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Director's Report


Change Company Name
BSE Code ISIN Demat Book Value NSE Symbol Div & Yield % Market Cap ( Cr.) P/E EPS Face Value

TO THE MEMBERS

Your directors are pleased to present the forty-sixth annual report of your Corporation with the audited accounts for the year ended March 31, 2023.

Financial Results

For the year ended March 31, 2023 For the year ended March 31, 2022
Rs in crore Rs in crore

Profit Before Sale of Investments, Dividend and Provision for Expected Credit Loss

18,889.98 17,404.30

Profit on Sale of Investments

183.81 263.02

Dividend

2,735.25 1,510.99

Impairment on Financial Instruments (Expected Credit Loss)

(1,795.00) (1,932.00)

Profit Before Tax

20,014.04 17,246.31

Tax Expense

(3,774.68) (3,504.13)

Net Profit After Tax

16,239.36 13,742.18

Other Comprehensive Income (OCI)

(786.12) 33.86

Total Comprehensive Income

15,453.24 13,776.04

Retained Earnings

Opening Balance

23,108.86 17,328.59

Profit for the year

16,239.36 13,742.18

Re-measurement of Net Defined Benefit Plans through OCI

(19.27) (5.25)

Amount Available for Appropriations

39,328.95 31,065.52

Appropriations:

Special Reserve No. II

2,200.00 2,100.00

Statutory Reserve (Under Section 29C of the National Housing Bank Act, 1987)

1,100.00 700.00

Transfer from retained earnings

1,366.17 1,004.01

Final Dividend Paid

5,442.70 4,152.65

Closing Balance Carried Forward

29,220.08 23,108.86

Dividend

Based on the performance of the Corporation and in accordance with Section 123(3) of the Companies Act, 2013, the Board of Directors at its meeting held on May 4, 2023, declared an interim dividend of Rs 44 per equity share of Rs 2 each for the financial year ended March 31, 2023. Accordingly, no final dividend has been recommended for the year ended March 31, 2023.

In the previous year, the Corporation had declared a final dividend of Rs 30 per equity share.

The dividend pay-out ratio for the year ended March 31, 2023 is 49.7% compared to 39.6% in the previous year.

The dividend declared is in accordance with the principles and criteria as set out in the Dividend Distribution Policy. The Dividend Distribution Policy is placed on the Corporation's website.

Material Developments: Ongoing Scheme of Amalgamation

The Board of Directors of the Corporation at its meeting held on April 4, 2022, subject to requisite approvals/ consents, approved a composite scheme of amalgamation (Scheme) for the amalgamation of: (i) HDFC Investments Limited (HDFC Investments) and HDFC Holdings Limited (HDFC Holdings), wholly-owned subsidiaries of the Corporation, with and into the Corporation and (ii) the Corporation with and into HDFC Bank Limited (HDFC Bank) and matters related thereto.

On April 3, 2022, subject to requisite approvals/consents, the Board of Directors of HDFC Investments and HDFC Holdings had approved the amalgamation of their respective companies with and into the Corporation.

Upon the Scheme becoming effective, the subsidiaries/ associates of the Corporation will become subsidiaries/ associates of HDFC Bank. Shareholders of the Corporation as on the record date will receive 42 shares of HDFC Bank (each of face value of Rs 1), for every 25 shares held in the Corporation (each of face value of Rs 2), and the equity shares held by the Corporation in HDFC Bank will be extinguished as per the Scheme. Further, HDFC Bank will be 100% owned by public shareholders and existing shareholders of the Corporation will own 41% of HDFC Bank upon the Scheme becoming effective.

During the year, the Corporation received various no- objection/approval letters regarding the Scheme from the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), the Competition Commission of India, the Pension Fund Regulatory and Development Authority, the National Housing Bank (NHB) and the stock exchanges. Further, during the year, the resolution approving the Scheme was passed by the shareholders of the Corporation. On March 17, 2023, the Hon'ble National Company Law Tribunal, Mumbai Bench approved the Scheme.

As of date, certain approvals are awaited from regulators of a few subsidiary/associate companies of the Corporation in respect of change in control/transfer of shares to HDFC Bank. The Scheme shall become effective upon receiving all such requisite approvals, fulfilment of conditions prescribed therein and upon filing of the certified copy of the order with the Registrar of Companies, Mumbai (ROC) by all the companies involved in the Scheme.

Upon the Scheme coming into effect, HDFC Investments, HDFC Holdings and the Corporation would be dissolved without being wound up.

Conversion of Warrants

In August 2020, the Corporation had completed its Qualified Institutional Placement of equity shares and secured, redeemable non-convertible debentures simultaneously with warrants. The Corporation had raised Rs 307 crore through the issue and allotment of 1,70,57,400 warrants at an issue price of Rs 180 per warrant with a right exercisable by the warrant holder to exchange each warrant for one equity share of face value of Rs 2 each of the Corporation at any time on or before August 10, 2023, at a warrant exercise price of Rs 2,165 per equity share, to be paid by the warrant holder at the time of exchange of the warrants. As of date, 3,600 warrants have been converted into equity shares. The warrants are listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE).

As per the Scheme, the warrants outstanding on the Effective Date shall continue in the amalgamated company i.e. HDFC Bank. The number of equity shares of HDFC Bank that the warrant holders shall be entitled to upon exercise of such warrants shall be on the basis of the Share Exchange Ratio. There will be no other changes to the terms of the warrants in the amalgamated company.

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

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) and directions issued by RBI, the MD&A and the Report of the Directors on Corporate Governance form part of this report.

As recommended by SEBI, the Business Responsibility and Sustainability Report (BRSR) has been placed on the Corporation's website.

Key Regulatory Changes

The RBI's 'Scale Based Regulation (SBR): A Revised Regulatory Framework for NBFCs' came into effect from October 1, 2022. Scale based regulation entail further alignment of regulations of NBFCs with those applicable to banks on internal capital adequacy assessment process, concentration of credit/investment, large exposure framework, senior management compensation and adoption of core financial services solution, amongst others.

On September 30, 2022, the RBI released a list of NBFCs that qualified under the NBFC Upper Layer (NBFC-UL). RBI stated that the top 10 NBFCs based on asset size would qualify as NBFC-UL. RBI, however, clarified that despite the Corporation qualifying in terms of asset size to be included in NBFC-UL, it was not being considered in this category in light of the impending amalgamation. The Corporation is in compliance with the necessary requirements as applicable under Scale Based Regulation.

As mandated under Scale Based Regulation, the Corporation has adopted a board approved policy for Internal Capital Adequacy Assessment Process (ICAAP). The objective of ICAAP is to ensure availability of adequate capital to support all risks in business as also to develop and use better internal risk management techniques for monitoring and managing risks.

The Corporation is in compliance with the applicable provisions of the Master Direction - Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021 (RBI HFC Directions) and other directions/ guidelines issued by RBI/NHB, as applicable.

Further details on regulatory issues are elucidated in the MD&A.

Lending Operations

The Corporation is a Non-Banking Financial Company - Housing Finance Company (NBFC-HFC) and is engaged in financing the purchase and construction of residential houses, real estate and certain other purposes in India. All other activities of the Corporation revolve around the main business.

Lending operations of the Corporation continued seamlessly during the year, with the demand for individual housing continuing to remain strong.

During the year, individual loan approvals and disbursements grew by 13% and 16% respectively.

The Assets Under Management (AUM) as at March 31, 2023 amounted to Rs 7,23,988 crore as compared to Rs 6,53,902 crore in the previous year - a growth of 11%.

On an AUM basis, the growth in the individual loan book was 17%.

The Corporation's outstanding loan book stood at Rs 6,20,507 crore as at March 31, 2023, compared to Rs 5,68,363 crore in the previous year.

During the year, the Corporation assigned individual loans amounting to Rs 36,910 crore compared to Rs 28,455 crore in the previous year.

As at March 31, 2023, the outstanding amount in respect of individual loans sold was Rs 1,02,071 crore. The Corporation continues to service these loans.

Further details of lending operations are provided in the MD&A.

Market Borrowings

The Corporation is in compliance with the provisions of the guidelines on Private Placement of Non-Convertible Debentures (NCDs) as per RBI HFC Directions, and other regulations as may be applicable. The Corporation has been regular in payment of principal and interest on the NCDs.

Details of market borrowings are provided in the MD&A and notes to accounts.

Deposits

Deposits outstanding as at March 31, 2023 amounted to Rs 1,52,111 crore as compared to Rs 1,60,900 crore in the previous year.

CRISIL and ICRA have for the twenty-eighth consecutive year, reaffirmed their 'CRISIL AAA/Stable' and 'ICRA AAA/ Stable' ratings respectively for HDFC's deposits. These ratings represent the highest degree of safety regarding timely servicing of financial obligations.

There has been no default in repayment of deposits or payment of interest during the year. All the deposits accepted by the Corporation are in compliance with the requirements of the regulations regarding deposit acceptance.

As at March 31, 2023, public deposits amounting to Rs 42 crore pertaining to 1,392 deposit accounts had matured and was not repaid by the Corporation. These cases were claimed, but could not be repaid by the Corporation for pending legal matters or instances where the depositor is deceased and the nominee/legal heir has not claimed the deposit or the succession certificate is awaited. Other than these cases, there were no unclaimed deposits as at March 31, 2023. Since then, 50 deposit accounts amounting to Rs 0.27 crore have been settled. The Corporation continues to make concerted efforts to resolve these issues.

Depositors were intimated regarding the maturity of deposits with a request to either renew or claim their deposits. Where the deposit remains unclaimed, reminders are sent to depositors periodically and follow up action is initiated through the concerned agent or branch.

Deposits remaining unclaimed for a period of seven years from the date they became due for payment have to be transferred to the Investor Education and Protection Fund (IEPF) established by the central government. The concerned depositor can claim the deposit from the IEPF. During the year, an amount of Rs 5.32 crore was transferred to the IEPF.

Capital Adequacy Ratio

As at March 31, 2023, the Corporation's capital adequacy ratio (CAR) stood at 24.3%, of which Tier I capital was 23.8% and Tier II capital was 0.5%.

As per regulatory norms, the minimum required capital adequacy ratio is 15%, of which the minimum Tier I Capital requirement is 10%.

Corporate Social Responsibility (CSR)

During the year, the Corporation's CSR activities were undertaken in accordance with the board approved Annual Action Plan, which focused primarily on core sectors of education and healthcare. Other sectors included environment, supporting persons with disability and heritage restoration.

The Corporation prioritised key sub-thematic areas within each of the above sectors to ensure that the CSR interventions were targeted optimally. The Corporation contributed directly to implementing agencies and through the H T Parekh Foundation to the identified social sectors.

Further details on the prescribed CSR spend under Section 135 of the Companies Act, 2013, the amount spent during the year under review and the executive summaries of impact assessment reports of CSR projects completed are provided in the Annual Report on CSR activities annexed to this report.

Subsidiary and Associate Companies

In accordance with the provisions of Section 136 of the Companies Act, 2013, the annual report of the Corporation as well as the annual financial statements and related documents of the Corporation's subsidiary companies are placed on the website of the Corporation.

Shareholders may download the annual financial statements and detailed information on the subsidiary companies from the Corporation's website or may write to the Corporation for the same. Further, the documents shall also be available for inspection by the shareholders at the registered office of the Corporation.

HDFC Asset Management Company Limited (HDFC AMC)

On May 27, 2022, HDFC AMC International (IFSC) Limited (HDFC AMC International) was incorporated as a wholly- owned subsidiary of HDFC AMC, a subsidiary of the Corporation, in Gujarat International Finance Tec-City (Gift City).

On August 16, 2022, abrdn Investment Management Limited (abrdn), formerly Standard Life Investments Limited, (one of the promoters of HDFC AMC), sold

1,28,00,000 equity shares of Rs 5 each representing 6% of its issued and paid-up capital in HDFC AMC. Post the sale, the shareholding of abrdn of HDFC AMC has reduced from 16.21% to 10.21%.

In December 2022, abrdn intimated their intention to sell their entire stake in HDFC AMC, subject to applicable regulatory approvals. In February 2023, SEBI permitted abrdn to reduce its shareholding in HDFC AMC to less than 10%, subject to HDFC AMC complying with the requirements specified under SEBI (Mutual Fund) Regulations, 1996. Post compliance of the said requirements by HDFC AMC and reduction of stake by abrdn in HDFC AMC to less than 10%, abrdn will cease to be a co-sponsor of HDFC Mutual Fund.

HDFC Life Insurance Company Limited (HDFC Life)

On September 16, 2022, the NCLT approved the Scheme of Amalgamation for amalgamation of Exide Life Insurance Company Limited (Exide Life) with and into HDFC Life, under Sections 230 to 232 of the Companies Act, 2013, subject to the final approval of the Insurance Regulatory and Development Authority of India (IRDAI). On October 13, 2022, IRDAI provided its final approval to the said Scheme. The Appointed Date of the Scheme was April 1, 2022 and the Scheme became effective from end of day on October 14, 2022. Accordingly, Exide Life was dissolved without being wound up from the said effective date.

HDFC Capital Advisors Limited (HDFC Capital)

On May 25, 2022, the Corporation completed sale of 2,35,019 equity shares of Rs 10 each of HDFC Capital, representing 10% of its fully diluted paid-up share capital, to a wholly-owned subsidiary of Abu Dhabi Investment Authority at a price of Rs 7,843 per equity share, aggregating to Rs 184 crore. Pursuant to the said sale, HDFC Capital ceased to be a wholly-owned subsidiary of the Corporation, though it continues to remain a subsidiary of the Corporation.

HDFC Venture Capital Limited (HDFC Venture)

On August 4, 2022, the Corporation acquired 97,500 equity shares of Rs 10 each of HDFC Venture, a subsidiary of the Corporation, representing 19.50% of its paid-up equity share capital from State Bank of India, at a consideration of Rs 9,75,000 and pursuant to the said acquisition, HDFC Venture became a wholly-owned subsidiary of the Corporation.

Amalgamation of HDFC Property Ventures Limited (HDFC Property) and HDFC Venture Capital Limited (HDFC Venture) with and into HDFC Capital Advisors Limited (HDFC Capital)

The boa rd of directors of HDFC Property and HDFC Venture, wholly-owned subsidiaries of the Corporation and HDFC Capital, a subsidiary of the Corporation, at their respective meetings held on August 25, 2022 approved a Scheme of Amalgamation (Scheme of subsidiary companies) for the amalgamation of HDFC Property and HDFC Venture with and into HDFC Capital, under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013, subject to receipt of requisite approvals.

The NCLT vide its order dated March 3, 2023 approved the Scheme of subsidiary companies. Since the companies are still under discussions on various aspects pertaining to the amalgamation, an application has been filed with the NCLT seeking an extension of 60 days for filing of the certified true copy of order with the ROC.

HDFC Ventures Trustee Company Limited (HDFC Ventures Trustee)

During the year, HDFC Ventures Trustee, a wholly-owned subsidiary of the Corporation stepped down as trustee to 3E Education Trust and Maharashtra 3E Education Trust, HDFC Property Fund, HDFC Investment Trust and HDFC Investment Trust II and wound-up its trusteeship business.

The Board of Directors of HDFC Ventures Trustee has approved the change of name of the company to Savoir Trustee Limited, subject to approval of the shareholders.

The Corporation has not made any loans or advances in the nature of loans to any of its subsidiary or associate company or companies in which its directors are deemed to be interested, other than in the ordinary course of business.

The Corporation is in compliance with the provisions of Foreign Exchange Management Act, 1999 with respect to downstream investments made by it/by its subsidiaries during the year. Further, as required by the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, the Corporation has obtained a certificate from statutory auditors on the same.

A review of key subsidiary and associate companies of the Corporation forms part of the MD&A which forms part of this report. Further, a statement containing salient features of financial statements of the subsidiaries and associates of the Corporation in the prescribed Form No. AOC-1 is provided elsewhere in this annual report.

Particulars of Employees

HDFC had 4,017 employees as of March 31, 2023. During the year, 19 employees employed throughout the year were in receipt of remuneration of Rs 1.02 crore or more per annum and 4 employees employed for part of the year were in receipt of remuneration of Rs 8.5 lac or more per month.

In accordance with the provisions of Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and particulars of the top ten employees in terms of remuneration drawn and of the aforesaid employees are set out in the annex to the Directors' Report. In terms of the provisions of Section 136(1) of the Companies Act, 2013 read with rules made thereunder. The Directors' Report is being sent to all shareholders of the Corporation excluding the annex. Any shareholder interested in obtaining a copy of the annex may write to the Corporation.

Further disclosures on managerial remuneration are annexed to this report.

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

The Corporation has a policy on prevention, prohibition and redressal of sexual harassment of women at the workplace and has an Internal Complaints Committee (ICC) in compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Corporation's policy on the same is placed on the Corporation's website. The ICC comprises majority of women members. Members of the Corporation's ICC are responsible for conducting inquiries pertaining to such complaints.

The Corporation on a regular basis sensitises its employees, including outsourced employees on the prevention of sexual harassment at the workplace through workshops, group meetings, online training modules and awareness programmes which are held on a regular basis. The Corporation also conducted a special training programme for members of the ICC. During the year, three complaints were received by the ICC which were reviewed and disposed of and accordingly, there were no complaints pending as at March 31, 2023.

Particulars of Loans, Guarantees or Investments

Since the Corporation is an NBFC-HFC, the disclosures regarding particulars of loans/guarantees given and securities provided is exempt under the provisions of Section 186 (11) of the Companies Act, 2013.

As regards investments made by the Corporation, the details of the same are provided in the notes to the financial statements of the Corporation for the year ended March 31, 2023 (note 9).

Particulars of Contracts or Arrangements with Related Parties

The particulars of contracts or arrangements with related parties required to be disclosed in Form No. AOC-2 is annexed to this report. Details of related party transactions are given in the notes to the financial statements.

The policy on Related Party Transactions of the Corporation ensures proper approval and reporting of the related party transactions. Pursuant to applicability of certain amendments to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, effective April 1, 2023 with respect to related party transaction norms, the said policy was amended to align it with all the applicable amendments.

The policy on Related Party Transactions is published elsewhere in the annual report and is also placed on the Corporation's website.

Particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

During the year ended March 31, 2023, earnings in foreign currency stood at Rs 0.63 crore and expenditure in foreign currency stood at Rs 970 crore (largely pertaining to interest on foreign currency borrowings).

The Corporation is in the business of housing finance and hence its operations are not energy intensive. The Corporation is cognisant of the importance of imbibing measures towards optimum energy utilisation and conservation. Further details are available in the BRSR.

Employees Stock Option Scheme (ESOS)

Presently, the stock options granted to the employees operate under ESOS-07, ESOS-08, ESOS-14, ESOS-17 and ESOS-20 schemes. During the year, there has been no variation in the terms of the options granted under any of the schemes and all the schemes are in compliance with SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (SBEB Regulations). The Corporation has obtained a certificate from secretarial auditors on the same.

During the year under review, the Corporation granted 60,38,952 options under ESOS-20. Of this, 59,33,952 options were granted to all employees of the Corporation equally on May 2, 2022. The balance 1,05,000 options were granted to a few employees who subsequently joined the Corporation during the year. The exercise prices for all such stock options were the latest available closing prices of the equity shares of the Corporation on NSE, prior to the date of the respective meetings of the Nomination and Remuneration Committee at which the stock options were granted.

The vesting and exercise schedule is the same as earlier grants under ESOS-2020.

The disclosures as required under SBEB Regulations have been placed on the website of the Corporation.

Unclaimed Dividend and Shares

As at March 31, 2023, dividend amounting to Rs 23 crore had not been claimed by shareholders of the Corporation.

The Corporation undertakes various initiatives to reduce the quantum of unclaimed dividend and has been periodically intimating the concerned shareholders, requesting them to encash their dividend before it becomes due for transfer to the I EPF.

During the year, unclaimed dividend amounting to Rs 3 crore for FY15 was transferred to the IEPF. Further, in compliance with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 as amended, the Corporation transferred 78,279 equity shares of Rs 2 each (corresponding to dividend for FY15 remaining unclaimed for a continuous period of 7 years) in favour of the IEPF. However, the concerned shareholders may claim the unclaimed dividend and unclaimed shares from IEPF, the procedure of which is detailed on the Corporation's website.

The unclaimed dividend in respect of final dividend for FY16 must be claimed by shareholders on or before August 25, 2023, failing which the unclaimed dividend and corresponding shares would be required to be transferred to the IEPF within a period of 30 days from the said date.

Directors

Mr. U. K. Sinha and Mr. Jalaj Dani retired as the independent directors of the Corporation with effect from April 29, 2023 on completion of their respective tenures. The board placed on record its sincere appreciation for the wise counsel and contributions made by Mr. Sinha and Mr. Dani to the Corporation during their respective tenures.

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Corporation, Mr. Keki M. Mistry and Ms. Renu Sud Karnad are liable to retire by rotation and are eligible for re-appointment. The brief profiles of Mr. Mistry and Ms. Karnad are provided elsewhere in the annual report.

All the directors of the Corporation have confirmed that they satisfy the fit and proper criteria as prescribed under the applicable regulations and that they are not disqualified from being appointed as directors in terms of Section 164(2) of the Companies Act, 2013.

The details on the number of board/committee meetings held are provided in the Report of the Directors on Corporate Governance, which forms part of this report.

Auditors

The members of the Corporation vide resolution passed by way of postal ballot on November 10, 2021, had appointed Messrs S.R. Batliboi & Co. LLP, Chartered Accountants (Firm Registration No. 301003E/ E300005) and Messrs G. M. Kapadia & Co., Chartered Accountants (Firm Registration No. 104767W), as joint statutory auditors of the Corporation for a period of three consecutive years, subject to them continuing to fulfil the applicable eligibility norms.

During the year, the total remuneration paid by the Corporation and some of its subsidiaries as per the provisions of the Companies Act, 2013 to Messrs S.R. Batliboi & Co. LLP and its network firm entities and Messrs G. M. Kapadia & Co. was Rs 4.03 crore and Rs 3.65 crore respectively. The remuneration pertains to fees for audit, internal financial control reporting, limited reviews, tax audits and taxation services, certifications and other matters during their respective tenures. Further details of remuneration paid by the Corporation to the said audit firms are provided in note 36.3 of the financial statements.

The Joint Statutory Auditors' Report annexed to the financial statement for the year under review does not contain any qualifications.

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

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Messrs BNP & Associates, practicing company secretaries undertook the secretarial audit of the Corporation for FY23. The Secretarial Audit Report is annexed to this report and does not contain any qualifications.

The Secretarial Compliance Report as prescribed by SEBI is provided elsewhere in the annual report.

Significant and Material Orders Passed by Regulators

During the year, RBI imposed a monetary penalty of Rs 5 lac on the Corporation for non-compliance with certain provisions of 'The Housing Finance Companies (NHB) Directions, 2010' issued by the National Housing Bank (NHB) read with the press release dated August 13, 2019 issued by RBI on 'Transfer of Regulation of Housing Finance Companies (HFCs) to Reserve Bank of India.'

The Corporation paid the penalty on March 29, 2023. The Corporation maintains that this is not significant or material in nature.

There were no significant or material orders passed by the regulators or courts or tribunals against the Corporation during the year under review.

Directors' Responsibility Statement

In accordance with the provisions of Section 134(3)(c) and Section 134 (5) of the Companies Act, 2013 and based on the information provided by the management, your directors state that:

(a) In the preparation of annual accounts, the applicable accounting standards have been followed;

(b) Accounting policies selected have been applied consistently. Reasonable and prudent judgements and estimates have been made so as to give a true and fair view of the state of affairs of the Corporation as at March 31, 2023 and of the profit of the Corporation for the year ended on that date;

(c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Corporation and for preventing and detecting frauds and other irregularities;

(d) The annual accounts of the Corporation have been prepared on a going concern basis;

(e) Internal financial controls have been laid down to be followed by the Corporation and such internal financial controls are adequate and operating effectively; and

(f) Systems to ensure compliance with the provisions of all applicable laws are in place and were adequate and operating effectively.

Internal Financial Controls

The Corporation has put in place adequate policies and procedures to ensure that the system of internal financial controls is commensurate with the size and nature of the Corporation's business. These systems provide a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes, safeguarding of assets of the Corporation, prevention and detection of frauds, accuracy and completeness of accounting records and ensuring compliance with corporate policies.

Annual Return

The Annual Return in Form No. MGT-7 for FY23 is uploaded on the Corporation's website.

Material changes and commitment, if any, affecting the financial position of the Corporation from the financial year end till the date of this report

There are no material changes and commitments affecting the financial position of the Corporation which have occurred after March 31, 2023 till the date of this report.

Acknowledgements

The directors place on record their gratitude for the support of various regulatory authorities including RBI, NHB, NCLT, Competition Commission of India, SEBI, IRDAI, Pension Fund Regulatory and Development Authority, Ministry of Finance, Ministry of Housing and Urban Affairs, Ministry of Corporate Affairs, Registrar of Companies, Financial Intelligence Unit (India), the stock exchanges, National Securities Depository Limited and Central Depository Services (India) Limited.

The Corporation deeply acknowledges the invaluable contribution of the lawyers, chartered accountants, financial advisors, registered valuers, tax advisors, amongst others who have helped the Corporation and HDFC Bank navigate through the complexities of the amalgamation process. The Corporation also appreciates the co-operation of all its subsidiary and associate companies during the year.

The board of directors collectively place their gratitude to all key stakeholders of the Corporation - its shareholders, borrowers, channel partners, depositors, deposit agents, lenders and regulators for their unstinting support that has contributed to the successful track record of the Corporation over the years.

Finally, the greatest appreciation goes to the efforts of each and every employee - past and present who for forty-six long years truly demonstrated the power of ordinary people building an extra-ordinary company.

On behalf of the Board of Directors

MUMBAI

DEEPAK S. PAREKH

May 4, 2023

Chairman