I n accordance with AS-29, “Provisions, ContingentLiabilities and Contingent Assets”, the Bank recognisesprovisions when it has a present obligation as a result ofa past event, it is probable that an outflow of resourcesembodying economic benefits will be required to settle theobligation and when a reliable estimate of the amount of theobligation can be made.
Provisions are determined based on management estimaterequired to settle the obligation at the Balance Sheet date,supplemented by experience of similar transactions. Theseare reviewed at each Balance Sheet date and adjusted toreflect the current management estimates.
• a possible obligation arising from a past event, theexistence of which will be confirmed by the occurrenceor non-occurrence of one or more uncertain futureevents not within the control of the Bank; or
• a present obligation arising from a past event whichis not recognised as it is not probable that an outflowof resources will be required to settle the obligationor a reliable estimate of the amount of the obligationcannot be made.
When there is a possible obligation or a present obligationin respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made.
Contingent assets, if any, are not recognised in the financialstatements since this may result in the recognition ofincome that may never be realised.
Cash and cash equivalents include cash, rupee digitalcurrency, balances with RBI, balances with other banksand money at call and short notice.
Interest expense on deposits accepted and borrowings isrecognised in the Profit and Loss Account on an accrualbasis, in accordance with the terms of the respectivedeposits and borrowings.
Share issue expenses are adjusted against Share PremiumAccount in terms of Section 52 of the Companies Act, 2013.
Expenditure towards corporate social responsibility, inaccordance with Companies Act, 2013, is recognised inthe Profit and Loss Account.
SCHEDULE 18 - SCHEDULES FORMING PART OF THE STANDALONE FINANCIAL STATEMENTS FORTHE YEAR ENDED MARCH 31, 2026
Amounts in notes forming part of the standalone financial statements for the year ended March 31,2026 are denominated in rupeecrore to conform to extant RBI guidelines, except where stated otherwise.
During the year ended March 31, 2026, the shareholders of the Bank have approved, through postal ballot, the issuance ofbonus shares, in the proportion of 1:1, i.e. 1 (One) bonus equity share of ' 1/- each for every 1 (One) fully paid-up equity shareheld as on the record date. Accordingly, the Bank has allotted 7,67,70,39,761 equity shares as bonus shares on August 28,2025, by utilisation of share premium. All shares and per share information in the financial statements reflect the effect of bonusshares issuance retrospectively. Further, pursuant to the shareholders’ approval obtained through the postal ballot, the Bankhas increased its authorised share capital to 2,000.00 crore (20,00,00,00,000 shares of ' 1/- each) during the year ended March31,2026.
The Bank paid special interim dividend of ' 5.00 per equity share (pre-bonus) approved by Board of Directors at its meetingheld on July 19, 2025, amounting to ' 3,836.57 crore. The Board of Directors, at its meeting held on April 18, 2026, proposeda final dividend of ' 13.00 per equity share, subject to the approval of shareholders at the ensuing Annual General Meeting.Adjusted for the bonus issue, total dividend per equity share for the financial year 2025-26 is ' 15.50 (previous year: ' 11.00)and the total dividend aggregates to ' 23,847.94 crore (previous year ' 16,869.41 crore). In terms of the AS-4 “Contingenciesand events occurring after the balance sheet date”, the Bank has not appropriated the proposed dividend from the Profit andLoss Account and the same will be recognised in the year of actual payout post approval. Effect of the proposed dividend hasbeen reckoned in determining capital funds in computation of the capital adequacy ratio.
The Bank’s capital to risk-weighted assets ratio (‘Capital Adequacy Ratio’) is calculated in accordance with the RBI guidelineson Basel III capital regulations (‘Basel III’). The minimum capital ratio requirement under Basel III is as follows:
As on March 31,2026, the Bank’s subordinated and perpetual debt capital instruments amounted to ' 22,000.00 crore (previousyear: ' 22,000.00 crore) and ' 13,222.50 crore (previous year: '12,286.50 crore) respectively. In accordance with the RBI guidelines,banks are required to make consolidated Pillar 3 and Net Stable Funding Ratio (NSFR) disclosures under the Basel III Framework.These disclosures would be available on the Bank's website at the following link: https://www.hdfc.bank.in/about-us/regulatory-disclosures. These disclosures have not been subjected to audit by the statutory auditors of the Bank.
During the year ended March 31, 2026, the Bank allotted 6,41,06,893 equity shares (previous year: 5,53,11,012 equity shares)aggregating to face value of ' 6.41 crore (previous year: ' 5.53 crore) on exercise of stock options / units. Accordingly, the sharecapital increased by ' 6.41 crore (previous year: ' 5.53 crore) and the share premium increased by ' 5,102.09 crore (previous year:' 6,340.97 crore).
The cost of stock-based compensation is determined using the fair value method based on the Black-Scholes model. For theyear ended March 31,2026, an amount of ' 1,971.07 crore (previous year: ' 1,890.70 crore) is recognised in the Profit and LossAccount and credited to Employees Stock Options / Units Outstanding account.
During the year ended March 31,2026, on exercise of share-linked instruments, an amount of ' 1,179.83 crore (previous year:' 723.11 crore) is transferred from Employees Stock Options / Units Outstanding to share premium and on lapses of share-linked instruments, an amount of ' 51.32 crore (previous year: ' 15.11 crore) is transferred from Employees Stock Options /Units Outstanding to General reserve.
The shareholders of the Bank approved the grant of equity stock options under Plan “C” in June 2005, Plan “D” in June 2007,Plan “E” in June 2010, Plan “F” in June 2013, Plan “G” in July 2016 and Plan “H” in August 2024. The Bank also approvedthe Employee Stock Incentive Master Scheme in May 2022. Under the terms of each of these plans, the Bank may issue toits employees and Whole Time Directors, Equity Stock Options (‘ESOPs’) or Restricted Stock Units (‘Units’) each of which isconvertible into one equity share. Further, pursuant to the amalgamation of eHDFC Limited with and into Bank effective fromJuly 01, 2023, the existing ESOP Schemes of the eHDFC Limited comprising of eHDFC 2007, eHDFC 2008, eHDFC 2014,eHDFC 2017 and eHDFC 2020 were taken over by the Bank.
All the plans were framed in accordance with the SEBI (Employee Stock Option Scheme & Employee Stock Purchase Scheme)Guidelines, 1999 as amended from time to time and as applicable at the time of the grant. The accounting for the stock optionshas been in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity)Regulations, 2021 and RBI guidelines to the extent applicable.
The plans provide for the issuance of options at the recommendation of the Governance, Nomination and RemunerationCommittee of the Board (‘GNRC’) at the closing price on the working day immediately preceding the date when options aregranted. This closing price is the closing price of the Bank’s equity share on an Indian stock exchange with the highest tradingvolume as of the working day preceding the date of grant. Further, the units are issued at the face value of the equity share of' 1/- each. The vesting conditions applicable to the options / units are at the discretion of the GNRC. These options / units areexercisable on vesting, for a period as set forth by the GNRC at the time of the grant. The period in which the options and unitsmay be exercised cannot exceed five years and one year respectively from the date of vesting period.
Pursuant to the issuance of bonus shares in the ratio of 1:1 approved by the shareholders on July 19, 2025, stock options /units and the exercise price of options were proportionately adjusted.
The fair value at grant date is determined using “Black-Scholes Model” which takes into account the exercise price, termof the option, share price at grant date and expected price volatility of the underlying shares, expected dividend yield andthe risk-free interest rate for the term of the option / units.
Expected volatility is based on GARCH volatility forecasting model using historical stock price of Bank shares.
The weighted average fair value of options granted during the year ended March 31, 2026 was ' 292.15 (previous year:' 270.12) and of units granted during the year ended March 31, 2026 was ' 937.54 (previous year: ' 848.04).
The assumptions considered in the model for valuing the ESOPs and RSUs granted during the year ended are given below:
During the year ended March 31,2026, the Bank has made an appropriation of ' 18,667.82 crore (previous year: ' 16,836.84crore) out of profits for the year to the Statutory Reserve pursuant to the requirements of Section 17 of the Banking RegulationAct, 1949 read with RBI guidelines.
During the year ended March 31,2026, the Bank has made an appropriation of ' 7,467.13 crore (previous year: ' 6,734.74 crore)out of profits for the year to the General Reserve. Further, the Bank has transferred ' 51.32 crore (previous year: ' 15.11 crore)from Employee Stock Options Outstanding to General Reserve on lapses of share-linked instruments.
During the previous year, on transition to the revised norms on the classification, valuation and operation of Investment portfolioof Banks, which became applicable from April 01, 2024 (herein after referred as ‘revised norms on investments’), the Bankrecognised a net gain of ' 482.87 crore (net of tax ' 127.00 crore) which was credited to General Reserve.
During the year ended March 31, 2026, the Bank has made an appropriation of ' 3,000.00 crore (previous year: ' 3,200.00crore) to the Special Reserve as per Section 36(1)(viii) of the Income-tax Act, 1961.
The balance of ' 1,063.56 crore represents excess of net assets taken over the paid-up value of equity shares issued asconsideration with respect to amalgamation of Times Bank Limited during FY 2000 and Centurion Bank of Punjab Limitedduring FY 2009 with the Bank.
The net debit balance of ' 13,947.06 crore includes: (i) ' 59.25 crore representing the excess of net assets taken over the paid-up value of equity shares issued as consideration, and (ii) excess of cost over face value of Investment in shares of the Bankby eHDFC Limited of ' 14,006.31 crore, pursuant to amalgamation of eHDFC Limited with the Bank during FY 2023-24.
During the year ended March 31,2026, the Bank has made an of appropriation ' 8,320.40 crore (previous year: ' 507.00 crore),representing the profit on sale of investments classified under HTM and Group Cos. categories and profit on sale of immovableproperties, net of taxes and transfer to statutory reserve, from the Profit and Loss Account to the Capital Reserve.
In the previous year, on transition to the revised norms on investments, the Bank transferred ' 529.42 crore from the InvestmentReserve Account (IRA) to Investment Fluctuation Reserve (IFR).
During the year ended March 31, 2026, the Bank has made an appropriation of Nil (previous year: Nil) to IFR. As per RBIguidelines, banks are required to maintain an IFR equivalent to 2.00% of their AFS and FVTPL investment portfolios. Thebalance in the IFR as at March 31, 2026 is 2.67% (previous year: 2.55%) of the Bank’s AFS and FVTPL investment portfolios.
In the previous year, on transition to the revised norms on investments, the Bank transferred ' 529.42 crore from the IRA to IFR.
As at March 31,2026, the Bank has recognised ' 2,168.78 crore (previous year: ' 1,073.94 crore) as Foreign Currency TranslationReserve on account of translation of foreign currency assets and liabilities of non-integral foreign operations.
As at March 31,2026, the Bank has recognised debit balance of ' 41.32 crore (previous year: debit balance of ' 32.73 crore)as Cash Flow Hedge Reserve on derivative contracts designated as cash flow hedge.
Pursuant to the revised norms on investments, the net appreciation or depreciation on all performing investments held underAFS category is directly credited or debited to AFS Reserve. Accordingly, as at March 31,2026 the Bank has recognised debitbalance of ' 38.05 crore (previous year: credit balance of ' 616.81 crore), net of taxes as AFS Reserve.
The Bank has not undertaken any drawdown from reserves during the years ended March 31, 2026 and March 31,2025.
The Liquidity Coverage Ratio (LCR) is one of the Basel Committee’s key reforms to develop a more resilient banking sector.The objective of the LCR is to promote the short-term resilience of the liquidity risk profile of Banks. It does this by ensuringthat Banks have an adequate stock of unencumbered high-quality liquid assets (HQLA) that can be converted easily andimmediately into cash to meet their liquidity needs for a 30 calendar day liquidity stress scenario. The LCR is expected toimprove the banking sector’s ability to absorb shocks arising from financial and economic stress, whatever the source, thusreducing the risk of spillovers from the financial sector to the real economy.
The Liquidity Risk Management of the Bank is governed by the Asset Liability Management (ALM) Policy approved by the Board.The Asset Liability Committee (ALCO) is a decision-making unit responsible for implementing the liquidity and interest raterisk management strategy of the Bank in line with its risk management objectives and ensures adherence to the risk tolerance/ limits set by the Board. The Bank has also set up a senior level management committee, viz., the Group Risk ManagementCommittee (GRMC) under the ICAAP framework of the Bank, to establish a formal and dedicated structure to periodicallyassess the nature / quantum of material risks of the subsidiaries and adequacy of its risk management processes, includingproviding oversight for managing liquidity risk. Liquidity for the Bank’s domestic banking operations is directly managed atthe Head Office. The overseas branches and offshore unit of the Bank independently manage their liquidity requirements withsupport from the Head Office. Similarly, the Bank’s subsidiaries independently manage their liquidity requirements underguidance of the GRMC, which, along with senior management of the subsidiaries, reviews the risk assessment of materialrisks at the subsidiaries. Further, the Bank maintains suitable systems and processes to monitor liquidity requirements in othercurrencies as appropriate.
In order to determine cash outflows, the Bank segregates its deposits into various customer segments, viz., Retail (whichinclude deposits from individuals), Small Business Customers (those with deposits upto ' 7.5 crore), and Wholesale (whichwould cover all residual deposits). Other contractual funding, including a portion of other liabilities which are expected to rundown in a 30-day timeframe are included in the cash outflows. These classifications, based on extant regulatory guidelines,are part of the Bank’s LCR framework, and are also submitted to the RBI.
The LCR is calculated by dividing a Bank's stock of HQLA by its total net cash outflows over a 30-day stress period. The presentminimum requirement, as on March 31,2026, is 100%.
In the Indian context, the run-off factors for the stressed scenarios are prescribed by the RBI, for various categories of liabilities(viz., deposits, unsecured and secured wholesale borrowings), undrawn commitments, derivative-related exposures, andoffset with inflows emanating from assets maturing within the same time period. Given below is a table of run-off factors andthe average LCR maintained by the Bank quarter-wise over the past two years:
The average LCR for the quarter ended March 31, 2026, was at 114.17% as against 118.96% for the quarter ended March 31,
2025, and above the present prescribed minimum requirement of 100%. The average HQLA for the quarter ending March 31,
2026, was ' 772,640.21 crore, as against ' 725,568.81 crore for the quarter ended March 31,2025. During the same period thecomposition of government securities and treasury bills in the HQLA was at 91.01% as compared to 96.55% in the previous year.
For the quarter ended March 31, 2026, derivative exposures (net of cash inflows) / collateral requirements and undrawncommitments constituted around 0.47% and 1.55% respectively of average cash outflow as against 0.47% and 1.28%respectively for quarter ended March 31, 2025. The Bank has a significant portion of funding through deposits. As of March31,2026, the top 20 depositors comprised of 4.81% of total deposits indicating a healthy and stable deposit profile.
In terms of the RBI guidelines, banks are required to disclose the divergence in asset classification and provisioning consequentto RBI’s annual supervisory process in their notes to accounts to the financial statements, wherever the additional provisioningassessed / additional gross NPAs identified by RBI exceeds the threshold specified by RBI. The threshold for provisioning is5 per cent of the reported profit before provisions and contingencies for the reference period and / or that for additional grossNPAs is 5 per cent of the published incremental Gross NPAs for the reference period.
There was no reportable divergence in asset classification and provisioning for standard advances / NPAs for the year endedMarch 31, 2025 and March 31, 2024.
Advances for which intangible collaterals such as rights, licenses, authority, trademarks, patents, etc. are charged infavour of the Bank in respect of projects financed by the Bank, are reckoned as unsecured advances under Schedule9 of the Balance Sheet in line with the extant RBI guidelines. There are no such advances outstanding as at March 31,2026 (previous year: Nil).
The factoring exposure of the Bank as at March 31, 2026 is ' 56,797.90 crore (previous year: ' 38,922.37 crore).
The Bank has in place a policy and process for managing currency induced credit risk. The credit appraisal memorandumprepared at the time of origination and review of a credit facility is required to discuss the exchange risk that the customeris exposed to from all sources, including trade related, foreign currency borrowings and external commercial borrowings.It could cover the natural hedge available to the customer as well as other hedging methods adopted by the customerto mitigate exchange risk. For foreign currency loans granted by the Bank beyond a defined threshold the customer isencouraged to enter into appropriate risk hedging mechanisms with the Bank. Alternatively, the Bank satisfies itselfthat the customer has the financial capacity to bear the exchange risk in the normal course of its business and / or hasother mitigants to reduce the risk. On a periodic basis, the Bank reviews information on the unhedged portion of foreigncurrency exposures of customers, whose total foreign currency exposure with the Bank exceeds a defined threshold.A Board approved credit risk rating linked limit on unhedged foreign currency position of customers is applicable whenextending credit facilities to a customer. The compliance with the limit is assessed by estimating the extent of drop ina customer’s annual Earnings Before Interest and Depreciation (‘EBID’) due to a potentially large adverse movement inexchange rate impacting the unhedged foreign currency exposure of the customer. Where a breach is observed in sucha simulation, the customer is suitably advised to review and manage its unhedged exposure, where deemed necessary.The Bank holds standard asset provisions of ' 312.47 crore (previous year: ' 318.05 crore) and maintains capital (includingD-SIB) of ' 2,543.38 crore (previous year: ' 1,551.56 crore) as at March 31, 2026, in respect of the unhedged foreigncurrency exposure of its customers.
• Inter-bank Participation with risk sharing
The aggregate amount of participation issued by the Bank and reduced from advances as per regulatory guidelines asat March 31,2026 was ' 46,680.00 crore (previous year: ' 77,703.73 crore).
Derivatives are financial instruments whose characteristics are derived from underlying assets, or from interest rates,exchange rates or indices. These include forwards, swaps, futures and options. The notional amounts of financialinstruments such as foreign exchange contracts and derivatives provide a basis for comparison with the instrumentsrecognised on the Balance Sheet but do not necessarily indicate the amounts of future cash flows involved or the currentfair value of the instruments and, therefore, do not indicate the Bank’s exposure to credit or price risks. The followingsections outline the nature and terms of the derivative transactions generally undertaken by the Bank.
Forward rate agreements give the buyer the ability to determine the underlying rate of interest for a specified periodcommencing on a specified future date (the settlement date). The underlying rate of interest could be an interest rate curve,interest rate index or bond yield. There is no exchange of principal and settlement is effected on the settlement date. Thesettlement amount is the difference between the contracted rate and the market rate prevailing on the settlement datediscounted for the interest period of the agreement.
Interest rate swaps involve the exchange of interest obligations with the counterparty for a specified period withoutexchanging the underlying (or notional) principal.
Interest rate caps and floors give the buyer the ability to fix the maximum or minimum rate of interest. The writer ofthe contract pays the amount by which the market rate exceeds or is less than the cap rate or the floor rate respectively.A combination of interest rate caps and floors can create structures such as interest rate collar, cap spreads andfloor spreads.
Interest rate futures are standardised interest rate derivative contracts traded on a recognised stock exchange to buyor sell a notional security or any other interest bearing instrument or an index of such instruments or interest rates at aspecified future date, at a price determined at the time of the contract.
Forward foreign exchange contracts are agreements to buy or sell fixed amounts of currency at an agreed exchange rateon a future date. These instruments are carried at fair value, determined based on either FEDAI rates or market quotations.
Cross currency swaps are agreements to exchange principal amounts denominated in different currencies. Crosscurrency swaps may also involve the exchange of interest payments on one specified currency for interest payments inanother specified currency for a specified period.
Currency options (including Exchange Traded Currency Option) give the buyer, on payment of a premium, the rightbut not an obligation, to buy or sell specified amounts of currency at an agreed exchange rate on or before a specifiedfuture date.
Currency futures contract is a standardised contract traded on an exchange, to buy or sell a certain underlying currencyon a certain date in the future, at a specified price. The contract specifies the rate of exchange between one unit ofcurrency with another.
The Bank’s derivative transactions relate to sales and trading activities. Sale activities include the structuring andmarketing of derivatives to customers to enable them to hedge their market risks (both interest rate and exchange risks),within the regulatory framework as applicable from time to time. The Bank deals in derivatives on its own account (tradingactivity) principally for the purpose of generating a profit from short term fluctuations in price yields or implied volatility.The Bank also deals in derivatives to hedge the risk embedded in some of its Balance Sheet assets or liabilities.
The Treasury front-office enters into derivative transactions with customers and inter-bank counterparties. The Bankhas an independent back-office and mid-office as per regulatory guidelines. The Bank has credit risk and market riskdepartments, as part of the Risk Management Group, that assesses counterparty credit risk and market risk limits, withinthe risk architecture and processes of the Bank.
The Bank has in place a Derivative policy which covers various aspects that apply to the functioning of the derivativebusiness. The derivative business is administered through various market risk limits such as position limits, tenor limits,sensitivity limits, scenario based profit and loss limit for option portfolio, stop loss trigger levels and value-at-risk limitsthat are recommended by the Risk Policy and Monitoring Committee (‘RPMC’) to the Board of Directors for approval.All methodologies that are used to assess market and credit risks for derivative transactions are specified by the marketrisk and credit risk units. Limits are monitored on a daily basis by the mid-office.
The Bank has a Board approved policy on Customer Suitability & Appropriateness, which forms part of the Derivativepolicy, to ensure that derivative transactions entered into are appropriate and suitable to the customer’s nature ofbusiness / operations. Before entering into a derivative deal with a customer, the Bank scores the customer on variousrisk parameters and based on the overall score level it determines the kind of product that best suits its risk appetite andthe customer’s requirements.
The derivative book is classified into trading and hedging book. Classification of the derivative book is made on the basisof the definitions of the trading and hedging specified in the RBI guidelines. The trading book is managed within thetrading limits recommended by the RPMC and approved by the Board of Directors.
For derivative contracts designated as hedging instruments, the Bank documents, at inception of the hedge, therelationship between the hedging instrument and the hedged item, the risk management objective for undertakingthe hedge and the methods used to assess the hedge effectiveness. Hedge effectiveness is ascertained at the time ofinception of the hedge and periodically thereafter. Hedge effectiveness is measured by the degree to which changes inthe fair value or cash flows of the hedged item that are attributable to a hedged risk are offset by changes in the fair valueor cash flows of the hedging instrument using various qualitative and quantitative methods.
The hedging book consists of transactions to hedge Balance Sheet assets or liabilities. The tenor of hedging instrumentmay be less than or equal to the tenor of underlying hedged asset or liability. The Bank as part of its risk managementstrategy, makes use of derivative instruments, including foreign exchange forward contracts, for hedging the riskembedded in some of its financial assets or liabilities recognised on the Balance Sheet. In case of a fair value hedge, thechanges in the fair value of the hedging instruments and hedged items are recognised in the Profit and Loss Account and
in case of cash flow hedges other than for foreign exchange forward contracts and principal only swaps, the changes infair value of effective portion are recognised in Reserves and Surplus under ‘Cash flow hedge reserve’ and ineffectiveportion of an effective hedging relationship, if any, is recognised in the Profit and Loss Account. The accumulated balancein the cash flow hedge reserve, in an effective hedging relationship, is recycled in the Profit and Loss Account at thesame time that the impact from the hedged item is recognised in the Profit and Loss Account. Foreign exchange forwardcontracts and principal only swaps not intended for trading, that are entered into to establish the amount of reportingcurrency required or available at the settlement date of a transaction, and are outstanding at the Balance Sheet date, areaccounted in accordance with AS-11. Accordingly, such contracts are not marked to market and only translated at spotrate. The premia or discount arising at the inception of such forward exchange contract is amortised as expense or incomeover the life of the contract. The interest income / expense on such POS transaction is accounted on accrual basis.
The Bank enters into derivative transactions with counterparties based on their business ranking and financial position.The Bank sets up appropriate appetite / limits upon evaluating the ability of the counterparty to honour its obligationsin the event of crystallisation of the exposure. Appropriate credit covenants are stipulated where required, as triggerevents to call for collaterals or terminate a transaction and contain the risk. Further, to mitigate the current exposure innon-centrally cleared forex and derivative transactions, Bank has entered into Credit Support Annex (‘CSA’) agreementswith some of the major international counterparty banks and few Indian financial institutions.
The Bank, at the minimum, conforms to the RBI guidelines with regard to provisioning requirements. Overdue receivablesrepresenting crystallised positive mark to market value of a derivative contract are transferred to the account of theborrower and treated as non-performing assets, if these remain unpaid for 90 days or more. Full provision is madefor the entire amount of overdue and future receivables relating to positive marked to market value of non-performingderivative contracts.
• RBI vide its letter dated November 28, 2025, levied a penalty of ' 9,100,000 on the Bank for not adopting a uniformexternal benchmark within a loan category, for the Bank’s subsidiary undertaking a business not covered under Section6 of the Banking Regulation Act, 1949, and for outsourcing offline verification of KYC documents to Direct Selling Agents(DSAs), in contravention to the Reserve Bank Directions on ‘Interest Rate on Advances’, the Reserve Bank Guidelineson Managing Risks and Code of Conduct in Outsourcing of Financial Services read with provisions of Reserve Bank ofIndia (Know Your Customer (KYC)) Directions, and the provisions of the Banking Regulation Act, 1949.
The penalties have been paid by the Bank and has initiated / taken corrective measures, as necessary, to align theoperations / procedures in line with the applicable regulations.
During the year ended March 31, 2025, RBI has levied following penalties on the Bank:
• RBI vide its letter dated September 10, 2024 levied a penalty of ' 10,000,000 on the Bank for giving gifts to the depositorsat the time of accepting deposits, for opening certain savings accounts in the names of ineligible entities and for failureto ensure that customers are not contacted after 7 pm and before 7 am, in contravention to the Reserve Bank directionson ‘lnterest Rate on Deposits’ and ‘Recovery Agents engaged by Banks’.
• RBI vide its letter dated March 26, 2025 levied a penalty of ' 7,500,000 on the Bank for not categorising certain customersinto low, medium and high-risk category based on its assessment and risk perception and for allotting multiple customeridentification code to certain customers instead of a Unique Customer ldentification Code (UCIC) for each customer,which were in contravention to Reserve Bank directions on ‘Know Your Customer (KYC)’.
The penalties were paid by the Bank and initiated / took corrective measures, as necessary, to align the operations /procedures in line with the applicable regulations.
The Board of Directors of the Bank has constituted the Governance, Nomination and Remuneration Committee(hereinafter, the ‘GNRC’) for overseeing and governing the compensation policies of the Bank. The GNRC is comprisedof four non-executive directors as of March 31, 2026. Further, two members of the GNRC are also members of the RiskPolicy and Monitoring Committee (hereinafter, the ‘RPMC’) of the Board.
As of March 31,2026, the GNRC is comprised of Dr. Harsh Kumar Bhanwala, Mr. Sandeep Parekh, Mr. M.D. Ranganathand Mr. Keki Mistry. Further, Mr. M.D. Ranganath and Mr. Sandeep Parekh are also the members of the RPMC.Dr. Harsh Kumar Bhanwala is the chairperson of the GNRC.
The primary mandate of the GNRC is to actively oversee and review the implementation of compensation policy ofthe Bank. The GNRC periodically reviews the overall Remuneration Policy of the Bank with a view to attract, retainand motivate employees. In this capacity it is required to review and approve the design of the total compensationframework, including compensation strategy programs and plans, ensure alignment with prudent risk taking on behalfof the Board of Directors. The compensation structure and pay revision for the Group Heads, Material Risk Takers,Senior Management, Risk and Control Staff, Key Management Personnel and Whole Time Directors (who are alsoMaterial Risk Takers) of the Bank is approved by the GNRC and subsequently approved by the Board of Directors.The compensation of the Whole Time Directors requires the additional approval of the Reserve Bank of India. TheGNRC co-ordinates with the RPMC to ensure that compensation is aligned with prudent risk taking. Further, theGNRC also reviews the appointments of individuals at the levels of Group Heads, Key Management Personnel, SeniorManagement and Whole Time Directors of the Bank.
The Bank engaged with the following consultants during the year ended March 31, 2026:
1. AON Consulting Private Limited - in respect of the Bank’s annual salary market benchmarking exercise.
2. Deloitte Touche Tohmatsu India LLP - in respect of the Bank’s benchmarking exercise pertaining to executivecompensation and compensation philosophy.
3. Mercer Consulting (India) Private Limited - in the area of job evaluation.
4. Grant Thornton for Black Scholes Valuation of ESOPs and RSUs.
5. Willis Towers Watson - in respect of Bank’s annual salary market benchmarking exercise for C1 & above employees.
6. Overseas Legal Counsel (multiple consultants - OLN Law, Howard and Kennedy, ENS Africa, Al Tamini Allen &Gladhill) for employment related policies for the Bank’s presence outside India.
The Remuneration Policy of the Bank includes within its scope all business lines and functions, and all permanentstaff in the Bank’s domestic as well as international offices. The principles articulated in the compensation policy areapplicable uniformly across the Bank. However, any statutory/regulatory provisions applicable in overseas locationstake precedence over the Remuneration Policy of the Bank.
All permanent employees of the Bank except those covered under the long-term wage agreement is covered by the saidRemuneration Policy. The number of employees covered under the compensation policy was 2,10,969 as on March 31,2026 (previous year: 2,14,308, i.e. as on March 31, 2025).
I. Key Features and Objectives of Remuneration Policy
The Bank’s Remuneration Policy (the ‘Policy’) is aligned to business strategy, market dynamics, internal characteristicsand complexities within the Bank. The ultimate objective of the Policy is to provide a fair and transparent structurethat helps in acquiring and retaining the talent pool critical to build competitive advantage and brand equity. ThePolicy has been designed basis the principles for sound compensation practices in accordance with regulatoryrequirements and provides a framework to create, modify and maintain appropriate compensation programs andprocesses with adequate supervision and control.
The Bank’s performance management system provides a sound basis for assessing employee performanceholistically. The Bank’s compensation framework is aligned with the performance management system anddifferentiates pay appropriately amongst its employees based on degree of contribution, performance, skill,experience, grade and availability of talent owing to competitive market forces. Further, the Bank also considerscompliance to processes, regulatory compliance and risk management as an integral part of its performanceappraisal process. These factors are given due weightage for the purposes of the final performance rating ofemployees for a given performance year.
The GNRC considers the aforementioned principles enunciated in the Bank’s compensation policy and ensures that:
(a) the compensation is adjusted for all types of prudent risk taking;
(b) compensation outcomes are symmetric with risk outcomes;
(c) compensation payouts are sensitive to the time horizon of risk; and
(d) the mix of cash, equity and other forms of compensation are aligned with risk.
In line with Annual Review of the Compensation Policy for the Bank, the same was proposed by the Bank to the GNRCwith the proposal of changes basis observations of Audit on specific inclusions.
This was reviewed and approved by the GNRC during the year ended March 31, 2026, vide GNRC dated February25, 2026.
The design and structure of remuneration in accordance with the RBI guidelines dated November 4, 2019, for thefinancial year ended March 31, 2026, is as follows:
The Remuneration Policy ensures that the fixed component of the compensation is reasonable, taking into accountall relevant factors including industry practice.
The fixed pay component of the Bank’s compensation structure typically consists of elements such as base salary,allowances, perquisites and retirement benefits. Perquisites extended are in the nature of company car, companyleased accommodation, club membership and such other benefits or allowances in lieu of such perquisites/ benefits. Retirement benefits include contributions to Provident Fund, Superannuation Fund (for employeesabove certain job bands), National Pension Scheme and Gratuity. The Bank also provides pension to certainemployees of the erstwhile Lord Krishna Bank (eLKB) under the Indian Banks’ Association (‘IBA’) structure.
The fixed pay is primarily determined by taking into account factors such as the job size, performance, experience,location, market competitiveness of pay and is designed to meet the following key objectives of:
(a) fair compensation given the role complexity and size;
(b) fair compensation given the individual’s skill, competence, experience and market pay position;
(c) contribution to post retirement benefits; and
(d) compliance with all statutory obligations.
The quantum of fixed pay for the Top Management i.e., Employees in Executive Vice President and above grades,who are Material Risk Takers (including the Whole Time Directors), Risk and Control Staff and Key ManagementPersonnel are approved by the GNRC and the Board.
The quantum of fixed pay for Whole Time Directors is approved by the GNRC and the Board, and is subject to theapproval of the RBI.
The performance management system forms the basis for variable pay allocation of the Bank. The RemunerationPolicy of the Bank ensures that the performance management system is comprehensive and considers both,quantitative and qualitative performance measures.
The variable pay will be in the form of share linked instruments or a mix of cash and share linked instruments.The share linked instrument used in the financial year 2025-26 was the Employee Stock Options. All plans forgrant of options are framed in accordance with the SEBI guidelines, 1999 as amended from time to time andare approved by the shareholders of the Bank. These plans provide for the grant of options post approval bythe GNRC. For the Whole Time Directors, the variable pay is approved by the GNRC, Board and the ReserveBank of India.
The Bank will ensure that there is a proper balance between Fixed Pay and Variable Pay. In cases wherecompensation by way of share-linked instruments is not permitted by law / regulations, the entire variable paywill be in cash.
For the Material Risk Takers including the Whole Time Directors, a substantial portion of compensation i.e. atleast 50% will be variable and paid on the basis of individual, business-unit and organization performance.This will be in line with the principle that, at higher levels of responsibility, the proportion of variable pay will behigher. The total variable pay shall be limited to a maximum of 300% of the fixed pay (for the relative performanceperiod).
In case the variable pay is up to 200% of the fixed pay, a minimum of 50% of the variable pay; and in case thevariable pay is above 200%, a minimum of 67% of the variable pay shall be via non-cash instruments. The non¬cash component in 2025-26 comprised of Employee Stock Options.
In the event that the employee is barred by statute or regulation from grant of share-linked instruments, his/hervariable pay will be capped at 150% of fixed pay but shall not be less than 50% of the fixed pay.
For the Risk and Control staff, their Total Compensation is weighed in favor of Fixed Pay.
For top management including Whole Time Directors (WTDs) and Material Risk Takers (MRTs), deferralarrangements exist for the variable pay. A minimum of 60% of total variable pay is under deferral arrangements.If cash component is a part of the variable pay, at least 50% of the cash bonus is deferred. In cases where cashcomponent of the bonus is under ' 25 lakh, deferral arrangements is not necessary.
The deferral period is a minimum of three years and is applicable to both cash and non-cash components ofvariable pay. The deferral period for share linked instruments / ESOPs / RSUs is governed by the ESOP / RSUScheme Rules which is approved by the GNRC and the Board. In 2025-26, the deferment of variable pay,wherever applicable, was at least 3 years.
The deferred portion of the remuneration vests at the end of deferral period and is spread out over the courseof the deferral period. The first vesting is not before one year from the commencement of the deferral period.The vesting is no faster than on a pro rata basis and the frequency of the vesting is more than a year in order toensure appropriate assessment of risk.
The Bank believes in sustained business performance in tandem with prudent risk taking. The Bank, therefore,has devised appropriate deterrents in order to institutionalize the aforementioned commitment.
Malus Arrangement: The provision of a Malus arrangement would entail cancellation of payout for the deferredportion of reward (cash variable pay / long term incentive (LTI) i.e., any Share Linked Instrument). The RBIguidelines thus define malus as “A malus arrangement permits the bank to prevent vesting of all or part of theamount of a deferred remuneration. Malus arrangement does not reverse vesting after it has already occurred.”
Clawback Arrangement: The provision of Clawback arrangement would entail return of payout of reward (cashvariable pay / long term incentive (LTI) i.e., any Share Linked Instrument) made in the previous years attributableto a given reference year wherein the incident has occurred. The return would be in terms of net amount. The RBIthus define clawback as “A clawback is a contractual agreement between the employee and the bank in whichthe employee agrees to return previously paid or vested remuneration to the bank under certain circumstances.”
The malus and clawback clause will be actioned when the employee demonstrates behaviour involving fraudulentbehaviour, moral turpitude, lack of integrity, flagrant breach of company policies and statutory norms resultingin financial or non-financial losses. Manifestation of behaviour listed above is presumed to have a malafideintent. Illustrative list of conditions is enumerated below. The occurrence of any / some / all of the followingconditions / events shall trigger a review by the GNRC for the application of the Malus or the Clawbackarrangement:
a) Substantial Financial Deterioration in profitability or risk parameters
b) Reckless, negligent or willful actions or exhibited inappropriate values and behavior
c) Fraud that requires a financial restatement
d) Reputational harm
e) Exposing the bank to substantial risk
f) Such other conditions or events, of similar nature as above, as determined by GNRC for triggering reviewby GNRC for the purpose of application of the Malus or the Clawback arrangement
In determining the causes for deterioration in financial performance under (a), the GNRC may take intoconsideration and have due regard to the fact whether the deterioration was for factors within control orwhether it was on account of conditions like global market headwinds, industry performance, changes in legal/ regulatory regime, force majeure events like occurrence of natural disasters, pandemic, other socio-economicconditions etc.
While undertaking the review for the concerned person for the application of the Malus or the Clawbackarrangement based on any trigger events, when determining accountability of the concerned person, the GNRCshall be guided by the principles of proportionality, culpability or proximity or nexus to the event or misconduct.
In accordance with the RBI guidelines, wherever the assessed divergence in Bank’s provisioning for Non¬Performing Assets (NPAs) or asset classification exceeds the prescribed threshold for public disclosure, theBank shall not pay the unvested portion of the variable compensation for the assessment year under ‘malus’arrangement. Further, in such situations, no proposal for increase in variable pay (for the assessment year)shall be entertained. In case the Bank’s post assessment Gross NPAs are less than 2.0%, these restrictionswill apply only if criteria for public disclosure are triggered either on account of divergence in provisioning orboth provisioning and asset classification.
The GNRC may decide to apply malus on part, or all of the variable pay. The time horizon for the application ofmalus / clawback clause shall be four years from the date of reward.
The GNRC shall review the act of misconduct / incident to ascertain the degree of accountability attributableto a Whole Time Director / Material Risk Taker / Top Management (Job Bands C1 and above) prior to applyingthe Malus or Clawback arrangement.
The criteria for Malus / Clawback will be reviewed by the Governance, Nomination and RemunerationCommittee annually.
The GNRC and Board of Directors has also approved an addendum to the compensation policy on Clawbackof Incentive Compensation in view of the final rules on listing standards for the recovery of erroneously awardedcompensation adopted by the Securities and Exchange Commission on October 26, 2022, applicable tocompanies listed on the New York Stock Exchange and NASDAQ.
This addendum shall be read with, and is in addition to, the Compensation Policy formulated and approved bythe Board of Directors of the Bank. The same has been formulated to comply with the requirements of Section10D promulgated under the U.S. Securities Exchange Act of 1934, as amended (“Exchange Act”), and Section303A.14 of the NYSE so as to recover certain compensation in the event of an accounting restatement due to anymaterial non-compliance relating to any financial reporting requirements under the applicable U.S. securitieslaws, and shall be interpreted and applied consistent therewith.
The Variable Pay for Senior Management, who are Material Risk Takers (including the Whole Time Directors)Risk and control staff is approved by the GNRC and the Board. For Whole Time Directors the variable pay isapproved by the GNRC, Board and the Reserve Bank of India.
The Bank has formulated the following variable pay plans:
The quantum of variable payout is a function of the performance of the Bank, performance of thebusiness unit, performance of the individual employee, job band of the employee and the functionalcategory. Basis these key determinants and due adjustment for risk alignment, a payout matrix forvariable pay is developed. Market trends for specific businesses / functions along with inputs fromcompensation surveys may also be used in finalizing the payout.
Bonus pools are designed to meet specific business needs therefore resulting in differentiation in boththe quantum and the method of payout across functions.
PLPs are formulated for employees in sales, collections, customer service and relationship roles whoare given business / service targets but have limited impact on risk since credit decisions are exercisedindependent of these functions. All PLP payouts are based on a balanced scorecard framework whichfactors not just quantitative, but also qualitative measures, and are subject to achievement of individualtargets enumerated in the respective scorecards of the employees. A portion of the PLP payouts isdeferred till the end of the financial year to provide for any unforeseen performance risks. Employees whoare on the PLPs for the entire financial year are excluded from the Annual Bonus Plan.
Employees in Job Bands D4 and above also receive ESOPs as a vehicle to create a balance betweenshort term rewards and long term sustainable value creation. ESOPs play a key role in the attraction andretention of key talent.
The GNRC grants options after considering parameters such as the incumbent’s grade and performancerating, and such other factors as may be deemed appropriate by the GNRC.
All plans for grant of options are framed in accordance with the SEBI guidelines, 1999 as amended fromtime to time and are approved by the shareholders of the Bank. These plans provide for the grant of optionspost approval by the GNRC.
The Bank grants ESOPs to eligible employees. Such ESOPs vest over four tranches spread over a periodof 48 months.
In accordance with the RBI guidelines, Employee Stock Options is included as part of Variable Pay.
The Bank granted RSUs to employees at E3 - D3 bands (up to 10 levels below the MD). The same wasapproved by the GNRC after considering parameters such as the employee’s grade, performance ratingand any other factors as may be deemed appropriate by the GNRC.
RSUs are granted based on one or more of the pre-defined performance cond itions as may be determined bythe GNRC on a case-to-case basis: Organization performance basis factors such as, i) Total Shareholders’Return ii) Asset Quality iii) Return on Asset iv) Profitability v) Return on Equity vi) Relative performancevis-a-vis peers, Business Unit Performance and individual performance.
All plans for grant of units are framed in accordance with the SEBI guidelines, 1999 as amended from timeto time and are approved by the shareholders of the Bank. These plans provide for the grant of units postapproval by the GNRC.
Such units vest over three to four tranches spread over a period of 36 to 48 months.
The Bank has separated the Risk, Control and Compliance functions from the Business functions inorder to create a strong culture of checks and balances and to eliminate any possible conflict of interestbetween revenue generation and risk management and control. Accordingly, the overall variable pay aswell as the annual salary increment of the employees in the Risk, Control and Compliance functions isbased on their performance, functional objectives and goals. The Bank ensures that the mix of fixed tovariable compensation for these functions is weighted in favor of fixed compensation.
Guaranteed bonuses are not consistent with sound risk management or pay for performance principlesof the Bank and therefore do not form an integral part of the general compensation practice.
For critical hiring for some select strategic roles, the Bank may consider granting of bonus, based on theperformance rating upon confirmation, as a prudent way to avoid loading the entire cost of attraction intothe fixed component of the compensation which could have a long term cost implication for the Bank.For such hiring, the said bonus is generally decided by taking into account appropriate risk factors andmarket conditions.
For hiring at levels of Whole Time Directors / Managing Director / Material Risk Takers and certain employeesin select strategic roles, a sign-on bonus, if any, is limited to the first year only and would be in the form ofEmployee Stock Options or Units.
Joining / Sign-On Bonus in the form of RSUs were granted to select employees in FY 2025-26 - however,as per the RBI Guidelines dated November 04, 2019, such Bonus are neither considered part of Fixed Paynor part of Variable Pay. The Bank grants such bonus to employees in line with the Compensation Policyof the Bank, post approval by the GNRC.
The Bank does not grant severance pay other than accrued benefits (such as gratuity, pension) except incases where it is mandated by any statute.
The Bank does not provide any facility or fund or permit its Whole Time Directors and employees to insure or hedgetheir compensation structure to offset the risk alignment effects embedded in their compensation arrangement.
Some employees are also paid statutory bonus as per the Payment of Bonus Act, 1965 as amended from timeto time.
Pay scales at the Bank are set basis the job size, experience, location and the academic and professional credentialsof the incumbent.
The compensation of new hires is in line with the existing pay ranges and consistent with the compensation levelsof the existing employees of the Bank at similar profiles. The pay ranges are subject to change basis market trendsand the Bank’s talent management priorities. While the Bank believes in the internal equity and parity as a keydeterminant of pay, it does acknowledge the external competitive pressures of the talent market. Accordingly,there could be certain key profiles with critical competencies which may be hired at a premium and treated as anexception to the overall pay philosophy. Any deviation from the defined pay ranges is treated as a hiring exceptionrequiring approval with appropriate justification.
The Bank strives to ensure external competitiveness as well as internal equity without diluting the overall focus onoptimizing cost. In order to enhance the Bank’s external competitiveness, it participates in an annual salary survey ofthe banking sector to understand key market trends as well as get insights on relative market pay position comparedto peers. The Bank endeavors to ensure that most employees progress to the median of the market in terms of fixedpay over time. This coupled with key internal data indicators like performance score, job family, experience, jobgrade and salary budget form the basis of decision making on revisions in fixed pay.
Increments in fixed pay for majority of the employee population are generally undertaken once every financial year.However, promotions, confirmations and change in job dimensions could also lead to a change in the fixed payduring other times of the financial year.
The Bank also makes salary corrections and adjustments during the financial year for competitive pay positioningfor the purpose of retention of critical skills and critical talent in the domain of Information Technology, Digital,Information Security, Data Science as well as other segments that are strategic focus areas of the Bank. However,such pay revisions are done on a need basis.
The Fixed Pay for the Material Risk Takers (other than Whole Time Directors), Senior Management, Key ManagementPersonnel is approved by the GNRC and the Board. The Fixed Pay for the Whole Time Directors is approved by theGNRC, Board and the Reserve Bank of India.
The Bank takes into account various types of risks in its remuneration processes. The Bank follows a comprehensiveframework that includes within its ambit the key dimensions of remuneration such as fixed pay, variable pay and longterm incentives (i.e., Employee Stock Options).
Fixed pay: The Bank conducts a comprehensive market benchmarking study to ensure that employees are competitivelypositioned in terms of fixed pay. The Bank follows a robust salary review process wherein revisions in fixed compensationare based on performance. The Bank also makes salary adjustments taking into consideration pay positioning ofemployees vis-a-vis market reference points. Through this approach the Bank endeavors to ensure that the talentrisk due to attrition is mitigated. Fixed pay could be revised downwards as well, in the event of certain proven cases ofmisconduct by an employee.
Variable pay: The Bank has distinct types of variable pay plans as given below:
All quarterly / monthly PLP plans are based on the principle of balanced scorecard framework that includes withinits ambit both quantitative and qualitative factors including key strategic objectives that ensure future competitiveadvantage for the Bank. PLP plans, by design, have deterrents that play a role of moderating payouts based on thenon-fulfillment of established quantitative / qualitative risk factors. Deterrents also include risks arising out of non¬compliance, mis-sell etc. Further, a portion of all payouts under the PLP plans is deferred till the end of the financialyear to provide for any unforeseen performance risks. Employees who are part of the PLP plans for the entire financialyear are excluded from the Annual Bonus Plan.
The Bank takes into consideration the fact that a portion of the Bank’s profits are directly attributable to various typesof risks the Bank is exposed to such as credit risk, operational risk, market risk etc.
The framework developed by the Bank in order to arrive at the quantum of bonus pool is based on the performance ofthe Bank and profitability. The annual variable pay is distributed based on business unit and individual performanceand job band and role of the individual for non-business functions. The business unit performance is based on factorssuch as growth in revenue, growth in profit, improvement in cost to income ratio, improvement in Gross NPA, Keyobjectives met. Bonus pay out for an individual employee in a particular grade is linked to the performance ratingof the employee and subject to meeting the Bank’s standards of ethical conduct.
The Bank has devised appropriate malus and clawback clauses as a risk mitigant for Whole Time Directors, MaterialRisk Takers, Senior Management (i.e. Employees in the job Bands of Executive Vice President and above). Under themalus clause the incumbent could forego the vesting of the deferred variable pay in full or in part. Under the clawbackclause the incumbent is obligated to return all the tranches of variable pay payout pertaining to the referenceperformance year. The deferred variable pay is paid out post review and approval by the GNRC and the Board.
D. Description of the ways in which the Bank seeks to link performance during a performance measurementperiod with levels of remuneration
The Bank has a robust performance management system for evaluating the performance of its Whole Time Directors.The performance appraisal system is based on a Balanced Scorecard Framework and considers qualitative as well asquantitative factors of performance which includes the parameters at overall organization level and at Target BusinessLevel. Following is an illustrative list of few which are covered in the Balanced Scorecards of Whole Time Directors.
1. Business Performance - This includes business growth, profitability, asset quality and shareholder value.
2. Risk, Audit and Compliance - This includes internal reports, audit reports and compliance with the regulationsRBI inspection.
3. Digital Transformation - This includes performance on initiatives required to run the Bank and grow the Bank.
4. People Excellence - This includes succession planning and employee attrition.
The above list is not exhaustive.
While the above parameters form the core evaluation parameters for the Bank and the remuneration of its Whole TimeDirectors, each of the business units are measured on the following from a remuneration standpoint:
a) Growth in Net Revenue (%) over previous year;
b) Growth in Profit Before Tax (%) over previous year;
c) Improvement in Cost to Income over the previous year;
d) Improvement in Gross NPA over the previous year and
e) Achievement of Key Strategic Objectives.
The process by which levels of remuneration in the Bank are aligned to the performance of the Bank, business unit andindividual employees is articulated below:
The Bank reviews the fixed pay portion of the compensation structure basis merit-based increments and marketcorrections. These are based on a combination of performance rating, job band and the functional category of theindividual employee. For a given job band, the merit increment is directly related to the performance rating of an employee.The Bank strives to ensure that most employees progress to the median of the market in terms of fixed pay over time.All other things remaining equal, the correction percentage is directly related to the tenure and performance rating ofthe individual. Multiple factors such as past Performance Ratings, Job Size of the position etc, are considered to takedecisions on employee promotions which also results into increase in an employees Fixed Pay.
Basis the performance of the business unit, individual performance and role, the Bank has formulated the following variablepay plans:
For Employees in Job Bands of Sr Vice President I and Above (includes employees in Senior Management, MaterialRisk Takers, Whole Time Directors, Risk & Control staff) the variable pay intends to reward short term as well as longterm sustained performance of the Bank and shareholder value creation.
Short term Performance: Short term performance is realized in the form of cash variable pay. The cash variablepay is based on performance rating and the job band of the individual and is further enhanced or moderated by thebusiness performance multiplier and role. The cash variable pay is computed on the gross salary.
Long term Performance: Employee Stock Options are granted to employees based on their performance rating andjob band and the value of the same is realized vide long term performance of the Bank and creation of shareholdervalue. The units granted vest over multiple years.
For Employees in job bands Vice President and below:
At these levels the variable pay is primarily in the form of cash variable pay and is based on the annual performance.In FY 2025-26, the Bank granted RSUs at E3-D3 bands based on their performance rating, grade and any other suchparameter as approved by the GNRC.
The Bank’s annual bonus is computed as a percentage of the gross salary for every job band. The bonus multipleis based on performance of the business unit (based on the parameters mentioned above, wherever applicable),individual performance rating, job band and the functional category of the individual employee. The businessperformance category determines the multiplier for the bonus. All other things remaining equal, for a given jobband, the bonus is directly related to the performance rating. Employees who are part of the annual cash VariablePay plan for the entire financial year are not part of the Performance Linked Plans mentioned below.
The Bank has formulated PLPs for its sales, collections, customer service and relationship roles who are givensales, collections and service targets basis a balanced scorecard methodology. All PLP payouts are subject to theachievement of individual targets enumerated in the respective scorecards of the employees and moderated byqualitative parameters. A portion of the PLP payouts is deferred till the end of the financial year to provide for anyunforeseen performance risks. All PLPs are based on a balanced scorecard framework and, depending on the plan,could be paid out monthly or quarterly.
For employees in Senior Management, Material Risk Takers including Whole Time Directors, and Risk & Control staff theBank seeks the Bank seeks to adjust remuneration to take account of the longer term performance in the following way.
For Material Risk Takers including the Whole Time Directors, a substantial portion of compensation i.e., at least 50%will be variable and paid on the basis of individual, business-unit and organization performance as applicable. Thiswill be in line with the principle that, at higher levels of responsibility, the proportion of variable pay will be higher. Thetotal variable pay shall be limited to a maximum of 300% of the fixed pay.
In case the variable pay is up to 200% of the fixed pay, a minimum of 50% of the variable pay; and in case thevariable pay is above 200%, a minimum of 67% of the variable pay shall be via non-cash instruments. The non-cashcomponent in 2025-26 comprised of Employee Stock Options.
In the event that the employee is barred by statute or regulation from grant of share-linked instruments, his / hervariable pay will be capped at 150% of fixed pay but shall not be less than 50% of the fixed pay.
For top management including Whole Time Directors (WTDs) and Material Risk Takers (MRTs), deferral arrangementswill exist for the variable pay. A minimum of 60% of total variable pay will be under deferral arrangements. If cashcomponent is a part of the variable pay, at least 50% of the cash bonus shall be deferred. In cases where cashcomponent of the bonus is under ' 25 lakh, deferral arrangements would not be necessary.
The deferral period would be a minimum of three years and will be applicable to both cash and non-cash componentsof variable pay. The deferral period for share linked instruments / ESOPs will be governed by the ESOP SchemeRules which will be approved by the GNRC and the Board. In FY 2025-26, the deferment of variable pay, whereverapplicable, was at least 3 years.
The deferred portion of the remuneration will vest at the end of deferral period and will be spread out over the courseof the deferral period. The first vesting would not be before one year from the commencement of the deferral period.The vesting would be no faster than on a pro rata basis and the frequency of the vesting would be more than a yearin order to ensure appropriate assessment of risk.
The Bank believes in sustained business performance in tandem with prudent risk taking. The Bank, therefore, hasdevised appropriate deterrents in order to institutionalize the aforementioned commitment.
Malus Arrangement: The provision of a Malus arrangement would entail cancellation of payout for the deferredportion of reward (cash variable pay / long term incentive (LTI) i.e., any Share Linked Instrument). The RBI guidelinesthus define malus as “A malus arrangement permits the bank to prevent vesting of all or part of the amount of adeferred remuneration. Malus arrangement does not reverse vesting after it has already occurred.”
Clawback Arrangement: The provision of Clawback Arrangement would entail return of payout of reward (cashvariable pay / long term incentive (LTI) i.e., any Share Linked Instrument) made in the previous year’s attributableto a given reference year wherein the incident has occurred. The return would be in terms of net amount. TheRBI guidelines thus define clawback as “A clawback is a contractual agreement between the employee and thebank in which the employee agrees to return previously paid or vested remuneration to the bank under certaincircumstances.”
The malus and clawback clause will be actioned when the employee demonstrates behavior involving fraudulentbehavior, moral turpitude, lack of integrity, flagrant breach of company policies and statutory norms resultingin financial or non-financial losses. Manifestation of behavior listed above is presumed to have a malafideintent. Illustrative list of conditions is enumerated below. The occurrence of any / some / all of the followingconditions / events shall trigger a review by the GNRC for the application of the Malus or the Clawback arrangement:
a) Substantial financial deterioration in profitability or risk parameters
f) Such other conditions or events, of similar nature as above, as determined by GNRC for triggering review byGNRC for the purpose of application of the Malus or the Clawback arrangement
In determining the causes for deterioration in financial performance under (a), the GNRC may take into considerationand have due regard to the fact whether the deterioration was for factors within control or whether it was on accountof conditions like global market headwinds, industry performance, changes in legal / regulatory regime, force majeureevents like occurrence of natural disasters, pandemic, other socio-economic conditions etc.
While undertaking the review for the concerned person for the application of the Malus or the Clawback arrangementbased on any trigger events, when determining accountability of the concerned person, the GNRC shall be guidedby the principles of proportionality, culpability or proximity or nexus to the event or misconduct.
In accordance with the RBI guidelines, wherever the assessed divergence in bank’s provisioning for Non-PerformingAssets (NPAs) or asset classification exceeds the prescribed threshold for public disclosure, the bank shall not paythe unvested portion of the variable compensation for the assessment year under ‘malus’ arrangement. Further,in such situations, no proposal for increase in variable pay (for the assessment year) shall be entertained. In casethe bank’s post assessment Gross NPAs are less than 2.0%, these restrictions will apply only if criteria for publicdisclosure are triggered either on account of divergence in provisioning or both provisioning and asset classification.
The GNRC may decide to apply malus on part, or all of the unvested deferred Variable pay. The time horizon for theapplication of malus / clawback clause shall be four years from the date of reward.
The GNRC shall review the act of misconduct / incident to ascertain the degree of accountability attributable toa Whole Time Director / Material Risk Taker / Senior Management (C1 and above) prior to applying the Malus orClawback arrangement.
The GNRC and Board of Directors has also approved an addendum to the compensation policy on Clawbackof Incentive Compensation in view of the final rules on listing standards for the recovery of erroneously awardedcompensation adopted by the Securities and Exchange Commission on October 26, 2022, applicable to companieslisted on the New York Stock Exchange and NASDAQ.
This addendum shall be read with, and is in addition to, the Compensation Policy formulated and approved by theBoard of Directors of the Bank. The same has been formulated to comply with the requirements of Section 10Dpromulgated under the U.S. Securities Exchange Act of 1934, as amended (“Exchange Act”), and Section 303A.14of the NYSE so as to recover certain compensation in the event of an accounting restatement due to any materialnon-compliance relating to any financial reporting requirements under the applicable U.S. securities laws, and shallbe interpreted and applied consistent therewith.
Employees other than Whole Time Directors, Material Risk Takers and Senior Management
The quantum of variable payout is a function of the performance of the Bank, performance of the individualemployee, job band of the employee and the functional category. Basis these key determinants and dueadjustment for risk alignment, a payout matrix for variable pay is developed. Market trends for specificbusinesses / functions along with inputs from compensation surveys may also be used in finalizing the payout.
Bonus pools are designed to meet specific business needs therefore resulting in differentiation in both thequantum and the method of payout across functions. Typically, higher levels of responsibility receive a higherproportion of variable pay vis-a-vis fixed pay.
For Employees in Job Bands of Sr Vice President I and Above (includes employees in Senior Management,Material Risk Takers, Whole Time Directors, Risk & Control staff) the variable pay intends to reward short termas well as long term sustained performance of the Bank and shareholder value creation.
Short term Performance: Short term performance is realized in the form of cash variable pay. The cash variablepay is based on performance rating and the job band of the individual and is further enhanced or moderatedby the business performance multiplier and role. The cash variable pay is computed on the gross salary.
Long term Performance: Employee Stock Options are granted to employees based on their performance ratingand job band and the value of the same is realized vide long term performance of the Bank and creation ofshareholder value. The units granted vest over multiple years.
For Employees in job bands Vice President and below: At these levels the variable pay is primarily in the formof cash variable pay and is based on the annual performance. In FY 2025-26, the Bank granted RSUs at E3-D3bands based on their performance rating, grade and any other such parameter as approved by the GNRC.
The Bank has formulated PLPs for its sales, collections, customer service and relationship roles who are givensales, collections and service targets basis a balanced scorecard methodology. All PLP payouts are subject tothe achievement of individual targets enumerated in the respective scorecards of the employees and moderatedby qualitative parameters. A portion of the PLP payouts is deferred till the end of the financial year to provide forany unforeseen performance risks. All PLPs are based on a balanced scorecard framework and, depending onthe plan, could be paid out monthly or quarterly.
The Bank recognises the importance of variable pay in reinforcing a pay for performance culture. Variable pay stimulatesemployees to stretch their abilities to exceed expectations.
These are paid to reward performance for a given financial year. This covers all employees (excluding employeesunder PLPs for the entire financial year). This is based on performance of the business unit, performance rating,job band and functional category of the individual. For higher job bands the proportion of variable pay to totalcompensation tends to be higher. For Material Risk Takers, Senior Management and Whole Time Directors 50% ofthe cash variable pay is deferred over 3 years in the event the cash variable pay exceeds ' 25 lakhs.
This is to reward for contribution of employees in creating a long term, sustainable earnings and enhancing shareholdervalue. Only employees in a certain job bands and with a specific performance rating are eligible for stock options.Performance is the key criteria for granting stock options.
The Bank granted Restricted Stock Units (Units) to employees at E3-D3 bands in FY 2025-26. The units would vestover 3 to 4 years.
The quantitative disclosures for the financial year ended March 31, 2026 cover the Bank’s Whole Time Directors andMaterial Risk Takers. The material risk takers are identified in accordance with the revised guidelines on remunerationissued by the RBI on November 04, 2019. Hitherto, the quantitative disclosures would cover the Bank’s Whole TimeDirectors and Key Risk Takers as per the erstwhile guidelines on remuneration dated January 13, 2012.
Commission income for the year ended March 31,2026 includes fees of ' 5,687.53 crore (previous year: ' 5,026.97 crore)in respect of life insurance business and ' 1,239.69 crore (previous year: ' 1,281.30 crore) in respect of general insuranceand health insurance business.
Commission income for the year ended March 31, 2026 includes income from marketing and distribution of ' 1,266.58crore (previous year: ' 1,629.86 crore), which comprises of income for displaying publicity materials at the Bank’sbranches / ATMs, commission on mutual funds, pension and other investment / saving products and sourcing andreferral income.
The Bank enters into transactions for the sale or purchase of Priority Sector Lending Certificates (PSLCs). In the case ofa sale transaction, the Bank sells the fulfilment of priority sector obligation and in the case of a purchase transactionthe Bank buys the fulfilment of priority sector obligation through RBI trading platform. There is no transfer of risks orloan assets in such transactions. The details of purchase / sale of PSLCs during the year are as under:
The Ministry of Corporate Affairs, in its press release dated January 18, 2016, had issued a roadmap for implementationof Indian Accounting Standards (IND-AS) for scheduled commercial banks, insurers / insurance companies and non¬banking financial companies, which was subsequently confirmed by the RBI through its circular dated February 11,2016. This roadmap required these institutions to prepare IND-AS based financial statements for the accounting periodsbeginning April 01, 2018 with comparatives for the periods ending March 31, 2018. The implementation of IND-AS bybanks requires certain legislative changes in the format of financial statements to comply with the disclosures requiredunder IND-AS. In April 2018, the RBI deferred the implementation of IND-AS by a year by when the necessary legislativeamendments were expected. The legislative amendments recommended by the RBI are under consideration by theGovernment of India. Accordingly, the RBI, through its circular dated March 22, 2019, deferred the implementation ofIND-AS until further notice.
Presently, the Bank prepares and submits its IND-AS Proforma information to the RBI on a half yearly basis. The Bankis well prepared for IND-AS implementation as and when it becomes applicable, with due consideration to updatedregulations, accounting standards / guidance and business strategy at the date of actual transition.
The RBI, vide its circular dated September 12, 2023 revised the norms on classification, measurement and valuationof investments, in view of the significant development in the global standards. These norms are closer to IND-AS. TheBank has implemented the revised norms with effect from April 01, 2024.
The Bank has not issued Letter of Comfort during the year ended March 31, 2026 and March 31, 2025 and there is nooutstanding as at March 31, 2026 and March 31, 2025.
The Bank has not raised green deposits on or after June 01, 2023 based on the framework for the acceptance ofgreen deposits issued by RBI.
• The Bank held provisions towards standard assets amounting to ' 11,620.77 crore as at March 31, 2026 (previousyear: ' 10,862.90 crore). These are included under other liabilities.
S Provision for standard assets is made @ 0.25% for direct advances to agriculture, individual housing loans and Smalland Micro Enterprises (SMEs) sectors, @ 1% for advances to commercial real estate sector, @ 0.75% for advancesto commercial real estate - residential housing sector, @ 5% on restructured standard advances, @ 2% until afterone year from the date on which the rates are reset at higher rates for housing loans offered at a comparatively lowerrate of interest in the first few years and @ 2% on all exposures to the wholly owned step down subsidiaries of theoverseas subsidiaries of Indian companies, sanctioned / renewed after December 31,2015.
S Provision is maintained at rates higher than the regulatory minimum, on standard advances based on evaluation ofthe risk and stress in various sectors as per the policy approved by the Board of the Bank.
S In accordance with regulatory guidelines and based on the information made available by its customers to the Bank,for exposures to customers who have not hedged their foreign currency exposures, provision for standard assetsis made at levels ranging from 0.10% to 0.80% depending on the likely loss the entities could incur on account ofexchange rate movements.
S Provision for standard assets of overseas branches is made at higher of rates prescribed by the overseas regulatoror RBI.
S For all other loans and advances including credit exposures computed as per the current marked to market valuesof interest rate and foreign exchange derivative contracts, provision for standard assets is made @ 0.40%.
• Other liabilities include contingent provisions of ' 16,395.59 crore as at March 31,2026 (previous year: ' 14,219.29 crore)in respect of advances and investments. Further, inter office adjustments is Nil as at March 31,2026 (previous year: Nil).
• The Bank has presented gross unrealised gain on foreign exchange and derivative contracts under other assets andgross unrealised loss on foreign exchange and derivative contracts under other liabilities. Accordingly, other liabilities asat March 31, 2026 include unrealised loss on foreign exchange and derivative contracts of ' 55,890.98 crore (previousyear: ' 14,079.86 crore).
• Unrealised loss on foreign exchange and derivative contracts exceeded 1% of total assets as at March 31,2026 reportedunder Other Liabilities and Provisions “Others (including provisions)”. There was no item under Other Liabilities andProvisions “Others (including provisions)” exceeding 1% of total assets as at March 31, 2025.
Interest income under the sub-head Income on investments includes dividend on units of mutual funds and equity andpreference shares received during the year ended March 31,2026 amounting to ' 1,832.82 crore (previous year: ' 2,073.95crore).
Commission, exchange and brokerage income is presented net of related commission expenses.
During the year ended March 31, 2026, the Bank’s subsidiary company, HDB Financial Services Limited (“HDBFS”)launched its initial public offering (“IPO”), comprised of a fresh issuance of equity shares aggregating to ' 2,500.00 croreand an offer for sale (“OFS”) of equity shares by the Bank, aggregating to ' 10,000.00 crore. Under the OFS, the Bankdivested 13,51,35,135 equity shares of ' 10/- each of HDBFS at ' 740/- per share, for a consideration aggregating to' 10,000.00 crore. Consequently, the net gain to the Bank on sale of shares under the OFS is ' 9,179.40 crore (before taxand net of IPO related expenses).
Miscellaneous income includes recoveries from written-off accounts amounting to ' 4,014.44 crore (previous year:' 3,785.01 crore) exceeding 1% of the total income of the Bank.
The guidance note on AS 15, Employee Benefits, states that employer established provident funds, where interest is guaranteedare to be considered as defined benefit plans and the liability has to be valued. The Institute of Actuaries of India (IAI) has issueda guidance note on valuation of interest rate guarantees on exempt provident funds. The actuary has accordingly valued thesame and the Bank held a provision of Nil as at March 31,2026 (previous year: Nil), towards the present value of the guaranteedinterest benefit obligation. The actuary has followed the deterministic approach as prescribed by the guidance note.
The Bank does not have any unfunded defined benefit plan. The Bank contributed ' 809.03 crore (previous year: ' 750.43crore) to the provident fund, ' 51.30 crore (previous year: ' 21.00 crore) to the National Pension Scheme (for employees whoopted) and ' 97.94 crore (previous year: ' 95.95 crore) to the superannuation plan.
On November 21,2025, the Government of India notified four Labour Codes - the Code on Wages, 2019, the Industrial RelationsCode, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020,collectively referred to as the ‘New Labour Codes’, consolidating 29 existing labour laws. The Ministry of Labour & Employmenthas published draft Central Rules and FAQs on December 30, 2025, to facilitate assessment of the financial impact arising fromthese regulatory changes. Accordingly, the Bank has recognised an estimated incremental impact of ' 800.00 crore underSchedule 16 - Operating expenses -‘Payments to and provisions for employees’ in the Profit and Loss Account during theyear ended March 31, 2026, considering best information available. The Bank continues to monitor the finalisation of Centraland State Rules and clarifications from the Government on the New Labour Codes and would provide appropriate accountingeffect on the basis of such developments, as needed.
Business segments have been identified and reported taking into account, the target customer profile, the nature of productsand services, the differing risks and returns, the organisation structure, the internal business reporting system and the guidelinesprescribed by RBI. The Bank operates in the following segments:
The treasury segment primarily consists of net interest earnings from the Bank’s investment portfolio, money marketborrowing and lending, gains or losses on investment operations and on account of trading in foreign exchange andderivative contracts.
The digital banking segment represents business by Digital Banking Units (DBUs) of the Bank. The said DBUs servesretail customers through the Bank’s digital network and other online channels. This segment raises deposits fromcustomers and provides loans and other services to customers.
Revenues of the DBUs are derived from interest earned on retail loans, fees from services rendered, etc. Expenses ofthis segment primarily comprise of interest expense on deposits, infrastructure and premises expenses for operatingthe DBUs, other direct overheads and allocated expenses of specialist product groups.
The retail banking segment serves retail customers through the Bank’s branch network and other channels. Thissegment raises deposits from customers and provides loans and other services to customers with the help ofspecialist product groups. Exposures are classified under retail banking taking into account the status of theborrower (orientation criterion), the nature of product, granularity of the exposure and the quantum thereof.
Revenues of the retail banking segment are derived from interest earned on retail loans, interest earned from othersegments for surplus funds placed with those segments, subvention received from dealers and manufacturers,fees from services rendered, foreign exchange earnings on retail products, etc. Expenses of this segment primarilycomprise interest expense on deposits, commission paid to retail assets sales agents, infrastructure and premisesexpenses for operating the branch network and other delivery channels, personnel costs, other direct overheadsand allocated expenses of specialist product groups, processing units and support groups.
The wholesale banking segment provides loans, non-fund facilities and transaction services to large corporates, emergingcorporates, public sector units, government bodies, financial institutions and medium scale enterprises. It also sourcesdeposits from wholesale entities and raises funds through securitisation and assignment transactions. Revenues of thewholesale banking segment consist of interest earned on loans made to customers, interest / fees earned on the cashfloat arising from transaction services, earnings from trade services and other non-fund facilities and also earnings fromforeign exchange and derivative transactions on behalf of customers. The principal expenses of the segment consist ofinterest expense on funds borrowed from external sources and other internal segments, premises expenses, personnelcosts, other direct overheads and allocated expenses of delivery channels, specialist product groups, processing unitsand support groups.
This segment includes income from parabanking activities such as credit cards, debit cards, third party productdistribution, primary dealership business and the associated costs.
e) Unallocated
All items which are reckoned at an enterprise level are classified under this segment. This includes capital and reserves,debt classified as Tier 1 or Tier 2 capital and other unallocable assets and liabilities such as deferred tax, etc.
Segment revenue includes earnings from external customers plus earnings from funds transferred to other segments.Segment result includes revenue less interest expense less operating expense and provisions, if any, for that segment.Segment-wise income and expenses include certain allocations. Interest income is charged by a segment that providesfunding to another segment, based on yields benchmarked to an internally approved yield curve or at a certain agreedtransfer price rate. Transaction charges are levied by the retail banking segment to the wholesale banking segment forthe use by its customers of the retail banking segment’s branch network or other delivery channels.
The geographic segments of the Bank are categorised as domestic operations and foreign operations. Domesticoperations comprise branches in India and foreign operations comprise branches outside India including offshore bankingunits in India.
The significant transactions between the Bank and related parties for year ended March 31,2026 are given below. A specific
related party transaction is a significant transaction wherever it exceeds 10% of all related party transactions in that category:
• Interest paid: HDFC Life Insurance Company Limited ' 347.12 crore (previous year: ' 382.33 crore); HDFC ERGO GeneralInsurance Company Limited ' 89.06 crore (previous year: ' 87.90 crore)
• Interest received: HDB Financial Services Limited ' 577.49 crore (previous year: ' 690.51 crore)
• Rendering of services: HDFC Life Insurance Company Limited ' 3,850.25 crore (previous year: ' 3,789.23 crore); HDFCERGO General Insurance Company Limited ' 682.65 crore (previous year: ' 699.66 crore)
• Receiving of services: HDB Financial Services Limited ' 1,223.91 crore (previous year: ' 1,216.66 crore); HDFC SalesPrivate Limited ' 910.79 crore (previous year: ' 964.36 crore); HDFC ERGO General Insurance Company Limited ' 341.15crore (previous year: ' 207.63 crore)
• Dividend paid: Mr. Kaizad Bharucha ' 5.37 crore (previous year: ' 4.12 crore); Mr. Sashidhar Jagdishan ' 4.14 crore(previous year: ' 3.00 crore); Mr. V. Srinivasa Rangan ' 3.66 crore (previous year: ' 2.86 crore); Ms. Mala Zaveri ' 1.55crore (previous year: ' 1.12 crore)
• Dividend received: HDFC Securities Limited ' 697.33 crore (previous year: ' 851.92 crore); HDFC Asset ManagementCompany Limited ' 1,009.62 crore (previous year: ' 785.26 crore); HDFC Life Insurance Company Limited ' 227.50 crore(previous year: ' 216.67 crore)
• Fixed Assets purchased from: Aurionpro Solutions Limited ' 4.50 crore (previous year: ' 9.55 crore)
• Fixed asset sold to: HDFC Sales Private Limited ' 0.95 crore (previous year: Nil)
The Bank’s related party balances and transactions for the year ended March 31,2026 are summarised as follows:
• Figures in bracket in dicate maximum balance outstanding during the year based on comparison of the total outstan ding balances at each quarter-end.
• Remuneration paid is ' 15.13 crore to Mr. Sashidhar Jagdishan, ' 17.14 crore to Mr. Kaizad Bharucha, ' 7.12 crore to Mr. Bhavesh Zaveri and ' 11.28crore to Mr. V. Srinivasa Rang an (above excludes value of employee stock options exercised during the year).
• Bonus and retiral benefits for key managerial personnel are accrued as a part of an overall pool and are not allocated against the key managerialpersonnel. These will be paid based on approval from RBI. As of March 31, 2026, approved unpaid deferred bonus in respect of earlier years was' 1726 crore.
During the year ended March 31,2026, the Bank sold SLR securities of Nil (previous year: ' 125.15 crore) to HDFC ERGOGeneral Insurance Company Limited.
During the year ended March 31, 2026, the Bank bought back Non SLR securities of Nil (previous year: ' 174.63 crore)from HDFC Life Insurance Company Limited.
During the year ended March 31, 2026, the Bank sold Non SLR securities of ' 851.75 crore (previous year: ' 2,052.09crore) to HDFC Life Insurance Company Limited, ' 575.33 crore (previous year: ' 888.02 crore) to HDFC ERGO GeneralInsurance Company Limited and Nil (previous year: ' 5.01 crore) to HDFC Pension Fund Management Limited.
The deposit outstanding from HDB Employees Welfare Trust as at March 31,2026 was ' 1.93 crore (previous year: ' 0.94crore) and interest on deposit aggregating to ' 0.07 crore (previous year: ' 0.10 crore).
The Bank’s related party balances and transactions for the year ended March 31,2025 are summarised as follows:
• Includes HDFC Education and Development Services Private Limited, ceased to be a subsidiary with effect from October 18,2024.
• Figures in bracket indicate maximum balance outstanding during the year based on comparison of the total outstanding balances at each quarter-end.
• Remuneration paid is ' 11.23 crore to Mr. Sashidhar Jagdishan, ' 8.02 crore to Mr. Kaizad Bharucha, ' 6.52 crore to Mr. Bhavesh Zaveri and ' 8.85crore to Mr. V. Srinivasa Rang an
(above excludes value of employee stock options exercised during the year).
• Bonus and retiral benefits for key managerial personnel are accrued as a part of an overall pool and are not allocated against the key managerialpersonnel. These will be paid based on approval from RBI. As of March 31,2025, approved unpaid deferred bonus in respect of earlier years was' 14.51 crore.
Operating leases primarily comprise office premises, staff residences and Automated Teller Machines (‘ATM’s), which arerenewable at the option of the Bank.
The details of maturity profile of future operating lease payments are given below:
Basic and diluted earnings per equity share are computed in accordance with AS-20 - Earnings per share. Basic earningsper equity share is computed by dividing the net profit after tax of ' 74,671.29 crore (previous year: ' 67,347.36 crore) by theweighted average number of equity shares outstanding during the year. Diluted earnings per equity share is computed usingthe weighted average number of equity shares and weighted average number of dilutive potential equity shares outstandingduring the year. The dilutive impact is on account of stock options / units granted to employees by the Bank. There is no impactof dilution on the profits in the current year and previous year.
During the year ended March 31, 2026, the shareholders of the Bank have approved, through postal ballot, the issuance ofbonus shares, in the proportion of 1:1, i.e. 1 (One) bonus equity share of ' 1 each for every 1 (One) fully paid-up equity shareheld as on the record date. Accordingly, the Bank has allotted 7,67,70,39,761 equity shares as bonus shares on August 28,2025, by utilisation of share premium. Pursuant to the issue, the earnings per share have been restated for the year endedMarch 31, 2025.
Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from October 2, 2006, certaindisclosures are required to be made relating to Micro, Small and Medium enterprises. There have been no reported cases ofdelays in payments to micro and small enterprises or of interest payments due to delays in such payments during the yearsended March 31, 2026 and March 31, 2025. The above is based on the information available with the Bank which has beenrelied upon by the auditors.
The details of Corporate Social Responsibility (CSR) activities carried out in line with the CSR Policy of the Bank aregiven below:
There has been no delay in transferring amounts, required to be transferred to the Investor Education and Protection Fundby the Bank during the year ended March 31, 2026 and March 31, 2025.
The Bank, as part of its normal banking business, grants loans and advances to its constituents including foreignentities with permission to lend / invest / provide guarantee or security or the like in other entities identified bysuch constituents. Similarly, the Bank accepts deposits from its constituents, who may instruct the Bank to lend /invest / provide guarantee or security or the like against such deposit in other entities identified by such constituents.These transactions are part of Bank’s normal banking business, which is conducted after exercising proper due diligenceincluding adherence to “Know Your Customer” guidelines as applicable in respective jurisdiction.
Other than the nature of transactions described above, the Bank has not advanced or loaned or invested (either from borrowedfunds or share premium or any other sources or kind of funds) to or in any other person(s) or entity(ies), including foreign entities(“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall directly orindirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Bank (“UltimateBeneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries. The Bank has not receivedany funds from any person(s) or entity(ies), including foreign entities (“Funding Parties”), with the understanding, whetherrecorded in writing or otherwise, that the Bank shall directly or indirectly, lend or invest in other persons or entities identified inany manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security orthe like on behalf of the Ultimate Beneficiaries.
As per the requirements of rule 3(1) of the Companies (Accounts) Rules 2014 the Bank uses only such accounting software formaintaining its books of account that have a feature of recording audit trail (edit log). This feature of recording audit trail hasoperated throughout the year and was not tampered with, except that in respect of the accounting software used for maintainingthe core banking system the feature of recording audit trail (edit log) facility was enabled at the database level to log any directdata changes from March 4, 2026. Further, where audit trail facility was enabled in the previous year, the audit trail has beenpreserved by the Bank as per the statutory requirements for record retention. The Bank has established and maintained anadequate internal control framework and based on its assessment, believes that this was effective as of March 31, 2026.
As intimated to the Stock Exchanges on September 26, 2025, the Bank’s branch at the Dubai International Financial Centre(“DIFC Branch”) received a decision notice dated September 25, 2025 from the Dubai Financial Services Authority (“DFSA”),prohibiting, amongst other things, the branch from soliciting or conducting business with new clients for specified financialservices. The prohibition does not affect servicing of existing customers and will remain in place until otherwise amended orrevoked in writing by DFSA. The Bank is taking necessary steps to comply with the directives in the above-referred notice.
The business undertaken at the DIFC Branch is not material to the Bank’s operations or its financial position and accordinglyno material impact is expected with respect to the overall operations or financial position of the Bank.
As intimated to the Stock Exchanges on March 24, 2026, the Board of Directors of the Bank approved the appointmentof external law firms (domestic and international) to conduct a review related to the resignation letter of the Bank’s formerPart-time Chairman and Independent Director, Mr. Atanu Chakraborty. The Bank does not expect any material impact onthe financial statements as of and for the year ended March 31, 2026, arising from the external law firms’ review, which iscurrently in progress. The Bank continues to be committed to corporate governance standards and remains adequatelycapitalised in accordance with the regulatory requirements.
Figures for the previous year have been regrouped and reclassified wherever necessary to conform to the currentyear’s presentation. The previous year comparative numbers were jointly audited by Price Waterhouse LLP, CharteredAccountants and Batliboi & Purohit, Chartered Accountants.