding report of the auditor of such company incorporated in India.

Our opinion is not modified in respect of the above matter.

For B S R & Co. LLP Chartered Accountants ICAI Firm Registration No: 101248W/W-100022

Manoj Kumar Vijai

Partner Membership No:046882 UDIN: 21046882AAAAAI6941

Place: Mumbai Date: 8 May 2021

Annual Report 2020-21 237

Consolidated Balance Sheet

as at March 31, 2021

Particulars Schedule No.	(`in Thousands) As at March 31, 2021 As at March 31, 2020
Capital and Liabilities
Capital 1	56,758,499 48,099,030
Employees' stock options outstanding 1a	974 -
Reserves and surplus 2	122,237,676 105,936,199
Deposits 3	885,362,442 650,789,413
Borrowings 4	457,860,854 573,971,855
Other liabilities andprovisions 5	108,494,798 112,789,021
TOTAL	1,630,715,243 1,491,585,518

Assets
Cash and balances with Reserve Bank of India 6	46,695,475 33,484,198
Balances with Banks and moneyat call and short notice 7	11,035,770 8,144,241
Investments 8	451,815,865 451,744,235
Advances 9	1,005,501,259 855,953,595
Fixed assets 10	12,959,304 10,732,314
Other assets 11	102,707,570 131,526,935
TOTAL	1,630,715,243 1,491,585,518

Contingent liabilities 12	2,124,865,217 2,806,789,233
Bills for collection	12,853,780 9,149,534
Signifcant accounting policies and notes to accounts 17 & 18

The schedules and the accompanying notes to accounts referred to above form an integral part of the consolidated Balance Sheet.

As per our report of even date

The balance sheet has been prepared in conformity with form ‘B’ of the Third Schedule to the Banking Regulation Act, 1949

For B S R & Co. LLP

For and on behalf of the Board of Directors of IDFC FIRST Bank Limited

Chartered Accountants (Firm Registration No: 101248W/W-100022)

Manoj Kumar Vijai Partner (Membership No. 046882)

Aashish Kamat Director DIN: 06371682

V. Vaidyanathan Managing Director & Chief Executive Officer DIN: 00082596

Date : May 8, 2021 Place : Mumbai

Satish Gaikwad Head - Legal & Company Secretary

Sudhanshu Jain

Chief Financial Officer & Head Corporate Centre

238 IDFC FIRST Bank

Consolidated Profit & Loss Account

for the year ended March 31, 2021

Schedule No.	(`in Thousands) Year Ended March 31, 2021 Year Ended March 31, 2020
I Income
Interest earned 13	159,681,523 162,403,190
Other income 14	22,538,021 17,224,087
TOTAL	182,219,544 179,627,277
II Expenditure
Interest expended 15	85,851,273 102,282,695
Operatingexpenses 16	70,529,490 57,647,959
Provisions and contingencies 18.05	21,006,988 48,130,527
TOTAL	177,387,751 208,061,181
Net Proft/(Loss)before share in Proft/ (Loss)of associates	4,831,792 (28,433,904)
Add : Share in Proft/ (Loss)of associates	- -
III Consolidated Proft / (Loss) for the year attributable to the group	4,831,792 (28,433,904)
Balance in proft and loss account brought forward from previous year	(34,993,352) (4,899,448)
IV Amount Available for Appropriation	(30,161,560) (33,333,352)
V Appropriations :
Transfer to statutoryreserve 18.06	1,135,000 -
Transfer to investment reserve 18.06	3,350,000 -
Transfer to capital reserve 18.06	1,485,000 1,660,000
Transfer to special reserve 18.06	240,000 -
Transfer to investment fuctuation reserve 18.06	- -
Dividendpaid(includes tax on dividend) 18.13	- -
Balance inproft and loss account carried forward	(36,371,560) (34,993,352)
TOTAL	(30,161,560) (33,333,352)
VI Earnings per Share 18.08
(Face value`10per share)
Basic(`)	0.88 (5.94)
Diluted(`)	0.87 (5.86)
Signifcant accounting policies and notes to accounts 17 & 18

The schedules and the accompanying notes to accounts referred to above form an integral part of the consolidated Profit and Loss Account

As per our report of even date

For B S R & Co. LLP

For and on behalf of the Board of Directors of IDFC FIRST Bank Limited

Chartered Accountants (Firm Registration No: 101248W/W-100022)

Manoj Kumar Vijai Partner (Membership No. 046882)

Aashish Kamat

Director DIN: 06371682

V. Vaidyanathan Managing Director & Chief Executive Officer DIN: 00082596

Date : May 8, 2021 Place : Mumbai

Satish Gaikwad Head - Legal & Company Secretary

Sudhanshu Jain Chief Financial Officer & Head Corporate Centre

Annual Report 2020-21 239

Cash Flow Statement

for the year ended March 31, 2021

Schedule No.	(`in Thousands) Year Ended March 31, 2021 Year Ended March 31, 2020
A Cash fow from operating activities
Proft / (Loss) after tax	4,831,792 (28,433,904)
Add: Provision for tax	358,048 4,974,955
Netproft / (loss) before taxes	5,189,840 (23,458,949)
Adjustments for :
Depreciation on fxed assets 16 (V)	3,425,065 3,200,069
Amortization of deferred employee compensation 16 (I)	974 -
Amortisation ofpremium on held to maturityinvestments	1,061,129 1,286,952
Provision on depreciation in value of investments 18.05	(8,203,859) 10,514,904
Provision / (write back) towards nonperformingadvances 18.05	9,450,777 4,415,807
Provision / (write back) for restructured assets 18.05	993,198 205,915
Provision / (Write back) on identifed standard assets 18.05	811,004 (410,618)
Provision for standard assets 18.05	958,147 3,309,472
Bad debts includingtechnical /prudential write off 18.05	23,870,190 13,864,356
Loss/(Proft) on sale of fxed assets (net) 14 (IV)	(157,597) (161)
Otherprovisions and contingencies 18.05	(7,230,516) 11,255,735
Adjustments for :
(Increase) / decrease in investments (excluding held to maturity investment and investment in subsidiary)	29,909,121 152,616,283
Increase in advances	(183,578,718) (11,006,196)
Increase / (Decrease) in deposits	234,573,029 (52,746,494)
(Increase) / Decrease in other assets	30,489,977 (25,751,783)
Increase / (Decrease) in other liabilities andprovisions	(6,320,221) 23,853,657
Direct taxes (paid) / refund (net)	5,175,591 (1,493,593)
Net cash fowgenerated from operating activities (A)	140,417,131 109,655,356
B Cash fow from investing activities
Purchase of fxed assets	(5,859,728) (4,275,961)
Proceeds from sale of fxed assets	365,271 84,144
Increase in held to maturityinvestments	(22,838,021) (33,710,082)
Net cash fow used in investing activities (B)	(28,332,478) (37,901,899)

240 IDFC FIRST Bank

Cash Flow Statement

for the year ended March 31, 2021

C	Cash fow from fnancing activities
	Decrease in borrowings	(116,111,000) (125,862,047)
	Proceeds from issue of share capital	20,129,152 475,496
	Net cash fow used in fnancing activities (C)	(95,981,848) (125,386,551)
D	Net increase / (decrease) in cash and cash equivalents	16,102,805 (53,633,094)
	(A+B+C)
	Cash and cash equivalents at the beginningof theyear	41,628,440 95,261,534
	Cash and cash equivalents at the end of theyear	57,731,245 41,628,440
	Represented by:
	Cash and Balances with Reserve Bank of India	6 46,695,475 33,484,198
	Balances with Banks and Moneyat Call and Short Notice	7 11,035,770 8,144,241
	Cash and cash equivalents at the end of theyear	57,731,245 41,628,439

As per our report of even date.

For B S R & Co. LLP

For and on behalf of the Board of Directors of IDFC FIRST Bank Limited

Chartered Accountants (Firm Registration No: 101248W/W-100022)

Manoj Kumar Vijai Aashish Kamat Partner Director (Membership No. 046882) DIN: 06371682

V. Vaidyanathan

Managing Director & Chief Executive Officer DIN: 00082596

Date : May 8, 2021 Place : Mumbai

Satish Gaikwad Head - Legal & Company Secretary

Sudhanshu Jain

Chief Financial Officer & Head Corporate Centre

Annual Report 2020-21 241

Schedules

forming part of the Consolidated Balance Sheet as at March 31, 2021

Schedule 1 - Capital

	(`in Thousands) As at March 31, 2021 As at March 31, 2020
Authorised capital
7,500,000,000(Previous Year - 5,325,000,000)equityshares of`10 each	75,000,000 53,250,000
3,800,000(Previous Year - 3,800,000)Preference shares of`100 each	380,000 380,000
Equity Share Capital
Issued, subscribed andpaid-up capital ^
5,675,849,855(Previous Year - 4,809,903,016)equityshares of`10 each,fully paid up	56,758,499 48,099,030
TOTAL	56,758,499 48,099,030

^Includes 3,506,135 equity shares (Previous Year 28,226,604 equity shares) allotted pursuant to the exercise of options under the Employee Stock Option Scheme.

Also includes additional capital raised by Holding Company aggregating to 2,000 crore (rounded off) on a preferential basis through issuance of 862,440,704 equity shares, fully paid-up, at the price of 23.19/- per equity share (including premium).

SCHEDULE 1a - EMPLOYEES’ STOCK OPTIONS OUTSTANDING

SCHEDULE 1a - EMPLOYEES’ STOCK OPTIONS OUTSTANDING
Employees’ stock option outstanding	974 -
TOTAL	974 -

Schedule 2 - Reserves and Surplus

	(`in Thousands) As at March 31, 2021 As at March 31, 2020
I Statutory reserves
Openingbalance	8,197,951 8,197,951
Additions duringtheyear(refer note 18.06)	1,135,000 -
Deduction duringtheyear	- -
Closingbalance	9,332,951 8,197,951
II Capital reserves
Openingbalance	4,575,100 2,915,100
Additions duringtheyear(refer note 18.06)	1,485,000 1,660,000
Deduction duringtheyear	- -
Closingbalance	6,060,100 4,575,100
III Share premium
Openingbalance	118,142,291 117,949,061
Additions duringtheyear	11,469,684 193,230
Deduction duringtheyear	- -
Closingbalance	129,611,975 118,142,291
IV General reserve
Openingbalance	6,882,161 6,882,161
Additions duringtheyear(refer note 18.06)	- -
Deduction duringtheyear	- -
Closingbalance	6,882,161 6,882,161
V Amalgamation Reserve	(2,317,951) (2,317,951)
VI Special reserve
Openingbalance	5,450,000 5,450,000
Additions duringtheyear(refer note 18.06)	240,000 -
Deduction duringtheyear	- -
Closingbalance	5,690,000 5,450,000

242 IDFC FIRST Bank

Schedules

forming part of the Consolidated Balance Sheet as at March 31, 2021

	(`in Thousands) As at March 31, 2021 As at March 31, 2020
VII Investment Fluctuation Reserve
Openingbalance	- -
Additions duringtheyear(refer note 18.06)	- -
Deduction duringtheyear	- -
Closingbalance	- -
VIII Investment Reserve Account (IRA)
Openingbalance	- -
Additions duringtheyear	3,350,000 -
Deduction duringtheyear(refer note 18.06)	- -
Closingbalance	3,350,000 -
IX Balance in Proft and Loss Account	(36,371,560) (34,993,352)
TOTAL(I+II+III+IV+V+VI+VII+VIII+IX)	122,237,676 105,936,199

Schedule 3 - Deposits

	(`in Thousands) As at March 31, 2021 As at March 31, 2020
A I Demand deposits
(i)From banks	3,343,654 1,599,190
(ii)From others	50,207,547 40,790,053
II Savings bank deposits	404,805,164 166,929,213
III Term deposits
(i)From banks	24,490,499 19,604,899
(ii)From others	402,515,578 421,866,058
TOTAL(I+II+III)	885,362,442 650,789,413
B I Deposits of branches in India	885,362,442 650,789,413
II Deposits of branches outside India	- -
TOTAL(I+II)	885,362,442 650,789,413

Schedule 4 - Borrowings

	(`in Thousands) As at March 31, 2021 As at March 31, 2020
I Borrowings in India
(i)Reserve Bank of India	- -
(ii)Other banks ^	17,746,794 40,924,349
(iii)Other institutions and agencies$	411,357,414 486,367,444
II Borrowings outside India	28,756,646 46,680,062
TOTAL(I + II)	457,860,854 573,971,855
Secured borrowings included in I and II above*	50,824,682 70,855,239

^ Borrowings from banks include long term infrastructure bonds of 281.50 crore (Previous Year 281.50 crore).

Secured borrowings includes borrowings under Collateralised Borrowing and Lending Obligation / Triparty Repo (TREPS), market repurchase transactions with banks & financial institutions, transactions under Liquidity Adjustment Facility and Marginal Standing Facility secured against Government Securities.

Annual Report 2020-21 243

Schedules

forming part of the Consolidated Balance Sheet as at March 31, 2021

Schedule 5 - Other Liabilities and Provisions

Schedule 5 - Other Liabilities and Provisions
	(`in Thousands) As at March 31, 2021 As at March 31, 2020
I Billspayable	9,155,950 3,831,576
II Inter-offce adjustments(net)	- -
III Interest accrued	25,267,114 34,886,084
IV Contingentprovision against standard assets	9,594,974 7,542,712
V Others(including provisions)	64,476,760 66,528,649
TOTAL(I + II + III + IV + V)	108,494,798 112,789,021
Schedule 6 - Cash and Balances with Reserve Bank of India	(`in Thousands) As at March 31, 2021 As at March 31, 2020
I Cash in hand(includingforeign currencynotes)	5,012,304 4,718,977
II Balances with Reserve Bank of India:
(i)In current accounts	41,683,171 28,765,221
(ii)In other accounts	- -
TOTAL(I + II)	46,695,475 33,484,198

Schedule 7 - Balances with Banks and Money at call and short notice

	(`in Thousands) As at March 31, 2021 As at March 31, 2020
I In India
(i) Balance with banks
(a)In current accounts	2,847,839 1,840,697
(b)In other deposit accounts	- -
(ii) Moneyat call and short notice
(a)With banks	4,470,000 5,250,000
(b)With other institutions	958,978 -
TOTAL	8,276,817 7,090,697

II Outside India
(i)In current accounts	398,324 189,669
(ii)In other deposit accounts	- -
(iii)Moneyat call and short notice	2,360,629 863,875
TOTAL	2,758,953 1,053,544
GRAND TOTAL(I+II)	11,035,770 8,144,241

244 IDFC FIRST Bank

Schedules

forming part of the Consolidated Balance Sheet as at March 31, 2021

Schedule 8 - Investments (Net of Provisions)

Schedule 8 - Investments (Net of Provisions)
	(`in Thousands) As at March 31, 2021 As at March 31, 2020
I Investments in India in:
(i) Government securities	354,464,011 330,138,163
(ii) Other approved securities	- -
(iii)Shares*	4,637,847 3,849,701
(iv)Debentures and bonds	40,919,490 50,797,993
(v) Others(venture capital funds,securityreceipts,PTCs etc.)	51,791,257 66,955,118
Total Investments in India	451,812,605 451,740,975

II Investments Outside India in:
(i) Government securities(includinglocal authorities)	- -
(ii) Subsidiaries and/orjoint ventures abroad	- -
(iii)Others(EquityShares)	3,260 3,260
Total Investments outside India	3,260 3,260
GRAND TOTAL(I+II)	451,815,865 451,744,235

Includes investments in associates

Schedule 9 - Advances (net of provisions)

Schedule 9 - Advances (net of provisions)
	(`in Thousands) As at March 31, 2021 As at March 31, 2020
A (i) Billspurchased and discounted	17,346,701 15,650,404
(ii) Cash credits,overdrafts and loans repayable on demand	65,618,583 55,798,000
(iii) Term loans#	922,535,975 784,505,191
TOTAL	1,005,501,259 855,953,595

B (i) Secured bytangible assets *	568,100,921 516,370,564
(ii)Covered bybank/ governmentguarantees$	18,917,010 9,846,717
(iii)Unsecured	418,483,328 329,736,314
TOTAL	1,005,501,259 855,953,595

C I Advances in India
(i) Prioritysector	272,239,206 199,738,539
(ii) Public sector	3,600,000 8,600,000
(iii) Banks	2,907,752 3,138,122
(iv) Others	726,754,301 644,476,934
TOTAL	1,005,501,259 855,953,595
C II Advances Outside India
(i) Due from banks	- -
(ii) Due from others :
(a)Billspurchased and discounted	- -
(b)Syndicated loans	- -
(c)Others	- -
TOTAL	- -
GRAND TOTAL(C I+C II)	1,005,501,259 855,953,595
The above advances are net of provisions of`3,173.12 crore (Previous Year`2,153.36 crore).

Net of borrowings under Inter Bank Participation Certificate (IBPC) Nil for current year (previous year ` 3,484.12 crore)

Includes advances against book debts

$ Includes advances against LCs issued by banks

Annual Report 2020-21 245

Schedules

forming part of the Consolidated Balance Sheet as at March 31, 2021

Schedule 10 - Fixed Assets

Schedule 10 - Fixed Assets
	(`in Thousands) As at March 31, 2021 As at March 31, 2020
I Premises (including land)
Gross block
At cost at the beginningof theyear	3,001,176 3,001,176
Additions duringtheyear	- -
Deductions duringtheyear	(128,015) -
TOTAL	2,873,161 3,001,176

Depreciation
As at the beginningof theyear	588,914 536,831
Charge for theyear	51,422 52,083
Deductions duringtheyear	(36,148) -
Depreciation to date	604,188 588,914
Net block ofpremises	2,268,973 2,412,262

II Other fxed assets (including furniture and fxtures) (refer note 18.11)
Gross block
At cost at the beginningof theyear	43,127,015 39,606,326
Additions duringtheyear	5,859,728 3,872,505
Deductions duringtheyear	(305,355) (351,816)
TOTAL	48,681,388 43,127,015

Depreciation
As at the beginningof theyear	35,551,563 32,671,406
Charge for theyear	3,373,642 3,147,986
Deductions duringtheyear	(281,441) (267,829)
Depreciation to date	38,643,764 35,551,563
Net block of other fxed assets(including furniture and fxtures)	10,037,624 7,575,452

III CAPITAL WORK-IN-PROGRESS (including capital advances)	652,707 744,600
GRAND TOTAL(I+II+III)	12,959,304 10,732,314

246 IDFC FIRST Bank

Schedules

forming part of the Consolidated Balance Sheet as at March 31, 2021

Schedule 11 - Other Assets

Schedule 11 - Other Assets
	(`in Thousands) As at March 31, 2021 As at March 31, 2020
I Inter-offce adjustments(net)	- -
II Interest accrued	16,751,212 16,593,655
III Taxpaid in advance/tax deducted at source(net ofprovisions)	5,330,643 10,643,405
IV Stationeryand stamps	176 97
V Non bankingassets acquired in satisfaction of claims	- -
VI Others *	80,625,539 104,289,778
TOTAL( I + II + III + IV + V + VI)	102,707,570 131,526,935

Includes RIDF Deposit of 2,515.53 crore (Previous Year 2,736.59 crore), Deferred Tax Asset (net) of 2,001.64 crore (Previous Year 2,023.73 crore) and share issue expenses of ` 41.18 crore which shall be adjusted against securities premium to the extent permissible under Companies Act, 2013 on the date of completion of Qualified Institutional Placement i.e. April 6, 2021.

Schedule 12 - Contingent Liabilities

Schedule 12 - Contingent Liabilities
	(`in Thousands) As at March 31, 2021 As at March 31, 2020
I Claims against thegroupnot acknowledged as debts	684,615 640,506
II Liabilityforpartly paid investments	255,816 143,993
III Liabilityon account of forward exchange and derivative contracts :
(a)Forward Contracts	686,623,792 732,933,712
(b) Interest rate swaps, currency swaps, forward rate agreement and interest rate futures	1,175,398,844 1,740,855,788
(c)Foreign currencyoptions	19,700,180 75,460,600
Total(a+b+c)	1,881,722,816 2,549,250,100
IV Guaranteesgiven on behalf of constituents
In India	151,181,907 165,222,583
Outside India	- -
V Acceptances,endorsements and other obligations	84,122,392 89,279,212
VI Other items for which thegroupis contingentlyliable	6,897,671 2,252,839
GRAND TOTAL(I+II+III+IV+V+VI)	2,124,865,217 2,806,789,233

Annual Report 2020-21 247

Schedules

forming part of Consolidated Profit and Loss Account for the year ended March 31, 2021

Schedule 13 - Interest Earned

Schedule 13 - Interest Earned
	(`in Thousands) Year Ended March 31, 2021 Year Ended March 31, 2020
I Interest/discount on advances/bills	126,329,781 120,071,674
II Income on investments	30,392,107 39,172,849
III Interest on balances with Reserve Bank of India and other inter-bank funds	1,123,126 805,243
IV Others *	1,836,509 2,353,424
TOTAL	159,681,523 162,403,190

Includes interest on income tax refunds amounting to 32.99 crore (Previous Year 42.89 crore).

Schedule 14 - Other Income

	(`in Thousands) Year Ended March 31, 2021 Year Ended March 31, 2020
I Commission,exchange and brokerage	14,995,496 14,201,187
II Proft/ (loss)on sale of investments(net)	5,969,578 3,904,461
III Proft/ (loss)on revaluation of investments(net)	- -
IV Proft/ (loss)on sale of land,buildingand other fxed assets(net)	157,597 161
V Proft/ (loss)on exchange/derivative transactions(net)	1,360,828 (1,106,447)
VI Income earned by way of dividends etc. from subsidiaries / companies and / or joint venture abroad / in India	- -
VII Miscellaneous Income	54,522 224,725
TOTAL	22,538,021 17,224,087

Schedule 15 - Interest Expended

Schedule 15 - Interest Expended
	(`in Thousands) Year Ended March 31, 2021 Year Ended March 31, 2020
I Interest on deposits	47,326,152 47,080,677
II Interest on borrowings from Reserve Bank of India/inter-bank borrowings	11,133,766 15,925,879
III Others	27,391,355 39,276,139
TOTAL	85,851,273 102,282,695

Schedule 16 - Operating Expenses

	(`in Thousands) Year Ended March 31, 2021 Year Ended March 31, 2020
I Payments to andprovisions for employees	23,015,156 17,950,057
II Rent,taxes and lighting	3,432,670 2,917,583
III Printingand stationery	514,495 641,293
IV Advertisement andpublicity	822,222 1,394,955
V Depreciation ongroup'sproperty	3,425,065 3,200,069
VI Directors' fees,allowance and expenses	24,966 19,932
VII Auditors' fees and expenses	43,608 40,497
VIII Law charges	377,558 73,853
IX Postage,telegrams,telephones etc.	839,641 882,438
X Repairs and maintenance	1,297,634 1,930,547
XI Insurance	902,986 536,293
XII Other expenditure	35,833,489 28,060,442
TOTAL	70,529,490 57,647,959

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forming part of the Consolidated Financial Statements as at and for the year ended March 31, 2021

17 Significant accounting policies forming part of the consolidated financial statements for the year ended March 31, 2021

A Background

IDFC FIRST Bank Limited (Formerly IDFC Bank Limited) (“the Bank”) was incorporated on October 21, 2014 as a Company under the Companies Act, 2013. Further, the Bank commenced its banking operations on October 1, 2015 after receiving universal banking license from the Reserve Bank of India (‘the RBI’) on July 23, 2015. The Bank has 598 branches and 156 Banking Outlets in India. The Bank’s shares are listed on National Stock Exchange of India Limited and BSE Limited. IDFC FIRST Bharat Limited is the subsidiary of the Bank. IDFC FIRST Bharat Limited (“the Subsidiary”) operates as business correspondent.

B Principles of Consolidation

The consolidated financial statements comprise the financial statements of IDFC FIRST Bank Limited (‘the Holding company’ or ‘the Bank’) and its subsidiary, which together constitute ‘the Group’.

The Bank consolidates its subsidiary in accordance with AS-21, Consolidated Financial Statements notified under Section 133 of the Companies Act, 2013 read together with para 7 of the Companies (Accounts) Rules, 2014 and the Companies (Accounting Standards) Amendment Rules, 2016 on a line-by-line basis by adding together the like items of assets, liabilities, income and expenditure. All significant inter-company accounts and transactions are eliminated on consolidation. Further, the Bank accounts for investments in associates in accordance with AS-23, Accounting for Investments in Associates in Consolidated Financial Statements, notified under Section 133 of the Companies Act, 2013 of the Companies (Accounts) Rules, 2014 and the Companies (Accounting Standards) Amendment Rules, 2016 using the equity method of accounting.

C Basis of preparation

The financial statements have been prepared based on historical cost convention and accrual basis of accounting, unless otherwise stated and are in accordance with the requirements prescribed under Section 29 and third schedule of the Banking Regulation Act, 1949 and in conformity with Generally Accepted Accounting Principles in India to comply with the statutory requirements prescribed under the circulars and guidelines issued by the RBI from time to time and the Accounting Standards notified under section 133 of the Companies Act, 2013, read together with Companies (Accounts) Rules, 2014 and the Companies (Accounting Standards) Amendment Rules, 2016 to the extent applicable and practices generally prevalent in the banking industry in India.

The consolidated financial statements present the accounts of IDFC FIRST Bank Limited, IDFC FIRST Bharat Limited and its associate for the full year.

Name Relation Country of Incorporation	Ownership Interest
	March 31, 2021 March 31, 2020
IDFC FIRST Bharat Limited (formerly IDFC Bharat Limited) Subsidiary India	100.00% 100.00%
Millennium City Expressways Private Limited Associate India	29.98% 29.98%

The audited financial statements of the subsidiary company and the un-audited financial statements of associate have been drawn up to the same reporting date as that of the Bank, i.e. March 31, 2021.

The standalone financial statements of the subsidiary has been prepared in accordance with notified Indian Accounting Standards(‘Ind-AS’) with effect from April 1, 2018. The financial statements of the subsidiary used for consolidation of the consolidated financial statements are special purpose financial statements prepared in accordance with Generally Accepted Accounting Principles in India (‘GAAP’) specified under Section 133 of the Companies Act, 2013 read together with paragraph 7 of the Companies (Accounts) Rules, 2014 and the Companies (Accounting Standards) Amendment Rules, 2016.

In case the accounting policies followed by a subsidiary are different from those followed by the Bank, the same have been disclosed in the respective accounting policy.

D Use of estimates

E Significant accounting policies :

17.01 Investments
Classification :

In accordance with the RBI Guidelines on investment classification and valuation; Investments are classified into:

Held for Trading (HFT),

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forming part of the Consolidated Financial Statements as at and for the year ended March 31, 2021

Available for Sale (AFS) and
Held to Maturity (HTM).

Basis of classification and accounting :

Investments that are held principally for resale within 90 days from the date of purchase are classified under HFT category. Further, as per the RBI guidelines, HFT securities, which remain unsold for a period of 90 days are reclassified to AFS category. Investments which the Bank intends to hold till maturity are classified as HTM securities. Investments which are not classified in either of the above categories are classified under AFS category. Purchase and sale transactions in securities are recorded under settlement date of accounting, except in the case of equity shares where trade date accounting is followed.

Cost of acquisition :

Costs including brokerage and commission pertaining to investments paid at the time of acquisition are charged to the Profit and Loss Account.
Cost of investments is computed based on First in First out Method for all categories of Investments including Short sales.
Broken period interest (the amount of interest from the previous interest payment date till the date of purchase / sale of instrument) on debt instrument is treated as a revenue item.

Valuation :

Investments classified under AFS and HFT categories are marked to market as per the RBI guidelines. Traded investments are valued based on the trades / quotes on the recognised stock exchanges, or prices/ yields declared by Primary Dealers Association of India (‘PDAI’) jointly with Fixed Income Money Market and Derivatives Association (‘FIMMDA’) / Financial

Benchmark India Pvt. Ltd. (‘FBIL’), periodically.

The valuation of other unquoted fixed income securities (viz. State Government securities, Other approved securities, Bonds and Debentures) and preference shares, wherever linked to the YTM rates, is done with a mark-up (reflecting associated credit and liquidity risk) over the YTM rates for government securities published by FIMMDA / FIBIL. For Tax-free bonds, the valuation is done after grossing up the coupon in line with FIMMDA/ FBIL guidelines.
Unquoted equity shares are valued at the breakup value, if the latest balance sheet is available or at ` 1 as per the RBI guidelines.
Units of mutual funds are valued at the latest repurchase price / net asset value (‘NAV’) declared by the mutual fund.
Treasury Bills, Commercial Papers and Certificate of Deposits being discounted instruments, are valued at carrying cost. Accretion of discount on discounted Money Market Securities is computed on straight line method and for long term discounted securities, constant YTM method is used.
Security receipts (‘SR’) are valued as per NAV as provided by the Reconstruction Company (‘RC’) / Securitization Company (‘SC’).
Units of Venture Capital Funds (‘VCF’) and Alternate Investment Fund (‘AIF’) held under AFS category are marked to market based on the NAV provided by VCF/AIF based on the latest audited financial statements. In case the audited financials are not available for a period beyond 18 months, the investments are valued at ` 1 per VCF/AIF. Banks’ investments in units of VCFs is classified under HTM for an initial period of three years and valued at cost during this period, in accordance with the RBI guidelines.
Priority Sector Pass Through Certificates (PTC) are valued at book value as per FIMMDA guidelines.

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forming part of the Consolidated Financial Statements as at and for the year ended March 31, 2021

Non-performing investments are identified and depreciation / provision is made thereon based on the RBI guidelines. The depreciation / provision is not set off against the appreciation in respect of other performing securities. Interest on non-performing investments is recognised on cash basis.

Bonds and debentures are classified as other receivables under other assets on maturity date and disclosed under Schedule - 11.

Investment Fluctuation Reserve (‘IFR’) :

The RBI has advised banks to create an Investment Fluctuation Reserve (‘IFR’) with effect from FY 201819. Accordingly, an amount not less than the lower of net profit on sale of investments during the year or net profit for the year less mandatory appropriations shall be transferred to the IFR by the Holding company, until the amount of IFR is at least 2 percent of the HFT and AFS portfolio, on a continuing basis. Where feasible, this should be achieved within a period of 3 years.

Further, the Holding company may, at its discretion, draw down the balance available in IFR in excess of 2 percent of its HFT and AFS portfolio, for credit to the balance of profit/loss as disclosed in the profit and loss account at the end of any accounting year. In the event the balance in the IFR is less than 2 percent of the HFT and AFS investment portfolio, a draw down is permitted subject to the following conditions:

(a) The drawn down amount is used only for meeting the minimum Common Equity Tier 1/Tier 1 capital requirements by way of appropriation to free reserves or reducing the balance of loss and
(b) The amount drawn down is not more than the extent the MTM provisions made during the aforesaid year exceed the net profit on sale of investments during that year.

IFR is eligible for inclusion in Tier 2 capital.

Short sales :

The Bank undertakes short sale transactions in Central Government dated securities in accordance with RBI guidelines and these are shown under Schedule 8 - Investments. The short position is marked to market along with other securities in that category and loss, if any, is charged to the Profit and Loss Account while

gain, if any, is ignored. Profit / loss on settlement of the short position are recognised in the Profit and Loss Account.

Repo and Reverse Repo Transaction :

In accordance with the RBI guidelines Repo and Reverse Repo transactions in government securities and corporate debt securities, including transactions conducted under Liquidity Adjustment Facility (‘LAF’) and Marginal Standby Facility (‘MSF’) with the RBI are reflected as borrowing and lending transactions respectively. Borrowing cost on repo transactions is accounted as interest expense and revenue on reverse repo transactions are accounted as interest income.

17.02 Advances

The Holding company may transfer advances through inter-bank participation with and without risk. In accordance with the RBI guidelines, in the case of participation with risk, the aggregate amount of the participation issued by the Bank is reduced from advances and where the Bank is participating, the aggregate amount of the participation is classified under advances. In the case of participation without risk, the aggregate amount of participation issued by the Bank is classified under borrowings and where the Bank is participating, the aggregate amount of participation is shown as due from banks under advances.

The Holding company makes general provisions on all standard advances based on the rates under each category of advance as prescribed by the RBI. In addition, the Bank makes provisions for standard assets in telecom sector (as defined by RBI) and other stressed sectors, at rates higher than the regulatory minimum, based on evaluation of risk and stress as per the Board approved policy. The provision on standard advances is not reckoned for arriving at net NPAs. The provision against standard advances (other than provision against identified advances) is shown separately as “Contingent Provisions against Standard Assets” under “Schedule 5 - Other Liabilities”.

In case of corporate loans, specific loan loss provisions in respect of identified advances and non-performing advances are made based on the management’s

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forming part of the Consolidated Financial Statements as at and for the year ended March 31, 2021

assessment of the degree of impairment, subject to the minimum provisioning level prescribed by the RBI. The Bank can provide additional specific provision on standard advances at higher than prescribed rates as a prudent risk measure. These provisions are reviewed and reassessed at least once in a year. Provision on / write off of homogeneous retail loans and advances, subject to minimum provisioning requirement of the RBI, is assessed on the basis of ageing of loans as prescribed in the Board approved policy of the Bank. Provision due to diminution in the fair value of restructured/rescheduled loans and advances is made in accordance with the applicable RBI guidelines.

In the event of substantial erosion in value of loan and remote possibility of collection, non performing loans with adequate provisions are evaluated for technical / prudential write off based on Bank’s policy and the RBI guidelines. Such write off does not have an impact on the Bank’s legal claim against the borrower. The Bank may also write off non performing loans on one time settlement (‘OTS’) with the borrower or otherwise. Amounts recovered form borrowers against debts written off is recognised in the Profit and Loss Account under “Provisions and contingencies”.

Further, the RBI has issued guidelines on “Prudential Framework for Resolution of Stressed Assets dated June 07, 2019” with a view to providing a framework for early recognition, reporting and time bound resolution of stressed assets. The Bank has put in place Boardapproved policy for resolution of distressed Borrowers with an objective to initiate the process of resolution even before a default and prior to the initiation of proceedings under the IBC.

The Bank is required to make an additional provisioning for the delayed implementation of Resolution Plan (RP) as under:

(a) Additional provision of 20% of total outstandings if RP is implemented beyond 180 days from the end of the review period
(b) Additional provision of 35% of total outstandings if RP is implemented beyond 360 days from the end of the review period

The additional provisions shall be made over and above the higher of the following, subject to the total provisions held being capped at 100% of total outstanding:

(a) The provisions already held; or,
(b) The provisions required to be made as per IRAC norms

In respect of accounts where the Review Period was over, but the 180-day resolution period had not expired as on March 1, 2020, the Bank may at its discretion extend such timeline for resolution by 180 days from the date on which the 180-day period was originally set to expire, on case by case basis.

COVID-19 – Regulatory Package

In accordance with the RBI guidelines on ‘COVID-19 Regulatory Package’ of March 27, 2020, April 17, 2020 and May 23, 2020, the Bank granted moratorium on repayment of instalments and/or interest, as applicable, due between March 1, 2020 and August 31, 2020 to all eligible borrowers. For all eligible accounts, where the moratorium is granted, the asset classification shall remain stand still during the moratorium period (i.e. the number of days past-due shall exclude the moratorium period for the purposes of asset classification under the Income Recognition, Asset Classification and Provisioning norms).

The Holding company made general provision in terms of the RBI circular dated April 17, 2020.These provisions are adjusted against the actual provisioning requirements for slippages from the accounts reckoned for such provisions. The residual provisions at the end of the financial year are written back or adjusted against

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forming part of the Consolidated Financial Statements as at and for the year ended March 31, 2021

the provisions required for all other accounts.

Unhedged Foreign Currency Exposure

17.03 Revenue recognition

Interest income :

Interest Income is recognised on accrual basis in the Profit and Loss Account, except in the case of NonPerforming Assets (NPAs) and identified stressed advances, where it is recognised upon realisation. The unrealised interest, fees and charges booked in respect of NPAs and identified stressed advances and any other facility given to the same borrower is reversed to the Profit and Loss and subsequent interest income is accounted into interest suspense.

In accordance with the instructions in the RBI Circular on Refund/adjustment of ‘interest on interest’ dated April 07, 2021, the Bank shall refund / adjust ‘interest on interest’ to all borrowers including those who had availed of working capital facilities during the moratorium period, irrespective of whether moratorium had been fully or partially availed, or not availed. As required by the RBI notification, the methodology for calculation of such interest on interest has recently been circulated by the Indian Banks’ Association. The Bank is in process of implementing this circular. As at March 31, 2021, the Bank has created a liability towards estimated interest relief and reduced the same from the

interest income.

Subvention income on loans is recognised as income over the tenor of the loan agreements. The unamortized balance is disclosed as part of other liabilities . On foreclosure, balance unamortised subvention income is recognised in the Profit and Loss Account. Income on retained interest in the assigned asset, if any, is accounted on accrual basis except in case of NPAs wherein interest income is recognised on receipt basis as per RBI guidelines.

Dividend on equity shares, preference shares and on mutual fund units is recognised as income when the right to receive the dividend is established.

Fees and charges :

Commission received on guarantees and letter of credit issued is recognised on straight line basis over the period of the contract or the period for which commission is received.

Fee on rescheduling of outstanding debt is recognised on accrual basis over the period of time covered by the rescheduled extension period.

Underwriting commission earned to the extent not reduced from the cost of the securities is recognised as fees on closure of issue.

All other fees and charges is recognised as and when they become due and revenue can be reliably measured and reasonable right of recovery is established.

Investments :

Profit / loss on sale of investments under the HTM, AFS and HFT categories are recognised in the Profit and

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forming part of the Consolidated Financial Statements as at and for the year ended March 31, 2021

Loss Account. The profit from sale of investment under HTM category is appropriated from Profit and Loss Account to “Capital Reserve” (net of applicable taxes and transfer to Statutory Reserve) in accordance with the RBI guidelines.

Other operating income :

Securitisation transactions :

Net income arising on account of sale of standard asset, being the difference between the sale consideration and book value, is amortised over the life of the securities issued by the Special Purpose Vehicle (‘SPV’). Any loss arising on account of sale is recognised in the Profit and Loss Account in the year in which the sale occurs.

In case of Non-Performing Assets sold to Securitisation Company (‘SC’) / Reconstruction Company (‘RC’) for cash, excess provision is reversed to Profit and Loss Account. Any loss arising on account of sale is recognised in the Profit and Loss Account in the year in which the sale occurs. If sale is against issuance of SRs by SC / RC, the sale will be recognised at lower of redemption value of SRs and net book value of financial asset sold. On realisation, the proceeds are reduced against the carrying value of SRs and surplus, if any, is recognised in the Profit and Loss Account.

Direct Assignments :

17.04 Priority Sector Lending Certificates (PSLCs)

The Holding company may enter into transactions for the purchase or sale of Priority Sector Lending Certificates

(‘PSLCs’). In case of a purchase transaction the bank buys the fulfilment of priority sector obligation and in case of a sale transaction, the bank sells the fulfilment of priority sector obligation through the RBI trading platform without any transfer of underlying risk or loan assets. Fees paid for purchase of the PSLCs is recorded as ‘Other Expenditure’ and fees received for the sale of PSLCs is recorded as ‘Miscellaneous Income’ in Profit and Loss Account. These are amortised on straight-line basis over the tenor of the certificate.

17.05 Transactions involving foreign exchange

17.06 Accounting for derivative transactions

Derivative transactions comprises of forward contracts, futures, swaps and options. The Holding company undertakes derivative transactions for trading and hedging on-balance sheet assets and liabilities. All trading transactions are marked to market and resultant gain or loss is recognized in the Profit and Loss Account.

For hedge transactions, the Holding company identifies the hedged item (asset or liability) and assesses the effectiveness at inception as well as at each reporting date. Funding swaps are accounted in accordance with FEDAI guidelines. The Hedge swaps and funding swaps are accounted on accrual basis except the swap designated with an asset or liability that is carried at lower of cost or market value in the financial statements. In such cases swaps are marked to market with the resulting gain or loss recorded as an adjustment to the market value of designated asset or liability. Any

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forming part of the Consolidated Financial Statements as at and for the year ended March 31, 2021

resultant profit or loss on termination of hedge swaps is amortized over the life of the swap or underlying liability whichever is shorter. Upon ineffectiveness of hedge on re-assessment or termination of underlying, the Bank shall de-designate the derivative as trade.

Premium in option transaction is recognized as income / expense on expiry or early termination of the transaction. Mark to market gain / loss (adjusted for premium received / paid on options contracts) is recorded as other income. The amounts received / paid on cancellation of option contracts are recognized as realized gain / loss on options. Pursuant to the RBI guidelines, any receivables under derivative contracts which remain overdue for more than 90 days and markto-market gains on other derivative contracts with the same counter-parties are reversed in Profit and Loss Account.

Currency futures contracts are marked-to-market using daily settlement price on a trading day, which is the closing price of the respective futures contracts on that day. All open positions are marked to market based on the settlement price and the resultant marked to market profit / loss settled with the exchange. Charges receivable / payable on cancellation / termination of foreign exchange forward contracts is recognized as income / expense on the date of cancellation / termination under ‘Other Income’.

As per the RBI guidelines on ‘Prudential Norms for Off Balance Sheet Exposures of Banks’ a general provision is made on the current gross MTM gain of the contract for all outstanding interest rate and foreign exchange derivative transactions. For provisioning purpose, the credit exposure for all the counterparties except CSA / Qualified Central Counter Party (‘QCCP’) are calculated at deal level, i.e. Gross Positive MTM after netting of margin to the extent of Positive MTM. The credit exposure reckoned for standard provisioning on CSA / QCCP is calculated at counterparty level i.e. Net Positive MTM.

Contracts (QFC) on March 30, 2021 permitting taking benefit of netting agreement in computation of exposure with immediate effect. The Bank shall work towards implementation of the revised guidelines.

17.07 Fixed assets and depreciation

Fixed assets are carried at cost of acquisition or construction less accumulated depreciation and impairment, if any. Cost includes freight, duties, taxes and incidental expenses related to the acquisition and installation of the asset.

Capital work-in-progress includes cost of fixed assets that are not ready for their intended use and also include advances paid to acquire fixed assets.

	Asset Building–RCC Frame Building–Other than RCC Frame Computers – Desktops, Laptops, End User Devices Computers–Server & Network	Estimated Useful Life 60Years 30Years 3 Years 6Years
	Vehicles	4 Years to 8 years
	Furniture	10Years
	Offce Equipment	5Years
	Leasehold Improvements	Over the extended period of lease
	Others (including software and	5 years
	system development)

All fixed assets individually costing less than ` 5,000 are fully depreciated in the year of installation.

Depreciation on assets sold during the year is recognized on a pro-rata basis to the Profit and Loss Account till the date of sale. Profit on sale of premises net of taxes and transfer to statutory reserve is appropriated to Capital Reserve as per the RBI guidelines. The Subsidiary Company recognises the gains or losses arising on the disposal of the tangible assets in the Profit and Loss Account within other income or other expenses, as the case may be.

17.08 Income tax

The RBI has released amendments to prudential guidelines on bilateral netting of Qualified Financial

Income tax expense is the aggregate amount of current tax and deferred tax charge. The current tax expense

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forming part of the Consolidated Financial Statements as at and for the year ended March 31, 2021

and deferred tax expense is determined in accordance with the provisions of the Income Tax Act, 1961 and as per Accounting Standard 22 - Accounting for Taxes on Income respectively.

17.09 Employees’ stock option scheme

The Holding company has formulated Employee Stock Option Scheme - IDFC FIRST Bank Limited ESOS -2015 (‘the Scheme’) in accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The scheme provides for the grant of options to acquire equity shares of the Bank to its employees. The options granted to employees vest in a graded manner and these may be exercised by the employees within a specified period.

The Holding company follows the intrinsic value method to account for its stock-based employee compensation plans. Compensation cost is measured by the excess, if any, of the market price / fair value of the underlying stock over the grant price as determined under the option plan. Compensation cost, if any is amortized over the vesting period on a straight line method. In case the vested stock options expire unexercised, the balance in stock options outstanding is transferred to the general reserve. In case the unvested stock options get lapsed/ cancelled, the balance in stock option outstanding account is transferred to the Profit and Loss Account.

17.10 Employee benefits Defined contribution plan :

The contribution to provident fund, superannuation fund

and pension fund are considered as defined plans and are charged to the Profit and Loss Account as they fall due, based on the amount of contribution required to be made and when services are rendered.

Defined benefit plan :

Compensated absences :

Any unavailed privilege leave to the extent encashable is paid to the employees and charged to the Profit and Loss Account for the year based on estimates of availment / encashment of leaves.

17.11 Provisions, contingent liabilities and contingent assets

A provision is recognised when the Group has a present obligation as a result of past event where it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

Provisions for onerous contracts are recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable costs of meeting the future obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Group recognises any impairment loss on the assets associated with that contract.

A disclosure of contingent liability is made when there is :

a possible obligation arising from a past event, the existence of which will be confirmed by occurrence or non-occurrence of one or more uncertain future events not within the control of the Bank; or
a present obligation arising from a past event which is not recognised as it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.

When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Contingent assets are not recognised in the financial

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forming part of the Consolidated Financial Statements as at and for the year ended March 31, 2021

statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognised in the period in which the change occurs.

17.12 Earnings per share

The Group reports basic and diluted earnings per share in accordance with AS-20, Earnings per Share, as notified under Section 133 of the Companies Act, 2013 read together with paragraph 7 of the Companies (Accounts) Rules, 2014 and the Companies (Accounting Standards) Amendment Rules, 2016. Basic earnings per share are computed by dividing the net profit after tax by the weighted average number of equity shares outstanding for the year.

17.13 Leases

Leases where the lessor effectively retains substantially all the risks and benefits of ownership over the lease term are classified as operating lease. Amount due under the operating leases, including cost escalation, are charged on a straight line method over the lease term in the Profit and Loss account. Initial direct cost incurred specifically for operating leases are recognised as expense in the Profit and Loss Account in the year in which they are incurred.

17.14 Reward Points

17.15 Segment reporting

As per the RBI guidelines, the Holding company’s business segments are divided under a) Treasury b) Corporate and wholesale banking c) Retail Banking and d) Other Banking Business. Business segments have been identified and reported considering the target customer segment, the nature of products, internal business reporting system, transfer pricing policy approved by Asset Liability Committee (ALCO), the guidelines prescribed by the RBI.

17.16 Securities issue expenses

Securities issue expenses are adjusted from Securities Premium Account in terms of Section 52 of the Companies Act, 2013.

17.17 Impairment of assets

The carrying amount of the assets at each Balance Sheet date is reviewed for impairment. If any indication of impairment based on internal / external factors exists, the recoverable amount of such assets is estimated and impairment is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and its value in use, which is arrived at by discounting the future cash flows to their present value, based on an appropriate discounting factor. If at the Balance Sheet date, there is an indication that previously recognised impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount, subject to a maximum of the depreciable historical cost and reversal of such impairment loss is recognised in the Profit and Loss Account, except in case of revalued assets.

17.18 Fraud Provisioning

As per RBI guidelines, in case of frauds due to the Holding company or for which the Holding company is liable, provision needs to be immediately recognised in Profit and Loss Account. However, the Holding company has an option to make provisions over a period, not exceeding four quarters, commencing from the quarter in which the fraud has been detected.

17.19 Cash and cash equivalents

Cash and cash equivalents include cash in hand, balances with the RBI, balances with other banks and money at call and short notice.

17.20 Corporate social responsibility

Expenditure towards corporate social responsibility, in accordance with Companies Act, 2013, are recognised in the Profit and Loss Account.

17.21 Accounting for Dividend

As per AS-4 ‘Contingencies and Events occurring after the Balance sheet date’ as notified by the Ministry of Corporate Affairs through amendments to Companies (Accounting Standards) Amendment Rules, 2016, dated 30 March, 2016, the Holding company does not account for proposed dividend (including tax) as a liability through appropriation from the profit and loss account. The same is recognised in the year of actual payout post approval of shareholders. However, the Holding Company reckons proposed dividend in determining capital funds in computing the capital adequacy ratio.

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forming part of the Consolidated Financial Statements as at and for the year ended March 31, 2021

18 Notes forming part of the Consolidated Financial Statements as at and for the year ended March 31, 2021

Amounts in notes forming part of the financial statements for the year ended March 31, 2021 are denominated in ` crore to conform with the extant RBI guidelines.

18.01

IDFC FIRST Bank Limited (Formerly ‘IDFC Bank Limited’) (“the Bank” or “Holding company”) was incorporated on October 21, 2014 as a Company under the Companies Act, 2013. Further, the Bank commenced its banking operations on October 1, 2015 after receiving universal banking license from the Reserve Bank of India (‘the RBI’) on July 23, 2015.

The Bank had sought for renewal of dispensation from the RBI, which was valid till December 31, 2019, to grandfather certain loan accounts which were given by the erstwhile Capital First Limited as a Non Banking Financial Company (NBFC). In this regard, the RBI vide letter dated March 4, 2021, having not acceded to the dispensation, had advised the Bank to hold 100% provisions in respect of non-compliant non-performing loans. Further, for other non-compliant standard loans with insignificant outstanding balance, the Bank is required to assign additional risk weight of 25% and make such loan accounts compliant with the extant regulatory instructions by June 30, 2021. The Bank has made additional provision of ` 89.34 crore for the year ended March 31, 2021 for such non-compliant nonperforming loans and assigned additional risk weight of 25% on other non-compliant standard loans.

18.02 Employee benefits

i The Group has charged the following amounts in the Profit and Loss Account towards contribution to defined contribution plans which are included under schedule 16 (I) :

contribution plans which are included under schedule 16 (I) :
Particulars	(`in crore) March 31, 2021 March 31, 2020
Provident fund	84.09 69.74
Superannuation fund	- -
Pension fund	2.77 2.79

ii Gratuity The following tables summarise the components of net benefit expenses recognised in the Profit and Loss Account and funded status and amounts recognised in the balance sheet for the gratuity benefit plan :

Profit and Loss Account

Net employee benefit expenses (recognised in payments to and provisions for employees) :

Particulars	(`in crore) March 31, 2021 March 31, 2020
Current service cost	18.31 17.37
Interest on defned beneft obligation	5.49 5.89
Expected return onplan assets	(4.53) (4.92)
Net actuarial losses/ (gains)recognised in theyear	(10.25) (2.94)
Past service cost	0.20 0.20
Losses/ (gains)on Acquisition/Divestiture	- -
Total included in “employee beneft expense”[schedule 16(I)]	9.22 15.60
Actual return onplan assets	6.66 4.50

Balance Sheet

Details of provision for gratuity :

Particulars	(`in crore) March 31, 2021 March 31, 2020
Fair value ofplan assets	69.87 62.09
Present value of funded obligations	(84.51) (75.53)
Unrecognised Past Service Cost	0.20 0.39
Net Liability Included under Schedule 5 - Other Liabilities	(14.44) (13.05)

258 IDFC FIRST Bank

Notes

forming part of the Consolidated Financial Statements as at and for the year ended March 31, 2021

Changes in the present value of the defined benefit obligation are as follows :

Particulars	Particulars	March 31, 2021 March 31, 2020
Openingdefned beneft obligation		75.53 69.23
Current service cost		18.31 17.37
Interest cost		5.49 5.89
Actuarial losses/ (gains)		(8.12) (3.32)
Past service cost		- -
Beneftspaid		(6.69) (13.64)
Closing defned beneft obligation		84.52 75.53
Changes in the fair value of plan assets are as follows : Particulars		March 31, 2021 March 31, 2020
Openingfair value ofplan assets		62.09 65.62
Expected return onplan assets		4.53 4.92
Actuarialgains/ (losses)		2.13 (0.39)
Contributions byemployer		7.81 5.58
Assets acquired on acquisition/ (distributed on divestiture)		- -
Beneftspaid		(6.69) (13.64)
Closing fair value of plan assets		69.87 62.09
Expected Employers Contribution Next Year		10.60 9.37
Experience adjustments Particulars	March 31, 2021 March 31, 2020 March 31, 2019 March 31, 2018 March 31, 2017
Defned beneft obligations	84.52 75.53 69.23 48.14 46.38
Plan assets	69.87 62.09 65.62 46.92 43.70
Surplus/ (defcit)	(14.65) (13.44) (3.61) (1.22) (2.68)
Experience adjustments onplan liabilities	(3.76) (6.33) (1.57) (1.68) 1.29
Experience adjustments onplan assets	2.38 (0.35) (0.20) (0.16) 1.13
Major categories of plan assets (managed by Insurers) as a percentage of fair value of total plan assets : Particulars March 31, 2021 March 31, 2020
Government securities		44.24% 32.70%
Bonds,debentures and other fxed income instruments		38.06% 50.56%
Deposits and moneymarket instruments		5.99% 4.97%
Equityshares		11.71% 11.77%
Principal actuarial assumptions at the Balance Sheet date: Particulars		March 31, 2021 March 31, 2020
Discount rate(p.a.)		5.30% to 7.15% 6.20% to 6.69%
Expected rate of return onplan assets(p.a.)		7.00% to 7.15% 6.69% to 7.00%
Salaryescalation rate(p.a.)		8.00% to 10.00% 8.00% to 10.00%

18.03 Segment reporting

Business Segments :

The Business of the Group is divided into four segments : Treasury, Corporate / Wholesale Banking, Retail Banking Business and Other Banking Business. These segments have been identified and reported taking into account, the target customer segment, the nature of products, internal business reporting system, transfer pricing policy approved by Asset Liability Committee (ALCO), the guidelines prescribed by the Reserve Bank of India (‘the RBI’), which has been relied upon by the auditors.

Annual Report 2020-21 259

Notes

forming part of the Consolidated Financial Statements as at and for the year ended March 31, 2021

Segment	Principal activities
	The treasury segment primarily consists of Group’s investment portfolio, money market borrowing
	and lending, investment operations and entire foreign exchange and derivative portfolio of the
Treasury	Bank. Revenue of treasury segment consist of interest income on investment portfolio, inter segment revenue, gains or losses from trading operations, trades and capital market deals. The principal
	expenses consists of interest expenses from external sources & on funds borrowed from inter
	segments, premises expenses, personnel cost, direct and allocated overheads.
	The wholesale banking segment provides loans, non-fund facilities and transaction services to
	corporate relationship not included under Retail Banking, and syndication. Revenues of the
Corporate / Wholesale Banking	wholesale banking segment consists of interest earned on loans to customers, inter segment revenue, interest / fees earned on transaction services, earnings from trade services, fees on client FX & derivative and other non-fund facilities. The principal expenses of the segment consists of
	interest expense on funds borrowed from internal segments, premises expenses, personnel costs,
	other direct overheads and allocated expenses of delivery channels, and support groups.
	Retail Banking constitutes lending to individuals / business banking customers through the branch
	network and other delivery channels subject to the orientation, nature of product, granularity of
	the exposure and the quantum thereof. Revenues of the retail banking segment are derived from
Retail Banking	interest earned on retail loans, inter segment revenue and fees from services rendered, fees on client FX & derivative. Expenses of this segment primarily comprise interest expense on deposits &
	funds borrowed from inter segments, commission paid to retail assets sales agents, infrastructure
	and premises expenses for operating the branch network and other delivery channels, personnel
	costs, other direct overheads and allocated and support groups.
Other BankingBusiness	This segment includes revenue from distribution of thirdparty products.
	All items which are reckoned at an enterprise level are classifed under this segment. This includes
	assets and liabilities which are not directly attributable to any segment. Revenue & expense of this
Unallocated	segment includes income & expenditure which are not directly attributable to any of the above segments. Revenue includes interest on income tax refund and expense of this segment mainly
	includes employee cost, establishment & technology expense which is not directly attributable to
	any segment.

Segmental reporting for the year ended March 31, 2021 are set out below :

						(`in crore)
Particulars	Treasury	Corporate/ Wholesale Banking	Retail Banking	Other Banking Business	Unallocated	Total
Revenue(i)	10,773.55	6,118.04	15,011.16	152.67	50.60	32,106.02
Less : inter segment revenue(ii)						(13,884.07)
Total Revenue(i-ii)						18,221.95
Segment Results before tax	2,594.94	698.50	(2,551.52)	(17.24)	(205.70)	518.98
Less: Provision for tax						(35.80)
Net Proft / (loss) before						483.18
earnings from Associate
Add: Share of proft / (loss)						-
in Associate
Net Proft/ (loss)						483.18
Total Segment assets	56,190.47	29,167.89	74,597.36	41.61	3,074.20	163,071.52
Total Segment liabilities	40,843.59	35,890.91	67,308.75	27.36	1,101.21	145,171.81
Net assets	15,346.88	(6,723.02)	7,288.61	14.25	1,972.99	17,899.71
Capital expenditure for theyear	22.10	6.28	532.09	23.23	2.26	585.97
Depreciation on fxed assets for	47.06	4.46	286.62	2.24	2.12	342.51
the year

260 IDFC FIRST Bank

Notes

forming part of the Consolidated Financial Statements as at and for the year ended March 31, 2021

Segmental reporting for the year ended March 31, 2020 are set out below :

						(`in crore)
Particulars	Treasury	Corporate/ Wholesale Banking	Retail Banking	Other Banking Business	Unallocated	Total
Revenue(i)	12,866.02	8,028.33	11,778.36	158.53	43.49	32,874.73
Less : inter segment revenue(ii)						(14,844.37)
Total Revenue(i-ii)						18,030.36
Segment Results before tax	(1,241.68)	(25.61)	(884.71)	(6.29)	(187.61)	(2,345.89)
Less: Provision for tax						(497.50)
Net Proft / (loss) before						(2,843.38)
earnings from Associate
Add: Share of proft / (loss)						-
in Associate
Net Proft/ (loss)						(2,843.38)
Total Segment assets	57,497.38	30,660.45	57,510.48	76.37	3,413.86	149,158.55
Total Segment liabilities	58,293.05	39,063.31	36,149.10	68.79	180.78	133,755.03
Net assets	(795.67)	(8,402.86)	21,361.39	7.58	3,233.08	15,403.51
Capital expenditure for theyear	3.71	29.79	349.06	4.57	0.12	387.25
Depreciation on fxed assets for	9.23	34.42	270.38	0.09	5.89	320.01
the year

Geographic segments

The business of the Group is concentrated in India. Accordingly, geographical segment results have not been reported.

18.04 Deferred tax

The major components of deferred tax assets and deferred tax liabilities arising out of timing differences are as under :

Particulars	(`in crore) March 31, 2021 March 31, 2020
Deferred tax assets:
- Provisions for loan losses	1,008.01 708.12
- Provision for diminution in value of investments	521.91 489.97
- Depreciation on fxed assets	2.98 438.50
- Provision for employee benefts	- 0.86
- Other contingencies	557.50 461.31
Total(A)	2,090.40 2,098.76
Deferred tax liabilities on:
- Depreciation on fxed assets	7.01 -
- Provision for employee benefts	0.79 -
- Others(special reserve under section 36(1)(viii)of Income Tax Act,1961)	80.96 75.03
Total(B)	88.76 75.03
Net Deferred tax asset(A-B)	2,001.64 2,023.73

The Finance Act, 2021 has provided that goodwill of a business or profession will not be considered as a depreciable asset and no depreciation on goodwill would be allowed effective April 1, 2020. The Bank had claimed depreciation on goodwill while computing provision for tax that arose pursuant to the merger with erstwhile Capital First Limited and its subsidiaries in FY2018, and a deferred tax asset had been recognised on carrying value of such goodwill as per Income Tax Act. Pursuant to the change in law, the Bank has now written off the deferred tax asset of ` 338.00 crores on depreciation on goodwill in excess of the depreciation claimed in its returns of income filed till FY 2020 by debiting the profit and loss account. Further, as at March 31, 2021, the Bank has reassessed the continuing recognition of deferred tax assets by assessing availability of sufficient future taxable profits, based on financial projections which have been approved by the Board of Directors, to absorb the carrying amount of deferred tax asset.

Annual Report 2020-21 261

Notes

forming part of the Consolidated Financial Statements as at and for the year ended March 31, 2021

18.05 Provisions and contingencies

Provisions and contingencies’ shown under the head expenditure in Profit and Loss Account comprise of :

18.05 Provisions and contingencies Provisions and contingencies’ shown under the head expenditure in Proft and	Loss Account comprise of :
Particulars	(`in crore) March 31, 2021 March 31, 2020
Provision made towards income taxes	35.80 497.50
Provisions for depreciation on investment	(820.39) 1,051.49
Provision/ (write back)towards non-performingadvances	945.08 441.58
Provision/ (write back)for restructured assets	99.32 20.59
Provision/ (write back)on identifed standard assets	81.10 (41.06)
Provision against Standard Assets	95.81 330.95
Bad-debts written off/technical write off ^	2,387.02 1,386.44
Provision and other contingencies	(723.05) 1,125.57
Total	2,100.70 4,813.05

^ Net of bad-debt recoveries from borrowers on written off accounts of 420.10 crore (Previous Year 229.58 crore)

18.06 Draw down from reserves

The Group has not undertaken any draw down from reserves during the year ended March 31, 2021 and March 31, 2020.

Appropriation to Reserves

i Statutory Reserve

As mandated by the Banking Regulation Act, 1949, all banking companies incorporated in India shall create a reserve fund, out of the balance of profit of each year as disclosed in the profit and loss account and before any dividend is declared and transfer a sum equivalent to not less than twenty five per cent of such profit. The Group has transferred ` 113.50 crore (Previous Year Nil) to Statutory Reserve for the year.

ii Investment Reserve Account (IRA)

As per RBI guidelines, if provisions created on account of depreciation in the ‘AFS’ or ‘HFT’ categories are found to be in excess of the required amount in any year, the excess shall be credited to the Profit and Loss Account and an equivalent amount (net of taxes, if any and net of transfer to Statutory Reserves as applicable to such excess provision) shall be appropriated to Investment Reserve Account. Further, the Bank may draw down from the IRA to the extent of provision made during the year towards depreciation in investment in AFS and HFT categories (net of taxes, if any, and net of transfer to Statutory Reserves as applicable to such excess provision). During the year ended March 31, 2021 and March 31 2020, as per RBI guidelines, the Holding company has appropriated ` 335.00 crore (Previous Year Nil) to Investment Reserve Account.

iii Investment Fluctuation Reserve (IFR)

The RBI vide circular DBR.No.BP.BC.102/21.04.048/2017-18 dated April 2, 2018 advised banks to create an Investment Fluctuation Reserve (IFR) with effect from FY 2018-19. Accordingly, an amount not less than the lower of net profit on sale of investments during the year or net profit for the year less mandatory appropriations shall be transferred to the IFR, until the amount of IFR is at least 2 percent of the HFT and AFS portfolio, on a continuing basis. Where feasible, this should be achieved within a period of 3 years. During the year ended March 31, 2021 and March 31, 2020, the Holding company transferred Nil (Previous year Nil) to Investment Fluctuation Reserve.

iv Capital Reserve

As per RBI Guidelines, profit/loss on sale of investments in the ‘Held to Maturity’ category is recognised in the Profit and Loss Account and profit is thereafter appropriated (net of applicable taxes and statutory reserve requirements) to Capital Reserve. Profit / loss on sale of investments in ‘Available for Sale’ and ‘Held for Trading’ categories is recognised in the Profit and Loss Account. Accordingly, the Holding company has appropriated 148.50 crore (Previous Year 166.00 crore) to capital reserve.

262 IDFC FIRST Bank

Notes

forming part of the Consolidated Financial Statements as at and for the year ended March 31, 2021

v Special Reserve

As per the provisions under Section 36(1)(viii) of Income Tax Act, 1961, specified entities like banks are allowed deduction in respect of any special reserve created and maintained, i.e. an amount not exceeding twenty per cent of the profits derived from eligible business computed under the head “Profits and gains of business or profession” is carried to such reserve account. This would be applicable till the aggregate of the amounts carried to such reserve account from time to time exceeds twice the amount of the paid up share capital and general reserves of the entity. During the year, the Holding company has transferred an amount of ` 24.00 crore (Previous Year Nil) to Special Reserve.

vi General Reserve

During the year ended March 31, 2021 and March 31, 2020, no amount was transferred to the general reserve.

18.07 Related party disclosure :

As per AS-18, Related Party Disclosure, the Group’s related parties are disclosed below :

a Entities having Significant Influence
IDFC Limited
IDFC Financial Holding Company Limited
b Associates
Millennium City Expressways Private Limited
c Key Management Personnel
Mr. V. Vaidyanathan
d Relatives of key management personnel:
Mrs. Jeyashree Vaidyanathan, Mr. Krishnamurthy Vembu, Mr. Pranav Vaidyanathan, Mr. Amartya Vaidyanathan, Ms. Anusha Vaidyanathan, Group Captain V. Satyamurthy, Mr. Maj V Krishnamurthy, Ms. Savitri Krishnamoorthy

In accordance with paragraph 5 and 6 of AS - 18, the Group has not disclosed certain transactions with relatives of key management personnel as they are in the nature of banker-customer relationship.

The significant transactions between the Group and related parties for year ended March 31, 2021 are given below. A specific related party transaction is disclosed as a significant related party transaction wherever it exceeds 10% of all related party transactions in that category:

Interest Expense :
IDFC Financial Holding Company Limited 7.61 crore (Previous year 3.99 crore)
Interest income earned :
Millennium City Expressways Private Limited 8.93 crore (Previous year 0.11 crore)
Managerial Remuneration :
Mr. V. Vaidyanathan 6.18 crore (Previous year 8.72 crore)
Receiving of services
IDFC Limited 0.35 crore (Previous year 0.27 crore)
Rendering of services
Millennium City Expressways Private Limited 0.10 crore (Previous year 0.10 crore)
Sale of fixed assets
IDFC Limited ` 0.09 crore (Previous year Nil)

Annual Report 2020-21 263

Notes

forming part of the Consolidated Financial Statements as at and for the year ended March 31, 2021

The details of the transactions of the Bank with its related party during the year ended March 31, 2021 are given below:

(` in crore)

Particulars	Related Party
	Entities having Signifcant Infuence Associates Key Management Personnel
Interest expense	7.62 - 0.12
Interest income earned	- 8.93 -
Managerial Remuneration^	- - 6.18
Receivingof services	0.35* - -
Renderingof services	- 0.10 ß
Sale of fxed assets	0.09 - -

Reimbursement of chairman office expenses done by the Bank to IDFC Limited for Dr. Rajiv Lall during the tenure of chairmanship till September 4, 2020.
^ During FY 2020-21, the Board of Directors of the Bank, based on the recommendation of Nomination and Remuneration Committee, at its meeting held on May 21, 2020 had approved grant of 50,00,000 stock options to Mr. V. Vaidyanathan, MD & CEO under ‘IDFC FIRST Bank – Employees Stock Option Scheme 2015’. In terms of Section 35B of the Banking Regulation Act, 1949, the said grant was duly approved by the Reserve Bank of India vide its letter dated January 22, 2021.
During FY 2019-20, the Board of Directors of the Bank, based on the recommendation of Nomination and Remuneration Committee, at its meeting held on October 24, 2019 had approved grant of 30,00,000 stock options to Mr. V. Vaidyanathan, MD & CEO under ‘IDFC FIRST Bank – Employees Stock Option Scheme 2015’. In terms of Section 35B of the Banking Regulation Act, 1949, the said grant was duly approved by the Reserve Bank of India vide its email dated April 13, 2020. The aforesaid grant has been accounted for in the FY 2020-21, in terms of the relevant applicable accounting norms.

The balances payable to / receivable from the related parties of the Bank as on March 31, 2021 are given below:

(` in crore)

	(`in crore)
Particulars	Related Party
	Entities having Signifcant Infuence Associates Key Management Personnel
Deposits with the Bank	7.73 - 0.93
Interest Accrued on Deposit	- - ß
Loan and Advances includingcredit card balances	- 341.40 ß
Investment of the Bank	- 226.38 -
Investment of relatedpartyin the Bank#	- - -

As at March 31, 2021, IDFC Financial Holding Company Limited holds 2,268,937,489 and KMP holds 24,857,117 equity shares in the Bank.

The maximum balances payable to / receivable from the related parties of the Bank during the year ended March 31, 2021 are given below:

(` in crore)

Particulars	Related Party
	Entities having Signifcant Infuence Associates Key Management Personnel
Deposits with the Bank	875.08 - 6.54
Loan and Advances includingcredit card balances	- 351.00 ß
Investment of the Bank	- 226.38 -

Amount less than ` 50,000 is denoted by ß

264 IDFC FIRST Bank

Notes

forming part of the Consolidated Financial Statements as at and for the year ended March 31, 2021

The details of the transactions of the Bank with its related party during the year ended March 31, 2020 are given below:

(` in crore)

Particulars	Related Party
	Entities having Signifcant Infuence Fellow Subsidiary Companies Associates Key Management Personnel
Interest expense	4.01 - - 0.07
Interest income earned	- - 0.11 -
Purchase of investments	51.61 - - -
Managerial Remuneration	- - - 8.72
Renderingof services	0.27 - 0.10 -

The balances payable to / receivable from the related parties of the Bank as on March 31, 2020 are given below:

(` in crore)

Particulars	Related Party
	Entities having Signifcant Infuence Fellow Subsidiary Companies Associates Key Management Personnel
Deposits with the Bank	609.43 - - 6.58
Interest Accrued on Deposit	0.54 - - -
Investment of relatedpartyin the Bank#	- - - -
Advances	- - 351.00 -
Investment of the Bank	- - 226.38 -

As at March 31, 2020, IDFC Financial Holding Company Limited holds 1,923,961,207 and KMP holds 25,081,117 equity shares in the Bank.

The maximum balances payable to / receivable from the related parties of the Bank during the year ended March 31, 2020 are given below:

Particulars	(`in crore) Related Party
	Entities having Signifcant Infuence Fellow Subsidiary Companies Associates Key Management Personnel
Deposits with the Bank	614.44 - - 10.03
Advances	- - 351.00 -
Investment of the Bank	- - 226.38 -

18.08 Earnings per share (‘EPS’)

Basic and diluted earnings per share are computed in accordance with AS 20 - Earnings per share. Basic earnings per equity share is computed by dividing net profit after tax attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted earnings per equity share is computed by dividing net profit after tax attributable to equity shareholders by the weighted average number of equity shares and weighted average number of dilutive potential equity shares outstanding during the year, except where the results are anti-dilutive. Dilution of equity is on account of stock options granted to employees by the Bank.

Particulars	March 31, 2021 March 31, 2020
Basic
Weighted average number of equityshares outstanding (in crore)	550.26 478.64
Net Proft after Tax( `in crore)	483.18 (2843.39)
Basic earningsper share( ` )	0.88 (5.94)
Diluted
Weighted average number of equityshares outstanding (in crore)	557.58 484.88
Net Proft after Tax( `in crore)	483.18 (2843.39)
Diluted earningsper share( ` )	0.87 (5.86)
Nominal value of shares( ` )	10.00 10.00

Annual Report 2020-21 265

Notes

forming part of the Consolidated Financial Statements as at and for the year ended March 31, 2021

18.09 Unclaimed Shares

Details of unclaimed shares as of March 31, 2021 and March 31, 2020 are as follows :

Particulars	March 31, 2021 March 31, 2020
Aggregate number of shareholders at the beginningof theyear	99 99
Total outstanding shares in Unclaimed Suspense Account at the beginning of the year	28,253 28,253
Number of shareholders who approached to issuer for transfer of shares from Unclaimed Suspense Account during the year	- -
Number of shareholders to whom shares were transferred from Unclaimed Sus- pense Account during the year	- -
Aggregate number of shareholders at the end of theyear	99 99
Total outstanding shares in Unclaimed Suspense Account at the end of the year	28,253 28,253

18.10 Leases

In accordance with Accounting Standard 19 on ‘Leases’ as specified under Section 133 of the Companies Act 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, the following disclosures in respect of operating leases are made:

(This comprises of office premises / branches / ATMs taken on lease)

(This comprises of offce premises / branches / ATMs taken on lease)
Particulars	(`in crore) March 31, 2021 March 31, 2020
Future lease rentalspayable as at the end of theyear :
Notlaterthanone year	247.79 214.35
Later than oneyear and not later than fveyears	724.92 589.76
Later than fveyears	252.82 210.70
Total of minimum lease payments recognised in the Proft and Loss Account for the year	307.45 249.49
Total of future minimum sub-lease payments expected to be received under non-cancellable subleases	- -
Sub-leasepayments recognised in the Proft and Loss Account for theyear	- -

The Group has not sub-leased any of its properties taken on lease. There are no provisions relating to contingent rent. The terms of renewal / purchase options and escalation clauses are those normally prevalent in similar agreements. There are generally no undue restrictions or onerous clauses in the agreements.

18.11 Other Fixed Assets

The movement in fixed assets capitalised as Intangible assets is given below :

Particulars	(`in crore) March 31, 2021 March 31, 2020
	Software Other Intangibles Software Other Intangibles**
Cost
At the beginningof theyear	791.25 2,599.35 655.69 2,599.35
Additions duringtheyear	295.69 - 135.62 -
Deductions duringtheyear	- - - -
Total(i)	1,086.94 2,599.35 791.32 2,599.35
Depreciation
Accumulated depreciation at the beginning of the year	515.01 2,599.35 350.54 2,599.35
Depreciation charge for theyear	159.35 - 164.47 -
Deductions duringtheyear	- - - -
Total(ii)	674.36 2,599.35 515.01 2,599.35
Net Value(i-ii)	412.58 - 276.31 -

Other intangibles includes Goodwill & Brand acquired and arising on amalgamation

266 IDFC FIRST Bank

Notes

forming part of the Consolidated Financial Statements as at and for the year ended March 31, 2021

18.12 Corporate Social Responsibility (CSR)

i Amount required to be spent by the Group on CSR during the year 1.02 crores (Previous Year 0.76 crores).
ii Amount spent towards CSR during the year and recognised as expense in the statement of profit and loss on CSR related activities is 20.64 crores (Previous Year 8.08 crores), which comprise of following -

Year ended March 31, 2021

ear ended March 31, 2021
			(`in crore)
Nature of activities	In cash	Yet to be paid in cash(i.e.provision)	Total
Construction/acquisition of anyasset	-	-	-
Onpurpose other than above	20.49	0.16	20.64
Year ended March 31, 2020
			(`in crore)
Nature of activities	In cash	Yet to be paid in cash(i.e.provision)	Total
Construction/acquisition of anyasset	-	-	-
Onpurpose other than above	8.08	-	8.08

18.13 Proposed dividend

The Bank did not declare any dividend for the financial year ended March 31, 2021 and March 31, 2020.

18.14 Small and Micro Industries

‘Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from October 2, 2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises.During the year ended March 31, 2021 23.91 crores (previous year Nil) worth bills were paid with delays to micro and small enterprises and 1.86 crores worth bills remained unpaid as at March 31, 2021. There have been no demand of interest on these payments.

18.15 The Bank pays loan servicing fees to business correspondents for services rendered towards sourcing and servicing of loans and other related activities. These were hitherto netted off from “Interest/discount on advances/bills” in the profit and loss account. During the year ended March 31, 2021, the Bank has changed this presentation and accordingly reclassified them as part of “Operating Expenses” with the corresponding change in the previous year. Basis this change, all relevant disclosures have been regrouped / reclassified wherever applicable.

	(`in crore)
	Year ended
	31.03.2020
Interest/discount on advances/bills - As reported	12,007.17
Interest/discount on advances/bills - Asper reclassifcation	12,074.80
OperatingExpenses - As reported	5,764.80
OperatingExpenses Asper reclassifcation	5,832.43

18.16 In accordance with the instructions in the RBI circular RBI/2021-22/17 DOR.STR.REC.4/21.04.048/2021-22 circular dated April 7, 2021, the Holding Company shall refund / adjust ‘interest on interest’ to all borrowers including those who had availed of working capital facilities during the moratorium period, irrespective of whether moratorium had been fully or partially availed, or not availed. As required by the RBI notification, the methodology for calculation of such interest on interest has recently been circulated by the Indian Banks’ Association. The Holding Company is in process of implementing this circular. As at March 31, 2021, the Holding Company has created a liability towards estimated interest relief of ` 55.00 crores and reduced the same from the interest income.

18.17 Disclosure of penalties imposed by RBI

During the year ended March 31, 2021 no penalty was imposed by RBI. During the previous year, RBI imposed a penalty of ` 10,000 on the Bank with respect to certain deficiencies observed on note /coin exchange and clean note policy during the incognito visit to the branch.

Annual Report 2020-21 267

Notes

forming part of the Consolidated Financial Statements as at and for the year ended March 31, 2021

18.17 Description of contingent liabilities

i Claims against the Group not acknowledged as debts
The entities under the Group is a party to taxation matters which are in dispute and are under appeal. The demands have been partly paid / adjusted and will be received as refund if the matters are decided in favour of the Group. The Group is a party to various legal proceedings in the normal course of business. The Group does not expect the outcome of these proceedings to have a material adverse effect on the Group’s financial conditions, results of operations or cash flows.

ii Liability for partly paid investments

This represents amounts remaining unpaid towards liability for partly paid investments. These payment obligations of the Group do not have any profit / loss impact.

iii Liability on account of forward exchange and derivative contracts

The Group enters into foreign exchange contracts, currency options, forward rate agreements, currency swaps and interest rate swaps with inter-bank participants on its own account and for customers. Forward exchange contracts are commitments to buy or sell foreign currency at a future date at the contracted rate. Currency swaps are commitments to exchange cash flows by way of interest / principal in one currency against another, based on predetermined rates. Interest rate swaps are commitments to exchange fixed and floating interest rate cash flows. Interest rate futures are standardised, exchange-traded contracts that represent a pledge to undertake a certain interest rate transaction at a specified price, on a specified future date. Forward rate agreements are agreements to pay or receive a certain sum based on a differential interest rate on a notional amount for an agreed period. A foreign currency option is an agreement between two parties in which one grants to the other the right to buy or sell a specified amount of currency at a specific price within a specified time period or at a specified future time. An exchange traded currency option contract is a standardised foreign exchange derivative contract, which gives the owner the right, but not the obligation, to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date on the date of expiry. Currency Futures contract is a standardised, exchange-traded contract, to buy or sell a certain underlying currency at a certain date in the future, at a specified price.

With respect to transactions entered by customers, the Group generally takes off-setting positions in the inter-bank markets which results into higher numbers of outstanding contracts. The same also leads to representation of large gross notional principal of the portfolio, while the actual credit /market risk is much smaller.

iv Guarantees given on behalf of constituents

As a part of its banking activities, the Group issues guarantees on behalf of its customers to enhance their credit standing. Guarantees represent irrevocable assurances that the Group will make payments in the event of the customer failing to fulfil its financial or performance obligations.

v Acceptances, endorsements and other obligations

These includes documentary credit issued by the Group on behalf of its customers and bills drawn by the Group’s customers that are accepted or endorsed by the Group.

vi Other items

Other items represent estimated amount of contracts remaining to be executed on capital account. This also includes the amount of investments bought and remaining to be settled on the date of financial statements.

268 IDFC FIRST Bank

Notes

forming part of the Consolidated Financial Statements as at and for the year ended March 31, 2021

18.19 Statement of Net Assets as per Schedule III to the Companies Act, 2013 Year ended March 31, 2021

Year ended March 31, 2021
Name of the entity	Net assets, i.e. total assets minus total liabilities Share of proft or (loss)
	% of total Amount (`in crore)<br>% of total<br>Amount<br>(`in crore)
Holding company
IDFC FIRST Bank	99.49 17,807.89 93.61 452.28
Subsidiary
IDFC Bharat Limited	1.02 182.33 6.39 30.90
Associate
Millennium CityExpressways Private Limited	- - - -
Inter-companyadjustments	(0.51) (90.51) - -
Total net assets/netproft	100.00 17,899.71 100.00 483.18

Period ended March 31, 2020

Name of the entity	Net assets, i.e. total assets minus total liabilities Share of proft or (loss)
	% of total Amount (`in crore)<br>% of total<br>Amount<br>(`in crore)
Holding company
IDFC FIRST Bank	99.60 15,342.60 100.73 (2,864.21)
Subsidiary
IDFC Bharat Limited	0.98 151.41 (0.73) 20.82
Associate
Millennium CityExpressways Private Limited	- - - -
Inter-companyadjustments	(0.59) (90.49) - -
Total net assets/netproft	100.00 15,403.52 100.00 (2,843.39)

18.20 Additional disclosure

Additional statutory information disclosed in the separate financial statements of the Bank and subsidiary have no material bearing on the true and fair view of the Consolidated Financial Statements and the information pertaining to the items which are not material have not been disclosed in the Consolidated Financial Statements.

18.21 COVID-19 Regulatory Package - Asset Classification and Provisioning:

The impact of COVID-19, including changes in customer behaviour and pandemic fears, as well as restrictions on business and individual activities, has led to significant volatility in global and Indian financial markets and a significant decrease in global and local economic activity, which may persist even after the restrictions related to the COVID-19 outbreak are being lifted. While the easing of restrictions has driven a revival in economic activity across sectors, the continued slowdown has impacted lending business, fee income generation from sale of third party products, collection efficiency etc. Further, there may be a rise in the number of customer defaults and consequently an increase in provisions. The extent to which the COVID-19 pandemic, including the current “second wave” will continue to impact the Bank’s operations and asset quality will depend on future developments, which are highly uncertain. The current second wave COVID-19 pandemic where the number of cases have increased significantly in India, has resulted into re-imposition of localised / regional lock down measures in various parts of the country. The Holding Company’s capital and liquidity position is strong and would continue to be the focus area for the Holding Company during this period.

In accordance with the RBI guidelines on ‘COVID-19 Regulatory Package’ of March 27, 2020, April 17, 2020 and May 23, 2020, the Holding Company granted moratorium on repayment of instalments and/or interest, as applicable, due between March 1, 2020 and August 31, 2020 to all eligible borrowers. For all eligible accounts, where the moratorium was granted, the asset classification was under standstill during the moratorium period (i.e. the number of days pastdue shall exclude the moratorium period for the purposes of asset classification under the Income Recognition, Asset Classification and Provisioning norms).

During the year ended March 31, 2021, the Holding Company has made an additional COVID-19 related provision (net) amounting to ` 375.00 crores.

Annual Report 2020-21 269

Notes

forming part of the Consolidated Financial Statements as at and for the year ended March 31, 2021

18.22 Comparative figures

Figures for the previous year have been regrouped and reclassified wherever necessary to conform to the current year’s presentation.

18.23 The figures of ` 50,000 or less have been denoted by ß .

For B S R & Co. LLP

For and on behalf of the Board of Directors of IDFC FIRST Bank Limited

Chartered Accountants (Firm Registration No: 101248W/W-100022) Manoj Kumar Vijai Aashish Kamat V. Vaidyanathan Partner Director Managing Director & Chief Executive Officer (Membership No. 046882) DIN: 06371682 DIN: 00082596 Satish Gaikwad Sudhanshu Jain Date : May 8, 2021 Head - Legal & Chief Financial Officer & Place : Mumbai Company Secretary Head Corporate Centre

270 IDFC FIRST Bank

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IDFC FIRST Bank Limited

Corporate Identity Number: L65110TN2014PLC097792

Naman Chambers, C-32, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051, Maharashtra, India Tel: + 91 22 7132 5500 Fax: +91 22 2654 0354

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Business Responsibility Report IDFC FIRST Bank Limited FY 2020-21

Business Responsibility Report

The Business Responsibility Report ( ‘BRR’ ) articulates IDFC FIRST Bank Limited’s ( ‘IDFC FIRST Bank’ / the ‘Bank’ ) commitment to future generations while conducting responsible businesses at the Bank.

IDFC FIRST Bank’s responsible banking is integrated with all divisions of the Bank and is based on ethics, transparency, technology and human resources, thus ensuring sustainable growth for the present and future generations.

The Bank has built a strong foundation by bringing together strengths to unlock new avenues for growth and delivering a more diversified suite of products and services. The Bank also extends its reach to meet the needs of various segments by utilizing its existing relationships and extending its existing product portfolio to wider segments. The Bank targets the demands arising from accelerating urbanization to meet the aspiration of urban, middle and rural India.

IDFC FIRST Bank is one of the emerging private banks in India that seeks to set a new standard in customer experience. The Bank offers products like Savings Accounts, Current Accounts, NRI/NRE/NRO Accounts, Fixed Deposits, Home Loans, Wheeler Loans, Personal Loans among others, using technology and a service-oriented approach, to make banking simple and accessible.

The year 2020-21 saw an undying spirit of humanity to fight a global crisis caused by the COVID-19 pandemic out break with ramification on life and livelihood. During the year, IDFC FIRST Bank had implemented various relief measures and operational measures to support customers, employees and society at large.

The disclosures on Business Responsibility is aligned with the nine (9) principles of National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business, as notified by the Ministry of Corporate affairs (‘MCA’), Government of India and is in accordance with regulations 34(2)(f) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended.

The Bank undertakes to adhere to the below principles by aiming to improve systems and processes to integrate community development, responsible governance and environment responsibility in its business practices and banking operations.

PRINCIPLE 1

Businesses should conduct and govern themselves with ethics, transparency and accountability

This principle captures the main aspects of business responsibility namely governance through stakeholders’ engagement in all aspects of the Bank’s operations. The Bank’s businesses through the Code of Conduct ensures the highest levels of ethical standards, professional integrity,

corporate governance and regulatory compliance for its employees, suppliers, vendors, contractors, customers, consultants and agents.

Board Governance

The Bank has adopted an effective and robust Corporate Governance Framework based on emerging best practices and requirements prescribed under the Companies Act, 2013, rules & regulations framed by the Securities and Exchange Board of India & Reserve Bank of India and other legal & regulatory requirements, as applicable to the Bank. This has helped the Bank to ensure protection of all stakeholders’ interest, to create accountability and deter malpractices among employees.

As on date of this report, the Board of Directors (the ‘Board’ ) of the Bank consisted of Nine (9) Directors including six (6) Independent Directors. The various Committees of the Board meet periodically to review and advise the Management on matters of strategic importance.

The Nomination and Remuneration Committee of the Board ensures all appointments of Directors and Key Managerial Personnel, to maintain balance of skills, experience and knowledge on the Board, so as to enable the Board to discharge its functions and duties effectively. For more details on Board Governance, please refer to the Corporate Governance Report forming part of the Annual Report FY 2020-21.

Bank Policies

Policies and frameworks have been set up across the Bank to guide employees and stakeholders and to ensure compliance to regulatory norms applicable to the Bank. A brief on some of these policies are given below:-

The Code of Conduct enunciates ethical principles and values including business ethics and anti-corruption as pillars for business conduct of the Bank. It articulates high standards of professionalism, honesty, integrity and ethical behaviour in all its banking operations.

The Whistle Blower Policy has been formulated for all employees of the Bank to prevent malpractices or any breach of the Code of Conduct, Employment Contract or Abuse of Authority. It provides a framework for responsible and secure whistle blowing.

The Vigilance Policy prevents employees from accepting valuables or pecuniary advances by corrupt and illegal means or by abusing his / her position as an employee. It prevents the possession of disproportionate assets by employees through forgery, cheating or through criminal offences.

The Enterprise Risk Management (‘ERM’) Framework identifies, assesses, monitors and mitigates risks in the operational and external environment. For more details on

IDFC FIRST Bank

the Risk Management section, please refer to the Directors’ Report in the Annual Report FY 2020-21.

The Compliance Policy outlines a framework to identify and evaluate significant compliance risks to ensure soundness of the Bank’s operations. The Chinese Wall Policy ensures accountability of all employees towards conflict management and information barriers. This policy ensures visibility and openness at every level of functioning.

The Policy on Related Party Transactions monitors transactions of the Bank entered into with related parties. These related party transactions are placed before the Audit Committee of the Board on a quarterly basis to ensure that these transactions are at arm’s length dealings to prevent conflict of interests involving such related parties.

The Code of Conduct for Prohibition of Insider Trading has been implemented in accordance with the requirements of the SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended, in order to regulate trading in securities by the Board of Directors and Insiders of the Bank, including their immediate relatives.

The Fraud Risk Management Policy has been formulated to assist in reporting frauds in banking operations. The policy enables the management of fraud risks to protect the Bank’s reputation or any loss/ damage of assets of the Bank.

The Disciplinary Action Guidelines / Policy assists in maintaining the Bank’s values, ethical standards and compliance to applicable laws and regulations. It provides basic principles to guide employees while dealing with clients, customers and other stakeholders.

PRINCIPLE 2

Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle.

It has always been the Bank’s endeavour to provide products and services designed in a manner to meet customer requirements as well as to contribute towards socio-economic development.

The Environment & Social Policy Framework of IDFC FIRST Bank is applicable to Wholesale Banking and Retail Banking Assets. It helps to identify sector and industry specific risks and lays out the systems and procedures for undertaking the Environment and Social Due-diligence.

IDFC FIRST Bank has been constantly working towards developing solutions to minimise its impact on the environment. The Bank has been going digital which not only enables customer convenience by way of digital banking solutions but also reduces carbon footprint at branches and ATMs.

The Bank has encouraged greater use of electronic payments through e-statements & e-receipts and use of mobile banking and net banking, thus contributing to conservation of resources. Use of digital channels and the Green Initiative Program that enables shareholders to opt for electronic copies of the Annual Report, are ways through

which the Bank articulates its emphasis on sustainable services to its customers and stakeholders.

The retail banking business with its network of branches in rural areas has been striving to achieve sustainable products, processes and practices and energy conservation measures.

Our ATMs in rural and semi-urban areas, doorstep banking services in villages and innovative digital solutions offering banking convenience are some of the services that are safe and contribute to sustainability.

PRINCIPLE 3

Businesses should promote the wellbeing of all employees

“To win in the marketplace you must first win in the workplace.”

The Bank trusts its employees’ ability to be successful, especially at challenging new tasks, delegating responsibility and authority and allowing employees the freedom to decide how they will accomplish their goals and resolve issues.

Employees are the first customers for the Bank. Keeping internal customers satisfied and happy is the first step towards creating external customer loyalty. The Bank believes in fostering a culture of innovation amongst its employees, thus it invests in training of its employees and providing technical & behavioural support to manage customer relationships better.

To enhance employee value, the Bank has various processes in place to uphold the right of every employee. IDFC FIRST Bank is an equal opportunity employer providing opportunities for all its employees for learning, professional growth and development.

Various HR policies ensures ample and sufficient safeguard for the employees. These policies have been designed with the industry’s best practices and international benchmarks, to serve as effective levers for human capital management approach. The Bank organizes various employee engagement activities for employees which are conducted pan India.

Some of the HR policies which ensure employee well-being in the Bank are:

The Equal Opportunity & Diversity Guidelines supports equal opportunities at the time of recruitment as well as during the course of employment, irrespective of caste, creed, gender, religion, disability or sexual orientation.

The Whistle Blower Policy as described in Principle 1, identifies any breach of ethical behaviors and malpractices by any employee.

The Policy on Prevention, Prohibition & Redressal of Sexual Harassment protects women from sexual harassment at the workplace thus reflecting the Bank’s zero-tolerance towards any form of prejudice, gender bias, exploitation, prohibition and prevents misconduct on the part of any employee while also ensuring speedy redressal of complaints.

Annual Report 2020-21 3

Group Insurance Policies for healthcare, accidents, death, Work Enablers, Performance Management Processes and Learning & Development are some of the benefits and facilities extended to the Banks’ employees. All new employees go through an on-boarding orientation and a mandatory induction programme which familiarizes them with the Bank’s structure, policies, culture and values.

The Bank strives to build a culture based on strong values. It strives to improve diversity and inclusion at the workplace so that women have equal opportunities. As on March 31, 2021, the total employee strength stood at 24,169, out of which 3,554 are women and 20,615 are men employees.

The Bank provides the benefit of Group insurances to its employees and conducts wellness activities for them. To cover employee wellbeing in times of illness, we provide free 24*7 online Doctor’s Consultation, and medical room facility in our larger offices; and during the lockdown period, the Bank launched a COVID-19 Assistance Program with free Doctors’ call-in number for employees & family members with COVID symptoms, Monthly Wellness Diaries, Monthly Wellness Webinars including a Resilience Building session, Wellness Week in December 2020 and Women’s day activities were conducted.

We have three Group Insurance policies viz. Group Mediclaim Insurance, Group Personal Accident Insurance & Group Term Life Insurance covering medical, accident and life coverages respectively. The three major advantages for employees through these insurance policies are attractive top-up options for increased family cover, enhancement in the cover for normal & c-section delivery for women employees, coverage of selected day care procedures and parental coverage from the first day of joining without any limit on pre-existing illnesses. We also cover Stem Cell treatment, Therapy & Robotic Surgery, Oral and Adjuvant Chemotherapy.

The Bank arranged for a Wellness Week in December 2020 with online mental & physical wellness sessions including yoga, nutritionist consultations & healthy bytes/tips on ergonomics, chair yoga, skin care, etc; and also celebrated Women’s day on 8[th] March 2021 by engaging women employees with a session on Challenging Self-Doubt and a Shout-Out by our employees to the IDFC FIRST Bank women who inspire us at the workplace.

Learning plays a very critical role in capability development across the Bank. The learning journey starts with trainingneed analysis to identify relevant training interventions. Training interventions at the Bank are aimed at enhancing technical knowledge & skills and managerial capabilities through the e-learn portal of the Bank.

IDFC FIRST Bank has always kept employee’s interest and wellbeing at the forefront. To face this pandemic, we have been providing extensive support to our employees through various measures such as:

safety kits and awareness
quarantine leave
extended sick leave
prompt workplace sanitization
assistance in testing and hospitalization
hospitalization expenses
on-call support and reimbursement of vaccination cost

As a step further to assist our employee/ family in the event of any unfortunate death, we announced the comprehensive “COVID Assistance, Rehabilitation and Relief scheme” (COVID CARE ). The main features under this scheme are:

Salary advance is available to employees in addition to mediclaim benefits to support them to manage incidental expenses/treatment expenses of their family.
In case of a fatality, we provide one of the highest insurance coverage in the system, under our Group Term Life plan.
We will continue to pay salary to the nominee of the employee for 24 months after a Covid death and also continue to extend medical insurance to the family.
Post 24 months (i.e. after the ex-gratia monthly salary ceases), the Bank will provide monthly scholarship of INR 10,000/- (INR Ten Thousand Only) for up to 2 children till their graduation.
We will waive off all IDFC FIRST Bank employee loans (such as Car Loan, Two-Wheeler loan, Personal Loan, etc.) which are not covered through a personal life insurance of the employee, this is subject to conditions.
In addition we would also provide one time funeral expenses, relocation expenses and provide employment to the spouse or reimbursement for skill training.
To help the family plan their future, on the family’s request, we will also provide personalized financial advisory service that helps the family plan their financial future.

COVID-19 Operational Relief Measures undertaken

by the Bank for its empolyees:

Towards the end of 2020 and early 2021 India saw considerable decrease in new COVID-19 cases. But major Pandemics have multiple waves of infection and the BCM team aware of the same, continued to monitor and create awareness among staff and management on the related threat to the Bank’s services. In the later weeks of February India saw the 2[nd] wave of the COVID-19 Pandemic hit the country.

The continued and proactive review by the BCM team on the evolving nature of the pandemic helped the Bank take timely actions and minimize the impact of the 2[nd] wave.

Initiative undertaken to combat 2[nd] wave of COVID-19 Pandemic for the Bank were:

Proactive & Inclusive Communication to Bank employees: The Bank continues its communication with its staff on the Pandemic, creating awareness on the threat, precautions to take, the Bank’s Pandemic

IDFC FIRST Bank

Assistance Program, government guidelines/ restrictions and the Bank’s strategy to address the ongoing situation. Managers were encouraged to have frequent sessions with staff to understand and address any issues considering that the staff have been working remotely for most parts of the Pandemic.

COVID-19 Policies & Assistance Programs: The Bank last year implemented various policies targeted towards employee health & safety like the Work from Home Policy & Quarantine Policy. Both these policies were activated & implemented before the lockdown in India, thus ensuring the Bank was well prepared to address the effects of the Pandemic and the Lockdowns. The 21 days Quarantine Leaves – paid leaves ensured infected employee recovers well and don’t infect other staff or customers.

Further, as Pandemic started having impact on our staff, the Bank came out with a “COVID-19 Assistance Program” to help its staff and their families. The program addressed multiple issues affecting staff – Reimbursement of the cost of testing & vaccination, a 24x7 Doctor Helpline to allay their doubts/concerns, discounted Pricing for Home Isolation Packages and hospitalization assistance for employees and their family on best effort basis. The Bank has also launched countrywide vaccination drive for its staff and their dependents thus ensuring that staff and families are safe.

Safe & Secure Operating Environment: The government came out with specific guidelines on keeping the Bank premises safe and secure. The Bank implemented these guidelines and ensured that our premises are sanitized and deep cleaned frequently so that they are safe and secure both for our staff and our customers. Specialized in-house and external partners were involved in ensuring the same daily. Further, branches were closed for predefined periods whenever there is a positive COVID-19 case in the branch and fully sanitized. Our Bank is fully compliant to Government laid down guidelines on use of mask, social distancing and relevant controls across our offices/branches in the country.
Business Continuity & Course Correction: The Business Continuity Program stood up well against the Pandemic last year. The Pandemic plan has been further enhanced with learnings e.g. like the Bank’s continuity strategy has embraced the remote working and split site operations as a primary strategy, the Bank’s branches & teams operate as per changing nature of the operating environments as and government directives, seamlessly with staff on rotation.
Sprucing Up Technology Infrastructure: Our technology infrastructure has been the backbone of the Bank’s fight against the Pandemic. It provided the remote access platform that helped critical teams to perform business activities from the secure confines of their homes and ensure continuity of critical business functions. The remote access technology supporting the Bank has been further enhanced over the course of the last year

to ensure the Bank can support more staff in the remote operating model.

PRINCIPLE 4

Businesses should respect the interests of, and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalised

The Bank develops, maintains and strengthens relationships while securing support and forming alliances with both internal and external stakeholders that help advance organizational mandate.

As on March 31, 2021, the Bank has built a national footprint through the operation of 596 branches (out of which 371 are Urban Branches and 225 are Rural Branches) across many cities in India, 655 Corporate Business Correspondent (‘BC’) branches, 592 ATMs, 85 Recyclers, 3 Central Processing Centers and 1 Clearing Hub.

The rural banking division reaches out to banked and under-banked segments of the market mostly in Rural/ Semi Urban areas among others. It offers several savings and loan account products to customers. Sakhi Shakti loans are extended to women from low and middle income households, for income generating activities and advancing their livelihoods. The Bank also offers various types of loans such as Water/ Sanitation loans, Used Car Loans, Personal Loans, Home loans, Consumer Durable loans, etc. in Rural banking division.

To enable the Bank to have a wider coverage of the underserved areas and segments, the Bank has tied up with Business Correspondents (BCs) across the geographies, where our direct branch coverage is currently limited. Herein, the products of the Bank are offered through the BCs thereby enabling access of credit to these underserved segments. In line with our philosophy, our initial focus has been on providing livelihood loans to meet the needs of the micro entrepreneurs.

The Bank believes in creating a strong alliance of trust with its different stakeholders. Every stakeholder influences the manner in which a bank operates and it is our Bank’s endeavour to build strong relationships with each of its stakeholders, thus enhancing innovative services for them. IDFC FIRST Bank has evolved formal and informal engagement mechanisms to understand stakeholders’ expectations and concerns, which includes periodic meetings and regular communication.

The Bank’s stakeholders include employees, shareholders, investors, customers, business associates (vendors / suppliers), government and regulatory authorities, NGOs, creditors, debtors and local communities.

Some of the engagement mechanisms which have been formulated by the Bank to understand the various stakeholders’ expectations and concerns are as under:

Annual Report 2020-21 5

Equity Shareholders, Infra Bondholders, Private Placement Bondholders and Customers form part of the key stakeholders of IDFC FIRST Bank. Queries and complaints of these stakeholders are addressed through a dedicated toll-free telephone line, emails, letters, through the SEBI SCORES portal (Equity and Infra Bonds) and through customer engagements at branches, registered office and corporate office. The Investor Grievance cell is the first point of contact between these stakeholders and the Bank.

Media and analysts’ interactions are organized by the Bank after quarterly financial results. The Investors interact with senior management in the investor conferences organized by market intermediaries including brokerage firms, investment banking firms etc. Additionally, the investors get to interact with the management during the annual general meeting of the Bank. The updated corporate presentation and financials of the Bank are available at the Bank‘s website: www.idfcfrstbank.com.

Channels of engagement with employees along with various beneficial programs, redressal grievance cells and training programs have been given under Principle 3.

The Bank promotes an efficient and transparent financial system, enhancing financial literacy and improving access to the banking system. Some of the Bank’s disclosures serve as channels to share financial performance.

Creating sustainable communities is one of the key values for the Bank’s CSR initiatives. These CSR initiatives improve the economic and social conditions of locations where such activities are operated. Some of these activities include promoting education, skill training and livelihood enhancement, healthcare and hygiene, financial literacy and inclusion. There are various projects undertaken as part of CSR initiatives which are enumerated in the Directors’ Report forming part of the Annual Report FY 2020-21.

PRINCIPLE 5

Businesses should respect and promote Human Rights

The Bank upholds human rights and respects every citizen’s right. A strong commitment to human rights is embedded in the Bank’s Code of Conduct which imbibes the essence of acceptance of behaviour amongst employees.

The various policies and processes of the Bank have been formulated and implemented for employees indiscriminately, thus upholding every employee, customer and stakeholders’ right. Some of the policies within the Bank which enumerates this principle are:

The Equal Opportunity and Diversity Guidelines which aids in maintaining a diverse set of employees, be it from any caste, country, gender, age, race, religion or differently abled segments. Focus has been made on gender diversity also.

The Whistle Blower Policy and the Policy of Prevention, Prohibition & Redressal of Sexual Harassment conforms to zero-tolerance of any form of prejudice, discrimination and harassment at work. A formal process for addressing employee grievances arising from the annual performance

review discussions with their managers has been implemented by the Bank. The HR team partakes in discussions with specific employees and their managers to address such concerns.

Education is a fundamental human right, essential for the empowerment and development of every individual and the society as a whole. Corporate Social Responsibility is an intrinsic element of our Bank and its culture. The Bank believes that businesses have the power to transform lives and the communities around them and the Bank does this with rigour, commitment and by building meaningful partnerships. The Bank is focused in its approach of four key thematic areas, namely, Education, Livelihoods, Women Empowerment and Health.

The Bank has set specific aims and goals for each of these priority areas and monitors and evaluates each of its programs to assess the outcomes and impact on ground. The Bank understands that deeper and meaningful impact can only be achieved through long-term commitment and thus the Bank aims to support not-for-profit organisations and social enterprises using the program approach. This has been the Bank’s way of ensuring that its support towards all the social impact programs creates genuine social value.

Education

The Bank’s programs under the theme ‘Education’ aims to support youth and young adults from marginalised sections of the society and provides them with equal opportunities to succeed in life. This includes supporting scholarships and extending monetary assistance to needy candidates from economically weaker sections across India or supporting youth with disabilities to live a life of dignity by supporting programs that work on educating and promoting independent living among them. Some such programs include MBA Scholarship Program, Banyan Academy of Leadership In Mental Health Fellowship program, Aspiring Life Scholarship and Ashoka University Scholarship program.

Livelihoods

The Bank’s programs under the theme ‘Livelihoods’ aim to increase employability of rural youth and women in order to uplift their position in the society and country. By adopting a plethora of skill development programs, the Bank has empowered and engaged myriad of people from rural areas. The Bank understands different locations have different labor and skill demands and depending on opportunities like infrastructure and industries available in those locations, the Bank identifies partners that are well equipped to impart skills training to less privileged youth in that area. Some such programs include Women Entrepreneurship Program, Social Action for Manpower Creation, Om Creations Trust, Om Abode, Lighthouse Program and Digital Empowerment Program, Saksham and Shwetdhara program.

Women Empowerment

The Bank’s programs under the theme ‘Women Empowerment’ aims to recognise the growing role of women in today’s workforce and businesses. By supporting social enterprises led by women entrepreneurs or supporting women from low-

IDFC FIRST Bank

income groups in their entrepreneurial journey, our programs have women at the centre of the development model. Some such programs include Beauty Entrepreneurship Program and Social entrepreneurship program.

Health

The Bank’s program under the theme ‘Health’ aims to create awareness regarding community driven solid waste management processes and segregation at source within the Worli Koliwada community through a participatory process. To solve the problem, the Bank has partnered with Stree Mukti Sanghatana and The Municipal Corporation of Greater Mumbai to develop a process model for building a responsible community and self-sustained zones that are well equipped to manage the solid waste.

PRINCIPLE 6

Businesses should respect, protect and make efforts to restore the environment.

The Bank operates in an environmentally sustainable manner by developing, promoting and utilising eco-friendly and resource efficient services. As an environment friendly organisation, IDFC FIRST Bank strives to develop solutions to minimise its impact on the environment. The Environment and Social Policy (‘E&S Policy’) Framework of IDFC FIRST Bank sets the guidelines through which the Bank assesses its environmental and social risks associated with its lending business operations.

The E&S policy Framework engages its customers and stakeholders on mainstreaming E&S Risk management, ensures the Bank’s lending is made to environmentally sustainable, socially acceptable and economically viable projects, ensures environmental and social safeguards as defined by the applicable Indian legislation and The Equator Principles and ensures that a project’s environmental and social risks are properly addressed throughout the loan tenure.

The Environment & Social Risk Management Framework lays down processes and guidelines for various stages of the project appraisal process. The Environment Risk Group (‘ERG’) at the Bank proactively works with clients and internal teams to identify and address E&S risks associated with the project. ERG had conducted eight training workshop sessions in FY21 on environmental risk management framework for business and credit risk executives of IDFC FIRST Bank.

Digital Banking

At IDFC FIRST Bank, we are deploying sophisticated technologies that enable us to be flexible and highly responsive to changing customer preferences. Predictive and data-driven technologies such as cloud, Artificial Intelligence (‘AI’) and Machine Learning (‘ML’) are being used to deepen insight into customer needs and automate decision making. For our customers, this has resulted in improved user interface and experience.

Listed are some of the key digital initiatives that have benefited our customers.

1) IDFC FIRST App & Netbanking – a revolution in digital banking.
2) IDFC FIRST App Credit Cards - Digital-First & Super Rewarding.
3) Monthly credit of interest on Savings accounts.
4) SafePay – wave, pay & go - contactless card payments on phone.
5) Video KYC – Putting customers’ safety first.
6) Pay to Contacts – simpler & faster digital payments.
7) Loan account servicing – digitally driven.

The other digital initiatives implemented by the Bank are:

Usage of e-statements and e-receipts and providing digital platforms for its customers.
The Bank encourages shareholders to opt for electronic copies of the Annual Report through its Green Initiative program.
Use of audio / video conferencing facilities for meetings. This year being impacted by COVID-19, there was high usage of video conferencing for meetings and for interactive sessions with employees.
While putting our customers first through 2020, we also helped them put nature first with our noble green initiative – TreePublic 2.0. On the occasion of the Bank’s second anniversary, we tied up with an NGO and planted a sapling for every Savings Account opened between December 18, 2020 and January 26, 2021. Besides planting trees, we also encouraged our staff across branches in urban and rural areas to explore their green thumbs with a contest. The branch employees had to decorate the branch with all things green, and the top 3 branches were awarded. We took to our social media channels to spread the word, and designed innovative green hoardings made out of plants to create buzz. All this was supported by a radio campaign and a special air-index check that let customers know the air quality in their city.

We also announced the Environment FIRST Heroes initiative that celebrated those who put nature first. With all this and more, we planted over 1 lakh trees during this period.

PRINCIPLE 7

Businesses when engaged in influencing public and regulatory policy should do so in a responsible manner

IDFC FIRST Bank is an active member of several Trade Bodies and Associations. The Bank does not engage in policy advocacy but is actively involved in consultation / discussion forums with the Government and other banking industry bodies such as Indian Banks’ Association, Confederation of Indian Industry (CII), Fixed Income Money Market and Derivatives Association of India (FIMMDA), Foreign Exchange Dealers Association of India (FEDAI) and other Associations.

Annual Report 2020-21

The Bank promotes an efficient and transparent financial system, enhancing financial literacy and improving access to the banking system. The Bank also participates in key initiatives undertaken by the Government and Regulators.

The Bank’s disclosures serve as a means of sharing organisational performance and best practices with all its stakeholders.

Some of the modes of disclosure are:

Publishing the Business Responsibility Report of IDFC FIRST Bank in adherence to National Voluntary Guidelines (‘NVGs’) laid out by the Ministry of Corporate Affairs (‘MCA’), Government of India.
Nomination of the Bank for awards, assessments and ratings by national and international agencies.

PRINCIPLE 8

Businesses should support inclusive growth and equitable development

IDFC FIRST Bank provides customised solutions to people in rural and semi-urban locations through intensive use of technology. Unique projects launched by the Bank have helped in linking excluded sections of the society with formal banking systems to achieve financial inclusion. The Bank reaches out to banked and under-banked segments of the market mostly in Rural/Semi Urban locations. The loans are extended to women from low and middle income households, for income generating activities and advancing their livelihoods in these locations.

Rural Banking has presence in 18 states across 342 districts.

Currently covering 57,000+ villages.

CSR Initiatives Supporting Inclusive Growth:

The CSR initiatives of the Bank in 2020-21 were implemented through various implementation partners. In order to achieve impact and scale, the Bank’s CSR activities undertaken during the year mainly focused on four areas: Education, Livelihoods, Women Empowerment, Health and COVID-19 relief. During the pandemic, IDFC FIRST Bank extended its support to the ones on the frontline - the Doctors, Nurses, Police Officers, the local municipal corporation workers; and all those who were working relentlessly to fight the pandemic risking their own lives. We provided free of cost transport to medical staff of leading hospitals in Mumbai, distributed masks to frontline workers and vulnerable communities, distributed food to the marginalized and ensured livelihood support to daily wage workers across the country. We mobilized the entire IDFC FIRST Bank ecosystem, that included our employees, customers, women entrepreneurs who were direct beneficiaries of our CSR programs and the NGOs to join hands to provide relief and prevent the spread of the COVID-19 disease. We supported 6 programs and impacted 32 lakh lives.

Even during the Pandemic, the main objective of CSR activities included:-

[a] serve the poor, marginalized and underprivileged

[b] promote inclusion

[c] be sustainable

[d] meet needs of the larger community and society

Elaborating further, the Bank’s COVID-19 CSR relief work had positively impacted more than 30 lakh lives across 7 COVID-19 programs. Ranging from providing meals to those in need, to transport support to frontline health workers to reach hospitals, cash support to migrant workers, IDFC FIRST Bank has managed to successfully engage stakeholders from employees, customers and larger society. To bolster our support to our partner NGOs during these tough times, the CSR team designed and implemented a unique donation program called Karma First to facilitate our customers to donate to our partner NGOs. 211 customers have donated 3 lakh rupees through the platform till date. The Bank had successfully donated 10+ second hand laptops to our NGO partners who needed the support to migrate to virtual environment. We delivered and facilitated 20+ trainings for 12+ hours on topics such as Business canvas model, Theory of Change, POSH, Digital literacy etc. During COVID-19 pandemic, meal kits and ration kits were distributed to families across our NGO partners as part of relief effort and physical model of intervention has replaced with online/ virtual classes and trainings. In rural Madhya Pradesh and Rajasthan, we enabled Gram Sakhis (village level entrepreneurs) to stitch 2 Lakh masks under the Bank’s Gaon Gaon mask initiative who in turn earned an average of Rs. 6,000 despite the COVID-19 lockdown.

Details of the CSR initiatives undertaken by the Bank through various implementation partners are given in the Directors’ Report which forms part of the Annual Report FY 2020-21.

The Bank’s wholly owned subsidiary, IDFC FIRST Bharat Limited ( ‘IFBL’ ) also has a CSR division which is a corporate self-regulatory mechanism having a long and cherished tradition of commendable initiatives, institutionalized programs and CSR practices which help in the development of several underdeveloped regions in the country. IFBL focusses on Eradication of hunger, Women empowerment, Health, Sanitation and Education. The CSR division of IFBL implements programs directly through its team ensuring a direct reach to the beneficiaries. During the FY 2020-21, IFBL has launched two initiatives to create a long-lasting impact on education. Installation of Smart boards in government schools started to improve the quality of delivery of education to the lower income segments of population. Toilets were constructed / renovated for girls in government schools, this ensures healthy environment drawing girl students to schools without any fear and anxiety. In the FY 2020-21, 2330 programs across focus areas were organised creating an impact on 4.1 lakh beneficiaries.

PRINCIPLE 9

Businesses should engage with and provide value to their customers in a responsible manner

The Bank has number of mechanisms for resolving grievances of its customers and clients, thus adding value to the customer base. The Bank has in place the various policies to protect customer rights.

IDFC FIRST Bank

The Bank consistently demonstrates, focuses, initialises and energises to deliver its promise of delighting customers.

Some of the grievance redressal mechanisms at the Bank are:

Customers’ queries are addressed by our customer service executives available round the clock. The contact centre team consistently strives to delight customers and is powered with high-end technology and infrastructure to seamlessly deliver elevated service levels. Customers can also send in their queries via web portal, mobile app to have their queries answered. Our Bank aspires to create a Zero Contact Resolution architecture and various efforts have been initiated in this direction. Our efforts are directed in creating pleasant customer experiences and enhanced digitalfirst interventions for all our customers.
The Customer Grievance Redressal policy emphasizes equal and fair treatment to customers without any biasness. Grievances are resolved within the turnaround time (‘TAT’). Customers are made aware of

alternative remedial channels if they are not satisfied and an endeavor is made to enable customers to make informed choices.

Through the Fair Practice Code for lenders, the Bank undertakes to provide comprehensive information relating to fees, charges, terms and conditions and any other material information so that the borrower can make an informed decision. For relevant segments, the Bank has laid down timelines for processing the applications/ requests received and communicate, in writing, the reason(s) for rejection of borrower loan application etc.
The customer service staff are imparted training, which is aimed to understand the customers’ need in order to enhance quality service to them.
The Bank also provides information on its products through its website www.idfcfrstbank.com including details on product features, service charges, applicable fees, interest rates, deposit schemes etc.

Annual Report 2020-21 9

ANNUAL BUSINESS RESPONSIBILITY REPORT [REGULATION 34(2)(F)]

SECTION A:

GENERAL INFORMATION ABOUT THE COMPANY

SECTION A: GENERAL INFORMATION ABOUT THE COMPANY
NO. PARTICULARS	DETAILS
01 CIN of the Company	L65110TN2014PLC097792
02 Name of the Company	IDFC FIRST Bank Limited
03 Registered Address	KRM Tower, 7thFloor, No. 1, Harrington Road, Chetpet, Chennai 600 031,Tamil Nadu.
04 Website	www.idfcfrstbank.com
05 E-mail id	[email protected]
06 Financial Year reported	2020-21
07 Sector(s) that the Company is engaged in (industrial activitycode-wise)	Code: 64191 – IDFC FIRST Bank Limited is a banking company governed bythe BankingRegulation Act,1949.
08 List three key products/services that the Company manufactures/ provides	IDFC FIRST Bank is engaged in providing a wide range of Banking and Financial services including retail banking, corporate banking and treasuryoperations.
09 Total number of locations where business Activity is undertaken bythe Company
Number of International Locations (Provide details of major 5)	None
Number of National Locations	As on March 31, 2021, the Bank has built a national footprint through the operation of 596 branches (out of which 371 are Urban Branches and 225 are Rural Branches) across many cities in India, 655 Corporate Business Correspondent (‘BC’) branches, 592 ATMs, 85 Recyclers,3 Central ProcessingCenters and 1 ClearingHub.
10 Markets served by the Company – Local/ State/ National / International	IDFC FIRST Bank serves customers in national markets.

SECTION B:

FINANCIAL DETAILS OF THE COMPANY

NO.	PARTICULARS	DETAILS
01	Paid up Capital (INR)	Rs. 5,675.85 crore
02	Total Turnover (INR)	Rs. 18,221.56 crore
03	Total proft after taxes (INR)	Rs. 452.28 crore
04	Total Spending on Corporate Social Responsibility (CSR) as	The amount spent for CSR contribution by the Bank for
	percentage ofproft after tax(%)	FY 2020-21 was Rs. 19.62 crore
05	List of activities in which expenditure in 4 above has been	CSR activities as undertaken by the Bank can be referred
	incurred:-	to the Directors’ Report which forms part of the Annual
		Report FY 2020-21.

SECTION C:

OTHER DETAILS

NO.	PARTICULARS	DETAILS
01	Does the Company have any Subsidiary Company / Com- panies?	Yes, the Bank has one subsidiary - IDFC FIRST Bharat Limited
	Do the Subsidiary Company / Companies participate in	Yes, IDFC FIRST Bharat Limited participates in the BR
02	the Business Responsibility (BR) Initiatives of the parent company? If yes, then indicate the number of such	initiatives of the Parent Company.
	subsidiarycompany(s)
03	Do any other entity / entities (e.g. suppliers, distributors	Nil
	etc.) that the Company does business with, participate
	in the BR initiatives of the Company? If yes, then indicate
	the percentage of such entity / entities? [less than 30%,
	30-60%,More than 60%]

10 IDFC FIRST Bank

SECTION D: BUSINESS RESPONSIBILITY INFORMATION

Details of Director/Directors responsible for BR.
a) Details of the Director/Directors responsible for implementation of the BR policy/policies

NO.	PARTICULARS	DETAILS
1.	DIN Number (if applicable)	00082596
2.	Name	Mr. V. Vaidyanathan
3.	Designation	Managing Director & Chief Executive Offcer
b)	Details of the BR Head
NO.	PARTICULARS	DETAILS
1.	DIN Number (if applicable)	NA
2.	Name	Mr. Adrian Andrade
3.	Designation	Chief Human Resources Offcer

Principle-wise (as per NVGs) BR Policy/policies

Please refer to Table 2A and 2B

2A. PRINCIPLE-WISE (AS PER NVGS) BR POLICY / POLICIES

Details of Compliance (Reply in Y / N)

	Details of Compliance (Reply in Y / N)
NO	QUESTIONS	(P1)	(P2)	(P3)	(P4)	(P5)	(P6)	(P7)	(P8)	(P9)
1	Doyou have apolicy/policies for....	Y	Y	Y	Y	Y	Y	N	Y	Y
2	Has the policy being formulated in consultation with the relevant stakeholders?	Y	Y	Y	Y	Y	Y	-	Y	Y
3	Does the policy conform to any national / international standards?	Y	Y	Y	Y	Y	Y	-	Y	Y
	Ifyes,specify?(50 words) (Note 1)
4	Has the policy being approved by the Board? Is yes, has it been	Y	Y	Y	Y	Y	Y	-	Y	Y
	signed byMD / owner / CEO / appropriate Board Director?(Note 2)
5	Does the company have a specifed committee of the Board / Director	Y	Y	Y	Y	Y	Y	-	Y	Y
	/ offcial to oversee the implementation of thepolicy?
6	Indicate the link for thepolicyto be viewed online?(Note 3)	Y	Y	Y	Y	Y	Y	-	Y	Y
7	Has the policy been formally communicated to all relevant internal	Y	Y	Y	Y	Y	Y	-	Y	Y
	and external stakeholders?
8	Does the company have in-house structure to implement the policy	Y	Y	Y	Y	Y	Y	-	Y	Y
	/policies.
9	Does the Company have a grievance redressal mechanism related	Y	Y	Y	Y	Y	Y	-	Y	Y
	to the policy / policies to address stakeholders’ grievances related to
	thepolicy/policies?
10	Has the company carried out independent audit / evaluation of the	Y	Y	Y	Y	Y	Y	-	Y	Y
	workingof thispolicybyan internal or external agency?(Note 4)

Note 1

The policies are developed and aligned to applicable compliance requirements, RBI norms and guidelines, requirements of listing agreement with stock exchanges, or the Bank’s internal requirements and best practices.

Note 2

The policies are approved by the Board of Directors / Committee of the Board of Directors / Senior Management of the Bank.

Note 3

The Web-link and accessibility to the following polices which are relevant to the principles are available on https://www. idfcfrstbank.com/investors/corporate-governance

Remuneration Policy - WTD, CEO, MRT, KMP, SMP & Control Function

Remuneration Policy - Employees

Remuneration Policy - Independent Directors

Annual Report 2020-21 11

Code of Conduct for Board of Directors & Senior Management Personnel

Policy for Appointment of Statutory Auditors of the Bank

Policy for Determination of Materiality of Events

Code of Practices and Procedure for Fair Disclosure of Unpublished Price Sensitive Information

Policy on Related Party Transactions.

IDFC FIRST Bank - Dividend Distribution Policy

IDFC FIRST Bank - Policy For Determining Material Subsidiaries

Corporate Social Responsibility Policy

Environment & Social Policy Framework

IDFC FIRST Bank Whistle Blower Policy

Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace

In addition to the above, there are policies for employees which are available on the internal portal of IDFC FIRST Bank (iconnect).

Note 4

The various Head of Departments are responsible for effective implementation of the pertinent policies. The Bank’s Internal Audit Department, among its mandates, assesses each department’s adherence to their respective policies. In addition, the Bank’s Risk and Compliance Department monitors the adherence to implementation of policies mandated by RBI.

2B. IF ANSWER TO THE QUESTION AT SERIAL NUMBER 1 AGAINST ANY PRINCIPLE, IS ‘NO’, PLEASE EXPLAIN WHY:

	EXPLAIN WHY:
NO	QUESTIONS	P1	P2	P3	P4	P5	P6	P7	P8	P9
1	The companyhas not understood the Principle
2	The company is not at a stage where it fnds itself in a position to formulate and implement thepolicies on specifedprinciples
3	The company does not have fnancial or manpower resources available
	for the task
4	It isplanned to be done within next 6 months
5	It isplanned to be done within the next 1year
6	Any other reason (please specify)
	While there is no specifc policy outlined for this principle, the Bank works closely with clients, regulators, lenders, business partners and collective							
	trade and industryassociations.

3. Governance related to BR

a. Indicate the frequency with which the Board of Directors, Committee of the Board or CEO to assess the BR performance of the Company. Within 3 months, 3-6 months, Annually, More than 1 year.
The performance on aspects of BR is reviewed by the Management Committees / Committees of Board, on a periodical basis.
b. Does the Company publish a BR or a Sustainability Report? What is the hyperlink for viewing this report? How frequently it is published?
The Bank publishes the BR Report annually. This report is available on the Bank’s website: www.idfcfrstbank.com

SECTION E:

PRINCIPLE-WISE PERFORMANCE

PRINCIPLE 1

1. Does the policy relating to ethics, bribery and corruption cover only the company? Yes / No. Does it extend to the Group / Joint Ventures / Suppliers / Contractors / NGOs / Others?

The policies relating to ethics, bribery and corruption covers not only IDFC FIRST Bank, but also other external stakeholders. Please refer to Principle 1 which revolves around ethics, bribery and corruption for more information

2. How many stakeholder complaints have been received in the past financial year and what percentage was satisfactorily resolved by the management?

The Company has established various channels of communication, including grievance redressal mechanisms, for stakeholders to communicate their expectations and concerns.

12 IDFC FIRST Bank

The details of the stakeholder complaints are as below:

Particulars	Pending at the	No. of complaints	No. of complaints	No. of complaints
	beginning of	received during	redressed during	pending at the end of
	theyear FY21	theyear FY21	theyear FY21	theyear FY21
Shareholders’ complaints	0	8	8	0
Infrastructure Bondholders’ complaints	3	6831	6155	679
Customer Complaints	540	21015	21228	327

PRINCIPLE 2

1. List up to 3 of your products or services whose design has incorporated social or environmental concerns, risks and / or opportunities.

As a financial institution, the Bank believes that it can play a significant role towards achieving inclusive growth and sustainable development. The Bank is delivering diverse financial products and services to the under-banked and unbanked population in rural and urban India. In addition, through its digital banking initiatives and adoption of technology, the Bank is helping to take banking to remote regions and deliver governance and benefits to millions of its citizens.

Most of the Bank’s products incorporate social and environmental concerns in its financial operations, to name a few - Sakhi Shakti Women’s Group loans, Suvidha Shakti Loans for water/sanitation work and Affordable housing loan in rural areas.

2. For each such product, provide the following details in respect of resource use (energy, water, raw material etc.) per unit of product (optional):

a. Reduction during sourcing / production / distribution achieved since the previous year throughout the value chain?
b. Reduction during usage by consumers (energy, water) has been achieved since the previous year?
- Given the nature of the Bank’s business activities, which is providing banking products and financial services, resource consumption during usage by consumers is not a significant material issue for the banking sector in general. However, given the focus on digitization and other initiatives within the Bank, the impact is also visible among its customer base.
- Through varied initiatives, the Bank works towards reducing its resource consumption, which are primarily paper and grid electricity as well as focus on enhancing energy efficiency. In addition, the digitization of its internal processes has aided its efforts, such as by replacing the need for paper.

3. Does the company have procedures in place for sustainable sourcing (including transportation)? Considering the nature of banking products which is service oriented and not material resource intensive, sustainable sourcing for the Bank’s products may not be a significant material issue for the banking sector in general. However, as a responsible corporate citizen,

the Bank has been focusing on maximising its resource consumption efficiency, reducing waste output while focusing on improvising its process efficiency and productivity. Even as digitization of products and services has been reducing the requirement of paper, it remains a significant resource consumed during the Bank’s normal course of business.

a. If yes, what percentage of your inputs is sourced sustainably?
- Our major material requirements are office, communications and IT related equipment’s. The Bank has various vendor agreements for major suppliers, which are in line with labour standards, environment and ethical business practices. It would not be possible to ascertain the percentage of inputs that are sourced sustainably.

4. Has the company taken any steps to procure goods and services from local & small producers, including communities surrounding their place of work?

a. If yes, what steps have been taken to improve their capacity and capability of local and small vendors?
- The nature of banking products is service oriented and not material resource intensive, and the Bank does not procure goods for further processing. Given that the Bank has many branches and offices in urban and rural areas across the Country, the Bank plays an integral role in the local economies and depends on local suppliers for many of its needs, within the defined procurement standards and guidelines laid by the Bank.

5. Does the company have a mechanism to recycle products and waste? If yes what is the percentage of recycling of products and waste (separately as <5%, 5-10%, >10%).

The nature of banking products is service oriented and not material resource intensive. Thus recycling of products is not applicable for the Bank’s products and services. However, paper remains a significant resource required as well as waste output and the Bank has put in necessary systems ans processes for its effective and sustainable management.

For e-waste, the Bank has engaged with authorised vendors for disposal in compliance with pertinent Government Regulations.

PRINCIPLE 3

1. Please indicate the Total number of employees: 24,169 employees as on March 31, 2021.

Annual Report 2020-21 13

2. Please indicate the Total number of employees hired on temporary / contractual / casual basis

IDFC FIRST Bank had total of 16 Direct Consultants hired on contractual basis as on March 31, 2021.

3. Please indicate the Number of permanent women employees.

3,554 permanent women employees as on March 31, 2021.

4. Please indicate the Number of permanent employees with disabilities

Being an equal opportunity employer, IDFC FIRST Bank does not mandate the disclosure of disability. The number of permanent employees who had voluntarily disclosed their disability status and the nature of disability stands at 8 as on March 31, 2021.

5. Do you have an employee association that is recognized by management?

The Bank does not have an employee association. The Bank ensures that all employee grievances are received and addressed through various channels. Please refer to the brief description on Principle 3 for more information.

6. What percentage of your permanent employees is members of this recognized employee association? Not Applicable.

7. Please indicate the Number of complaints relating to child labour, forced labour, involuntary labour, sexual harassment in the last financial year and pending, as on the end of the financial year.

In accordance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder, the Bank has in place a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace which has constituted region-wise Internal Committees (‘ICs’) to investigate and resolve such cases. The regions comprise of North, East, West, South and National. Online training is conducted for all new IC members. During FY21, there were 4 sexual harassment cases filed.

8. What percentage of your under mentioned employees were given safety & skill up-gradation training in the last year?

a) 24,169 Permanent Employees (98%)
b) 3,554 Permanent Women Employees (98%)
c) Casual / Temporary / Contractual Employees: Nil
d) 8 Employees with Disabilities (100%)

All employees are imparted training basis their requirements and organisational profile. Training needs are identified for different personnel based on the nature of their jobs. The above data includes classroom and e-learning courses attended.

NO.	CATEGORY	NO OF COMPLAINTS FILED	NO OF COMPLAINTS PENDING AS
		DURING THE FINANCIAL YEAR	ON END OF THE FINANCIAL YEAR
1.	Child labour/forced labour/involuntary labour	NIL	NIL
2.	Sexual harassment	4	1 *
3.	Discriminatory employment	NIL	NIL

1 complaint was received in the month of February 2021, and was subsequently resolved within the timelines.

PRINCIPLE 4

1. Has the company mapped its internal and external stakeholders? Yes / No Yes

2. Out of the above, has the company identified the disadvantaged, vulnerable & marginalized stakeholders.

3. Are there any special initiatives taken by the company to engage with the disadvantaged, vulnerable and marginalized stakeholders?

Yes, the Bank regularly undertakes initiatives to engage with disadvantaged, vulnerable and marginalized stakeholders. Please refer to the brief description on Principle 4 for more information.

PRINCIPLE 5

1. Does the policy of the company on human rights cover only the company or extend to the Group/ Joint Ventures / Suppliers / Contractors/ NGOs / Others?

The policies revolving around human rights covers only the Bank and not other stakeholders. Please refer to the brief description on Principle 5 for more information.

2. How many stakeholder complaints have been received in the past financial year and what percent was satisfactorily resolved by the management?

IDFC FIRST Bank did not receive any complaint relating to human rights violations from internal or external stakeholders.

14 IDFC FIRST Bank

PRINCIPLE 6

1. Does the policy related to Principle 6 cover only the company or extends to the Group/ Joint Ventures / Suppliers / Contractors/ NGOs / others.

The policies relating to Principle 6 covers not only the Bank but also other stakeholders. Please refer to the brief description in Principle 6 for steps taken to protect environment.

2. Does the company have strategies / initiatives to address global environmental issues such as climate change, global warming, etc?

Yes, IDFC FIRST Bank as a responsible Bank, has undertaken several initiatives to minimize its environmental impact. Please refer to the various initiatives described in Principle 6 for more information.

3. Does the company identify and assess potential environmental risks?

The Environment & Social (E&S) Risk Management is an integral part of the Credit Risk Appraisal System of IDFC FIRST Bank. The Environment Risk Group, which is a part of the Credit Risk Group, is responsible for managing E&S risk in IDFC FIRST Bank’s lending business. An E&S Risk Management Framework has been developed for the Wholesale and Retail Banking businesses that identifies sector / industry specific risks and lays out the systems and procedures for E&S review of the transactions.

4. Does the company have any project related to Clean Development Mechanism?

No, the Bank does not have any project related to the clean development mechanism.

5. Has the company undertaken any other initiatives on – clean technology, energy efficiency, renewable energy, etc.

Yes, IDFC FIRST Bank has undertaken various initiatives on clean technology, energy efficiency and renewable energy. For more information on this, please refer to Principle 6.

6. Are the Emissions / Waste generated by the company within the permissible limits given by CPCB/ SPCB for the financial year being reported?

The Bank’s emission and waste are within permissible limits of applicable laws. Low emission diesel generators are used in urban branches while solar panels are used in Rural Banking branches for energy efficiency.

7. Number of show cause / legal notices received from CPCB / SPCB which are pending (i.e. not resolved to satisfaction) as on end of Financial Year.

No show cause / legal notices were received from CPCB / SPCB.

PRINCIPLE 7

1. Is your company a member of any trade and chamber or association?

IDFC FIRST Bank is an active member of several trade bodies and associations. Please refer to the Principle 7 for more information.

2. Have you advocated / lobbied through above associations for the advancement or improvement of public good?

IDFC FIRST Bank is also working with other financial institutions, NGOs and local government at district level for CSR activities and industrial associations towards advancement or improvement of public good, economic reforms, inclusive development and other associate services. For more details please refer to Principle 7.

PRINCIPLE 8

1. Does the company have specified programmes / initiatives / projects in pursuit of the policy related to Principle 8?

IDFC FIRST Bank’s Rural Banking offers banking solutions that are customised to the needs of people in rural and semi-rural areas of India. IDFC FIRST Bank has adopted a strategically different service approach for catering to people in these areas. The concepts used by Rural Banking involves creating hub branches with an ecosystem of access points. Rural Banking has created a distribution network among villages to provide connectivity in remote areas.

In addition, there are various projects undertaken by the Bank as part of its rural banking and CSR activities. For more information on CSR activities undertaken by the Bank please refer to Principle 8.

2. Are the programmes / projects undertaken through in-house team / own foundation / external NGO / government structures / any other organization?

A plethora of non-profits programmes were undertaken by the in-house CSR team. For FY21, the approach adopted was to enhance income flows of households through livelihood financing, market linkages and helping governmental and non-governmental organizations in delivering better services to the community. It helps financial inclusion through channelising inter-operable branch network to improve access to basic banking & payments network services after providing financial literacy and digital skilling program under the Rural livelihoods & Development program. It provides support to communities in the areas of education, health, affordable housing and livelihood development or direct financial support, depending upon the requirement of the project / programme with the help of various partners.

Annual Report 2020-21 15

3. Have you done any impact assessment of your initiative?

The in-house CSR team does periodic assessments of each of its non-profit partners based on the Key Performance Indicator’s agreed upon during the beginning of each partnership. This also includes due diligence and quality assurance visits from time to time on-ground. Also, social responsibility is embedded in the rural model of our Bank.

4. What is your company’s direct contribution to community development projects - Amount in INR and the details of the projects undertaken?

IDFC FIRST Bank has spent Rs.19.62 crore during FY 2020-21 towards CSR activities. Details of the said activities undertaken by the Bank are included in the Director’s Report which forms part of the Annual Report FY21.

5. Have you taken steps to ensure that this community development initiative is successfully adopted by the community?

Through effective stakeholder engagement, the Bank ensures that its community engagement initiatives have a strong focus on sustainability in the long term.

2. Does the company display product information on the product label, over and above what is mandated as per local laws?

All the information relating to products are transparently displayed & explained to our customers. All employees on customer-facing roles are provided with enhanced training on the products.

3. Is there any case filed by any stakeholder against the company regarding unfair trade practices, irresponsible advertising and / or anti-competitive behaviour during the last five years and pending as on end of financial year.

There was one case filed against the Bank before the Consumer Forum.

4. Did your company carry out any consumer survey / consumer satisfaction trends?

IDFC FIRST Bank periodically measures the satisfaction among its customers, understanding their expectation to essentially gauge its competitiveness in the banking industry. For more details on customer engagement, please refer to Principle 9.

PRINCIPLE 9

1. What percentage of customer complaints / consumer cases are pending as on the end of financial year.

There were 327 customer complaints which were pending as on March 31, 2021, i.e. 1.6% of the total complaints received during the year.

IDFC FIRST Bank

AI assistant

IDFC FIRST BANK LIMITED — AGM Information 2021

59433_rns_2021-08-24_ba736a48-b334-448a-be41-cd404131adae.pdf

Ref.: Regulation 34(1) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (‘SEBI Listing Regulations’).

IDFC FIRST Bank Limited

Notice

IDFC FIRST Bank Limited

CIN: L65110TN2014PLC097792

ORDINARY BUSINESS

3. To re-appoint and fix remuneration of M/s. B S R & Co. LLP, as one of the Joint Statutory Auditors of the Bank, for a period of one (1) year.

4. To appoint and fix remuneration of M/s. MSKA & Associates, as one of the Joint Statutory Auditors of the Bank, for a period of three (3) years.

SPECIAL BUSINESS

5. To appoint Mr. S. Ganesh Kumar as an Independent Director of the Bank.

6. To appoint Mr. Ajay Sondhi as a Non-Executive NonIndependent Director of the Bank.

7.

To re-appoint Mr. Pravir Vohra as an Independent Director of the Bank.

8. To re-appoint Mr. V. Vaidyanathan as Managing Director and Chief Executive Officer of the Bank.

9. To approve payment of Fixed Remuneration to the Non- Executive Directors of the Bank.

10. To offer and issue of Debt Securities on Private Placement basis.

IDFC FIRST Bank Limited

NOTES:

19. Procedure & Instructions for E-voting and Joining the AGM through VC/ OAVM are as follows:

A. VOTING THROUGH ELECTRONIC MEANS:

Step 1: Access to NSDL e-Voting system. A) Login method for e-Voting and joining virtual meeting for Individual shareholders holding securities in demat mode.

How to Log-in to NSDL e-Voting website?

Manner of holding shares Your User ID is: i.e. Demat (NSDL or CDSL) or Physical

Step 2: Cast your vote electronically and join General Meeting on NSDL e-Voting system.

How to cast your vote electronically and join General Meeting on NSDL e-Voting system?

General Guidelines for shareholders

Process for registration of e-mail id for obtaining Annual Report and user id/password for e-voting and updation of bank account:

ANNEXURE TO NOTICE

Statement pursuant to Section 102(1) of the Companies Act, 2013 setting out all material facts:

Item Nos. 3 & 4

To re-appoint and fix remuneration of M/s. B S R & Co. LLP, as one of the Joint Statutory Auditors of the Bank, for a period of one (1) year; and

To appoint and fix remuneration of M/s. MSKA & Associates, as one of the Joint Statutory Auditors of the Bank, for a period of three (3) years.

M/s. B S R & Co. LLP

M/s. MSKA & Associates

Item No. 5

To appoint Mr. S. Ganesh Kumar as an Independent Director of the Bank.

Nature of Expertise in specific functional areas:

No. of Board Meetings attended during FY21 :

Directorships held in other companies (Except Section 8 and Foreign Companies) :

Memberships/Chairmanships of Committees of other Boards (Only Audit and Stakeholders’ Relationship Committee of Indian Public Limited Companies have been considered):

Remuneration last drawn :

Details of Remuneration sought to be paid :

Shareholding in IDFC FIRST Bank (as on July 31, 2021) : Nil

Relationship with other Directors & Key Managerial Personnel of the Bank: None

Item No. 6

To appoint Mr. Ajay Sondhi as a Non-Executive NonIndependent Director of the Bank.

Name :

Age:

Brief Resume, Qualification and Experience:

Nature of Expertise in specific functional areas:

No. of Board Meetings attended during FY21:

Remuneration last drawn:

Details of Remuneration sought to be paid:

Item No. 7

To re-appoint Mr. Pravir Vohra as an Independent Director

of the Bank.

Nature of Expertise in specific functional areas:

Item No. 8

To re-appoint Mr. V. Vaidyanathan as Managing Director and Chief Executive Officer of the Bank.

Brief Resume, Qualification and Experience:

Nature of Expertise in specific functional areas:

No. of Board Meetings attended during FY21:

Directorships held in other companies (Except Section 8 and Foreign Companies): None

Remuneration last drawn:

Details of Remuneration sought to be paid:

Shareholding in IDFC FIRST Bank (as on July 31, 2021):

Relationship with other Directors & Key Managerial Personnel of the Bank: None

Item No. 9

To approve payment of Fixed Remuneration to the NonExecutive Directors of the Bank.

Item No. 10

To offer and issue of Debt Securities on Private Placement

basis.

EXHIBIT A

EXHIBIT B

Green Initiative

IDFC FIRST Bank Limited

GO - GREEN INITIATIVE AND IEPF

IDFC FIRST BANK LIMITED AGM Information 2021