Share Wealth

Year End :2025-03

Your Directors take pleasure in presenting the Eighteenth Annual Report on the business and financial operations of your Company together with the audited accounts for the Financial Year ended March 31,2025.

SUMMARY OF FINANCIAL PERFORMANCE

(' in Crore)
Particulars	FY 2024-25	FY 2023-24
Total Income	16,300.28	14,171.12
Total Expenditure (excluding depreciation)	13,178.06	10,721.31
Profit/(Loss) before Depreciation & Tax	3,122.22	3,449.81
Less: Depreciation	194.42	145.14
Profit before Tax	2,927.80	3,304.67
Tax Expense	751.88	843.83
Profit after Tax	2,175.92	2,460.84
Other Comprehensive Income (net of tax)	(47.88)	(36.40)
Total Comprehensive Income after tax	2,128.04	2,424.44
Appropriations from Profit after Tax:
Transfer to Reserve Fund under Section 45-IC of the RBI Act, 1934	435.18	492.17
Dividend Paid	238.10	245.38
Dividend Tax thereon	0.00	0.00
Balance carried forward to Balance Sheet	1502.64	1,723.29

Your Company posted total income and net profit of ' 16,300.28 Crore and ' 2,175.92 Crore, respectively, for the financial year ended March 31, 2025, as against ' 14,171.12 Crore and ' 2,460.84 Crore respectively, in the previous financial year.

DIVIDEND & DIVIDEND DISTRIBUTION POLICY

The Board of Directors of the Company, at its meeting held on April 16, 2025, has recommended a final dividend of ' 1/- (Rupee One only) per equity share i.e. 10% (Ten percent) on each equity share of face value of ' 10 (Rupees Ten only) entailing a total payout of ' 79.58 Crore. The proposal is subject to the approval of the shareholders at the ensuing Annual General Meeting (AGM) to be held on June 12, 2025. During the year, the Company has paid Interim Dividend of ' 2/- (Rupees Two Only) per equity share i.e. 20% on each equity share, aggregating to ' 158.79 Crore.

The Company has formulated a Dividend Distribution Policy, with an objective to provide the dividend distribution framework to the Stakeholders of the Company. The policy sets out various internal and external factors, which shall be

considered by the Board in determining the dividend pay-out. The policy is available on the website of the Company and can be accessed at https://www.hdbfs.com/investors

TRANSFER TO RESERVE

Under Section 45-IC (1) of Reserve Bank of India ('RBI') Act, 1934, non-banking financial companies ('NBFCs') are required to transfer a sum not less than 20% of its net profit every year to reserve fund before declaration of any dividend. Your Company has transferred an amount of ' 435.18 Crore to Reserve Fund under Section 45-IC (1) of the RBI Act, 1934.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

There are no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this Report.

MATERIAL DEVELOPMENT

Pursuant to Master Direction - Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023, Company shall be mandatory listed within 3 years of identification as NBFC in Upper Layer. RBI had issued a letter to the Company communicating that the Company has been categorised as the Upper Layer NBFC. During the year, Company had filed Draft Red Herring Prospectus dated October 30, 2024 in connection with the IPO of the Company, aggregating up to ' 12,500 Crore (Rupees Twelve Thousand Five Hundred Crore Only) comprising of a fresh issue aggregating up to ' 2,500 Crore (Rupees Two Thousand Five Hundred Crore Only) and an offer for sale aggregating up to ' 10,000 Crore (Rupees Ten Thousand Crore Only).

CAPITAL STRUCTURE

As at March 31, 2025, the issued, subscribed and paid-up share capital of your Company is ' 795,77,63,450/- (Rupees Seven Hundred Ninety-Five Crore Seventy-Seven Lakhs Sixty-Three Thousand Four Hundred and Fifty Only) comprising of 79,57,76,345 (Seventy-Nine Crore Fifty-Seven Lakhs Seventy-Six Thousand Three Hundred and Forty-Five Only) equity shares of ' 10 each as on March 31, 2025.

During the year, your Company has issued 27,01,779 equity shares. The details of which are provided below:

No. of fully paid up equity shares	Date of allotment	Purpose
8,88,974	August 13, 2024	Shares were issued to employees under the Employees Stock Option Scheme
18,12,805	January 10, 2025	Shares were issued to employees under the Employees Stock Option Scheme

CAPITAL ADEQUACY

Capital adequacy as at March 31,2025 under Ind-AS stood at 19.22% which is well above the minimum regulatory norms for nondeposit accepting NBFCs.

RATINGS

The CARE Ratings Limited (CARE) and CRISIL Ratings Limited (CRISIL) have reaffirmed highest ratings for the various facilities availed by the Company, details of which are given below:

Facility	CARE	Amount (' in Crore)	CRISIL	Amount (' in Crore)
Bank Facilities	CARE AAA; Stable	57,900.00	CRISIL AAA; Stable	62,500.00
Short Term Debt Program	CARE A1 +	5,000.00	CRISIL A1 +	5,000.00
Non-Convertible Debentures	CARE AAA; Stable	45,000.00	CRISIL AAA; Stable	38,475.82
Subordinated Bonds	CARE AAA; Stable	5,600.00	CRISIL AAA; Stable	4,670.00
Perpetual Bonds	CARE AAA; Stable	1,500.00	CRISIL AAA; Stable	1,500.00
All of the above ratings indicate a high degree of safety with regard to timely payment of interest and principal amount.

BORROWINGS

Your Company has diversified funding sources from Public Sector, Private Sector, Foreign Banks, Mutual Funds, Insurance Companies, Pension Funds, Financial Institutions etc. Funds were raised in line with Company's Resource Planning Policy

through Term Loans, Non-Convertible Debentures ("NCDs"), Subordinated Bonds, Perpetual Bonds and Commercial Papers Instruments. The details of funds raised during the year are as below:

#	Borrowings / Security type	Credit rating		Amount raised (' In Crore)
		CARE	CRISIL
1	Term Loans from Banks and Financial Institutions*	CARE AAA; Stable	CRISIL AAA; Stable	20,240.91
2	Secured Redeemable Non-Convertible Debentures	CARE AAA; Stable	CRISIL AAA; Stable	12,658.00
3	Commercial Paper	CARE A1 +	CRISIL A1 +	13,565.00
4	Subordinated Bonds	CARE AAA; Stable	CRISIL AAA; Stable	357.00
5	Perpetual Bonds	CARE AAA; Stable	CRISIL AAA; Stable	500.00
	Grand Total			47,320.91
*Include ECB and exclude WCDL/CC

No interest payment or principal repayment of the Term Loans was due and unpaid as on March 31, 2025. The assets of the Company which are available by way of security are sufficient to discharge the claims of the banks and financial institutions as and when they become due.

Secured Redeemable Non-Convertible Debentures, Unsecured Redeemable Subordinated Bonds, Unsecured Perpetual Debt Instruments are issued by your Company on private placement basis and the rating for various facilities indicates the highest degree of safety with regard to timely servicing of financial obligations.

Perpetual Debt Securities are 10.06% of Tier I capital of the Company. An amount of ' 1,500 Crore are outstanding as on March 31, 2025. During the year Company has raised ' 500 Crore through Perpetual Debt Securities.

NCDs were issued with maturity period ranging from 13 to 60 months. The interest payable on all the debt securities is either annually or on maturity. No interest was due and unpaid as on March 31, 2025. The Company has not received any grievance from the debt security holders during the year under review. The assets of the Company which are available by way of security are sufficient to discharge the claims of the debt security holders as and when they become due.

The above mentioned Debt securities are listed on Wholesale Debt Market (WDM) segment of the BSE Limited and Commercial Papers were listed on National Stock Exchanges of India Limited.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company believes that CSR is a way of creating shared value and contributing to social and environmental good. Our endeavor is to mainstream economically, physically and socially challenged groups and to draw them into the cycle of growth, development and empowerment. To achieve this, your Company collaborates with development-focused organisations, involves local communities in the development process and works with systems & frontline staff to achieve desirable social outcomes in an effective and sustainable manner.

The Company's CSR Projects are compliant with the CSR mandate as specified under Section 135 read with Schedule VII of the Act along with the Companies (Corporate Social Responsibility Policy) Rules, 2014 ("CSR Rules"), as amended from time to time and in line with notifications issued by the Ministry of Corporate Affairs ("MCA"), from time to time.

The Company's CSR interventions are designed to strengthen the healthcare services and infrastructure, impart skill training and basic literacy for better livelihoods and to promote environmentally sustainable initiatives. All CSR initiatives are implemented in accordance with the Schedule VII of the Companies Act, 2013 ("Act").

The brief outline of CSR Policy, including overview of the program proposed to be undertaken, the composition of the CSR Committee, average net profits of the Company for the past three financial years, prescribed CSR expenditure and

details of amount spent on CSR activities during the financial year have been disclosed in "Annexure A" to this report, as mandated under the said Rules. Further, the Corporate Social Responsibility Policy of the Company as approved by the Board has been hosted on the website of the Company at https://www.hdbfs.com/investors

As per Section 135 of the Act, the Company was required to spend an amount of ' 48.44 Crore equivalent to 2% of the 'average net profits' of the last three (3) financial year. After adjusting the excess spend of ' 2.09 Crore for FY 2023-24, the total CSR obligation of the Company was ' 46.35 Crore.

During the FY 2024-25, the Company has spent an amount of ' 46.78 Crore on CSR activities as against total CSR obligation of ' 46.35 Crore.

BOARD OF DIRECTORS

As on March 31, 2025, the Board comprised of nine members consisting of one Executive Director, one PartTime Non-Executive Chairman & Independent Director, one Non-Executive Director and six Non-Executive Independent Directors including two Women Directors. Changes in Directors during the financial year 2024-25 are given below:

Name of the Director/ KMP	Nature of change	With effect from
Dr. Amla Samanta (DIN: 00758883)	Re-appointment as an Independent Director for a period of three years	May 01, 2024
Mr. A K Viswanathan (DIN: 08518003)	Re-appointment as an Independent Director for a period of three years	July 24, 2024
Mr. Bhaskar Sharma (DIN: 02871367)	Appointment as an Independent Director for a period of three years	September 16, 2024
Mr. Jayant Gokhale (DIN: 00190075)	Appointment as an Independent Director for a period of three years	September 16, 2024
Ms. Smita Affinwalla (DIN: 07106628)	Ceased as an Independent Director upon completion of second term of five years	March 11,2025
Mr. Venkatraman Srinivasan (DIN: 00246012)	Ceased as an Independent Director upon completion of second term of five years	March 11,2025

KEY MANAGERIAL PERSONNEL

During the financial year 2024-25, no changes were observed in the Key Managerial Personnel of the Company. As on the date of this report, following are the Key Managerial Personnel (the "KMP") as per Section 203(1) read with Section 2(51) of the Act and Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Name of the KMP	Designation
Mr. Ramesh G.	Managing Director & Chief Executive Officer
Mr. Jaykumar Shah	Chief Financial Officer
Ms. Dipti Khandelwal	Company Secretary and Head Legal

DECLARATION BY DIRECTORS

The Company has received necessary declarations/ disclosures from each Independent Directors of the Company under Section 149(7) of the Act and Regulation 25(8) of the SEBI Listing Regulations that they fulfill the criteria of Independence as prescribed under Section 149(6) of the Act

and Regulation 16(1 )(b) of the Listing Regulations, and have also confirmed that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgement and without any external influence.

The Independent Directors have also confirmed that they have registered themselves with the Independent Director's Database maintained by the Indian Institute of Corporate Affairs. All the Independent Directors have qualified in the online proficiency self-assessment test or are exempted from passing the test as required in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014.

None of the Directors of the Company are disqualified from being appointed as Directors as specified under Section 164(1) and 164(2) of the Act read with Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014 (including any statutory modification(s) and or re-enactment(s) thereof for the time being in force) or are

debarred or disqualified by the Securities and Exchange Board of India ("SEBI"), Ministry of Corporate Affairs ("MCA") or any other such statutory authority.

All the Directors of the Company have confirmed that they satisfy the 'fit and proper' criteria as prescribed under Chapter XI of Master Direction - Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023.

All members of the Board and Senior Management have affirmed compliance with the Code of Conduct for Board and Senior Management for the financial year 2024-25.

Further, based on these disclosures and confirmations, the Board is of the opinion that the Directors of the Company are distinguished persons with integrity and have necessary expertise and experience to continue to discharge their responsibilities as the Directors of the Company.

DIRECTOR E-KYC

Pursuant to the requirement prescribed under the Companies (Appointment and Qualification of Directors) Rules, 2014, the Directors with active Director Identification Number need to file an eForm DIR-3 KYC annually on the MCA portal verifying their mobile number and personal email address. All the Directors of the Company have complied with the KYC registration on the MCA portal for FY 2024-25.

DIRECTORS & OFFICERS LIABILITY INSURANCE

The Directors and Officers (D&O) insurance is liability insurance which covers or protects Directors, Officers and Employees of the Company from claims which may arise from decisions and actions taken while serving their duty. During the FY 2024-25, the Company has taken Directors & Officers Liability Insurance for all its Board of Directors and members of Senior Management for such quantum and risks as determined by the Board.

MEETINGS

During the year, eight Meetings of Board of Directors were convened and held, the details of which are given in the report on Corporate Governance, which is forming a part of this Directors' Report. The intervening gap between the said Meetings of Board of Directors was within the period prescribed under the Companies Act, 2013. The details of the Board and Committee Meetings and the attendance of Directors thereat, forms part of the Corporate Governance Report, which is annexed to this Directors' Report.

 

COMPLIANCE WITH SECRETARIAL STANDARDS

Secretarial Standards are guidelines, which lays down the standard procedure and structure for undertaking specific tasks and actions within an organisation, which is in addition to the provisions of the original law i.e., Companies Act, 2013 and not in substitution to the original law. Pursuant to Section 118(10) of the Companies Act, 2013, every Company shall observe Secretarial Standards with respect to general and board meetings specified by the Institute of Company Secretaries of India.

The Company is in compliance with Secretarial Standard on Meetings of the Board of Directors (SS-1) and Secretarial Standard on General Meetings (SS-2) issued by the Institute of Company Secretaries of India.

DIRECTORS' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Act:

i.    that in preparation of the annual financial statements for the year ended March 31, 2025, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii.    that appropriate accounting policies have been selected and applied consistently and judgements and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended March 31, 2025 and of the profits of the Company for the said year;

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

iv.    that the annual accounts have been prepared on a going concern basis;

v.    that the Company had laid down internal financial controls to be followed and that such internal financial controls are adequate and were operating effectively; and

vi.    that systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY

As per the provisions of Section 177(9) of the Act and Regulation 22 of the SEBI Listing Regulations, the Company is required to establish an effective Vigil Mechanism for Directors and employees to report genuine concerns. The Company as part of the 'vigil mechanism' has in place a Board approved 'Whistle Blower Policy' to deal with instances of fraud and mismanagement, if any. The Whistle Blower Policy has been placed on the website of the Company and can be accessed at https://www.hdbfs.com/investors.

This vigil mechanism of the Company is overseen by the Audit Committee and provides adequate safeguard against victimisation of employees and directors and also provides direct access to the Chairman of the Audit Committee in exceptional circumstances. The whistle blower complaints were reviewed by the Audit Committee on a quarterly basis.

During the year under review, no whistle blower complaint was received by the Company and there was no outstanding complaint as on March 31, 2025. None of the personnel of your Company were denied access to the Audit Committee.

COMPLIANCE MANAGEMENT

The Company has in place a comprehensive and robust legal compliance management tool, which is devised to ensure compliance with all applicable laws which impact the Company's business. Automated alerts are sent to compliance owners to ensure compliance within stipulated timelines. This measure helps keep on track and avoid any penalties or other legal issues that could arise from non-compliance. The compliance owners certify the compliance status which is reviewed by compliance approvers and a consolidated dashboard is presented to the respective functional heads and Compliance Officer. A certificate of compliance with all applicable laws and regulations along with the corrective and preventive action, if any, is placed before the Audit Committee and Board of Directors on a quarterly basis.

DISCLOSURES PURSUANT TO THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

In line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 your Company has adopted a Policy on Prevention of Sexual Harassment at Workplace and Rules framed thereunder. The said policy is uploaded on the website of the Company which can be accessed at https://www.hdbfs.com/policies Your

Company has complied with the provisions relating to the constitution of Internal Complaints Committee under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the year under review, the Company has received Thirty-six complaints, of which Twenty-two complaints were investigated and addressed as per the policy and Fourteen complaints were under investigation as on March 31, 2025. All Eleven open complaints during the previous year ending March 31,2024 were closed in the reporting year.

PROHIBITION OF INSIDER TRADING

Your Company has adopted the Insider Trading Code of Conduct ('Code") for prohibition of insider trading in the securities of the Company and a Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information.

ANNUAL RETURN

Pursuant to the provisions of Section 134(3)(a) and Section 92(3) of the Act read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the Annual Return of the Company is available on the Company's website viz; URL : https://www.hdbfs.com/investors

PARTICULARS OF EMPLOYEES

As on March 31, 2025, the permanent employee strength of the Company was 89,943.

Disclosures in terms of Section 197(12) read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in 'Annexure D'. Further, the statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in an Annexure and forms part of this report. In terms of Section 136(1) of the Act, the annual report and the financial statements are being sent to the Members excluding the aforesaid Annexure. The Annexure is available for inspection and any Member interested in obtaining a copy of the Annexure may write to the Company Secretary of the Company.

STATUTORY AUDITORS AND THEIR REPORT

Pursuant to the provisions of Sections 139 and 141 of the Act and Rules made thereunder, the Shareholders in the

17^th Annual General Meeting had appointed M/s. Kalyaniwala & Mistry LLP and M/s. G D Apte & Co. as the Joint Statutory Auditors of the Company, to hold office for a continuous period of three years until the conclusion of the 20^th Annual General Meeting of the Company.

M/s. Kalyaniwala & Mistry LLP and M/s. G D Apte & Co. have given their confirmation to the effect that they are eligible to be appointed as a Statutory Auditors and that they have not been disqualified in any manner from continuing as Statutory Auditors of the Company.

Further, the Auditors' Report "with an unmodified opinion", given by the Joint Statutory Auditors on the Financial Statements of the Company for FY 2024-25, is disclosed in the Financial Statements forming part of the Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Joint Statutory Auditors in their Report for the year under review.

No instance of fraud in terms of the provisions of section 143(12) of the Act have been reported by the Joint Statutory Auditors in their report for the FY 2024-25.

SECRETARIAL AUDITORS AND THEIR REPORT

Pursuant to the provisions of Section 204 of the Act and Rules thereunder and Regulation 24A of the SEBI Listing Regulations, M/s. Mehta & Mehta, Practicing Company Secretaries, were appointed as the Secretarial Auditor of the Company, to conduct Secretarial Audit for FY 2024-25.

The Report of the Secretarial Auditor in Form MR-3 is annexed as 'Annexure B'. There has been no qualification, reservation, adverse remark or disclaimer given by the Secretarial Auditor in its Report for the year under review.

Company at its meeting of Board of Directors held on April 16, 2025, appointed N L Bhatia & Associates, Practicing Company Secretaries, as a Secretarial Auditors of the Company for an audit period of five consecutive years commencing from April 01, 2025.

MAINTENANCE OF COST RECORDS

Maintenance of cost records and requirement of cost audit as prescribed under the provisions of section 148(1) of the Companies Act, 2013 are not applicable for the business activities carried out by the Company as the Central Government has not prescribed the maintenance of cost records under Section 148 of the Act for the services rendered by the Company.

NOMINATION AND REMUNERATION POLICY

Pursuant to the provisions of Section 178(3) of the Act and Regulation 19 of the SEBI Listing Regulations, the Board has formulated Nomination and Remuneration Policy of the Company which inter alia, includes the criteria for determining qualifications, positive attributes and independence of Directors, identification of persons who are qualified to become Directors, Key Managerial Personnel and Senior Management. The Nomination and Remuneration Policy also covers the Remuneration of the Directors, Key Managerial Personnel, Senior Management and other employees of the Company. The Nomination and Remuneration Policy is available on the website of the Company at https://www. hdbfs.com/investors.

EMPLOYEES STOCK OPTION SCHEME (ESOS)

There are three Employee Stock Options Schemes viz; ESOS 2014, ESOS 2017 and ESOS 2022. During the FY 2024-25, the members of the Company approved the alignment of these three ESOP Schemes of the Company with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 through postal ballot.

The objective of the ESOS Schemes is to enable the Company to attract and retain appropriate human talent and encourage value creation and value sharing with the employees by aligning the interests of the employees with the long-term interests of the Company.

The information pertaining to ESOS in terms of Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014 is given in 'Annexure C'.

RELATED PARTY TRANSACTIONS

All the related party transactions that were entered into during the financial year were on arm's length basis and in ordinary course of business. Pursuant to the provisions of Section 134(3)(h) read with Rule 8(2) of the Companies (Accounts) Rules, 2014, particulars of the contracts or arrangements with related parties referred to in section 188(1) in Form AOC-2 is annexed as 'Annexure E'. The Related Party Transactions Policy has been hosted on the website of the Company at https://www.hdbfs.com/investors

CORPORATE GOVERNANCE REPORT

Your Company is committed to maintain the highest standards of Corporate Governance and adheres to the Corporate Governance requirements set out by SEBI. The

report on Corporate Governance of the Company forms part of the Annual Report.

The Quarterly Report on Corporate Governance has been submitted by the Company to the Stock Exchanges, in terms of Regulation 27(2) of the SEBI Listing Regulations. The said reports have been uploaded on the website of the Company at https://www.hdbfs.com/investors

The Report on Corporate Governance for the financial year 2024-25 along with the Certificate issued by the Secretarial Auditors of the Company regarding compliance of conditions of corporate governance, is annexed as 'Annexure F' to this Report confirming compliance with the mandatory requirements relating to Corporate Governance as stipulated under Chapter IV of the SEBI Listing Regulations.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND THE COMPANY'S OPERATIONS IN FUTURE

There are no significant and material orders passed by the regulators or courts or tribunals that would impact the going concern status of the Company and its future operations.

CHANGES IN NATURE OF BUSINESS

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

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Pursuant to section 186(11) of the Act, the provisions related to loans made, guarantees given and securities provided do not apply to the Company.

As regards investments made by the Company, the details of the same are provided in note no. 9 to the financial statements of the Company for the year ended March 31, 2025.

SUBSIDIARIES, JOINT VENTURES, ASSOCIATE COMPANIES

During the year under review, your Company has no subsidiary, joint venture or associate company. Also, the Company did not become a part of any Joint Venture during the year.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The provisions of Section 134(3)(m) of the Act, the rules made there under relating to conservation of energy, technology absorption do not apply to your Company as it is not a manufacturing Company. However, your Company

 

has been increasingly using information technology in its operations and promotes conservation of resources. The details of foreign exchange earnings and foreign exchange expenditures are as below:

(' in Crore)
#	Particulars	FY 2024-25	FY 2023-24
i	Foreign exchange earnings	Nil	Nil
2	Foreign exchange expenditures	55.75	5.85

Further, according to the IEPF Rules, the shares on which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to IEPF. During the year under review, dividend amount of ' 336 remaining unclaimed for consecutive seven (7) years from the date of its transfer to the Unpaid Dividend Account of the Company has been transferred to IEPF Authority. During the year under review, there were no equity shares due to be transferred to the IEPF Authority pursuant to IEPF Rules.

Any claimant of dividend transferred above shall be entitled to claim the dividend from Investor Education and Protection Fund (IEPF) in accordance with such rules, procedure and submission of documents as prescribed.

RBI GUIDELINES

Reserve Bank of India ("RBI") granted the Certificate of Registration to the Company in December 2007 vide Registration No. N.01.00477, to commence the business of a Non-Banking Financial Institution without accepting deposits. Your Company is a Non-Banking Financial Company - Upper Layer (NBFC - UL). Your Company has complied with and continues to comply with RBI Scale Based Regulations and other applicable regulations.

Management Discussion and Analysis

GLOBAL ECONOMIC OVERVIEW

In 2024, the global economy reflected a mix of resilience and uncertainty, shaped by geopolitical developments, evolving trade policies and shifting market dynamics. Geopolitical tensions, including the Russia-Ukraine war, conflict in west Asia and trade disputes continued to influence global stability and investment decisions. While inflationary pressures eased, they remained a concern in certain regions, driven by supply chain adjustments and fluctuations in energy markets.

At the same time, global trade volumes rebounded, growing by 3.6% in CY 2024, as economies adapted by diversifying trade routes and strengthening supply chains, highlighting the evolving nature of global commerce.

The International Monetary Fund (IMF) forecasts global growth to stabilise at 3.3% in both CY 2025 and CY 2026, indicating steady, albeit below historical average, expansion. Advanced economies are expected to grow by 1.9% in CY 2025 and 1.8% in CY 2026 as monetary policy easing and fiscal consolidation shape economic conditions. In contrast, emerging market and developing economies (EMDEs) are projected to expand by 4.2% in CY 2025 and 4.3% in CY 2026, supported by strong domestic consumption and infrastructure development.

GLOBAL ECONOMIC GROWTH PROJECTS
Year		World (%)	Advanced Economies (%)	Emerging Markets and Developing Economies (%)
CY 2024	Estimates	3.2	1.7	4.2
CY 2025	Projections	3.3	1.9	4.2
CY 2026		3.3	1.8	4.3

Global headline inflation is anticipated to decrease from 4.2% in CY 2025 to 3.5% in CY 2026, with advanced economies likely reaching target inflation levels sooner than their emerging market counterparts. As major central banks, including the US Federal Reserve and European Central Bank, shift towards more accommodative policies, they are expected to reduce interest rates to support economic activity.

The US Federal Reserve (Fed), which kept rates at a two-decade high of 5.25%-5.50% in January 2024, began its rate cuts in CY 2024, with estimates pointing to a cumulative reduction of 50-75 basis points in 2025. Similarly, the

European Central Bank (ECB), which set rates at 4.0%, is likely to ease its stance gradually as inflation moderates in the Euro area. Consequently, global financial conditions are expected to ease supporting credit growth and investment sentiment across regions. However, trade uncertainties and geopolitical risks continue to influence investment sentiment, leading to varied economic expansion across different regions.

Currency volatility remains a significant concern, as fluctuations in the US Dollar continue to impact capital flows. Emerging markets have been particularly affected, witnessing net portfolio outflows of US$ 45 Bn as of January 2025. This shift can be attributed to a stronger US dollar and an evolving investor sentiment.

On a positive note, global Foreign Direct Investment (FDI) inflows have shown a moderate 3.8% recovery with investments, favouring sectors such as clean energy, digital infrastructure and advanced manufacturing. This trend signifies that the economy is moving closer to prioritising supply chain resilience and sustainability. The US and EU's push to de-risk supply chains has led to a 12% increase in manufacturing FDI inflows to Southeast Asia and India, further solidifying the trend of diversification beyond China.

Sectoral performance shows marked disparities across regions with services consistently surpassing manufacturing, fuelled by robust consumer demand and a strong recovery in post-pandemic tourism. In contrast, the manufacturing sector faces challenges, hindered by trade tensions, restructured supply chains and sluggish global demand. At the same time, the energy market is adapting to evolving geopolitical dynamics, with oil prices forecasted to decline by 2.6%, while non-fuel commodities are expected to experience a modest increase of 2.5% in CY 2025.

Looking ahead, monetary policies in advanced economies are anticipated to ease, fostering improved global liquidity and credit availability. Conversely, emerging markets are likely to adopt a more measured approach, balancing inflation control with growth objectives. Ongoing tariff escalations, including the sharp rise in cross-border duties in April 2025, have added to trade uncertainties, impacting global commerce and production strategies. As these trends unfold, trade dynamics, particularly US-China relations, evolving sanctions regimes, ongoing wars and regional trade agreements, are expected to influence supply chain realignments and global investment flows.

Technological innovations and Al-led automation are increasingly becoming central to industrial strategies. Meanwhile, China's tempered growth and its ongoing domestic rebalancing continue to reverberate across global trade and commodity flows. Climate resilience and ESG compliance are also becoming pivotal in global investment decisions. As economies adapt to structural shifts, geopolitical developments, evolving financial conditions, technology, sustainability and policy reforms will remain critical in shaping long-term economic momentum and resilience.

INDIAN ECONOMIC OVERVIEW

As per the Economic Survey 2024-25, India's GDP growth rate is projected at 6.4% in FY 2024-25. This positions the country among the fastest-growing major economies globally, despite prevailing global uncertainties. The growth is largely fuelled by strong domestic demand, higher capital expenditure, private investment and a resilient services sector.

Agricultural output is expected to rise by 3.8% in FY 2024-25, supported by favourable monsoons, higher Kharif production and improved Rabi sowing. Rising rural incomes are reflected in growing sales of two-wheelers and tractors. Higher Minimum Support Prices (MSP) and a decline in demand for MGNREGA jobs further indicate strengthening financial conditions across the rural economy. As rural demand remains strong and urban consumption remains constant, private spending is anticipated to sustain overall economic expansion going forward.

A major contributor to this growth is the revival of private consumption. Private Final Consumption Expenditure (PFCE), at constant prices, rose by 7.3% as of January 2025, compared to 4.0% in the previous financial year. This improvement reflects stable household spending.

The growing middle class, rising incomes and aspirational spending trends are reshaping consumption patterns. A growing number of consumers are choosing premium products and experiences, propelling demand in sectors such as luxury goods, automobiles and lifestyle services. The government's decision to raise the income tax exemption limit to ' 12 Lakhs in the Union Budget FY 2025-26 is likely to further support consumer sentiment and discretionary spending in retail, apparel and luxury segments.

The services sector remains the backbone of India's economic performance, with services exports projected to expand at 12.8% YoY in FY 2024-25. Government initiatives like Unified Payments Interface (UPI) and Open Network for Digital Commerce (ONDC) are promoting and facilitating digital transactions, with UPI alone recording ' 23.24 Lakh Crore in transactions in December 2024, up from ' 707.93 Crore in December 2016. This rapid digital transformation is advancing financial inclusion and reshaping consumer behaviour.

Inflation is anticipated to remain stable, supported by prudent fiscal and monetary policies. Headline inflation, measured by the Consumer Price Index (CPI), moderated to 3.16% in April 2025, compared to 5.4% in FY 2023-24. This decline is primarily due to a sharp reduction in food price index, which decreased to 1.78% in April 2025. The Reserve Bank of India (RBI) further reduced the repo rate by 25 basis points to 6% as of April 2025. This move is expected to stimulate economic activity by making borrowing cheaper, thereby encouraging spending and investment. As of April 2025, the Monetary Policy Committee (MPC) also changed its stance from 'neutral' to 'accommodative', signalling that, going forward-absent any shocks—the MPC would consider only two options: maintaining the status quo or implementing a rate cut.

Infrastructure investments and manufacturing incentives under the Production Linked Incentive (PLI) scheme are expected to further strengthen economic momentum. To realise the long-term ambition of 'Viksit Bharat' by 2047, India aims to sustain an 8% annual growth rate. This objective is supported by policy measures such as 'Ease of Doing Business 2.0,' systemic deregulation, labour law simplification, tax rationalisation and digital governance.

Additionally, MSMEs continue to drive innovation and contribute to the diversification of India's manufacturing base. In line with this, the Union Budget for FY 2025-26 introduced several measures to strengthen the sector. These include higher investment and turnover thresholds, improved credit access, targeted support for first-time entrepreneurs and productivity-linked initiatives across key industries. With these structural reforms and a continued emphasis on innovation and investment, India is well-positioned for sustained and inclusive growth.

On the infrastructure front, the government maintained strong focus by allocating ' 11.2 Tn for capital expenditure in the Union Budget FY 2025-26. This substantial outlay is directed towards transportation, energy and digital infrastructure projects. Urban development is also seeing growth, with projections indicating that India's urban population is expected to reach approximately 500 Mn in 2025. To meet growing housing needs, the government remained committed to affordable housing initiatives, including the Pradhan Mantri Awas Yojana, which aims to ensure housing for all.

OUTLOOK

India's economic outlook remains strong, driven by stable domestic consumption, rising infrastructure investment and a dynamic services sector. Inflation is expected to stabilise enabling a more accommodative monetary policy, while robust credit growth and strong banking fundamentals continue to support private sector expansion and capital formation.

The digital economy and formalisation of financial services continue to unlock new opportunities, particularly in Tier-II and Tier-III markets, while a booming start-up ecosystem continues to prosper. With a youthful workforce, accelerating digital adoption and targeted policy reforms in manufacturing, MSMEs and favourable taxation are expected to enhance productivity and long-term competitiveness. Over the coming decade, India is expected to play a pivotal role in shaping global economic momentum, contributing meaningfully to innovation, supply chain diversification and sustainable development worldwide.

INDUSTRY OVERVIEW

The Indian Non-Banking Financial Companies (NBFC) sector remains a critical pillar of financial inclusion and economic

growth. Over the years, NBFCs have demonstrated remarkable endurance, expanding their prominence within the financial ecosystem. The sector's assets under management (AUM) have grown significantly, from less than ' 2 Tn at the turn of the century to ' 41 Tn by the end of FY 2023-24. Between FY 2018-19 and FY 2023-24, NBFC credit has expanded at a compound annual growth rate (CAGR) of approximately 11%.

Despite this significant expansion, AUM growth is expected to moderate, with year-on-year growth projected at 15-17% in FY 2024-25 and FY 2025-26, compared to 23% in FY 2023-24. This deceleration is primarily attributed to rising delinquencies, funding constraints and heightened regulatory oversight.

However, certain lending segments, including SME loans, loans against property (LAP) and used vehicle financing are expected to maintain strong growth. This underscores the strength of specific market verticals. MSME sector continues to offer strong growth potential supported by growing demand for alternate credit. Additionally, government initiatives aimed at promoting digital financial inclusion and expanding access to credit will further support the sector's growth. In this context, NBFCs have remained instrumental in widening credit outreach in underserved areas, especially in Tier-II and Tier-III cities, enabled by the rise of fintech partnerships and embedded finance ecosystems.

The Reserve Bank of India (RBI) has recently reduced the risk weight on bank loans to NBFCs to 100%, thus reinstating the previous framework.

This revision is poised to expand banks' lending capacity, offering NBFCs enhanced access to bank funding. Consequently, NBFCs are likely to rebalance their funding mix, increasing reliance on bank loans and reducing their dependence on short-term commercial papers. This strategic shift is anticipated to enhance funding stability and facilitate long-term growth.

Simultaneously, the regulatory expectations have risen sharply, particularly for larger NBFCs under the RBI's Scale-Based Regulatory (SBR) framework. NBFCs in the Upper Layer now face stricter governance, capital adequacy, risk management and disclosure norms, aligning them more closely with the regulatory standards set for banks. This represents a significant shift in the supervisory approach towards systemically important NBFCs.

In addition, the RBI has mandated public listing for Upper Layer NBFCs, with the aim of fostering greater transparency and improved market discipline. This move is expected

to strengthen governance frameworks, deepen investor engagement and enhance long-term capital access for eligible NBFCs.

Recent restrictions on First Loss Default Guarantee (FLDG) arrangements have redefined the contours of NBFC-fintech collaboration. The cap on such exposures at 5% is set to promote more balanced risk-sharing models. These changes are likely to drive more equitable risk-sharing models and encourage responsible growth in digital lending partnerships.

GROWTH STRATEGIES

Regulatory Compliance and RegTech Adoption

A strong compliance framework is crucial for NBFCs to effectively navigate an ever-evolving regulatory environment. Harnessing RegTech solutions will streamline reporting, enhance risk management and ensure transparency. Additionally, automated compliance systems will enhance regulatory adherence, while also boosting investor confidence and operational efficiency, securing long-term sustainability.

For Upper Layer NBFCs, compliance expectations now encompass enhanced governance protocols. These include board independence, risk committee oversight and senior management accountability, all vital components of the new regulatory regime.

Technology-Driven Transformation

Digital innovation is set to drive enhanced efficiency and customer engagement within NBFCs. Data analytics and digital lending platforms will streamline credit assessments, fraud detection and onboarding processes, resulting in quicker loan approvals and more tailored financial solutions. These advancements will improve the borrower experience, reduce operational costs and reinforce the competitive standing of NBFCs within the financial sector.

Diversification of Funding Sources

Expanding funding channels will be crucial for mitigating liquidity risks and ensuring financial stability. Securitisation, co-lending with banks and fintech partnerships will offer alternative capital sources, reducing reliance on traditional funding. In addition, a diversified financial structure will enable NBFCs to adapt to market shifts and sustain long-term growth. Furthermore, a strategic tilt towards longer-tenure borrowings, diversified debt instruments and calibrated co-lending models will be essential to building resilient funding architecture in a dynamic interest rate and regulatory environment.

Focus on Tier-II and Tier-III Cities

As urban markets mature, NBFCs will expand into semiurban and rural areas, where financial services remain underpenetrated. To capture this high-growth market and drive long-term growth, offering region-specific products, using digital outreach and providing vernacular language support will be essential.

Customer-Centric Strategies

Personalised financial solutions will set NBFCs apart in a competitive market. Dynamic credit scoring and data-driven decision-making will help address diverse customer needs, improving satisfaction and retention. Therefore, by harnessing real-time insights, NBFCs will strengthen customer relationships, drive growth and improve their market positioning.

Sustainability and ESG Financing

ESG considerations are set to influence NBFCs' lending strategies, with an increasing emphasis on green financing and sustainable investments. By aligning portfolios with ESG principles, NBFCs can enhance their credibility and attract responsible investors.

Despite facing headwinds from asset growth deceleration and regulatory changes, the NBFC sector's ability to innovate and adapt will define its long-term trajectory. With the right mix of technology adoption, policy alignment and financial prudence, NBFCs will continue to play a pivotal role in India's financial ecosystem, driving inclusive growth and expanding credit access across various segments.

Although the new regulatory environment poses transitional challenges, it is laying the groundwork for lasting strength. The framework promotes greater transparency, institutional maturity and structural resilience, ensuring the sector remains aligned with India's evolving financial goals.

COMPANY OVERVIEW

HDB Financial Services Limited (hereafter referred to as 'HDBFS' or 'The Company') is a leading, diversified retail-focussed NBFC. Established in 2007, the Company delivers a wide range of lending solutions through three primary verticals: Enterprise Lending, Asset Finance and Consumer Finance. It caters to the underserved and underbanked customers, including salaried individuals, self-employed professionals and entrepreneurs.

With a firm focus on customer centricity, the Company uses data insights to deliver tailored financial solutions beyond

conventional lending. A strong commitment to integrity and transparency drives its ethical business practices and expanding service portfolio. This focussed strategy strengthens the Company's reputation as a trusted and respected player in India's financial sector.

PRODUCTS AND SERVICES Loans

HDBFS offers tailored financial products and services that address the distinct needs of its customers, including firsttime borrowers and underserved segments. It operates across three core areas, lending, fee-based financial solutions and business process outsourcing services. With each of its offerings, the Company ensures end-to-end support across a wide range of financial needs.

Consumer Loans

HDBFS provides a comprehensive suite of loan offerings designed to support individuals in meeting personal and household financial needs, both short term and medium term. The Company's consumer loan portfolio includes the following:

•    Consumer Durable Loans: HDBFS offers loans that help customers purchase essential home appliances and consumer electronics such as air conditioners, washing machines, televisions and refrigerators. They also enable customers to spread out their payments, making these purchases more affordable without putting a strain on their finances.

•    Digital Product Loans: The Company offers financing solutions for a variety of digital products, from everyday essentials to premium devices. With these loans, customers can purchase smartphones, laptops, tablets and other electronic gadgets without bearing the burden of upfront costs, ensuring access to the latest technology with financial ease.

•    Lifestyle Product Loans: These loans empower customers to enrich their living standards by financing premium furniture, high-end home appliances and luxury goods, among others. These loans offer an effortless way to improve comfort and style, all while maintaining financial stability.

•    Personal Loans: HDBFS extends financial solutions to individuals seeking support for various personal requirements. Whether addressing major life events, unforeseen expenses, or home improvements, these

loans offer flexibility and convenience. With repayment plans and costs tailored to align with individual financial situations, customers can access funds in a way that suits their specific needs.

•    Auto Loans: The Company's auto loans simplify the process for individuals and businesses looking to finance the purchase of new or pre-owned vehicles. With flexible repayment options, competitive interest rates and a seamless application process, these loans make vehicle ownership more attainable. Whether for personal use or business purposes, the Company provides customised financing solutions to suit diverse customer needs while ensuring a smooth and seamless borrowing experience.

•    Two-Wheeler Loans: Tailored financing solutions are offered to make two-wheeler ownership more accessible and affordable. With competitive interest rates, flexible repayment plans and minimal documentation, the offering serves both first-time buyers and experienced riders. Designed for daily commutes or personal use, these loans ensure a smooth and hassle-free purchase journey.

•    Micro Lending: With the aim of promoting financial inclusion and empowering underprivileged segments of society, the Company provides micro loans to customers through the Joint Liability Groups (JLGs) framework.

ENTERPRISE LOANS

The Company offers financial support to small and micro

enterprises, enabling them to scale and meet working capital

requirements. Its business loan offerings include:

•    Business Loans: The Company offers unsecured loans designed to help small businesses address financial needs such as acquiring equipment, replenishing inventory, managing working capital, or renovating outlets.

•    Loan Against Property: This facility enables businesses to get access to capital by using the market value of their property. The funds can be used for business expansion, working capital, debt refinancing, or other financial obligations. As a secured offering, it typically carries lower interest rates than unsecured alternatives.

•    Enterprise Business Loan: HDBFS extends these loans to self-employed individuals, professionals, private firms and partnership businesses. They offer flexible terms, competitive interest rates and easy repayment options,

helping businesses expand operations, acquire assets and manage day-to-day expenses efficiently.

•    Salaried Personal Loans (SPL): The Company offers personal loans to salaried individuals, providing financial flexibility to address both personal and professional needs.

•    Gold Loans: The Company provides secured loans against gold jewellery, allowing customers to access quick credit for urgent financial requirements.

ASSET FINANCE

The Company offers specialised financing solutions under Asset Finance, enabling customers to purchase new and preowned vehicles and equipment. These loans are structured to promote income generation and business expansion. The offerings include:

•    Commercial Vehicle Loans: The Company finances the purchase of new and used commercial vehicles, along with offering refinancing for existing ones. It serves a wide range of customers, including fleet operators, firsttime users, first-time buyers and captive users. Branch-based field officers (FOS) and strategic alliances with OEMs and dealers drive customer acquisition for this segment.

•    Construction Equipment Loans: Designed for the construction sector, these loans support the purchase of both new and used machinery. Customers can also refinance existing equipment, ensuring ready access to essential machinery for their projects efficiently.

•    Tractor Loans: HDBFS provides specialised loan solutions for acquiring tractors and related equipment, addressing both agricultural and commercial needs. These solutions enable customers to invest in vital equipment for farming and business operations.

FEE-BASED PRODUCTS/INSURANCE SERVICES

The Company holds a Corporate Insurance Agent licence from the Insurance Regulatory and Development Authority of India (IRDAI) and is authorised to offer both Life and General (NonLife) insurance products. HDBFS has established partnerships with HDFC Life Insurance Co. Limited and Aditya Birla Sun Life Insurance Co. Limited for life insurance offerings. For general insurance, the Company collaborates with HDFC Ergo General Insurance Co. Limited, Tata AIG General Insurance Co. Limited and Go Digit General Insurance Limited, expanding its portfolio with comprehensive risk coverage solutions.

BPO SERVICES

The Company delivers a comprehensive range of BPO services, including collection support, sales assistance, back office operations and processing functions. An overview of its service offerings is provided below:

•    Collection Services: HDBFS operates collection call centres for HDFC Bank, managing collections for its full suite of retail lending products. With a presence in 700 locations, the Company offers both telephonic and onground support. It has set up 18 call centres nationwide, equipped with 5,500 seats to deliver seamless and efficient collection services.

•    Back Office and Sales Support: The Company supports HDFC Bank with back office operations and sales enablement. Its services include form processing, document verification, accounting tasks and transaction handling.

DIGITAL FIRST APPROACH

The Company has invested and built an advanced technology and data analytics platform that covers all key areas and stages of its business, including customer sourcing, onboarding and underwriting as well as operations and collections. The Company strives to elevate customer experience and operational efficiency through the use of technology. Our digital vision is to adopt new technologies to enable it to further develop and grow business within the regulatory environment we operate in. When investing in technological solutions, we ensure that our systems are built with customer-centric propositions that allows us to combine different services and improve customer experience with a strong security underpinning.

To realise this vision, we have adopted a structured platform categorisation strategy as explained below.

> Systems of Innovation: Over the past two years, HDBFS has prioritised investments in this foundational layer, recognising it as the core of the Company's differentiation strategy. Key focus areas include:

•    Loan Origination System (LOS): Platform that addresses specific product requirements, empowering the Company to craft customised business propositions for the market.

•    Customer Relationship Management (CRM): Deployed an industry-standard CRM system that serves as the omni-channel hub for sales and customer engagement, streamlining interactions with leads, prospects and existing customers.

•    Data Lake and Analytics: Consolidated a data repository that ensures consistent, timely access, supporting data-driven decision-making with structured access rights.

•    Digital Innovations: Integrated modern technologies such as Low-Code/No-Code platforms and Robotic Process Automation (RPA) to optimise operations. Deployed reusable components like CKYC, eNACH and UPI 2.0 to facilitate seamless digital transactions throughout the organisation.

•    Systems of Engagement: This functions as the API layer through which all channels, both direct-to-customer (D2C) and assisted digital platforms, interact with the Company's systems for acquisition and service-related needs. The channel framework is designed to accommodate existing engagement models, including APIs, IVR, contact centres, mobile applications, email, SMS, web platforms, chatbots, social media, DSAs, aggregators and frntech collaborations. It also remains adaptable to future engagement models ensuring scalability and innovation.

•    Mobile App: Redesigned a Flutter-based native mobile application, complemented by a Progressive Web App (PWA) framework, serving as a comprehensive platform for prospects, existing customers and alumni to access the Company's services seamlessly.

•    Assisted Digital App: Developed a dedicated mobile application for the sales, credit and collections teams, enabling them to assist customers through guided digital journeys.

•    API Gateway: Integrated a modern API gateway with a developer and partner portal, supporting a selfservice model and an Open API approach for secure and rapid onboarding.

•    DIY Platform: Implemented a low-code platform that facilitates customer onboarding through a fully self-service, unassisted process.

•    Account Aggregators: Established an end-to-end digital customer onboarding, pre-filling

customer and prospect data to enhance credit decision-making and ensure a smooth, frictionless experience.

• Communication Gateways: Standardised solutions for email, SMS, WhatsApp, contact centres and chatbot interactions, all integrated with the CRM system to deliver a seamless omni-channel experience.

DIGITAL CUSTOMER SERVICE CHANNELS

The Company has introduced multiple digital channels

to elevate customer service and ensure a smooth user

experience:

•    HDB On-the-Go App: Upgraded the mobile application with an enhanced user interface and advanced functionalities, designed to offer a seamless experience for users on both Android and iOS platforms. The app had 8.8 Mn downloads as of March 31, 2025.

•    Web-based Version: A web-based version of the mobile app is deployed on the Company's website, enabling customers to conveniently access their loan account on their desktop.

•    WhatsApp Account Management: The Company's customers can receive real-time updates on their loan accounts by sending a simple 'Hi' to the Company's WhatsApp number, +91 73049 26929. This feature allows easy and instant access to account details via a widely used messaging platform.

•    Chatbot Assistance: The Company's virtual assistant, #AskPriya, provides instant responses to customer queries regarding loans and the latest offers. Powered by AI, this chatbot enhances service efficiency by delivering accurate and timely information.

•    Missed Call Service: A service where customers can retrieve loan details via SMS by giving a missed call from their registered mobile number to 044 4560 2401. This service offers a quick and hassle-free way to access essential account information without requiring an internet connection.

OTHER KEY INITIATIVES

•    Customer Service Week: 'Customer Service Week' is an engaging initiative to educate walk-in customers about HDBFS's self-service tools. The programme highlights how customers can manage their loan accounts, apply for new loans, explore digital payment options, understand the grievance redressal system and learn about RBI's Ombudsman Scheme. Additionally, customer feedback is collected to assess service quality and drive continuous improvements.

•    Personalised Relationship Management: Select customers are connected to a dedicated Relationship Manager who assist them with their financial needs.

SEGMENT-WISE PERFORMANCE

Revenue from the Company's lending business increased to ' 15,083.62 Crore in FY 2024-25, up from ' 12,221.57 Crore in FY 2023-24 driven by an increase in assets under management.

Revenue from the BPO services division was ' 1,216.66 Crore in FY 2024-25 compared to ' 1,949.55 Crore in FY 2023-24.

GEOGRAPHICAL PRESENCE

HDBFS has adopted a comprehensive approach to expanding its pan-India presence through a hybrid distribution model that combines both physical and digital channels. This strategy has enabled the Company to establish a significant nationwide footprint, with a network of 1,771 branches across 1,170 cities as of March 31, 2025.

The Company's strategy aims to ensure seamless customer access across urban, semi-urban and rural areas. This is achieved not only through its extensive branch network but also by strengthening partnerships with OEMs, dealers and brands. Additionally, the Company uses digital platforms to create multiple touchpoints that enhance customer reach, engagement and convenience. Majority of its network is located outside the top 20 cities, underscoring a strong emphasis on rural and semi-urban outreach.

The Company's data centres are located in Bengaluru and Mumbai, while its centralised operations are managed from Hyderabad, Chennai and Noida. To further optimise internal processes, HDBFS has implemented a specialised quality management system tailored for its centralised operations. This initiative is designed to enhance process efficiency, standardise operations and maintain consistent service quality across all branches.

OUTLOOK

The Company has a balanced approach to growth, regulatory compliance and customer-focussed innovation and is strategically positioned to create long-term value and make a significant contribution to India's financial inclusion and formalisation initiative.

With the economy projected to continue growing, the Company, with its diversified product portfolio, broad reach through its network of branches across the country and its digital infrastructure, is cautiously optimistic in its outlook for FY 2025-26.

RISK MANAGEMENT

As a financial services provider, the Company is exposed to multiple risks, including risks related to credit, operations, liquidity, digital lending and information security. To address these challenges, HDBFS has implemented a comprehensive risk management framework, ensuring proactive identification and mitigation of risks.

Risk oversight is a key priority, with the Board of Directors taking a central role in monitoring all risk categories. Dedicated committees have been established to provide focussed supervision and ensure stringent risk controls. The Company continually strengthens its security infrastructure, particularly in cybersecurity, to defend against emerging threats. With risk mitigation remaining a core priority, HDBFS remains confident in its ability to safeguard its financial stability, operational efficiency and market reputation.

CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements include the financial performance of the Company along with its subsidiaries, collectively referred to as the Group. Control is determined based on the Group's ability to direct relevant activities and derive benefits from its association with the investee. A uniform set of accounting policies is applied across all entities within the Group to maintain consistency in financial reporting. In cases where any entity follows different

accounting policies, necessary adjustments are made to align them with the Group's standard accounting practices, ensuring uniformity in the consolidated financial statements.

INTERNAL CONTROL SYSTEM AND INTERNAL AUDIT

The Company has implemented a comprehensive internal control framework to ensure operational efficiency, regulatory compliance and accurate financial reporting. The Internal Audit Department (IAD) plays a crucial role in strengthening Governance, Risk and

Compliance (GRC) by conducting independent and objective evaluations. These assessments enhance transparency, accountability and trust across the organisation.

The internal audit function operates under a clear and comprehensive internal audit charter, supported by a risk-based audit policy that defines the department's purpose, structure, authority and responsibilities. Adopting a risk-based approach, the IAD focusses on high and medium-risk areas, ensuring effective resource allocation and addressing potential vulnerabilities.

The risk-based Internal Audit Framework also offers independent assurance to the Board's Audit Committee, tailored to the Company's scale, complexity and operations. The audit plan, developed based on activity risk profiles, is reviewed and approved annually by the Audit Committee, which also evaluates audit findings and performance.

To enhance audit quality and efficiency, while ensuring extensive data coverage, the IAD utilises advanced data analytics tools. Additionally, recognising the evolving industry scenario, Information Systems (IS) audits have become a key component of the internal audit function. This comprehensive audit strategy not only strengthens risk management practices but also reinforces the Company's ability to navigate technological advancements and emerging challenges.

HUMAN RESOURCES Nurturing the Workforce

People are the driving force behind the success and operational efficiency of HDBFS. Recognising this, the Company is dedicated to creating an environment that empowers employees to achieve both their professional goals and personal milestones. By fostering safe, inclusive and supportive workplaces, HDBFS ensures that its employees adopt a mindset focussed on growth and positivity.

Cultivating a Strong Organisational Culture

The culture at HDBFS is rooted in six core values—Integrity, Collaboration, Agility, Respect, Excellence and Simplicity. These principles influence internal interactions and shape the Company's engagement with customers, suppliers and stakeholders. HDBFS conducts regular training sessions and workshops for both new hires and existing employees. Through this commitment, HDBFS strives to realise its ambition of becoming 'India's most admired NBFC.'

Fostering Diversity, Equity and Inclusion

HDBFS is committed to creating an equitable workplace where every individual is valued, respected and provided with equal opportunities. Recruitments and promotions are driven by merit, taking into account factors such as skills, experience and competence.

As part of its commitment to inclusivity, HDBFS actively hires individuals with disabilities and assigns roles aligned with their strengths. Office spaces are designed for accessibility, ensuring smooth mobility across locations. To further support their integration, tailored training programmes equip them with the skills needed to thrive in their roles. The Company also conducts regular awareness sessions to educate employees on inclusive policies and respectful workplace behaviour.

Developing Future-Ready Leaders

Talent development forms a critical pillar of the Company's growth strategy, evident in its consistent investment in people. Employees are continuously empowered through structured learning & development (L&D), skill enhancement and talent management programmes. The approach includes a blend of instructor-led training and digital learning platforms, equipping employees with technical expertise, emerging industry insights and advanced skill sets.

The Company conducts specialised programmes to prepare first-line managers for future leadership. Management Development Programmes sharpen strategic thinking, market understanding and leadership ability in high-potential talent. Taking this further, Leadership Development Programmes identify and nurture future leaders through holistic coaching and mentoring initiatives.

The Company also emphasises internal growth, with over 67% of middle and senior management roles filled through internal promotions. With a belief that career progression is not only about vertical progression, employees are encouraged to explore cross-functional roles across diverse functions and geographies.

Prioritising Employee Well-being and Recognition

Employee well-being remains a key priority for the Company, supported by a proactive focus on both physical and emotional health. Events like health check-ups, yoga and meditation workshops, sports tournaments, cultural celebrations and community outreach programmes are organised throughout

the year. These activities improve engagement, boost morale, strengthen teamwork and support work-life balance.

The Company also places strong emphasis on acknowledging employee contributions. Through dedicated reward and recognition programmes, it celebrates high performance and motivates individuals to pursue excellence and continuous development.

CSR ACTIVITIES

HDBFS remains committed to its role as a responsible corporate entity, actively working to create a meaningful and lasting impact in the communities it serves. Through a structured and expansive Corporate Social Responsibility (CSR) framework, the Company has strengthened its outreach across multiple regions, focussing on critical areas such as healthcare accessibility, hygiene awareness, education, livelihood enhancement and environmental sustainability.

In collaboration with grassroots organisations, HDBFS has successfully implemented 10 targeted initiatives, extending support to underserved communities across 151 districts in 20 states and 2 union territories. These efforts have directly improved the lives of over 1,25,000 individuals, driving positive social transformation and fostering long-term resilience.

For further details on the Company's CSR activities, please refer to page 35.

CAUTIONARY STATEMENT

This Management Discussion and Analysis (MD&A) contains forward-looking statements that involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed or implied in these statements due to various factors, including economic conditions, regulatory changes, market dynamics and other unforeseen circumstances. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are advised to exercise caution and not to place undue reliance on these forward-looking statements.

(Source: IMF Report on World Economic Outlook, January 2025, Economic Survey 2024-25, Press Information Bureau, Economic Times, Economic Survey of India, India Infrastructure, Crisil Report on NBFC Sector in India, Economic Times, Business Standard, Economic Times)

GREEN INITIATIVES

In line with the Green Initiatives, the Notice of Eighteenth Annual General Meeting of the Company is being sent to all Members whose email addresses are registered with the Company's Registrar and Share Transfer Agents /Depository Participant(s). Members who have not registered their e-mail addresses, are requested to register their e-mail IDs with their Depository Participant(s)/Company's Registrar and Share Transfer Agents, MUFG Intime India Private Limited.

ACKNOWLEDGEMENT

The Directors are grateful to the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDAI), Ministry of Corporate Affairs (MCA) and Registrar of Companies (ROC) and other government and regulatory authority for their continued co-operation, support and guidance. The Directors would also like to take this opportunity to express their sincere thanks all the customers, shareholders, employees, bankers and distributors for reposing their trust, commitment, loyalty and confidence in the Company. The Directors also express their gratitude for the advice, guidance and assistance received from time to time, from the auditors and statutory authorities.