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நிறுவன பெயரின் முதல் சில எழுத்துக்களை நிரப்பி 'கோ' பட்டனை கிளிக் செய்யவும்

PNB Housing Finance Ltd. இன் கணக்கு குறிப்புகள்

Mar 31, 2023

ECL movement as on March 31, 2022 and March 31, 2023

a) The loan assets in stage 2 were 3.61% as on March 31, 2023 as against 3.88% as on March 31,2022. The Company has

applied qualitative SICR criteria owing to which stage 1 assets of H584.70 Crore has moved to stage 2 assets. Pre SICR, the stage 2 loan assets as on March 31, 2023 would be 2.56% against 2.25% as on March 31, 2022.

b) ECL % POS has increased by 2.63% as on March 31, 2023 in stage 2.

c) Overall ECL % POS have decreased by 25 bps on accounts improvement in Asset quality.

ECL movement as on March 31, 2021 and March 31, 2022

a) The loan assets in stage 2 were 3.88% as on March 31, 2022 as against 5.17% as on March 31, 2021. The Company has applied qualitative SICR criteria owing to which stage 1 assets of H823.17 crore has moved to stage 2 assets. Pre SICR, the stage 2 loan assets as on March 31, 2022 would be 2.25% against 3.46% as on March 31, 2021.

b) ECL % POS has decreased by 1.29% as on March 31, 2022 in stage 2 due to transition of stage 2 accounts to stage 3 (as an impact of RBI Circular No. RBI/2021-2022/125 DOR.STR.REC.68/21.04.048/2021-22)

ECL movement as on March 31, 2022 and March 31, 2023

a) Stage 1 ECL % of POS increased from 6.50% to 9.47%.

b) The loan assets in stage 2 were decresed to nil as on March 31, 2023 from 0.29% as on March 31, 2022 majorly due to decreasing corporate portfolio.

c) The Company''s stage 3 asset ratio has decreased from 37.13% as on March 31, 2022 to 22.25% as on March 31, 2023 owing to this ECL has also decreased.

ECL movement as on March 31, 2021 and March 31, 2022

a) Stage 1 ECL % of POS increased from 4.31% to 6.50%. This is due to restructuring cases carrying higher provisions.

b) The loan assets in stage 2 were decresed to 0.29% as on March 31, 2022 from 9.90% as on March 31,2021 majorly due to shift of stage 2 asset to stage 3.

c) The Company''s stage 3 asset ratio has increased from 13.46% as on March 31, 2021 to 37.13% as on March 31, 2022 owing to this ECL has also increased.

AThe restructuring was done for Stage 1 accounts, total restructured assets were H967 crore (Previous year H1,647 crore), against which provision of H102 (Previous year H204 crore) is held.

#Refer Note 2.21, 2.22, 2.23 and 46.1.

Note 6.4: Loans due from borrowers are secured wholly or partly by any one or all of the below as applicable:

Tangible securities

i) Equitable/ Simple/ English Mortgage of immovable property;

ii) Mortgage of Development Rights/ FSI/ any other benefit flowing from the immovable property;

iii) Hypothecation of rent receivables, cash flow of the project, debt service reserve account, fixed deposit, current and escrow accounts;

Intangible securities

i) Demand Promissory Note;

ii) Post dated cheques towards the repayment of the debt;

iii) Personal/Corporate Guarantees;

iv) Undertaking to create a security;

v) Letter of Continuity.

Note 8.1: D uring the year ended March 31 2023, the Company has sold some loans and advances measured at amortised cost under co-lending deals through assignment mode, as a source of finance. As per the terms of deal, the derecognition criteria as per IND AS 109, including transfer of substantially all the risks and rewards relating to assets being transferred to the buyer is met and the assets have been derecognised.

Since the Company transferred the above financial asset in a transfer that qualified for derecognition in its entirety therefore the whole of the interest spread and net servicing fees (over the expected life of the assets) is recognised at present value on the date of derecognition as interest-only strip/net servicing fees receivable ("Receivables on assignment of loan") and correspondingly recognised as profit on derecognition of financial assets.

Note 8.2: Includes receivable from related party H0.44 crore (Previous year H0.61 crore).

Note 8.3: Disclosure pursuant to RBI Notification dated September 24, 2021 on "Transfer of Loan Exposures" are given below:

(a) The Company has not acquired any stressed loans or loans not in default during the year ended March 31, 2023 and March 31, 2022.

Note 18.2: Term loan from Banks:

a) Nature of security

i) Term loan from Punjab National Bank (related party) are secured by hypothecation by way of exclusive charge on specific standard book debts of the Company with minimum asset cover of 1.10 times to be maintained at all times.

ii) Term loans from banks other than Punjab National Bank are secured by hypothecation of specific book debts to the extent of 1.0 to 1.12 times of outstanding amount.

i) The ECB borrowings are secured against eligible housing loans/book debts and are hedged through currency swaps, interest rate swaps and forward contracts as per the applicable RBI guidelines.

ii) The derivative contracts are initially recognised at fair value on the date of the transaction and all outstanding derivative transactions, on the date of balance sheet, are subsequently measured at fair value on that date. Where cash flow hedge accounting is used, fair value changes of the derivative contracts are recognised through the cash flow hedge reserve (through other comprehensive income) which is reclassified to profit and loss account as the hedged item effects profit and loss. Premium paid/discount received in advance (if any) on the derivative contracts, which are not intended for trading or speculation purposes, are amortised over the period of the contracts, if such contracts relate to monetary items as at the balance sheet date.

iii) As at March 31, 2023, the Company has outstanding ECB of USD 670.00 million (equivalent to I 5,508.53 crore) (March 31, 2022 USD 796.00 million (equivalent to I 6,034.25 crore)). The Company has undertaken cross currency swaps and principal only swaps to hedge the foreign currency risk of the ECB principal. Whereas the Company

has entered into floating to fixed coupon only swaps and interest rate swaps along with forward contracts to hedge the floating interest and foreign currency risk of the coupon payments respectively. All the derivative instruments are purely for hedging the underlying ECB transactions as per applicable RBI guidelines and not for any speculative purpose.

Redeemable non-convertible subordinated debentures are subordinated debt to present and future senior indebtedness of the Company and based on the balance term to maturity as at March 31, 2023, I 337.70 crore (March 31, 2022 I 577.50 crore) qualify as Tier II Capital under regulatory guidelines for assessing capital adequacy.

Note 24.4: Terms/Rights attached to equity shares The Company has only one class of shares referred to as equity shares having a par value of H10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in H. Dividend distribution is for all equity shareholders who are eligible for dividend as on record date. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General meeting. In the event of liquidation of the Company, the holders of equity

shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Note 24.5: The Company has not allotted any share pursuant to contracts without payment being received in cash nor it has issued any bonus shares or bought back any shares, during the period of five years immediately preceding the reporting date.

Note 24.6: The Company has not:

i. Issued any securities convertible into equity/ preference shares.

ii. Issued any shares where calls are unpaid.

iii. Forfeited any shares.

Note 24.7: Capital Management:

The Company maintains an actively managed capital base to cover risks inherent in the business and is meeting the capital adequacy requirements as per the directives of the regulator. The adequacy of the Company capital is monitored using, among other measures, the regulations issued by NHB & RBI from time to time.

Company has complied in full with all its externally imposed capital requirements.

The primary objectives of the Company capital management policy are to ensure that it complies with externally imposed capital requirements and maintains strong credit ratings and healthy capital ratios in order to support its business and to maximise shareholder''s value.

The Company manages its capital structure after taking in to consideration the inherent business risk and the changes in economic conditions. In order to maintain or adjust the capital

structure, the Company may adjust the amount of dividend payment to shareholders, return of capital to shareholders or issue capital securities.

No changes have been made to the objectives, policies and processes from the previous years and they are reviewed by the Board of Director''s at regular intervals.

Regulatory capital consists of Tier I capital, which includes owned funds comprising share capital, share premium, retained earnings including current year profit and free reserves less cash flow hedge reserve, deferred revenue expenditure and intangible assets. The book value of investment in shares of other non-banking financial companies including housing finance companies and in shares, debentures, bonds, outstanding loans and advances including hire purchase and lease finance made to and deposits with subsidiaries and companies in the same group exceeding, in aggregate 10% of owned funds will be reduced while arriving at the Tier I capital.

The other component of regulatory capital is Tier II Capital Instruments, which includes non-convertible preference shares, revaluation reserve, general provision and loss reserves to the extent of one and one fourth percent of risk weighted asset, hybrid capital instruments and subordinated debts.(Refer Note 36.1)

NOTE 25: OTHER EQUITY (Nature and purpose of reserves)

Share application money

Share application money pending allotment whereby the amount has been received on the application, of which allotment is yet to be made.

Securities premium

Securities premium includes :

- amount of premium received on issue of equity shares and;

- fair value of the stock options which are treated as expense, if any, in respect of shares allotted pursuant to Employee Stock Options Scheme.

The securities premium can be utilised only for limited purposes such as issuance of bonus shares, issue expenses of securities which qualify as equity instruments in accordance with the provisions of the Companies Act, 2013.

Special reserve and Statutory reserve

In accordance with Section 29C(i) of the National Housing Bank Act, 1987, the Company is required to transfer at least 20% of its net profit every year to a reserve fund (statutory reserve) before any dividend is declared.

The Company has created a special reserve in terms of clause (viii) of sub-section (1) of Section 36 of the Income-tax

Act, 1961 and the same is considered to be an eligible transfer for the purposes of Section 29C (i).

Share option outstanding accounts

The cost of equity settled transactions is determined by the fair value at the date when the grant is made using the Black-Scholes Model. The cumulative expense recognised for equity settled transaction is credited to share option outstanding account in equity.

Retained earnings

Retained earnings are profits earned by the Company after transfer to general reserve and payment of dividend to shareholders.

Effective portion of cash flow hedges

The Company uses hedging instruments as part of its management of foreign currency risk and interest rate risk associated on borrowings. For hedging foreign currency and interest rate risk, the Company uses foreign currency forward contracts, cross currency swaps and interest rate swaps. To the extent these hedges are effective, the change in fair value of the hedging instrument is recognised in the cash flow hedging reserve. Amounts recognised in the cash flow hedging reserve is reclassified to the statement of profit or loss when the hedged item affects profit or loss (e.g. interest payments).

ii) The basic earnings per share has been computed by dividing the net profit after tax attributable to equity share holders of the Company by the weighted average number of equity shares outstanding during the year. The diluted earnings per share has been computed by dividing the net profit after tax attributable to equity share holders of the Company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the outstanding equity shares). Diluted potential equity shares are deemed converted as of the beginning of the period unless issued at a later date. Diluted potential equity shares are determined independently for each period presented. Diluted earnings per share does not include conversion or exercise of potential ordinary shares that would have an anti-dilutive effect on earnings per share.

NOTE 36: DISCLOSURE AS PER NON-BANKING FINANCIAL COMPANY-HOUSING FINANCE COMPANY (RESERVE BANK) DIRECTIONS, 2021

The following additional disclosures have been given in compliance with:

(i) Non-Banking Financial Company-Housing Finance Company (Reserve Bank) Directions, 2021"" (''RBI directions"") issued by RBI vide notification number RBI/2020-21/73/DOR.FIN.HFC.CC.No.120/03.10/l36/2020-21 dated February 17, 2021; and

(ii) RBI notification number RBI/2022-23/26/DOR.ACC.REC.No.20/21.04.018/2022-23 dated April 19, 2022 in relation to Scale Based Regulation.

During the year, the Company has sold some loans and advances measured at amortised cost under co-lending deals through assignment mode, the details of which has been given in note 8.3 (b).

iv) During the year, the Company has not purchased any non-performing financial assets (Previous year H Nil).

v) During the year, the Company has sold non-performing financial assets details of which are given in note 8.3 (c) (Previous year H Nil).

Note 36.6: Asset Liability Management

The residual maturity profile of Assets and Liabilities is carried out based on the current estimates and assumptions regarding behavioural pattern of pre-payments/maturities and renewals. Maturity pattern of certain items of assets and liabilities are as follows:

Note: While computing the above information, certain estimates, assumptions and adjustments have been made by the Management which have been relied upon by the auditors.

ii) As on March 31, 2023, the Company does not have any exposure to Capital Market (Previous year H Nil).

iii) As on March 31, 2023, the Company has not financed any product of the parent company (Previous year H Nil).

iv) As on March 31, 2023, the Company has not exceeded the prudential exposure limit for single borrower or group

borrower (Previous year H Nil).

v) As on March 31, 2023, the Company has not given any unsecured advances (Previous year H Nil).

vi) As on March 31, 2023, all advances of the Company are secured against tangible assets and there are no advances against intangible assets (Previous year H Nil).

vii) As on March 31, 2023, the Company has no exposures to group companies engaged in the real estate business (Previous year H Nil).

viii) As on March 31, 2023, the Company has no Intra-group exposures with in the group companies as defined by RBI (Previous year H Nil).

Note 36.8: Registration obtained from financial sector regulators

NHB : vide registration number 01.0018.01

Ministry of Corporate Affairs : L65922DL1988PLC033856

Note 36.9: Disclosure of Penalties imposed by NHB/RBI and other regulators:

During the financial year ended March 31, 2023, Regulators have imposed a penalty of H0.08 crore for delay in appointment of

Independent directors on Board pursuant to Regulation 17 (1) of the SEBI (Listing Obligations and Disclosure Requirements)

Regulations, 2015.

During the financial year ended March 31, 2022, Regulators has imposed a penalty of H0.06 crore on account of the below

mentioned observations:

(i) NHB has levied a penalty of H0.01 crore for Non adherence of policy circular no. 58 and 75 with respect to upfront disbursal of sanctioned individual housing loan to the builders without linking the disbursals to various stages of construction of housing project.

(ii) BSE Ltd & National Stock Exchange of India Ltd has imposed a penalty of H0.05 crore for delay in appointment of Independent directors on Board pursuant to Regulation 17 (1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Note 36.13: Remuneration of Directors: Details of Remuneration of Directors are disclosed in Form No. MGT - 7.

Note 36.14: Management: Management Discussion and Analysis report shall be referred for the relevant disclosures.

Note 36.15: During the year, no transaction was accounted which was related to prior period in terms of Ind AS 8 (Previous year H Nil).

Note 36.16: During the year, no item of revenue recognition has been postponed except as disclosed in accounting policy for revenue recognition (Refer Note 2.3).

Note 36.17: Consolidated Financial Statements (CFS): Consolidated Financial Statements shall be referred for the relevant disclosures.

Note 36.19: Break-up of Loan & Advances and Provisions thereon:

The Company has complied with the norms prescribed by the regulator for recognising Non-Performing Assets (NPA) in preparation of accounts. As per the norms, NPAs are recognised on the basis of more than 90 days overdue. NPAs are to be treated as Bad & Doubtful, if they remain outstanding for more than 15 months. The Company has made adequate provisions on Non-Performing Assets and Standard Assets in respect of Housing and Non-Housing Loans as prescribed under directions issued by the regulator.

Note 36.30: As on March 31, 2023, the Company has not granted any loans and has no outstanding loans against collateral gold jewellery (Previous year H Nil).

Note 36.31: Deposit includes Public Deposits as defined in Paragraph 4.1.30 of RBI Directions, are secured by floating charge on the Statutory Liquid Assets maintained in terms of sub-sections (1) & (2) of Section 29B of the National Housing Bank Act, 1987. As on March 31, 2023, the public deposits (including accrued interest) outstanding amounts to H15,545.96 crore (Previous year H15,019.95 crore).

The Company is carrying Statutory Liquid Assets amounting to H2,276.42 crore (Previous year H2,234.18 crore).

Note 36.32: As on March 31, 2023, the Company operates within India and does not have any joint venture or overseas subsidiary.

Management regularly reviews the position of cash and cash equivalents by aligning the same with the projected maturity of financial assets and financial liabilities, economic environment, liquidity position in the financial market, anticipated pipeline of future borrowing & future liabilities and threshold of minimum liquidity defined in the ALM policy with additional liquidity buffers as management overlay.

(vi) Institutional set-up for liquidity risk management

The Board of Directors of the Company has constituted the Asset Liability Management Committee (ALCO) and the Risk Management Committee. The Board has the overall responsibility for management of liquidity risk. The Board decides the strategy, policies and procedures to manage liquidity risk in accordance with the liquidity risk tolerance/ limits approved by it. The Risk Management Committee (RMC), which is a committee of the Board, is responsible for evaluating and monitoring the integrated risk management system of the Company including liquidity risk. The ALCO is responsible for ensuring adherence to the liquidity risk tolerance/limits set out in the Board approved Asset Liability Management (ALM) policy. The role of the ALCO with respect to liquidity risk includes, inter alia, decision on desired maturity profile for assets & liabilities, responsibilities and controls for managing liquidity risk and overseeing the liquidity position of the Company. The ALM Policy is reviewed periodically to realign the same pursuant to any regulatory changes/changes in the economic landscape or business needs and tabled to the Board for approval.

(b) Disclosure pursuant to Reserve

Bank of India Circular DOR.FIN.HFC. CC.No.120/03.10.136/2020-21 dated February 17, 2021 pertaining to Liquidity Risk Management Framework for Housing Finance Companies

A. Qualitative Disclosure

As per above circular, all deposit taking HFCs irrespective of their asset size, shall maintain a liquidity buffer in terms of Liquidity Coverage Ratio (LCR) which will promote resilience of HFCs to potential liquidity disruptions by ensuring that they have sufficient High Quality Liquid Asset (HQLA) to survive any acute liquidity stress scenario lasting for 30 days. The timeline on adhering to LCR guidelines are tabulated below.

The objective of the LCR is to promote an environment wherein balance sheet carry a strong liquidity for short term cash flow requirements. To ensure strong liquidity NBFCs are required to maintain adequate pool of unencumbered HQLA which can be easily converted into cash to meet their stressed liquidity needs for 30 calendar days. The LCR is expected to improve the ability of financial sector to absorb the shocks arising from financial and/or economic stress, thus reducing the risk of spill over from financial sector to real economy.

The Liquidity Risk Management of the Company is managed by the ALCO under the governance of Board approved Liquidity Risk Framework comprising of Asset Liability Management policy, Contingency Funding Policy, Funding Strategy and Resource Mobilization Policy, and Market Risk Management Policy. The LCR levels for the balance sheet date is derived by arriving the stressed

expected cash inflow and outflow for the next calendar month. To compute stressed cash outflow, all expected and contracted cash outflows are considered by applying a stress of 15%. Similarly, inflows for the Company is arrived at by considering all expected and contracted inflows by applying a haircut of 25%.

The main drivers of LCR are:

Outflows comprises of:

a) All the contractual debt repayments and interest payments

b) Expected operating expense based on FY 2021-22

c) Committed credit facilities contracted with customers for both sanctioned but partly disbursed cases and sanctioned but undisbursed cases based on historical experience and other expected or

contracted cash outflows like expected pay-outs under contracted direct assignment deals.

The potential debt which may be recalled by the lenders on account of covenant breach has not been considered since the Company has not experienced such debt recall by any lender so far despite having breached covenants in the past.

Inflows comprises of:

a) Expected receipt (scheduled EMIs) from all performing loans

b) Liquid investment either in the form of short tenure Fixed Deposits with banks or in units of Debt Mutual Fund Schemes (like Overnight Liquid and Money Market Schemes) which are unencumbered and have not been considered as part of HQLA

c) Sanctioned and undrawn lines of credit from banks.

For the purpose of HQLA the Company considers unencumbered government securities and cash/bank balances with nil haircuts.

The unencumbered government securities held as part of HQLA are identified separately from the government securities which are lien marked in favour of Trustee for

Funding profile of the Company is tabulated below:

public deposits accepted by the Company. The LCR is computed by dividing the stock of HQLA by its total net cash outflows over one-month stress period.

LCR guidelines are effective from December 01,

2021. LCR has been calculated and monitored as per methodology prescribed in the RBI circular. LCR has been calculated as a simple average of the total number of days in a quarter on daily basis. The Company is compliant with maintenance of stipulated LCR. Further, the Company has been monitoring the LCR at monthly intervals for the period of April 2022 to March 2023. The maximum and minimum daily required HQLA for regulatory compliance has been H1,650.01 crore and H585.72 crore respectively for the period of April 22 to March 23.

The Company maintains diversified sources of funding comprising short/long term loans from banks, NonConvertible Debentures (NCDs), External Commercial Borrowings (ECBs), Deposits, Refinance from National Housing Bank (NHB) and Commercial Papers (CPs).

The funding pattern is reviewed on monthly basis by the management and on quarterly basis by the ALM Committee and Risk Management Committee.

Derivative exposures and potential collateral calls:

To hedge ECBs the Company enters into derivative transactions. All the derivatives of the Company are for hedging purpose and not for any speculative or trading purpose. As on March 31, 2023, the notional amount of outstanding derivatives is H10,065.79 crore (Previous year H10,288.45 crore) with net positive MTM of H682.37 crore (Previous year H242.25 crore). Further, the Company has executed bilateral Credit Support Agreement with one of its derivative counterparty. As on March 31, 2023 there is no outstanding margin but there could be potential future margin calls based on MTM movements. However, the Company has received MTM of H22.33 crore (Previous year H Nil).

Currency mismatch in LCR: There is no mismatch required to be reported in LCR as on March 31, 2023 and March 31, 2022 since all the Foreign Currency liabilities are reinstated to H as per the corresponding derivative/ forward deals and closing RBI reference / FBIL exchange rates.

Note 36.36: RBI vide its circular number RBI/2020-21/60/DOR.NBFC (HFC) CC.NO 118/03.10.136/2020-21 dated October 22, 2020 defined the principal business criteria for HFCs. Further, it also states that those HFCs which does not fulfil the defined criteria as on October 22, 2020 has an option to submit a board approved plan including a roadmap to fulfil the defined criteria and timeline for transition to RBI with in three months from the date of circular.

In compliance with the above circular, the Company has submitted board approved plan along with roadmap to fulfil the defined criteria and timeline for transition to RBI on January 21, 2021.

Note 36.37: In compliance with RBI notification number RBI/DNBS/2016-17/49/Master Direction DNBS. PPD.01/66.15.001/2016-17 dated September 29, 2016, during the year the Company has reported eight fraud cases in relation to loans advanced to the borrowers amounting to H5.44 crore to NHB (Previous year H4.04 crore in relation to four fraud cases for loans advanced to the borrowers and one fraud case in relation to deposits).

NOTE 37: LEASES

The Ministry of Corporate affairs vide notification number G.S.R. 463(E) dated July 24, 2020 has issued Companies (Indian Accounting Standards) Amendment Rules, 2020 which was further amended vide notification number G.S.R 419 (E) dated June 18, 2021. As per the amendment rules the Company has an option to apply practical expedients of paragraph 46A of Ind AS 116.

The Company had elected to use the practical expedient of paragraph 46A to not to assess whether a rent concession that meets the conditions of paragraph 46B is a lease modification and account for any change in lease payments resulting from the rent concession as if the change were not a lease modification. During the previous year the Company had applied the practical expedients to all rent concessions that meet the conditions specified in paragraph 46B of Ind AS 116.

The Company has recognised H Nil (Previous Year H0.02) as other income for the year ended March 31, 2023 on account of applicability of the above practical expedients.

(iv) There are no gains or losses from sales and leaseback for the year ended March 31, 2023 and March 31, 2022.

(v) There are no variable lease payments for the year ended March 31, 2023 and March 31, 2022.

NOTE 38: DISCLOSURE ON TEMPORARY EXCEPTIONS FROM APPLYING SPECIFIC HEDGE ACCOUNTING REQUIREMENTS AS PER IND AS 109

The Ministry of Corporate affairs vide notification number G.S.R. 463(E) dated July 24, 2020 has issued Companies (Indian Accounting Standards) Amendment Rules, 2020.

As per the amendment rules the Company has an option to apply the exceptions set out in paragraphs 6.8.4-6.8.12 of Ind AS 109.

The Company has elected to apply the exceptions as specified above. Disclosure with respect to paragraph 24H of Ind AS 107 in relation to uncertainty arising from interest rate benchmark reforms is as follows:

a) The Company has foreign currency borrowings in

USD only and the interest rate benchmarks where the Company''s hedging relationship is related are 3 month and 6 month USD LIBOR.

b) The Company has outstanding External Commercial Borrowing (ECB) principal of USD 670.00 million (equivalent to H5,508.53 crore) (March 31, 2022, USD 796.00 million (equivalent to H6,034.25 crore), which is directly linked or affected by the abovementioned two benchmarks. (USD 495.00 million - 3month USD LIBOR and remaining USD 175.00 million - 6 month USD LIBOR) (March 31, 2022, USD 546.00 million - 3month USD LIBOR and remaining USD 250.00 million - 6 month USD LIBOR).

c) USD 3 month & 6 Month LIBOR will cease to exist from June 30, 2023 and outstanding principal exposure

as on that date will be USD 640.00 million (March 31, 2022 USD 640.00 million) for which the Company will discuss and negotiate the alternative reference rate with the respective lenders to incorporate or align the same in the corresponding hedging/derivative deals. The Company will do bilateral negotiation or sign the ISDA fall back protocol as the case may be with each of the derivative counterparties.

d) The outstanding borrowings are long term in nature and the Company hasn''t yet received any specific communication from any of its lenders regarding the timelines to change to an alternate reference/benchmark rate. However, as soon as the Company receives any

communication or instruction from any of its lenders regarding the transition to an alternate reference rate other than the LIBOR, the Company will immediately take it up with the corresponding hedging counterparty/ies to effect the transition in the hedging/derivative deals also. However, this may result in higher pay out for the Company in the form of excess interest or hedging cost of the underlying borrowing for its remaining tenure.

e) The nominal amount of hedging instruments for outstanding principal as on March 31, 2023 is USD 670.00 million (March 31, 2022 is USD 796.00 million).

NOTE 39: SEGMENT REPORTING:

Company''s main business is to provide loans against/for purchase, construction, repairs & renovations of Houses/ Flats/Commercial Properties etc. All other activities of the Company revolve around the main business. As such, there are no separate reportable segment, as per the Operating Segments (Ind AS 108), notified by the Companies (Accounting Standard) Rules, 2015. The Company operates within India and does not have operations in economic environments with different risks and returns, hence it is considered operating in single geographical segment.

The Company is not reliant on revenues from transactions with any single external customer and does not receive 10% or more of its revenues from transactions with any single external customer.

NOTE 40: CONTINGENT LIABILITIES AND COMMITMENTS

i) Contingent liabilities in respect of Income-tax of H56.01 crore (Previous year H20.74 crore) is disputed and are under appeals. These includes contingent liability of H1.96 crore (Previous year H1.84 crore) with respect to Income-tax which have been decided by the CIT(A) in Company''s favour. However, Income-tax Department has filed appeal with Delhi High Court . The Company expects the demands to be set aside by the Delhi High Court, hence no additional provision is considered necessary.

ii) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is H21.51 crore (Previous year H7.60 crore).

iii) Claims against the Company not acknowledged as debt is H0.43 crore (Previous year H0.29 crore).

iv) Company had issued corporate financial guarantee amounting to H0.25 crore (Previous year H0.25 crore) to "UNIQUE IDENTIFICATION AUTHORITY OF INDIA (UIDAI)’’ against the Aadhar Authentication Services.

NOTE 41: DISCLOSURE IN RESPECT OF EMPLOYEE BENEFITS:

In accordance with Indian Accounting Standards on Employee Benefits’ (Ind AS 19), the following disclosure have been made:

Defined Contribution Plans:

Note 41.1: The Company makes contributions towards provident fund to a defined contribution retirement benefit plan for qualifying employees. Under the plan, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit plan to fund the benefits. The contribution has been recognised in the Statement of Profit and Loss which are included under "Contribution to Provident Fund and Other Funds" in Note 31.

Note 41.2: Defined Benefit Plans

The Company has a defined benefit gratuity plan. Every employee is entitled to gratuity as per the provisions of the Payment of Gratuity Act, 1972. The scheme is funded and the same is managed by Life Insurance Corporation of India. The liability of Gratuity is recognised on the basis of actuarial valuation.

The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out as at March 31, 2023. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

Risks associated with defined benefit plan

Interest rate risk: A fall in the discount rate, which is linked to the Government Securities rate, will increases the present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.

Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future salary of members. As such, an increase in the salary of the members more than assumed level may increase the plan''s liability.

Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.

Further, there are some old borrowings which have been fully repaid in past (other than tabled above) for which the Company is compiling the details in relation to which satisfaction is yet to be filed with Registrar of Companies.

Note 44.3: Quarterly returns/statements of current assets filed with banks or financial institutions against the underlying borrowings are in agreement with the books of accounts (principal outstanding).

NOTE 45: MATURITY ANALYSIS OF ASSETS AND LIABILITIES

The table below shows an analysis of assets and liabilities analysed according to when they are expected to be recovered or settled. However, with regard to loans and advances to customers and investements, the Company has used the contractual maturities for recovery/settlement. Borrowings (including debt securities and deposits) are reflected basis the contractual maturities.

The Company has formulated a comprehensive enterprise risk management policy to take care of major risks, such as credit risk, market risk, liquidity risk. The Company has an integrated risk management policy (IRM) in place, which communicates the risk management strategy, framework, and risk processes across the organisation, and has been approved by the Board. The risk management framework broadly includes governance, risk appetite approach, risk-specific guidelines, risk measurement, mitigation, monitoring reporting, and key risk indicators (KRIs). The Company has developed a clearly articulated risk appetite statement, functional policies, and KRIs to explicitly define the level and nature of risk that an organisation willing to take in order to pursue the articulated mission on behalf of various stakeholders. The Board has delegated the responsibility of risk management to its risk management committee (RMC), which reviews the efficacy of our risk management framework, provides important oversight, and assesses whether it is consistent with the risk tolerance levels laid down. The RMC gives directions to executive risk management committee (ERMC), comprising senior management.

Note 46.1: Credit Risk

The Company''s asset base comprises of retail loans and corporate loans.

Retail loans mainly focusses on financing of acquisition or construction of houses that includes repair, upgradation, and development of plot of land. In retail loans category, the Company also provides loan against properties and loans for purchase & construction of non-residential premises.

Corporate finance loans are given mainly to developers for financing the construction of residential / commercial properties, i.e. construction finance loans, and for general corporate purpose loans. i.e. corporate term loans and lease rental discounting loans.

Being in the lending domain, credit risk is one of the major risks in the business model of the Company. Credit risk stems from outright default due to inability or unwillingness of a customer or counterparty to meet the contractual commitments. The essence of credit risk management in the Company pivots around the early assessment of stress, both at a portfolio and account level, and taking appropriate measures.

Credit Risk Management

Credit risk of the Company is managed through a robust Credit Risk Management set-up at various levels. Given the pervasiveness of credit risk in the Company''s line of business, the Board and the senior management consider credit risk management to be an integral part of the organisational strategy. The Board has constituted

a Risk Management Committee (RMC) that owns the risk management framework. The RMC oversees the Risk Management practices and gives direction to the Executive Risk Management Committee (ERMC), comprising of the MD and CEO along with functional heads, in implementing the risk management framework and policy. The policies and procedures have been drafted in close consultation with process owners, ERMC and RMC.

The risk management function is led by the Chief Risk Officer who is independent and has direct access to the RMC.

The Company''s Risk Framework for credit risk management is mentioned below:

1) Established an appropriate credit risk environment

The Company has developed credit risk strategy which reflects its risk tolerance and level of profitability it expects to achieve. The execution of strategy is done through policies, guidelines and processes supervised by team of experienced professionals in the mortgage business.

2) Ensure sound credit approval process

The Company''s Target Operating Model (TOM) comprises Hub and Spoc structure, advanced technology platform, experienced and specialized professionals and mark to market policies and products. The Company''s TOM allows to manage various type of risks in a better manner which in turn helps building a robust portfolio.

The Company has clear segregation of duties between transaction originators in the business function and approvers in the credit risk function. Spoc or branch act as the primary point of sale, undertake loan originations, collection, deposit sourcing and customer service.

Hubs perform functions, such as loan processing, credit appraisal and monitoring through subject matter experts comprising team of underwriters, fraud control unit, legal counsels, and technical evaluators.

The credit sanction is done through a well-defined delegation matrix under four eye principle. All functions are subject to audit, undertaken by an independent team directly reporting to the Board.

Hubs and Spocs are supported by Central Support Office (CSO), Centralised Operations (COPS) and Central Processing Centre (CPC).

3) Maintains an appropriate credit administration, measurement and monitoring process

Policies and procedures have been developed for identifying, measuring, monitoring and mitigating credit risk. Portfolio monitoring allows a proactive approach to identify, at an early stage, credit quality deterioration. A system of independent, periodical reviews of

the Company''s credit risk management process is established and the results of such reviews are communicated across the levels for corrective actions as applicable. The expected credit loss on financial instruments has been presented in respective note.

Adequate controls are in place to ensure that the credit approval function is being properly managed and that credit exposures are within levels consistent with prudential standards and internal limits.

Note 46.2: Derivative Financial Instruments

Credit risk arising from derivative financial instruments is, at any time, limited to those with positive fair values, as recorded on the balance sheet.

Note 46.4: Market Risk

Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market variables such as interest rates, foreign exchange rates and equity prices. The Company monitors such changes and presents to the management on a regular basis. It undertakes scenario analysis as well as other techniques like earnings at risk to quantify the expected impact upon the change of market variables. The Board approved investment policy defines the overall exposure limits and specific limits pertaining to the exposure to a particular entity /counterparty as well as type of securities.

46.4.2 Interest rate risk

Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values of financial instruments. The Board has established limits on interest rate sensitive assets and interest rate sensitive liabilities. The Company''s policy is to monitor positions on a regular basis and hedging strategies are used to ensure positions are maintained within the established limits.

46.4.3 Currency risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Foreign currency risk arises majorly on account of foreign currency borrowings which are primarily in US dolllar ($). The Company manages its foreign currency risk by entering into cross currency swaps and forward contracts. When a derivative is entered into for the purpose of being as hedge, the Company negotiates the terms of those derivatives to match with the terms of the hedge exposure.

Currently, the Company is exposed to currency risk by virtue of its ECBs. But, the Company has undertaken hedging and mitigated a major portion of such risk.

Note 46.4.4: Equity price risk :

The Company''s investment in non-listed equity securities are accounted at cost in the financial statement net of impairment (if any). The expected cash flow from these entities are regularly monitored to identify impairment indicators.

Note 46.5: Liquidity risk and funding management

Liquidity risk is defined as the risk that the Company will encounter in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Liquidity risk arises because of the possibility that the Company might be unable to meet its payment obligations when they fall due as a result of mismatches in the timing of the cash flows under both normal and stress circumstances. Such scenarios could occur when funding needed for illiquid asset positions is not available to the Company on acceptable terms. To limit this risk, management has arranged for diversified funding sources and investors in addition to its core deposit base, also adopted a policy of managing assets with liquidity in mind and monitoring future cash flows and liquidity on a regular basis. The Company also keeps lines of credit and liquid investments that it can access to meet liquidity needs. The lines of credit are from various banks and institutions. The liquid investments are kept in liquid mutual funds, fixed deposits, liquid bonds, government securities etc., limits of which are defined as per investment policy based on the type of security, rating of entity and instrument. In accordance with the Company''s policy, the liquidity position is assessed under a variety of scenarios. The Company follows both stock and flow approaches to monitor and asses the liquidity position. Moreover, the Compnay keeps a track of the expected funds inflows and outflows along with the avenues of raising the funds. This incorporates an assessment of expected cash flows and the availability of high grade collateral which could be used to secure additional funding if required.

The Company has a Board approved Asset and Liability Management (ALM) policy. The policy has constituted an Asset and Liability Committee (ALCO) which meets at regular intervals and review the asset liability profile both at the particular time bucket level and cumulative level as well as the interest rate profile of the Company. The policy also defines the limits on such monitored items and these are further presented to the Board for information and further action, if any. Apart from the regulatory defined tools, the Company has voluntarily instituted various liquidity parameters that are presented to the ALCO and further to the Board. Moreover, the position of liquidity is presented to the Risk Management Committee of the Board.

The principles and techniques of fair valuation measurement of both financial and non-financial instruments are as follows:

(a) Valuation principles

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e. an exit price), regardless of whether that price is directly observable or estimated using a valuation technique.

For determination of fair value, financial instruments are classified based on a hierarchy of valuation techniques, as summarised below:

Level 1: Those where the inputs used in the valuation are unadjusted quoted prices from active markets for identical assets or liabilities that the Company has access to at the measurement date. The Company considers markets as active only if there are sufficient trading activities with regards to the volume and liquidity

of the identical assets or liabilities and when there are binding and exercisable price quotes available on the balance sheet date.

Level 2: Those where the inputs that are used for valuation are significant and are derived from directly or indirectly observable market data available over the entire period of the instrument''s life. Such inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical instruments in inactive markets and observable inputs other than quoted prices such as interest rates and yield curves, implied volatilities and credit spreads. In addition, adjustments may be required for the condition or location of the asset or the extent to which it relates to items that are comparable to the valued instrument.

Level 3: Those that include one or more unobservable input that is significant to the measurement as whole.

(b) Valuation governance

The Company''s fair value methodology and the governance over its models includes a number of

controls and other procedures to ensure appropriate safeguards are in place to ensure its quality and adequacy. All new product initiatives and their valuations are subject to approvals by related functions of the Company.

(c) Assets and liabilities by fair value hierarchy

The following table shows an analysis of financial instruments recorded at fair value by level of the fair value hierarchy

Below are the methodologies and assumptions used to determine fair values for the above financial instruments which are recorded and measured at fair value in the Company''s financial statements.

1. Mutual funds

Units held in mutual funds are valued based on their published Net asset value (NAV) and such instruments are classified under Level 1.

2. Debt securities

The Company''s debt instruments are standard fixed rate securities.The Company uses market prices whenever available, or other observable inputs in discounted cash flow models to estimate the corresponding fair value. These Corporate bonds are generally Level 2 instruments.

3. Assets held for sale

Assets held for sale valuation are basis independent valuations by a specialist in valuing these type of assets. The best estimate of fair value is current prices in an active market for similar assets.

4. Derivative financial instruments Interest rate derivatives

For Interest rate derivatives Company has interest rate swaps and cross currency swaps. The valuation techniques are the mark to market positions with forward pricing on the swap models using present value calculations by estimating future cash flows and discounting them with the appropriate yield curves like the OIS yield curve. These contracts are generally Level 2 unless adjustments to yield curves or credit spreads are based on significant non-observable inputs, in which case, they are Level 3.

Foreign exchange contracts

Foreign exchange contracts include spot contracts, foreign exchange forward and swap contracts and over-the-counter foreign exchange options. However, the Company has not entered into any foreign exchange options. These instruments are valued by either observable foreign exchange rates, observable or calculated forward points and option valuation models. Company classifies these foreign exchange contracts as level 2.

Below are the methodologies and assumptions used to determine fair values for the above financial instruments which are not recorded and measured at fair value in the Company''s financial statements.

1. Financial assets and liabilities (Short term)

Cash and cash equivalents, bank balances other than cash and cash equivalents, trade receivables, other financial assets, trade payables, commercial papers and other financial liabilities has been recognised at amortised cost in the financial statements.

In accordance with Ind AS 107.29(a), fair value is not required to be disclosed in relation to the financial instruments having short-term maturity (less than twelve months), where carrying amount (net of impairment) is a reasonable approximation of their fair value. Hence the fair value of cash and cash equivalents, bank balances other than cash and cash equivalents, trade receivables, other financial assets, trade payables, commercial papers and other financial liabilities has not been disclosed.

2. Financial assets

Loans and advances to customers

Substantial amount of the loans are based on floating rate of interest, carrying amount of which represents the fair value of these loans. Minuscule amount of loans are based on fixed to floating rate of interest, the fair values of these loans are computed by discounted cash flow models incorporating prevailing interest rate. The Company classifies these assets as Level 2.

Government debt securities

Government debt securities are financial instruments issued by sovereign governments and include both long- term bonds and short-term bills with fixed or floating rate interest payments. These instruments are generally liquid and traded in active markets resulting in a Level 1 classification. When active market prices are not available, the Company uses discounted cash flow models with observable market inputs of similar instruments and bond prices to estimate future index levels and extrapolating yields outside the range of active market trading, in which instances the Company classifies those securities as Level 2. The Company does not have Level 3 government securities where valuation inputs would be unobservable.

3. Financial liabilities

Debt securities and Subordinated liabilities

Debt securities and subordinated liabilities are generally liquid and traded in active markets resulting in a Level 1 classification. When active market prices are not available, the Company uses discounted cash flow models with observable market inputs of similar instruments and bond prices to estimate future index levels and extrapolating yields outside the range of active market trading, in which instances the Company classifies those securities as Level 2.

Deposits

The fair values of deposits are computed by discounted cash flow models that incorporates prevalling interest rate. The Company classifies these liabili


Mar 31, 2022

ECL movement as on March 31, 2021 and March 31, 2022

a) The loan assets in stage 2 were 3.88% as on March 31, 2022 as against 5.17% as on March 31,2021. The Company has

applied qualitative SICR criteria owing to which stage 1 assets of '' 823.17 crore has moved to stage 2 assets. Pre SICR,

the stage 2 loan assets as on March 31, 2022 would be 2.25% against 3.46% as on March 31, 2021.

b) ECL % POS has decreased by 1.29% as on March 31, 2022 in stage 2 due to transition of stage 2 accounts to stage 3 (as

an impact of RBI Circular No. RBI/2021-2022/125 DOR.STR.REC.68/21.04.048/2021-22).

c) Overall ECL % POS have increased by 24 bps on accounts of conservatism approach adopted by the Company.

ECL movement as on March 31, 2020 and March 31, 2021

a) The loan assets in stage 2 were 5.17% as on March 31, 2021 as against 2.98% as on March 31, 2020. The Company has

applied qualitative SICR criteria owing to which stage 1 assets of '' 613.62 crore has moved to stage 2 assets. Pre SICR,

the stage 2 loan assets as on March 31, 2021 would be 3.46% and last year 1.62%.

b) Increase in stage 2 ECL % principal outstanding (POS) is attributed to incorporation of pre-emptive measures in PD

models, higher LGD''s on account of restructure cases.

c) Overall ECL % POS have increased by 68 bps on accounts of conservatism build upon by the above mentioned reasons as well as incorporation of provision required as per regulatory guidelines and comparing it with existing level.

c) Pre SICR, the stage 2 loan assets as on March 31, 2021 would be 2.38% as against 3.65% as on March 31, 2020.

ECL movement as on March 31, 2021 and March 31, 2022

a) Stage 1 ECL % of POS increased from 4.31% to 6.50%. This is due to restructuring cases carrying higher provisions.

b) The loan assets in stage 2 were decresed to 0.29% as on March 31, 2022 from 9.90% as on March 31,2021 majorly due to shift of stage 2 asset to stage 3.

c) The Company''s stage 3 asset ratio has increased from 13.46% as on March 31, 2021 to 37.13% as on March 31, 2022 owing to this ECL has also increased.

ECL movement as on March 31, 2020 and March 31, 2021

a) Stage 1 ECL % of POS increased from 3.44% to 4.31% this is due to backward flow of accounts from stage 2 carrying higher provisions.

b) The loan assets in stage 2 were 9.90% as on March 31, 2021 as against 6.31% as on March 31, 2020. The Company has applied qualitative SICR criteria owing to which stage 1 assets of '' 877.31 crore has moved to stage 2 assets. The Company has its own qualitative assessment criteria comprising various operational and repayment variables like construction variance, historical delinquency rates, sales velocity, asset coverage ratio etc. Basis the review and management overlay, the Company has identified assets where likelihood of deterioration in credit quality is high and life time PD factor has been applied. Accordingly, stage 2 ECL % POS has increased from 27.23% to 30.23%.

d) The Company''s stage 3 asset ratio has increased from 8.77% as on March 31, 2020 to 13.46% as on March 31, 2021 owing to this ECL has also increased.

AThe restructuring was done for Stage 1 accounts, total restructured assets were'' 1,647 crore(previous year '' 1,378 crore), against which provision of '' 204 crore (previous year '' 206 crore) is held.

#Refer Note 2.20 and 46.1.

Note 6.4: Loans due from borrowers are secured wholly or partly by any one or all of the below as applicable:

Tangible securities

i) Equitable / Simple / English Mortgage of immovable property;

ii) Mortgage of Development Rights / FSI / any other benefit flowing from the immovable property;

iii) Hypothecation of rent receivables, cash flow of the project, debt service reserve account, fixed deposit, current and escrow accounts;

Intangible securities

i) Demand Promissory Note;

ii) Post dated cheques towards the repayment of the debt;

iii) Personal / Corporate Guarantees;

iv) Undertaking to create a security;

v) Letter of Continuity.

Since the Company transferred the above financial asset in a transfer that qualified for derecognition in its entirety therefore the whole of the interest spread and net servicing fees (over the expected life of the asset) is recognised at present value on the date of derecognition itself as interest-only strip / net servicing fees receivable ("Receivables on assignment of loan") and correspondingly recognised as profit on derecognition of financial asset.

Note 8.2: I ncludes receivable from related party '' 0.61 crore (previous year '' 0.13 crore).

Note 8.3: Disclosure pursuant to RBI Notification dated September 24, 2021 on "Transfer of Loan Exposures" are given below:

(a) The Company has not transferred or acquired, any loans not in default during the year ended March 31, 2022.

(b) The Company has not transferred or acquired, any stressed loans during the year ended March 31, 2022.

Redeemable non-convertible debentures are secured by hypothecation of specific book debts to the extent of 1.10 to 1.25 times of outstanding amount. In addition, initial few series of redeemable non-convertible debentures are also secured by mortgage of buildings of '' 0.77 crore (Refer Note 11 & 12).

NOTE 17.2: The rate of interest and amount of repayment appearing in Note 17.1(b) are as per the term of the debt instruments (i.e. excluding impact of effective interest rate). Further, refer Note 44.1, 44.2 and 44.3 for compliance in relation to the utilisation of the borrowed fund and submission of underlying returns/statements.

Note 18.1: Refinance from National Housing Bank (NHB):

a) Nature of security

(i) All the present and outstanding refinancing from NHB are secured by hypothecation of specific loans/ book debts to the extent of 1.0 to 1.20 times of outstanding amount.

(ii) During FY22, the Company has been availed refinance facility from NHB of '' 1490 crore under "Special Refinance Facility 2021 Assistance" for short term liquidity support and during FY21''1500.00 crore under "Liberalised Refinance Scheme and 2000.00 crore under " Special Refinance facility and adiitional Special Refinance Facility Scheme of NHB to provide refinance assistant in respect of eligible individual Housing loans".

Note 18.2: Term loan from Banks:

a) Nature of security

i) Term loan from Punjab National Bank (related party) are secured by hypothecation by way of exclusive charge on specific standard book debts of the Company with minimum asset cover of 1.10 times to be maintained at all times.

ii) Term loans from banks other than Punjab National Bank are secured by hypothecation of specific book debts to the extent of 1.0 to 1.12 times of outstanding amount.

i) The ECB borrowings are secured against eligible housing loans/book debts and are hedged through currency swaps, interest rate swaps and forward contracts as per the applicable RBI guidelines.

ii) The derivative contracts are initially recognised at fair value on the date of the transaction and all outstanding derivative transactions on the date of balance sheet, are subsequently measured at fair value on that date. Where cash flow hedge accounting is used, fair value changes of the derivative contracts are recognised through the cash flow hedge reserve (through other comprehensive income) which is reclassified to statement of profit and loss account as the hedged item effects profit and loss. Premium paid / discount received in advance ( if any ) on the derivative contracts, which are not intended for trading or speculation purposes, are amortised over the period of the contracts, if such contracts relate to monetary items as at the balance sheet date.

iii) As at March 31, 2022, the Company has outstanding ECB of USD 796.00 million (equivalent to '' 6,034.25 crore), (March 31, 2021 USD 812.50 million equivalent to '' 5,972.26 crore). The Company has undertaken cross currency swaps and principal only swaps to hedge the foreign currency risk of the ECB principals. Whereas the Company has entered into floating to fixed coupon only swaps and interest rate swaps along with forward contracts to hedge the floating interest and foreign currency risk of the coupon payments respectively. All the derivative instruments are purely for hedging the underlying ECB transactions as per applicable RBI guidelines and not for any speculative purpose.

Note 18.4: Bank overdraft:

a) Nature of security

Overdraft facilities are secured by hypothecation of specific book debts to the extent of 1.0 to 1.12 times of outstanding amount.

The rate of interest and amount of repayment appearing in note 18.1(b), 18.2(b) and 18.3(b) are as per the term of the respective instruments.(i.e. excluding impact of effective interest rate). Further, refer note no 44.1, 44.2 and 44.3 for compliance in relation to the utilisation of the borrowed fund and submission of underlying returns/statements.

Note 20.1: Nature of security and terms of repayment:

a) Nature of security

Redeemable non-convertible subordinated debentures are subordinated debt to present and future senior indebtedness of the Company and based on the balance term to maturity as at March 31, 2022, '' 577.50 crore (March 31, 2021''916.30 crore) qualify as Tier II Capital under regulatory guidelines for assessing capital adequacy.

Note 24.4: Terms / Rights attached to equity shares The Company has only one class of shares referred to as equity shares having a par value of '' 10/ - per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in ''. Dividend distribution is for all equity shareholders who are eligible for dividend as on record date. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Note 24.5: The Company has not allotted any share pursuant to contracts without payment being received in cash nor it has issued any bonus shares or bought back any shares, during the period of five years immediately preceding the reporting date.

Note 24.6: The Company has not:

i. Issued any securities convertible into equity / preference shares.

ii. Issued any shares where calls are unpaid.

iii. Forfeited any shares.

The Company maintains an actively managed capital base to cover risks inherent in the business and is meeting the capital adequacy requirements as per the directives of the regulator. The adequacy of the Company capital is monitored using, among other measures, the regulations issued by NHB & RBI from time to time.

Company has complied in full with all its externally imposed capital requirements.

The primary objectives of the Company capital management policy are to ensure that it complies with externally imposed capital requirements and maintains strong credit ratings and healthy capital ratios in order to support its business and to maximise shareholder''s value.

The Company manages its capital structure after taking in to consideration the inherent business risk and the changes in economic conditions. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividend payment to shareholders, return of capital to shareholders or issue capital securities.

No changes have been made to the objectives, policies and processes from the previous years and they are reviewed by the Board of Director''s at regular intervals.

Regulatory capital consists of Tier I capital, which includes owned funds comprising share capital, share premium, retained earnings including current year profit and free reserves less cash flow hedge reserve, deferred revenue expenditure and intangible assets. The book value of investment in shares of other non-banking financial companies including housing finance companies and in shares, debentures, bonds, outstanding loans and advances including hire purchase and lease finance made to and deposits with subsidiaries and companies in the same group exceeding, in aggregate 10% of owned funds will be reduced while arriving at the Tier I capital.

The other component of regulatory capital is Tier II Capital Instruments, which includes non convertible preference shares, revaluation reserve, general provision and loss reserves to the extent of one and one fourth percent of risk weighted asset, hybrid capital instruments and subordinated debts.(Refer Note 36.1)

NOTE 25: OTHER EQUITY (Nature and purpose of reserve)

Securities premium

Securities premium includes :

- amount of premium received on issue of equity shares and;

- fair value of the stock options which are treated as expense, if any, in respect of shares allotted pursuant to Employee Stock Options Scheme.

The Securities premium can be utilised only for limited purposes such as issuance of bonus shares, issue expenses of securities which qualify as equity instruments in accordance with the provisions of the Companies Act, 2013.

Special reserve and Statutory reserve

In accordance with Section 29C(i) of the National Housing Bank Act, 1987, the Company is required to transfer at least 20% of its net profit every year to a reserve fund (statutory reserve) before any dividend is declared.

The Company has created a special reserve in terms of clause (viii) of sub-section (1) of section 36 of the Income-tax Act, 1961 and the same is considered to be an eligible transfer for the purposes of section 29 C(i).

Share option outstanding accounts

The cost of equity settled transactions is determined by the fair value at the date when the grant is made using the Black-Scholes Model. The cumulative expense recognised for equity settled transaction is credited to share option outstanding account in equity.

Retained earnings

Retained earning are profit earned by the Company after transfer to general reserve and payment of dividend to shareholders.

Effective portion of cash flow hedges

The Company uses hedging instruments as part of its management of foreign currency risk and interest rate risk associated on borrowings. For hedging foreign currency and interest rate risk, the Company uses foreign currency forward contracts, cross currency swaps and interest rate swaps. To the extent these hedges are effective, the change in fair value of the hedging instrument is recognised in the cash flow hedging reserve. Amounts recognised in the cash flow hedging reserve is reclassified to the statement of profit or loss when the hedged item affects profit or loss (e.g. interest payments).

Note 26.1: In accordance with RBI circular no RBI/2021-22/17 DOR.STR.REC.4/21.04.048/2021-22 dated April 07, 2021, the Company shall refund / adjust ''interest on interest'' to all borrowers during the moratorium period in conformity with the judgement pronounced by the Hon''ble Supreme Court of India in the matter of Small Scale Industrial Manufacturers Association vs UOI & Ors. and other connected matters on March 23, 2021. The Company has charged Nil (previous year '' 28.00 crore) towards the interest relief from the interest income.

The basic earnings per share have been computed by dividing the net profit after tax attributable to equity share holders of the Company by the weighted average number of equity shares outstanding during the year. The diluted earnings per share have been computed by dividing the net profit after tax attributable to equity share holders of the Company by the weighted average number of equity shares considered for deriving basic earning per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.

The dilutive potential equity shares are adjusted for the proceed receivable had the equity shares been actually issued at fair value (i.e. the average market value of the outstanding equity shares). Diluted potential equity shares are deemed converted as of the beginning of the period unless issued at a later date. Diluted potential equity shares are determined independently for each period presented. Diluted earnings per share does not include conversion or exercise of potential ordinary shares that would have an antidilutive effect on earnings per share.

Note: While computing the above information, certain estimates, assumptions and adjustments have been made by the

Management which have been relied upon by the auditors.

ii) As on March 31, 2022, the Company does not have any exposure to Capital Market (Previous year '' Nil).

iii) As on March 31, 2022, the Company has not financed any product of the parent company (Previous year '' Nil).

iv) As on March 31, 2022, the Company has not exceeded the prudential exposure limit for single borrower or group

borrower (Previous year '' Nil).

v) As on March 31, 2022, the Company has not given any unsecured advances (Previous year '' Nil).

vi) As on March 31, 2022, all advances of the Company are secured against tangible assets and there are no advances against

intangible assets (Previous year '' Nil).

vii) As on March 31, 2022, the Company has no exposures to group companies engaged in the real estate business (Previous year '' Nil).

Note 36.8: Registration obtained from financial sector regulators

NHB : vide registration number 01.0018.01

Ministry of Corporate Affairs : L65922DL1988PLC033856

Note 36.9: Disclosure of Penalties imposed by NHB/RBI and other regulators:

During the financial year ended March 31, 2022, Regulators has imposed a penalty of '' 0.06 crore (Previous year '' 1.90 crore)

on account of the below mentioned observations:

(i) NHB has levied a penalty of '' .01 crore for Non adherence of policy circular no. 58 and 75 with respect to upfront disbursal of sanctioned individual housing loans to the builders without linking the disbursals to various stage of constructions of housing projects.

(ii) BSE Ltd & National Stock Exchange of India Ltd has imposed a penalty of '' 0.05 crore for delay in appointment of Women Director on the Board.

The Company has complied with the norms prescribed by the regulator for recognising Non-Performing Assets (NPA) in preparation of accounts. As per the norms, NPAs are recognised on the basis of more than 90 days overdue. NPAs are to be treated as Bad & Doubtful, if they remain outstanding for more than 15 months. The Company has made adequate provisions on Non-Performing Assets and Standard Assets in respect of Housing and Non-Housing Loans as prescribed under directions issued by the regulator.

Pursuant to the RBI circular dated November 12, 2021 "Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances - Clarifications", the Company has implemented the requirements and aligned its definition of default accordingly. Such alignment has resulted in transition of sub 90 DPD assets of '' 144.60 crore as additional nonperforming assets as on March 31, 2022.

Note 36.27: As on March 31, 2022, the Company does not have any assets outside the country (Previous year '' Nil).

Note 36.28: As on March 31, 2022, the Company does not have any Off-Balance Sheet SPVs sponsored which are required to be consolidated as per accounting norms (Previous year Nil).

Note 36.30: As on March 31, 2022, the Company has not granted any loans and has no outstanding loans against collateral gold jewellary (Previous year '' Nil).

Note 36.31: Deposit includes Public Deposits as defined in Paragraph 4.1.30 of RBI Directions, are secured by floating charge on the Statutory Liquid Assets maintained in terms of sub-sections (1) & (2) of Section 29B of the National Housing Bank Act, 1987. As on March 31, 2022, the public deposits (including accrued interest) outstanding amounts to '' 15,019.95 crore (Previous year '' 14,429.04 crore).

The Company is carrying Statutory Liquid Assets amounting to '' 2,234.18 crore (Previous year '' 1,941.79 crore).

Note 36.32: As on March 31, 2022, the Company operates with-in India and does not have any joint venture or overseas subsidary.

Note 36.33: Liquidity Risk Management and Liquidity Coverage Ratio

(a) Liquidity Risk Management disclosures as at March 31, 2022:

(i) Funding Concentration based on significant counterparty (both deposits and borrowings)

* Includes short term funds with original maturity of less than 1 year and includes funds from Refinance from NHB, Short Term Lines / OD / WCDL (vi) Institutional set-up for liquidity risk management

The Board of Directors of the Company has constituted the Asset Liability Management Committee (ALCO) and the Risk Management Committee. The Board has the overall responsibility for management of liquidity risk. The Board decides the strategy, policies and procedures to manage liquidity risk in accordance with the liquidity risk tolerance/limits approved by it. The Risk Management Committee (RMC), which is a committee of the Board, is responsible for evaluating and monitoring the integrated risk management system of the Company including liquidity risk. The ALCO is responsible for ensuring adherence to the liquidity risk tolerance/limits set out in the board approved Asset Liability Management (ALM) policy. The role of the ALCO with respect to liquidity risk includes, inter alia, decision on desired maturity profile for assets & liabilities, responsibilities and controls for managing liquidity risk and overseeing the liquidity position of the Company. The ALM Policy is reviewed periodically to realign the same pursuant to any regulatory changes/changes in the economic landscape or business needs and tabled to the Board for approval.

Management regularly reviews the position of cash and cash equivalents by aligning the same with the projected maturity of financial assets and financial liabilities, economic environment, liquidity position in the financial market, anticipated pipeline of future borrowing & future liabilities and threshold of minimum liquidity defined in the ALM policy with additional liquidity buffers as management overlay.

The objective of the LCR is to promote an environment wherein balance sheet carry a strong liquidity for short term cash flow requirements. To ensure strong liquidity NBFCs are required to maintain adequate pool of unencumbered HQLA which can be easily converted into cash to meet their stressed liquidity needs for 30 calendar days. The LCR is expected to improve the ability of financial sector to absorb the shocks arising from financial and/or economic stress, thus reducing the risk of spill over from financial sector to real economy.

The Liquidity Risk Management of the Company is managed by the ALCO under the governance of Board approved Liquidity Risk Framework comprising of Asset Liability Management policy, Contingency Funding Policy, Funding Strategy and Market Risk Policy. The LCR levels for the balance sheet date is derived by arriving the stressed expected cash inflow and outflow for the next calendar month. To compute stressed cash outflow, all expected and contracted cash outflows are considered by applying a stress of 15%. Similarly, inflows for the Company is arrived at by considering all expected and contracted inflows by applying a haircut of 25%.

The main drivers of LCR are:

Outflows comprises of:

a) All the contractual debt repayments and interest payments

b) Expected operating expense based on FY 2020-21

c) Committed credit facilities contracted with customers for both sanctioned but partly disbursed cases and sanctioned but undisbursed cases based on historical experience and other expected or contracted cash outflows like expected payouts under contracted direct assignment deals.

The potential debt which may be recalled by the lenders on account of covenant breach has not been considered since the Company has not experienced such debt recall by any lender so far despite having breached covenants in the past.

Inflows comprises of:

a) Expected receipt (scheduled EMIs) from all performing loans

b) Liquid investment either in the form of short tenure Fixed Deposits with banks or in units of Debt Mutual Fund Schemes (like Overnight Liquid and Money Market Schemes) which are unencumbered and have not been considered as part of HQLA

c) Sanctioned and undrawn lines of credit from banks.

For the purpose of HQLA the Company considers unencumbered government securities and cash/bank balances with nil haircuts.

The unencumbered government securities held as part of HQLA are identified separately from the government securities which are lien marked in favour of Trustee for public deposits accepted by the Company. The LCR is computed by dividing the stock of HQLA by its total net cash outflows over one-month stress period.

LCR guidelines are effective from December 01, 2021. LCR has been calculated and monitored as per methodology prescribed in the RBI circular. For the month of December, 2021 it has been calculated from the effective date and for the quarter ended March 2022 it has been calculated as a simple average of the past 90 days'' on daily basis. The Company is compliant with maintenance of stipulated LCR. Further, the Company has been monitoring the LCR at monthly intervals for the period of December 2021 to March 2022. The maximum and minimum daily required HQLA for regulatory compliance has been '' 283.01 crore and '' 668.21 crore respectively for the period of January 22 to March 22.

The Company maintains diversified sources of funding comprising short/long term loans from banks, NonConvertible Debentures (NCDs), External Commercial Borrowings (ECBs), Deposits, Refinance from National Housing Bank (NHB) and Commercial Papers (CPs).

The funding pattern is reviewed on monthly basis by the management and on quarterly basis by the ALM Committee and Risk Management Committee.

Note 36.33: Liquidity Risk Management and Liquidity Coverage Ratio: (Contd.)

Derivative exposures and potential collateral calls: To hedge ECBs the Company enters into derivative transactions. All the derivatives of the Company are for hedging purpose and not for any speculative or trading purpose. As on March 31, 2022, the notional amount of outstanding derivatives is '' 10,288.45 crore with net positive MTM of '' 242.25 crore. Further, the Company has executed bilateral Credit Support Agreement with one of its derivative counterparty. However, as on March 31, 2022 there is no outstanding margin but there could be potential future margin calls based on the MTM movements.

Currency mismatch in LCR: There is no mismatch required to be reported in LCR as on March 31, 2022 since all the Foreign Currency liabilities are reinstated to '' as per the corresponding derivative/ forward deals and closing RBI reference / FBIL exchange rates.

Note 36.35: RBI vide its circular number RBI/2020-21/60/DOR.NBFC (HFC) CC.NO 118/03.10.136/2020-21 dated October 22, 2020 defined the principal business criteria for HFCs. Further, it also states that those HFCs which does not fulfill the defined criteria as on October 22, 2020 has an option to submit a board approved plan including a roadmap to fulfill the defined criteria and timeline for transition to RBI with in three months from the date of circular.

In compliance with the above circular, the Company has submitted board approved plan along with roadmap to fulfill the defined criteria and timeline for transition to RBI on January 21, 2021.

Note 36.36: In compliance with RBI notification number RBI/DNBS/2016-17/49/Master Direction DNBS. PPD.01/66.15.001/2016-17 dated September 29, 2016, during the year the Company has reported five fraud case in relation to loans advanced to the borrowers and one fraud case in relation to deposits amounting to '' 4.04 crore to NHB (Previous year '' 1.92 crore).

NOTE 37: LEASES

The Ministry of Corporate affairs vide notification number G.S.R. 463(E) dated July 24, 2020 has issued Companies (Indian Accounting Standards) Amendment Rules, 2020. As per the amendment rules the Company has an option to apply practical expedients of paragraph 46A of Ind AS 116.

The Company has elected to use the practical expedient of paragraph 46A to not to assess whether a rent concession that meets the conditions of paragraph 46B is a lease modification and account for any change in lease payments resulting from the rent concession as if the change were not a lease modification. The Company has applied the practical expedients to all rent concessions that meet the conditions specified in paragraph 46B of Ind AS 116.

The Company has recognised '' 0.02 crore (Previous Year '' 0.43) as other income for the year ended March 31, 2022 on account of applicability of the above practical expedients.

The Ministry of Corporate affairs vide notification number G.S.R. 463(E) dated July 24, 2020 has issued Companies (Indian Accounting Standards) Amendment Rules, 2020. As per the amendment rules the Company has an option to apply the exceptions set out in paragraphs 6.8.4-6.8.12 of Ind AS 109.

The Company has elected to apply the exceptions as specified above. Disclosure with respect to paragraph 24H of Ind AS 107 in relation to uncertainty arising from interest rate benchmark reforms is as follows:

a) The Company has foreign currency borrowings in USD only and the interest rate benchmarks where the Company''s hedging relationship is related are 3 month and 6 month USD LIBOR.

b) The Company has outstanding External Commercial Borrowing (ECB) principal of USD 796.00 million (equivalent to '' 6,034.25 crore) ((March 31, 2021, USD 812.50 million (equivalent to '' 5,972.26 crore)), which is directly linked or affected by the above mentioned two benchmarks. (USD 546.00 million - 3month USD LIBOR and remaining USD 250.00 million - 6 month USD LIBOR) (March 31, 2021, USD 562.50 million - 3month USD LIBOR and USD 250.00 million - 6 month USD LIBOR).

c) USD 3 month & 6 Month LIBOR will cease to exist from June 30, 2023 and outstanding principal exposure as on that date will be USD 640.00 million (March 31, 2021 USD 640.00 million) for which the Company will discuss and negotiate the alternative reference rate with the respective lenders to incorporate or align the same in the corresponding hedging/ derivative deals. The Company will do bilateral negotiation or sign the ISDA fall back protocol as the case may be with each of the derivative counterparties.

d) The outstanding borrowings are long term in nature and the Company hasn''t yet received any specific communication from any of its lenders regarding the timelines to change to an alternate reference/benchmark rate. However, as soon as the Company receives any communication or instruction from any of its lenders regarding the transition to an alternate reference rate other than the LIBOR, the Company will immediately take it up with the corresponding hedging counterparty/ies to effect the transition in the hedging/derivative deals also. However, this may result in higher pay out for the Company in the form of excess interest or hedging cost of the underlying borrowing for its remaining tenure.

e) The nominal amount of hedging instruments for outstanding principal as on March 31, 2022 is USD 796.00 million (March 31, 2021 is USD 812.50 million) .

NOTE 39: SEGMENT REPORTING:

Company''s main business is to provide loans against/for purchase, construction, repairs & renovations of houses/ flats/ commercial properties etc. All other activities of the Company revolve around the main business. As such, there are no separate reportable segment, as per the Operating Segments (Ind AS 108), notified by the Companies (Accounting Standard) Rules, 2015. The Company operates within India and does not have operations in economic environments with different risks and returns, hence it is considered operating in single geographical segment.

The Company is not reliant on revenues from transactions with any single external customer and does not receive 10% or more of its revenues from transactions with any single external customer.

NOTE 40: CONTINGENT LIABILITIES AND COMMITMENTS

i) Contingent liabilities in respect of Income-tax of '' 20.74 crore (Previous year '' 12.12 crore) is disputed and are under appeals. These includes contingent liability of '' 1.84 crore (Previous year '' 4.87 crore) with respect to Income-tax which have been decided by the CIT(A) in Company''s favour. However, Income-tax Department has filed appeal with ITAT. The Company expects the demands to be set aside by the appellate authority and hence no additional provision is considered necessary.

ii) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is '' 7.60 crore (Previous year '' 4.31 crore).

iii) Claims against the Company not acknowledged as debt is '' 0.29 crore (Previous year '' Nil)

iv) Company had issued corporate financial guarantee amounting to '' 0.25 crore (Previous year '' 0.25 crore) to "UNIQUE IDENTIFICATION AUTHORITY OF INDIA (UIDAI)" against the Aadhar Authentication Services.

In accordance with Indian Accounting Standards on "Employee Benefits" (Ind AS 19), the following disclosure have been made:

Note 41.1: The Company makes contributions towards provident fund to a defined contribution retirement benefit plan for qualifying employees. Under the plan, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit plan to fund the benefits. The contribution has been recognised in the Statement of Profit and Loss which are included under "Contribution to Provident Fund and Other Funds" in Note 31.

Note 41.2: Defined Benefit Plans

The Company has a defined benefit gratuity plan. Every employee is entitled to gratuity as per the provisions of the Payment of Gratuity Act, 1972. The scheme is funded and the same is managed by Life Insurance Corporation of India. The liability of Gratuity is recognised on the basis of actuarial valuation.

The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out as at March 31, 2022. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

Risks associated with defined benefit plan

Interest rate risk: A fall in the discount rate, which is linked to the Government Securities rate, will increases the present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.

Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future salary of members. As such, an increase in the salary of the members more than assumed level may increase the plan''s liability.

Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.

Note 44.1: The borrowings has been utilised for the purpose for which it has been taken from banks and financial institutions. Note 44.2: The Company has complied/ in process of compliance with the registration of charges or satisfaction with Registrar of Companies within the defined prescribed timelines.

Note 44.3: Quarterly returns/statements of current assets filed with banks or financial institutions against the underlying borrowings are in agreement with the books of accounts.

NOTE 46: RISK MANAGEMENT

The Company has formulated a comprehensive enterprise risk management policy to take care of major risks, such as credit risk, market risk, liquidity risk. The Company has an integrated risk management policy (IRM) in place, which communicates the risk management strategy, framework, and risk processes across the organisation, and has been approved by the Board. The risk management framework broadly includes governance, risk appetite approach, risk-specific guidelines, risk measurement, mitigation, monitoring reporting, and key risk indicators (KRIs). The Company has developed a clearly articulated risk appetite statement, functional policies, and KRIs to explicitly define the level and nature of risk that an organisation willing to take in order to pursue the articulated mission on behalf of various stakeholders. The Board has delegated the responsibility of risk management to its risk management committee (RMC), which reviews the efficacy of our risk management framework, provides important oversight, and assesses whether it is consistent with the risk tolerance levels laid down. The RMC gives directions to executive risk management committee (ERMC), comprising senior management.

Note 46.1: Credit Risk

The Company''s asset base comprises of retail loans and corporate loans.

Retail loans mainly focusses on financing of acquisition or construction of houses that includes repair, upgradation, and development of plot of land. In retail loans category, the Company also provides loan against properties and loans for purchase & construction of non-residential premises.

Corporate finance loans are given mainly to developers for financing the construction of residential / commercial properties, i.e. construction finance loans, and for general corporate purpose loans. i.e. corporate term loans and lease rental discounting loans.

Being in the lending domain, credit risk is one of the major risks in the business model of the Company. Credit risk stems from outright default due to inability or unwillingness of a customer or counterparty to meet the contractual commitments. The essence of credit risk management in the Company''s pivots around the early assessment of stress, both at a portfolio and account level, and taking appropriate measures.

Credit Risk Management

Credit risk of the Company is managed through a robust Credit Risk Management set-up at various levels. Given the pervasiveness of credit risk in the Company''s line of business, the Board and the senior management consider credit risk management to be an integral part of the organisational strategy. The Board has constituted a Risk Management Committee (RMC) that owns the risk management framework. The RMC oversees the Risk Management practices and gives direction to the Executive Risk Management Committee (ERMC), comprising of the MD and CEO along with functional heads, in implementing the risk management framework and policy. The policies and procedures have been drafted in close consultation with process owners, ERMC and RMC.

The risk management function is led by the Chief Risk Officer who is independent and has direct access to the RMC.

The Company''s Risk Framework for credit risk management is mentioned below:

1) Established an appropriate credit risk environment

The Company has developed credit risk strategy which reflects its risk tolerance and level of profitability it expects to achieve. The execution of strategy is done through policies, guidelines and processes supervised by team of experienced professionals in the mortgage business.

2) Ensure sound credit approval process

The Company''s Target Operating Model (TOM) comprises Hub and Spoc structure, advanced technology platform, experienced and specialized professionals and mark to market policies and products. The Company''s TOM allows to manage various type of risks in a better manner which in turn helps building a robust portfolio.

The Company has clear segregation of duties between transaction originators in the business function and approvers in the credit risk function. Spoc or branch act as the primary point of sale, undertake loan originations, collection, deposit sourcing and customer service.

Hubs perform functions, such as loan processing, credit appraisal and monitoring through subject matter experts comprising team of underwriters, fraud control unit, legal counsels, and technical evaluators.

The credit sanction is done through a well-defined delegation matrix under four eye principle. All functions are subject to audit, undertaken by an independent team directly reporting to the Board.

Hubs and Spocs are supported by Central Support Office (CSO), Centralised Operations (COPS) and Central Processing Centre (CPC).

3) Maintains an appropriate credit administration, measurement, and monitoring process

Policies and procedures have been developed for identifying, measuring, monitoring and mitigating credit risk. Portfolio monitoring allows a proactive approach to identify, at an early stage, credit quality deterioration. A system of independent, periodical reviews of the Company''s credit risk management process is established and the results of such reviews are communicated across the levels for corrective actions as applicable.

Adequate controls are in place to ensure that the credit approval function is being properly managed and that credit exposures are within levels consistent with prudential standards and internal limits.

Note 46.2: Derivative Financial Instruments

Credit risk arising from derivative financial instruments is, at any time, limited to those with positive fair values, as recorded on the balance sheet.

Note 46.4: Market Risk

Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market variables such as interest rates, foreign exchange rates and equity prices. The Company monitors such changes and presents to the management on a regular basis. It undertakes scenario analysis as well as other techniques like earnings at risk to quantify the expected impact upon the change of market variables. The Board approved investment policy defines the overall exposure limits and specific limits pertaining to the exposure to a particular entity /counterparty as well as type of securities.

46.4.3 Currency risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Foreign currency risk arises majorly on account of foreign currency borrowings which are primarily in US dolllar ($). The Company manages its foreign currency risk by entering into cross currency swaps and forward contracts. When a derivative is entered into for the purpose of being as hedge, the Company negotiates the terms of those derivatives to match with the terms of the hedge exposure.

Currently, the Company is exposed to currency risk by virtue of its ECBs. But, the Company has undertaken hedging and mitigated a major portion of such risk.

Note 46.4.4: Equity price risk :

The Company''s investment in non-listed equity securities are accounted at cost in the financial statement net of impairment (if any). The expected cash flow from these entities are regularly monitored to identify impairment indicators.

Note 46.5: Liquidity risk and funding management

Liquidity risk is defined as the risk that the Company will encounter in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Liquidity risk arises because of the possibility that the Company might be unable to meet its payment obligations when they fall due as a result of mismatches in the timing of the cash flows under both normal and stress circumstances. Such scenarios could occur when funding needed for illiquid asset positions is not available to the Company on acceptable terms. To limit this risk, management has arranged for diversified funding sources and investors in addition to its core deposit base and has adopted a policy of managing assets with liquidity in mind and monitoring future cash flows and liquidity on a regular basis. The Company also keeps lines of credit and liquid investments that it can access to meet liquidity needs. The lines of credit are from various banks and institutions. The liquid investments are kept in liquid mutual funds, fixed deposits, liquid bonds, government

securities etc., limits of which are defined as per investment policy based on the type of security, rating of entity and instrument. In accordance with the Company''s policy, the liquidity position is assessed under a variety of scenarios. The Company follows both stock and flow approaches to monitor and asses the liquidity position. Moreover, the Company keeps a track of the expected funds inflows and outflows along with the avenues of raising the funds. This incorporates an assessment of expected cash flows and the availability of high grade collateral which could be used to secure additional funding if required.

The Company has a Board approved Asset and Liability Management (ALM) policy. The policy has constituted an Asset and Liability Committee (ALCO) which meets at regular intervals and review the asset liability profile both at the particular time bucket level and cumulative level as well as the interest rate profile of the Company. The policy also defines the limits on such monitored items and these are further presented to the Board for information and further action, if any. Apart from the regulatory defined tools, the Company has voluntarily instituted various liquidity parameters that are presented to the ALCO and further to the Board. Moreover, the position of liquidity is presented to the Risk Management Committee of the Board.

NOTE 47: FAIR VALUE MEASUREMENT

The principles and techniques of fair valuation measurement of both financial and non-financial instruments are as follows:

(a) Valuation principles

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e., an exit price), regardless of whether that price is directly observable or estimated using a valuation technique.

For determination of fair value, financial instruments are classified based on a hierarchy of valuation techniques, as summarised below:

Level 1: Those where the inputs used in the valuation are unadjusted quoted prices from active markets for identical assets or liabilities that the Company has access to at the measurement date. The Company

considers markets as active only if there are sufficient trading activities with regards to the volume and liquidity of the identical assets or liabilities and when there are binding and exercisable price quotes available on the balance sheet date.

Level 2: Those where the inputs that are used for valuation are significant and are derived from directly or indirectly observable market data available over the entire period of the instrument''s life. Such inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical instruments in inactive markets and observable inputs other than quoted prices such as interest rates and yield curves, implied volatilities and credit spreads. In addition, adjustments may be required for the condition or location of the asset or the extent to which it relates to items that are comparable to the valued instrument.

Level 3: Those that include one or more unobservable input that is significant to the measurement as whole.

(b) Valuation governance

The Company''s fair value methodology and the governance over its models includes a number of controls and other procedures to ensure appropriate safeguards are in place to ensure its quality and adequacy. All new product initiatives and their valuations are subject to approvals by related functions of the Company.

Valuation methodologies of financial instruments measured at fair value

Below are the methodologies and assumptions used to determine fair values for the above financial instruments

which are recorded and measured at fair value in the Company''s financial statements.

1. Debt securities

The Company''s debt instruments are standard fixed rate securities.The Company uses market prices whenever available, or other observable inputs in discounted cash flow models to estimate the corresponding fair value. These Corporate bonds are generally Level 2 instruments.

2. Assets held for sale

Assets held for sale valuation are basis independent valuations by a specialist in valuing these type of assets. The best estimate of fair value is current prices in an active market for similar assets.

3. Derivative financial instruments Interest rate derivatives

For Interest rate derivatives Company has interest rate swaps and cross currency swaps. The valuation techniques are the mark to market positions with

forward pricing on the swap models using present value calculations by estimating future cash flows and discounting them with the appropriate yield curves like the OIS yield curve. These contracts are generally Level 2 unless adjustments to yield curves or credit spreads are based on significant non-observable inputs, in which case, they are Level 3.

Foreign exchange contracts

Foreign exchange contracts include spot contracts, foreign exchange forward and swap contracts and over-the-counter foreign exchange options. However, the Company has not entered into any foreign exchange options. These instruments are valued by either observable foreign exchange rates, observable or calculated forward points and option valuation models. Company classifies these foreign exchange contracts as level 2.

Valuation methodologies of financial instruments not measured at fair value

Below are the methodologies and assumptions used to determine fair values for the above financial instruments which are not recorded and measured at fair value in the Company''s financial statements.

1. Financial assets and liabilities (Short term)

Cash and cash equivalents, bank balances other than cash and cash equivalents, trade receivables, other financial assets, trade payables, commercial papers and other financial liabilities has been recognised at amortised cost in the financial statements.

In accordance with Ind AS 107.29(a), fair value is not required to be disclosed in relation to the financial instruments having short-term maturity (less than twelve months), where carrying amount (net of impairment) is a reasonable approximation of their fair value. Hence the fair value of cash and cash equivalents, bank balances other than cash and cash equivalents, trade receivables, other financial assets, trade payables, commercial papers and other financial liabilities has not been disclosed.

2. Financial assets

Loans and advances to customers

Substantial amount of the loans are based on floating rate of interest,carrying amount of which represents the fair value of these loans. Minuscule amount of loans are based on fixed to floating rate of interest, the fair values of these loans are computed by discounted cash flow models incorporating prevalling interest rate.The Company classifies these assets as Level 2.

Government debt securities

Government debt securities are financial instruments issued by sovereign governments and include both long- term bonds and short-term bills with fixed or floating rate interest payments. These instruments are generally liquid and traded in active markets resulting in a Level 1 classification. When active market prices are not available, the Company uses discounted cash flow models with observable market inputs of similar instruments and bond prices to estimate future index levels and extrapolating yields outside the range of active market trading, in which instances the Company classifies those securities as Level 2. The Company

does not have Level 3 government securities where valuation inputs would be unobservable.

3. Financial liabilities

Debt securities and subordinated liabilities

Debt securities and subordinated liabilities are generally liquid and traded in active markets resulting in a Level 1 classification. When active market prices are not available, the Company uses discounted cash flow models with observable market inputs of similar instruments and bond prices to estimate future index levels and extrapolating yields outside the range of active market trading, in which instances the Company classifies those securities as Level 2.

Deposits

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Mar 31, 2019

Notes to Standalone Financial Statements for the year ended March 31, 2019

Profit Reconciliation for the year ended March 31, 2018

(Rs in crores)

Particulars

Foot Notes

Previous GAAP

Adjustment impact

IndAS

Revenue from operations

Revenue from operations

5,516.39

(5,516.39)

-

Interest Income

1 (a), 4 (a)

-

5,005.67

5,005.67

Fees and commission Income

1 (a), 3

-

332.66

332.66

Net gain on derecognition of financial instruments under amortised cost category

3

-

116.22

116.22

Net gain on fair value changes

4(b)

-

33.51

33.51

Total revenue from operations

5,516.39

(28.33)

5,488.06

Other Income

0.56

0.07

0.63

Total income

5,516.95

(28.26)

5,488.69

Expenses

Finance costs

1 (b)

3,530.80

5.76

3,536.56

Office operating expenses

101.20

(101.20)

-

Provisions and Contingencies

180.53

(180.53)

-

Bad debts written off

18.30

(18.30)

-

Impairment on financial instruments

2

-

276.57

276.57

Employee benefits expense

5,6

136.48

6.24

142.72

Fees and commission expense

-

84.74

84.74

Depreciation, amortisation and impairment

24.11

-

24.11

Other expenses

246.45

(57.04)

189.41

Total expenses

4,237.87

16.24

4,254.11

Profit before tax

1,279.08

(44.50)

1,234.58

Tax expense

Current tax

437.71

(0.69)

437.02

Earlier years

(0.08)

0.08

-

Deferred tax

9

10.80

(55.38)

(44.58)

Profit for the year

830.65

11.49

842.14

Other Comprehensive (loss) / income

A (i) Items that will not be reclassified to profit or loss

Remeasurement gain / (loss) on defined benefit plan

5

-

0.13

0.13

(ii) Income tax relating to items that will not be reclassified to profit or loss

9

-

(0.05)

(0.05)

Subtotal (A)

-

0.08

0.08

B (i) Items that will be reclassified to profit or loss

Cash flow hedge

7

-

(3.76)

(3.76)

(ii) Income tax relating to items that will be reclassified to profit or loss

9

-

1.52

1.52

Subtotal (B)

-

(2.24)

(2.24)

Other comprehensive (loss) / income (A B)

-

(2.16)

(2.16)

Total comprehensive income for the year

830.65

9.33

839.98

Foot notes to the reconciliation of the equity as at April 01, 2017 and March 31, 2018 and profit and loss for the year ended March 31, 2018:

1. EIR on loans and borrowings

a) Under Indian GAAP, transaction costs on origination of loan assets was recognised as an expense on straight line basis over the expected life of the loan assets and fees collected from the customer on origination of loan assets was recognised as an income on straight line basis over the expected life of the loan assets.

Under Ind AS, transaction costs and fees from customers are included in the initial recognition amount of loan assets and recognised as interest income using the effective interest rate method.

Consequently loan assets as at March 31, 2018 have increased by Rs.199.97 crores and on the date of transition (i.e April 01, 2017) have increased by Rs.138.56 crores. Interest income for the year ended March 31, 2018 have decreased by Rs.0.14 crores and retained earnings on the date of transition (i.e April 01, 2017) have decreased by RS.18.52 crores.

b) Under Indian GAAP, transaction costs incurred on borrowings was recognised as an expense on straight line basis over the life of the borrowings.

Under Ind AS, transaction costs are included in the initial recognition amount of borrowings and recognised as interest expense using the effective interest rate method.

Consequently, borrowings as at March 31, 2018 have decreased by Rs.67.42 crores and on the date of transition (i.e April 01, 2017) have decreased by Rs.60.02 crores and interest exepnse for the year ended March 31, 2018 have increased by Rs.6.23 crores and retained earnings on the date of transition (i.e April 01, 2017) decreased by Rs.8.94 crores.

2. Expected Credit Loss on loans

Under Indian GAAP, the Company has created provision for loans based on the guidelines on prudential norms issued by National Housing Bank. Under Ind AS, impairment allowance has been determined based on Expected Credit Loss model (ECL).

Consequently, loan assets as at March 31, 2018 have impaired by Rs.432.32 crores and on the date of transition (i.e April 01, 2017) have impaired by Rs.174.05 crores (including additional provision for unforeseen macro-economic factors).

Impairment on financial instruments for the year ended March 31, 2018 have increased by Rs.93.22 crores and on the date of transition (i.e April 01, 2017) decreased by Rs.86.18 crores.

Gain on derecognition of loans (assignment of loans)

Under Indian GAAP, interest spread and servicing fees on derecognition of the loans was recognised as an income during the contractual term of the derecognised loans.

Under Ind AS, interest spread and net servicing fees Cover the expected life of the asset) is recognised at present value on the date of derecognition itself as interest-only strip / net servicing fees receivable and correspondingly recognised as profit on derecognition of loans.

Consequently, other financial assets as at March 31, 2018 have increased by Rs 220.17 crores and on the date of transition (i.e April 01, 2017) have increased by Rs.141.60 crores.

Gain on derecognition of loans for the year ended March 31, 2018 have increased by Rs.116.22 crores.

Fees and commission income for the year ended March 31, 2018 have decreased by Rs.37.65 crores and retained earnings on the date of transition (i.e April 01, 2017) have increased by Rs.141.60 crores.

Investments

a) Under Indian GAAP, the company accounted for long term investments in Central and State Government securities at cost less provision for diminution in the value of investments (other than temporary).

Under Ind AS, these Investments are classified as amortised cost since these are to be held till maturity and the cash flows are solely payments of principal and interest only.

Consequently Investments as at March 31, 2018 have increased by Rs.3.12 crores and on the date of transition (i.e April 01, 2017) have increased by Rs.1.82 crores.

Interest income for the year ended March 31, 2018 have increased by Rs.1.30 crores and retained earnings on the date of transition (i.e April 01, 2017) have increased by Rs.1.82 crores.

b) Under Indian GAAP, the company accounted for short term investments in quoted bonds / debentures and mutual funds as investment measured at cost or market value whichever is less.

Under Ind AS, the company has classified such investments as FVTPL investments and are measured at fair value.

Consequently Investments as at March 31, 2018 have increased by Rs.3.60 crores and on the date of transition (i.e April 01, 2017) have increased by Rs.11.11 crores.

Net gain on fair value changes for the year ended March 31, 2018 have decreased by Rs.7.51 crores and retained earnings on the date of transition (i.e April 01, 2017) have increased by Rs.11.11 crores.

5. Defined benefit obligations

Both under Indian GAAP and Ind AS, the Company recognised costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to profit or loss. Under Ind AS, premeasurements [comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability] are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI. Thus for the year ended March 31, 2018 the employee benefit cost is increased by Rs. 0.13 crores and premeasurement gains/ losses on defined benefit plans has been recognised in the OCI net of tax.

6. Share-based payments

Under Indian GAAP, the Company recognised only the intrinsic value for the share based payments plans as an expense.

Under Ind AS, the fair value of the share options to be determined using an appropriate pricing model, recognised over the vesting period.

Consequently, share based expense to employees for the year ended March 31, 2018 have increased by Rs.17.15 crores and retained earnings on the date of transition (i.e April 01, 2017) have decreased by Rs.20.74 crores with the corresponding adjustment to reserves as "share option outstanding account."

7. Derivative Instruments (forward contracts / currency swaps / interest rate swaps)

Under Indian GAAP, exchange differences arising on principal only swaps are recognised in the statement of profit and loss in the reporting period in which the exchange rate changes.

Under Ind AS , derivatives are recorded at fair value and carried as assets when their fair value is positive and as liabilities when their fair value is negative. Changes in the fair value of derivatives are included in net gain on fair value changes unless hedge accounting is applied. The Company applies hedge accounting for derivative instruments.The effective portion of the cumulative gain or loss on the hedging instrument is recognised directly in other comprehensive income (OCI) and accumulated in a seperate component of equity as "cash flow hedge reserve."

8. Other comprehensive income

Under Indian GAAP, the Company has not presented other comprehensive income (OCI) separately. Hence, it has reconciled Indian GAAP profit or loss to profit or profit or loss as per Ind AS. Further, Indian GAAP profit or loss is reconciled to total comprehensive income as per Ind AS.

9. Deferred tax

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period.

Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP.

In addition, the various transitional adjustments lead to temporary differences. Deferred tax adjustments are recognised in correlation to the underlying transaction either in retained earnings or a separate component of equity.

10. Reclassification of provision of standard / non-performing assets (NPA)

Under Indian GAAP provision for non performing assets, standard assets and contingencies were presented under provisions. However, under Ind AS financial assets measured at amortised cost (majorly loans) are presented net of provision for expected credit losses.

Form AOC-1

(Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014)

Statement containing salient features of the financial statement of subsidiaries or associate companies or joint ventures Part A Subsidiaries

Sr. No.

Particulars

Details / (Rs. in crores)

1

Name of the subsidiary

PHFL Home Loans and Services Limited

2

Date since when subsidiary was acquired/ incorporated

August 22, 2017

3

Reporting period for the subsidiary concerned, if different from the holding company''s reporting period.

From April 01, 2018 to March 31, 2019

4

Reporting currency and Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries.

Rs.

5

Share capital

0.25

6

Reserves and surplus

138.38

7

Total assets

190.00

8

Total Liabilities

51.37

9

Investments

103.45

10

Turnover

404.22

11

Profit before taxation

193.09

12

Provision for taxation

56.24

13

Profit after taxation

136.85

14

Proposed Dividend (including Dividend Distribution Tax)

Nil

15

Extent of shareholding (in percentage)

100

Notes: 1. Names of subsidiaries which are yet to commence operations: None

2. Names of subsidiaries which have been liquidated or sold during the year: None

Part B Associates and Joint Ventures

The Company has no associate company or joint venture.

For and on behalf of the Board of Directors

Sanjaya Gupta

Sunil Kaul

L V. Prabhakar

Managing Director

Director

Director

DIN: 02939128

DIN: 05102910

DIN: 08110715

Kapish Jain

Sanjay Jain

Chief Financial Officer

Company Secretary

ACA: 057737

FCS: 002642

Place: New Delhi

Date: May 09, 2019


Mar 31, 2018

1. OVERVIEW AND SIGNIFICANT ACCOUNTING POLICIES

1.1 OVERVIEW

PNB Housing Finance Limited (‘PNBHFL’), “the Company” was incorporated on November 11th, 1988. The Company is primarily engaged in the business of providing loans to individuals and corporate bodies for purchase, construction, repair and up-gradation of houses. It also provides loans for commercial space, loan against property and loan for purchase of residential plots. The Company is deposit taking Housing Finance Company registered with National Housing Bank (NHB) under Section 29A of the National Housing Bank Act, 1987.

2.1 During the Financial year ended March 31st, 2017, the Company has raised capital of RS.3,000 crores through Initial Public Offer (IPO) by issuing 3,87,19,309 Equity Shares of RS.10/- each.

2.2 TERMS/RIGHTS ATTACHED TO EQUITY SHARES

The Company has only one class of equity shares having a par value of RS.10/- per share. Each shareholder is entitled to one vote per share. The company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting. In the event of the liquidation of the Company, the holder of the equity share are entitled to receive any of the remaining assets of the Company, after the distribution of the preferential amounts. The distribution will be in the proportion of the number of equity shares held by the equity shareholders.

2.3 ISSUE OF BONUS SHARES

During the financial year ended March 31st, 2013, the Company had issued 64,70,589 Equity Shares of RS.10/- each as fully paid up Bonus Shares after capitalisation of General Reserves of RS.6.47 crores to shareholders in proportion of their shareholding.

Apart from the issue of bonus shares as mentioned above, the Company has not allotted any share pursuant to contracts without payment being received in cash nor has it bought back any shares during the preceding period of 5 financial years.

2.4 SHARES RESERVED FOR ISSUE UNDER ESOP

i) During the year, Company has issued 9,44,173 (Previous year Nil) shares on exercise of options granted to its employees and directors under ESOS.

ii) As at March 31st, 2018, the Company has following Employee Stock Option Scheme, the features of the same are as follows:

iii) Intrinsic Value Method has been used to account for the employee share based payment plans. The intrinsic value of each stock option granted under the ESOP-2016 is Rs. Nil, since the market price of underlying share at the grant date was same as the exercise price and consequently, the accounting value of the option (compensation cost) is Rs. Nil.

iv) Movement in stock options ESOP-2016 plan is as follows:

v) Black-Scholes Model have been used to derive the estimated value of stock option granted, if the fair value method to account for the employee share based payment plans were to be used. The estimated value of each stock options and the parameters used for deriving the estimated value of Stock Option granted under Black-Scholes Model is as follows:

vi) Had the compensation cost for the stock options granted under ESOP - 2016 been determined on fair value approach, Company’s Profit After Tax and Earnings Per Share would have been as per the pro-forma amounts indicated below :

3.1 As per Section 29C(i) of the National Housing Bank Act, 1987, the Company is required to transfer at least 20% of its net profit every year to a reserve before any dividend is declared. For this purpose any Special Reserve created by the Company under Section 36(1) (viii) of the Income Tax Act, 1961 is considered to be an eligible transfer. The Company has transferred an amount of RS.150.00 crores (Previous year RS.95.00 crores) to Special Reserve in terms of Section 36(1) (viii) of the Income Tax Act, 1961.

3.2 Vide circular NHB(ND)/DRS/Pol. 62/2014 dated May 27th, 2014, the National Housing Bank (NHB) had directed Housing Finance Companies (HFCs) to provide for deferred tax liability in respect of the balance in the “Special Reserve” created under Section 36(1)(viii) of the Income-Tax Act, 1961. Vide circular NHB (ND)/DRS/Policy Circular 65 / 2014-15 dated August 22nd, 2014, the National Housing Bank (“NHB”) has directed Housing Finance Companies (HFCs) to create deferred tax liability in respect of accumulated balance of Special Reserve as on April 1st, 2014 from the free reserves over a period of 3 years starting with financial year 2014-15, in a phased manner in the ratio of 25:25:50. Accordingly, the Company has adjusted the balance in General Reserves as at April 1st, 2016 by Rs. 26.00 crores with respect to third and final tranche of deferred tax liability on Special Reserve balance as at April 1st, 2014.

The Company has charged its Statement of Profit and Loss for the year ended March 31st, 2018 by RS.51.91 crores (Previous year RS.31.01 crores) with the deferred tax liability on an additional amount appropriated towards Special Reserve out of current year’s profit. This amount is reflected under the head “Provision for Taxation -Deferred Tax(Net)”.

3.3 The Company has transferred an amount of RS.16.13 crores (Previous year RS.10.60 crores) to Statutory Reserve u/s 29C of the National Housing Bank Act, 1987.

3.4 During the year, the Company utilised RS.12.67 crores (net of tax effect of RS.6.71 crores) in accordance with Section 52 of the Companies Act, 2013, towards the proportionate discount on issue/premium on redemption of Zero Coupon Secured Redeemable Non Convertible Debentures and expenses in respect of Medium Term Note Programme (MTN Programme). During financial year 2016-17, RS.74.72 crores (net of tax effect of RS.25.88 crores) has been utilised towards the shares issue expenses.

3.5 Ministry of Corporate Affairs amended the Companies (Accounting Standards) Rules, 2006 on March 30th, 2016 and vide its General Circular No. 4/2016 dated 27.04.2016 has clarified that Companies (Accounting Standards) Amendment Rules, 2016 would be applicable for preparation of accounts for accounting periods commencing on or after the date of notification, i.e. w.e.f. from FY2016-17.

According to this amendment, the proposed dividend shall not be recognised as liability until approved by the Shareholders. In terms of this amendment, the dividend for financial year of RS.9/- per equity share of RS.10/- each, as proposed by the Board of Directors, has not been recognised as liability in annual accounts for FY2017-18. The same will be recognised as liability on approval of shareholders in the ensuing Annual General Meeting.

During the year, on the basis of shareholder’s approval, the Company has recognised the dividend of RS.6/- per equity share of RS.10/- each in respect of FY2016-17.

4.1 REFINANCE FROM NATIONAL HOUSING BANK (NHB) AND TERM LOANS FROM BANKS Nature of Security

a) Refinance from National Housing Bank (NHB) and Term Loans from Banks other than Punjab National Bank are secured by hypothecation of specific loans/ book debts against which Refinance/ Term Loan has been availed.

b) Term Loan from Punjab National Bank are secured by hypothecation of specific book debts and negative lien on assets created out of finance availed from Punjab National Bank.

4.2 EXTERNAL COMMERCIAL BORROWING

i) The Company has availed External Commercial Borrowing of USD 100 million in FY2014-15 and USD 150 million in FY2016-17 for financing prospective buyers of low cost affordable housing units under “approval route” in terms of the RBI guidelines dated December 17th, 2012. This facility is secured against eligible affordable housing loans. In terms of the RBI guidelines, these borrowings have been swapped into rupees for the entire tenure by way of principal only swaps and interest payable (fixed coupon) have been swapped into Rupees for the loan tenure by way of interest only swaps. The Company, in terms of the RBI guidelines, is required to keep these swap agreement for entire tenure of the borrowing.

ii) Consequent to the Guidance Note on Accounting for Derivative Contracts (the “GN”) issued by the Institute of Chartered Accountants of India, becoming effective from April 1st, 2016. During Financial year ended March 31st, 2017, the Company has changed its accounting policy relating to derivative contracts. On and from that date, all derivative contracts are recognised in the balance sheet and measured at fair value. The fair value changes are recognised in the Statement of Profit and Loss unless hedge accounting is used. Where hedge accounting is used, fair value changes of the derivative contracts are recognised through the Statement of Profit and Loss in the same period as the offsetting losses and gains on the hedged item.

iii) As at March 31st, 2018, the Company has outstanding foreign currency borrowings of USD 225.62 million equivalent (Previous year USD 233.13 million). The Company has currency swap contracts on a outstanding notional amount of USD 225.62 million equivalent (Previous year USD 233.13 million) to hedge the foreign currency risk. Further, interest rate swaps (fixed coupon only) on a notional amount of USD 225.62 million equivalent (Previous year USD 233.13 million) are outstanding, which have been undertaken to hedge the foreign currency risk arising out of interest payment on the said External Commercial Borrowing.

4.3 SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES Nature of Security

Redeemable Non-Convertible Debentures are secured by hypothecation of specific book debts to the extent of 1.10 to 1.25 times of outstanding amount. In addition, all the Redeemable Non-Convertible Debentures are also secured by mortgage of buildings of RS.0.77 crores (Refer Note 11).

4.4 UNSECURED REDEEMABLE NON-CONVERTIBLE SUBORDINATED DEBENTURES

Redeemable Non-Convertible Subordinated Debentures, for value aggregating to RS.1,399.00 crores (Previous year RS.1,399.00 crores) are subordinated debt to present and future senior indebtedness of the Company and based on the balance term to maturity as at March 31st, 2018, RS.1359.00 crores (Previous year RS.1,399.00 crores) qualify as Tier II Capital under National Housing Bank’s (NHB) guidelines for assessing capital adequacy.

4.5 DEPOSITS

i) Deposit includes Public Deposits as defined in Paragraph 2(1)(y) of the Housing Finance Companies (NHB) Directions, 2010, are secured by floating charge on the Statutory Liquid Assets maintained in terms of sub-sections (1) & (2) of Section 29B of the National Housing Bank Act, 1987. As on March 31st, 2018, the public deposits outstanding (including interest accrued) amounts to RS.9,363.49 crores (Previous year RS.8,715.77 crores).

ii) The Company is carrying Statutory Liquid Assets amounting to RS.1,161.59 crores (Previous year RS.961.55 crores).

5. DEFERRED TAX LIABILITIES (NET)

In accordance with Accounting Standard on ‘Accounting for Taxes on Income’ (AS 22), the Company is accounting for Deferred Tax. The break-up of deferred tax assets / liabilities are as follows:

6.1 Trade Payables RS.125.36 crores (Previous Year RS.93.56 crores) includes Rs. Nil (Previous Year Rs. Nil) payable to “Suppliers” registered under the Micro, Small and Medium Enterprises Development Act, 2006, which has been determined to the extent such parties have been identified on the basis of the information available with the Company. No interest has been paid / payable by the Company during the year to the “Suppliers” covered under the Micro, Small and Medium Enterprise Development Act, 2006.

7.1 Loans and Instalments due from Borrowers shown under Loans and Advances and Other Current Assets respectively are secured wholly or partly by any one or all of the below as applicable:

i) Equitable / Simple / English Mortgage of immovable property;

ii) Mortgage of Development Rights / FSI / any other benefit flowing from the immovable property;

iii) Demand Promissory Note;

iv) Post Dated Cheques towards the repayment of the debt;

v) Personal / Corporate Guarantees;

vi) Hypothecation of rent receivables, cash flow of the project, debt service reserve account, fixed deposit, current and escrow accounts;

vii) Pledge of shares, Security on shares through Non Disposal Undertaking and Power of Attorney, NSCs, other securities;

viii) Undertaking to create a security.

8.1 The installments due from borrowers is net of interest de-recognised of RS.24.68 crores (Previous year RS.17.71 crores) in respect of non-performing loans. (Refer note 19.1)

8.2 Stock of Acquired Properties is net of Provision for Diminution in Value of RS.23.50 crores (Previous year RS.14.77 crores)

9. DISCLOSURE REQUIRED BY NATIONAL HOUSING BANK

The following additional disclosures have been given in terms of the circular no. NHB.HFC.CG-DIR.1/MD&CEO/2016 dated February 9th, 2017 issued by the National Housing Bank.

9.1 DERIVATIVES

i) Forward Rate Agreement (FRA) / Interest Rate Swap (IRS)

@ The Company has entered into Swap agreement with four banks having almost equal exposure with each of them. Hence, there is no concentration of credit risk which could be exposure to particular industries or swaps with highly geared companies.

ii) Exchange Traded Interest Rate (IR) Derivative - There is no exchange traded interest rate derivative.

iii) Disclosure on Risk Exposure in Derivatives

9.2 SECURITISATION

i) There are no SPVs sponsored by PNB Housing Finance Limited.

ii) During the year, the Company has not sold any financial assets to Securitisation / Reconstruction Company for Asset Reconstruction (Previous year Rs. Nil)

iii) Details of assignment transactions undertaken:

iv) During the year, the Company has not purchased / sold any non-performing financial assets (Previous year Rs. Nil)

9.3 ASSET LIABILITY MANAGEMENT

The residual maturity profile of Assets and Liabilities is carried out based on the estimates and assumptions regarding pre-payments and renewals as prescribed by the National Housing Bank (NHB). Maturity pattern of certain items of assets and liabilities are as follows:

9.4 EXPOSURE:

i) Exposure to Real Estate Sector

Note: While computing the above information, certain estimates, assumptions and adjustments have been made by the Management which have been relied upon by the auditors.

ii) As on March 31st, 2018, the Company does not have any exposure to Capital Market (Previous year Rs. Nil).

iii) As on March 31st, 2018, the Company has not financed any product of the parent company (Previous year Rs. Nil).

iv) As on March 31st, 2018, the Company has not exceeded the prudential exposure limit prescribed by National Housing Bank for single borrower or group borrower (Previous year Rs. Nil).

v) As on March 31, 2018, the Company has not given any unsecured advances (Previous year Rs. Nil).

9.5 REGISTRATION OBTAINED FROM FINANCIAL SECTOR REGULATORS

From NHB : vide registration number 01.0018.01

Ministry of Corporate Affairs : L65922DL1988PLC033856

9.6 DISCLOSURE OF PENALTIES IMPOSED BY NATIONAL HOUSING BANK AND OTHER REGULATORS:

During the financial year ended March 31st, 2018:

i) NHB has concluded inspection for FY2015-16. It has no adverse or material impact on the financials.

ii) NHB has carried out inspection for FY2016-17 and has not reported any adverse comment having material impact on the financials.

iii) Company has not been imposed any penalty by National Housing Bank and other regulators.

9.7 RELATED PARTY TRANSACTIONS

As per the Accounting Standard ‘Related Party Disclosures’ (AS 18), notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:

*The Company has incorporated a wholly owned subsidiary “PHFL Home Loan and Services Limited” on August 22nd, 2017.

# Excluding perquisites on exercise of stock options during the year. Further, also exclude payment of one time Ex-gratia received from Destimoney Enterprises Limited, Mauritius aggregating to RS.2.41 crores.

The policy on dealing with Related Party Transactions is available on our website www.pnbhousing.com

9.8 During the year, no transaction was accounted which was related to prior period (Previous year Rs. Nil).

9.9 During the year, no item of revenue recognition has been postponed except as disclosed in accounting policy for revenue recognition (Refer Note 1.7).

9.10 BREAK-UP OF LOAN & ADVANCES AND PROVISIONS THEREON:

The Company has complied with the norms prescribed under Housing Finance Companies (NHB) Directions, 2010 for recognising Non-Performing Assets (NPA) in preparation of Accounts. As per the norms, NPAs are recognised on the basis of more than 90 days overdue. NPAs are to be treated as Bad & Doubtful, if they remain outstanding for more than 15 months. The Company has made adequate provisions on Non-Performing Assets and Standard Assets in respect of Housing and NonHousing Loans as prescribed under Housing Finance Companies (NHB) Directions, 2010.

9.11 As on March 31st, 2018, the Company does not have any Assets outside the country (Previous year Rs. Nil).

9.12 As on March 31st, 2018, the Company does not have any Off-Balance Sheet SPVs sponsored (Previous year Nil).

10. OPERATING LEASE

In accordance with the Accounting Standard on ‘Leases’ (AS 19), notified by the Companies (Accounting Standards) Rules, 2006, the following disclosures in respect of Operating Leases are made. The Company has acquired properties under cancellable and non-cancellable operating leases for periods ranging from 12 months to 60 months. The total minimum lease payments for the current year, in respect thereof, included under Rent, aggregates to RS.29.67 crores (Previous year RS.18.70 crores). The future minimum lease payments in respect of properties taken under non-cancellable operating lease are as follows:

11. In accordance with the Accounting Standard on ‘Earnings Per Share’ (AS 20), the Earnings Per Share is as follows:

i) The Earnings Per Share (EPS) is calculated as follows:

ii) The Basic Earnings Per Share have been computed by dividing the Profit After Tax by the weighted average number of equity shares for the respective periods. The weighted average number of shares have been derived as follows:

iii) The Diluted Earnings Per Share have been computed by dividing the Profit After Tax by the weighted average number of equity shares after giving effect of outstanding Stock Options for the respective periods. The weighted average number of shares have been derived as follows:

12. SEGMENT REPORTING:

Company’s main business is to provide loans against/for purchase, construction, repairs & renovations of Houses/ Flats/Commercial Properties etc. All other activities of the Company revolve around the main business. As such, there are no separate reportable segment, as per the Accounting Standard on Segment Reporting (AS-17), notified by the Companies (Accounting Standard) Rules, 2016.

13. CONTINGENT LIABILITIES AND COMMITMENTS

i) Contingent liabilities in respect of Income-tax of RS.21.30 crores (Previous year RS.20.33 crores) is disputed by the Company and are under appeals. These includes contingent liability of RS.20.18 crores (Previous year RS.17.69 crores) with respect to Income-tax which have been decided by the CIT(A) in Company’s favour. However, Income-tax Department has filed appeal with ITAT. The Company expects the demands to be set aside by the appellate authority and hence no additional provision is considered necessary.

ii) Letter of comfort issued on behalf of the clients RS.15 crores (Previous year RS.15 crores)

iii) Claims against the Company not acknowledged as debt is Rs. Nil (Previous year Rs. Nil)

iv) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is RS.18.14 crores (Previous year RS.14.11 crores)

14. DISCLOSURE IN RESPECT OF EMPLOYEE BENEFITS:

In accordance with Accounting Standards on “Employee Benefits” (AS 15), the following disclosure have been made:

14.1 The company has made contribution to Provident Fund of RS.4.77 crores (Previous year RS.3.71 crores) which has been recognised in the Statement of Profit and Loss which are included under “Contribution to Provident Fund and Other Funds” in Note 21.

14.2 The Company has recognised expenses of RS.1.48 crores (Previous Year RS.1.14 crores) in the Statement of Profit and Loss for Contribution to State Plan namely Employee’ Pension Scheme.

15. CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES

Other Expenses includes RS.10.69 crores for the year ended March 31st, 2018 (Previous year RS.3.68 crores) contribution towards Corporate Social Responsibility (CSR) in accordance with Companies Act, 2013.

Disclosure on Corporate Social Responsibility (CSR) under section 135 of the Companies Act, 2013 is as under:

a) Gross amount required to be spent by the Company during the year is RS.10.69 crores.

b) Amount spent during the year on: RS.12.34 crores (includes RS.1.65 crores for previous years).

c) Details of related party transactions in relation to CSR expenditure, as per Accounting Standard (AS-18) - Rs. Nil

d) An amount of Rs. Nil had been provided for by the company suo-motu as on March 31st, 2018 (Previous year RS.1.65 crores) which relates to the projects sanctioned during FY2017-18.

16. There are no indications which reflect that any of the assets of the Company had got impaired from its potential use and therefore no impairment loss was required to be accounted in the current year as per Accounting Standard on “Impairment of Assets” (AS 28) notified by the Companies (Accounting Standards) Rules, 2006.

17. Previous year figures have been rearranged / regrouped wherever necessary to correspond with Current year’s classification disclosure.


Mar 31, 2017

1.1 During the year, the Company has raised capital of Rs.3,000 crores through Initial Public Offer (IPO) by issuing 3,87,19,309 Equity Shares of Rs.10/- each.

* During the financial year ended March 31st, 2017, Destimoney Enterprises Limited transferred 6,21,92,300 equity shares to its holding company Quality Investments Hodlings pursuant to in-specie distribution of its assets as per winding-up scheme.

1.2 TERMS/RIGHTS ATTACHED TO EQUITY SHARES

The Company has only one class of Equity Shares having a par value of Rs.10/- per Share. Each Shareholder is entitled to one vote per Equity Share held.

1.3 RIGHTS ISSUE OF EQUITY SHARES

During the financial year ended March 31st, 2016, the Company has called third and final call of Rs.3/-alongwith proportionate premium of Rs.36/- per share on 7,69,23,000 Equity Shares and was fully received.

1.4 ISSUE OF BONUS SHARES

During the financial year ended March 31st, 2013, the Company had issued 64,70,589 Equity Shares of Rs.10/- each as fully paid up Bonus Shares after capitalisation of General Reserves of Rs.6.47 crores to shareholders in proportion of their shareholding.

Apart from the issue of bonus shares as mentioned above, the Company has not allotted any share pursuant to contracts without payment being received in cash nor has it bought back any shares during the preceding period of 5 financial years.

1.5 SHARES RESERVED FOR ISSUE UNDER ESOP

i) The Nomination and Remuneration Committee of Directors (NRC) at its meeting held on March 18th, 2016 had recommended the grant of 41,88,459 stock options, under ESOP-16, to the eligible employees and Managing Director. At the Extra Ordinary General Meeting (EGM) held on 22nd April, 2016, the shareholders had approved the issue of 41,88,459 stock options representing 41,88,459 equity shares of Rs.10/- each to the eligible employees and Managing Director of the Company.

Out of 41,88,459 stock options, 38,07,690 stock options have been granted on April 22, 2016 representing 38,07,690 equity shares of Rs.10/- each under PNB Housing Finance Limited of “Employee Stock Options (ESOPs) Policy 2015-16 (ESOP-2016)”, to the eligible employees and Managing Director. In terms of ESOP-2016, the options would vest over a period of 4 years from the date of grant. The options can be exercised over a period of three years from the date of respective vesting. Accordingly, no options have vested during the current year.

ii) Method used for accounting for Share based payment plan: Intrinsic Value Method has been used to account for the employee share based payment plans. The intrinsic value of each stock option granted under the ESOP-2016 is Rs.Nil, since the market price of underlying share at the grant date was same as the excercise price and consequently, the accounting value of the option (compensation cost) is Rs.Nil.

iii) Movement in stock options ESOP-2016 plan is as follows:

iv) Black-Scholes Model have been used to derive the estimated value of stock option granted, if the fair value method to account for the employee share based payment plans were to be used. The estimated value of each stock options and the parameters used for deriving the estimated value of Stock Option granted under Black-Scholes Model is as follows:

v) Had the compensation cost for the stock options granted under ESOP - 2016 been determined on fair value approach, Company’s Profit After Tax and earnings per share would have been as per the pro-forma amounts indicated below :

2.1 As per Section 29C(i) of the National Housing Bank Act, 1987, the Company is required to transfer at least 20% of its net profit every year to a reserve before any dividend is declared. For this purpose any Special Reserve created by the Company under Section 36(1) (viii) of the Income Tax Act, 1961 is considered to be an eligible transfer. The Company has transferred an amount of Rs.95.00 crores (Previous year Rs.58.40 crores) to Special Reserve in terms of Section 36(1) (viii) of the Income Tax Act, 1961.

2.2 Vide circular NHB (ND)/DRS/Policy Circular 65 / 2014-15 dated August 22, 2014, the National Housing Bank ("NHB”) has directed Housing Finance Companies (HFCs) to provide for a deferred tax liability in respect of amount transferred to “Special Reserve” created under section 36(1)(viii) of the Income Tax Act, 1961. As per the above circular, NHB has advised HFCs to create deferred tax liability in respect of accumulated balance of Special Reserve as on April 1, 2014 from the free reserves over a period of 3 years starting with financial year 2014-15, in a phased manner in the ratio of 25:25:50. Accordingly, the Company has adjusted the balance in General Reserves as at April 01, 2016 by Rs.26.00 crores (Previous year Rs.13.23 crores) with respect to third and final tranche of deferred tax liability on Special Reserve balance as at April 01, 2014.

The Company has charged its Statement of Profit and Loss for the year ended March 31st, 2017 by Rs.31.01 crores (Previous year Rs.20.40 crores) with the deferred tax liability on an additional amount appropriated towards Special Reserve out of current year’s profit. This amount is reflected under the head "Tax Expenses".

2.3 The Company has transferred an amount of Rs.10.60 crores (Previous year Rs.6.90 crores) to Statutory Reserve u/s 29C of the National Housing Bank Act, 1987.

2.4 "Ministry of Corporate Affairs amended the Companies (Accounting Standards) Rules, 2006 on March 30th, 2016 and vide its General Circular No 4/2016 dated 27.04.2016 has clarified that Companies (Accounting Standards) Amendment Rules, 2016 would be applicable for preparation of accounts for accounting periods commencing on or after the date of notification, i.e. w.e.f. from FY16-17.

According to this amendment, the proposed dividend shall not be recognised as liability until approved by the Shareholders. In terms of this amendment, the dividend for financial year of Rs.6/- per equity share of Rs.10/- each, as proposed by the Board of Directors, has not been recognised as liability in annual accounts for FY17. If the dividend proposed is approved by the shareholders, the outflow for dividend will be Rs.99.39 crores and dividend tax will be Rs.20.23 crores. The same will be recognised as liability on approval of shareholders in the ensuing Annual General Meeting.

On account of this change, the accounting policy followed for recognising the proposed dividend for current financial year and previous financial year are different and hence financial statements for these two years are not comparable, to that extent. "

3.1 REFINANCE FROM NATIONAL HOUSING BANK (NHB) AND TERM LOANS FROM BANKS:

Nature of Security

a) Refinance from National Housing Bank (NHB) and Term Loans from Banks other than Punjab National Bank are secured by hypothecation of specific loans/ book debts against which Refinance/ Term Loan has been availed.

b) Term Loan from Punjab National Bank are secured by hypothecation of book debts and negative lien on properties charged to the Company against loans disbursed.

3.2 EXTERNAL COMMERCIAL BORROWING

i) The Company has availed External Commercial Borrowing of USD 100 million in FY15 and USD 150 million in FY17 for financing prospective buyers of low cost affordable housing units under “approval route” in terms of the RBI guidelines dated December 17, 2012. This facility is secured against eligible affordable housing loans. In terms of the RBI guidelines, these borrowings have been swapped into rupees for the entire tenure by way of principal only swaps and interest payable (fixed coupon) have been swapped into Rupees for the loan tenure by way of interest only swaps. The Company, in terms of the RBI guidelines, is required to keep these swap agreement for entire tenure of the borrowing.

ii) Consequent to the Guidance Note on Accounting for Derivative Contracts (the “GN”) issued by the Institute of Chartered Accountants of India, becoming effective from April 1, 2016, the Company has changed its accounting policy relating to derivative contracts. On and from that date, all derivative contracts are recognised in the balance sheet and measured at fair value. The fair value changes are recognised in the Statement of Profit and Loss unless hedge accounting is used. Where hedge accounting is used, fair value changes of the derivative contracts are recognised through the Statement of Profit and Loss in the same period as the offsetting losses and gains on the hedged item. There is no material impact on the results of the Company for the year, as a result of change in this accounting policy.

iii) As on March 31st, 2017, the Company has outstanding foreign currency borrowings of USD 233.13 million equivalent (Previous year USD 100 million). The Company has currency swap contracts on a outstanding notional amount of USD 233.13 million equivalent (Previous year USD 100 million) to hedge the foreign currency risk. Further, interest rate swaps (fixed coupon only) on a notional amount of USD 233.13 million equivalent (Previous year USD 100 million) are outstanding, which have been undertaken to hedge the foreign currency risk arising out of interest payment on the said External Commercial Borrowing.

3.3 SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES

Nature of Security

Redeemable Non-Convertible Debentures are secured by hypothecation of book debts to the extent of 1.10 to 1.25 times of outstanding amount. In addition, all the Redeemable Non-Convertible Debentures are also secured by mortgage of buildings of Rs.0.77 Crore (Refer Note 11)

3.4 UNSECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES

Redeemable Non-Convertible Subordinated Debentures, for value aggregating to Rs.1,399.00 crores (Previous year Rs.610.00 crores) are subordinated debt to present and future senior indebtedness of the Company and qualify as Tier II Capital under National Housing Bank’s (NHB) guidelines for assessing capital adequacy. Based on the balance term to maturity as at March 31st, 2017, 100% (Previous year 100%) of the book value of Subordinate debt is considered as Tier II capital.

3.5 DEPOSITS

Deposit includes Public Deposits as defined in Paragraph 2(1)(y) of the Housing Finance Companies (NHB) Directions, 2010, are secured by floating charge on the Statutory Liquid Assets maintained in terms of sub-sections (1) & (2) of Section 29B of the National Housing Bank Act, 1987. As on March 31st, 2017, the public deposits outstanding amounts to Rs.8,526.42 crores (Previous year Rs.5,431.25 crores).

The Company is carrying Statutory Liquid Assets amounting to Rs.961.55 crores (Previous year Rs.895.79 crores) comprising of Investment of Rs.961.55 crores (Previous year Rs.813.96 crores) and Fixed Deposits of Rs.Nil (Previous year Rs.81.83 crores).

4. DEFERRED TAX LIABILITIES (NET)

In accordance with Accounting Standard on ‘Accounting for Taxes on Income’ (AS 22), the Company is accounting for Deferred Tax. The break-up of deferred tax assets / liabilities are as follows:

5.1 Trade Payables Rs.Nil (Previous Year Rs.Nil) payable to “Suppliers” registered under the Micro, Small and Medium Enterprises Development Act, 2006. No interest has been paid / payable by the Company during the year to the “Suppliers” covered under the Micro, Small and Medium Enterprise Development Act, 2006.

6.1 Loans and Instalments due from Borrowers shown under Loans and Advances and Other Current Assets respectively are secured wholly or partly by any one or all of the below as applicable:

i) Equitable / Simple / English Mortgage of immovable property;

ii) Mortgage of Development Rights / FSI / any other benefit flowing from the immovable property;

iii) Demand Promissory Note;

iv) Post Dated Cheques towards the repayment of the debt;

v) Personal / Corporate Guarantees;

vi) Hypothecation of rent receivables, cash flow of the project, debt service reserve account, fixed deposit, current and escrow accounts;

vii) Pledge of shares, Security on shares through Non Disposal Undertaking and Power of Attorney, NSCs, other securities

viii) Undertaking to create a security.

7.1 The installments due from borrowers is net of interest de-recognised of Rs.17.71 crores (Previous year Rs.14.48 crores) in respect of non-performing loans. (Refer note 19.1)

7.2 Stock of Acquired Properties is net of Provision for Diminution in Value of Rs.14.77 crores (Previous year Rs.3.81 crores)

8.1 Interest on non-performing loans is recognised on realisation basis as per the NHB Directions. Accordingly, movement of interest de-recognised as at the Balance Sheet date is summarised as under:

9. DISCLOSURE REQUIRED BY NATIONAL HOUSING BANK

The following additional disclosures have been given in terms of the circular no. NHB.HFC.CG-DIR.1/MD&CEO/2016 dated February 09, 2017 issued by the National Housing Bank.

10.1 Derivatives

i) Forward Rate Agreement (FRA) / Interest Rate Swap (IRS)

i) The Company has entered into Swap agreement with four banks having almost equal exposure with each of them. Hence, there is no concentration of credit risk which could be exposure to particular industries or swaps with highly geared companies.

ii) Exchange Traded Interest Rate (IR) Derivative-There is no exchange traded interest rate derivative.

iii) Disclosure on Risk Exposure in Derivatives

10.2 Securitisation

i) There are no SPVs sponsored by PNB Housing Finance Limited.

ii) During the year, the Company did not sell any Financial Assets to Securitisation / Reconstruction Company for Asset Reconstruction (Previous year Rs.Nil)

iii) Details of assignment transactions undertaken by the HFC:

iv) Details of non-performing financial assets purchased / sold: The Company has not purchased / sold any non-performing financial assets (Previous year Rs.Nil)

10.3 Asset Liability Management

The residual maturity profile of Assets and Liabilities is carried out based on the estimates and assumptions regarding prepayments and renewals as prescribed by the National Housing Bank (NHB). Maturity pattern of certain items of assets and liabilities are as follows:

10.4 Exposure:

i) Exposure to Real Estate Sector

Note: In computing the above information, certain estimates, assumptions and adjustments have been made by the Management which have been relied upon by the auditors.

ii) Exposure to Capital Market: As on March 31st, 2017, the Company does not have any exposure to Capital Market (Previous year Rs.Nil).

iii) Details of financing of parent company products: As on March 31st, 2017, the Company has not financed any product of the parent company (Previous year Rs.Nil).

iv) Details of Single Borrower Limit / Group Borrower Limit: As on March 31st, 2017, the Company has not exceeded the prudential exposure limit for single borrower or group borrower (Previous year Rs.Nil).

v) Unsecured Advances: As on March 31st, 2017, the Company has not given any unsecured advances (Previous year Rs.Nil).

10.5 Registration obtained from financial sector regulators

From NHB : vide registration number 01.0018.01

Ministry of Corporate Affairs : L65922DL1988PLC033856

10.6 Disclosure of Penalties imposed by National Housing Bank and other regulators:

During the financial year ended March 31st, 2017:

i) Company has not been imposed any penalty by National Housing Bank and other regulators.

ii) NHB has carried out inspection for FY2014-15 and has not reported any adverse comment having material impact on the financials.

10.7 Related Party Transactions

As per the Accounting Standard on ‘Related Party Disclosures’ (AS 18), notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:

* State Controlled Enterprises

** During the year, Destimoney Enterprises Limited transferred 6,21,92,300 equity shares to its holding Company i.e. Quality Investments Holdings pursuant to in-specie distribution of its assets as per winding up scheme.

# Pursuant to Initial Public Offer (IPO) of the Company, the status of Punjab National Bank has changed from Holding Company to Enterprise having Significant Influence as shareholding of PNB has reduced from 51% to 39.08%. Consequently, subsidiaries of Punjab National Bank cease to be fellow subsidiaries of the Company from the date of allotment of shares under IPO i.e. November 03, 2016.

Transactions with Related Parties

The nature & volume of transactions of the Company during the year, with the above related parties were as follows. These transactions were carried out in ordinary course of business and were at arm’s length price:

The policy on dealing with Related Party Transactions is available on our website www.pnbhousing.com

10.8 During the year, no transaction was accounted which was related to prior period (Previous year Rs.Nil).

10.9 During the year, no item of revenue recognition has been postponed except as disclosed in accounting policy for revenue recognition (Refer Note 1.6).

10.10 Break-up of Loan & Advances and Provisions thereon:

The Company has complied with the norms prescribed under Housing Finance Companies (NHB) Directions, 2010 for recognising Non-Performing Assets (NPA) in preparation of Accounts. As per the norms, NPAs are recognised on the basis of more than 90 days overdue. NPAs are to be treated as Bad & Doubtful, if they remain outstanding for more than 15 months. The Company has made adequate provisions on Non-Performing Assets and Standard Assets in respect of Housing and Non Housing Loans as prescribed under Housing Finance Companies (NHB) Directions, 2010.

10.11 Overseas Assets: As on March 31st, 2017, the Company does not have any Assets outside the country (Previous year Rs.Nil).

10.12 As on March 31st, 2017, the Company does not have any Off-Balance Sheet SPVs sponsored (Previous year Nil).

11. Operating Lease

In accordance with the Accounting Standard on ‘Leases’ (AS 19), notified by the Companies (Accounting Standards) Rules, 2006, the following disclosures in respect of Operating Leases are made. The Company has acquired properties under Cancellable and non-cancellable operating leases for periods ranging from 12 months to 60 months. The total minimum lease payments for the current year, in respect thereof, included under Rent, aggregates to Rs.18.70 crores (Previous year Rs.14.62 crores). The future minimum lease payments in respect of properties taken under non-cancellable operating lease are as follows:

12. In accordance with the Accounting Standard on ‘Earnings Per Share’ (AS 20), the Earnings Per Share is as follows:

i) The Earnings Per Share (EPS) is calculated as follows:

ii) The Basic Earnings Per Share have been computed by dividing the Profit After Tax by the weighted average number of equity shares for the respective periods. The weighted average number of shares have been derived as follows:

(a) For the year 2016-17 :

iii) The Diluted Earnings Per Share have been computed by dividing the Profit After Tax by the weighted average number of equity shares after giving effect of outstanding Stock Options for the respective periods. The weighted average number of shares have been derived as follows:

13. Segment Reporting:

Company’s main business is to provide loans against/for purchase, construction, repairs & renovations of Houses/ Flats/Commercial Properties etc. All other activities of the Company revolve around the main business. As such, there are no separate reportable segment, as per the Accounting Standard on Segment Reporting (AS-17), notified by the Companies (Accounting Standard) Rules, 2016.

14. Contingent Liabilities and Commitments

i) Contingent liability in respect of Income-tax and Interest-tax demands of Rs.20.33 crores (Previous year Rs.18.37 crores) is disputed by the Company and are under appeals. These includes contingent liability of Rs.17.69 crores (Previous year Rs.16.91 crores) with respect to Income-tax and Interest-tax which have been decided by the CIT(A) in Company’s favour. However, Income-tax Department has filed appeal with ITAT. The Company expects the demands to be set aside by the appellate authority and hence no additional provision is considered necessary.

ii) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs.14.11 crores (Previous year Rs.17.20 crores).

iii) Claims against the Company not acknowledged as debt is Rs.Nil (Previous year Rs.Nil)

15. Disclosure in respect of Employee Benefits:

In accordance with Accounting Standards on “Employee Benefits” (AS 15), the following disclosure have been made:

15.1 The company has made contribution to Provident Fund of Rs.3.71 crores (Previous year Rs.2.84 crores) which has been recognised in the Statement of Profit and Loss which are included under “Contribution to Provident Fund and Other Funds” in Note 21.

15.2 The Company has recognised expenses of Rs.1.14 Crore (Previous Year Rs.0.87 Crore) in the Statement of Profit and Loss for Contribution to State Plan namely Employee’ Pension Scheme.

16. Corporate Social Responsibility Activities

Other Expenses includes Rs.3.68 crores for the year ended March 31st, 2017 (Previous year Rs.3.98 crores) contribution towards Corporate Social Responsibility (CSR) in accordance with Companies Act, 2013.

Disclosure on Corporate Social Responsibility (CSR) under section 135 of the Companies Act, 2013 is as under:

a) Gross amount required to be spent by the Company during the year is Rs.6.50 crores.

b) Amount spent during the year on: Rs.5.72 crores (includes Rs.3.56 crores for earlier years).

c) Details of related party transactions in relation to CSR expenditure, as per Accounting Standard (AS-18) - Nil

d) An amount of Rs.1.65 crores had been provided for by the company suo-motu as on March 31st, 2017 (Previous year Rs.3.52 crores) which relates to the projects sanctioned during FY 2016-17 and the disbursement would be done subject to the receipt of a satisfactory field visit report.

17. There are no indications which reflect that any of the assets of the Company had got impaired from its potential use and therefore no impairment loss was required to be accounted in the current year as per Accounting Standard on “Impairment of Assets” (AS 28) notified by the Companies (Accounting Standards) Rules, 2006.

18. Previous year figures have been rearranged / regrouped wherever necessary to correspond with Current year’s classification disclosure.


Mar 31, 2016

1. TERMS/RIGHTS ATTACHED TO EQUITY SHARES

The Company has only one class of Equity Shares having a par value of Rs. 10/- per Share. Each Shareholder is entitled to one vote per Share held.

2. RIGHTS ISSUE OF EQUITY SHARES

During the financial year 2013-14, the Company approved Rights Issue of 7,69,23,000 Equity Shares of Rs. 10/- each along with premium of Rs. 120/- per share. The Company had allotted 3,92,30,700 Equity Shares in financial year 2013-14 and 3,76,92,300 Equity Shares in financial year 2014-15.

During the financial year 2014-15, the Company had called Rs. 3/- along with proportionate premium of Rs. 36/- per share on 7,69,23,000 equity shares.

During the financial year 2015-16, the Company has called third and final call of Rs. 3/- along with proportionate premium of Rs. 36/- per share on 7,69,23,000 Equity Shares and the call was fully received.

3. ISSUE OF BONUS SHARES

During the financial year 2012-13, the Company had issued 64,70,589 Equity Shares of Rs. 10/- each as fully paid up Bonus Shares after capitalization of General Reserves of Rs. 647.06 Lacs to shareholders in proportion of their shareholding.

4. As per Section 29C(i) of the National Housing Bank Act, 1987, the Company is required to transfer at least 20% of its net profit every year to a reserve before any dividend is declared. For this purpose any Special Reserve created by the Company under Section 36(1) (viii) of the Income Tax Act, 1961 is considered to be an eligible transfer. The Company has transferred an amount of Rs.5,840.00 Lacs (Previous year Rs. 3,110.00 Lacs) to Special Reserve in terms of Section 36 (1)(viii) of the Income Tax Act, 1961.

5. Vide circular NHB (ND)/DRS/Policy Circular 65/2014-15 dated August 22, 2014, the National Housing Bank ("NHB”) has directed Housing Finance Companies (HFCs) to provide for a deferred tax liability in respect of amount transferred to “Special Reserve” created under section 36(1) (viii) of the Income Tax Act, 1961. As per the above circular, NHB has advised HFCs to create deferred tax liability in respect of accumulated balance of Special Reserve as at April 1, 2014 from the free reserves over a period of 3 years starting with financial year 2014-15, in a phased manner in the ratio of 25:25:50. Accordingly, the Company has adjusted the balance in free reserves as at April 01, 2015 by Rs.1,323.25 Lacs (Previous year Rs.1,276.82 Lacs) with respect to second tranche of deferred tax liability on Special Reserve balance a at April 01, 2014.

Company has charged its Statement of Profit and Loss for the year ended March 31, 2016 by Rs.2,040.33 Lacs (Previous year Rs.1,057.09 Lacs) with the deferred tax liability on an additional amount appropriated towards Special Reserve out of current year''s profit. This amount is reflected under the head "Tax Expenses”.

6. The Company has transferred an amount of Rs.690.00 Lacs (Previous year Rs.815.00 Lacs) to Statutory Reserve u/s 29C of the National Housing Bank Act, 1987.

7. REFINANCE FROM NATIONAL HOUSING BANK (NHB) AND TERM LOANS FROM BANKS:

Nature of Security

a) Refinance from National Housing Bank (NHB) and Term Loans from Banks other than Punjab National Bank are secured by hypothecation of specific loans/ book debts against which Refinance/ Term Loan has been availed.

b) Term Loan from Punjab National Bank is secured by hypothecation of book debts and negative lien on properties charged to the Company against loans disbursed.

8. EXTERNAL COMMERCIAL BORROWING

During the financial year 2014-15, the Company has availed External Commercial Borrowing of USD 100 million for financing prospective owners of low cost affordable housing units under “approval route” in terms of Reserve Bank of India guidelines dated December 17, 2012. This facility is secured against eligible affordable housing loans. The borrowing has a maturity of five years. In terms of the RBI guidelines, these borrowings have been swapped into rupees for the entire maturity by way of principal only swaps and interest payable (fixed coupon) have been swapped into Rupees for the entire maturity by way of interest only swaps.

As at March 31, 2016, the Company has foreign currency borrowings of USD 100 million equivalent (Previous year USD 100 million). The Company has undertaken currency swap contracts on a notional amount of USD 100 million equivalent (Previous year USD 100 million) to hedge the foreign currency risk. Further, interest rate swaps (fixed coupon only) on a notional amount of USD 100 million equivalent (Previous year USD 100 million) are outstanding, which have been undertaken to hedge the foreign currency risk arising out of interest payment on the said External Commercial Borrowing.

9. SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES Nature of Security

Redeemable Non-Convertible Debentures are secured by hypothecation of book debts to the extent of 1.10 to 1.25 times of outstanding amount. In addition, all the Redeemable Non-Convertible Debentures are also secured by mortgage of buildings of Rs. 77.23 Lacs (Refer Note 11).

10. UNSECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES

Redeemable Non-Convertible Subordinated Debentures, for value aggregating to Rs. 61,000.00 Lacs are subordinated debt to present and future senior indebtedness of the Company and qualify as Tier II Capital under National Housing Bank''s (NHB) guidelines for assessing capital adequacy. Based on the balance term to maturity as at March 31, 2016,100% (Previous year 80%) of the book value of Subordinate debt is considered as Tier II capital.

11. PUBLIC DEPOSITS

i) Public deposits as defined in Paragraph 2(1) (y) of the Housing Finance Companies (NHB) Directions, 2010, are secured by floating charge on the Statutory Liquid Assets maintained in terms of sub-sections (1) & (2) of Section 29B of the National Housing Bank Act, 1987.

ii) The Company is carrying Statutory Liquid Assets amounting to Rs. 89,579.09 Lacs (Previous year Rs. 46,534.25 Lacs) comprising of Investment of Rs. 81,396.21 Lacs (Previous year Rs. 21,912.49 Lacs) in Central/State Government Securities and Fixed Deposits of Rs. 8,182.88 Lacs (Previous year Rs. 24,621.76 Lacs).

-Includes Buildings of Rs. 77.23 Lacs (Previous year Rs. 77.23 Lacs) mortgaged for securing Secured Redeemable Non-Convertible Debentures (Refer Note 4.3).

During the Previous Year ended March 31, 2015, the Company has reviewed its policy of providing for depreciation on its fixed assets and has also reassessed their useful lives. On and from April 1, 2014, the straight line method is being used to depreciate all class of fixed assets, Previously, fixed assets were being depreciated using reducing balance method except leasehold improvements, intangibles etc. The revised useful lives, as assessed match those specified in Part C of Schedule II of the Companies Act, 2013, for all classes of assets other than leasehold improvements, intangible assets etc. As a result of the change, the charge on account of Depreciation for the year ended on March 31, 2015 was lower by Rs. 280.16 Lacs.

12. Loans and Installments due from Borrowers shown under Loans and Advances and Other Current Assets respectively are secured wholly or partly by any one or all of the below as applicable:

i) Equitable Mortgage of Property

ii) Pledge of shares, units, NSCs, other securities, assignment of life insurance policies.

iii) Bank guarantee, corporate guarantee, government guarantee or personal guarantee.

iv) Undertaking to create a security.

13. The Company has complied with the norms prescribed under Housing Finance Companies (NHB) Directions, 2010 for recognizing Non-Performing Assets (NPA) in preparation of Accounts. As per the norms, NPAs are recognized on the basis of more than 90 days overdue. NPAs are to be treated as Bad & Doubtful, if they remain outstanding for more than 15 months. The Company has made adequate provisions on Non-Performing Assets and Standard Assets in respect of Housing and Non-Housing Loans as prescribed under Housing Finance Companies (NHB) Directions, 2010.

14. The installment due from borrowers is net of interest de-recognized of Rs.1,448.19 Lacs (Previous year Rs.377.05 Lacs) in respect of non-performing loans.

15. Stock of Acquired Properties is net of Provision for Diminution in Value of Rs.380.54 Lacs (Previous year Rs.109.93 Lacs)

*On Inspection for FY 2013-14, NHB has observed that NOF & CRAR as at March 31, 2014 was overstated on account of intangible assets, deferred revenue expenditure, short provisioning due to wrong asset classification, negative amortization and non-provisioning on loan against deposits. The Company has made necessary rectifications and accordingly the CRAR as at March 31, 2014 is restated at 12.64% as against 12.95% published in the Annual Report 2014-15. Similarly, the CRAR as at March 31, 2015 has been restated at 13.34% as against 13.76% published in Annual Report 2014-15.

In computing the above information, certain estimates, assumptions and adjustments have been made by the Management which have been relied upon by the auditors.

c) Disclosure regarding penalty or adverse comments as per Housing Finance Companies (NHB) Directions, 2010.

During the current year, the Company has:

i) Not been imposed any penalty by National Housing Bank.

ii) During the course of inspection for FY 2013-14, NHB has made certain observations. Most of the observations were routine in nature except with reference to the calculation of CRAR as explained above.

NOTE:16 OPERATING LEASE

In accordance with the Accounting Standard on ‘Leases’ (AS 19), notified by the Companies (Accounting Standards) Rules, 2006, the following disclosures in respect of Operating Leases are made. The Company has acquired properties under non-cancellable operating leases for periods ranging from 12 months to 60 months. The total minimum lease payments for the current year, in respect thereof, included under Rent, amounts to Rs. 1,462.43 Lacs (Previous year Rs. 1,145.24 Lacs). The future minimum lease payments in respect of properties taken under non-cancellable operating lease are as follows:

NOTE: 17 SEGMENT REPORTING

Company’s main business is to provide loans against/for purchase, construction, repairs & renovations of Houses/Flats/Commercial Properties etc. All other activities of the Company revolve around the main business. As such, there are no separate reportable segment, as per the Accounting Standard on Segment Reporting (AS-17), notified by the Companies (Accounting Standards) Rules, 2016.

NOTE: 18 CONTINGENT LIABILITIES AND COMMITMENTS

I Contingent liability in respect of Income-tax Rs. 503.22 Lacs (Previous year Rs. 447.18 Lacs) is disputed by the Company and are under appeal. The Company expects to succeed in these matters before appellate authorities and hence no additional provision is considered necessary.

ii) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs. 1,719.51 Lacs (Previous year Rs. 2,107.72 Lacs).

iii) Claims against the Company not acknowledged as debt is Nil (Previous year Nil).

NOTE: 19 DISCLOSURES IN RESPECT OF EMPLOYEE BENEFITS

In accordance with Accounting Standards on (AS-15) - "EMPLOYEE BENEFITS" the following disclosure have been made:

20. The Company has made Contribution to Provident Fund of Rs. 283.98 Lacs (Previous year Rs. 223.68 Lacs) which has been recognized in Statement of Profit and Loss which are included under "Contribution to Provident Fund and Other Funds" in Note 21.

30.2 The Company has recognized expenses of Rs. 87.48 Lacs (Previous year Rs. 60.25 Lacs) in Statement of Profit and Loss for Contribution to State Plan namely Employees’ Pension Scheme.

NOTE: 21 CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES

During the year, the Company has spent/provisioned Rs. 398.00 Lacs towards Corporate Social Responsibility (CSR) under section 135 of Companies Act, 2013 and rules thereon. In terms of clarification issued by the Institute of Chartered Accountants of India in current year same has been charged to Statement of Profit and Loss while during previous year CSR expenses of Rs. 269.58 Lacs had been appropriated from previous year’s profits.

NOTE: 22

There are no indications which reflects that any of the assets of the Company had got impaired from its potential use and therefore no impairment loss was required to be accounted in the current year as per Accounting Standard on ‘Impairment of Assets’ (AS 28) notified by the Companies (Accounting Standards) Rules, 2006.

NOTE: 23

Previous year figures have been rearranged/regrouped wherever necessary to correspond with current year’s classification disclosure.


Mar 31, 2015

1. Terms/Rights attached to Equity Shares

The Company has only one class of Equity Shares having a par value of Rs.10/- per Share. Each Shareholder is entitled to one Vote per Share held.

2. Rights Issue of Equity Shares

The Company has allotted 3,76,92,300 Equity Shares of Rs.10/- each (amount called and paid up Rs.4/- per share on allotment) along with premium of Rs.120/- per share (proportionate share premium called and paid up Rs.48/- per share on allotment) aggregating to Rs.19,600.00 lacs to DEPL on 8th August, 2014.

In the previous year, the Company had allotted 3,92,30,700 equity shares of Rs.10/- each (amount called and paid Rs.4/- per share along with proportionate premium of Rs.48/- per share) aggregating to Rs.20,399.96 Lacs to PNB on 29th March, 2014.

3. Second Call on Rights Issue of equity shares

(i) The Company has called Rs.3/- along with proportionate premium of Rs.36/- per share on 7,69,23,000 equity shares allotted to PNB and DEPL.

(ii) The second call on 3,92,30,700 equity shares along with proportionate premium aggregating to Rs.15299.97 lacs was paid on 15th December 2014.

(iii) The second call on 3,76,92,300 equity shares along with proportionate premium aggregating to Rs.14700.00 lacs was paid on 13th February 2015.

4. Issue of Bonus Shares

The Company had issued 64,70,589 equity shares of ''10/- each as fully paid up Bonus shares after capitalization of General Reserves of Rs.6,47,05,890 on 30th March 2013 to existing shareholders in proportion of their shareholding (PNB - 33,00,000 Equity Shares and DEPL 31,70,589 Equity Shares).

5. As per Section 29C(i) of the National Housing Bank Act, 1987, the Company is required to transfer at least 20% of its net profit every year to a reserve before any dividend is declared. For this purpose any Special Reserve created by the Company under Section 36(1) (viii) of the Income Tax Act, 1961 is considered to be an eligible transfer. The Company has transferred an amount of Rs.3,110.00 Lacs (Previous year Rs.1,875.00 Lacs to Special Reserve in terms of Section 36 (1)(viii) of the Income Tax Act, 1961.

6. Vide circular NHB (ND)/DRS/Policy Circular 65 / 2014-15 dated August 22, 2014, the National Housing Bank (”NHB”) has directed Housing Finance Companies (HFCs) to provide for a deferred tax liability in respect of amount transferred to “Special Reserve” created under section 36(1) (viii) of the Income Tax Act, 1961. As per the above circular, NHB has advised HFCs to create deferred tax liability in respect of accumulated balance of Special Reserve as on April 1, 2014 from the free reserves over a period of 3 years starting with current financial year, in a phased manner in the ratio of 25:25:50. Accordingly, the company has created 25% of deferred tax liability of Rs.1,276.82 Lacs on accumulated Special Reserve as on April 1, 2014 out of free reserves as on April 1, 2014.

Company has charged its Statement of Profit & Loss for the year ended March 31, 2015 with the deferred tax liability on an additional amount appropriated towards Special Reserve out of current year''s profits. An amount of Rs.1057.09 Lacs towards deferred tax liability for the year ended March 31, 2015 has been charged to the Statement of Profit and Loss and the same has been shown separately.

7. The Company has transferred an amount of Rs.815.00 Lacs (Previous year Rs.680.00 lacs) to Statutory Reserve u/s 29C of the National Housing Bank Act, 1987.

8. In terms of requirement of NHB''s Circular No. NHB(ND)/DRS/Pol.Circular.61/2013-14 dated April 7, 2014 following information on Reserve Fund under section 29C of NHB Act, 1987 is provided :

9. Refinance from National Housing Bank (NHB) and Term Loans from Banks Nature of Security

a) Refinance from National Housing Bank (NHB) and Term Loans from Banks other than Punjab National Bank are secured by hypothecation of specific loans/ book debts against which Refinance/ Term Loan has been availed.

b) Term Loan from Punjab National Bank are secured by hypothecation of book debts and negative lien on properties charged to/guarantees obtained by the company against Loans disbursed.

10. External Commercial Borrowing

During the year, the Company has availed External Commercial Borrowing of USD 100 million for financing prospective owners of low cost affordable housing units under “approval route” in terms of Reserve Bank of India guidelines dated December 17, 2012. The borrowing has a maturity of five years. In terms of the RBI guidelines, these borrowings have been swapped into rupees for the entire maturity by way of principal only swaps and interest payable (fixed coupon) have been swapped into Rupees for the entire maturity by way of interest only swaps.

As on March 31, 2015, the Company has foreign currency borrowings of USD 100 million equivalent (Previous year USD Nil million). The Company has undertaken currency swaps, options and forward contracts on a notional amount of USD 100 million equivalent (Previous year USD Nil million equivalent) to hedge the foreign currency risk. Further, interest rate swaps (fixed coupon only) on a notional amount of USD 100 million equivalent (Previous year Nil) are outstanding, which have been undertaken to hedge the foreign currency risk arising out of interest payment on the foreign currency borrowings.

11. Redeemable Non-Convertible Debentures Nature of Security

Redeemable Non-Convertible Debentures are secured by hypothecation of book debts to the extent of 1.10 to 1.25 times of outstanding amount by hypothecation of book debts of outstanding amount. In addition, all the Redeemable Non-Convertible Debentures are also secured by mortgage of buildings of Rs.77.23 Lacs (Refer Note 11)

12. Unsecured Redeemable Non-Convertible Debentures

Redeemable Non-Convertible Subordinated Debentures, for value aggregating to Rs. 50,000.00 Lacs are subordinated debt to present and future senior indebtedness of the Company and qualify as Tier II Capital under National Housing Bank''s (NHB) guidelines for assessing capital adequacy.

13. Public Deposits

i) Public deposits as defined in Paragraph 2(1)(y) of the Housing Finance Companies (NHB) Directions, 2010, are secured by floating charge on the Statutory Liquid Assets maintained in terms of subsections (1) & (2) of Section 29B of the National Housing Bank Act, 1987.

ii) The Company is carrying Statutory Liquid Assets amounting to Rs.46,534.25 Lacs (Previous year Rs.23,240.99 Lacs) comprising of Investment of Rs.21,912.49 Lacs (Previous year Rs.11,873.73 Lacs) and Fixed Deposits of Rs.24,621.76 Lacs (Previous year Rs.11,367.26 Lacs).

NOTE: 14.

DEFERRED TAX LIABILITIES (NET)

In accordance with Accounting Standard on ''Accounting for Taxes on Income'' (AS 22), the Company is accounting for Deferred Tax.

15. Nature of Security

a) Term Loans from Banks are secured by hypothecation of specific loans/ book debts against which Term Loan has been availed.

b) Bank Overdraft is secured by hypothecation of book debts and negative lien on properties charged to/guarantees obtained by the company against Loans disbursed

c) Public deposits as defined in Paragraph 2(1)(y) of the Housing Finance Companies (NHB) Directions, 2010, are secured by floating charge on the Statutory Liquid Assets maintained in terms of subsections (1) & (2) of Section 29B of the National Housing Bank Act, 1987.

Trade Payables '' Nil (Previous Year '' Nil) payable to “Suppliers” registered under the Micro, Small and Medium Enterprises Development Act, 2006. No interest has been paid / payable by the Company during the year to the “Suppliers” covered under the Micro, Small and Medium Enterprise Development Act, 2006.

"Includes Buildings of Rs.77.23 Lacs (Previous year Rs.77.23 Lacs) mortgaged for securing Secured Redeemable Non-Convertible Debentures (Refer Note 4.3).

16. During the Year ended March 31, 2015, the Company has reviewed its policy of providing for depreciation on its fixed assets and has also reassessed their useful lives. On and from April 1, 2014, the straight line method is being used to depreciate all class of fixed assets, Previously, fixed assets were being depreciated using reducing balance method except leasehold improvements, intangibles etc. The revised useful lives, as assessed match those specified in Part C of Schedule II of the Companies Act, 2013, for all classes of assets other than leasehold improvements, intangible assets etc. As a result of the change, the charge on account of Depreciation for the year ended March 31, 2015 is lower by Rs.280.16 Lacs.

17. Loans and installments due from borrowers shown under Loans and Advances and Other Current Assets respectively are secured wholly or partly by any one or all of the below as applicable:

i) Equitable Mortgage of Property

ii) Pledge of shares, units, NSCs, other securities, assignment of life insurance policies.

iii) Bank guarantee, corporate guarantee, government guarantee or personal guarantee.

iv) Undertaking to create a security.

18. The Company has complied with the norms prescribed under Housing Finance Companies (NHB) Directions, 2010 for recognizing Non-Performing Assets (NPA) in preparation of Accounts. As per the norms, NPAs are recognized on the basis of 90 days overdue. NPAs are to be treated as Bad & Doubtful, if they remain outstanding for more than 15 months. The Company has made adequate provisions on Non-Performing Assets and Standard Assets in respect of Housing and Non-Housing Loans as prescribed under Housing Finance Companies (NHB) Directions, 2010.

19. Interest on non-performing assets is recognized on realization basis as per the NHB Directions. Accordingly total interest de-recognized as at the Balance Sheet date is summarized as under:-

20. The installment due from borrowers is net of interest de-recognized Rs.377.05 Lacs (Previous year Rs.263.37 Lacs) (Refer note 13.3)

21 Surplus from deployment in Cash Management Schemes of Mutual Funds amounting to Rs.1,989.31 lacs (Previous year Rs.1,154.08 Lacs) is in respect of Investments held as Current Investments.

On Inspection for FY 2012-13, NHB has observed that NOF & CAR as on 31st March 2013 was over stated on account of deferred revenue expenditure, short provisioning due to negative amortization and incorrect application of discount on subordinate debts. The Company has made necessary rectifications and accordingly the CRAR as at March 31, 2014 & March 31, 2013 has been restated.

In computing the above information, certain estimates, assumptions and adjustments have been made by the Management which have been relied upon by the auditors.

c) Disclosure regarding penalty or adverse comments as per Housing Finance Companies (NHB) Directions, 2010. During the current year, the company has:

i) Not been imposed any penalty by National Housing Bank; and

ii) During the course of Inspection FY 2012-13, NHB has made certain observations. Most of the observations were routine in nature except with reference to the calculation of CRAR as explained above

d) Asset Liability Management

The residual maturity profile of Assets and Liabilities is carried out based on the estimates and assumptions regarding prepayments and renewals as prescribed by the National Housing Bank (NHB). Maturity pattern of certain items of assets and liabilities is as follows:

22. Transactions with Related Parties

In view of the exemption available to the company under para 9 of Accounting Standard on Related Party Disclosures (AS-18), related party relationships with other state controlled enterprises and transactions with such enterprises are not being disclosed. However, the company has identified all other related parties having transactions during the year as given below:

NOTE: 23

OPERATING LEASE

In accordance with the Accounting Standard on ''Leases'' (AS 19), notified by the Companies (Accounting Standards) Rules, 2006, the following disclosures in respect of Operating Leases are made. The Company has acquired properties under non-cancellable operating leases for periods ranging from 12 months to 60 months. The total minimum lease payments for the current year, in respect thereof, included under Rent, amounts to

iii) The Diluted Earnings Per Share is same as Basic Earnings Per Share, as there are no dilutive potential equity shares outstanding as on March 31, 2015 and March 31, 2014.

NOTE: 24

SEGMENT REPORTING

Company''s main business is to provide loans against/for purchase, construction, repairs & renovations of Houses/ Flats/Commercial Properties etc. All other activities of the Corporation revolve around the main business. There are no business operations located “Outside India”. Hence all the activities are considered as a “Single business/ Geographical Segment” for the purposes of Accounting Standard on Segment Reporting (AS-17), issued by The Institute of Chartered Accountants of India.

NOTE: 25

CONTINGENT LIABILITIES AND COMMITMENTS

I) Contingent liability in respect of Income-tax and Interest-tax demands of Rs.447.18 Lacs (Previous year Rs.312.49 Lacs) is disputed by the Company and are under appeal. The Company expects to succeed in these matters before appellate authority and hence no additional provision is considered necessary. Against the said demand, Rs.524.15 Lacs has been paid / adjusted and will be received as refund if the matters are decided in favour of the Company.

ii) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs.2107.72 Lacs (Previous year Rs.3217.99 Lacs).

iii) Claims against the Company not acknowledged as debt is Rs. Nil (Previous year Rs. Nil)

NOTE: 26.

CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES

During the year, The Company has spent / provisioned Rs.269.58 Lacs towards Corporate Social Responsibility (CSR) under section 135 of Companies Act, 2013 and rules thereon. As per clarification issued by the Institute of Chartered Accountants of India, CSR expenses have been appropriated from current year''s profits.

NOTE: 27.

There are no indications which reflects that any of the assets of the Company had got impaired from its potential use and therefore no impairment loss was required to be accounted in the current year as per Accounting Standard on ''Impairment of Assets'' (AS 28) notified by the Companies (Accounting Standards) Rules, 2006.

NOTE: 28.

Previous year figures have been rearranged / regrouped wherever necessary to correspond with Current year''s classification disclosure.


Mar 31, 2014

e. Description of the rights, preferences and restrictions attached to each class of shares:

The Company has only one class of equity shares having a par value of Rs. 10/- per share. Each holder of Equity shares is entitled to one vote per share.

f. Rights issue of equity shares during the year:

The Company has allotted 3,92,30,700 equity shares of Rs. 10 each (amount called and paid up Rs. 4 per share) along with premium of Rs. 120 per share (proportionate share premium called and paid up Rs. 48 per share) aggregating to Rs. 20,399.96 lacs to PNB on March 29th, 2014. (Refer note 22.18)

g. Conversion of Compulsory Convertible Debentures (CCDs) in to equity shares during previous year:

The Company had allotted 1,35,29,411 equity shares of Rs. 10 each on conversion of 1,35,29,411 CCDs at a premium of Rs.91.50 per share on 08.06.2012 to DEPL.

h. Issue of Bonus Shares during previous year:

The Company had issued 64,70,589 equity shares of Rs. 10 each as fully paid up Bonus shares after capitalization of General Reserves of Rs. 6,47,05,890 on March 30th, 2013 to existing shareholders in proportion of their shareholding (PNB-33,00,000 equity shares and DEPL 31,70,589 equity shares)

1. Loans and installments due from borrowers shown under Loans and Advances are secured wholly or partly by any one or all of the below as applicable:

(a) Equitable Mortgage of Property.

(b) Pledge of shares, units, NSCs, other securities, assignment of life insurance policies.

(c) Bank guarantee, corporate guarantee, government guarantee or personal guarantee.

(d) Undertaking to create a security.

2. Advances are classified as performing and non-performing assets in accordance with directions on prudential norms issued by National Housing Bank (NHB). Provisions on standard assets, sub-standard assets, doubtful assets and loss assets have been made as per NHB Directions, 2010 as amended from time to time. Details are given hereunder:

3. Related Party Transactions

In view of the exemption available to the Company under para 9 of Accounting Standard on Related Party Disclosures (AS-18), related party relationships with other state controlled enterprises and transactions with such enterprises are not being disclosed. However, tl Company has identified all other related parties having transactions during the year as given below:

a) Key Management Personnel:

c) The Company has paid a sum of Rs. 6.69 lacs (Previous Rs. 4.73 lacs) to independent directors for attending Board/ Committee meetings towards sitting fees.

4. The Company has not created any deferred tax liability on Special Reserves created and maintained u/s 36(1)(viii) of the Income Tax Act,1961 in view of the resolution passed by the Board on December 15th, 2011 resolving for non-withdrawal of existing Special Reserve and also any sum that might be transferred to Special Reserve from time to time in future. Moreover, as per prevalent practice amongst Housing Finance Companies, the Company has not created any deferred tax liability on Special Reserves maintained u/s 36(1)(viii) of the Income Tax Act,1961.

5. Segment Reporting: The Company''s prime business is to provide loans against/for purchase, construction, repairs & renovations of Houses/ Flats/Commercial Properties etc. There are no business operations located "Outside India". Hence all the activities are considered as a "Single business/Geographical Segment" for the purposes of Accounting Standard on Segment Reporting (AS-17), issued by The Institute of Chartered Accountants of India.

6. The provision for Income Tax has been made on the basis of the accounting practices consistently followed by the Company after allowing benefits under section 36(1)(viii) of the Income Tax Act, 1961. The method of bifurcation of income & expenses for long-term housing finance is the same as that of past years.

7. As per the information available with the Company, there are no amounts payable to Micro, Small and Medium Enterprises.

8. Statutory reserves as per Section 29C of National Housing Bank Act, 1987:

9. During the year, the Company has increased its authorized capital from Rs. 50.00 crores to Rs. 150.00 crores divided in to 15.00 crore equity shares of Rs. 10 each. (Refer Note 2)

10. The Company had made Rights Issue of 7,69,23,000 equity shares of Rs. 10 each at a premium of Rs. 120 per equity share on October 28th, 2013 to the existing shareholders PNB and DEPL aggregating to Rs.1,000.00 crores. The Board had called a sum of Rs. 4 per share along with proportionate premium of Rs. 48 per share towards application money. Pursuant to the Rights Offer, PNB has subscribed 3,92,30,700 equity shares offered to it. DEPL is seeking statutory approvals to subscribe to 3,76,92,300 equity shares offered to it. Pending statutory approvals to DEPL, the Board has allotted 3,92,30,700 equity shares to PNB on March 29th, 2014. The Board has extended last date for subscription for remaining shares up to July 20th, 2014. (Refer Note 2)

11. Disclosure regarding penalty or adverse comments as per Housing Finance Companies (NHB) Directions, 2010. During the current year, the Company has:

a) Neither been imposed any penalty by National Housing Bank

b) Nor received any adverse comments from National Housing Bank

12. The Central Government has notified The Companies (Prospectus and Allotment of Securities) Rules 2014, which are applicable from April 1st, 2014. The Company will seek clarification on requirement of creation of Debenture Redemption Reserves under these rules.

13. Previous year figures have been rearranged / regrouped wherever necessary as per the revised Schedule VI. The additional information pursuant to revised Schedule VI to the Companies Act, 1956 are either Nil or Not Applicable.


Mar 31, 2013

e. Description of the rights, preferences and restrictions attached to each class of shares

The company has only one class of equity shares having a par value of Rs. 10/- per share. Each holder of Equity shares Is entitled to one vote per share.

f. Terms of securities convertible into equity/preference shares :The company had allotted 13,529,411 equity shares of Rs.10 each on conversion of 13,529,411 Compulsory Convertible Debentures (CCDs) at a premium of Rs. 91.50 per share on 08.06.2012 to DEPL.

9- Issue of Bonus Shares : The company had issued 6,470,589 equity shares of Rs. 10 each as fully paid up Bonus shares after capitalization of General Reserves of Rs. 64,705,890 on 30th March 2013 to existing share holders In proportion of their shareholding (PNB - 3,300,000 equity shares and DEPL 3,170,589 equity shares)

2. Loans and installments due from borrowers shown under Loans and Advances are secured wholly or partly by:

(a) Equitable Mortgage of Property

(b) Pledge of shares, units, NSCs, other securities, assignment of life insurance policies.

(c) Bank guarantees corporate guarantees, government guarantee or personal guarantees.

(d) Undertaking to create a security.

1. Advances are classified as performing and non-performing assets in accordance with guidelines on prudential norms issued by National Housing Bank (NHB). Provisions on standard assets, sub-standard assets, doubtful assets and loss assets have been made as per NHB Directions 2010 as amended from time to time. Details are given hereunder:

includes portfolio purchased during the FY 11-12 (Current year Rs. Nil) through direct assignment by true sale from other institutions amounting to Rs. 34004 Lacs (Outstanding balance as on 31.03.2013 Rs. 22962 Lacs (Previous years Rs. 31940 Lacs).

2. Related Party Transactions:

In view of the exemption available to the company under para 9 of Accounting Standard on Related Party Disclosures (AS-18), related party relationships with other state controlled enterprises and transactions with such enterprises are not being disclosed. However, the company has identified all other related parties having transactions during the year as given below:

a) Key Management Personnel

c) The Company has paid a sum of Rs. 4.73 lacs (Previous Rs. 5.05 lacs) to independent directors for attending Board/ Committee meetings towards sitting fees.

3. The company has not created any deferred tax liability on Special Reserves created and maintained u/s 36(1 )(viii) of the Income Tax Act, 1961 in view of the resolution passed by the Board on 15th December, 2011 resolving for non-withdrawal of existing Special Reserve and also any sum that might be transferred to Special Reserve from time to time in future. Moreover, as per prevalent practice amongst Housing Finance Companies, the company has not created any deferred tax liability on Special Reserves maintained u/s 36(1 )(viii) of the Income Tax Act, 1961.

4. Segment Reporting: Company''s prime business is to provide loans against/for purchase, construction, repairs & renovations of Houses/ Flats/Commercial Properties etc. There are no business operations located “Outside India”. Hence all the activities are considered as a “Single business/ Geographical Segment” for the purposes of Accounting Standard on Segment Reporting (AS-17), issued by The Institute of Chartered Accountants of India.

Outflow in respect of above provisions would depend on developments/outcome of these events.

5. The provision for Income Tax has been made on the basis of the accounting practices consistently followed by the Company after allowing benefits under section 36(1 )(viii) of the Income Tax Act, 1961. The method of bifurcation of income & expenses for long term housing finance is the same as that of last years''.

6. As per the information available with the company, there are no amounts payable to Micro, Small and Medium Enterprises.

7. With respect to company''s borrowing in FCNR (B) - Term Loan Account, the company has paid/ incurred interest amounting to Rs. Nil (Previous year Rs. 257,828/-) in foreign currency. Further the company has taken foreign currency fluctuation cover by way of Forward Exchange Contract from reputed approved dealers. A sum of Rs. Nil being the liability (Previous year Rs. 139,050/-) of company with respect to exchange difference for the Forward Exchange Contract has been paid and accounted for as per the guidelines laid down by the Accounting Standard on accounting for the effects of changes in Foreign Exchange rates (AS-11) issued by The Institute of Chartered Accountants of India.

8. As per Section 29 C of National Housing Bank Act, 1987, the Company is required to transfer at least 20% of its net profit every year to a reserve before any dividend is declared. For this purpose any Special Reserve created by the Company under Section 36 (1) (viii) of Income Tax Act, 1961 is considered to be an eligible transfer. Accordingly, the Company has transferred Rs. 15.50 crore to Special Reserve u/s 36(1) (viii) of Income Tax Act, 1961 and Rs. 3.50 crore to Additional Reserve (u/s 29C of NHB Act) during the year.

9. During the current financial year, the Company has changed its Accounting Policy with respect to accounting for loan origination cost (net of upfront processing fees collected) and Accounting of ancillary borrowing costs, from the hitherto followed policy of charging off the same to Statement of Profit and Loss, to amortize the loan origination cost (net of upfront processing fees collected) over the average tenure of the loan and amortizing the ancillary borrowing cost on deposits/bonds over the average period of deposits/bonds. As a result thereof, the profit for the current year has increased by an amount of Rs. 11.55 crores (post tax) by virtue of carrying it forward for amortization in future accounting periods over which the benefits are expected to accrue, which otherwise would have been charged to the Statement of Profit and Loss.

10. During the current year, the company has increased its paid up share capital from Rs. 30 Crore to Rs. 50 Crore by issue of 2 crore equity shares of Rs. 10 each as under:

a. Conversion of 13,529,411 CCDs in to equal no. of equity shares on 8th June, 2012. (Refer Note 2)

b. Issue of6,470,589 Bonus Shares on 30th March 2013. (Refer Note 2)

Claims against the Company not acknowledged as debt is Rs. Nil (Previous year Rs. Nil)

11. Disclosure regarding penalty or adverse comments as per Housing Finance Companies (NHB) Directions, 2010. During the current year, the company has:

a. Neither been imposed any penalty by National Housing Bank

b. Nor received any adverse comments from National Housing Bank

12. As per NHB refinance guidelines, the Company is required to submit half-yearly certificate as on 30th September and 31st March disclosing therein the difference between hypothecated book debts and NHB refinance outstanding. The adverse balance, if any, is being paid back to NHB as per their guidelines (Adverse Balance as on 31.03.2013 is Nil Previous Year Rs. Nil).

13. Previous year figures have been rearranged / regrouped wherever necessary as per the revised schedule VI. The additional information pursuant to revised Schedule VI to the Companies Act, 1956 are either Nil or Not Applicable.

14. Figures have been rounded off to the nearest rupee.

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