Fino Payments Bank Ltd Directors Report

Dear Members,

Your Board of Directors are pleased to present the Seventh (7th) Annual Report of Fino Payments Bank Limited (“Bank”) together with the Audited Financial Statements for the Financial Year ended March 31, 2023.

FINANCIAL HIGHLIGHTS

The financial highlights for the year under review are presented below:

( H in Lakh)

Particulars	2022-23	2021-22
Balance Sheet:
Savings Bank Deposits	91,158	49,762
Current Account Deposits	556	505
Total Assets/ Liabilities	2,46,640	1,68,000
Total Income	1,22,991	1,00,885
Less: Expenses	1,09,383	92,447
Profit /(Loss) before Interest, Depreciation and Tax	13,608	8,438
Less: Depreciation	4,185	3,545
Less: Finance Charges	2,915	619
Profit /(Loss) before Tax and prior period items	6,508	4,274
Profit /(Loss) before Tax	6,508	4,274
Taxes	-	-
Net Profit /(Loss) after Tax	6,508	4,274
Other Comprehensive Income	-	-
Balance of Profit /(Loss) carried forward to next year	6,508	4,274
Appropriations
Transfer to Statutory Reserve	1,627	1,069
Transfer to Investment Reserve	2,390	11

BUSINESS OPERATIONS AND STATE OF AFFAIRS OF THE BANK

The brief details on the business operation and state of affairs of the Bank during financial year ended March 31, 2023 are given below:

1. Throughput grew by a whopping 36% year-on-year basis in FY23. year ended March 31, 2023 as compared to

2. The Bank processed 120cr+ transactions in FY23, a 79% growth compared to the previous year (Almost 1% of those year ended March 31, 2023 as compared to who walk-in to transact, eventually commenced a relationship with the Bank).

3. Digital throughput grew exponentially by 166% to touch nearly 19% of overall throughput in FY23 at H48,965 Cr.

4. The Bank opened approx. 29.7 Lakh current and savings accounts of customers in FY23, of which 82% were subscription based accounts.

5. The Bank delivered a robust ROE of 12.8% in FY23.

6. Distribution activity on critical KPIs was pivotal in delivering sales performance. The Business Enablement Teams played a big role in driving these KPIs, namely: a. Active Merchant ratio up by 31% on AEPS. b. Active Merchant ratio up by 20% on CMS and Micro ATMs. c. Active Merchant ratio up by 9% on DMT.

7. Merchant network went up by 34%, the Banks physical outreach reached to 13 Lakh + banking points in FY 23.

Further, the net revenue of the Bank was H1,229.9 Cr for the financial H1,008.9 Cr in previous financial year. The BanksProfitafter tax stood at H65.1 Cr for the financial H42.7 Cr in previous financial year.

Your Bank is a public limited company and is registered with Reserve Bank of India (“RBI”) to carry on the business of Payments Bank in India. A detailed Operational performance of the Bank during the year has been comprehensively discussed in the Management Discussion and Analysis Report which forms an integral part of this Annual Report.

CHANGE IN NATURE OF BUSINESS

During the year under review, there has been no change in nature of business of the Bank.

SCHEDULED BANK LICENSE

The Bank became the Scheduled Bank with effect from January 01, 2021 vide Notification DoR.NBD.No.2138/16.03.005/2020 21 dated January 01, 2021 and published in the Gazette of India (Part III - Section 4) dated February 13 - February 19, 2021 and continues to comply with all the applicable regulations prescribed by the RBI, from time to time.

CREDIT RATING

The details of credit rating as on March 31, 2023 along with its outlook are given here under:

Rating	Outlook	Rating Agency	Comments
Long Term: [ICRA] BBB+	Stable	ICRA Limited	Instruments with this rating are considered to have moderate degree of safety regarding timely servicing of financial obligations.
Short Term: [ICRA] A2+	Stable	ICRA Limited	Instruments with this rating are considered to have strong degree of safety regarding timely payment of tions. obliga financial

DIVIDEND

The Bank is in a growing stage and keeping in view of required funds to support its future growth, your Directors do not recommend any dividend for the financial In accordance with Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (“SEBI Listing Regulations”), the Bank has formulated a Dividend Distribution Policy, which ensures a fair balance between rewarding its Members and retaining enough capital for the Banks future growth and expansion plan. The Dividend Distribution Policy is available on the Banks website at https:// www.finobank.com/uploads/pages/corporate-governance/ 1661757567_dividenddistributionpolicy.pdf

TRANSFER TO RESERVES

During the year under review, the Bank has appropriated H16.27 Cr towards Statutory Reserves for the financial 31, 2023.

CAPITAL STRUCTURE & FUND RAISING

During the year under review, there has been no change in the authorised share capital of the Bank. During the year under review, the Bank has not raised any capital, therefore the issued, subscribed and paid up share capital of the Bank as on March 31, 2023 was H83,21,43,020 (Rupees Eighty Three Crores Twenty One Lakh Forty Three Thousand Twenty Only) comprising of 8,32,14,302 (Eight Crores Thirty Two Lakh Fourteen Thousand Three Hundred and Two) Equity Shares of face value of H10/- (Rupees Ten Only) each.

STRATEGIC INITIATIVES DURING THE YEAR UNDER REVIEW AND TILL THE DATE OF THIS REPORT i. ACQUISITION OF 7.98% STAKE IN PAYSPRINT PRIVATE LIMITED

Your Board at its meeting held on April 10, 2022 which continued till April 11, 2022 had approved the proposal to invest upto 12.19% i.e. H4 Cr by way of subscription to equity shares of PaySprint Private Limited (“PaySprint”) in two tranches.

The Bank executed Share Subscription and Shareholders Agreement with PaySprint on September 20, 2022 to acquire upto 12.19% equity shares of PaySprint in two tranches i.e. first tranche of the proposed investment upto H2.5 Cr representing 7.98% of paid up capital of PaySprint and remaining investment upto H1.5 Cr representing 4.21% of paid up capital of PaySprint, subject to RBI approval, as applicable, at the sole discretion of the Bank.

Consequently, the Board of Directors of PaySprint has approved the allotment of 867 equity shares for total consideration of H2,49,79,137, representing 7.98% of paid up share capital of PaySprint.

The investment is in continuation to several in-house initiatives by the Bank that are already underway towards building a digital ecosystem for its customers as part of its Fino 2.0 journey. This investment will further strengthen your Banks product portfolio into Application Programming Interface (API) for business-to-business integration (B2B). The . Bank has and intends to develop API stacks in the following sectors: 1) Financial 2) Banking 3) Payment 4) Collection 5) Insurance 6) Lending 7) Investment 8) Travel 9) and 10) Health Care API stacks.

UTILIZATION OF NET PROCEEDS FROM THE FRESH ISSUE IN IPO

The net proceeds from the fresh issue in the IPO were utilised towards the objects stated in the Red Herring Prospectus dated October 22, 2021 i.e. towards augmenting its Tier 1 capital base to meet its future capital requirements. Further, the proceeds from the Fresh Issue was also used towards meeting the expenses in relation to the Offer. TheBankonquarterlybasisaffirmingno year ended March deviation in utilisation of the issue proceeds from the object stated in offer documents and submits to Stock Exchanges in compliance with the SEBI Listing Regulations.

The Bank would require additional Tier-I capital for penetration of business/ services in uncovered/ sparsely covered areas, modernization to technology (banking) platform to handle business in line with large volumes on account of growing business development of customer oriented banking/ financial products, activities to generate awareness of banks products and services among targeted population andcountry,keepingsufficientcapital meeting the regulatory/ compliance requirements to operate as a Payments Bank. This future need for capital will be met through internal accruals as well as proceeds of the issue.

EMPLOYEES STOCK OPTION SCHEMES (“ESOS”)

The Bank has formulated and implemented Fino Payments Bank

Limited - Employees Stock Option Policy, 2020 (“ESOP 2020”) with a view to attract, retain, incentivize and motivate employees of the Bank by way of rewarding their performance and motivate them to contribute to the overall corporate growth and profitability. The ESOP 2020 has been amended from time to time in view of regulatory changes/ business requirements. None of these amendments were prejudicial to the interest of the employees. The Nomination and Remuneration Committee which also acts as a Compensation Committee (“NRC”) of the Board is entrusted with the responsibility of implementation and administration of the

ESOP 2020.

The details and disclosures as required under Regulation 14 of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (“SEBI (SBEB and SE)”) and circulars issued thereunder, have been uploaded on the Banks website at www. the ‘Investors section. The Equity Shares issued under ESOP 2020 shall rank pari passu with the existing equity shares of the Bank. Further, disclosure as per the ‘Guidance Note on Accounting for Employee Share-based Payments issued by the Institute of Chartered Accountants of India, are disclosed in the Notes to the Financial Statements of the Bank for the financial year March 31, 2023, which forms integral part of this Annual Report. The ESOP 2020 is in compliance with the SEBI (SBEB and SE) Regulations, 2021. A certificate from the Secretarial Auditor of the Bank that the ESOP 2020 has been implemented in accordance with SEBI (SBEB and SE) Regulations 2021 and in accordance with the resolutions passed by the members of the Bank, shall be placed at the 7th AGM of the Bank.

CAPITAL ADEQUACY RATIO

Your Bank has strong capital adequacy ratio. As on March 31, 2023, the Capital to Risk Assets Ratio (CRAR) of your Bank was 86.05% which is well above the minimum requirement of 15% CRAR prescribed by the Reserve Bank of India.

Out of the above, Tier I capital adequacy ratio stood at 82.12% and Tier II capital adequacy ratio stood at 3.93%.

MATERIAL CHANGES AND COMMITMENTS

Apart from the details given in this Report, there were no material changes or commitments affecting the financial position of the Bank which have occurred between the end of the financial i.e. March 31, 2023 and up to the date of this Report.

TRANSFER TO INVESTORS EDUCATION AND PROTECTION FUND

During the year under review, the Bank was not required to transfer any fund or Equity shares to the Investor Education and Protection Fund as per the provisions of Section 125 of the Act read with applicable rules framed thereunder, as amended from time to time.

DEPOSITS

Being a banking company, the disclosures relating to deposits as required in accordance to Sections 73 and 74 of the Companies Act, 2013 (“Act”) read with Companies (Accounts) Rules, 2014 and other applicable provisions of the Act are not applicable to the Bank.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

As on March 31, 2023, the composition of the Board was in compliance with the provisions of the Act, the SEBI Listing Regulations and the Guidelines for Licensing of “Payments Banks” dated November 27, 2014 issued by the Reserve Bank of India and the Articles of Association of the Bank.

During the year under review, the Bank as a matter of good governance practice has reconstituted its Board Committees to align with the Reserve Bank of India (“RBI”) Circular No. RBI/2021-22/24DOR.GOV.REC.8/29.67.001/2021-22 dated April 26, 2021 on Corporate Governance in Banks - Appointment of Directors and .comunder Constitution of Committees of the Board though, the aforesaid circular is not yet applicable on Payments Bank.

The Board of the Bank is duly constituted with an optimum combination of Executive Director, Non-Executive Directors including Independent Directors and Women Director. The changes in the composition of the Board that took place during the period under review were carried out in compliance with the provisions of the Act, SEBI Listing Regulations and RBI Regulations. In terms of the requirement of the Listing Regulations, the Board has identified core skills, expertise and competencies of the Directors in the context of the Companys businesses for effective functioning. The list of key skills, expertise and core competencies of the Board of Directors is detailed in the Corporate Governance Report.

In the opinion of the Board, all the directors, as well as the directors appointed / re-appointed during the year possess the requisite qualifications, experience of integrity.

In terms of SEBI Listing Regulations, the Bank has received Certificate from M/s. DM & Associates Company Secretaries LLP, Practicing Company Secretaries, the Secretarial Auditor of the Bank that none of the Directors on the Board of the Bank have been debarred or disqualified from being appointed or continuing as a Director of any Company by the Securities and Exchange Board of India/ Ministry of Corporate Affairs or any such other statutory authority. year

Appointment/re-appointment of Directors made during FY 2022-23 and till the date of this report.

Based on the recommendation of the Nomination and Remuneration Committee (“NRC”), the Board approved the appointment/re-appointment of the following Directors, during FY 2022-23 and till the date of this report:

1. Mr. Prakash Kulathu Iyer (DIN:00529591) was appointed by the Board as an Additional Director in the capacity of Independent Director with effect from June 01, 2022. The

Members also approved the appointment of Mr. Prakash Kulathu Iyer as an Independent Director of the Bank for a term of five consecutive years commencing from June 01, 2022 up to May 31, 2027 (both days inclusive) through postal ballot by passing a special resolution.

2. Mr. Rakesh Bhartia (DIN:00877865) was appointed by the Board as an Additional Director in the capacity of Independent Director with effect from July 27, 2022. The Members at the 6th AGM approved the appointment of Mr. Rakesh Bhartia as an Independent Director of the Bank for a term of five consecutive years commencing from July 27, 2022 up to July 26, 2027 (both days inclusive) by passing a special resolution.

3. Mr. Rishi Gupta (DIN:01433190), Managing Director & CEO of the Bank was re-appointed by the Members at the 6th AGM for a period of three consecutive years with effect from May 02, 2023 up to May 01, 2026 (both days inclusive), subject to approval of the RBI, by passing an ordinary resolution. The RBI vide its letter dated April 28, 2023 approved the reappointment of Mr. Rishi Gupta as the Managing Director & CEO of the Bank for the period of three consecutive years w.e.f May 02, 2023.

4. Mr. Prateek Roongta (DIN: 00622797) was appointed by the Board as a Non-Executive Nominee Director with effect from October 31, 2022, not liable to retire by rotation, subject to approval of Members. The Members also approved the appointment of Mr. Prateek Roongta as a Non-Executive Nominee Director of the Bank commencing from October 31, 2022, not liable to retire by rotation, through postal ballot by passing an ordinary resolution.

5. Mr. Pankaj Kumar (DIN: 07245781) was appointed by the Board as a Non-Executive Nominee Director with effect from April 11, 2023, not liable to retire by rotation, subject to approval of Members of the Bank. The Bank shall initiate the process for seeking approval for Members on his appointment.

Re-appointment of Directors retiring by rotation

In accordance with the provisions of Section 152 of the Act and the Articles of Association of the Bank, Mr. Rishi Gupta (DIN:01433190), Managing Director & CEO of the Bank retires by rotation at the ensuing AGM and being eligible, has offered himself for re-appointment. The resolution seeking the re-appointment of Mr. Rishi Gupta forms part of the Notice convening the ensuing 7^th Annual General Meeting.

The profile and particulars of experience, attributes, skills of Mr. Rishi Gupta together with his other directorships and committee memberships in terms of regulation 36 of SEBI Listing Regulations and Secretarial Standard on General Meetings (“SS-2”) issued by the Institute of Company Secretaries of India have been disclosed in the annexure to the Notice of the Annual General Meeting.

Cessation of Directors during the FY 2022-23

Mr. Mahendra Kumar Chouhan was appointed as an Independent Director of the Bank for a period of five years with effect from May 02, 2017 and as a Part-time Chairman of the Bank for a period of three years with effect from May 18, 2020. Mr. Mahendra Kumar Chouhan ceased to be Independent Director and Part-time

Chairman of the Bank w.e.f. May 01, 2022 upon completion of his tenure.

Dr. Punita Kumar-Sinha was appointed as an Independent Director of the Bank for a period of five years with effect from May 02, 2017. Dr. Punita Kumar-Sinha ceased to be Independent Director of the Bank w.e.f. May 01, 2022 upon completion of her tenure. Mr. Ravi Subbaiah Pagadala and Mr. Avijit Saha tendered their respective resignations and ceased to be Non-Executive Nominee Directors of the Bank with effect from November 02, 2022 and March 02, 2023, respectively.

The Board placed on record its appreciation for the valuable services and support provided by Mr. Mahendra Kumar Chouhan, Dr. Punita Kumar-Sinha, Mr. Ravi Subbaiah Pagadala and Mr. Avijit Saha during their tenure as Directors of the Bank.

During the year under review, there has been no change in the Directors and Key Managerial Personnel of the Bank other than those disclosed above.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(3)(c) of the Act, it is hereby confirmed that: a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b. the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as on March 31, 2023 and of the profit of the Bank for that period; c. the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities; d. the Directors had prepared the annual accounts on a going concern basis; e. the Directors had laid down internal financial controls to followed by the Bank and that such internal financial are adequate and were operating effectively; and f. the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

DECLARATION BY INDEPENDENT DIRECTORS

All the Independent Directors (“IDs”) of the Bank have submitted declarations that each of them meets the criteria of independence as provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations. There has been no change in the circumstances affecting their status as IDs of the Bank. In the opinion of the Board, the IDs possess the requisite integrity, experience, expertise and proficiency required under all applicable laws and the policies the Bank.

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

(“IICA”).

CODE OF CONDUCT FOR DIRECTORS INCLUDING INDEPENDENT DIRECTORS AND SENIOR MANAGEMENT PERSONNEL

The Board of the Bank has adopted a Code of Conduct for the Directors and Senior Management Personnel (“SMPs”) of the Bank in compliance of Regulation 17(5) of the SEBI Listing Regulations which sets forth the guiding principles for orderly and fair conduct by Board and SMPs.

For the financial year 2022-23, all the Board members and SMPs have affirmed the compliance with the Code and a declaration to this effect signed by the Managing Director & CEO forms part of Corporate Governance Report annexed to the Boards Report forming part of this Annual Report. The Banks Code of Conduct for Directors and SMPs is disclosed on the Banks website at https:// www.finobank.com/uploads/pages/corporate-governance/166 1755215_9cocbodsrmanagmentn.pdf

NUMBER OF MEETINGS OF THE BOARD, ATTENDANCE, MEETINGS AND CONSTITUTION OF VARIOUS COMMITTEES

During the year under review, eight Board meetings were held. The intervening gap between the said meetings were in compliance with the provisions of Act, relevant rules made thereunder, Secretarial Standard-I issued by Institute of Company Secretaries of India and provisions of SEBI Listing Regulations. The dates of Board meetings and details of attendance of each Director and constitution of various Committees of the Board are disclosed separately in the Corporate Governance Report annexed to the Boards Report forming part of this Annual Report.

POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of Section 178(3) of the Act read with rules made thereunder and RBI guidelines, the Board of Directors has formulated and adopted a comprehensive Compensation Policy which inter-alia covers criteria for appointment and remuneration of its Directors, Key Managerial Personnel, Senior Management Personnel and other Employees of the Bank.

The proposals for appointment of Directors are submitted to the Nomination and Remuneration Committee (“NRC”) along with requisite documents/disclosures received in the prescribed format from proposed candidates as Director. The NRC carries out the fit and proper assessment after ascertaining the veracity ofdocumentssubmitted,experienceand for the post and if deems fit, recommend the profile of proposed candidate for appointment to Board for its approval. The NRC and the Board ensures that the remuneration to be paid to the proposed appointee is in accordance with the compensation policy of the Bank and RBI guidelines issued in this regard. During the financial year 2022-23, the Board reviewed the Compensation Policy, which regulates the appointment and remuneration of Directors, Key Managerial Personnel, Senior Management Personnel and other employees of the Bank. The terms of reference of the NRC, objectives of Compensation Policy including other details have been detailed in Corporate Governance Report annexed to the Boards Report.

The Compensation Policy of the Bank is available on the Banks website at https://www.finobank.com/uploads/pages/corporate -governance/1661755335_18nrccompensationpolicye.pdf.

BOARD PERFORMANCE EVALUATION

In accordance with the provision of the Act, SEBI Listing Regulations and RBI guidelines, the Annual Performance Evaluation of the Board, its Committees and each Director has been carried out for the year under review. The details of evaluation process of the Board, its Committees and individual Directors have been disclosed in the Corporate Governance Report forming part of this Annual Report.

The policy on the Boards Evaluation framework is made available on the Banks website at https://www.finobank. com/uploads/pages/corporate-governance/1662443304_ BoardPerformanceEvaluationPolicy.pdf

SUCCESSION PLANNING

Pursuant to the recommendation of Nomination and Remuneration Committee (“NRC”) the Board has framed a Policy on Succession Planning at the Board and Senior Management levels. The Policy is periodically reviewed by the NRC and the Board. The Board composition and the desired skill sets/ areas of expertise at the Board level are continuously reviewed and vacancies, if any, are reviewed in advance through a systematic due diligence process. Succession planning at Senior Management levels, including business and assurance functions, is continuously reviewed to ensure continuity and depth of leadership at two levels below the Managing Director & CEO. Successors are identified prior to the Senior Management positions falling vacant, to ensure a smooth and seamless transition. The Policy on Succession Planning is made available on the Banks website at https://www.finobank. com/uploads/pages/corporate-governance/1661869150_ SuccessionPlanningPolicyN.pdf.

FAMILIARISATION PROGRAMME

The details about Familiarisation Programme carried out by the Bank have been disclosed in the Corporate Governance Report forming part of this Annual Report

STATUTORY CENTRAL AUDITORS AND THEIR REPORT

M/s. A P Sanzgiri & Co, Chartered Accountants (ICAI Firm Registration Number: 116293W) the Statutory Central Auditors of the Bank have conducted Statutory Audit of the Financial Statements of the Bank for financial The Notes referred in the Auditors Report are self-explanatory. There are no qualifications or reservations or adverse remark or disclaimers given by Statutory Central Auditors. The Auditors Report forms an integral part of this Annual Report. The total fees paid to the Statutory Central Auditors of the Bank for the financial year ended March 31, 2023 is disclosed in the Note No. 60 to Financial Statements for the financial year ended March 31, 2023 forming part of this Annual Report.

M/s. A P Sanzgiri & Co, Chartered Accountants were appointed as the Statutory Central Auditors in the 6th Annual General Meeting (“AGM”) for a period of one year, untiltheconclusionofthe7 under relevant Accounting th AGM of the Bank. It is proposed to re-appoint M/s A P Sanzgiri & Co, Chartered Accountants as Statutory Auditors of the Bank for the period of 2 years commencing from the conclusion of the 7th AGM until the conclusion of the 9th AGM that would be held in 2025, subject to the approval of the RBI on annual basis.

The Statutory Auditors confirmedthat they satisfy the have independence criteria required under the Act and the Code of Ethics issued by the Institute of Chartered Accountants of India. Approval of the Members is being sought for the re-appointment of M/s. A P Sanzgiri & Co, as Statutory Central Auditors of the Bank at the ensuing 7th AGM.

SECRETARIAL AUDITORS AND THEIR REPORT

In compliance with the provisions of Section 204 of the Act and the rules framed thereunder, M/s. DM & Associates Company Secretaries LLP, the Secretarial Auditors (“Secretarial Auditors”) of the Bank undertook the Secretarial Audit for the financial qualifica endedMarch31,2023.Therewerenoobservations, or adverse remark made by the Secretarial Auditors in their Report.

The Secretarial Audit Report for financial as Annexure-I to the Boards Report.

COST AUDITORS

During the year under review, the provisions for maintenance of section cost records as specified 148(1) of the Act are not applicable to the Bank and the Bank was not required to appoint Cost Auditor.

LOANS, GUARANTEES AND INVESTMENTS

The particulars of investments made by the Bank are disclosed in Note no. 2.5 of notes to account.

There was no loan made, guarantee given or security provided or and hence, no disclosure was required to be made in this regard.

RELATED PARTY TRANSACTIONS

All the Related Party Transactions (“RPTs”) that were entered into during the financial year were on an arms length basis and were in ordinary course of business. Transactions entered into by the Bank with related parties in the normal course of its business were placed before the Audit Committee of the Board (“ACB”). Prior omnibus/specific approval for normal banking transactions were also obtained from the ACB for the RPTs which are repetitive in nature as well as for the normal banking transactions which cannot be foreseen. A statement giving details of all RPTs, entered pursuant to the omnibus approval so granted, was placed before the ACB for their review on a quarterly basis.

The Bank has not entered into any material financial or transactions with any related parties as per AS-18 and the SEBI Listing Regulations that may have potential conflict with the interest of the Bank at large.

In terms of Regulation 23(9) of the SEBI Listing Regulations, the Bank submits the disclosure of RPTs in a prescribed format, as specified on half yearly basis to the Stock Exchanges and update its website accordingly. There were no transactions entered into individually or taken together with the previoustransactionsduringthefinancialyear with related parties, which were not in the normal / ordinary course of the business of the Bank, nor were there any transactions with related parties or others, which were not on an arms length basis. Hence, pursuant to Section 134(3)(h) of the Act, read with Rule 8(2) of the Companies (Accounts) Rules, 2014, there are no RPTs to be reported under Section 188(1) of the Act. Hence, Form AOC-2 is not applicable to the Bank.

Pursuant to the provisions of the Act and the Rules made thereunder, SEBI Listing Regulations, the Bank has in place a Board approved policy on related party transactions.

The said policy is also uploaded on the Banks website at https://www.finobank.com/uploads/pages/corporate-governance/1661757749_RPTPolicyRevised.pdf. year

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO

Your Bank is committed for maintaining a balance between growth and optimal utilisation of resources. Your Bank is also focused towards undertaking initiatives for absorption of technology with conservation of energy.

A. Research & Development

During the year under review, the Bank had conducted various in-house development activities in the following areas. Focus was mainly on creating generic plug & play interfaces for various transactions so that these can not only be consumed by Bank, but also can be extended to its Partners and Merchants.

i. Payments Bank

a. Teller / Merchant Application

Added value to existing applications by adding new products and enhancing existing products on Web Teller and Feet on Street. Also enabled the same for Merchant on Web and Mobile.

b. API Banking & Integrations

Considering large flow of payment the Bank has developed white label approach for on-boarding payment services clients. With this approach, plugging-in new payment services client has been easy and faster now. The Bank has also created Application Programming Interface and Software Development Kit for Aadhar Enabled Payment Services (“AEPS”)/Micro ATM/Domestic

Money Transfer/Cash Management Services transactions. These APIs are used by Banks different Partners to integrate and initiate transactions from their own platform.

c. Extending Current Account Saving Account

i. Implementation of subscription base products

ii. The Bank is implementing VKYC base merchant/ customer on-boarding. iii. CASA+, this is an auto sweep extended account in Partner bank.

d. Analytics

After rollout of SAS, the Bank has now extended the same to profiling customer as well as merchants. This will enhance product offering to customer and performance of merchants. The Bank endeavors to enhance it further for cross sell.

e. Other systems implemented

The Bank is implementing Gyankosh (Knowledge Management System), Chatbot, Inventory system & Customer Relationship Management.

The Banks system has integrated with CleverTap to extend its communication with merchant and customer.

Rewards points and re-admission system for merchant.

RPA Automation implemented for Cash-In and account Data

ii. Self-Channels

With digital focus the Bank is working on implementing self-channels to enhance user experience and convenience. a. Cash Bazar

Considering a cash demand and shortage in the “On-Demand” cash field, platform for rural area. b. Multilingual

To increase usability, the Bank has upgraded Fino-Pay platform with “Hindi” support. Going ahead it can be extended to other regional languages.

iii. Application Security

The Bank has further enhanced security for applications so as to reduce frauds. Implemented below security patches to applications.

Strengthening security of applications.

Implementing EMV certification devices so as to support chip based transactions.

Dynamic key implementation.

Secured Socket Layer pinning.

B. Future Readiness

Considering future load of transactions, the Bank is continuously taking steps to improve scaling capacity of its applications. Below approach is followed to achieve the same:

Benchmarking existing application capacity by doing load testing.

Reducing transaction hops to implement straight through transaction processing for HIGH throughput transactions.

Segregating critical transactions from non-financial ones so as to create a control based on priority of transactions.

Enhancing process so as to reduce TAT on transactions like 15-minute account activation.

1. Security

Implementation of a 24X7 Security Operations Center (SOC).

DLP (Data Leak Prevention) system deployed.

MDM (Mobile Device Management) systems deployed for Mobile devices security.

2. Production systems

Periodic reviews of Servers, Storage and Networks and implement the required augmentation of capacities (CPU, Memory, Storage).

Network optimizations were carried out to strengthen security and performance.

Server consolidation was done for optimization and better management. Half yearly IT DR Drills completed . successfully.

C. Technology absorption a. All Payments Bank applications are primarily using CBS

(Core Banking system) provided by “FIS” (FIS Payments and Solutions India Private Limited). b. For digital signing of documents, the Bank is using digital signing system. c. DMS (Document Management Server) workflows are implemented using robotic process automation.

The aforesaid Technologies have been absorbed by the Bank to the extent possible.

D. Foreign Exchange Earnings and Outgo

During the year under review, there was no foreign exchange earnings, however, there was foreign exchange outgo of H47.37 Lakhs.

RISK MANAGEMENT

Your Bank being a Payments Bank is required to largely follow/ on all acquiring implement directives issued by RBI for scheduled commercial banks in addition to those forming part of the operating guidelines meant for Payments Banks. Accordingly, the Bank has adopted risk management process to identify, assess, monitor and manage risks in its day to day activities/functions through the effective use of processes, information and technology.

The Risk Management Process is monitored under Risk Management Policies and the delegation matrix as approved by the Board. The Board is supported by management team, Board Committees and Board Delegated Executive Level Committees as part of the Risk Governance Framework. The Board has an oversight of the managements efforts to balance growth and prudent risk management, while creating value for stakeholders. Pursuant to RBI Regulations, the Bank has constituted a Risk and Asset Liability Management Committee of the Board (“RALM”) and as mandated by the regulatory provisions, the Bank has appointed Chief Risk Officer, who administers the risk associated key verticals through dedicated divisions i.e., Market Risk, Operational Risk, Fraud Risk and other Risks under the aegis of the Board approved risk management policies and in accordance with the approval and responsibility delegation matrix.

The details of the RALM Committee and its terms of reference are disclosed in the Corporate Governance Report annexed to the Boards Report.

The risk management framework within the Bank is a layered structure and broadly consists of the following aspects for effective risk management across the Bank:

(a) Operational Risk Management

Your Bank is exposed significantoperational risk (for instance, risks arising due to use of technology, introduction of new products/services, processes, channels like mobile, internet banking, cash handling, etc.). Banks operational risk management policies provide guidance on operational risk management issues and serves as a one-point reference loss. and creates awareness among all employees within the Bank. The policies set out the broad parameters for identification of various operational risks that the Bank is exposed to, on an ongoing basis and also to put in place systems and procedures to mitigate such risks.

For the effective management of operational risk, the Bank has constituted Operational Risk Management Committee (“ORMC”) an Executive Committee that supports the RALM. The main functions of the ORMC are to monitor and ensure appropriateness of operational risk management and recommend suitable control measures for mitigating the same besides monitoring thereof.

Your Bank also outsources certain functions / activities to third-parties subject to compliance with RBI guidelines. These functions/activities and associated issues are being overseen by the Outsourcing Committee, an Executive Committee that supports the RALM.

(b) Market Risk, Liquidity and Asset Liability Management

Your Bank is significantly exposed to Market risk, i.e. possibility of loss caused by changes in the market variables in addition to liquidity and mismatches in asset liability. Your Bank has put in place a Board approved Market Risk Management, ALCO & Investment policies aligned with RBI regulations and operating guidelines governing Payments Banks and

Executive level Committees, viz. Investment and Market Risk Committee and ALCO, that supports the RALM in dealing with the day to day affairs, associated issues/concerns, if any, in a comprehensive manner.

(c) IT Risk Management

The Bank has put adequate perimeter level security protection devices, internal data protection solutions, 24X7 monitored Security Operations Centre (SOC). Various security solutions such as threat monitoring and subscription to other global solutions are put in place to monitor and act on any critical alerts. However the cyber threats are evolving and various types of attacks are executed such as ‘Zero Day and many new variants of malware attacks. Any of the new variant attack may impact the network or data protection. To mitigate such risks on the technology stack, adequate security crisis management processes are in place as per regulatory requirements and internal processes. Further, the Bank has pool of technical resources, which is prone to attrition. To mitigate that the Bank has set of hiring and training process with multiple technology streams.

(d) Reputation Risk Management

Your Bank, as part of Internal Capital Adequacy Assessment Process under Pillar 2 of Basel-1 has identified Reputation Risk as one of the Pillar 2 risks and evaluated it in terms of its sources, risk level and mitigation in place.

(e) Compliance Risk Management

The compliance risk is the risk of failure (or perceived failure) by the Bank to comply with applicable laws, regulations, guidelines and standards, leading to damage to the reputation of the Bank, legal or regulatory sanctions, or financial Your Bank has a Compliance Policy to ensure the highest standards of compliance. A dedicated team of subject matter experts works to ensure active compliance risk management and monitoring. The team also provides advisory services on regulatory matters. The focus is on identifying and reducing risk by rigorously testing products and also putting in place robust internal policies. Internal policies are reviewed and updated periodically as per agreed frequency or based on market actions or regulatory guidelines/actions.

CORPORATE SOCIAL RESPONSIBILITY

The Bank has in place a Corporate Social Responsibility (“CSR”) policy and constituted CSR Committee in accordance with the provisions of Section 135 of the Act read with rules framed thereunder and Schedule VII to the Act. The CSR policy outlines the Banks philosophy to play a positive role in the community at large and consider the environmental and social impact of business decisions in which it operates.

The key areas identified by the Bank includes eradicating hunger, poverty and malnutrition, promoting health care including preventive health care and sanitation including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation and making available safe drinking water, promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly, the differently abled, and livelihood enhancement projects and ensuring environmental sustainability, ecological balance, protection of flora and fauna, conservation of natural resources and maintaining quality of soil, air and water.

In terms of the provisions of the Act, for FY 2022-23, the Bank has spent H25.2 Lakhs based on its commitment to CSR programs. The Annual Report on CSR activities as prescribed under the Act and rules framed thereunder is annexed as Annexure II to the Boards Report.

The details of the CSR Committee and its terms of reference are disclosed in the Corporate Governance Report annexed to the Boards Report forming part of this Annual Report.

The CSR Policy is made available on Banks website at https://www.finobank.com/uploads/pages/corporate-governance/1661756940_csrpolicy.pdf

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Bank has formulated and adopted a Policy on Prevention of Sexual Harassment of Women at workplace. The Bank has under the complied with the provisions relating to the constitution of Internal Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The information relating to complaints received and redressed during Financial Year 2022-23 is provided in the Report on Corporate Governance, forming part of this Annual Report.

SUBSIDIARY & ASSOCIATE COMPANIES

The Bank does not have any subsidiary, joint venture or associate Company. The details of Holding Company are given below:

Sr. No.	Name of the Company	Whether incorporated/ acquired/ converted	Year of incorporation	Status
1.	Fino PayTech Limited	Incorporated	2006	Public Limited Company

ANNUAL RETURN

In accordance with the provision of Section 92 (3) of the Act, the Annual Return in the prescribed form MGT-7 is uploaded on Banks website www.finobank

CORPORATE GOVERNANCE

The Banks activities are carried out in accordance with good Corporate Governance practices and the Bank is constantly striving to make them better with time. The Bank believes that Governance framework and good practices helps in creating right culture and in turn enhances long-term sustainable value for all its stakeholders. Bank adheres to the Corporate Governance requirements set out by the SEBI/MCA/RBI. The Corporate Governance Report for along with a certificate issued by M/s. DM financial & Associates Company Secretaries LLP, confirming the compliance to applicable requirements related to Corporate Governance as stipulated under the SEBI Listing Regulations is annexed to the Boards Report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

In terms of Regulation 34(2)(f) of the SEBI Listing Regulations, as amended the Business Responsibility and Sustainability Report describing the initiatives taken by the Bank from an Environmental, Social and Governance is presented in a separate section which forms an integral part of this Report.

COMPLIANCE WITH SECRETARIAL STANDARDS

During the year under review, the Bank has complied with the applicable 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.

STATUS OF IND AS IMPLEMENTATION

As per RBI circular RBI/2015-16/315 DBR.BP.BC. No.76/21.07.001/2015-16 dated February 11, 2016, Implementation of Indian Accounting Standards (Ind AS), Banks are advised that scheduled commercial banks (excluding RRBs) shall follow the Indian Accounting Standards as notified Companies (Indian Accounting Standards) Rules, 2015, subject to any guideline or direction issued by the Reserve Bank in this regard. Banks in India currentlypreparetheirfinancialstatements as per the guidelines issued by RBI, the Accounting Standards notified under section 133 of the Act and generally accepted accounting principles in India (Indian GAAP). In January 2016, the Ministry of Corporate Affairs issued the roadmap for implementation of new Indian Accounting Standards (Ind AS), which were based on convergence with the International Financial Reporting Standards (IFRS), for scheduled commercial banks, insurance companies and non-banking financialcompanies (NBFCs). In March 2019, RBI deferred the implementation of Ind AS for banks till further notice as the recommended legislative amendments were under consideration of Government of India. The Bank had undertaken preliminary diagnostic analysis of the GAAP differences between Indian GAAP vis a vis Ind AS and shall proceed for ensuring the compliance as per applicable requirements and directions in this regard.

PARTICULARS OF EMPLOYEES

The information in terms of Section 197(12) of the Act read with .com. Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure III to the Boards Report.

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 as amended, forms part of this Annual Report and will be made available to any Member on request as prescribed therein. The aforesaid statement is available for inspection and any Member interested in obtaining a copy of the statement may write to the Company Secretary of the Bank at cs@finobank.com.

KEY MANAGERIAL PERSONNEL

As on the date of this report, the following officials of the Bank are the ‘Key Managerial Personnel pursuant to the provisions of Section 203 of the Act:

Mr. Rishi Gupta

Managing Director & CEO

Mr. Ketan Merchant

Chief Financial Officer

Mr. Basavraj Loni

Company Secretary and Compliance Officer - Head Legal

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report for the year under review, as stipulated under Regulation 34 of the SEBI Listing Regulations is presented in a separate section which forms an integral part of this Report.

VIGIL MECHANISM/WHISTLE BLOWER

The Bank has implemented a Whistle Blower Policy in compliance with the provisions of the Act and SEBI Listing Regulations. Pursuant to this policy, the Whistle Blowers can raise concerns relating to reportable matters (as defined in the policy) such as breach of Fino Payments Banks Code of Conduct, employee misconduct, fraud, illegal unethical imprudent behaviour, leakage of Unpublished Price Sensitive Information, corruption, safety and misappropriation or misuse of Bank funds/ assets etc. Further, the mechanism adopted by the Bank encourages the Whistle Blower to report genuine concerns or grievances and provides for adequate safeguards against victimization of Whistle Blower to those who avail such mechanism and also provides for direct access to the Chairman of the Audit Committee. The Audit Committee reviews the functioning of the Vigil Mechanism from time to time. None of the Whistle Blowers has been denied access to the Audit Committee. The Whistle Blower Policy is available on the Banks website at https://www. finobank.com/uploads/pages/corporate-governance/1661755 269_10vigilanceandwhistleblowerpolicye.pdf

REPORTING OF FRAUDS

During year under review, pursuant to Section 143(12) of the Act, neither the Statutory Central Auditors nor the Secretarial Auditor of the Bank has reported any instances of frauds committed in the Bank by its officers or its employees.

As per the provisions of Section 138 of the Act read with Rule 13 of the Companies (Accounts) Rules, 2014, the Internal Auditors presented their report to the Audit Committee on a quarterly basis. The scope, functioning, periodicity and methodology for conducting the Internal Audit have been formulated in consultation with the Audit Committee.

INTERNAL CONTROLS AND THEIR ADEQUACY

The Bank has an Internal Control System commensurate with the size, scale and complexity of its operations. Internal Audit Control System ensures that the regular internal audits are conducted at both the branches and other functional areas. The findings taken up by Audit Committee along with management response for suitable action. The Bank has an adequate and effective Internal Audit System, covering on a continuous basis, the entire gamut of operations and services spanning all locations, business and functions. The Audit Committee monitors the Internal Audit System on regular intervals and directs necessary steps to further improve the Internal Control system.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNALS

During the year under review, no material orders have been passed by the Regulators/Courts/Tribunals which would impact the going concern status of the Bank and its future operations. The Bank has not made any application under the Insolvency and Bankruptcy Code, 2016 and no proceeding is pending under the said Code.

Further, no one time settlement was done with any Bank/ Financial Institution with respect to loans taken by the Bank, hence disclosure on the difference between amount of the valuation done at the time of one time settlement and the valuation done while taking such loans is not applicable.

ACKNOWLEDGEMENT AND APPRECIATION

The Board of Directors of your Bank would like to place on record its sincere gratitude for the guidance and co-operation received from the Reserve Bank of India, Ministry of Corporate Affairs, Securities Exchange Board of India, Stock Exchanges, Depositories and other statutory and regulatory authorities and thank all the stakeholders of the Bank including its investors, customers, merchants, partners, bankers, shareholders, vendors, Registrars and all other valued partners for their continued support. The Board would like to express its appreciation for the sincere and dedicated efforts put in by all the employees of the Bank at all levels during the year and look forward to their continued contribution in building this Bank into a great institution.

		For and on behalf of the Board of Directors
	Deena Asit Mehta	Rishi Gupta
Date : May 02, 2023	Independent Director	Managing Director & CEO
Place : Navi Mumbai	DIN: 00168992	DIN: 01433190